þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ohio | 34-1395608 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
401 Clinton Street, Defiance, Ohio | 43512 | |
(Address of principal executive offices) | (Zip Code) | |
Registrants telephone number, including area code: | (419) 783-8950 | |
Large Accelerate Filer o | Accelerated Filer o | Non-Accelerated Filer þ |
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71.
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F6
F7
F8
F9
F10
F11
F12
F13
F14
F15
F16
F17
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103.
104.
105.
106.
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limits the extent to which a bank or its subsidiaries may engage in covered
transactions with any one affiliate to an amount equal to 10% of that banks capital
stock and surplus (i.e., tangible capital);
limits the extent to which a bank or its subsidiaries may engage in covered
transactions with all affiliates to 20% of that banks capital stock and surplus; and
requires that all covered transactions be on terms substantially the same, or at
least as favorable to the bank or subsidiary, as those provided to non-affiliates.
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Increasing the deposit insurance limit for retirement accounts from $100,000 to
$250,000;
Adjusting the deposit insurance limits (currently $100,000 for most accounts) every
five years based on an inflation index, with the first adjustment to be effective on
January 1, 2011;
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Providing pass-through deposit insurance for the deposits of employee benefit plans
(but prohibiting undercapitalized depository institutions from accepting employee
benefit plan deposits);
Allocating an aggregate of $4.7 billion of one-time credits to offset the premiums
of depository institutions based on their assessment bases at the end of 1996;
Establishing rules for awarding cash dividends to depository institutions, based on
their relative contributions to the DIF and its predecessor funds, when the DIF reserve
ration reaches certain levels; and
Revising the rules and procedures for risk-based premium assessments.
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I.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
2005
2004
2003
Average
Avg
Average
Avg
Average
Avg
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
(dollars in thousands)
$
108,306
$
4,337
4.00
%
$
100,517
$
3,568
3.57
%
$
94,771
$
2,806
2.98
%
7,248
403
5.56
%
4,426
249
5.63
%
4,696
261
5.55
%
4,881
160
3.28
%
4,557
79
1.34
%
26,130
401
1.48
%
268,158
16,659
6.21
%
271,503
16,217
5.97
%
385,153
24,395
6.33
%
388,593
21,559
5.55
%
381,003
20,113
5.28
%
510,750
27,863
5.46
%
9,653
12,179
23,580
(4,885
)
(7,123
)
(13,755
)
15,570
12,168
14,089
24,435
19,574
14,707
$
433,366
$
417,801
$
549,371
$
102,453
$
716
0.70
%
$
94,051
$
350
0.37
%
$
124,828
$
781
0.63
%
167,140
4,935
2.95
%
162,865
4,205
2.58
%
267,227
9,244
3.46
%
6,854
165
2.41
%
4,613
53
1.15
%
46,376
2,040
4.40
%
48,814
1,877
3.85
%
40,809
2,276
5.58
%
14,434
1,275
8.83
%
10,248
1,119
10.92
%
10,000
1,075
10.75
%
2,247
237
10.55
%
5,039
347
6.89
%
10,314
596
5.78
%
339,504
9,368
2.76
%
325,630
7,951
2.44
%
453,178
13,972
3.08
%
36,675
38,134
43,729
6,105
4,758
7,865
382,284
368,522
504,772
51,083
49,279
44,599
$
433,367
$
417,801
$
549,371
$
12,191
$
12,162
$
13,891
3.14
%
3.19
%
2.72
%
(1)
Interest is computed on a tax equivalent basis using a 34% statutory tax rate. The tax equivalent adjustment was $137, $84 and $89 in 2005, 2004 and 2003, respectively.
(2)
Non-accruing loans and loans held for sale are included in the average balances.
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I.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
(Continued)
The following tables set forth the effect of volume and rate changes on interest income and
expense for the periods indicated. For purposes of these tables, changes in interest due to
volume and rate were determined as follows:
Rate Variance change in rate multiplied by the previous years volume.
Rate/Volume Variance change in volume multiplied by the change in rate. This variance was
allocated to volume variance and rate variance in proportion to the relationship of the
absolute dollar amount of the change in each.
Interest on non-taxable securities has been adjusted to a fully tax equivalent basis using a
statutory tax rate of 34% in 2005, 2004 and 2003.
Total
Variance
Variance Attributable To
2005/2004
Volume
Rate
(dollars in thousands)
$
751
$
291
$
460
154
157
(3
)
99
5
94
442
(202
)
644
1,446
251
1,195
366
34
332
730
113
617
112
34
78
163
(97
)
260
156
397
(241
)
(110
)
(244
)
134
1,417
237
1,180
$
29
$
14
$
15
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I.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
(Continued)
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II.
INVESTMENT PORTFOLIO
A.
The book value of securities available for sale as of December 31 in each of the
following years are summarized as follows:
2005
2004
2003
(dollars in thousands)
$
91,021
$
64,483
$
43,868
12,942
4,692
4,203
36,571
40,704
59,238
1,305
50
50
23
9
35
$
141,862
$
109,938
$
107,394
B.
The maturity distribution and weighted average yield of securities available for sale
at December 31, 2005 are as follows:
Maturing
After One Year
After Five Years
Within
But Within
But Within
After
One Year
Five Years
Ten Years
Ten Years
$
8,060
$
14,596
$
65,367
$
2,998
151
1,019
1,407
10,365
183
9,693
4,385
22,310
298
1,007
23
$
8,715
$
26,315
$
71,159
$
35,673
2.47
%
3.50
%
4.43
%
4.15
%
(1)
Yields are not presented on a tax-equivalent basis.
The weighted average interest rates are based on coupon rates for securities purchased at par
value and on effective interest rates considering amortization or accretion if the securities
were purchased at a premium or discount.
C.
Excluding those holdings of the investment portfolio in U.S. Treasury securities
and other agencies of the U.S. Government, there were no other securities of any one
issuer which exceeded 10% of the shareholders equity of the Company at December 31,
2005.
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III.
LOAN PORTFOLIO
A.
Types of Loans Total loans on the balance sheet are comprised of the following
classifications at December 31 for the years indicated:
2005
2004
2003
2002
2001
(dollars in thousands)
$
187,667
$
163,845
$
188,532
$
321,726
$
388,673
89,086
63,828
46,718
84,432
106,689
48,877
31,949
37,310
60,139
76,513
1,661
5,128
11,775
21,509
28,752
$
327,291
$
264,750
$
284,335
$
487,806
$
600,627
$
224
$
113
$
219
$
63,536
$
440
B.
Maturities and Sensitivities of Loans to Changes in Interest Rates The
following table shows the amounts of commercial and agricultural loans outstanding as
of December 31, 2005 which, based on remaining scheduled repayments of principal, are
due in the periods indicated. Also, the amounts have been classified according to
sensitivity to changes in interest rates for commercial and agricultural loans due
after one year. (Variable-rate loans are those loans with floating or adjustable
interest rates.)
Commercial and
Maturing
Agricultural
$
52,258
58,182
77,227
$
187,667
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III.
LOAN PORTFOLIO
(Continued)
Interest Sensitivity
Fixed
Variable
Rate
Rate
Total
(dollars in thousands)
$
17,397
$
40,785
$
58,182
5,420
71,807
77,227
$
22,817
$
112,592
$
135,409
C.
Risk Elements
1.
Non-accrual, Past Due, Restructured and Impaired Loans The
following schedule summarizes non-accrual, past due, restructured and impaired
loans at December 31 in each of the following years.
2005
2004
2003
2002
2001
(dollars in thousands)
$
6,270
$
13,384
$
18,352
$
18,259
$
12,557
5
11
476
2,131
825
1,570
5,058
$
7,100
$
14,965
$
23,410
$
18,735
$
14,688
$
3,283
$
4,671
$
9,099
$
3,166
$
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III.
LOAN PORTFOLIO
(Continued)
2005
(In thousands)
$
232
224
1.
Discussion of the Non-accrual Policy
The accrual of interest income is discontinued when the collection of a loan or
interest, in whole or in part, is doubtful. When interest accruals are
discontinued, interest income accrued in the current period is reversed. While
loans which are past due 90 days or more as to interest or principal payments are
considered for non-accrual status, management may elect to continue the accrual
of interest when the estimated net realizable value of collateral, in
managements judgment, is sufficient to cover the principal balance and accrued
interest. These policies apply to both commercial and consumer loans.
2.
Potential Problem Loans
As of December 31, 2005, in addition to the $7,100,000 of loans reported under
Item III. C. 1. (which includes all loans classified by management as doubtful or
loss), there are approximately $8,721,000 in other outstanding loans where known
information about possible credit problems of the borrowers causes management to
have concerns as to the ability of such borrowers to comply with the present loan
repayment terms (loans classified as substandard by management) and which may
result in disclosure of such loans pursuant to Item III. C. 1. at some future
date. In regard to loans classified as substandard, management believes that
such potential problem loans have been adequately evaluated in the allowance of
loan losses.
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III.
LOAN PORTFOLIO
(Continued)
3.
Foreign Outstandings
None
4.
Loan Concentrations
At December 31, 2005, loans outstanding related to agricultural operations or
collateralized by agricultural real estate aggregated approximately $40,237,000.
D.
Other Interest-Bearing Assets
There are no other interest-bearing assets as of December 31, 2005 which are required
to be disclosed under Item III. C. 1 or Item III. C. 2. if such assets were loans.
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IV.
SUMMARY OF LOAN LOSS EXPERIENCE
A.
The following schedule presents an analysis of the allowance for loan losses, average
loan data and related ratios for the years ended December 31:
2005
2004
2003
2002
2001
(dollars in thousands
)
$
327,272
$
264,594
$
284,323
$
551,011
$
600,731
$
268,158
$
271,503
$
385,153
$
627,685
$
583,239
$
4,899
$
10,181
$
17,694
$
9,239
$
7,215
910
1,427
(2,760
)
(6,599
)
(10,089
)
(19,584
)
(6,089
)
(133
)
(12
)
(195
)
(496
)
(54
)
(208
)
(70
)
(225
)
(173
)
(146
)
(308
)
(308
)
(1,345
)
(1,520
)
(884
)
(3,409
)
(6,989
)
(11,854
)
(21,773
)
(7,173
)
1,566
1,835
2,497
892
110
2
52
86
28
1
4
31
109
27
12
145
188
447
324
341
1,717
2,106
3,139
1,271
464
(1,692
)
(4,883
)
(8,715
)
(20,502
)
(6,709
)
583
(399
)
1,202
27,530
8,733
$
4,700
$
4,899
$
10,181
$
17,694
$
9,239
0.63
%
1.80
%
2.26
%
3.27
%
1.15
%
(1)
Net of unearned income and deferred loan fees, including loans held for sale
The allowance for loan losses balance and the provision for loan losses are determined by
management based upon periodic reviews of the loan portfolio. In addition, management
considered the level of charge-offs on loans as well as the fluctuations of charge-offs and
recoveries on loans in the factors which caused these changes. Estimating the risk of loss
and the amount of loss is necessarily subjective. Accordingly, the allowance is maintained
by management at a level considered adequate to cover losses that are currently anticipated
based on past loss experience, economic conditions, information about specific borrower
situations including their financial position and collateral values and other factors and
estimates which are subject to change over time.
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IV.
SUMMARY OF LOAN LOSS EXPERIENCE
(Continued)
B.
The following schedule is a breakdown of the allowance for loan losses allocated by
type of loan and related ratios.
Allocation of the Allowance for Loan Losses
Percentage
Percentage
Percentage
Percentage
Percentage
of Loans
of Loans
of Loans
of Loans
of Loans
In Each
In Each
In Each
In Each
In Each
Category to
Category to
Category to
Category to
Category to
Allowance
Total
Allowance
Total
Allowance
Total
Allowance
Total
Allowance
Total
Amount
Loans
Amount
Loans
Amount
Loans
Amount
Loans
Amount
Loans
December 31, 2005
December 31, 2004
December 31, 2003
December 31, 2002
December 31, 2001*
(dollars in thousands)
$
3,728
57.3
%
$
4,502
61.9
%
$
9,649
66.3
%
$
16,518
66.0
%
$
8,222
64.7
%
291
27.2
141
24.1
75
16.4
204
17.3
126
17.8
681
15.5
256
14.0
457
17.3
972
16.7
891
17.5
N/A
N/A
N/A
*
N/A
*
N/A
$
4,700
100.0
%
$
4,899
100.0
%
$
10,181
100.0
%
$
17,694
100.0
%
$
9,239
100.0
%
*
In 2001, management established a revised methodology for allocating the allowance for loan
losses which includes identifying specific allocations for impaired and problem loans and
quantifying general allocations for other loans based on a detailed evaluation of historical
loss ratios. Adjustments are then made to these amounts based on various quantifiable
information related to individual portfolio risk factors. Additional adjustments are made
based on local and national economic trends and their estimated impact on the industries to
which the Company and its subsidiaries extend credit. Prior to 2001, individual portfolio
risk factors allocations were made on a more subjective basis. Management believes the new
methodology more appropriately allocates the allowance for known and inherent risks within the
individual loan portfolios.
