EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF
APRIL 13, 2005
BY AND AMONG
RURBAN FINANCIAL CORP.
AND
EXCHANGE BANCSHARES, INC.
TABLE OF CONTENTS
PAGE
ARTICLE ONE -- THE MERGER....................................................... 1
1.01. The Merger............................................................. 1
1.02. Effective Time......................................................... 2
1.03. Effects of the Merger.................................................. 2
ARTICLE TWO -- CONVERSION OF SHARES; SURRENDER OF CERTIFICATES.................. 2
2.01. Conversion of Exchange Shares.......................................... 2
2.02. Election and Exchange and Payment Procedures........................... 5
2.03. Dissenting Exchange Shares............................................. 11
2.04. Anti-Dilution Provisions............................................... 12
2.05. Rurban Shares.......................................................... 12
2.06. Tax Consequences....................................................... 12
ARTICLE THREE -- REPRESENTATIONS AND WARRANTIES OF EXCHANGE..................... 12
3.01. Corporate Status....................................................... 12
3.02. Capitalization of Exchange............................................. 14
3.03. Exchange Bank; No Other Subsidiaries................................... 15
3.04. Corporate Proceedings.................................................. 15
3.05. Authorized and Effective Agreement..................................... 15
3.06. Financial Statements of Exchange....................................... 16
3.07. SEC Filings............................................................ 16
3.08. Absence of Undisclosed Liabilities..................................... 16
3.09. Absence of Changes..................................................... 17
3.10. Loan Documentation..................................................... 17
3.11. Allowance for Loan Losses.............................................. 18
3.12. Reports and Records.................................................... 18
3.13. Taxes.................................................................. 18
3.14. Property and Title..................................................... 19
3.15. Legal Proceedings...................................................... 20
3.16. Regulatory Matters..................................................... 20
3.17. No Conflict............................................................ 20
3.18. Brokers, Finders and Others............................................ 21
3.19. Employment Agreements.................................................. 21
3.20. Employee Benefit Plans................................................. 21
3.21. Compliance with Laws................................................... 24
3.22. Insurance.............................................................. 24
3.23. Governmental and Third-Party Proceedings............................... 25
3.24. Contracts.............................................................. 25
3.25. Environmental Matters.................................................. 26
3.26. Takeover Laws.......................................................... 27
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3.27. Exchange Information................................................... 27
3.28. CRA Compliance......................................................... 27
3.29. Ownership of Rurban Shares............................................. 27
3.30. Fairness Opinion....................................................... 28
3.31. Risk Management Instruments............................................ 28
3.32. Repurchase Agreements.................................................. 28
3.33. Investment Securities.................................................. 28
3.34. Off Balance Sheet Transactions......................................... 29
ARTICLE FOUR -- REPRESENTATIONS AND WARRANTIES OF RURBAN........................ 29
4.01. Corporate Status....................................................... 29
4.02. Corporate Proceedings.................................................. 29
4.03. Capitalization of Rurban............................................... 30
4.04. Authorized and Effective Agreement..................................... 30
4.05. No Conflict............................................................ 31
4.06. SEC Filings............................................................ 31
4.07. Financial Statements of Rurban......................................... 32
4.08. Brokers, Finders and Others............................................ 32
4.09. Governmental and Third-Party Proceedings............................... 32
4.10. CRA Compliance......................................................... 32
4.11. Legal Proceedings...................................................... 33
4.12. Ownership of Exchange Shares........................................... 33
4.13. Compliance with Laws................................................... 33
4.14. Regulatory Matters..................................................... 34
4.15. Reports and Records.................................................... 34
4.16. Absence of Undisclosed Liabilities..................................... 34
4.17. Absence of Changes..................................................... 35
ARTICLE FIVE -- FURTHER COVENANTS OF EXCHANGE................................... 35
5.01. Operation of Business.................................................. 35
5.02. Notification........................................................... 40
5.03. Acquisition Proposals.................................................. 40
5.04. Delivery of Information................................................ 41
5.05. Affiliates Compliance with the Securities Act.......................... 41
5.06. Takeover Laws.......................................................... 41
5.07. Voting Agreement....................................................... 41
5.08. No Control............................................................. 41
5.09. Termination of Employment and Severance Agreements..................... 41
5.10. Accounting Policies.................................................... 42
ARTICLE SIX -- FURTHER COVENANTS OF RURBAN...................................... 42
6.01. Access to Information.................................................. 42
6.02. Employees; Employee Benefits........................................... 42
6.03. Exchange Listing....................................................... 43
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6.04. Notification.......................................................... 43
6.05. Officers' and Directors' Liability Insurance.......................... 44
6.06. Election to Exchange Bank Board....................................... 44
6.07. Availability of Funds................................................. 44
ARTICLE SEVEN -- FURTHER OBLIGATIONS OF THE PARTIES............................. 45
7.01. Cooperative Action.................................................... 45
7.02. Press Releases........................................................ 45
7.03. Registration Statements; Proxy Statement; Exchange Meeting............ 45
7.04. Regulatory Applications............................................... 47
7.05. Supplemental Assurances............................................... 48
7.06. Confidentiality....................................................... 48
ARTICLE EIGHT -- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES......... 49
8.01. Conditions to the Obligations of Rurban............................... 49
8.02. Conditions to the Obligations of Exchange............................. 50
8.03. Mutual Conditions..................................................... 50
ARTICLE NINE -- CLOSING......................................................... 51
9.01. Closing............................................................... 51
9.02. Closing Deliveries Required of Rurban................................. 52
9.03. Closing Deliveries Required of Exchange............................... 52
ARTICLE TEN -- NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS........ 53
10.01. Non-Survival of Representations, Warranties and Covenants............. 53
ARTICLE ELEVEN -- TERMINATION................................................... 53
11.01. Termination........................................................... 53
11.02. Effect of Termination................................................. 55
ARTICLE TWELVE -- MISCELLANEOUS................................................. 56
12.01. Notices............................................................... 56
12.02. Counterparts.......................................................... 57
12.03. Entire Agreement...................................................... 57
12.04. Successors and Assigns................................................ 58
12.05. Captions.............................................................. 58
12.06. Governing Law......................................................... 58
12.07. Payment of Fees and Expenses.......................................... 58
12.08. Amendment............................................................. 58
12.09. Waiver................................................................ 58
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12.10. Disclosure Schedule...................................................... 58
12.11. No Third-Party Rights.................................................... 59
12.12. Waiver of Jury Trial..................................................... 59
12.13. Severability............................................................. 59
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"Acquisition Transactions" -- Section 5.03
"Adjusted Exchange Equity" -- Section 2.01(e)
"Aggregate Cash Consideration" -- Section 2.01(c)
"Aggregate Consideration" -- Section 2.01(f)
"Aggregate Stock Consideration" -- Section 2.02(f)
"Agreement" -- Preamble
"BHCA" -- Section 3.01(a)
"Cash Election Shares" -- Section 2.02(b)
"Cash Election Shares" -- Section 2.02(b)
"CERCLA" -- Section 3.25
"Closing" -- Section 9.01
"Closing Date" -- Section 9.01
"Code" -- Preamble
"Compensation and Benefit Plans" -- Section 3.19(a)
"Consideration Adjustment" -- Section 2.01(e)
"Consultants" -- Section 3.19(a)
"Continuing Employees" -- Section 6.02(a)
"Contracts" -- Section 3.24
"Costs" -- Section 6.05
"CRA" -- Section 3.28
"Directors" -- Section 3.19(a)
"DOL" -- Section 3.19(c)
"Effective Time" -- Section 1.02
"Election Deadline" -- Section 2.02(c)
"Election Form" -- Section 2.02(b)
"Employees" -- Section 3.20(a)
"Environmental Law" -- Section 3.25
"ERISA" -- Section 3.20(a)
"ERISA Affiliate" -- Section 3.20(c)
"ERISA Affiliate Plan" -- Section 3.20(c)
"Exchange" -- Preamble
"Exchange Act" -- Section 3.07
"Exchange Agent" -- Section 2.02(a)
"Exchange Balance Sheet Date" -- Section 3.08
"Exchange Bank" -- Section 3.01(b)
"Exchange Bank Real Estate Collateral" -- Section 3.25
"Exchange Certificate" -- Section 2.02(b)
"Exchange Disclosure Schedule" -- Article Three
"Exchange Dissenting Share" -- Section 2.03
"Exchange Filed SEC Documents" -- Section 3.08
"Exchange Financial Statements" -- Section 3.06
"Exchange Fund" -- Section 2.02(f)
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"Exchange Meeting" -- Section 3.04
"Exchange Off Balance Sheet Transaction" -- Section 3.34
"Exchange Ratio" -- Section 2.01(b)
"Exchange Real Properties" -- Section 3.14
"Exchange SEC Documents" -- Section 3.07
"Exchange Shares" -- Preamble
"Exchange Walkaway Right" -- Section 11.01(c)(ii)
"Exchange's Counsel" -- Section 7.01
"Exchange's Financial Advisor" -- Section 3.18
"FDIC" -- Section 3.01(b)
"Final Determination Letter" -- Section 7.06(e)
"FRB" -- Section 3.01(b)
"GAAP" -- Section 3.06
"Governmental Authority" -- Section 3.17
"Hazardous Substances" -- Section 3.25
"IRS" -- Section 3.13
"Indemnified Party" -- Section 6.05
"Loan Assets" -- Section 3.10
"Loan Documentation" -- Section 3.10
"Mandatory Cash Shares" -- Section 2.01(a)
"material" -- Section 3.01(c)
"material adverse effect" -- Section 3.01(c)
"Merger" -- Preamble
"Nasdaq" -- Section 2.01(f)
"No-Election Shares" -- Section 2.02(b)
"ODFI" -- Section 3.01(b)
"OGCL" -- Section 1.01
"Officers" -- Section 3.20(a)
"PCBs" -- Section 3.25
"Pension Plan" -- Section 3.20(b)
"Per Share Cash Consideration" -- Section 2.01(a)(ii)
"Per Share Stock Consideration" -- Section 2.01(a)(i)
"Proxy Statement" -- Section 7.03(a)
"Proxy Statement/Prospectus" -- Section 7.03(a)
"Reallocated Cash Shares" -- Section 2.02(d)(i)
"Reallocated Stock Shares" -- Section 2.02(d)(ii)
"Reference Period" -- Section 11.01(c)
"Registration Statement" -- Section 7.03(a)
"Regulatory Authorities" -- Section 3.16
"Rule 145 Affiliates" -- Section 5.05
"Rurban" -- Preamble
"Rurban Filed SEC Documents" -- Section 4.11
"Rurban Financial Statements" -- Section 4.07
"Rurban Reference Price" -- Section 11.01(c)(iv)
"Rurban SEC Documents" -- Section 4.06
"Rurban Shares" -- Preamble
"Rurban Stock Option Plans" -- Section 4.03(a)
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"Rurban Stock Options" -- Section 4.03(a)
"Rurban's Counsel" -- Section 7.01
"SEC" -- Section 3.03
"Securities Act" -- Section 3.20(b)
"Stock Election Shares" -- Section 2.02(b)
"Subsidiary" -- Section 3.03
"Surviving Corporation" -- Section 1.01
"Tax" -- Section 3.13
"Tax Returns" -- Section 3.13
"Top-Up Notice" -- Section 11.01(c)(ii)
"Updated Exchange Disclosure Schedule" -- Section 5.02
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of
April 13, 2005, is made and entered into by and between Rurban Financial Corp.,
an Ohio corporation ("RURBAN"), and Exchange Bancshares, Inc., an Ohio
corporation ("EXCHANGE").
WITNESSETH:
WHEREAS, the Boards of Directors of Rurban and Exchange each have
determined that it is in the best interests of their respective corporations and
shareholders for Exchange to merge with and into Rurban (the "MERGER"), upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the Boards of Directors of Rurban and Exchange each have
approved this Agreement and the consummation of the transactions contemplated
hereby; and
WHEREAS, as a result of the Merger, in accordance with the terms of
this Agreement, Exchange will cease to have a separate corporate existence, and
shareholders of Exchange will receive from Rurban in exchange for each common
share, par value $5.00 per share, of Exchange ("EXCHANGE SHARES"), (a) $22.00 in
cash, or (b) 1.555 common shares, without par value, of Rurban ("RURBAN
SHARES"), subject, in each case, to any adjustments pursuant to the terms of
this Agreement;
WHEREAS, in connection with the Merger, each shareholder of Exchange
will be entitled to elect to receive, in exchange for such shareholder's
Exchange Shares, either (a) cash, (b) Rurban Shares, or (c) a combination of
cash and Rurban Shares, as determined in accordance with the terms of this
Agreement; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger contemplated by this Agreement qualify as a "reorganization" under the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "CODE");
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, Rurban and Exchange, intending to be legally bound hereby, agree as
follows:
ARTICLE ONE
THE MERGER
1.01. THE MERGER
Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.02), Exchange shall
merge with and into Rurban in accordance with the Ohio General Corporation Law
(the "OGCL"). Rurban shall be the
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continuing and surviving corporation in the Merger, shall continue to exist
under the laws of the State of Ohio, and shall be the only one of Rurban and
Exchange to continue its separate corporate existence after the Effective Time.
As used in this Agreement, the term "SURVIVING CORPORATION" refers to Rurban
immediately after the Effective Time. As a result of the Merger, the outstanding
Exchange Shares and any Exchange Shares held in treasury by Exchange shall be
cancelled or converted in the manner provided in Article Two.
1.02. EFFECTIVE TIME
The Merger shall become effective upon the filing of the appropriate
certificate of merger with the Ohio Secretary of State, or such time thereafter
as is agreed to in writing by Rurban and Exchange and so provided in the
certificate of merger filed with the Ohio Secretary of State. The date and time
at which the Merger shall become effective is referred to in this Agreement as
the "EFFECTIVE TIME."
1.03. EFFECTS OF THE MERGER
At the Effective Time:
(a) the articles of Rurban in effect immediately prior to the
Effective Time shall be the articles of the Surviving
Corporation;
(b) the regulations of Rurban in effect immediately prior to the
Effective Time shall be the regulations of the Surviving
Corporation;
(c) the directors of Rurban immediately prior to the Effective
Time shall be the directors of the Surviving Corporation;
(d) each individual who is an officer of Rurban immediately prior
to the Effective Time shall be an officer of the Surviving
Corporation holding the same office held with Rurban
immediately prior to the Effective Time; and
(e) the Merger shall have the effects prescribed in the OGCL.
ARTICLE TWO
CONVERSION OF SHARES; SURRENDER OF CERTIFICATES
2.01. CONVERSION OF EXCHANGE SHARES
At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof:
(a) Conversion of Exchange Shares. Subject to Sections 2.02, 2.03
and 2.04, each Exchange Share issued and outstanding
immediately prior to the Effective Time (other than Exchange
Shares to be canceled or converted
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to treasury shares of the Surviving Corporation in accordance
with Section 2.01(d) and Exchange Dissenting Shares, as
defined in Section 2.03) shall be converted into the right to
receive, at the election of the holder thereof:
(i) the number of Rurban Shares that is equal to the
Exchange Ratio, as defined in Section 2.01(b) (the "PER
SHARE STOCK CONSIDERATION"); or
(ii) a cash amount equal to $22.00, subject to adjustment
pursuant to Section 2.01(e) (the "PER SHARE CASH
CONSIDERATION");
provided, however, that any Exchange Shares with respect to
which the holder thereof owns one hundred (100) or fewer
Exchange Shares of record as of the Election Deadline, as
defined in Section 2.02(c), shall be converted into the right
to receive the Per Share Cash Consideration, and no such
Exchange Shares shall be converted into the right to receive
the Per Share Stock Consideration. Any such Exchange Shares
are hereinafter referred to as "MANDATORY CASH SHARES."
(b) Exchange Ratio. Unless adjusted pursuant to the terms of this
Agreement, the Exchange Ratio shall be 1.555. The Exchange
Ratio shall be subject to adjustment (i) pursuant to Section
2.01(e) or 2.01(f); (ii) if the Rurban Reference Price, as
defined in Section 11.01(c)(iv), is greater than $16.27, the
Exchange Ratio shall equal (A) 115% of the Per Share Cash
Consideration, divided by (B) the Rurban Reference Price; and
(iii) if Rurban shall have delivered a Top-Up Notice pursuant
to the provisions of Section 11.01(c)(iv), the Exchange Ratio
shall be as set forth in such notice.
(c) Aggregate Cash Consideration. The "AGGREGATE CASH
CONSIDERATION" for purposes of this Agreement shall be an
amount equal to the Per Share Cash Consideration multiplied by
50% of the number of Exchange Shares (excluding any of
Exchange's treasury shares or Exchange Shares owned by Rurban)
outstanding at the Effective Time.
(d) Cancellation of Treasury Shares; Exchange Shares Owned by
Rurban. All Exchange Shares held by Exchange as treasury
shares shall be canceled and retired and shall cease to exist,
and no Rurban Shares or other consideration shall be delivered
in exchange therefor. All Exchange Shares, if any, that are
beneficially owned by Rurban, upon conversion into Rurban
Shares, shall become treasury shares of the Surviving
Corporation.
(e) In the event that, at the last day of the month preceding the
Closing Date, the Adjusted Exchange Equity (as defined below)
is less than $8,100,000, the Aggregate Consideration (as
defined in Section 2.01(f)) payable by
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Rurban in the Merger shall be reduced by an amount equal to
150% of the difference between (A) the amount of the Adjusted
Exchange Equity at the last day of the month preceding the
Closing Date and (B) $8,100,000 (such amount hereinafter
referred to as the "CONSIDERATION ADJUSTMENT"), and the Per
Share Cash Consideration and the Exchange Ratio shall be
reduced accordingly, as follows:
(1) the amount of the Per Share Cash Consideration shall be
reduced by the amount of the Consideration Adjustment
divided by the number of issued and outstanding Exchange
Shares immediately prior to the Effective Time; and
(2) the Exchange Ratio shall be reduced to an amount equal
to the Per Share Cash Consideration, as adjusted
pursuant to subsection (e)(1) above, divided by $14.15.
