<PAGE>
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.
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TABLE OF CONTENTS
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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
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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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<PAGE>
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
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<PAGE>
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
<PAGE>
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
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<PAGE>
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
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<PAGE>
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
<PAGE>
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
<PAGE>
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.
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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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
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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
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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
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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
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(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
thereu