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V.
DEPOSITS
2 0 0 5
2 0 0 4
2 0 0 3
Average
Average
Average
Average
Average
Average
Amount
Rate
Amount
Rate
Amount
Rate
(dollars in thousands)
$
102,453
0.70
%
$
94,051
0.37
%
$
124,828
0.63
%
167,140
2.95
162,865
2.58
267,227
3.46
36,675
38,134
43,729
$
306,268
$
295,050
$
435,784
Amount
$
16,083
18,150
9,314
15,720
$
59,267
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VI.
RETURN ON EQUITY AND ASSETS
2005
2004
2003
(dollars in thousands)
$
433,367
$
417,801
$
549,371
$
51,083
$
49,279
$
44,599
$
673
$
2,734
$
12,305
$
914
$
$
0.16
%
0.65
%
2.24
%
1.32
%
5.55
%
27.59
%
133.33
N/A
N/A
11.79
%
11.79
%
8.12
%
(1)
Cash dividends declared divided by net income.
VII.
SHORT-TERM BORROWINGS
2003
(dollars in thousands)
$
13,924
1.08
%
$
15,765
$
11,144
1.17
%
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1.
State Banks main office is owned and located at 401 Clinton Street,
Defiance, Ohio. State Bank leases portions of this facility to the Company and RFS.
(Banking and Other)
2.
State Bank owns a drive through branch office located in Defiance, Ohio.
(Banking)
3.
State Bank owns a full service branch office located on Main Street in Ney,
Ohio. (Banking)
4.
State Bank owns a full service branch office located at 1796 North Clinton
Street, Defiance, Ohio. (Banking)
5.
State Bank owns a full service branch office located at 1856 East Second
Street, Defiance, Ohio. (Banking)
6.
State Bank owns a full service branch office located at 220 North Main
Street, Paulding, Ohio. (Banking)
7.
State Bank owns a full service branch office located at 312 Main Street,
Delta, Ohio. (Banking)
8.
State Bank owns a full service branch office located at 133 E. Morenci
Street, Lyons, Ohio. (Banking)
9.
State Bank owns a full service branch office located at 515 Parkview,
Wauseon, Ohio. (Banking)
10.
State Bank leases a full service branch located in the Chief Market Square
supermarket at 705 Deatrick Street, Defiance, Ohio, pursuant to a 15-year lease.
(Banking)
11.
State Bank owns a full service branch office located at 218 North First
Street, Oakwood, Ohio. (Banking)
12.
State Bank owns a full service branch office located at 930 West Market
Street, Lima, Ohio. (Banking)
13.
State Bank owns a full service branch office located at 2903 Elida Road,
Lima, Ohio. (Banking)
1.
Exchanges main office is owned and located at 235 Main Street, Luckey,
Ohio. (Banking)
2.
Exchange owns a full service branch office located at 311 Main Street,
Walbridge, Ohio. (Banking)
3.
Exchange owns a full service branch office located at 940 Clarion Avenue,
Holland, Ohio. (Banking)
4.
Exchange owns a full service branch office located at 610 East South
Boundary, Perrysburg, Ohio. (Banking)
Table of Contents
5.
Exchange owns a full service branch office located at 6401 Monroe Street,
Sylvania, Ohio. (Banking)
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Position(s) Held with the Company and
Name
Age
its Subsidiaries and Principal Occupation(s)
53
Chairman of the Board of Directors of the
Company since 1992; Chairman of the Board of
Directors of State Bank since 1992; Director
of State Bank since 1990; Director of RDSI
since 1997; Director of RFCBC since 2004;
General Manager of Defiance Publishing
Company, Defiance, Ohio, a newspaper
publisher, since 1985.
58
President and Chief Executive Officer of the
Company since August 2002; Chairman and Chief
Executive Officer of RDSI since October 1997;
Director of State Bank since 2002; Director
of RDSI since 1997; Director of RFCBC since
2004; Director of Exchange since January
2006; and; Director of ROC since January
2006.
59
President and Chief Executive Officer of
Exchange Bank since December 31, 2005; Chief
Operating Officer of the Company from May
2005 to December 2005; Executive Vice
President and Chief Operating Officer of
State Bank from 2002 to May 2005; President
and Chief Executive Officer of RFCBC since
2004; Senior Vice President and Operations
Manager of the Company from 1998 to 2001;
Director of Exchange since January 2006;
Director of RFCBC since 2004; President of
RMC since August 1999; Director of RMC since
August 1999.
47
President and Chief Executive Officer of ROC
since December 2005; Executive Vice President
and Chief Operating Officer of State Bank
from June 2005 to December 2005; Chairman of
the Board of Directors of RFS since January
2006; President of RFS from 2002 to June
2005; Trust Operation Supervisor 1998 to 2002
of RFS; Director of RDSI since 2005; Director
of RFS since 2002 and; Director of ROC since
January 2006.
35
Executive Vice President and Chief Financial
Officer of the Company since December 2005;
Senior Vice President and Financial Analysis
Manager of State Bank from 2004 to December
2005; Senior Vice President and Controller of
the Company from 2000 to 2004 and; Treasurer
and Director of ROC since January 2006.
Table of Contents
Position(s) Held with the Company and
Name
Age
its Subsidiaries and Principal Occupation(s)
51
President and Chief Executive Officer of
State Bank since January 2006; Senior Vice
President Private Banking of Sky Bank,
Toledo, OH from 2004 to January 2006; Vice
President and Team Leader of Sky Bank,
Toledo, OH from 2000 to 2004; Director of
State Bank since 2006 and; Director of ROC
since January 2006.
Per Share
Per Share
Bid Prices
Dividends
2005
High
Low
Declared
$
14.49
$
13.50
$
.050
14.47
12.65
.050
13.50
12.50
.050
13.00
11.50
.050
2004
$
15.50
$
13.32
$
.000
15.15
11.25
.000
13.15
11.90
.000
14.25
12.57
.000
Table of Contents
(1)
Per share data restated for 5% stock dividend declared in 2000 and 2001.
Table of Contents
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Table of Contents
$
5,887,339
752,574
3,947,768
28,962
1,239,000
11,855,643
60,383,141
62,114
46,432
60,491,687
$
(48,636,044
)
Table of Contents
$
2,292,907
16,703,037
56,147,296
2,578,606
2,825,301
4,121,433
497,079
85,165,659
68,132,043
3,740,000
1,312,051
73,184,094
$
11,981,565
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Year Ended
Year Ended
December 31,
December 31,
2005
2004
%Change
2004
2003
%Change
(dollars in thousands except per share data)
$
530,542
$
415,349
+28
%
$
415,349
$
435,312
-5
%
$
139,353
$
108,720
+28
%
$
108,720
$
107,699
1
%
224
113
N/A
113
219
N/A
322,348
259,582
+24
%
259,582
273,923
-5
%
4,700
4,899
-4
%
4,899
10,181
-52
%
384,838
279,624
+38
%
279,624
317,475
-12
%
29,525
28,768
+3
%
28,768
48,489
-41
%
12,054
12,077
12,077
13,802
-12
%
583
(399
)
N/A
(399
)
1,202
+133
%
17,471
16,691
+5
%
16,691
34,687
-52
%
28,187
25,324
+11
%
25,324
28,678
-12
%
673
2,734
N/A
2,734
12,305
N/A
$
0.15
$
0.60
N/A
$
0.60
$
2.71
N/A
$
0.15
$
0.60
N/A
$
0.60
$
2.70
N/A
Year Ended
Year Ended
December 31,
December 31,
2005
2004
% Change
2004
2003
% Change
(dollars in thousands)
$
12,054
$
12,077
$
12,077
$
13,802
-12
%
Table of Contents
Year Ended
Year Ended
December 31,
December 31,
2005
2004
% Change
2004
2003
% Change
(dollars in thousands)
$
17,471
$
16,691
+5
%
$
16,691
$
34,687
-52
%
$
11,842
$
10,478
+13
%
$
10,478
$
8,972
+17
%
$
3,133
$
3,042
+3
%
$
3,042
$
2,602
+17
%
$
1,860
$
1,985
-6
%
$
1,985
$
2,179
-9
%
$
(437
)
$
41
N/A
$
41
$
416
-90
%
$
$
N/A
$
$
19,901
N/A
$
25
$
241
N/A
$
241
$
24
N/A
$
1,048
$
904
+16
%
$
904
$
593
+52
%
Table of Contents
Year Ended
Year Ended
December 31,
December 31,
2005
2004
% Change
2004
2003
% Change
(Dollars in thousands)
$
11,842
$
10,478
+13
%
$
10,478
$
8,972
+17
%
Table of Contents
Year Ended
Year Ended
December 31,
December 31,
2005
2004
% Change
2004
2003
% Change
(dollars in thousands)
$
28,187
$
25,324
+11
%
$
25,324
$
28,678
-12
%
$
13,519
$
12,993
+4
%
$
12,993
$
13,428
-3
%
$
2,730
$
2,253
+21
%
$
2,253
$
4,172
-46
%
$
11,938
$
10,078
+18
%
$
10,078
$
11,078
-9
%
Table of Contents
Period Ended
% of
% of
%
% of
%
12/31/05
Total
12/31/04
Total
Inc/(Dec)
12/31/03
Total
Inc/(Dec)
(dollars in thousands)
$
79,359
24
%
$
58,499
22
%
36
%
$
89,471
31
%
(35
)%
68,072
21
%
64,107
24
%
6
%
62,340
22
%
3
%
40,236
12
%
41,240
16
%
(2
)%
36,722
13
%
12
%
89,086
27
%
63,828
24
%
40
%
46,718
16
%
37
%
48,877
15
%
31,949
12
%
53
%
37,310
13
%
(14
)%
1,661
1
%
5,127
2
%
(68
)%
11,774
5
%
(56
)%
$
327,291
$
264,750
24
%
$
284,335
(7
)%
224
113
219
$
327,515
$
264,863
$
284,554
Period Ended December 31,
(dollars in millions)
Change in
Change in
Dollars/
Dollars/
12/31/05
12/31/04
Percentages
12/31/03
percentages
$
6.3
$
14.4
$
-8.1
$
18.4
$
-4.0
$
8.9
$
15.4
$
-6.5
$
19.9
$
-4.5
2.70
%
5.80
%
-3.10
%
6.96
%
-1.16
%
1.67
%
3.71
%
-2.04
%
4.57
%
-0.86
%
$
1.7
$
4.9
$
-3.2
$
8.7
$
-3.8
0.52
%
1.81
%
-1.29
%
3.06
%
-1.25
%
$
.6
$
(.4
)
$
+1.0
$
1.2
$
-1.6
$
4.7
$
4.9
$
-0.2
$
10.2
$
-5.3
1.44
%
1.85
%
-0.41
%
3.58
%
-1.73
%
75
%
34
%
+41
%
55
%
-21
%
53
%
32
%
+21
%
51
%
-19
%
Grade 5 Special Mention: Potential weaknesses that
deserve managements close attention
Grade 6 Substandard: Inadequately protected, with
well-defined weakness that jeopardize liquidation of debt
Table of Contents
Grade 7 Doubtful: Inherent weaknesses well-defined and
high probability of loss (impaired)
Grade 8 Loss: Considered uncollectible. May have
recovery or salvage value with future collection efforts (these loans
are either fully reserved or charged off)
12/31/05
12/31/04
Increase (Decrease)
Loan
Allocation
Loan
Allocation
Loan
Allocation
Balance
$
%
Balance
$
%
Balance
$
%
$
6.1
$
2.0
32.79
%
$
11.4
$
1.3
11.40
%
$
-5.3
$
0.7
21.39
%
7.7
0.5
6.49
15.5
1.0
6.45
-7.8
-0.5
0.04
12.2
0.4
3.28
13.6
0.4
2.94
-1.4
0.34
301.5
1.8
0.60
224.4
2.2
0.98
77.1
-0.4
-0.38
$
327.5
$
4.7
1.44
%
$
264.9
$
4.9
1.85
%
$
62.6
$
-0.2
-0.41
%
*
The Company changed its methodology during 2003. Special Mention loans are allocated at 3%.