As used in this Section 2.01(e), the "ADJUSTED EXCHANGE
SHAREHOLDERS' EQUITY" means the shareholders' equity of
Exchange, calculated in accordance with GAAP, except that such
calculation shall exclude any changes in shareholders' equity
arising or resulting from:
(i) any changes or adjustments made, or charges taken, at
the request of Rurban pursuant to the provisions of
Section 5.10;
(ii) expenses associated with the transactions contemplated
by this Agreement (including, without limitation, fees
and expenses of the Exchange Agent, legal, accounting
and investment bankers' fees and expenses and
change-in-control and severance payments) up to a
maximum of $1,150,000;
(iii) expenses, fees and all other sums paid to Rurban by
Exchange pursuant to an Administrative Services
Agreement among Rurban, Exchange and Exchange Bank; or
(iv) any unrealized gains or losses in Exchange's investment
portfolio during the period from January 1, 2005 through
the Effective Time.
(f) Notwithstanding anything in this Agreement to the contrary but
subject to the rights described in Section 11.01(d)(iii), to
preserve the status of the Merger as a tax-free reorganization
within the meaning of Section 368(a)(1)(A) of the Code, if,
based upon the closing price of the Rurban Shares as reported
on The Nasdaq Stock Market, Inc. ("NASDAQ") on the trading day
immediately preceding the Effective Time, the aggregate value
of the Rurban Shares to be issued in connection with the
Merger (the "AGGREGATE STOCK CONSIDERATION") would be less
than 40% of the Aggregate Consideration (as defined below),
then Rurban shall increase
4
the Exchange Ratio so that the Aggregate Stock Consideration,
as determined based upon the closing price of the Rurban
Shares as reported on Nasdaq on the trading day immediately
preceding the Effective Time, is equal to at least 40% of the
Aggregate Consideration. As used in this Agreement, the
"AGGREGATE CONSIDERATION" means the sum of (i) the Aggregate
Cash Consideration plus (ii) the Aggregate Stock
Consideration.
2.02. ELECTION AND EXCHANGE AND PAYMENT PROCEDURES
(a) Exchange Agent. Registrar and Transfer Company will act as
agent (the "EXCHANGE AGENT") for purposes of conducting the
election procedure and the exchange and payment procedures as
described in this Section 2.02.
(b) Election Procedure. No later than three (3) business days
following the Effective Time, Rurban shall cause the Exchange
Agent to mail or make available to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time represented issued and outstanding Exchange
Shares ("EXCHANGE CERTIFICATE"): (i) a notice and letter of
transmittal, specifying that delivery shall be effected and
risk of loss and title to the Exchange Certificates shall pass
only upon proper delivery of such certificates to the Exchange
Agent and advising such holder of the effectiveness of the
Merger and the procedure for surrendering to the Exchange
Agent the Exchange Certificate in exchange for the
consideration set forth in Section 2.01, and (ii) an election
form in such form as Rurban and Exchange shall mutually agree
("ELECTION FORM"). Each Election Form shall permit the holder
(or in the case of nominee record holders, the beneficial
owner through proper instructions and documentation) (i) to
elect to receive Rurban Shares with respect to all of such
holder's Exchange Shares, (ii) to elect to receive cash with
respect to all of such holder's Exchange Shares, (iii) to
elect to receive cash with respect to some of such holder's
Exchange Shares and to receive Rurban Shares with respect to
such holder's remaining Exchange Shares, or (iv) to indicate
that such holder makes no such election with respect to such
holder's Exchange Shares ("NO-ELECTION SHARES"); provided,
however, that each holder of Mandatory Cash Shares shall be
permitted to elect only to receive cash with respect to such
holder's Mandatory Cash Shares. Any Exchange Shares with
respect to which the holder has elected to receive cash
(including Mandatory Cash Shares) are hereinafter referred to
as "CASH ELECTION SHARES," and any Exchange Shares with
respect to which the holder has elected to receive Rurban
Shares are hereinafter referred to as "STOCK ELECTION SHARES."
Any Exchange Shares with respect to which the holder thereof
shall not, as of the Election Deadline (as defined in Section
2.02(c) below), have made an election by submission to the
Exchange Agent of an effective, properly completed Election
Form shall
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be deemed to be No-Election Shares. Any Exchange Dissenting
Shares shall be deemed to be Cash Election Shares for purposes
of the allocation provisions of subsection (d) below, but in
no event shall such shares be classified as Reallocated Stock
Shares (as defined in Section 2.02(d)(ii)(B) below).
(c) Election Deadline; Revocation or Modification of Election. For
purposes of this Agreement, the term "ELECTION DEADLINE" shall
mean 5:00 p.m., Eastern Time, on the thirtieth (30th) day
following, but not including, the date of mailing of the
Election Form, or such other date upon which Rurban and
Exchange shall mutually agree prior to the Effective Time. Any
election to receive cash, Rurban Shares or a combination of
cash and Rurban Shares shall have been properly made only if
the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. Any
submitted Election Form may be revoked or changed by written
notice to the Exchange Agent only if such notice is actually
received by the Exchange Agent prior to the Election Deadline.
The Exchange Agent shall be required to make all
determinations as to when any election, modification or
revocation has been received and whether any such election,
modification or revocation has been properly made.
(d) Reallocation of Rurban Shares and Cash. The Exchange Agent
shall effect the allocation among holders of Exchange Shares
of rights to receive cash, Rurban Shares, or a combination of
cash and Rurban Shares in accordance with the Election Forms
as follows:
(i) If (A) the number of Cash Election Shares multiplied by
the Per Share Cash Consideration, plus (B) the cash to
be paid in lieu of fractional Rurban Shares pursuant to
Section 2.02(j) below, is less than the Aggregate Cash
Consideration, then:
(1) each of the Cash Election Shares (other than
Exchange Dissenting Shares) shall be converted
into the right to receive the Per Share Cash
Consideration;
(2) the Exchange Agent will designate first among the
No-Election Shares (by the method described in
Section 2.02(e)(i) below) and then, if necessary,
will designate among the Stock Election Shares (by
the method described in Section 2.02(e)(ii)
below), a sufficient number of such shares to
receive the Per Share Cash Consideration (such
redesignated shares hereinafter referred to as
"REALLOCATED CASH SHARES") such that the sum of
(a) the product of (1) the sum of the number of
Cash Election Shares plus the number of
Reallocated Cash Shares, multiplied by (2) the
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Per Share Cash Consideration, plus (b) the amount
of cash to be paid in lieu of fractional Rurban
Shares pursuant to Section 2.02(j) below, equals
the Aggregate Cash Consideration, and each of the
Reallocated Cash Shares shall be converted into
the right to receive the Per Share Cash
Consideration; and
(3) each of the No-Election Shares and Stock Election
Shares which are not Reallocated Cash Shares shall
be converted into the right to receive the Per
Share Stock Consideration.
(ii) If (A) the number of Cash Election Shares multiplied by
the Per Share Cash Consideration, plus (B) the cash to
be paid in lieu of fractional Rurban Shares pursuant to
Section 2.02(j) below, is greater than the Aggregate
Cash Consideration, then:
(1) each of the Stock Election Shares and No-Election
Shares shall be converted into the right to
receive the Per Share Stock Consideration;
(2) the Exchange Agent will designate among the Cash
Election Shares (other than Exchange Dissenting
Shares and Mandatory Cash Shares) (by the method
described in Section 2.02(e) below), a sufficient
number of such shares to receive the Per Share
Stock Consideration (such redesignated shares
hereinafter referred to as "REALLOCATED STOCK
SHARES") such that the sum of (a) the product of
(1) the number of remaining Cash Election Shares
(including all of the Exchange Dissenting Shares
and Mandatory Cash Shares) multiplied by (2) the
Per Share Cash Consideration, plus (b) the amount
of cash to be paid in lieu of fractional Rurban
Shares pursuant to Section 2.02(j) below, equals
the Aggregate Cash Consideration, and each of the
Reallocated Stock Shares shall be converted into
the right to receive the Per Share Stock
Consideration; and
(3) each of the Cash Election Shares (other than
Exchange Dissenting Shares) which are not
Reallocated Stock Shares shall be converted into
the right to receive the Per Share Cash
Consideration.
(iii) If (A) the number of Cash Election Shares (including
Exchange Dissenting Shares) multiplied by the Per Share
Cash Consideration, plus (B) the cash to be paid in lieu
of fractional Rurban Shares pursuant to Section 2.02(j)
below, is equal to the Aggregate Cash Consideration,
then subparagraphs (d)(i) and (ii)
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above shall not apply, all No-Election Shares and all
Stock Election Shares shall be converted into the right
to receive the Per Share Stock Consideration and all
Cash Election Shares shall be converted into the right
to receive the Per Share Cash Consideration.
(e) Method of Designation.
(i) If the Exchange Agent is required pursuant to Section
2.02(d)(i) to designate from among all No-Election
Shares the Reallocated Cash Shares to receive the Per
Share Cash Consideration, each holder of No-Election
Shares shall have a pro rata portion (based on such
holder's No-Election Shares relative to all No-Election
Shares) of such holder's No-Election Shares designated
as Reallocated Cash Shares.
(ii) If the Exchange Agent is required pursuant to Section
2.02(d)(i) to designate from among all Stock Election
Shares the Reallocated Cash Shares to receive the Per
Share Cash Consideration, each holder of Stock Election
Shares shall have a pro rata portion (based on such
holder's Stock Election Shares relative to all Stock
Election Shares) of such holder's Stock Election Shares
designated as Reallocated Cash Shares.
(iii) If the Exchange Agent is required pursuant to Section
2.02(d)(ii) to designate from among all Cash Election
Shares the Reallocated Stock Shares to receive the Per
Share Stock Consideration, each holder of Cash Election
Shares shall have a pro rata portion (based on such
holder's Cash Election Shares relative to all Cash
Election Shares) of such holder's Cash Election Shares
designated as Reallocated Stock Shares. For purposes of
this Section 2.02(e)(iii), neither Exchange Dissenting
Shares nor Mandatory Cash Shares shall be considered to
be Cash Election Shares.
(f) Deposit with Exchange Agent; Exchange Fund. Rurban shall
provide to the Exchange Agent the aggregate number of Rurban
Shares issuable pursuant to Section 2.01, the Aggregate Cash
Consideration payable pursuant to Section 2.01, the cash in
respect of fractional Rurban Shares payable pursuant to
Section 2.02(j), and the amount of all other cash payable in
the Merger, if any, on an "as needed" basis to the Exchange
Agent, all of which shall be held by the Exchange Agent in
trust for the holders of Exchange Shares (collectively, the
"EXCHANGE FUND"). No later than ten (10) days after the
Election Deadline, the Exchange Agent shall distribute Rurban
Shares and make payment of such cash as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any
rights of ownership with respect to the Rurban Shares held by
it from time
8
to time hereunder, except that it shall receive and hold in
trust for the recipients of the Rurban Shares until
distributed thereto pursuant to the provisions of this
Agreement all dividends or other distributions paid or
distributed with respect to such Rurban Shares for the account
of the persons entitled thereto. The Exchange Fund shall not
be used for any purpose other than as set forth in this
paragraph.
(g) Surrender of Exchange Certificates. After the completion of
the foregoing allocation, each holder of an Exchange
Certificate who surrenders such Exchange Certificate to the
Exchange Agent shall, upon acceptance thereof by the Exchange
Agent, be entitled to a certificate representing the full
number of Rurban Shares and/or the amount of cash into which
the aggregate number of Exchange Shares previously represented
by such surrendered Exchange Certificate shall have been
converted pursuant to this Agreement. The Exchange Agent shall
accept such Exchange Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance
with normal exchange practices. Each Exchange Certificate that
is not surrendered to the Exchange Agent in accordance with
the procedures provided for herein shall, except as otherwise
herein provided, until duly surrendered to the Exchange Agent,
be deemed to evidence ownership of the number of Rurban Shares
or the right to receive the amount of cash into which such
Exchange Shares shall have been converted. After the Effective
Time, there shall be no further transfer on the records of
Exchange of Exchange Certificates and, if such Exchange
Certificates are presented to Exchange for transfer, they
shall be canceled against delivery of certificates for Rurban
Shares and/or cash as provided above.
(h) Lost Certificates. If there shall be delivered to the Exchange
Agent by any person who is unable to produce any Exchange
Certificate for surrender to the Exchange Agent in accordance
with this Section 2.02:
(i) evidence to the reasonable satisfaction of the Surviving
Corporation that such Exchange Certificate has been
lost, wrongfully taken, or destroyed;
(ii) such security or indemnity as reasonably may be
requested by the Surviving Corporation to save it
harmless (which may include the requirement to obtain a
third party bond or surety, as determined by the
Surviving Corporation); and
(iii) evidence to the reasonable satisfaction of the Surviving
Corporation that such person was the owner of the
Exchange Shares represented by each such Exchange
Certificate claimed by him or her to be lost, wrongfully
taken or destroyed and that he or
9
she is the person who would be entitled to present such
Exchange Certificate for exchange pursuant to this
Agreement;
then the Exchange Agent, in the absence of actual notice to it
that any Exchange Shares represented by any such Exchange
Certificate have been acquired by a bona fide purchaser, shall
deliver to such person the cash and/or Rurban Shares (and cash
in lieu of fractional Rurban Share interests, if any) that
such person would have been entitled to receive upon surrender
of each such lost, wrongfully taken or destroyed Exchange
Certificate.
(i) No Further Ownership Rights in Exchange Shares. All cash and
Rurban Shares issued upon conversion of Exchange Shares in
accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such
Exchange Shares.
(j) No Fractional Rurban Shares.
(i) No certificates or scrip representing fractional Rurban
Shares shall be issued upon the surrender for exchange
of Exchange Certificates, and such fractional Rurban
Share interests will not entitle the owner thereof to
vote or to any rights of a shareholder of the Surviving
Corporation.
(ii) Each holder of Exchange Shares who would otherwise be
entitled to receive a fractional Rurban Share shall
receive from the Exchange Agent an amount of cash equal
to the product obtained by multiplying (a) the
fractional Rurban Share interest to which such holder
(after taking into account all Exchange Shares held at
the Effective Time by such holder) would otherwise be
entitled by (b) $14.15.
(k) Termination of Exchange Fund. Any portion of the Exchange Fund
delivered to the Exchange Agent by Rurban pursuant to Section
2.02(f) that remains undistributed to the shareholders of
Exchange for six (6) months after the Effective Time shall be
delivered to the Surviving Corporation, upon demand, and any
shareholders of Exchange who have not complied with this
Article Two by such time shall thereafter look only to the
Surviving Corporation for payment of the Per Share Stock
Consideration, the Per Share Cash Consideration, any cash in
lieu of a fractional Rurban Share interest and any dividends
or distributions with respect to Rurban Shares, in each case
without interest.
(l) No Liability. None of Rurban, Exchange, the Exchange Agent or
the Surviving Corporation shall be liable to any former holder
of Exchange Shares for any payment of the Per Share Stock
Consideration, the Per
10
Share Cash Consideration, any cash in lieu of a fractional
Rurban Share interest or any dividends or distributions with
respect to Rurban Shares delivered to a public official if
required by any applicable abandoned property, escheat or
similar law.
(m) Withholding Rights. Rurban or the Exchange Agent shall be
entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
Exchange Certificates such amounts as Rurban or the Exchange
Agent is required to deduct and withhold with respect to the
making of such payment under the Code, or any other provision
of domestic or foreign tax law (whether national, federal,
state, provincial, local or otherwise). To the extent that
amounts are so withheld and paid over to the appropriate
taxing authority by Rurban 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 Exchange
Certificates.
(n) Waiver. The Surviving Corporation may from time to time, in
the case of one or more persons, waive one or more of the
rights provided to it in this Article Two to withhold certain
payments, deliveries and distributions; and no such waiver
shall constitute a waiver of its rights thereafter to withhold
any such payment, delivery or distribution in the case of any
person.
2.03. DISSENTING EXCHANGE SHARES
Anything contained in this Agreement or elsewhere to the contrary
notwithstanding, if any holder of an outstanding Exchange Share seeks relief as
a dissenting shareholder under Section 1701.85 of the OGCL (an "EXCHANGE
DISSENTING SHARE"), then such Exchange Dissenting Share shall not be converted
into the right to receive the Per Share Stock Consideration or the Per Share
Cash Consideration, and instead:
(a) Each such Exchange Dissenting Share shall nevertheless be
deemed to be extinguished at the Effective Time as provided
elsewhere in this Agreement; and
(b) Each holder perfecting such dissenters' rights shall
thereafter have only such rights (and shall have such
obligations) as are provided in Section 1701.85 of the OGCL,
and the Surviving Corporation shall be required to deliver
only such cash payments to which the Exchange Dissenting
Shares are entitled pursuant to Section 1701.85 of the OGCL;
provided, however, that if any such person shall forfeit such
right to payment of the fair value under Section 1701.85 of
the OGCL, each such holder's Exchange Dissenting Shares shall
thereupon be deemed to have been converted as of the Effective
Time into the right to receive the Per Share Stock
Consideration or the Per
11
Share Cash Consideration, as shall have been designated by
each such holder, subject to Section 2.01.
Any letter of transmittal submitted by a holder of Exchange Dissenting Shares
shall be invalid, unless and until the demand for payment of the fair cash value
of the Exchange Shares shall have been or is deemed to have been withdrawn or
forfeited.
2.04. ANTI-DILUTION PROVISIONS
The Exchange Ratio and the Per Share Stock Consideration shall be
adjusted fully to reflect any occurrence, subsequent to the date of this
Agreement but prior to the Effective Time, pursuant to which the outstanding
Rurban Shares shall have been increased, decreased, changed into or exchanged
for a different number or kind of shares or securities through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other like changes in Rurban's capitalization. Nothing contained herein
shall be deemed to permit any action which may be proscribed by this Agreement.
2.05. RURBAN SHARES
All Rurban Shares, if any, that are owned directly by Exchange
immediately prior to the Effective Time shall become treasury shares of the
Surviving Corporation. Each other Rurban Share issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding and unaffected by the Merger.
2.06. TAX CONSEQUENCES
For federal income tax purposes, the Merger is intended to
constitute a reorganization within the meaning of Section 368(a) of the Code.
The parties hereto hereby adopt this Agreement as a "plan of reorganization"
within the meaning of Treasury Department regulation sections 1.368-2(g) and
1.368-3(a).
