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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
8
<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
10
<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
11
<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.
14
<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
15
<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
16
<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
17
<PAGE>
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
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