Borrower financial information received;
Physical inspections of collateral securing loans performed, new
appraisals of collateral securing loans received, and other
information regarding borrower collateral levels; and
Consideration of exposures to industries potentially most affected
by current risks in the economic and political environment.
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Payment due by period
Less
More
than 1
1 3
3 5
than 5
Total
year
years
Years
years
$
45,500,000
$
16,500,000
5,000,000
$
5,000,000
$
19,000,000
21,558,572
451,681
486,891
0
20,620,000
0
0
0
0
0
2,040,696
261,600
523,200
523,200
732,696
0
0
0
0
0
208,558,046
138,786,242
63,928,459
4,998,570
844,775
$
277,657,314
$
155,999,523
$
69,938,550
$
10,521,770
$
41,197,471
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Table of Contents
Table of Contents
(Dollars in thousands)
2006
2007
2008
2009
2010
Thereafter
Total
$
60,603
$
11,792
$
5,792
$
3,111
$
1,730
$
1,930
$
84,958
7.51
%
7.05
%
7.02
%
7.01
%
6.97
%
6.96
%
7.37
%
$
24,720
$
19,834
$
14,301
$
14,188
$
9,623
$
48,215
$
130,881
6.22
%
6.18
%
6.01
%
5.95
%
5.99
%
5.93
%
6.04
%
$
37,928
$
21,925
$
13,593
$
9,130
$
6,400
$
22,700
$
111,676
5.95
%
5.97
%
6.08
%
5.90
%
5.75
%
5.40
%
5.84
%
$
123,251
$
53,551
$
33,686
$
26,429
$
17,753
$
72,845
$
327,515
6.77
%
6.29
%
6.21
%
6.06
%
6.00
%
5.79
%
6.32
%
$
88,439
$
10,973
$
8,621
$
5,597
$
310
$
15,720
$
129,660
4.08
%
3.74
%
4.12
%
4.04
%
3.90
%
4.36
%
4.09
%
$
4,031
$
3,063
$
1,938
$
589
$
231
$
3,449
$
13,301
4.54
%
4.45
%
4.32
%
4.21
%
4.40
%
4.53
%
4.47
%
$
0
$
0
$
150
$
0
$
0
$
0
$
150
0.00
%
0.00
%
2.64
%
0.00
%
0.00
%
0.00
%
2.64
%
$
215,721
$
67,587
$
44,395
$
32,615
$
18,294
$
92,014
$
470,626
5.63
%
5.79
%
5.71
%
5.68
%
5.94
%
5.50
%
5.65
%
$
10,440
$
10,441
$
10,441
$
10,441
$
10,310
$
0
$
52,073
$
9,972
$
9,972
$
9,972
$
9,972
$
9,872
$
0
$
49,760
1.19
%
1.19
%
1.19
%
1.19
%
1.19
%
0.00
%
1.19
%
$
8,440
$
8,440
$
8,440
$
8,440
$
8,356
$
0
$
42,116
1.18
%
1.22
%
1.22
%
1.22
%
1.22
%
0.00
%
1.21
%
$
7,538
$
7,413
$
7,413
$
7,413
$
7,373
$
0
$
37,150
0.59
%
0.59
%
0.59
%
0.59
%
0.59
%
0.00
%
0.59
%
$
137,036
$
51,616
$
10,266
$
2,799
$
1,178
$
844
$
203,739
3.15
%
3.69
%
3.30
%
3.28
%
3.92
%
3.93
%
3.30
%
$
5,000
$
0
$
5,000
$
1,000
$
4,000
$
19,000
$
34,000
2.84
%
0.00
%
5.53
%
4.52
%
6.25
%
3.96
%
4.31
%
$
11,500
$
0
$
0
$
0
$
0
$
0
$
11,500
4.33
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
4.33
%
$
240
$
0
$
20
$
679
$
0
$
20,620
$
21,559
7.25
%
0.00
%
0.00
%
6.50
%
0.00
%
8.25
%
8.17
%
$
0
$
0
$
0
$
0
$
0
$
0
$
0
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
$
10,680
$
0
$
0
$
0
$
0
$
0
$
10,680
3.40
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
3.40
%
$
200,846
$
87,882
$
51,552
$
40,744
$
41,089
$
40,464
$
462,577
2.79
%
2.47
%
1.71
%
1.10
%
1.36
%
6.14
%
2.62
%
Table of Contents
(Dollars in Thousands)
First
Years
Year
2 5
Thereafter
Total
$
215,721
$
162,891
$
92,014
$
470,626
131,266
151,944
93,317
376,527
$
84,455
$
10,947
$
(1,303
)
$
94,099
$
200,846
$
221,267
$
40,464
$
462,577
$
152,986
$
174,129
$
33,459
$
360,574
$
47,860
$
47,138
$
7,005
$
102,003
Table of Contents
Table of Contents
information required to be disclosed by the Company in this Annual Report on
Form 10-K, and the other reports that the Company files or submits under the
Exchange Act would be accumulated and communicated to the Companys management,
including its principal Executive Officer and principal Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure;
information required to be disclosed by the Company in this Annual Report on
Form 10-K, and the other reports that the Company files or submits under the
Exchange Act would be recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms; and
the Companys disclosure controls and procedures are effective as of the end of
the fiscal year covered by this Annual Report on Form 10-K to ensure that material
information relating to the Company and its consolidated subsidiaries is made known
to them, particularly during the period for which the Companys periodic reports,
including this Annual Report on Form 10-K, are being prepared.
Table of Contents
Table of Contents
a portion of the executive officers Annual Direct Salary (15% for Mr.
Joyce, 10% for Messrs. Sinn and Thiemann, and 5% for Messrs. Klein and Sewell) if
the executive officer terminates employment after age 55 and before age 60;
a portion of the executive officers Annual Direct Salary (20% for Mr.
Joyce, 15% Messrs. Sinn and Thiemann, and 10% for Messrs. Klein and Sewell) if the
executive officer terminates employment after age 60 and before age 65 (after age
59 and before age 61 for Mr. Joyce); or
a portion of the executive officers Annual Direct Salary (25% for Mr.
Joyce; 20% for Messrs. Sinn and Thiemann, and 15% for Mr. Klein and Mr. Sewell) if
the executive officer terminates employment at age 65 (age 62 for Mr. Joyce).
Table of Contents
providing financial or executive assistance to any person or entity
(1) located within 50 miles of the office of the Company or its subsidiary at which
the executive officer works and (2) engaged in the banking or financial services
industry or any other activity engaged in by the Company or its subsidiaries at the
beginning of the non-competition period;
directly or indirectly soliciting, inducing or encouraging any of the
customers or referral sources of the Company and its subsidiaries (who were
customers or referral sources during the executive officers employment) to become
a customer or referral source of another company; and
directly or indirectly contacting, soliciting or inducing any of the
employees of the Company and its subsidiaries (who were employees during the
executive officers employment) to terminate their employment with the Company or
its subsidiaries or to seek, obtain or accept employment with another company.
Table of Contents
the last day of the twelfth complete calendar month beginning after
the change in control;
60 days after the date the executive officer learns of an event
occurring during the Protection Period which falls within the definition of Good
Reason and which the Company or its successor concealed (the Change in Control
Agreements use substantially the same definition of Good Reason described below
under Employment Agreement
Termination by the Company Without Cause or by Mr.
Joyce for Good Reason
); and
60 days after the conclusion of an unsuccessful attempt to terminate
the executive officer for Cause (the Change in Control Agreements use
substantially the same definition of Cause described below under Employment
Agreement
Termination for Cause or Without
Good Reason
).
the executive officers employment is terminated before the beginning
of a Protection Period;
the executive officer is reassigned before the beginning of a
Protection Period to a more junior position (unless a majority of the employees in
the new job classification have change in control agreements);
Table of Contents
the executive officer agrees to terminate his Change in Control
Agreement; or
all payments due to the executive officer under the Change in Control
Agreement have been paid.
any transaction that would be required to be reported in a proxy
statement sent to the Companys shareholders;
a merger or consolidation of the Company or the purchase of all or
substantially all of the Companys assets by another person or group, in each case,
resulting in less than a majority of the successor entitys outstanding voting
stock being owned immediately after the transaction by the holders of the Companys
voting stock before the transaction;
any person becoming a beneficial owner of securities representing
50% or more of the combined voting power of the Company eligible to vote for the
election of the Companys Board of Directors;
any person other than the Company, the executive officer or the Rurban
ESOP and Savings Plan becoming the beneficial owner of securities representing 25%
or more of the combined voting power of the Company (disregarding any securities
which were not acquired for the purpose of changing or influencing control of the
Company);
individuals who constitute the Companys Board of Directors on March
1, 2006 ceasing for any reason to constitute at least a majority of the members of
the Companys Board of Directors (unless the new directors were approved by the
vote of at least 2/3rds of the then incumbent directors); or
any other change of control of the Company similar in effect to any of
the foregoing.
pay the executive officer a lump sum cash payment equal to 2 times
(1.5 times for Mr. Sewell) the executive officers Annual Direct Salary (i.e., the
highest base salary paid to the executive officer for any calendar month during the
36-month period preceding the termination of his employment, multiplied by 12);
provide the executive officer and his family (if the executive officer
elected family coverage prior to the termination of his employment) with continued
health care, life insurance and disability insurance coverage without cost to the
executive for a period of two years (1.5 years for Mr. Sewell), at the same level
and subject to the same terms that were in effect on the first day of the
Protection Period; and
any other payments or benefits to which the executive officer is
entitled under the terms of any other agreement, arrangement, plan or program in
which he participates.
Table of Contents
providing financial or executive assistance to any person or entity
(1) located within 50 miles of the office of the Company or its subsidiary at which
the executive officer works and (2) engaged in the banking or financial services
industry or any other activity engaged in by the Company or its subsidiaries on the
date of the change in control;
directly or indirectly contacting, soliciting or inducing any of the
customers or referral sources of the Company and its subsidiaries (who were
customers or referral sources during the executive officers employment) to become
a customer or referral source of another company; and
directly or indirectly soliciting, inducing or encouraging any of the
employees of the Company or its successor and their subsidiaries (who were
employees during the
Table of Contents
Table of Contents
receive bonuses from time to time as the Company, in its sole discretion, deems
appropriate;
receive paid vacation time in accordance with policies established by the Companys
Board of Directors;
participate any of the Companys employee benefit plans (provided that the Company
may not change any of its employee benefits in any way that would adversely affect Mr.
Joyce, unless the change would apply to all of the Companys executive officers and
would not affect Mr. Joyce disproportionately); and
receive prompt reimbursement for all reasonable business expenses he incurs in
accordance with the policies and procedures established by the Companys Board of
Directors.
the willful failure to substantially perform job duties;
willfully engaging in misconduct injurious to the Company;
dishonesty, insubordination or gross negligence in the performance of duties;
breach of a fiduciary duty involving personal gain or profit;
any violation of any law, rule or regulation governing public companies, banks or
bank officers or any regulatory enforcement actions issued by a regulatory authority
against the executive;
conduct which brings public discredit to the Company;
Table of Contents
conviction of, or plea of guilty or nolo contendre to, a felony, crime of falsehood
or a crime involving moral turpitude;
unlawful discrimination or harassment affecting the Companys employees, customers,
business associates or contractors;
theft or abuse of the Companys property;
the recommendation of a state or federal bank regulatory authority to remove the
executive from his position with the Company;
willful failure to follow the good faith lawful instructions of the Companys Board
of Directors;
material breach by the executive of any contract or agreement with the Company; or
unauthorized disclosure of the Companys trade secrets or confidential information.
pay Mr. Joyce an amount equal to twice his Agreed Compensation
(i.e., the sum of (a) the average of Mr. Joyces annual base salary for the five
calendar years immediately preceding his termination and (b) the average of Mr.