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF EXCHANGE
Exchange has delivered to Rurban, concurrently with the execution of
this Agreement, a disclosure schedule prepared by Exchange (the "EXCHANGE
DISCLOSURE SCHEDULE"). Exchange represents and warrants to Rurban as follows:
3.01. CORPORATE STATUS
(a) Exchange is an Ohio corporation and a bank holding company
registered under the Bank Holding Company Act of 1956, as
amended (the "BHCA"). Exchange is duly organized, validly
existing and in good standing under the laws of the State of
Ohio and has the full corporate power and authority to own its
property, to carry on its business as presently conducted, and
to enter into and, subject to the required adoption
12
of this Agreement by the Exchange shareholders and the
obtaining of appropriate approvals of Governmental and
Regulatory Authorities (as defined below), perform its
obligations under this Agreement and consummate the
transactions contemplated by this Agreement. Exchange is not
qualified to do business in any other jurisdiction or required
to be so qualified to do business in any other jurisdiction
except where the failure to be so qualified individually or in
the aggregate would not reasonably be expected to have a
material adverse effect on Exchange. Exchange has made
available to Rurban true and complete copies of the articles
of incorporation and regulations of Exchange, in each case as
amended to the date of this Agreement.
(b) The Exchange Bank ("EXCHANGE BANK") is the only Subsidiary (as
that term is defined in Section 3.03 below) of Exchange.
Exchange Bank is an Ohio-chartered bank, is a member of the
Federal Reserve System and is regulated by the Ohio Division
of Financial Institutions (the "ODFI") and the Board of
Governors of the Federal Reserve System (the "FRB"). The
savings accounts and deposits of Exchange Bank are insured by
the Federal Deposit Insurance Corporation (the "FDIC").
Exchange Bank is duly organized, validly existing and in good
standing under the laws of the State of Ohio and has full
power and authority, corporate or otherwise, to own its
property and to carry on its business as presently conducted.
Exchange Bank is not qualified to do business in any other
jurisdiction or required to be qualified to do business in any
other jurisdiction, except where the failure to be so
qualified individually or in the aggregate would not
reasonably be expected to have a material adverse effect on
Exchange Bank. Exchange Bank has made available to Rurban true
and complete copies of the articles of incorporation,
constitution and other governing instruments of Exchange Bank,
in each case as amended to the date of this Agreement.
(c) As used in this Agreement, (i) any reference to any event,
change or effect being "MATERIAL" with respect to any entity
means an event, change or effect which is material in relation
to the financial condition, properties, assets, liabilities,
businesses or results of operations of such entity and its
subsidiaries taken as a whole and (ii) the term "MATERIAL
ADVERSE EFFECT" means, with respect to an entity, a material
adverse effect on the financial condition, properties, assets,
liabilities, businesses or results of operations of such
entity and its subsidiaries taken as a whole or on the ability
of such entity to perform its obligations under this Agreement
or consummate the Merger and the other material transactions
contemplated by this Agreement other than, in any case, any
state of facts, change, development, event, effect, condition
or occurrence (A) resulting from changes in the United States
economy or the United States securities markets in general;
(B) resulting from changes in the industries in which Exchange
or Rurban, as the case may be, operates and not specifically
13
relating to Exchange or Rurban, as the case may be; or (C)
resulting from the Merger generally; provided, however, that
in no event shall a decrease in the trading price of Exchange
Shares or Rurban Shares be considered a material adverse
effect or material adverse change.
3.02. CAPITALIZATION OF EXCHANGE
(a) As of the date of this Agreement, the authorized capital of
Exchange consists only of (i) 750,000 Exchange Shares, of
which 586,644 Exchange Shares are issued and outstanding and
no Exchange Shares are held in treasury by Exchange, and (ii)
750 preferred shares, par value $25.00 per share, none of
which are outstanding. All outstanding Exchange Shares have
been duly authorized and are validly issued, fully paid and
non-assessable, and were not issued in violation of the
preemptive rights of any person. All Exchange Shares issued
have been issued in compliance in all material respects with
all applicable federal and state securities laws.
(b) As of the date of this Agreement, there are no bonds,
debentures, notes or other indebtedness of Exchange, and no
securities or other instruments or obligations of Exchange,
the value of which is in any way based upon or derived from
any capital or voting stock of Exchange, having the right to
vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders
of Exchange may vote.
(c) As of the date of this Agreement, except for this Agreement,
there are no options, warrants, calls, rights, commitments or
agreements of any character to which Exchange is a party or by
which it is bound, obligating Exchange to issue, deliver or
sell, or cause to be issued, delivered or sold, any additional
shares of capital stock of, or other equity or voting
interests in, or securities convertible into, or exchangeable
or exercisable for, shares of capital stock of, or other
equity or voting interests in, Exchange or obligating Exchange
to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment or agreement. As of
the date of this Agreement, there are no outstanding
contractual obligations of Exchange to repurchase, redeem or
otherwise acquire any Exchange Shares.
(d) Except as disclosed in Section 3.02(c) of the Exchange
Disclosure Schedule, since December 31, 2004, Exchange has not
(A) issued or permitted to be issued any Exchange Shares, or
securities exercisable for or convertible into Exchange
Shares; (B) repurchased, redeemed or otherwise acquired,
directly or indirectly through any Exchange Subsidiary or
otherwise, any Exchange Shares; or (C) declared, set aside,
made or paid to the shareholders of Exchange dividends or
other distributions on the outstanding Exchange Shares.
14
3.03. EXCHANGE BANK; NO OTHER SUBSIDIARIES
Exchange Bank is the only Subsidiary of Exchange. Exchange owns
beneficially and of record all of the issued and outstanding equity securities
of Exchange Bank. There are no options, warrants, calls, rights, commitments or
agreements of any character to which Exchange or Exchange Bank is a party or by
which either of them is bound obligating Exchange or Exchange Bank to issue,
deliver or sell, or cause to be issued, delivered or sold, additional equity
securities of Exchange Bank (other than to Exchange), or obligating Exchange or
Exchange Bank to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement. There are no contracts, commitments,
understandings or arrangements relating to Exchange's rights to vote or to
dispose of the equity securities of Exchange Bank, and all of the equity
securities of Exchange Bank held by Exchange are fully paid and non-assessable
and are owned by Exchange free and clear of any charge, mortgage, pledge,
security interest, hypothecation, restriction, claim, option, lien, encumbrance
or interest of any persons whatsoever. Except as disclosed in Section 3.03 of
the Exchange Disclosure Schedule, neither Exchange nor Exchange Bank owns of
record or beneficially, directly or indirectly, any equity securities or similar
interests of any person, or any interest in a partnership or joint venture of
any kind, other than Exchange's ownership of Exchange Bank.
For purposes of this Agreement, "SUBSIDIARY" has the meaning
ascribed to such term in Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC").
3.04. CORPORATE PROCEEDINGS
All corporate proceedings of Exchange necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the Merger and the other transactions contemplated hereby, have been duly and
validly taken, except for the adoption of this Agreement by the holders of at
least a majority of the outstanding Exchange Shares entitled to vote thereon
(which is the only required shareholder vote with respect to the Merger) and
subject, in the case of the consummation of the Merger, to the filing and
recordation of a certificate of merger with the Secretary of State of Ohio as
required by the OGCL. The Board of Directors of Exchange has duly adopted
resolutions (a) approving and declaring advisable this Agreement, the Merger and
the other transactions contemplated hereby, (b) declaring that it is in the best
interests of Exchange's shareholders that Exchange enter into this Agreement and
consummate the Merger on the terms and subject to the conditions set forth in
this Agreement, (c) declaring that this Agreement is fair to Exchange's
shareholders, (d) directing that this Agreement be submitted to a vote at a
meeting of Exchange's shareholders to be held as promptly as practicable (the
"EXCHANGE MEETING") and (e) recommending that Exchange's shareholders adopt this
Agreement, which resolutions have not been subsequently rescinded, modified or
withdrawn in any way except as permitted by Section 5.03.
3.05. AUTHORIZED AND EFFECTIVE AGREEMENT
This Agreement has been duly executed and delivered by Exchange and,
assuming the due authorization, execution and delivery by Rurban, constitutes a
valid and
15
binding obligation of Exchange, enforceable against Exchange in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws relating to or affecting the enforcement of creditors' rights generally, by
general equitable principles (regardless of whether enforceability is considered
in a proceeding in equity or at law) and by an implied covenant of good faith
and fair dealing. Exchange has the right, power, authority and capacity to
execute and deliver this Agreement and, subject to the required adoption of this
Agreement by the Exchange shareholders, the obtaining of appropriate approvals
by Governmental and Regulatory Authorities and the expiration of applicable
regulatory waiting periods, to perform its obligations under this Agreement.
3.06. FINANCIAL STATEMENTS OF EXCHANGE
Except as set forth in Section 3.06 of the Exchange Disclosure
Schedule, the financial statements of Exchange (including the related notes)
included in the Exchange SEC Documents (as defined below) (the "EXCHANGE
FINANCIAL STATEMENTS"), comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") (except, in the case of
unaudited financial statements, as permitted by Form 10-Q of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present, in all material respects, the
consolidated financial position of Exchange and its consolidated subsidiaries as
of the dates thereof and their respective consolidated results of operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which are not expected to be,
individually or in the aggregate, materially adverse to Exchange and the absence
of full footnotes).
3.07. SEC FILINGS
Exchange has filed or furnished all reports and proxy materials
required to be filed with, or furnished by it to, the SEC pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") (together with
all information incorporated therein by reference, the "EXCHANGE SEC
DOCUMENTS"), except for any reports or proxy materials the failure to file or
furnish would not reasonably be expected to have a material adverse effect upon
Exchange. Except as set forth in Section 3.07 of the Exchange Disclosure
Schedule, all such filings, at the time of filing, complied in all material
respects as to form and included all exhibits required to be filed under the
rules of the SEC applicable to such Exchange SEC Documents. None of such
documents, as subsequently supplemented or amended, contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
3.08. ABSENCE OF UNDISCLOSED LIABILITIES
Except as set forth in the Exchange SEC Documents filed or furnished
since January 1, 2004 and publicly available prior to the date of this Agreement
(including the
16
financial statements included therein) (the "EXCHANGE FILED SEC DOCUMENTS"), or
in Section 3.08 of the Exchange Disclosure Schedule, and except as arising
hereunder, Exchange and Exchange Bank have no liabilities or obligations
(whether accrued, absolute, contingent or otherwise) as of December 31, 2004,
other than liabilities and obligations that individually or in the aggregate
could not reasonably be expected to have a material adverse effect on Exchange
or Exchange Bank. Except as set forth in Section 3.08 of the Exchange Disclosure
Schedule, all debts, liabilities, guarantees and obligations of Exchange and
Exchange Bank incurred since December 31, 2004 (the "EXCHANGE BALANCE SHEET
DATE") have been incurred in the ordinary course of business and are usual and
normal in amount both individually and in the aggregate. Except as disclosed in
Section 3.08 of the Exchange Disclosure Schedule, neither Exchange nor Exchange
Bank is in default or breach of any material agreement to which Exchange or
Exchange Bank is a party other than any such breaches or defaults that
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on Exchange or Exchange Bank. To the knowledge of
Exchange, no other party to any material agreement to which Exchange or Exchange
Bank is a party is in default or breach of such agreement, which breach or
default would reasonably be expected to have a material adverse effect on
Exchange or Exchange Bank.
3.09. ABSENCE OF CHANGES
Except (a) as set forth in the Exchange Filed SEC Documents or (b)
as set forth in Section 3.09 of the Exchange Disclosure Schedule, since the
Exchange Balance Sheet Date: (i) there has not been any material adverse change
in the business, operations, assets or financial condition of Exchange and
Exchange Bank taken as a whole, and, to the knowledge of Exchange, no fact or
condition exists which Exchange or Exchange Bank believes will cause such a
material adverse change in the future; and (ii) neither Exchange nor Exchange
Bank has taken or permitted any of the actions described in Section 5.01(b) of
this Agreement.
3.10. LOAN DOCUMENTATION
The documentation ("LOAN DOCUMENTATION") governing or relating to
the loan and credit-related assets ("LOAN ASSETS") included in the loan
portfolio of Exchange Bank is legally sufficient for the purposes intended
thereby and creates enforceable rights of Exchange Bank in accordance with the
terms of such Loan Documentation, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
relating to or affecting the enforcement of creditors' rights generally, by
general equitable principles (regardless of whether enforceability is considered
in a proceeding in equity or at law) and by an implied covenant of good faith
and fair dealing, except for such insufficiencies as would not reasonably be
expected to have a material adverse effect on Exchange or Exchange Bank. Except
as set forth in Section 3.10 of the Exchange Disclosure Schedule, no debtor
under any of the Loan Documentation has asserted any claim or defense with
respect to the subject matter thereof. Except as set forth in Section 3.10 of
the Exchange Disclosure Schedule, Exchange Bank is not a party to a loan,
including any loan guaranty, with any director, executive officer or holder of
5% or more of the outstanding Exchange Shares, or any person, corporation or
enterprise controlling, controlled by or under common control with either
Exchange or Exchange Bank. All loans and extensions of credit that have been
made by Exchange Bank and
17
which are reflected as assets on the Exchange Financial Statements comply in all
material respects with applicable regulatory limitations and procedures.
3.11. ALLOWANCE FOR LOAN LOSSES
Except as set forth or in Section 3.11 of the Exchange Disclosure
Schedule, there is no loan which was made by Exchange Bank and which is
reflected as an asset of Exchange or Exchange Bank on the Exchange Financial
Statements that (a)(i) is ninety (90) days or more delinquent, (ii) has been
classified by examiners (regulatory or internal) as "Substandard," "Doubtful" or
"Loss," or (iii) designated by management of Exchange or Exchange Bank as
"special mention" and (b) the default by the borrower under which would
reasonably be expected to have a material adverse effect on Exchange or Exchange
Bank. The allowance for loan losses reflected on the Exchange Financial
Statements has been determined in accordance with GAAP and in accordance with
all rules and regulations applicable to Exchange and Exchange Bank and is
adequate as of the date hereof to provide for reasonably anticipated losses or
outstanding loans, except for such failures and inadequacies which would not
reasonably be expected to have a material adverse effect on Exchange or Exchange
Bank.
3.12. REPORTS AND RECORDS
Exchange and Exchange Bank have filed all reports and maintained all
records required to be filed or maintained by them under the rules and
regulations of the FRB, the ODFI and the FDIC, except for such reports and
records the failure to file or maintain would not reasonably be expected to have
a material adverse effect on Exchange or Exchange Bank. All such documents and
reports complied in all material respects with applicable requirements of law
and rules and regulations in effect at the time such documents and reports were
filed and contained in all material respects the information required to be
stated therein. None of such documents or reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.13. TAXES
Except as set forth in Section 3.13 of the Exchange Disclosure
Schedule, Exchange and Exchange Bank have timely filed all returns, statements,
reports and forms (including, without limitation, elections, declarations,
disclosures, schedules, estimates and information returns) (collectively, the
"TAX RETURNS") with respect to all federal, state, local and foreign income,
gross income, gross receipts, gains, premium, sales, use, ad valorem, transfer,
franchise, profits, withholding, payroll, employment, excise, severance, stamp,
occupancy, license, lease, environmental, customs, duties, property, windfall
profits and all other taxes (including, without limitation, any interest,
penalties or additions to tax with respect thereto, individually a "TAX," and
collectively, "TAXES") required to be filed with the appropriate tax authority.
Such Tax Returns are and will be true, correct and complete in all material
respects. Exchange and Exchange Bank have paid and discharged all Taxes due
(whether reflected on such Tax Returns or otherwise), other than such Taxes that
are adequately reserved as shown on the Exchange Financial Statements or have
arisen in the ordinary course of business since the
18
Exchange Balance Sheet Date. Except as set forth in Section 3.13 of the Exchange
Disclosure Schedule, neither the Internal Revenue Service (the "IRS") nor any
other taxing agency or authority, domestic or foreign, has asserted, is now
asserting or, to the knowledge of Exchange, is threatening to assert against
Exchange or Exchange Bank any deficiency or claim for additional Taxes. No
federal, state, local, or foreign Tax audits or administrative or judicial Tax
proceedings are pending or being conducted with respect to Exchange or Exchange
Bank and, to the knowledge of Exchange, no such audit or proceeding is
threatened. There are no unexpired waivers by Exchange or Exchange Bank of any
statute of limitations with respect to Taxes, and neither Exchange nor Exchange
Bank is the beneficiary of any extention of time within which to file any Tax
Return. The accruals and reserves for Taxes reflected in the Exchange Financial
Statements are adequate in all material respects for the periods covered.
Exchange and Exchange Bank have withheld or collected and paid over to the
appropriate Governmental Authorities or are properly holding for such payment
all Taxes required by law to be withheld or collected. There are no liens for
Taxes upon the assets of Exchange or Exchange Bank, other than liens for current
Taxes not yet due and payable. Neither Exchange nor Exchange Bank has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
Neither Exchange nor Exchange Bank has agreed to make, or is required to make,
any adjustment under Section 481(a) of the Code. Except as set forth in Section
3.13 of the Exchange Disclosure Schedule, neither Exchange nor Exchange Bank is
a party to any agreement, contract, arrangement or plan that has resulted, or
could result, individually or in the aggregate, in the payment of "excess
parachute payments" within the meaning of Section 280G of the Code. Neither
Exchange nor Exchange Bank has ever been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code, other than an
affiliated group of which Exchange is or was the common parent corporation.
Neither Exchange nor Exchange Bank has any liability for the Taxes of any other
person or entity under Treasury Department Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise. No Tax is required to be withheld pursuant to Section
1445 of the Code as a result of the transactions contemplated by this Agreement.