Joyces annual bonuses for the five calendar years immediately preceding his
termination) in 24 equal monthly installments;
provide Mr. Joyce and his family (if he elected family coverage prior
to the termination of his employment) with continued health care, life insurance
and disability insurance coverage without cost to the executive for a period of one
year, at the same level and subject to the same terms that were in effect at any
time during the two years prior of his termination; and
pay Mr. Joyce any other payments or benefits to which he is entitled
under the terms of any other agreement, arrangement, plan or program in which he
participates.
the assignment of duties and responsibilities inconsistent with Mr. Joyces
status as Chief Executive Officer;
requiring Mr. Joyce to move his office more than 50 miles from the location of
the Companys principal office in Defiance, Ohio;
reducing Mr. Joyces annual base salary (except for reductions resulting from a
national financial depression or bank emergency and implemented for all of the
Companys senior management);
Table of Contents
materially reducing the employee benefits afforded to Mr. Joyce (unless the
reduction applies to all of the Companys executive officers);
the Companys attempt to amend or terminate the Employment Agreement without Mr.
Joyces consent;
the failure of any successor of the Company to assume the Companys obligations
under the Employment Agreement; and
any unsuccessful attempt to terminate Mr. Joyce for Cause.
pay Mr. Joyce a lump sum cash payment 2.99 times his Agreed
Compensation;
provide Mr. Joyce and his family (if he elected family coverage prior
to the termination of his employment) with continued health care, life insurance
and disability insurance coverage without cost to the executive for a period of
three years, at the same level and subject to the same terms that were in effect at
any time during the two years prior of his termination; and
pay Mr. Joyce any other payments or benefits to which he is entitled
under the terms of any other agreement, arrangement, plan or program in which he
participates.
Table of Contents
providing financial or executive assistance to any person or entity
located within 50 miles of the Companys main office in Defiance, Ohio and engaged
in the banking or financial services industry or any other activity engaged in by
the Company or its subsidiaries;
directly or indirectly contacting, soliciting or inducing any of the
customers or referral sources of the Company and its subsidiaries (who were
customers or referral sources during his employment) to become a customer or
referral source of another company; and
directly or indirectly soliciting, inducing or encouraging any of the
employees of the Company or its successor and their subsidiaries (who were
employees during his employment) to terminate their employment with the Company or
its successor and their subsidiaries or to seek, obtain or accept employment with
another company.
Table of Contents
(a)
(b)
(c)
Number of
securities
remaining available for
future issuance under
Number of securities to
Weighted-average
equity compensation
be issued upon exercise
exercise price of
plans (excluding
of outstanding options,
outstanding options,
securities reflected in
Plan Category
warrants and rights
warrants and rights
column (a))
357,886
$
13.44
83,114
N/A
N/A
N/A
357,886
$
13.44
83,114
(1)
Information relates to the 1997 Rurban Financial Corp. Stock Option Plan.
(2)
Information relates to the Rurban Financial Corp. Employee Stock Purchase Plan (the ESPP).
All employees of the Company and its subsidiaries are eligible to participate in the ESPP
immediately following their date of hire. Participants are allowed to deduct from their
compensation for each payroll
Table of Contents
Table of Contents
RURBAN FINANCIAL CORP.
/s/ Duane L. Sinn
Date: March 24, 2006
By:
Duane L. Sinn, Executive Vice President and
Chief Financial Officer
Name
Date
Capacity
March 24, 2006
President, Chief Executive
Officer, Principal
Executive Officer and
Director
March 24, 2006
Chief Financial Officer, Executive Vice President
March 24, 2006
Director
Table of Contents
Name
Date
Capacity
March 24, 2006
Director
March 24, 2006
Director
March 24, 2006
Director
March 24, 2006
Director
March 24, 2006
Director
March 24, 2006
Director
March 24, 2006
Director
March 24, 2006
Director
March 24, 2006
Director
Table of Contents
F-1
F-2 to F-3
F-4 to F-5
F-6
F-7 to F-8
F-9 to F-46
Table of Contents
Rurban Financial Corp.
Defiance, Ohio
February 13, 2006
Table of Contents
2005
2004
$
12,650,839
$
10,617,766
150,000
150,000
139,353,329
108,720,491
224,000
112,900
327,048,229
264,480,789
(4,699,827
)
(4,899,063
)
13,346,632
7,740,442
3,607,500
2,793,000
2,309,900
720,000
3,010,355
1,984,452
8,917,373
2,144,304
3,742,333
542,978
3,916,913
4,564,474
10,443,487
9,146,816
6,521,213
6,529,397
$
530,542,276
$
415,348,746
Table of Contents
December 31
2005
2004
$
52,073,751
$
37,831,810
124,206,115
87,795,630
208,558,046
153,996,874
384,837,912
279,624,314
10,680,420
11,559,151
938,572
3,079,656
45,500,000
56,000,000
20,620,000
10,310,000
1,373,044
994,114
1,140,001
523,111
11,001,679
2,952,605
476,091,628
365,042,951
12,568,583
11,439,255
14,835,110
11,003,642
28,702,817
28,943,736
(1,655,862
)
(803,189
)
(277,649
)
54,450,648
50,305,795
$
530,542,276
$
415,348,746
Table of Contents
2005
2004
2003
$
16,593,703
$
16,151,220
$
24,305,358
64,609
65,711
89,356
4,337,477
3,567,819
2,805,614
265,959
164,541
172,063
160,240
78,549
401,459
21,421,988
20,027,840
27,773,850
5,651,372
4,554,093
10,024,718
334,713
386,450
596,418
67,300
13,896
2,039,851
1,877,284
2,276,439
1,275,168
1,118,751
1,074,722
9,368,404
7,950,474
13,972,297
12,053,584
12,077,366
13,801,553
583,402
(399,483
)
1,202,000
11,470,182
12,476,849
12,599,553
11,841,765
10,478,245
8,971,632
3,133,550
3,042,297
2,602,270
1,859,547
1,985,389
2,179,036
(436,971
)
40,603
415,851
25,300
241,008
23,632
306,929
367,753
394,647
19,900,945
741,340
535,336
199,343
$
17,471,460
$
16,690,631
$
34,687,356
Table of Contents
Consolidated Statements of Income
2005
2004
2003
$
13,518,749
$
12,993,449
$
13,428,366
1,214,169
981,700
1,183,569
5,148,458
4,336,573
4,201,260
411,465
371,153
435,700
2,730,337
2,252,677
4,171,758
445,656
339,968
397,137
524,473
423,030
472,193
682,807
637,528
716,227
313,379
347,494
540,339
218,484
292,418
568,946
994,735
796,556
951,997
572,456
591,142
617,036
1,412,030
960,643
993,807
28,187,198
25,324,331
28,678,335
754,444
3,843,149
18,608,574
81,353
1,108,857
6,303,342
$
673,091
$
2,734,292
$
12,305,232
$
0.15
$
0.60
$
2.71
$
0.15
$
0.60
$
2.70
Table of Contents
Years Ended December 31
Accumulated
Additional
Unearned
Other
Common
Paid-in
Retained
ESOP
Comprehensive
Treasury
Stock
Capital
Earnings
Shares
Income (Loss)
Stock
Total
$
11,439,255
$
11,009,733
$
13,904,212
$
(320,765
)
$
664,911
$
(315,014
)
$
36,382,332
12,305,232
12,305,232
(463,829
)
(463,829
)
11,841,403
(465
)
2,214
1,749
157,272
157,272
11,439,255
11,009,268
26,209,444
(163,493
)
201,082
(312,800
)
48,382,756
2,734,292
2,734,292
(1,004,271
)
(1,004,271
)
1,730,021
(5,626
)
35,151
29,525
163,493
163,493
11,439,255
11,003,642
28,943,736
(803,189
)
(277,649
)
50,305,795
673,091
673,091
(852,673
)
(852,673
)
(179,582
)
(914,010
)
(914,010
)
(4,158
)
40,753
36,595
(10,962
)
(225,934
)
236,896
1,140,290
4,061,560
5,201,850
$
12,568,583
$
14,835,110
$
28,702,817
$
$
(1,655,862
)
$
$
54,450,648
Table of Contents
2005
2004
2003
$
673,091
$
2,734,292
$
12,305,232
3,108,693
2,492,661
2,310,122
583,402
(399,483
)
1,202,000
163,493
157,272
218,221
469,148
1,049,838
131,826
102,009
125,790
384,337
3,344,719
3,083,200
(116,800
)
(93,400
)
(120,400
)
436,971
(40,603
)
(415,851
)
(19,900,945
)
214,642
(33,758
)
248,951
18,817
(79,084
)
(25,300
)
(241,008
)
(23,632
)
5,481,329
5,709,084
39,124,752
(6,029,400
)
(5,562,628
)
(38,927,654
)
(513,229
)
16,280
1,965,989
(1,241,089
)
(707,055
)
3,218,909
899,500
(2,256,287
)
237,820
4,225,011
5,697,464
5,562,309
110,000
(38,373,878
)
(88,396,063
)
(133,540,054
)
17,107,354
62,537,668
121,586,538
5,154,173
23,086,736
17,634,708
(4,562,982
)
13,852,870
127,071,877
(2,975,180
)
(3,652,078
)
(2,851,908
)
93,216
1,561,574
(8,000,000
)
1,565,223
1,592,373
2,577,604
(383,300
)
428,600
1,041,400
50,928,950
(74,680,022
)
28,936,876
1,176,806
60,401,717
Table of Contents
2005
2004
2003
$
(6,940,715
)
$
(17,178,739
)
$
33,380,843
(16,360,869
)
(20,671,696
)
(121,226,188
)
2,021,269
135,397
3,923,754
(2,900,000
)
7,500,000
20,500,000
66,500,000
10,000,000
(34,500,000
)
(49,500,000
)
(18,850,000
)
1,219,863
10,097,881
10,310,000
(2,381,084
)
(8,467,806
)
(10,133,450
)
36,595
29,525
1,749
(914,010
)
(31,128,814
)
(20,433,456
)
(92,805,411
)
2,033,073
(13,559,186
)
(26,841,385
)
10,617,766
24,176,952
51,018,337
$
12,650,839
$
10,617,766
$
24,176,952
$
8,989,474
$
9,303,363
$
14,596,442
$
(1,021,302
)
$
(717,666
)
$
(1,602,512
)
$
$
$
4,363,168
$
11,826,130
$
$
$
3,247,539
$
888,063
$
2,256,831
Table of Contents
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
2003
$
673,091
$
2,734,292
$
12,305,232
(655,615
)
(196,730
)
(63,108
)
$
17,476
$
2,537,562
$
12,242,124
$
0.15
$
0.60
$
2.71
$
0.00
$
0.56
$
2.69
$
0.15
$
0.60
$
2.70
$
0.00
$
0.56
$
2.69
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Gross
Gross
Amortized
Unrealized
Unrealized
Approximate
Cost
Gains
Losses
Fair Value
$
91,020,624
$
13,675
$
(1,363,079
)
$
89,671,220
36,571,076
9,783
(920,973
)
35,659,886
12,942,183
6,713
(255,001
)
12,693,895
23,000
23,000
1,305,328
1,305,328
$
141,862,211
$
30,171
$
(2,539,053
)
$
139,353,329
$
64,483,532
$
2,848
$
(838,900
)
$
63,647,480
40,703,975
64,949
(452,420
)
40,316,504
4,691,938
97,459
(90,890
)
4,698,507
8,000
8,000
50,000
50,000
$
109,937,445
$
165,256
$
(1,382,210
)
$
108,720,491
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Available for Sale
Amortized
Fair
Cost
Value
$
8,510,593
$
8,510,562
16,621,488
16,466,355
66,773,830
65,606,804
13,362,223
13,086,721
105,268,134
103,670,442
36,594,077
35,682,887
$
141,862,211
$
139,353,329
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Less than 12 Months
12 Months or Longer
Total
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
$
24,755,316
$
(313,414
)
$
46,397,390
$
(1,049,665
)
$
71,152,706
$
(1,363,079
)
10,869,812
(197,459
)
23,102,173
(723,514
)
33,971,985
(920,973
)
10,124,496
(215,897
)
1,771,884
(39,104
)
11,896,380
(255,001
)
$
45,749,624
$
(726,770
)
$
71,271,447
$
(1,812,283
)
$
117,021,071
$
(2,539,053
)
Less than 12 Months
12 Months or Longer
Total
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
$
56,657,342
$
(838,900
)
$
$
$
56,657,342
$
(838,900
)
22,520,674
(239,195
)
11,950,258
(213,225
)
34,470,932
(452,420
)
1,963,998
(90,890
)
1,963,998
(90,890
)
$
81,142,014
$
(1,168,985
)
$
11,950,258
$
(213,225
)
$
93,092,272
$
(1,382,210
)
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
$
79,359,126
$
58,498,557
68,071,738
64,107,549
40,236,664
41,239,895
89,086,024
63,828,237
48,876,788
31,948,581
1,661,126
5,127,639
327,291,466
264,750,458
(243,237
)
(269,669
)
$
327,048,229
$
264,480,789
$
(4,699,827
)
$
(4,899,063
)
2005
2004
2003
$
4,899,063
$
10,181,135
$
17,693,841
910,004
583,402
(399,483
)
1,202,000
1,716,815
2,106,470
3,139,534
(3,409,457
)
(6,989,059
)
(11,854,240
)
$
4,699,827
$
4,899,063
$
10,181,135
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
2003
$
1,676,128
$
975,000
$
153,000
4,460,129
10,411,000
19,685,000
$
6,136,257
$
11,386,000
$
19,838,000
$
1,992,807
$
1,265,000
$
5,651,000
$
10,036,150
$
14,313,000
$
18,633,000
$
223,782
$
433,242
$
1,186,762
$
232,008
$
455,872
$
153,000
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
$
1,558,946
$
684,825
11,145,608
5,260,531
11,367,868
8,599,360
24,072,422
14,544,716
(10,725,790
)
(6,804,274
)
$
13,346,632
$
7,740,442
2005
2004
2003
$
2,144,304
$
2,144,304
$
2,323,643
3,947,768
2,825,301
(179,339
)
$
8,917,373
$
2,144,304
$
2,144,304
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
Gross Carrying
Accumulated
Gross Carrying
Accumulated
Amount
Amortization
Amount
Amortization
$
708,435
$
(385,643
)
$
708,435
$
(313,668
)
752,574
(47,036
)
2,578,606
8,531,302
(4,614,389
)
7,984,840
(3,420,366
)
200,627
(65,230
)
200,627
(52,416
)
$
12,771,544
$
(5,112,298
)
$
8,893,902
$
(3,786,450
)
Core Deposits
Purchased
And Other
Software
468,188
1,184,240
456,806
985,017
447,366
818,025
439,773
542,949
434,320
129,770
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
138,786,242
52,788,505
11,139,954
3,133,428
1,865,142
844,775
$
208,558,046
2005
2004
$
4,600,000
$
7,500,000
6,080,420
4,059,151
$
10,680,420
$
11,559,151
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
$
$
2,000,000
19,879
48,837
306,002
629,856
773,654
240,000
$
938,572
$
3,079,656
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Debt
451,681
173,257
175,577
138,057
$
938,572
Debt
16,500,000
5,000,000
1,000,000
4,000,000
19,000,000
$
45,500,000
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
For The Year Ended December 31,
2005
2004
2003
$
(302,984
)
$
(2,235,862
)
$
3,220,142
384,337
3,344,719
3,083,200
$
81,353
$
1,108,857
$
6,303,342
For The Year Ended December 31,
2005
2004
2003
$
256,511
$
1,306,670
$
6,326,915
(103,015
)
(72,091
)
(78,962
)
(72,143
)
(125,722
)
55,389
$
81,353
$
1,108,857
$
6,303,342
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
At December 31,
2005
2004
$
1,438,141
$
1,313,891
363,428
388,745
91,756
91,688
852,695
413,756
212,434
531,704
67,647
29,971
3,557,805
2,238,051
(1,677,950
)
(1,742,905
)
(51,222
)
(51,222
)
(852,695
)
(413,756
)
(1,553,898
)
(97,190
)
(147,841
)
(192,113
)
(362,576
)
(263,976
)
(51,624
)
(4,697,806
)
(2,761,162
)
$
(1,140,001
)
$
(523,111
)
For The Year Ended December 31,
2005
2004
2003
$
(1,266,627
)
$
(1,280,615
)
$
(679,139
)
(25,300
)
(241,008
)
(23,632
)
(1,291,927
)
(1,521,623
)
(702,771
)
(439,254
)
(517,352
)
(238,942
)
$
(852,673
)
$
(1,004,271
)
$
(463,829
)
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
To Be Well Capitalized
For Capital Adequacy
Under Prompt Corrective
Actual
Purposes
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(to Risk-Weighted Assets)
$
67.8
19.3
%
$
28.1
8.0
%
$
N/A
36.6
13.0
22.6
8.0
28.2
10.0
%
7.5
13.8
4.4
8.0
5.5
10.0
(to Risk-Weighted Assets)
62.1
17.7
14.0
4.0
N/A
33.5
11.9
11.3
4.0
16.9
6.0
6.9
12.6
2.2
4.0
3.3
6.0
(to Average Assets)
62.1
14.4
17.2
4.0
N/A
33.5
8.0
16.7
4.0
20.8
5.0
6.9
8.5
3.2
4.0
4.1
5.0
(to Risk-Weighted Assets)
$
61.9
22.0
%
$
22.5
8.0
%
$
N/A
39.4
15.3
20.7
8.0
25.8
10.0
%
(to Risk-Weighted Assets)
58.4
20.7
11.3
4.0
N/A
36.3
14.0
10.3
4.0
15.5
6.0
(to Average Assets)
58.4
14.2
16.5
4.0
N/A
36.3
9.3
15.6
4.0
19.5
5.0
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
$
3,959,000
$
2,065,000
5,915,000
7,277,000
(5,206,000
)
(7,205,000
)
(2,274,000
)
1,822,000
$
2,394,000
$
3,959,000
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
2003
Shares
Weighted-
Shares
Weighted-
Shares
Weighted-
Subject to
Average
Subject to
Average
Subject to
Average
Outstanding
Exercise
Outstanding
Exercise
Outstanding
Exercise
Awards
Price
Awards
Price
Awards
Price
339,227
$
13.46
183,584
$
13.07
241,289
$
13.02
54,000
13.48
177,000
13.85
(2,929
)
12.49
(2,509
)
11.77
(158
)
11.07
(32,411
)
13.81
(18,848
)
13.52
(57,547
)
12.89
357,886
13.44
339,227
13.46
183,584
13.07
337,886
13.50
192,140
13.29
168,901
13.17
2005 (1)
2004
0.00% - 1.53
%
0.00
%
23.74% -27.73
%
24.52
%
4.46% - 4.52
%
1.24
%
10 years
10 years
$
4.03 $6.97
$
4.79
(1)
There were two grants
in 2005; March 16, 2005 and
December 21, 2005.
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Options Outstanding
Options Exercisable
Weighted-Average
Range of Exercise
Number
Remaining
Weighted-Average
Number
Weighted-Average
Prices
Outstanding
Contractual Life
Exercise Price
Exercisable
Exercise Price
142,822
3.68 years
$
12.24
127,822
$
12.30
189,024
8.26 years
$
13.88
184,024
$
13.88
26,040
3.03 years
$
16.76
26,040
$
16.76
Year Ended December 31, 2005
Weighted-
Average
Per Share
Income
Shares
Amount
$
673,091
4,571,348
$
0.15
13,058
$
673,091
4,584,406
$
0.15
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Year Ended December 31, 2004
Weighted-
Average
Per Share
Income
Shares
Amount
$
2,734,292
4,559,459
$
0.60
12,680
$
2,734,292
4,572,139
$
0.60
Year Ended December 31, 2003
Weighted-
Average
Per Share
Income
Shares
Amount
$
12,305,232
4,545,320
$
2.71
6,829
$
12,305,232
4,552,149
$
2.70
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
$
261,600
261,600
261,600
261,600
261,600
732,696
$
2,040,696
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
December 31, 2005
December 31, 2004
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
$
12,650,839
$
12,651,000
$
10,617,766
$
10,618,000
150,000
150,000
150,000
150,000
139,353,329
139,353,000
108,720,491
108,720,000
322,572,403
320,313,000
259,694,626
259,181,000
3,607,500
3,608,000
2,793,000
2,793,000
3,010,355
3,010,000
1,984,452
1,984,000
$
384,837,912
$
383,785,000
$
279,624,314
$
277,854,000
6,080,420
6,080,000
4,059,151
4,059,000
4,600,000
4,600,000
7,500,000
7,500,000
938,572
939,000
3,079,656
3,080,000
45,500,000
46,046,000
56,000,000
58,231,000
20,620,000
20,537,000
10,310,000
11,298,000
1,373,044
1,373,000
994,114
994,000
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
$
69,584,000
$
49,242,000
657,000
392,000
$
70,241,000
$
49,634,000
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
$
15,590,954
$
326,775
58,870,748
53,846,585
6,277,462
5,776,392
2,529,825
1,500,072
$
83,268,989
$
61,449,824
$
20,000,000
$
10,000,000
240,000
620,000
310,000
7,958,341
834,029
28,818,341
11,144,029
54,450,648
50,305,795
$
83,268,989
$
61,449,824
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
2003
$
2,126
$
1,875
$
2,014
7,153,134
2,185,720
5,169,456
1,513,000
995,043
1,150,000
8,666,134
3,180,763
6,319,456
1,091,721
1,128,316
2,496,981
9,759,981
4,310,954
8,818,451
1,364,168
1,155,729
1,263,741
2,514,712
2,206,457
3,176,605
3,878,880
3,362,186
4,440,346
5,881,101
948,768
4,378,105
(946,911
)
(757,526
)
(660,060
)
6,828,012
1,706,294
5,038,165
(6,383,468
)
131,679
6,901,065
228,547
896,319
366,002
(6,154,921
)
1,027,998
7,267,067
$
673,091
$
2,734,292
$
12,305,232
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
2005
2004
2003
$
673,091
$
2,734,292
$
12,305,232
6,192,398
(1,027,998
)
(7,267,067
)
(15,230
)
(1,059,391
)
220,878
629,444
(1,049,450
)
1,283,113
7,479,703
(402,547
)
6,542,156
(310,000
)
(6,000,000
)
(1,014,523
)
3,029
(1,321,494
)
(6,000,000
)
(914,010
)
(326,615
)
10,310,000
36,595
29,525
1,749
9,105,970
29,525
1,749
15,264,179
(373,022
)
543,905
326,775
699,797
155,892
$
15,590,954
$
326,775
$
699,797
$
11,826,130
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Data
Total
Intersegment
Consolidated
2005
Banking
Processing
Other
Segments
Elimination
Totals
$
13,607,036
$
(234,741
)
$
(1,318,711
)
$
12,053,584
$
$
12,053,584
2,422,644
11,841,765
3,207,051
17,471,460
17,471,460
1,354,001
1,739,287
3,093,288
(3,093,288
)
16,029,680
12,961,025
3,627,627
32,618,332
(3,093,288
)
29,525,044
16,319,085
10,297,698
4,663,703
31,280,486
(3,093,288
)
28,187,198
668,288
2,287,592
124,784
3,080,664
3,080,664
583,402
583,402
583,402
(245,779
)
945,869
(618,737
)
81,353
81,353
132,621
1,717,458
(1,176,988
)
673,091
673,091
520,581,903
10,204,699
20,931,806
551,718,408
(21,176,132
)
530,542,276
12,659,706
12,659,706
12,659,706
662,245
2,252,592
183,697
3,098,534
3,098,534
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Data
Total
Intersegment
Consolidated
2004
Banking
Processing
Other
Segments
Elimination
Totals
$
13,427,694
$
(217,829
)
$
(1,120,559
)
$
12,089,306
$
(11,940
)
$
12,077,366
3,169,122
10,478,245
3,031,324
16,678,691
11,940
16,690,631
1,314,942
1,995,973
3,310,915
(3,310,915
)
16,596,816
11,575,358
3,906,738
32,078,912
(3,310,915
)
28,767,997
15,258,307
8,965,124
4,441,815
28,635,246
(3,310,915
)
25,324,331
534,415
1,857,524
100,722
2,492,661
2,492,661
(399,483
)
(399,483
)
(399,483
)
919,192
688,498
(498,833
)
1,108,857
1,108,857
1,742,705
1,921,737
(930,150
)
2,734,292
2,734,292
407,831,742
10,974,521
4,030,214
422,836,477
(7,487,731
)
415,348,746
2,687,282
2,687,282
2,687,282
415,402
3,098,388
138,288
3,652,078
3,652,078
Data
Total
Intersegment
Consolidated
2003
Banking
Processing
Other
Segments
Elimination
Totals
$
15,293,092
$
(286,906
)
$
(1,204,633
)
$
13,801,553
$
$
13,801,553
23,047,951
8,971,632
2,667,773
34,687,356
34,687,356
1,580,426
3,249,904
4,830,330
(4,830,330
)
38,341,043
10,265,152
4,713,044
53,319,239
(4,830,330
)
48,488,909
20,308,343
7,986,031
5,214,291
33,508,665
(4,830,330
)
28,678,335
585,735
1,592,380
132,007
2,310,122
2,310,122
1,202,000
1,202,000
1,202,000
5,968,819
774,902
(440,379
)
6,303,342
6,303,342
11,655,187
1,504,220
(854,175
)
12,305,232
12,305,232
435,203,288
8,434,735
3,577,550
447,215,573
(11,903,701
)
435,311,872
2,789,291
2,789,291
2,789,291
529,051
2,252,992
69,865
2,851,908
2,851,908
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
December 31, 2005
March
June
September
December
$
5,044,213
$
5,133,104
$
5,429,354
$
5,815,317
2,047,303
2,205,784
2,446,879
2,668,437
2,996,910
2,927,320
2,982,475
3,146,880
0
352,000
(382,000
)
613,402
4,410,525
4,418,686
4,385,971
4,256,279
6,519,900
7,244,940
7,010,438
7,411,919
249,070
(137,232
)
247,824
(278,308
)
638,465
(113,702
)
492,184
(343,854
)
0.14
(0.02
)
0.11
(0.08
)
0.14
(0.02
)
0.11
(0.08
)
.05
.05
.05
.05
December 31, 2004
March
June
September
December
$
5,113,877
$
4,849,118
$
5,063,851
$
5,000,994
2,129,697
1,939,239
1,909,352
1,972,186
2,984,180
2,909,879
3,154,499
3,028,808
150,000
(340,000
)
319,517
(529,000
)
4,335,014
4,082,884
4,080,007
4,192,724
6,289,199
6,564,712
5,910,528
6,559,892
267,973
59,008
305,819
476,055
612,022
709,043
698,642
714,585
0.13
0.16
0.15
0.16
0.13
0.16
0.15
0.16
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
$
5,887,339
752,574
3,947,768
28,962
1,239,000
11,855,643
60,383,141
62,114
46,432
60,491,687
$
(48,636,044
)
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
$
2,292,907
16,703,037
56,147,296
2,578,606
2,825,301
4,121,433
497,079
$
85,165,659
$
68,132,043
3,740,000
1,312,051
73,184,094
$
11,981,565
Table of Contents
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
Year Ended December 31,
($ 000s)
2005
2004
2003
$
15,424
$
15,572
$
17,660
$
(1,286
)
$
1,933
$
12,240
$
(0.26
)
$
0.39
$
2.45
$
(0.26
)
$
0.38
$
2.44
Table of Contents
Exhibit No.