3.14. PROPERTY AND TITLE
Section 3.14 of the Exchange Disclosure Schedule lists and describes
all real property, and any leasehold interest in real property, owned or held by
Exchange or Exchange Bank and used in the business of Exchange or Exchange Bank
(collectively, the "EXCHANGE REAL PROPERTIES"). The Exchange Real Properties
constitute all of the real property and interests in real property used in the
businesses of Exchange and Exchange Bank. Copies of all leases of Exchange Real
Properties to which Exchange or Exchange Bank is a party have been provided to
Rurban. Such leasehold interests have not been assigned or subleased. All
Exchange Real Properties which are owned by Exchange or Exchange Bank are free
and clear of all mortgages, liens, security interests, defects, encumbrances,
easements, restrictions, reservations, conditions, covenants, agreements,
encroachments, rights of way and zoning laws, except (a) those set forth in
Section 3.14 of the Exchange Disclosure Schedule; (b) easements, restrictions,
reservations, conditions, covenants, rights of way, zoning laws and other
defects and irregularities in title and encumbrances which do not materially
impair the use thereof for the purposes for which they are held; and (c) liens
for current Taxes not yet due and payable. Exchange and Exchange Bank own, and
are in rightful possession of, and have good title to, all of the other assets
indicated in
19
the Exchange Financial Statements as being owned by Exchange or Exchange Bank,
free and clear of any charge, mortgage, pledge, security interest,
hypothecation, restriction, claim, option, lien, encumbrance or interest of any
persons whatsoever except (a) those described in Section 3.14 of the Exchange
Disclosure Schedule and (ii) those assets disposed of in the ordinary course of
business consistent with past practices. The assets of Exchange and Exchange
Bank, taken as a whole, are adequate to continue to conduct the businesses of
Exchange and Exchange Bank as such businesses are presently being conducted.
3.15. LEGAL PROCEEDINGS
Except as set forth in the Exchange Filed SEC Documents or Section
3.15 of the Exchange Disclosure Schedule, there are no actions, suits,
proceedings, claims or investigations pending or, to the knowledge of Exchange,
threatened in any court, before any Governmental Authority or instrumentality or
in any arbitration proceeding against Exchange or Exchange Bank.
3.16. REGULATORY MATTERS
Except as set forth in Section 3.16 of the Exchange Disclosure
Schedule, neither Exchange, Exchange Bank nor their respective properties is a
party to or subject to any order, judgment, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from, any court or federal or
state governmental agency or authority, including any such agency or authority
charged with the supervision or regulation of financial institutions (or their
holding companies) or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the FRB, the ODFI, the FDIC and the
SEC) or the supervision or regulation of Exchange or Exchange Bank
(collectively, the "REGULATORY AUTHORITIES"). Except as set forth in Section
3.16 of the Exchange Disclosure Schedule, neither Exchange nor Exchange Bank has
been advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, judgment, decree, agreement, memorandum
of understanding, commitment letter, supervisory letter or similar submission.
3.17. NO CONFLICT
Subject to the required adoption of this Agreement by the
shareholders of Exchange, receipt of the required approvals of Governmental and
Regulatory Authorities, expiration of applicable regulatory waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby by Exchange and Exchange Bank do not and will
not (a) conflict with, or result in a violation of, or result in the breach of
or a default (or which with notice or lapse of time would result in a default)
under, any provision of: (i) any federal, state or local law, regulation,
ordinance, order, rule or administrative ruling of any administrative agency or
commission or other federal, state or local governmental authority or
instrumentality (each, a "GOVERNMENTAL AUTHORITY") applicable to Exchange or
Exchange Bank or any of their respective properties; (ii) the articles or code
of regulations of Exchange, or the
20
articles, constitution or other governing instruments of Exchange Bank, (iii)
any material agreement, indenture or instrument to which Exchange or Exchange
Bank is a party or by which either of their properties or assets may be bound;
or (iv) any order, judgment, writ, injunction or decree of any court,
arbitration panel or any Governmental Authority applicable to Exchange or
Exchange Bank; (b) result in the creation or acceleration of any security
interest, mortgage, option, claim, lien, charge or encumbrance upon or interest
in any property of Exchange or Exchange Bank; or (c) violate the terms or
conditions of, or result in the cancellation, modification, revocation or
suspension of, any material license, approval, certificate, permit or
authorization held by Exchange or Exchange Bank.
3.18. BROKERS, FINDERS AND OTHERS
Except for the fees payable to Capital Market Securities, Inc.
("EXCHANGE'S FINANCIAL ADVISOR"), which fees shall be paid in full by Exchange
and/or Exchange Bank prior to the Effective Time, there are no fees or
commissions of any sort whatsoever claimed by, or payable by Exchange or
Exchange Bank to, any broker, finder, intermediary, attorney, accountant or any
other similar person in connection with effecting this Agreement or the
transactions contemplated hereby, except for ordinary and customary legal and
accounting fees.
3.19. EMPLOYMENT AGREEMENTS
Except as disclosed in Section 3.19 of the Exchange Disclosure
Schedule, neither Exchange nor Exchange Bank is a party to any employment,
change in control, severance or consulting agreement not terminable at will.
Neither Exchange nor Exchange Bank is a party to, bound by or negotiating, any
collective bargaining agreement, nor are any of their respective employees
represented by any labor union or similar organization. Each of Exchange and
Exchange Bank is in compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages and hours
other than with respect to any noncompliance that individually or in the
aggregate would not reasonably be expected to have a material adverse effect on
Exchange or Exchange Bank.
3.20. EMPLOYEE BENEFIT PLANS
(a) Section 3.20(a) of the Exchange Disclosure Schedule contains a
complete and accurate list of all bonus, incentive, deferred
compensation, pension (including, without limitation, Pension
Plans defined below), retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, severance, welfare
(including, without limitation, "welfare plans" within the
meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), fringe benefit
plans, employment or severance agreements and all similar
practices, policies and arrangements maintained or contributed
to (currently or within the last six years) by (i) Exchange or
Exchange Bank and in which any employee or former employee
(the "EMPLOYEES"), consultant or former consultant (the
"Consultants"), officer or former officer (the "OFFICERS"), or
director or former director
21
(the "DIRECTORS") of Exchange or Exchange Bank participates or
to which any such Employees, Consultants, Officers or
Directors are parties or (ii) any ERISA Affiliate (as defined
below) (collectively, the "COMPENSATION AND BENEFIT PLANS").
Neither Exchange nor Exchange Bank has any commitment to
create any additional Compensation and Benefit Plan or to
modify or change any existing Compensation and Benefit Plan,
nor will Exchange or Exchange Bank make discretionary
contributions to a Compensation or Benefit Plan during the
2005 calendar year (prior to the Effective Time) in excess of
the amounts contributed for the 2004 calendar year to such
plan, except to the extent required by law or as contemplated
by this Agreement.
(b) Each Compensation and Benefit Plan has been operated and
administered in accordance with its terms and with applicable
law, including, but not limited to, ERISA, the Code, the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the
Exchange Act, the Age Discrimination in Employment Act, or any
regulations or rules promulgated thereunder, and all filings,
disclosures and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely
made. Each Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "PENSION PLAN") and which is intended to be qualified
under Section 401(a) of the Code has been amended, or amended
and restated, to meet the qualification requirements set forth
in Section 401(a) of the Code and applicable guidance
thereunder not later than by the date or dates specified by
the Internal Revenue Service. There is no material pending or,
to the knowledge of Exchange, threatened, legal action, suit
or claim relating to the Compensation and Benefit Plans other
than routine claims for benefits thereunder. Neither Exchange
nor Exchange Bank has engaged in a transaction, or omitted to
take any action, with respect to any Compensation and Benefit
Plan that would reasonably be expected to subject Exchange or
Exchange Bank to a tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA, assuming for
purposes of Section 4975 of the Code that the taxable period
of any such transaction expired as of the date hereof.
(c) None of Exchange or Exchange Bank, or any entity which is
considered one employer with Exchange or Exchange Bank under
Section 4001(a)(14) of ERISA or Section 414(b), (c) or (m) of
the Code (an "ERISA AFFILIATE"), has ever sponsored,
maintained or been obligated to contribute to any Pension Plan
subject to either Title IV of ERISA or the funding
requirements of Section 412 of the Code. None of Exchange or
Exchange Bank, or any ERISA Affiliate has contributed, or has
been obligated to contribute, to either a multiemployer plan
under Subtitle E of Title IV of ERISA (as defined in ERISA
Sections 3(37)(A) and
22
4001(a)(3)) at any time since September 26, 1980, or a
multiple employer plan (as defined in Section 413 of the
Code). There is no pending investigation or enforcement action
by the PBGC, the Department of Labor (the "DOL"), the IRS or
any other Governmental Authority with respect to any
Compensation and Benefit Plan.
(d) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any
employee benefit arrangements under any collective bargaining
agreement to which Exchange or Exchange Bank is a party have
been timely made or have been reflected on the Exchange
Financial Statements.
(e) Except as disclosed in Section 3.20(e) of the Exchange
Disclosure Schedule, neither Exchange nor Exchange Bank has
any obligations to provide retiree health and life insurance
or other retiree death benefits under any Compensation and
Benefit Plan, other than benefits mandated by Section 4980B of
the Code.
(f) Exchange and Exchange Bank do not maintain any foreign
Compensation and Benefit Plans.
(g) With respect to each Compensation and Benefit Plan, if
applicable, Exchange or Exchange Bank has provided or made
available to Rurban, true and complete copies of: (i)
Compensation and Benefit Plan documents and all amendments
thereto; (ii) trust instruments and insurance contracts; (iii)
the most recent annual returns (Forms 5500) and financial
statements; (iv) the most recent summary plan descriptions;
(v) the most recent determination letter issued by the IRS;
and (vi) any Form 5310, Form 5310A, Form 5300 or Form 5330
filed within the past year with the IRS.
(h) Except as disclosed in Section 3.20(h) of the Exchange
Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement would not, directly or
indirectly (including, without limitation, as a result of any
termination of employment prior to or following the Effective
Time), reasonably be expected to (i) entitle any Employee,
Officer, Consultant or Director to any payment (including
severance pay or similar compensation) or any increase in
compensation, (ii) result in the vesting or acceleration of
any benefits under any Compensation and Benefit Plan or (iii)
result in any material increase in benefits payable under any
Compensation and Benefit Plan.
23
3.21. COMPLIANCE WITH LAWS
Except with respect to Environmental Laws and Taxes, which are the
subject of Sections 3.25 and 3.13, respectively, and except as set forth in
Section 3.21 of the Exchange Disclosure Schedule, each of Exchange and Exchange
Bank:
(a) has been in compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to
the employees conducting such business, including, without
limitation, the Equal Credit Opportunity Act, as amended, the
Fair Housing Act, as amended, the Federal Community
Reinvestment Act, as amended, the Home Mortgage Disclosure
Act, as amended, and all other applicable fair lending laws
and other laws relating to discriminatory business practices,
except for failures to be in compliance which, individually or
in the aggregate, have not had or would not reasonably be
expected to have a material adverse effect on Exchange or
Exchange Bank;
(b) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental and Regulatory
Authorities that are required in order to permit it to own or
lease its properties and to conduct its business as presently
conducted, except where the failure to obtain any of the
foregoing or to make any such filing, application or
registration has not had or would not reasonably be expected
to have a material adverse effect on Exchange or Exchange
Bank; and all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect
and no suspension or cancellation of any of them has been
threatened in writing; and
(c) has received no written notification or communication from any
Governmental or Regulatory Authority since January 1, 2004,
(i) asserting that Exchange or Exchange Bank is not in
compliance with any of the statutes, regulations or ordinances
which such Governmental or Regulatory Authority enforces, or
(ii) threatening to revoke any license, franchise, permit or
governmental authorization, which has not been resolved to the
satisfaction of the Governmental or Regulatory Authority that
sent such notification or communication. There is no event
which has occurred that, to the knowledge of Exchange, would
reasonably be expected to result in the revocation of any such
license, franchise, permit or governmental authorization.
3.22. INSURANCE
(a) Section 3.22 of the Exchange Disclosure Schedule lists all of
the insurance policies, binders or bonds maintained by
Exchange or Exchange Bank and a description of all claims
filed by Exchange or Exchange Bank against
24
the insurers of Exchange and Exchange Bank since January 1,
2002. All such insurance policies are in full force and
effect, neither Exchange nor Exchange Bank is in material
default thereunder and all claims thereunder have been filed
in due and timely fashion.
(b) The savings accounts and deposits of Exchange Bank are insured
up to applicable limits by the FDIC in accordance with the
Federal Deposit Insurance Act, and Exchange Bank has paid all
assessments and filed all reports required by the Federal
Deposit Insurance Act.
3.23. GOVERNMENTAL AND THIRD-PARTY PROCEEDINGS
No consent, approval, authorization of, or registration, declaration
or filing with, any court, Governmental Authority, Regulatory Authority or any
other third party is required to be made or obtained by Exchange or Exchange
Bank in connection with the execution, delivery or performance by Exchange of
this Agreement or the consummation by Exchange of the transactions contemplated
hereby, except for (a) filings of applications and notices, as applicable, with
and the approval of certain federal and state banking authorities, (b) the
filing of the appropriate certificate of merger with the Secretary of State of
Ohio pursuant to the OGCL, (c) the adoption of this Agreement by the Exchange
shareholders, (d) the filing with the SEC of the Proxy Statement/Prospectus, and
such other reports under the Exchange Act as may be required in connection with
this Agreement, the Merger and the other transactions contemplated hereby, and
(e) such other consents, approvals, order, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate would not reasonably be expected to have a
material adverse affect on Exchange or Exchange Bank.
3.24. CONTRACTS
Except for the contracts, agreements commitments and arrangements,
whether written or oral (collectively, "CONTRACTS"), filed as exhibits to the
Exchange Filed SEC Documents, there are no Contracts that are required to be
filed as an exhibit to any Exchange Filed SEC Document under the Exchange Act
and the rules and regulations promulgated thereunder. Except for Contracts filed
in unredacted form as exhibits to the Exchange Filed SEC Documents and purchase
orders entered into in the ordinary course of business, Section 3.24 of the
Exchange Disclosure Schedule sets forth a true and complete list as of the date
of this Agreement of all Contracts in existence as of the date of this Agreement
(other than those which have been performed completely): (a) which involve the
payment by or to Exchange or Exchange Bank of more than $25,000 in connection
with the purchase of property or goods or the performance of services or (b)
which are not in the ordinary course of their respective businesses. True,
complete and correct copies of all such Contracts have been delivered to Rurban.
Neither Exchange nor Exchange Bank, nor, to the knowledge of Exchange, any other
party thereto, is in default under any such Contract to which it is a party, by
which its respective assets, business or operations may be bound or affected in
any way, or under which it or its respective assets, business or operations
receive benefits, and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default.
25
3.25. ENVIRONMENTAL MATTERS
Except as otherwise disclosed in Section 3.25 of the Exchange
Disclosure Schedule: (a) to the knowledge of Exchange, each of Exchange and
Exchange Bank is and has been at all times in compliance in all material
respects with all applicable Environmental Laws and neither Exchange nor
Exchange Bank has engaged in any activity in violation of any applicable
Environmental Law; (b)(i) no investigations, inquiries, orders, hearings,
actions or other proceedings by or before any court, Governmental or Regulatory
Authority are pending or, to the knowledge of Exchange, have been threatened in
writing in connection with any activities of Exchange or Exchange Bank or any
Exchange Real Properties or improvements thereon, and (ii) to the knowledge of
Exchange, no investigations, inquiries, orders, hearings, actions or other
proceedings by or before any court or Governmental or Regulatory Authority are
pending or threatened in connection with any real properties in respect of which
Exchange Bank has foreclosed or holds a mortgage or mortgages (hereinafter
referred to as the "EXCHANGE BANK REAL ESTATE COLLATERAL"); (c) to the knowledge
of Exchange, no claims are pending or threatened by any third party against
Exchange or Exchange Bank, or with respect to the Exchange Real Properties or
improvements thereon, or the Exchange Bank Real Estate Collateral or
improvements thereon, relating to damage, contribution, cost recovery,
compensation, loss, injunctive relief, remediation or injury resulting from any
Hazardous Substance which have not been resolved to the satisfaction of the
parties involved; (d) to the knowledge of Exchange, no Hazardous Substances have
been integrated into the Exchange Real Properties or improvements thereon or any
component thereof, or the Exchange Bank Real Estate Collateral or improvements
thereon or any component thereof in such manner or quantity as may reasonably be
expected to or in fact would pose a threat to human health or the value of the
real property and improvements; and (e) Exchange does not have knowledge that
(i) any of the Exchange Real Properties or improvements thereon or the Exchange
Bank Real Estate Collateral or improvements thereon has been used for the
treatment, storage or disposal of Hazardous Substances or has been contaminated
by Hazardous Substances, (ii) any of the business operations of Exchange or
Exchange Bank have contaminated lands, waters or other property of others with
Hazardous Substances, except routine, office-generated solid waste, or (iii) any
of the Exchange Real Properties or improvements thereon, or the Exchange Bank
Real Estate Collateral or improvements thereon have in the past or presently
contain underground storage tanks, friable asbestos materials or PCB-containing
equipment.
For purposes of this Agreement, (a) "ENVIRONMENTAL LAW" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"); the Resource Conservation and Recovery Act of 1976, as
amended; the Hazardous Materials Transportation Act, as amended; the Toxic
Substances Control Act, as amended; the Federal Water Pollution Control Act, as
amended; the Safe Drinking Water Act, as amended; the Clean Air Act, as amended;
the Occupational Safety and Health Act of 1970, as amended; the Hazardous &
Solid Waste Amendments Act of 1984, as amended; the Superfund Amendments and
Reauthorization Act of 1986, as amended; the regulations promulgated thereunder,
and any other federal, state, county, municipal, local or other statute, law,
ordinance or regulation which may relate to or deal with human health or the
environment, as of the date of this Agreement, and (b) "HAZARDOUS SUBSTANCES"
means, at any time: (i) any "hazardous substance" as defined in Section 101(14)
of CERCLA or regulations promulgated thereunder; (ii) any
26
"solid waste," "hazardous waste," or "infectious waste," as such terms are
defined in any other Environmental Law as of the date of this Agreement; and
(iii) friable asbestos, urea-formaldehyde, polychlorinated biphenyls ("PCBS"),
nuclear fuel or material, chemical waste, radioactive material, explosives,
known carcinogens, petroleum products and by-products, and other dangerous,
toxic or hazardous pollutants, contaminants, chemicals, materials or substances
listed or identified in, or regulated by, any Environmental Law.
3.26. TAKEOVER LAWS
The approval of this Agreement and the Merger by the Board of
Directors of Exchange constitutes approval of the Merger for purposes of Chapter
1704 of the OGCL and represents all of the action necessary to ensure that the
restrictions on a "Chapter 1704. transaction" as defined in Chapter 1704 of the
OGCL do not and will not apply to the execution or delivery of this Agreement
(including any amendments to this Agreement) or the consummation of the Merger
and the other transactions contemplated hereby.