Description
Location
Branch Purchase and Assumption
Agreement dated as of March 15,
2005 between Liberty Savings
Bank, FSB and State Bank and
Trust Company
Incorporated herein
by reference to
Exhibit 2 to the
Companys Current
Report on Form 8-K
filed March 21,
2005 (File No.
0-13507).
Agreement and Plan of Merger,
dated as of April 13, 2005, by
and between Rurban Financial
Corp. and Exchange Bancshares,
Inc.
Incorporated herein
by reference to
Exhibit 2.1 to the
Companys Current
Report on Form 8-K
filed April 14,
2005 (File No.
0-13507).
Amended Articles of Registrant,
as amended
Incorporated herein
by reference to
Exhibit 3(a)(i) to
the Companys
Annual Report on
Form 10-K for the
fiscal year ended
December 31, 1989
(File No. 0-13507).
Certificate of Amendment to the
Amended Articles of Rurban
Financial Corp.
Incorporated herein
by reference to
Exhibit 3(b) to the
Companys Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1993 (File No.
0-13507).
Certificate of Amendment to the
Amended Articles of Rurban
Financial Corp.
Incorporated herein
by reference to
Exhibit 3(c) to the
Companys Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1997 (File No.
0-13507).
Amended and Restated Articles
of Rurban Financial Corp. Note:
filed for purposes of SEC
reporting compliance only
this document has not been
filed with the Ohio Secretary
of State.
Incorporated herein
by reference to
Exhibit 3(d) to the
Companys Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1997 (File No.
0-13507).
Amended and Restated
Regulations of Rurban Financial
Corp.
Filed herewith.
Indenture, dated as of
September 15, 2005, by and
between Rurban Financial Corp.
and Wilmington Trust Company,
as Debenture Trustee, relating
to Floating Rate Junior
Subordinated Deferrable
Interest Debentures
Incorporated herein
by reference to
Exhibit 4.1 to the
Companys Quarterly
Report on Form 10-Q
for the quarterly
period ended
September 30, 2005
(File No. 0-13507).
Table of Contents
Exhibit No.
Description
Location
Amended and Restated
Declaration of Trust of Rurban
Statutory Trust II, dated as of
September 15, 2005
Incorporated herein
by reference to
Exhibit 4.2 to the
Companys Quarterly
Report on Form 10-Q
for the quarterly
period ended
September 30, 2005
(File No. 0-13507).
Guarantee Agreement, dated as
of September 15, 2005, by and
between Rurban Financial Corp.
and Wilmington Trust Company,
as Guarantee Trustee
Incorporated herein
by reference to
Exhibit 4.3 to the
Companys Quarterly
Report on Form 10-Q
for the quarterly
period ended
September 30, 2005
(File No. 0-13507).
Rurban Financial Corp. Stock
Option Plan
Incorporated herein
by reference to
Exhibit 10(u) to
the Companys
Annual Report on
Form 10-K for the
fiscal year ended
December 31, 1996
(File No. 0-13507).
Rurban Financial Corp. Plan to
Allow Directors to Elect to
Defer Compensation
Incorporated herein
by reference to
Exhibit 10(v) to
the Companys
Annual Report on
Form 10-K for the
fiscal year ended
December 31, 1996
(File No. 0-
13507).
Form of Non-Qualified Stock
Option Agreement with Five-Year
Vesting under Rurban Financial
Corp. Stock Option Plan
Incorporated herein
by reference to
Exhibit 10(w) to
the Companys
Annual Report on
Form 10-K for the
fiscal year ended
December 31, 1997
(File No. 0-13507).
Form of Non-Qualified Stock
Option Agreement with Vesting
After One Year of Employment
under Rurban Financial Corp.
Stock Option Plan
Incorporated herein
by reference to
Exhibit 10(a) to
the Companys
Current Report on
Form 8-K filed
March 21, 2005
(File No. 0-13507).
Form of Incentive Stock Option
Agreement with Five-Year
Vesting under Rurban Financial
Corp. Stock Option Plan
Incorporated herein
by reference to
Exhibit 10(x) to
the Companys
Annual Report on
Form 10-K for the
fiscal year ended
December 31, 1997
(File No. 0-13507).
Form of Incentive Stock Option
Agreement with Vesting After
One Year of Employment under
Rurban Financial Corp. Stock
Option Plan
Incorporated herein
by reference to
Exhibit 10(c) to
the Companys
Current Report on
Form 8-K filed
March 21, 2005
(File No. 0-13507).
Table of Contents
Exhibit No.
Description
Location
Form of Stock Appreciation
Rights under Rurban Financial
Corp. Stock Option Plan
Incorporated herein
by reference to
Exhibit 10(b) to
the Companys
Current Report on
Form 8-K filed
March 21, 2005
(File No. 0-13507).
Employees Stock Ownership and
Savings Plan of Rurban
Financial Corp.
Incorporated herein
by reference to
Exhibit 10(y) to
the Companys
Annual Report on
Form 10-K for the
fiscal year ended
December 31, 1999
(File No. 0-13507).
Rurban Financial Corp. Employee
Stock Purchase Plan
Incorporated herein
by reference to
Exhibit 10(z) to
the Companys
Annual Report on
Form 10-K for the
fiscal year ended
December 31, 2002
(File No. 0-13507).
Employment Agreement, executed
March 6, 2006 and effective as
of March 1, 2006, by and
between Rurban Financial Corp.
and Kenneth A. Joyce
Filed herewith.
Supplemental Executive
Retirement Plan Agreement,
executed March 13, 2006 and
effective as of March 1, 2006,
by and between Rurban Financial
Corp. and Kenneth A. Joyce
Filed herewith.
Schedule A to Exhibit 10.11
identifying other substantially
identical Supplemental
Executive Retirement Plan
Agreements with executive
officers of Rurban Financial
Corp. and its subsidiaries
Filed herewith.
Change in Control Agreement,
executed March 9, 2006 and
effective as of March 1, 2006,
by and between Rurban Financial
Corp. and Duane L. Sinn
Filed herewith.
Schedule A to Exhibit 10.13
identifying other substantially
identical Change in Control
Agreements with executive
officers of Rurban Financial
Corp. and its subsidiaries
Filed herewith.
Table of Contents
Exhibit No.
Description
Location
Statement re: Computation of
Per Share Earnings
Included in Note 1
of the Notes to
Consolidated
Financial
Statements of
Registrant in the
financial
statements portion
of this Annual
Report on Form
10-K.
Subsidiaries of Registrant
Filed herewith.
Consent of BKD, LLP
Filed herewith.
Rule 13a-14(a)/15d-14(a)
Certification Principal
Executive Officer
Filed herewith.
Rule 13a-14(a)/15d-14(a)
Certification Principal
Financial Officer
Filed herewith.
Section 1350 Certification
Principal Executive Officer and
Principal Financial Officer
Filed herewith.
Report of Written Agreement
Incorporated herein
by reference to
Exhibit 99(b) to
the Companys Form
8-K filed July 11,
2002 (File No.
0-13507).
Termination of Written Agreement
Incorporated herein
by reference to
Exhibit 99 to the
Companys Form 8-K
filed February 22,
2005 (File No.
0-13507).
*
Management contract or compensatory plan or arrangement.
Exhibit 3.5
AMENDED AND RESTATED
REGULATIONS
OF
RURBAN FINANCIAL CORP.
INDEX
Section Caption Page No. ------- ------- -------- ARTICLE ONE MEETINGS OF SHAREHOLDERS 1.01 Annual Meetings............................................ l 1.02 Calling of Meetings........................................ l 1.03 Place of Meetings.......................................... 1 1.04 Notice of Meetings......................................... 1 1.05 Waiver of Notice........................................... 2 1.06 Quorum..................................................... 2 1.07 Votes Required............................................. 3 1.08 Order of Business.......................................... 3 1.09 Shareholders Entitled to Vote.............................. 3 1.10 Proxies.................................................... 3 1.11 Inspectors of Election..................................... 3 ARTICLE TWO DIRECTORS 2.01 Authority and Qualifications............................... 4 2.02 Number of Directors and Term of Office..................... 4 2.03 Election................................................... 5 2.04 Removal.................................................... 6 2.05 Vacancies.................................................. 6 2.06 Meetings................................................... 6 2.07 Notice of Meetings......................................... 7 2.08 Waiver of Notice........................................... 7 2.09 Quorum..................................................... 8 2.10 Executive Committee........................................ 8 2.11 Compensation............................................... 9 2.12 By-Laws.................................................... 9 |
ARTICLE THREE OFFICERS 3.01 Offices.................................................... 9 3.02 Tenure of Office........................................... 9 3.03 Duties of the Chairman of the Board........................ 9 3.04 Duties of the President.................................... 9 3.05 Duties of the Vice Presidents.............................. 10 3.06 Duties of the Secretary.................................... 10 3.07 Duties of the Treasurer.................................... 10 ARTICLE FOUR SHARES 4.01 Certificates............................................... 11 4.02 Transfers.................................................. 11 4.03 Transfer Agents and Registrars............................. 12 4.04 Lost, Wrongfully Taken or Destroyed Certificates........... 12 ARTICLE FIVE INDEMNIFICATION AND INSURANCE 5.01 Indemnification............................................ 12 5.02 Discretionary Indemnification.............................. 13 5.03 Indemnification for Expenses............................... 14 5.04 Determination Required..................................... 14 5.05 Advances for Expenses...................................... 15 5.06 Article Five Not Exclusive................................. 15 5.07 Insurance.................................................. 15 5.08 Definition of "the Corporation"............................ 15 ARTICLE SIX MISCELLANEOUS 6.01 Seal....................................................... 16 6.02 Amendments................................................. 16 6.03 Action by Shareholders or Directors Without a Meeting...... 16 |
REGULATIONS
OF
RURBAN FINANCIAL CORP.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the shareholders for the election of directors, for the consideration of reports to be laid before such meeting and for the transaction of such other business as may properly come before such meeting, shall be held on the fourth Monday in April in each year or on such other date as may be fixed from time to time by the directors.