3.27. EXCHANGE INFORMATION
True and complete copies of all documents listed in the Exchange
Disclosure Schedule have been made available or provided to Rurban. The books of
account, stock record books and other financial and corporate records of
Exchange and Exchange Bank, all of which have been made available to Rurban, are
complete and correct in all material respects, including the maintenance of a
system of internal accounting controls sufficient to provide reasonable
assurance that transactions are executed with its management's authorizations
and such books and records are accurately reflected in all material respects in
the Exchange SEC Documents.
3.28. CRA COMPLIANCE
Neither Exchange nor Exchange Bank has received any notice of
non-compliance with the applicable provisions of the Community Reinvestment Act,
as amended ("CRA"), and the regulations promulgated thereunder, and Exchange
Bank has received a CRA rating of satisfactory or better from the FRB. Exchange
does not have knowledge of any fact or circumstance or set of facts or
circumstances which would be reasonably likely to cause Exchange or Exchange
Bank to receive any notice of non-compliance with such provisions or cause the
CRA rating of Exchange or Exchange Bank to fall below satisfactory.
3.29. OWNERSHIP OF RURBAN SHARES
As of the date hereof, except as otherwise disclosed in Section 3.29
of the Exchange Disclosure Schedule, neither Exchange nor Exchange Bank nor, to
the knowledge of Exchange, any of their affiliates or associates (as such terms
are defined under the Exchange Act), (a) beneficially owns, directly or
indirectly, or (b) is a party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of, any Rurban Shares.
27
3.30. FAIRNESS OPINION
The Board of Directors of Exchange has received the opinion of
Exchange's Financial Advisor dated the date of this Agreement to the effect that
the consideration to be received by the Exchange shareholders in the Merger is
fair, from a financial point of view, to the Exchange shareholders.
3.31. RISK MANAGEMENT INSTRUMENTS
All material interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management arrangements,
whether entered into for the account of Exchange or Exchange Bank, were entered
into (i) in accordance in all material respects with prudent business practices
and all applicable laws, rules, regulations and regulatory policies and (ii)
with counter-parties believed to be financially responsible at the time; and
each of them constitutes the valid and legally binding obligation of Exchange or
Exchange Bank, as applicable, enforceable in accordance with its terms, and is
in full force and effect, except with respect to such risk management agreements
the loss of which would not reasonably be expected to have a material adverse
effect on Exchange or Exchange Bank. Neither Exchange nor Exchange Bank, nor to
the knowledge of Exchange, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement, which breach would
reasonably be expected to have a material adverse effect on Exchange or Exchange
Bank.
3.32. REPURCHASE AGREEMENTS
With respect to any agreement pursuant to which Exchange or Exchange
Bank has purchased securities subject to an agreement to repurchase, Exchange or
Exchange Bank, as the case may be, has a valid, perfected first lien or security
interest in or evidence of ownership in book entry form of the government
securities or other collateral securing the repurchase agreement, and the value
of such collateral equals or exceeds the amount of the debt secured thereby,
except for such agreements with respect to which the failure to maintain such
liens or maintain such collateral would not reasonably be expected to have a
material adverse effect on Exchange or Exchange Bank.
3.33. INVESTMENT SECURITIES
Each of Exchange and Exchange Bank has good and marketable title to
all securities held by it (except securities sold under repurchase agreement or
held in any fiduciary or agency capacity), free and clear of any charge,
mortgage, pledge, security interest, hypothecation, restriction, claim, option,
lien, encumbrance or interest of any person or persons whatsoever, except to the
extent such securities are pledged in the ordinary course of business consistent
with prudent banking practice to secure obligations of Exchange or Exchange
Bank, and except for charges, mortgages, pledges, security interests,
hypothecations, restrictions, claims, options, liens, encumbrances or interests
that individually or in the aggregate would not reasonably be expected to have a
material adverse effect on Exchange or Exchange Bank. Such
28
securities are valued on the books of Exchange in accordance with GAAP in all
material respects.
3.34. OFF BALANCE SHEET TRANSACTIONS
Section 3.34 of the Exchange Disclosure Schedule sets forth a true
and complete list of all special purpose entities, limited purpose entities and
qualified special purpose entities, in which Exchange or Exchange Bank has an
economic or management interest. Section 3.34 of the Exchange Disclosure
Schedule also sets forth a true and complete list of all transactions,
arrangements and other relationships between or among any such Exchange
affiliated entity, on the one hand, and Exchange, Exchange Bank, and any officer
or director of Exchange or Exchange Bank, on the other hand, that are not
reflected in the Exchange Financial Statements (each, an "EXCHANGE OFF BALANCE
SHEET TRANSACTION").
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF RURBAN
Rurban hereby represents and warrants to Exchange that:
4.01. CORPORATE STATUS
Rurban is an Ohio corporation and a bank holding company registered
under the BHCA. Rurban is duly organized, validly existing and in good standing
under the laws of the State of Ohio and has the full corporate power and
authority to own its property, to carry on its business as presently conducted
and to enter into and, subject to the required obtaining of appropriate
approvals of Governmental and Regulatory Authorities, perform its obligations
under this Agreement and consummate the transactions contemplated by this
Agreement, and is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than where the failure to be so organized, existing,
qualified or licensed or in good standing individually or in the aggregate would
not reasonably be expected to have a material adverse effect on Rurban. Rurban
has made available to Exchange true and complete copies of its articles of
incorporation and code of regulations as amended to the date of this Agreement.
4.02. CORPORATE PROCEEDINGS
All corporate proceedings of Rurban necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly and validly taken, subject,
in the case of the consummation of the Merger, to the filing and recordation of
a certificate of merger with the Secretary of State of Ohio as required by the
OGCL. This Agreement has been duly executed and delivered by Rurban. No vote of
Rurban's stockholders is required to be obtained in connection with the
consummation of the transactions contemplated hereby.
29
4.03. CAPITALIZATION OF RURBAN
(a) As of the date of this Agreement, the authorized capital stock
of Rurban consists only of 10,000,000 Rurban Shares, of which
4,575,702 Rurban Shares are issued and outstanding and 7,214
Rurban Shares are held in treasury by Rurban. All outstanding
Rurban Shares have been duly authorized and are validly
issued, fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any person.
(b) As of the date of this Agreement, 441,000 Rurban Shares were
reserved for issuance upon the exercise of outstanding stock
options (the "RURBAN STOCK OPTIONS") granted under Rurban's
stock option plans (the "RURBAN STOCK OPTION PLANS"), and
35,123 Rurban Shares were available for future grants of stock
options under the Rurban Stock Option Plans.
(c) As of the date of this Agreement, there are no bonds,
debentures, notes or other indebtedness of Rurban, and no
securities or other instruments or obligations of Rurban, the
value of which is in any way based upon or derived from any
capital or voting stock of Rurban, having the right to vote
(or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which shareholders of
Rurban may vote.
(d) As of the date of this Agreement, except for the Rurban Stock
Options and this Agreement, there are no options, warrants,
calls, rights, commitments or agreements of any character to
which Rurban is a party or by which it is bound, obligating
Rurban to issue, deliver or sell, or cause to be issued,
delivered or sold, any additional shares of capital stock of,
or other equity or voting interests in, or securities
convertible into, or exchangeable or exercisable for, shares
of capital stock of, or other equity or voting interests in,
Rurban or obligating Rurban to issue, grant, extend or enter
into any such security, option warrant, call, right,
commitment or agreement. As of the date of this Agreement,
there are no outstanding contractual obligations of Rurban to
repurchase, redeem or otherwise acquire any Rurban Shares.
(e) The Rurban Shares to be issued in exchange for Exchange Shares
in the Merger, when issued in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and non-assessable, will not be subject to any preemptive
or other statutory right of shareholders and will be issued in
compliance with applicable federal and state securities laws.
4.04. AUTHORIZED AND EFFECTIVE AGREEMENT
This Agreement has been duly executed and delivered by Rurban and,
assuming the due authorization, execution and delivery by each of Exchange,
constitutes the legal, valid
30
and binding obligation of Rurban, enforceable against Rurban in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
relating to or affecting the enforcement of creditors' rights generally, by
general equitable principles (regardless of whether enforceability is considered
in a proceeding in equity or at law) and by an implied covenant of good faith
and fair dealing. Rurban has the right, power, authority and capacity to execute
and deliver this Agreement and, subject to the obtaining of appropriate
approvals by Governmental and Regulatory Authorities and the expiration of
applicable regulatory waiting periods, and required filings under federal and
state securities laws, to perform its obligations under this Agreement.
4.05. NO CONFLICT
Subject to the receipt of the required approvals of Governmental and
Regulatory Authorities, expiration of applicable regulatory waiting periods and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, by Rurban do not and will not (a) conflict
with, or result in a violation of, or result in the breach of or a default (or
which with notice or lapse of time would result in a default) under, any
provision of: (i) any federal, state or local law, regulation, ordinance, order,
rule or administrative ruling of any Governmental Authority applicable to Rurban
or any of its properties; (ii) the articles or code of regulations of Rurban;
(iii) any material agreement, indenture or instrument to which Rurban is a party
or by which it or its properties or assets may be bound; or (iv) any order,
judgment, writ, injunction or decree of any court, arbitration panel or any
Governmental Authority applicable to Rurban; (b) result in the creation or
acceleration of any security interest, mortgage, option, claim, lien, charge or
encumbrance upon or interest in any property of Rurban, other than such security
interests, mortgage, options, claims, liens, charges or encumbrances that
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on Rurban; or (c) violate the terms or conditions of, or
result in the cancellation, modification, revocation or suspension of, any
material license, approval, certificate, permit or authorization held by Rurban.
4.06. SEC FILINGS
Rurban has filed all reports and proxy materials required to be
filed by it with, or furnished by it to, the SEC pursuant to the Exchange Act
(together with all information incorporated therein by reference, the "RURBAN
SEC DOCUMENTS"), except for any reports or proxy materials the failure to file
or furnish would not reasonably be expected to have a material adverse effect
upon Rurban. All such filings, at the time of filing, complied in all material
respects as to form and included all exhibits required to be filed under the
rules of the SEC applicable to such Rurban SEC Documents. None of such
documents, as subsequently supplemented or amended, contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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4.07. FINANCIAL STATEMENTS OF RURBAN
The financial statements of Rurban (including the related notes)
included in the Rurban SEC Documents (the "RURBAN FINANCIAL STATEMENTS"), comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present, in all material respects, the consolidated financial
position of Rurban and its consolidated subsidiaries as of the dates thereof and
their respective consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments which are not expected to be, individually or in the
aggregate, materially adverse to Rurban and the absence of full footnotes).
4.08. BROKERS, FINDERS AND OTHERS
Except for fees paid or payable to Xxxxxxxx Xxxxxxxx Xxxxxx, there
are no fees or commissions of any sort whatsoever claimed by, or payable by
Rurban to, any broker, finder, intermediary attorney, accountant or any other
similar person in connection with effecting this Agreement or the transactions
contemplated hereby, except for ordinary and customary legal and accounting
fees.
4.09. GOVERNMENTAL AND THIRD-PARTY PROCEEDINGS
No consent, approval, authorization of, or registration, declaration
or filing with, any court, Governmental or Regulatory Authority or any other
third party is required to be made or obtained by Rurban in connection with the
execution, delivery or performance by Rurban of this Agreement or the
consummation by Rurban of the transactions contemplated hereby, except for (a)
filings of applications or notices, as applicable, with and the approval of
certain federal and state banking authorities, (b) the filing of the appropriate
certificate of merger with the Secretary of State of Ohio pursuant to the OGCL,
(c) the filing with the SEC of the Registration Statement (as defined in Section
7.03 below) and such reports under the Exchange Act as may be required in
connection with this Agreement, the Merger and the other transactions
contemplated hereby, (d) any filings required under the rules and regulations of
Nasdaq, and (e) such other consents, approvals, orders, authorizations,
registrations, declarations and filings, except for such consents, approvals
orders, authorizations, registrations, declarations and filings, the failure of
which to be obtained or made individually or in the aggregate would not
reasonably be expected to have a material effect on Rurban.
4.10. CRA COMPLIANCE
Neither Rurban nor any Rurban Subsidiary has received any notice of
non-compliance with the applicable provisions of the CRA and the regulations
promulgated thereunder, and neither Rurban nor any Rurban Subsidiary has
received a CRA rating of less than "satisfactory" on its most recent
examination. Rurban knows of no fact or circumstance or set of facts or
circumstances which would be reasonably likely to cause Rurban or any Rurban
32
Subsidiary to receive any notice of non-compliance with such provisions or cause
the CRA rating of Rurban or any Rurban Subsidiary to fall below satisfactory.
4.11. LEGAL PROCEEDINGS
Except as set forth in the Rurban Filed SEC Documents, there are no
actions, suits, proceedings, claims or investigations pending or, to the
knowledge of Rurban, threatened in any court, before any Governmental Authority
or instrumentality or in any arbitration proceeding (a) against Rurban which, if
adversely determined against Rurban, would have a material adverse effect on
Rurban; or (b) against or by Rurban which, if adversely determined against
Rurban, would prevent the consummation of this Agreement or any of the
transactions contemplated hereby or declare the same to be unlawful or cause the
rescission thereof.
4.12. OWNERSHIP OF EXCHANGE SHARES
Neither Rurban nor, to the knowledge of Rurban, any of its
Subsidiaries (as such terms are defined under the Exchange Act), (a)
beneficially owns, directly or indirectly, or (b) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, any Exchange Shares.
4.13. COMPLIANCE WITH LAWS
Each of Rurban and its Subsidiaries:
(a) has been in compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to
the employees conducting such business, including, without
limitation, the Equal Credit Opportunity Act, as amended, the
Fair Housing Act, as amended, the Federal Community
Reinvestment Act, as amended, the Home Mortgage Disclosure
Act, as amended, and all other applicable fair lending laws
and other laws relating to discriminatory business practices,
except for failures to be in compliance which, individually or
in the aggregate, have not had or would not reasonably be
expected to have a material adverse effect on Rurban or any of
its Subsidiaries;
(b) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental and Regulatory
Authorities that are required in order to permit it to own or
lease its properties and to conduct its business as presently
conducted, except where the failure to obtain any of the
foregoing or to make any such filing, application or
registration has not had or would not reasonably be expected
to have a material adverse effect on Rurban or any of its
Subsidiaries; and all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect
and no suspension or cancellation of any of them has been
threatened in writing; and
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(c) has received no written notification or communication from any
Governmental or Regulatory Authority since January 1, 2004,
(i) asserting that Rurban or any of its Subsidiaries is not in
compliance with any of the statutes, regulations or ordinances
which such Governmental or Regulatory Authority enforces, or
(ii) threatening to revoke any license, franchise, permit or
governmental authorization, which has not been resolved to the
satisfaction of the Governmental or Regulatory Authority that
sent such notification or communication. There is no event
which has occurred that, to the knowledge of Rurban, would
reasonably be expected to result in the revocation of any such
license, franchise, permit or governmental authorization.
4.14. REGULATORY MATTERS
Neither Rurban, any of its Subsidiaries nor their respective
properties is a party to or subject to any order, judgment, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any
Regulatory Authority, and neither Rurban nor any of its Subsidiaries has been
advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, judgment, decree, agreement, memorandum
of understanding, commitment letter, supervisory letter or similar submission,
except, in each case, for any such order, judgment, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission that would not be required to be publicly disclosed by Rurban
pursuant to the Exchange Act and the rules and regulations promulgated
thereunder.
4.15. REPORTS AND RECORDS
Rurban and each of its Subsidiaries have filed all reports and
maintained all records required to be filed or maintained by them under the
rules and regulations of the FRB, the ODFI and the FDIC, except for such reports
and records the failure to file or maintain would not reasonably be expected to
have a material adverse effect on Rurban or any of its Subsidiaries. All such
documents and reports complied in all material respects with applicable
requirements of law and rules and regulations in effect at the time such
documents and reports were filed and contained in all material respects the
information required to be stated therein. None of such documents or reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.16. ABSENCE OF UNDISCLOSED LIABILITIES
Except as set forth in the Rurban SEC Documents filed or furnished
since January 1, 2004 and publicly available prior to the date of this Agreement
(including the financial statements included therein) (the "RURBAN FILED SEC
DOCUMENTS"), and except as arising hereunder, Rurban and each of its
Subsidiaries have no liabilities or obligations (whether
34
accrued, absolute, contingent or otherwise) as of December 31, 2004, other than
liabilities and obligations that individually or in the aggregate (a) would not
reasonably be expected to have a material adverse effect on Rurban or any of its
Subsidiaries or (b) would not be required to be publicly disclosed by Rurban
pursuant to the Exchange Act and the rules and regulations promulgated
thereunder. All debts, liabilities, guarantees and obligations of Rurban and
each of its Subsidiaries incurred since December 31, 2004 have been incurred in
the ordinary course of business and are usual and normal in amount both
individually and in the aggregate. Neither Rurban nor any of its Subsidiaries is
in default or breach of any material agreement to which Rurban or any of its
Subsidiaries is a party other than any such breaches or defaults that
individually or in the aggregate (a) would not reasonably be expected to have a
material adverse effect on Rurban or any of its Subsidiaries or (b) would not be
required to be publicly disclosed by Rurban pursuant to the Exchange Act and the
rules and regulations promulgated thereunder.
4.17. ABSENCE OF CHANGES
Except as set forth in the Rurban Filed SEC Documents, since the
Rurban Balance Sheet Date, there has not been any material adverse change in the
business, operations, assets or financial condition of Rurban and its
Subsidiaries taken as a whole and, to the knowledge of Rurban, no fact or
condition exists which Rurban believes will cause such a material adverse change
in the future, except, in each case, for any change that would not be required
to be publicly disclosed by Rurban pursuant to the Exchange Act and the rules
and regulations promulgated thereunder.