Section 1.02. Calling of Meetings. Meetings of the shareholders may be called only by the chairman of the board, the president, or, in case of the president's absence, death, or disability, the vice president authorized to exercise the authority of the president; the secretary; the directors by action at a meeting, or a majority of the directors acting without a meeting; or the holders of at least 25% of all shares outstanding and entitled to vote thereat.
Section 1.03. Place of Meetings. All meetings of shareholders shall be held at the principal office of the corporation, unless otherwise provided by action of the directors. Meetings of shareholders may be held at any place within or without the State of Ohio.
Section 1.04. Notice of Meetings. (A) Written notice stating the time, place and purposes of a meeting of the shareholders shall be given either by personal delivery or by mail not less than seven nor more than 60 days before the date of the meeting, (l) to each shareholder of record entitled to notice of the meeting, (2) by or at the direction of the president or the secretary. If mailed, such notice shall be addressed to the shareholder at his address as it appears on the records of the corporation. Notice of adjournment of a meeting need not be given if the time and place to which it is adjourned are fixed and announced at such meeting. In the event of a transfer of
shares after the record date for determining the shareholders who are entitled to receive notice of a meeting of shareholders, it shall not be necessary to give notice to the transferee. Nothing herein contained shall prevent the setting of a record date in the manner provided by law, the Articles or the Regulations for the determination of shareholders who are entitled to receive notice of or to vote at any meeting of shareholders or for any purpose required or permitted by law.
(B) Following receipt by the president or the secretary of a request in writing, specifying the purpose or purposes for which the persons properly making such request have called a meeting of the shareholders, delivered either in person or by registered mail to such officer by any persons entitled to call a meeting of shareholders, such officer shall cause to be given to the shareholders entitled thereto notice of a meeting to be held on a date not less than seven nor more than 60 days after the receipt of such request, as such officer may fix. If such notice is not given within 30 days after the receipt of such request by the president or the secretary, then, and only then, the persons properly calling the meeting may fix the time of meeting and give notice thereof in accordance with the provisions of the regulations.
Section 1.05. Waiver of Notice. Notice of the time, place and purpose or purposes of any meeting of shareholders may he waived in writing, either before or after the holding of such meeting, by any shareholders, which writing shall be filed with or entered upon the records of such meeting. The attendance of any shareholder, in person or by proxy, at any such meeting without protesting the lack of proper notice, prior to or at the commencement of the meeting, shall be deemed to be a waiver by such shareholder of notice of such meeting.
Section 1.06. Quorum. At any meeting of shareholders, the holders of a majority of the voting shares of the corporation then outstanding and entitled to vote thereat, present in person or by proxy, shall constitute a quorum for such meeting. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, or the chairman of the board, the president, or the officer of the corporation acting as chairman of the meeting, may adjourn such meeting from time to time, and if a quorum is present at such adjourned meeting any business may be transacted as if the meeting had been held as originally called.
Section 1.07. Votes Required. At all elections of directors the candidates receiving the greatest number of votes shall he elected. Any other matter submitted to the shareholders for their vote shall be decided by the vote of such proportion of the shares, or of any class of shares, or of each class, as is required by law, the Articles or the Regulations.
Section 1.08. Order of Business. The order of business at any meeting of shareholders shall be determined by the officer of the corporation acting as chairman of such meeting unless otherwise determined by a vote of the holders of a majority of the voting shares of the corporation then outstanding, present in person or by proxy, and entitled to vote at such meeting.
Section 1.09. Shareholders Entitled to Vote. Each shareholder of record on the books of the corporation on the record date for determining the shareholders who are entitled to vote at a meeting of shareholders shall be entitled at such meeting to one vote for each share of the corporation standing in his name on the books of the corporation on such record date. The directors may fix a record date for the determination of the shareholders who are entitled to receive notice of and to vote at a meeting of shareholders, which record date shall not be a date earlier than the date on which the record date is fixed and which record date may be a maximum of 60 days preceding the date of the meeting of shareholders.
Section 1.10. Proxies. At meetings of the shareholders any shareholder of record entitled to vote thereat may be represented and may vote by a proxy or proxies appointed by an instrument in writing signed by such shareholder, but such instrument shall be filed with the secretary of the meeting before the person holding such proxy shall be allowed to vote thereunder. No proxy shall be valid after the expiration of eleven months after the date of its execution, unless the shareholder executing it shall have specified therein the length of time it is to continue in force.
Section 1.11. Inspectors of Election. In advance of any meeting of shareholders, the directors may appoint inspectors of election to act at such meeting or any adjournment thereof; if inspectors are not so appointed, the officer of the corporation acting as chairman of any such meeting may make such appointment. In case any person appointed as inspector fails to appear or act, the vacancy may be filled only by appointment made by the directors in advance of such meeting or, if not so filled, at the
meeting by the officer of the corporation acting as chairman of such meeting. No other person or persons may appoint or require the appointment of inspectors of election.
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications. Except where the law, the Articles or the Regulations otherwise provide, all authority of the corporation shall be vested in and exercised by its directors. Directors need not be shareholders of the corporation. No person shall be eligible to be elected or reelected as a director after such person has reached the age of 70 years; except that this qualification shall not apply to a person elected as an initial director of the corporation who shall have reached 70 years of age at the time of such initial election.
Section 2.02. Number of Directors and Term of Office.
(A) Until changed in accordance with the provisions of the Regulations, the number of directors of the corporation shall be nine (9). Except as provided in the Articles of the corporation, each director shall be elected to serve until the annual meeting of shareholders at which the term of such director shall expire and until his successor is duly elected and qualified or until his earlier resignation, removal from office, or death.
(B) The number of directors may be fixed or changed in accordance with the Articles of the corporation at a meeting of the shareholders called for the purpose of electing directors at which a quorum is present.
(C) The directors may fix or change the number of directors by the affirmative vote of two-thirds (2/3) of the authorized number of directors and may fill any director's office that is created by an increase in the number of directors; provided, however, that the directors may not increase the number of directors to more than fifteen (15) nor reduce the number of directors to less than nine (9).
(D) No reduction in the number of directors shall of itself have the effect of shortening the term of any incumbent director.
Section 2.03. Nomination and Election. (A) Any nominee for election as
a director of the corporation may be proposed only by the Board of Directors or
by any shareholder entitled to vote for the election of directors. No person,
other than a nominee proposed by the Board of Directors, may be nominated for
election as a director of the corporation unless such person shall have been
proposed in a written notice, delivered or mailed by first-class United States
mail, postage prepaid, to the Secretary of the corporation at its principal
office. In the case of a nominee proposed for election as a director at an
annual meeting of shareholders, such written notice of a proposed nominee shall
be received by the Secretary of the corporation on or before the later of (i)
February l, immediately preceding such annual meeting or (ii) the sixtieth
(60th) day prior to the first anniversary of the most recent annual meeting of
shareholders of the corporation held for the election of directors; provided,
however, that if the annual meeting for the election of directors in any year is
not held on or before the thirty-first (31st) day next following such
anniversary, then the written notice required by this subparagraph (A) shall be
received by the Secretary within a reasonable time prior to the date of such
annual meeting. In the case of a nominee proposed by a shareholder for election
as a director at a special meeting of shareholders at which directors are to be
elected, such written notice of a proposed nominee shall be received by the
Secretary of the corporation no later than the close of business on the
seventh(7th) day following the day on which notice of the special meeting was
mailed to shareholders. Each such written notice of a proposed nominee shall set
forth (l) the name, age, business or residence address of each nominee proposed
in such notice, (2) the principal occupation or employment of each such nominee,
and (3) the number of common shares of the corporation owned beneficially and/or
of record by each such nominee and the length of time any such shares have been
so owned.
(B) If a shareholder shall attempt to nominate one or more persons for election as a director at any meeting at which directors are to be elected without having identified each such person in a written notice given as contemplated by, and/or without having provided therein the information specified in, sub-paragraph (A) of this Section, each such attempted nomination shall be invalid and shall be disregarded unless the person acting as chairman of the meeting determines that the facts warrant the acceptance of such nomination.
(C) The election of directors shall be by ballot whenever requested by the person acting as chairman of the meeting or by the holders of a majority of the voting shares outstanding, entitled to vote at such meeting and present in person or by proxy, but unless such request is made, the election shall be by voice vote.
Section 2.04. Removal. A director or directors may be removed from office, with or without assigning any cause, only by the vote of the holders of shares entitling them to exercise not less than eighty percent (80%) of the voting power of the corporation entitling them to elect directors in place of those to be removed. In case of any such removal, a new director may be elected at the same meeting for the unexpired term of each director removed. Failure to elect a director to fill the unexpired term of any director removed shall be deemed to create a vacancy in the board.
Section 2.05. Vacancies. Vacancies, and newly created directorships resulting from any increase in the authorized number of directors, may be filled by the affirmative vote of two-thirds (2/3) of the whole authorized number of directors or by the affirmative vote of the holders of at least four-fifths (4/5) of the outstanding voting power of the corporation voting at a meeting of the shareholders called for such purpose or in any other manner provided by law, the Articles or the Regulations.
Section 2.06. Meetings. A meeting of the directors shall be held immediately following the adjournment of each annual meeting of shareholders at which directors are elected, and notice of such meeting need not be given. The directors shall hold such other meetings as may from time to time be called, and such other meetings of directors may be called only by the chairman of the board, the president, or any two directors. All meetings of directors shall be held at the principal office of the corporation in Defiance, Ohio or at such other place within or without the State of Ohio, as the directors may from time to time determine by a resolution. Meetings of the directors may be held through any communications equipment if all persons participating can hear each other and participation in a meeting pursuant to this provision shall constitute presence at such meeting.
Section 2.07. Notice of Meetings. Notice of the time and place of each meeting of directors for which such notice is required by law, the Articles, the Regulations or the By-Laws
shall be given to each of the directors by at least one of the following methods:
(A) In a writing mailed not less than three days before such meeting and addressed to the residence or usual place of business of a director, as such address appears on the records of the corporation; or
(B) By telegraph, cable, radio, wireless, or a writing sent or delivered to the residence or usual place of business of a director as the same appears on the records of the corporation, not later than the day before the date on which such meeting is to be held; or
(C) Personally or by telephone not later than the day before the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified in the Regulations shall be sufficient, and the method of giving notice to all directors need not be uniform. Notice of any meeting of directors may be given only by the chairman of the board, the president or the secretary of the corporation. Any such notice need not specify the purpose or purposes of the meeting. Notice of adjournment of a meeting of directors need not be given if the time and place to which it is adjourned are fixed and announced at such meeting.
Section 2.08. Waiver of Notice. Notice of any meeting of directors may be waived in writing, either before or after the holding of such meeting, by any director, which writing shall be filed with or entered upon the records of the meeting. The attendance of any director at any meeting of directors without protesting, prior to or at the commencement of the meeting, the lack of proper notice, shall be deemed to be a waiver by him of notice of such meeting.
Section 2.09. Quorum. A majority of the whole authorized number of directors shall be necessary to constitute a quorum for a meeting of directors, except that a majority of the directors in office shall constitute a quorum for filling a vacancy in the board. The act of a majority of the directors present at a meeting at which a quorum is present is the act of the board, except as otherwise provided by law, the Articles or the Regulations.
Section 2.10. Executive Committee. The directors may create an executive committee or any other committee of directors, to consist of not less than three directors, and may authorize the delegation to such executive committee or other committees of any of the authority of the directors, however conferred, other than that of filling vacancies among the directors or in the executive committee or in any other committee of the director.
Such executive committee or any other committee of directors shall serve at the pleasure of the directors, shall act only in the intervals between meetings of the directors, and shall be subject to the control and direction of the directors. Such executive committee or other committee of directors may act by a majority of its members at a meeting or by a writing or writings signed by all of its members.