ARTICLE FIVE
FURTHER COVENANTS OF EXCHANGE
5.01. OPERATION OF BUSINESS
Exchange covenants to Rurban that, throughout the period from the
date of this Agreement to and including the Closing (as defined in Section 9.01
below), except as expressly contemplated or permitted by this Agreement or to
the extent that Rurban shall otherwise consent in writing:
(a) Conduct of Business. The business of Exchange and Exchange
Bank will be conducted only in the ordinary and usual course
consistent with past practice. Exchange will not, and will
cause Exchange Bank not to, take any action that would be
inconsistent with any representation or warranty of Exchange
set forth in this Agreement or which would cause a breach of
any such representation or warranty if made at or immediately
following such action, except as may be required by applicable
law or regulation.
(b) Changes in Business and Capital Structure. Except as provided
for by this Agreement, as set forth in Section 5.01(b) of the
Exchange Disclosure Schedule or as otherwise approved
expressly in writing by Rurban, Exchange will not, and will
cause Exchange Bank not to:
35
(i) sell, transfer, mortgage, pledge or subject to any
lien or otherwise encumber any of the assets of
Exchange or Exchange Bank, tangible or intangible,
which are material, individually or in the aggregate,
to Exchange or Exchange Bank except for securitization
activities in the ordinary course of business;
(ii) make any capital expenditure or capital additions or
improvements which individually exceed $10,000 or
exceed $50,000;
(iii) become bound by, enter into, or perform any material
contract, commitment or transaction that would be
reasonably likely to (A) have a material adverse
effect on Exchange or Exchange Bank, (B) impair in any
material respect the ability of Exchange or Exchange
Bank to perform its obligations under this Agreement
or (C) prevent or materially delay the consummation of
the transactions contemplated by this Agreement;
(iv) declare, pay or set aside for payment any dividends or
make any distributions on Exchange shares;
(v) purchase, redeem, retire or otherwise acquire any
Exchange Shares;
(vi) issue or grant any option or right to acquire any of
its capital shares other than the issuance of Exchange
Shares pursuant to the exercise of options outstanding
as of the date of this Agreement;
(vii) amend or propose to amend any of the governing
documents of Exchange or Exchange Bank except as
otherwise expressly contemplated by this Agreement;
(viii) effect, directly or indirectly, any share split,
recapitalization, combination, exchange of shares,
readjustment or other reclassification;
(ix) acquire any real property or all or any portion of the
assets, business, deposits or properties of any other
entity other than in the ordinary and usual course of
business consistent with past practice (A) by way of
foreclosures or (B) by acquisitions of control in a
bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith;
(x) enter into, establish, adopt or amend any pension,
retirement, stock option, stock purchase, savings,
profit-sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or
any trust agreement (or similar arrangement) related
thereto, in respect of
36
any Director, Officer or Employee of Exchange or
Exchange Bank, or take any action to accelerate the
vesting or exercisability of stock options, restricted
stock or other compensation or benefits payable
thereunder; provided, however, that Exchange or
Exchange Bank may take such actions in order to
satisfy either applicable law or contractual
obligations, including those arising under its benefit
plans, existing as of the date hereof and disclosed in
the Exchange Disclosure Schedule, or regular annual
renewals of insurance contracts;
(xi) hire any full-time employee, other than replacement
employees for positions then existing, announce or pay
any general wage or salary increase or bonus, or enter
into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with
any Officer, Director or Employee of Exchange or
Exchange Bank, except, in each case, for changes that
are required by applicable law or to satisfy
contractual obligations existing as of the date hereof
that are disclosed in the Exchange Disclosure
Schedule;
(xii) borrow or agree to borrow any funds, including but not
limited to repurchase transactions, or indirectly
guarantee or agree to guarantee any obligations of
others, except for amounts as may be obtained with the
right of prepayment at any time without penalty or
premium, borrowings on an overnight or daily basis and
deposit taking in the ordinary course of its business;
(xiii) enter into or terminate any contract, other than a
loan or deposit contract, requiring the payment or
receipt of $10,000 or more in any 12-month period or
$25,000 in the aggregate, or amend or modify in any
material respect any of its existing material
contracts, except in each case as set forth in the
Exchange Disclosure Schedule;
(xiv) except as disclosed in the Exchange Disclosure
Schedule, implement or adopt any change in its
accounting principles, practices or methods, other
than as may be required by GAAP;
(xv) make or change any Tax election, annual accounting
period or Tax accounting method, file any amended Tax
Return, settle any Tax claim or assessment, consent to
the extension or waiver of any statute of limitations
with respect to Taxes, enter into any closing
agreement, surrender any right to claim a refund of
Taxes, or take any similar action relating to the
filing of any Tax Return or the payment of any Tax, if
such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other
37
action would have the effect of increasing the Tax
liability of Rurban or Exchange Bank for any period
ending after the Effective Time or decreasing any Tax
attribute of Exchange or Exchange Bank existing at the
Effective Time;
(xvi) originate or issue a commitment to originate any loan
secured by real estate in a principal amount of
$200,000 or more or any unsecured loan or loan secured
by other than real estate in a principal amount of
$50,000 or more;
(xvii) establish any new lending programs or make any changes
in its policies concerning which persons may approve
loans;
(xviii) enter into any securities transactions for its own
account or purchase or otherwise acquire any
investment security for its own account other than
U.S. Government and U.S. agency obligations;
(xix) enter into any interest rate swaps or derivative or
hedge contracts;
(xx) increase or decrease the rate of interest paid on time
deposits or certificates of deposits, except in a
manner consistent with past practices and in relation
to rates prevailing in the relevant Exchange Bank
market;
(xxi) foreclose upon or otherwise take title to or
possession or control of any real property without
first obtaining a Phase I Environmental Report thereon
which indicates that the property is free of
pollutants, contaminants or hazardous or toxic waste
materials including asbestos and petroleum products;
provided, however, that Exchange Bank shall not be
required to obtain such a report with respect to
single-family, non-agriculture residential property of
one acre or less to be foreclosed upon unless it has
reason to believe such property may contain any such
pollutants, contaminants, waste materials including
asbestos or petroleum products;
(xxii) take any action that would result in (A) any of its
representations or warranties contained in this
Agreement being or becoming untrue in any material
respect at any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set forth in
Article Eight not being satisfied, or (C) a violation
of any provision of this Agreement except, in each
case, as may be required by applicable law or
regulation; or
(xxiii) enter into any agreement to do any of the foregoing.
38
(c) Maintenance of Property. Exchange shall, and shall cause
Exchange Bank to, use its commercially reasonable efforts to
maintain and keep their respective properties and facilities
in their present condition and working order, ordinary wear
and tear excepted.
(d) Performance of Obligations. Exchange shall, and shall cause
Exchange Bank to, perform all of their obligations under all
agreements relating to or affecting their respective
properties, rights and businesses.
(e) Maintenance of Business Organization. Exchange shall, and
shall cause Exchange Bank to, use their commercially
reasonable efforts to maintain and preserve their respective
business organizations intact, to retain present key Employees
and to maintain the respective relationships of customers,
suppliers and others having business relationships with them.
(f) Insurance. Exchange shall, and shall cause Exchange Bank to,
maintain insurance coverage with reputable insurers, which in
respect of amounts, premiums, types and risks insured, were
maintained by them as of the date of this Agreement, and upon
the renewal or termination of such insurance, Exchange and
Exchange Bank will use their commercially reasonable efforts
to renew or replace such insurance coverage with reputable
insurers, in respect of the amounts, premiums, types and risks
insured or maintained by them as of the date of this
Agreement..
(g) Access to Information. Exchange shall, and shall cause
Exchange Bank to, afford to Rurban and to its officers,
employees, investment bankers, attorneys, accountants and
other advisors and representatives reasonable and prompt
access during normal business hours during the period prior to
the Effective Time or the termination of this Agreement to all
of Exchange's and Exchange Bank's respective properties,
assets, books, contracts, commitments, directors, officers,
employees, attorneys, accountants, auditors, other advisors
and representatives and records and, during such period,
Exchange and Exchange Bank will make available to Rurban on a
prompt basis (i) a copy of each report, schedule, form,
statement and other document filed or received by it during
such period pursuant to the requirements of domestic or
foreign (whether national, federal, state, provincial, local
or otherwise) laws and (ii) all other information concerning
its business, properties and personnel as Rurban may
reasonably request (including the financial and Tax work
papers of independent auditors and financial consultants);
provided, however, that Rurban shall not unreasonably
interfere with the business operations of Exchange or Exchange
Bank.
(h) Payment of Taxes. Exchange shall, and shall cause Exchange
Bank to, timely file all Tax Returns required to be filed on
or before the Effective
39
Time, and accrue for and/or pay any Tax shown on such Tax
Returns to be due.
5.02. NOTIFICATION
Between the date of this Agreement and the Closing Date, Exchange
promptly shall notify Rurban in writing if Exchange or Exchange Bank becomes
aware of any fact or condition that (a) causes or constitutes a breach of any of
the representations and warranties of Exchange, or (b) would (except as
expressly contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the Exchange Disclosure Schedule,
Exchange will promptly deliver to Rurban a supplement to the Exchange Disclosure
Schedule specifying such change ("UPDATED EXCHANGE DISCLOSURE SCHEDULE");
provided, however, that the disclosure of such change in the Updated Exchange
Disclosure Schedule shall not be deemed to constitute a cure of any breach of
any representation or warranty made pursuant to this Agreement unless consented
to in writing by Rurban. During the same period, Exchange will promptly notify
Rurban of (i) the occurrence of any breach of any of the covenants of Exchange
contained in this Agreement, (ii) the occurrence of any event that may make the
satisfaction of the conditions in this Agreement impossible or unlikely or (iii)
the occurrence of any event that is reasonably likely, individually or taken
with all other facts, events or circumstances known to Exchange, to result in a
material adverse effect with respect to Exchange.
5.03. ACQUISITION TRANSACTIONS
From and after the date hereof, Exchange shall not, directly or
indirectly through any of its Officers, Directors, Employees, agents or
advisors, solicit, initiate or knowingly encourage, including by means of
furnishing information, any proposals or offers from any person or entity, or
discuss or negotiate with any such person or entity, regarding any acquisition
or purchase of 20% or more of the outstanding shares of any class of voting
securities, or 20% or more of the assets or deposits, of Exchange or Exchange
Bank, or any merger, tender or exchange offer, consolidation or business
combination involving Exchange or Exchange Bank (collectively, "ACQUISITION
TRANSACTIONS"). The foregoing sentence shall not apply, however, to the
consideration, negotiation and consummation of an Acquisition Transaction not
solicited or initiated by Exchange or Exchange Bank or any of their respective
Officers, Directors, agents or affiliates if, and to the extent that, the Board
of Directors of Exchange reasonably determines in good faith after consultation
with Exchange's Financial Advisor and upon written advice of legal counsel to
Exchange that failure to consider such Acquisition Transaction could reasonably
be expected to constitute a breach of its fiduciary duties to the shareholders
of Exchange under Ohio law. Exchange shall give Rurban prompt notice of any
proposal of an Acquisition Transaction and keep Rurban promptly informed
regarding the substance thereof and the response of the Board of Directors of
Exchange thereto. Exchange shall immediately cease and cause to be terminated
any activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Rurban with respect to any Acquisition
Proposal and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal.
40
5.04. DELIVERY OF INFORMATION
Exchange shall furnish to Rurban promptly after such documents are
available: (a) all reports, proxy statements or other communications by Exchange
to its shareholders generally and (b) all press releases relating to any events
or transactions.
5.05. AFFILIATES COMPLIANCE WITH THE SECURITIES ACT
No later than the 15th day prior to the mailing of the Proxy
Statement/Prospectus, Exchange shall deliver to Rurban a schedule of all persons
who Exchange reasonably believes are, or are likely to be, as of the date of the
Exchange Meeting, deemed to be "affiliates" of Exchange as that term is used in
Rule 145 under the Securities Act (the "RULE 145 AFFILIATES"). Exchange shall
cause each person who may be deemed to be a Rule 145 Affiliate to execute and
deliver to Rurban on or before the date of mailing of the Proxy
Statement/Prospectus an agreement in the form of Exhibit A.
5.06. TAKEOVER LAWS
Exchange shall (a) take all necessary steps to exempt (or
cause the continued exemption of) this Agreement and the Merger from, or comply
with, the requirements of Chapter 1704 of the OGCL and from any provisions under
its articles of incorporation and code of regulations, as applicable, by action
of the Board of Directors of Exchange or otherwise, and (b) use reasonable
efforts to assist in any challenge by Rurban to the validity, or applicability
to the Merger, of any such takeover law.
5.07. VOTING AGREEMENT
Concurrently with the execution and delivery of this Agreement, and
as a condition and material inducement to Rurban's willingness to enter into
this Agreement, each of the directors of Exchange and Exchange Bank shall enter
into a Voting Agreement in the form attached hereto as Exhibit B. If any person
shall become a director of Exchange or Exchange Bank after the date of this
Agreement and until the Effective Time, Exchange shall cause each such person to
execute a Voting Agreement.
5.08 NO CONTROL
Nothing contained in this Agreement shall give Rurban, directly or
indirectly, the right to control or direct the operations of Exchange or
Exchange Bank prior to the Effective Time. Prior to the Effective Time, each of
Exchange and Rurban shall exercise, consistent with the terms of this Agreement,
complete control and supervision over its and its subsidiaries respective
operations.
5.09 TERMINATION OF EMPLOYMENT AND SEVERANCE AGREEMENTS
Prior to the Effective Time, Exchange shall, and shall cause
Exchange Bank to, satisfy and/or terminate each employment, change in control,
severance or consulting agreement
41
to which Exchange or Exchange Bank is a party, including those agreements
disclosed in Section 3.19 of the Exchange Disclosure Schedule (but excluding any
agreements between Exchange and Rurban), and to pay or accrue any and all
severance and other payments and benefits required to be paid by Exchange or
Exchange Bank as a result of the termination thereof or the transactions
contemplated by this Agreement.
5.10 ACCOUNTING POLICIES
Before the Effective Time and at the request of Rurban, Exchange
shall, and shall cause Exchange Bank to, promptly (a) establish and take such
reserves and accruals to conform Exchange Bank's loan, accrual and reserve
policies to Rurban's policies; (b) establish and take such accruals, reserves
and charges in order to implement such policies in respect of excess facilities
and equipment capacity, severance costs, litigation matters, write-off or
write-down of various assets and other appropriate accounting adjustments; and
(c) recognize for financial accounting purposes such expenses of the Merger and
restructuring charges related to or to be incurred in connection with the
Merger, to the extent permitted by law and consistent with GAAP; provided,
however, that neither Exchange nor Exchange Bank shall be obligated to make any
such changes or adjustments until the satisfaction of all unwaived conditions
set forth in Section 8.03(a) and (b).
ARTICLE SIX
FURTHER COVENANTS OF RURBAN
6.01. ACCESS TO INFORMATION
Rurban shall furnish to Exchange promptly after such documents are
available: (a) all reports, proxy statements or other communications by Rurban
to its shareholders generally; and (b) all press releases relating to any
transactions.
6.02. EMPLOYEES; EMPLOYEE BENEFITS
(a) All employees of Exchange and Exchange Bank who are actively
employed at the Effective Time and who Rurban determines to
retain after the Merger shall continue as employees of
Exchange Bank ("CONTINUING EMPLOYEES") at the Effective Time
and, with respect to continuing Employees who are not
currently covered by a written employment or severance
agreement with Exchange Bank, shall be employed as at-will
employees of Exchange Bank. Continuing Employees shall
continue to participate in the Exchange Compensation and
Benefit Plans unless and until Rurban, in its sole discretion,
shall determine that all or some of the Exchange Compensation
and Benefit Plans shall be terminated or merged into certain
employee benefit plans of Rurban or a Rurban Subsidiary.
Following the termination or merger of all or some of the
Exchange Compensation and Benefit Plans, Rurban will, or will
cause its Subsidiaries to, provide each Continuing Employee
with employee
42
benefits to replace those programs that have been terminated
or merged (other than equity or equity-based plans and
programs) that are no less than the benefits provided to
similarly situated employees of Rurban and its Subsidiaries.
At such time as the Continuing Employees shall participate in
any employee benefit plans of Rurban pursuant to the
foregoing, each such Continuing Employee shall be credited
with years of service with Exchange, Exchange Bank and, to the
extent credit would have been given by Exchange or Exchange
Bank for years of service with a predecessor (including any
business organization acquired by Exchange or Exchange Bank),
years of service with a predecessor of Exchange or Exchange
Bank, for purposes of eligibility and vesting (but not for
benefit accrual purposes) in the employee benefit plans of
Rurban, and shall not be subject to any exclusion or penalty
for pre-existing conditions that were covered under the
Exchange Compensation and Benefit Plans immediately prior to
the Effective Time, or to any waiting period relating to such
coverage.
(b) Any employee of Exchange or Exchange Bank immediately before
the Effective Time who is not currently covered by a written
employment, severance or change in control agreement with
Exchange or Exchange Bank and who Rurban elects not to retain
as an employee of Exchange Bank or Rurban after the Effective
Time shall receive (subject to any applicable regulatory
constraints): (i) a severance payment equal to one week of pay
for each year of service to Exchange and/or Exchange Bank, up
to a maximum of 13 weeks of pay; and (ii) payment for vacation
and sick time that is unused and accrued consistent with the
terms of Exchange's or Exchange Bank's vacation and sick time
policies in effect on the date of this Agreement.
Additionally, any such employee who is not retained after the
Effective Time shall be entitled to elect so-called "COBRA" in
accordance with, and subject to, the provisions of Code
Section 4980B(f).
6.03. EXCHANGE LISTING
Rurban shall file a listing application with Nasdaq for the Rurban
Shares to be issued to the former holders of Exchange Shares in the Merger at
the time prescribed by applicable rules and regulations of Nasdaq, and shall use
commercially reasonable efforts to cause the Rurban Shares to be issued in
connection with the Merger to be approved for listing on Nasdaq, subject to
official notice of issuance, prior to the Closing Date. In addition, Rurban will
use its best efforts to maintain its listing on Nasdaq.
6.04. NOTIFICATION
Between the date of this Agreement and the Closing Date, Rurban will
promptly notify Exchange in writing if Rurban becomes aware of any fact or
condition that (a) causes or constitutes a breach of any of the representations
and warranties of Rurban or (b) would (except
43
as expressly contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. During the
same period, Rurban will promptly notify Exchange of (i) the occurrence of any
breach of any of the covenants of Rurban contained in this Agreement, (ii) the
occurrence of any event that may make the satisfaction of the conditions in this
Agreement impossible or unlikely or (iii) the occurrence of any event that is
reasonably likely, individually or taken with all other facts, events or
circumstances known to Rurban, to result in a material adverse effect with
respect to Rurban.
6.05. OFFICERS' AND DIRECTORS' LIABILITY INSURANCE
(a) For a period of five (5) years from the Effective Time, Rurban
shall contract for the provision of that portion of directors'
and officers' liability insurance that serves to reimburse the
present and former Officers and Directors of Exchange and
Exchange Bank (determined as of the Effective Time) with
respect to claims against such Officers and Directors arising
from facts or events which occurred before the Effective Time,
on terms no less favorable than those in effect on the date
hereof; provided, however, that Rurban may substitute therefor
policies providing at least comparable coverage containing
terms and conditions no less favorable than those in effect on
the date hereof; and provided further, however, that in no
event shall Rurban be required to expend more than 300% of the
current annual premium paid by Exchange and Exchange Bank to
maintain or procure such directors' and officers' liability
insurance (and, if Rurban is unable to maintain or obtain the
insurance called for by this Section 6.05(b) for such amount,
Rurban shall obtain as much comparable insurance as is
available for such amount).
(b) The provisions of this Section 6.05 shall survive consummation
of the Merger.
6.06. ELECTION TO EXCHANGE BANK BOARD
After the Effective Time, Rurban agrees to take all reasonable
actions necessary to elect Xx. Xxxxxx Xxxxxx as a director of the Exchange Bank
through December 31, 2006.
6.07. AVAILABILITY OF FUNDS
At the Effective Time, Rurban shall have sufficient funds available
for the payment of the Aggregate Cash Consideration in accordance with the
provisions of Article Two.
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ARTICLE SEVEN
FURTHER OBLIGATIONS OF THE PARTIES
7.01. COOPERATIVE ACTION
Subject to the terms and conditions of this Agreement, each of
Exchange and Rurban agrees to use its best efforts to satisfy all of the
conditions to this Agreement and to cause the consummation of the transactions
described in this Agreement, and to take, or cause to be taken, all further
actions and execute all additional documents, agreements and instruments which
may be reasonably required, in the opinion of counsel for Exchange ("EXCHANGE'S
COUNSEL"), and counsel for Rurban ("RURBAN'S COUNSEL"), to satisfy all legal
requirements of the State of Ohio and of the United States, so that this
Agreement and the transactions contemplated hereby will become effective as
promptly as practicable.
7.02. PRESS RELEASES
Neither Rurban nor Exchange shall make any press release or other
public announcement concerning the transactions contemplated by this Agreement
without the consent of the other party hereto as to the form and contents of
such press release or public announcement, except to the extent that such press
release or public announcement may be required by law or Nasdaq rules to be made
before such consent can be obtained.
7.03. REGISTRATION STATEMENTS; PROXY STATEMENT; EXCHANGE MEETING
(a) Rurban agrees to prepare pursuant to all applicable laws,
rules and regulations a registration statement on Form S-4
(such registration statement and all amendments or supplements
thereto, the "REGISTRATION STATEMENT"), to be filed by Rurban
with the SEC in connection with the issuance of Rurban Shares
in the Merger (including the appropriate proxy solicitation
materials to be submitted to the Exchange shareholders for the
Exchange Meeting (the "PROXY STATEMENT"), constituting a part
thereof and all related documents). Exchange agrees to
cooperate, and to cause Exchange Bank to cooperate, with
Rurban, its counsel and its accountants in the preparation of
the Registration Statement and the Proxy Statement; and
provided that Exchange and Exchange Bank have cooperated as
required above, Rurban agrees to file the Registration
Statement, which will include the Proxy Statement and a
prospectus in respect of the Rurban Shares to be issued in the
Merger (together, the "PROXY STATEMENT/PROSPECTUS"). Each of
Rurban and Exchange agrees to use all commercially reasonable
efforts to cause the Registration Statement, including the
Proxy Statement/Prospectus, to be declared effective under the
Securities Act as promptly as reasonably practicable after the
filing thereof. Rurban also agrees to use all reasonable
efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. Exchange agrees
to
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promptly furnish to Rurban all information concerning
Exchange, Exchange Bank and the Officers, Directors and
shareholders of Exchange as Rurban reasonably may request in
connection with the foregoing. Each of Exchange and Rurban
shall promptly notify the other upon the receipt of any
comments from the SEC or its staff or any request from the SEC
or its staff for amendments or supplements to the Registration
Statement or the Proxy Statement/Prospectus and shall promptly
provide the other with copies of all correspondence between it
and its representatives, on the one hand, and the SEC and its
staff, on the other hand. Notwithstanding the foregoing, prior
to filing the Registration Statement (or any amendment or
supplement thereto), filing or mailing the Proxy
Statement/Prospectus (or any amendment or supplement thereto),
or responding to any comments of the SEC with respect thereto,
each of Exchange and Rurban, as the case may be, (i) shall
provide the other party with a reasonable opportunity to
review and comment on such document or response, (ii) shall
include in such document or response all comments reasonably
proposed by such other party, and (iii) shall not file or mail
such document or respond to the SEC prior to receiving such
other's approval, which approval shall not be unreasonably
withheld or delayed.
(b) Each of Exchange and Rurban agrees, as to itself and its
Subsidiaries, that none of the information to be supplied by
it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration
Statement and each amendment or supplement thereto, if any, is
filed with the SEC and at the time the Registration Statement
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which
they were made, not misleading, and (ii) the Proxy
Statement/Prospectus and any amendment or supplement thereto
will, as of the date such Proxy Statement/Prospectus is mailed
to shareholders of Exchange and up to and including the date
of the meeting of Exchange's shareholders to which such Proxy
Statement/Prospectus relates, contain any untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
in light of the circumstances under where they were made not
misleading.
(c) Each of Exchange and Rurban agrees, if it shall become aware
prior to the Effective Time of any information furnished by it
that would cause any of the statements in the Registration
Statement or the Proxy Statement/Prospectus to be false or
misleading with respect to any material fact, or to omit to
state any material fact necessary to make the statements
therein not false or misleading, to promptly inform the other
party thereof and to take the necessary steps to correct the
Registration Statement and the Proxy Statement/Prospectus.
46
(d) Exchange shall, as promptly as practicable following the date
of this Agreement, establish a record date for, duly call,
give notice of, convene and hold the Exchange Meeting,
regardless of whether the Board of Directors of Exchange
determines at any time that this Agreement or the Merger is no
longer advisable or recommends that the shareholders of
Exchange reject this Agreement or the Merger. Exchange shall
cause the Exchange Meeting to be held as promptly as
practicable following the effectiveness of the Registration
Statement, and in any event not later than 45 days after the
effectiveness of the Registration Statement. Exchange shall,
through its Board of Directors, recommend to its shareholders
that they adopt this Agreement, and shall include such
recommendation in the Proxy Statement/Prospectus, in each case
subject to its fiduciary duties as provided in Section 5.03.
Without limiting the generality of the foregoing, Exchange
agrees that its obligations pursuant to this Section shall not
be affected by the commencement, public proposal, public
disclosure or communication to Exchange or any other person of
any Acquisition Transaction.
7.04. REGULATORY APPLICATIONS
Rurban and Exchange and their respective Subsidiaries shall
cooperate and use their reasonable best efforts to prepare all documentation, to
timely effect all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and Governmental and Regulatory Authorities,
including, without limitation, those required to be filed pursuant to the BHCA,
as well as pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties, in any event which are necessary to consummate the transactions
contemplated by this Agreement. Each of Rurban and Exchange shall have the right
to review in advance, and to the extent practicable, each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to, and shall be provided in advance so as to
reasonably exercise its right to review in advance, all material written
information submitted to any third party or any Governmental or Regulatory
Authority in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that it will
consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental and Regulatory Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other apprised of the status of material matters relating to completion of the
transactions contemplated hereby. Each party agrees, upon request, to furnish
the other party with all information concerning itself, its Subsidiaries,
directors, officers and shareholders 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 party or of its Subsidiaries to any third party or
Governmental or Regulatory Authority.
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7.05. SUPPLEMENTAL ASSURANCES
(a) On the date the Registration Statement becomes effective and
on the Closing Date, Exchange shall deliver to Rurban a
certificate signed by its principal executive officer and its
principal financial officer to the effect that, to such
officers' knowledge, the information contained in the
Registration Statement relating to the business, financial
condition and affairs of Exchange and Exchange Bank, does not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances under which they were made.
(b) On the date the Registration Statement becomes effective and
on the Closing Date, Rurban shall deliver to Exchange a
certificate signed by its chief executive officer and its
chief financial officer to the effect that, to such officers'
knowledge, the Registration Statement (other than the
information contained therein relating to the business,
financial condition and affairs of Exchange and Exchange Bank)
does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
light of the circumstances under which they were made.
7.06. CONFIDENTIALITY
Exchange and Rurban agree for themselves, and their representatives,
successors and assigns, that any and all confidential or proprietary information
each obtains (including information obtained by their Subsidiaries) from the
other will be kept strictly confidential and not be disclosed by them or their
representatives, agents, successors and assigns to any other person or group,
except (a) among their attorneys, accountants and other representatives; (b) for
any disclosure of such information to which the other consents in writing or
which in the opinion of counsel for the disclosing party is required to be made
under the Securities Act of 1933, the Exchange Act, or other applicable laws or
orders in order to permit any transaction in their securities; and (c) for
information already in the public domain not as a result of the actions of the
disclosing person or its representatives in violation of this provision. In the
event that the transactions contemplated by this Agreement shall fail to be
consummated for any reason, each party to this Agreement shall promptly cause
all confidential or proprietary information relating to the other party, and
furnished by the other party or prepared pursuant to information provided by the
other party regardless of who prepared the information, to be returned to the
other party or be destroyed.
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ARTICLE EIGHT
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
8.01. CONDITIONS TO THE OBLIGATIONS OF RURBAN
The obligations of Rurban under this Agreement shall be subject to
the satisfaction, or written waiver by Rurban prior to the Closing Date, of each
of the following conditions precedent:
(a) The representations and warranties of Exchange set forth in
this Agreement shall be true and correct in all material
respects (except for representations and warranties that
contain qualifications as to materiality, which shall be true
and correct in all respects) as of the date of this Agreement
and as of the Closing Date as though such representations and
warranties were also made as of the Closing Date, except that
those representations and warranties which by their terms
speak as of a specific date shall be true and correct as of
such date; and Rurban shall have received a certificate, dated
the Closing Date, signed by the chief executive officer and
the chief financial officer of Exchange to such effect.
(b) Exchange shall have performed in all material respects all of
its covenants and obligations under this Agreement to be
performed by it on or prior to the Closing Date, including
those relating to the Closing and the closing deliveries
required by Section 9.03 of this Agreement, and Rurban shall
have received a certificate, dated the Closing Date, signed by
the chief executive officer and the chief financial officer of
Exchange to such effect.
(c) Exchange and Exchange Bank shall have obtained the consent or
approval of each person (other than Governmental and
Regulatory Authorities) whose consent or approval shall be
required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument,
except those for which failure to obtain such consents and
approvals would not, individually or in the aggregate, have a
material adverse effect, after the Effective Time, on the
Surviving Corporation.
(d) From the date of this Agreement, there shall not have occurred
any material adverse effect on Exchange, or any change,
condition, event or development that, individually or in the
aggregate, would reasonably be expected to result in a
material adverse effect on Exchange. Without limiting the
generality of the foregoing, the entering into by Exchange
and/or Exchange Bank of a written agreement with a Regulatory
Authority, or the issuance by a Regulatory Authority of a
cease and desist order against Exchange and/or Exchange Bank,
shall be conclusively deemed to constitute a material adverse
effect on Exchange for purposes of this Section 8.01(e).
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8.02. CONDITIONS TO THE OBLIGATIONS OF EXCHANGE
The obligations of Exchange under this Agreement shall be subject to
satisfaction, or written waiver by Exchange prior to the Closing Date, of each
of the following conditions precedent:
(a) The representations and warranties of Rurban set forth in this
Agreement shall be true and correct in all material respects
(except for representations and warranties that contain
qualifications as to materiality, which shall be true and
correct in all respects) as of the date of this Agreement and
as of the Closing Date as though such representations and
warranties were also made as of the Closing Date, except that
representations and warranties which by their terms speak as
of a specific date shall be true and correct as of such date;
and Exchange shall have received a certificate, dated the
Closing Date, signed by the chief executive officer and the
chief financial officer of Rurban to such effect.
(b) Rurban shall have performed in all material respects all of
its covenants and obligations under this Agreement to be
performed by it on or prior to the Closing Date, including
those related to the Closing and the closing deliveries
required by Section 9.02, and Exchange shall have received a
certificate, dated the Closing Date, signed by the chief
executive officer and the chief financial officer of Rurban to
such effect.
(c) Rurban shall have obtained the consent or approval of each
person (other than Governmental and Regulatory Authorities)
whose consent or approval shall be required in connection with
the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, except those for which failure to
obtain such consents and approvals would not, individually or
in the aggregate, have a material adverse effect, after the
Effective Time, on the Surviving Corporation.
(d) Exchange shall have received from Exchange's Financial Advisor
an opinion reasonably acceptable to Exchange, dated as of the
date of the Proxy Statement/Prospectus, to the effect that the
consideration to be received by the holders of the Exchange
Shares in the Merger is fair, from a financial point of view.
8.03. MUTUAL CONDITIONS
The obligations of Exchange and Rurban under this Agreement shall be
subject to the satisfaction, or written waiver by the parties prior to the
Closing Date, of each of the following conditions precedent:
(a) The shareholders of Exchange shall have duly adopted this
Agreement by the required vote.
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(b) All approvals of Governmental and Regulatory Authorities
required to consummate the transactions contemplated by this
Agreement 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 or statute,
rule or order shall contain any conditions, restrictions or
requirements that would reasonably be expected to have a
material adverse effect after the Effective Time on the
present or prospective consolidated financial condition,
business or operating results of the Surviving Corporation.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect.
No Governmental or Regulatory Authority of competent
jurisdiction shall have enacted, issued, promulgated,
enforced, deemed applicable or entered any statute, rule,
regulation, judgment, decree, injunction or other order
prohibiting consummation of the transactions contemplated by
this Agreement or making the Merger illegal.
(d) The Registration Statement shall have become effective under
the Securities Act and no stop-order or similar restraining
order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that
purpose shall have been initiated by the SEC.
(e) The Rurban Shares to be issued in the Merger shall have been
approved for listing on Nasdaq, subject to official notice of
issuance.
(f) Rurban and Exchange shall have received the written opinion of
Rurban's Counsel, dated the Closing Date, to the effect that,
on the basis of facts, representations and assumptions set
forth in such opinion, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of
Section 368(a)(1)(A) of the Code. In rendering its opinion,
Rurban's Counsel will require and rely upon customary
representations contained in letters from Rurban and Exchange
that Rurban's Counsel reasonably deems relevant.
ARTICLE NINE
CLOSING
9.01. CLOSING
The closing (the "CLOSING") of the transactions contemplated by this
Agreement shall be held at the offices of Rurban, 000 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxx 00000, commencing at 10:00 a.m., local time, on (a) the date designated by
Rurban, which date shall not be earlier than the third business day to occur
after the last of the conditions set forth in Article Eight shall have been
satisfied or waived in accordance with the terms of this Agreement (excluding
conditions
51
that, by their terms, cannot be satisfied until the Closing Date) or later than
the last business day of the month in which such third business day occurs;
provided, however, that no such election shall cause the Closing to occur on a
date after that specified in Section 11.01(b)(i) of this Agreement or after the
date or dates on which any Governmental or Regulatory Authority approval or any
extension thereof expires; and provided further, that if Exchange has delivered
a termination notice pursuant to the provisions of Section 11.01(c)(iv), the
Closing Date shall be the third business day following delivery of the Top-Up
Notice, if any, or (b) such other date to which the parties agree in writing.
The date of the Closing is sometimes herein called the "CLOSING DATE."
9.02. CLOSING DELIVERIES REQUIRED OF RURBAN
At the Closing, Rurban shall cause all of the following to be
delivered to Exchange:
(a) The certificates of Rurban contemplated by Section 8.02(a) and
(b) of this Agreement.
(b) Copies of all resolutions adopted by the Board of Directors of
Rurban, approving and adopting this Agreement and authorizing
the consummation of the transactions described herein,
accompanied by a certificate of the secretary or assistant
secretary of Rurban, as applicable, dated as of the Closing
Date, and certifying (i) the date and manner of adoption of
each such resolution; and (ii) that each such resolution is in
full force and effect, without amendment or repeal, as of the
Closing Date.
9.03. CLOSING DELIVERIES REQUIRED OF EXCHANGE
At the Closing, Exchange shall cause all of the following to be
delivered to Rurban:
(a) The certificates of Exchange contemplated by Sections 8.01(a)
and (b) of this Agreement.
(b) Copies of all resolutions adopted by the Board of Directors
and the shareholders of Exchange approving and adopting this
Agreement and authorizing the consummation of the transactions
described herein, accompanied by a certificate of the
secretary or the assistant secretary of Exchange dated as of
the Closing Date, and certifying (i) the date and manner of
the adoption of each such resolution; and (ii) that each such
resolution is in full force and effect, without amendment or
repeal, as of the Closing Date.
(c) A statement issued by Exchange in the form attached hereto as
Exhibit C, dated as of the Closing Date, certifying that the
Exchange Shares are not a U.S. real property interest within
the meaning of Treasury Department Regulation Sections
1.897-2(b)(1) and (h).
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ARTICLE TEN
NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
10.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations, warranties and covenants of Rurban and Exchange
set forth in this Agreement, or in any document delivered pursuant to the terms
hereof or in connection with the transactions contemplated hereby, shall not
survive the Closing and the consummation of the transactions referred to herein,
other than covenants which by their terms are to survive or be performed after
the Effective Time (including, without limitation, those set forth in Section
6.02, 6.05, this Article Ten and Article Twelve); except that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive the Surviving Corporation (or any director,
officer or controlling person thereof) of any defense in law or equity which
otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either Exchange or
Rurban.
ARTICLE ELEVEN
TERMINATION
11.01. TERMINATION
This Agreement may be terminated, and the Merger may be abandoned,
at any time prior to the Effective Time, whether prior to or after this
Agreement has been adopted by the shareholders of Exchange:
(a) By mutual written agreement of Exchange and Rurban duly
authorized by action taken by or on behalf of their respective
Boards of Directors;
(b) By either Exchange or Rurban, duly authorized by action taken
by or on behalf of its Board of Directors, upon written
notification to the non-terminating party by the terminating
party, if:
(i) at any time after December, 31, 2005, the Merger shall
not have been consummated on or prior to such date and
such failure to consummate the Merger is not caused by a
breach of this Agreement by the terminating party;
(ii) the shareholders of Exchange shall not have adopted this
Agreement by reason of the failure to obtain the
requisite vote upon a vote held at the Exchange Meeting,
or any adjournment thereof;
(iii) the approval of any Governmental or Regulatory Authority
required for consummation of the Merger and the other
transactions contemplated by this Agreement shall have
been
53
denied by final, non-appealable action of such
Governmental or Regulatory Authority; or
(c) By Exchange, duly authorized by action taken by or on behalf
of its Board of Directors, by providing written notice to
Rurban, if:
(i) prior to the Closing Date, any representation or
warranty of Rurban shall have become untrue such that
the condition set forth in Section 8.01(a) would not be
satisfied and which breach has not been cured within
thirty (30) days following receipt by Rurban of written
notice of breach or is incapable of being cured during
such time period;
(ii) Rurban shall have failed to comply in any material
respect with any covenant or agreement on the part of
Rurban contained in this Agreement required to be
complied with prior to the date of such termination,
which failure to comply shall not have been cured within
thirty (30) days following receipt by Rurban of written
notice of such failure to comply or is incapable of
being cured during such time period;
(iii) the Board of Directors of Exchange determines in good
faith, based upon advice from independent legal counsel,
that termination of this Agreement is required for the
Board of Directors of Exchange to comply with its
fiduciary duties to shareholders imposed by law by
reason of an Acquisition Proposal having been made and
provided Exchange has complied with its obligations
under Section 5.03 with respect to such Acquisition
Proposal; provided, however, that Exchange's ability to
terminate pursuant to this subsection (c)(iii) is
conditioned upon the prior payment by Exchange to Rurban
of any amounts owed by Exchange to Rurban pursuant to
Section 11.02(b); or
(iv) (A) the market value of a Rurban Share based on the
average closing prices for Rurban Shares for the twenty
(20) trading days ending on the tenth (10th) trading day
prior to the date then established for the Closing Date
(such value referred to herein as the "RURBAN REFERENCE
PRICE," and such period referred to herein as the
"REFERENCE PERIOD"), is less than $12.02, appropriately
adjusted for any stock splits, reverse stock splits,
stock dividends, recapitalizations or other similar
transactions, and (B) the Rurban Reference Price has
declined as a percentage of $14.15, by more than 15%
from the decline, if any, in the SNL Bank Index during
the period beginning on the date of this Agreement and
ending on the tenth (10th) trading day prior to the date
then established for the Closing Date (the "EXCHANGE
WALKAWAY RIGHT"); provided,
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however, that if Exchange elects to exercise the
Exchange Walkaway Right, Rurban shall have five (5) days
to notify Exchange in writing (the "TOP-UP NOTICE") that
it elects to adjust the Exchange Ratio such that the
product of the Exchange Ratio multiplied by the Rurban
Reference Price equals 85% of the Per Share Cash
Consideration. If Rurban so notifies the Company, the
Exchange Walkaway Right shall be of no further force and
effect and this Agreement shall remain in effect in
accordance with its terms (except that the Exchange
Ratio shall thereafter, for all purposes of this
Agreement, be deemed to be as set forth in the Top-Up
Notice).
(d) By Rurban, duly authorized by action taken by or on behalf of
its Board of Directors, by providing written notice to
Exchange, if:
(i) prior to the Closing Date, any representation or
warranty of Exchange shall have become untrue such that
the condition set forth in Section 8.02(a) would not be
satisfied and which breach has not been cured within
thirty (30) days following receipt by Exchange of
written notice of breach or is incapable of being cured
during such time period;
(ii) Exchange shall have failed to comply in any material
respect with any covenant or agreement on the part of
Exchange contained in this Agreement required to be
complied with prior to the date of such termination,
which failure to comply shall not have been cured within
thirty (30) days following receipt by Exchange of
written notice of such failure to comply or is incapable
of being cured during such time period; or
(iii) Rurban is required to increase the Exchange Ratio
pursuant to, and in accordance with, the provisions of
Section 2.01(f).
11.02. EFFECT OF TERMINATION
(a) If this Agreement is validly terminated by either Exchange or
Rurban pursuant to Section 11.01, this Agreement will
forthwith become null and void and there will be no liability
or obligation on the part of Exchange or Rurban, except (i)
that the provisions of Sections 7.02, 7.06 and 12.07 and this
Article Eleven will continue to apply following any such
termination, (ii) that nothing contained herein shall relieve
any party hereto from liability for breach of its
representations, warranties, covenants or agreements contained
in this Agreement and (iii) as provided in paragraph (b)
below.
55
(b) Exchange shall promptly pay to Rurban a termination fee equal
to $625,000 in immediately available federal funds if:
(i) (A) this Agreement is terminated pursuant to Section
11.01(b)(ii), 11.01(d)(i) or 11.01(d)(ii), and (B)
within eighteen (18) months after the date of such
termination, Exchange and/or Exchange Bank shall have
entered into an agreement relating to an Acquisition
Proposal or any Acquisition Proposal shall have been
consummated;
(ii) Exchange, Exchange Bank or the shareholders of Exchange
receive an Acquisition Proposal, the Board of Directors
of Exchange withdraws or modifies in any manner
materially adverse to Rurban its recommendation of the
Merger to the shareholders of Exchange and either (A)
the shareholders of Exchange do not adopt this Agreement
at the Exchange Meeting called and held for such purpose
in accordance with this Agreement, or (B) the
shareholders of Exchange fail to meet by October 31,
2005, to vote on the adoption of this Agreement; or
(iii) Exchange terminates this Agreement pursuant to the
provisions of Section 11.01(c)(iii) hereof.
(c) Rurban shall promptly pay to Exchange a termination fee equal
to $250,000 in immediately available federal funds if this
Agreement is terminated pursuant to Section 11.01(d)(iii).
ARTICLE TWELVE
MISCELLANEOUS
12.01. NOTICES
All notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be given in writing and shall
be deemed to have been duly given (a) on the date of delivery if delivered by
hand or by telecopy, upon confirmation of receipt, (b) on the first business day
following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the third business day following the date of mailing if sent
by certified mail, postage prepaid, return receipt requested. All notices
thereunder shall be delivered to the following addresses:
If to Exchange, to:
Exchange Bancshares, Inc.
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxx 00000
56
Attn: Xxxxxx Xxxxxx, Chairman
Facsimile Number: (000) 000-0000
with a copy to:
Xxxxxxxx & Shohl LLP
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Facsimile Number: (000) 000-0000
If to Rurban, to:
Rurban Financial Corp.
000 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, President and CEO
Facsimile Number: (000) 000-0000
with a copy to:
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. XxXxxxxx
Facsimile Number: (000) 000-0000
Any party to this Agreement may, by notice given in accordance with this Section
12.01, designate a new address for notices, requests, demands and other
communications to such party.
12.02. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be a duplicate original, but all of which taken
together shall be deemed to constitute a single instrument.
12.03. ENTIRE AGREEMENT
This Agreement (including the exhibits, documents and instruments
referred to herein) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement.
57
12.04. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns (including successive, as well as immediate,
successors and assigns) of the parties hereto. This Agreement may not be
assigned by either party hereto without the prior written consent of the other
party.
12.05. CAPTIONS
The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or modify this
Agreement or its interpretation, construction or meaning and are in no way to be
construed as part of this Agreement.
12.06. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Ohio without giving effect to principles of
conflicts or choice of laws (except to the extent that mandatory provisions of
Federal law are applicable).
12.07. PAYMENT OF FEES AND EXPENSES
Except as otherwise agreed in writing, each party hereto shall pay
all of its own costs and expenses, including legal, accounting and investment
bankers' fees, and all expenses relating to its performance of, and compliance
with, its undertakings herein. All fees to be paid to Governmental and
Regulatory Authorities in connection with the transactions contemplated by this
Agreement shall be borne by Rurban.
12.08. AMENDMENT
From time to time and at any time prior to the Effective Time, this
Agreement may be amended only by an agreement in writing executed by the parties
hereto, after authorization of such action by their respective Boards of
Directors; except that, after the Exchange Meeting, this Agreement may not be
amended if it would violate the OGCL.
12.09. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege.
12.10. DISCLOSURE SCHEDULE
If there is any inconsistency between the statements in the body of
this Agreement and those in the Exchange Disclosure Schedule (other than an
exception expressly set forth as
58
such in the Exchange Disclosure Schedule with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
12.11. NO THIRD-PARTY RIGHTS
Except as specifically set forth herein, nothing expressed or
referred to in this Agreement will be construed to give any person other than
the parties to this Agreement any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
12.12. WAIVER OF JURY TRIAL
Each of the parties hereto irrevocably waives any and all right to
trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
12.13. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
59
IN WITNESS WHEREOF, this Agreement and Plan of Merger has been
executed on behalf of Rurban and Exchange to be effective as of the date set
forth in the first paragraph above.
ATTEST: RURBAN FINANCIAL CORP.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxx
------------------------ --------------------------------------
Printed Name: Xxxxx X. Xxxxx
Title: Executive Vice President and CFO
ATTEST: EXCHANGE BANCSHARES, INC.
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxx
------------------------ ---------------------------------------
Printed Name: Xxxxxx Xxxxxx
Title: Chairman
60
EXHIBIT A
FORM OF AFFILIATE LETTER
__________, 2005
Rurban Financial Corp.
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
I have been advised that, as of the date hereof, I may be deemed to be an
"affiliate" of Exchange Bancshares, Inc., an Ohio corporation ("Exchange"), as
the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "1933 Act"), and/or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission. Pursuant
to the terms of the Agreement and Plan of Merger, dated as of April 13, 2005
(the "Merger Agreement"), by and between Exchange and Rurban Financial Corp., an
Ohio corporation ("Rurban"), Exchange will be merged (the "Merger") with and
into Rurban and the name of the surviving corporation will be Rurban Financial
Corp.
As used herein, "Exchange Shares" means the common shares, $5.00 par value
per share, of Exchange, and "Rurban Shares" means the common shares, without par
value, of Rurban.
I represent, warrant and covenant to Rurban that if I receive any Rurban
Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of any
Rurban Shares (including any securities which may be paid as a dividend or
otherwise distributed thereon or received pursuant to the exercise of
stock options) acquired by me in the Merger in violation of the 1933 Act
or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed
their requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of Rurban Shares (including any
securities which may be paid as a dividend or otherwise distributed
thereon or received pursuant to the exercise of stock options) to the
extent I felt necessary, with my counsel or counsel for Exchange.
C. I have been advised that the issuance of Rurban Shares to me
pursuant to the Merger has been or will be registered with the Commission
under the 1933 Act on a Registration Statement on Form S-4. However, I
have also been advised that, because at
A-1
the time the Merger was submitted for a vote of the shareholders of
Exchange, I may have been deemed to be an affiliate of Exchange, the
distribution by me of any Rurban Shares acquired by me in the Merger will
not be registered under the 1933 Act and that I may not sell, transfer or
otherwise dispose of any Rurban Shares (including any securities which may
be paid as a dividend or otherwise distributed thereon or received
pursuant to the exercise of stock options) acquired by me in the Merger
unless (i) such sale, transfer or other disposition has been registered
under the 1933 Act, (ii) such sale, transfer or other disposition is made
in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the 1933 Act, or (iii) in the opinion
of counsel reasonably acceptable to the Rurban, such sale, transfer or
other disposition is otherwise exempt from registration under the 1933
Act.
D. I understand that Rurban is under no obligation to register under
the 1933 Act the sale, transfer or other disposition by me or on my behalf
of any Rurban Shares acquired by me in the Merger or to take any other
action necessary in order to make an exemption from such registration
available.
E. I also understand that stop transfer instructions will be given
to Rurban's transfer agent with respect to Rurban Shares (including any
securities which may be paid as a dividend or otherwise distributed
thereon or received pursuant to the exercise of stock options) and that
there will be placed on the certificates for the Rurban Shares acquired by
me in the Merger, or any substitutions therefor, a legend stating in
substance:
"The common shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act
of 1933 applies. The common shares represented by this certificate
may only be transferred in accordance with the terms of an agreement
dated __________, 2005 between the registered holder hereof and the
issuer of the certificate, a copy of which agreement will be mailed
to the holder hereof without charge within five days after receipt
of written request therefor."
F. I also understand that unless the transfer by me of my Rurban
Shares has been registered under the 1933 Act or is a sale made in
conformity with the provisions of Rule 145, Rurban reserves the right to
put the following legend on the certificates issued to my transferee:
"The common shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from a
person who received such common shares in a transaction to which
Rule 145 promulgated under the Securities Act of 1933 applies. The
common shares may not be sold, pledged or otherwise transferred
except in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
A-2
It is understood and agreed that the legends set forth in paragraphs E and
F above shall be removed by delivery of substitute certificates without such
legends if the undersigned shall have delivered to Rurban a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Rurban, to the effect that such legends are not
required for purposes of the 1933 Act.
Very truly yours,
_________________________________________
Printed Name: ___________________________
Accepted this ___ day of
________, 2005
RURBAN FINANCIAL CORP.
By: ____________________________________________
Printed Name: __________________________________
Title: _________________________________________
A-3
EXHIBIT B
FORM OF VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is entered into as of this 13th
day of April, 2005, between the undersigned Shareholder (the "Shareholder") of
Exchange Bancshares, Inc., an Ohio corporation ("Exchange"), and Rurban
Financial Corp., an Ohio corporation ("Rurban").
RECITALS
A. The Shareholder owns or has the power to vote, other than in a
fiduciary capacity, ___________ common shares, par value $5.00 per share, of
Exchange (together with all other shares of Exchange that the Shareholder may
subsequently acquire or obtain the power to vote, other than in a fiduciary
capacity, the "Shares").
B. Exchange has entered into an Agreement and Plan of Merger by and
between Rurban and Exchange of even date herewith (the "Merger Agreement").
C. Under the terms of the Merger Agreement, Exchange has agreed to call a
meeting of its Shareholders for the purpose of voting upon the adoption of the
Merger Agreement (together with any adjournments thereof, the "Exchange
Meeting").
D. The parties to the Merger Agreement have made it a condition to their
entering into the Merger Agreement that certain Shareholders of Exchange,
including the Shareholder, agree to vote their shares of Exchange in favor of
the adoption of the Merger Agreement.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1. AGREEMENT TO VOTE. The Shareholder agrees, subject to Section 2 below,
to vote the Shares as follows:
(a) in favor of the adoption of the Merger Agreement;
(b) against the approval of any proposal relating to a competing
merger or business combination involving an acquisition of Exchange or Exchange
Bank or the purchase of all or a substantial portion of the assets of Exchange
or Exchange Bank by any person or entity other than Rurban or an affiliate of
Rurban; and
(c) against any other transaction which is inconsistent with the
obligations of Exchange under the Merger Agreement.
2. LIMITATION ON VOTING POWER. It is expressly understood and acknowledged
that nothing contained herein is intended to restrict the Shareholder from
voting on any matter, or otherwise from acting, in the Shareholder's capacity as
a director or officer of Exchange with respect to any matter including, but not
limited to, the management or operation of Exchange.
3. TERMINATION. This Agreement shall terminate on the earlier of (a) the
date on which the Merger Agreement is terminated in accordance with Article
Eleven of the Merger Agreement, (b) the date on which the merger contemplated by
the Merger Agreement is consummated, or (c) the death of the Shareholder.
4. REPRESENTATIONS, WARRANTIES, AND ADDITIONAL COVENANTS OF THE
SHAREHOLDER. The Shareholder hereby represents and warrants to Rurban that (a)
the Shareholder has the capacity and all necessary power and authority to vote
the Shares and (b) this Agreement constitutes a legal, valid, and binding
obligation of the Shareholder, enforceable in accordance with its terms, except
as may be limited by bankruptcy, insolvency, or similar laws affecting
enforcement of creditors rights generally. The Shareholder further agrees that,
during the term of this Agreement, the Shareholder will not, without the prior
written consent of Rurban, which consent shall not be unreasonably withheld,
sell, pledge, or otherwise voluntarily dispose of any of the Shares which are
owned by the Shareholder or take any other voluntary action which would have the
effect of removing the Shareholder's power to vote the Shares or which would be
inconsistent with this Agreement.
5. SPECIFIC PERFORMANCE. The undersigned hereby acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this Agreement
and agrees that the obligations of the Shareholder shall be specifically
enforceable and that Rurban shall be entitled to injunctive or other equitable
relief upon such a breach by the Shareholder. The Shareholder further agrees to
waive any bond in connection with obtaining any such injunctive or equitable
relief. This provision is without prejudice to any other rights that Rurban may
have against the Shareholder for any failure to perform his obligations under
this Agreement.
6. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio without regard to any of its
conflict of laws principles.
7. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings attributed to such terms in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned have executed or caused to be executed
this Agreement as of the day and year first above written.
SHAREHOLDER RURBAN FINANCIAL CORP.
_______________________________ By: ________________________________
Print Name:____________________ Title: _____________________________
B-2
EXHIBIT C
STATEMENT THAT STOCK OF DOMESTIC CORPORATION IS NOT A U.S. REAL PROPERTY
INTEREST
To: Rurban Financial Corp.
Pursuant to your request, please be advised that an ownership
interest in Exchange Bancshares, Inc. is not a U.S. real property interest for
purposes of Treasury Department regulation sections 1.897-2(b)(1) and (h).
The undersigned responsible officer of Exchange Bancshares, Inc.
hereby certifies under penalties of perjury that this Statement is correct to
his knowledge and belief and he has authority to sign this Statement on behalf
of the Corporation.
Dated: ________ , 2005
EXCHANGE BANCSHARES, INC.
By: _________________________________
Print Name: __________________________
Title: _______________________________