Any act or authorization of an act by the executive committee or any other committee within the authority delegated to it shall be as effective for all purposes as the act or authorization of the directors. No notice of a meeting of the executive committee or of any other committee of directors shall be required. A meeting of the executive committee or of any other committee of directors may be called only by the president or by a member of such executive or other committee of directors. Meetings of the executive committee or of any other committee of directors may be held through any communications equipment if all persons participating can hear each other and participation in such a meeting shall constitute presence thereat.
Section 2.11. Compensation. Directors shall be entitled to receive as compensation for services rendered and expenses incurred as directors, such amounts as the directors may determine.
Section 2.12. By-Laws. The directors may adopt, and amend from time to time, By-Laws for their own government, which By-Laws shall not be inconsistent with the law, the Articles or the Regulations.
ARTICLE THREE
OFFICERS
Section 3.01. Offices. The officers of the corporation to be elected by the directors shall be a president, a secretary, a treasurer, and, if desired, one or more vice presidents and such other officers and assistant officers as the directors may from time to time elect. The directors may elect a chairman of the board, who must be a director. Officers need not be shareholders of the corporation, and may be paid such compensation as the board of directors may determine. Any two or more offices may be held by the same person, but no officer shall execute, acknowledge, or verify any instrument in more than one capacity if such instrument is required by law, the Articles, the Regulations or the By-Laws to be executed, acknowledged, or verified by two or more officers.
Section 3.02. Tenure of Office. The officers of the corporation shall hold office at the pleasure of the directors. Any officer of the corporation may be removed, either with or without cause, at any time, by the affirmative vote of a majority of all the directors then in office; such removal, however, shall be without prejudice to the contract rights, if any, of the person so removed.
Section 3.03. Duties of the Chairman of the Board. The chairman of the board, if any, shall preside at all meetings of the directors. He shall have such other powers and duties as the directors shall from time to time assign to him.
Section 3.04. Duties of the President. The president shall be the chief executive officer of the corporation and shall exercise supervision over the business of the corporation and shall have, among such additional powers and duties as the directors may from time to time assign to him, the power and authority to sign all certificates evidencing shares of the corporation and all deeds, mortgages, bonds, contracts, notes and other instruments requiring the signature of the president of the corporation. It shall be the duty of the president to preside at all meetings of shareholders.
Section 3.05. Duties of the Vice Presidents. In the absence of the president or in the event of his inability or refusal to act, the vice president, if any (or in the event there be more than one vice president, the vice presidents in the order designated, or in the absence of any designation, then in the
order of their election), shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all restrictions upon the president. The vice presidents shall perform such other duties and have such other powers as the directors may from time to time prescribe.
Section 3.06. Duties of the Secretary. It shall be the duty of the secretary, or of an assistant secretary, if any, in case of the absence or inability to act of the secretary, to keep minutes of all the proceedings of the shareholders and the directors and to make a proper record of the same; to perform such other duties as may be required by law, the Articles or the Regulations; to perform such other and further duties as may from time to time be assigned to him by the directors or the president; and to deliver all books, paper and property of the corporation in his possession to his successor, or to the president.
Section 3.07. Duties of the Treasurer. The treasurer, or an assistant treasurer, if any, in case of the absence or inability to act of the treasurer, shall receive and safely keep in charge all money, bills, notes, choses in action, securities and similar property belonging to the corporation, and shall do with or disburse the same as directed by the president or the directors; shall keep an accurate account of the finances and business of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, stated capital and shares, together with such other accounts as may be required and hold the same open for inspection and examination by the directors; shall give bond in such sum with such security as the directors may require for the faithful performance of his duties; shall, upon the expiration of his term of office, deliver all money and other property of the corporation in his possession or custody to his successor or the president; and shall perform such other duties as from time to time may be assigned to him by the directors.
ARTICLE FOUR
SHARES
Section 4.01. Certificates. Certificates evidencing ownership to shares of the corporation shall be issued to those entitled to them. Each certificate evidencing shares of the corporation shall bear a distinguishing number; the signatures of the chairman of the board, the president, or a vice president,
and of the secretary or an assistant secretary (except that when any such certificate is countersigned by an incorporated transfer agent or registrar, such signatures may be facsimile, engraved, stamped or printed); and such recitals as may be required by law. Certificates evidencing shares of the corporation shall be of such tenor and design as the directors may from time to time adopt and may bear such recitals as are permitted by law.
Section 4.02. Transfers. Where a certificate evidencing a share or shares of the corporation is presented to the corporation or its proper agents with a request to register transfer, the transfer shall be registered as requested if:
(l) An appropriate person signs on each certificate so presented or signs on a separate document an assignment or transfer of shares evidenced by each such certificate, or signs a power to assign or transfer such shares, or when the signature of an appropriate person is written without more on the back of each such certificate; and
(2) Reasonable assurance is given that the indorsement of each appropriate person is genuine and effective; the corporation or its agents may refuse to register a transfer of shares unless the signature of each appropriate person is guaranteed by a commercial bank or trust company having an office or a correspondent in the City of New York or by a firm having membership in the New York Stock Exchange; and
(3) All applicable laws relating to the collection of transfer or other taxes have been complied with; and
(4) The corporation or its agents are not otherwise required or permitted to refuse to register such transfer.
Section 4.03. Transfer Agents and Registrars. The directors may appoint one or more agents to transfer or to register shares of the corporation, or both.
Section 4.04. Lost, Wrongfully Taken or Destroyed Certificates. Except as otherwise provided by law, where the owner of a certificate evidencing shares of the corporation claims that such certificate has been lost, destroyed or wrongfully taken, the directors must cause the corporation to issue a new certificate in place of the original certificate if the owner:
(1) So requests before the corporation has notice that such original certificate has been acquired by a bona fide purchaser; and
(2) Files with the corporation, unless waived by the directors, an indemnity bond, with surety or sureties satisfactory to the corporation, in such sums as the directors may, in their discretion, deem reasonably sufficient as indemnity against any loss or liability that the corporation may incur by reason of the issuance of each such new certificate; and
(3) Satisfies any other reasonable requirements which may be imposed by the directors, in their discretion.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. Indemnification. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action threatened or instituted directly by the corporation) by reason of the fact that he is or was a director or officer of the corporation or any present or former director or officer of the corporation who is or was serving at the request of the corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
Section 5.02. Discretionary Indemnification. The corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative by reason of the fact that he is or was an employee or agent of the corporation or is or was serving at the request of the corporation as a director, trustee, of officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
The corporation may also indemnify or agree to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit which is threatened or instituted by the corporation directly (rather than a derivative action in the right of the corporation) to produce a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation or any present or former director or officer of the corporation who is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him, judgments and amounts paid in connection with such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no such indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the Court of Common Pleas of Defiance County, Ohio or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses as such Court of Common Pleas or such other court shall deem proper.
Section 5.03. Indemnification for Expenses. To the extent that a director, trustee, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 5.02 hereof, or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
Section 5.04. Determination Required. Any indemni-fication under Sections 5.01 and 5.02 (unless ordered by a court) shall be made by the corporation only upon a determination that the indemnification of the director, trustee, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 5.01 and 5.02. Such determination shall be made (A) by the board of directors by a majority vote of a quorum consisting of directors who were not and are not parties to, or threatened with, such action, suit or proceeding or (B) if such a quorum is not obtainable or if a majority of a quorum of disinterested directors so directs, in a written opinion by independent legal counsel, or (C) by the shareholders. Any determination made by the disinterested directors or by independent legal counsel under this Section 5.04 to provide indemnity under Section 5.01 or 5.02 to a person threatened or sued in the right of the corporation (derivatively) shall be promptly communicated to the person who threatened or brought the derivative action or suit in the right of the corporation, and such person shall have the right, within 10 days after receipt of such notification, to petition the Court of Common Pleas of Defiance County, Ohio or the court in which action or suit was brought to review the reasonableness of such determination.
Section 5.05. Advances for Expenses. Expenses (including attorneys' fees) incurred in defending any civil or criminal action, suit, or proceeding referred to in Sections 5.01 and 5.02 may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee, or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as authorized in this Article Five.
Section 5.06. Article Five Not Exclusive. The indemnification provided by this Article Five shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under the Articles or the Regulations or any agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
Section 5.07. Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article Five.
Section 5.08. Definition of "the Corporation". As used in this Article Five, references to "the corporation" include all constituent corporations in a consolidation or merger and the new or surviving corporation, so that any person who is or was a director, trustee, officer, employee or agent of such a constituent corporation, or is or was serving at the request of such constituent corporation as a director, trustee, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, shall stand in the same position under the provisions of this Article Five with respect to the new or surviving corporation as he would if he had served the new or surviving corporation in the same capacity.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Seal. The corporation shall have no seal.
Section 6.02. Amendments. The Regulations may be amended, or new regulations may be adopted, at a meeting of shareholders held for such purpose, or without a meeting by the
written consent of the holders of shares entitling them to exercise not less than all (100%) of the voting power of the corporation on such proposal.
Section 6.03. Action by Shareholders or Directors Without a Meeting. Anything contained in the Regulations to the contrary notwithstanding, except as provided in Section 6.02, any action which may be authorized or taken at a meeting of the shareholders or of the directors or of a committee of the directors, as the case may be, may be authorized or taken without a meeting with the affirmative vote or approval of, and in a writing or writings signed by, all the shareholders who would be entitled to notice of a meeting of the shareholders held for such purpose, or all the directors, or all the members of such committee of the directors, respectively, which writings shall be filed with or entered upon the records of the corporation.
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the first day of March 2006, among Rurban Financial Corp. ("RFC"), an Ohio bank holding company having a place of business at 401 Clinton Street, Defiance, Ohio, and Kenneth A. Joyce ("Executive"), individually, an Executive.
WITNESSETH:
WHEREAS, RFC desires to employ Executive to serve in the capacity of Chief Executive Officer of RFC under the terms and conditions set forth herein;
WHEREAS, Executive desires to accept employment with RFC on the terms and conditions set forth herein.
WHEREAS,: The Executive previously entered into an agreement describing amounts payable upon a change of control ("Prior Agreement"), which agreement is superseded and replaced by this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained it is agreed as follows:
1. EMPLOYMENT. RFC hereby employs Executive and Executive hereby accepts employment with RFC, under the terms and conditions set forth in this Agreement.
2. DUTIES OF EMPLOYEE. Executive shall perform and discharge well and faithfully such duties as an executive officer of RFC as may be assigned to Executive from time to time by the Board of Directors of RFC so long as the assignment is consistent with the Executive's office and duties. Executive shall be employed as Chief Executive Officer of RFC, and shall hold such other titles as may be given to him from time to time by the Board of Directors of RFC. Executive shall devote his full time, attention and energies to the business of RFC during the Employment Period (as defined in Section 3 of this Agreement); provided, however, that this Section 2 shall not be construed as preventing Executive from (a) engaging in activities incident or necessary to personal investments, so long as such investment does not exceed 5% of the outstanding shares of any publicly held company, (b) acting as a member of the board of directors of any other corporation or as a member of the board of trustees of any other organization, with the prior approval of the Board of Directors of RFC, or (c) being involved in any other activity with the prior approval of the Board of Directors of RFC. The Executive shall not engage in any business or commercial activities, duties or pursuits which compete with the business or commercial activities of RFC or its subsidiaries or affiliates, nor may the Executive serve as a director or officer or in any other capacity in a company which competes with RFC or its subsidiaries or affiliates.
3. TERM OF AGREEMENT.
(a) This Agreement shall be for a three (3) year period (the "Employment Period"), beginning on the date first written above and, if not previously terminated pursuant to the terms of this Agreement, the Employment Period shall end three (3) years later; provided however, that this Agreement will be automatically renewed on the third anniversary date of the date first written above (the "Renewal Date") commencing on the Renewal Date and ending on December 31, 2010, unless either party gives written notice of nonrenewal to the other party at least one-hundred eighty (180) days prior to the Renewal Date (in which case this Agreement will terminate on the Renewal Date).
(b) Notwithstanding the provisions of Section 3(a) of this Agreement, this agreement shall terminate automatically for Cause (as defined herein) upon written notice from the Board of Directors of RFC to Executive. As used in this Agreement, "Cause" shall mean any of the following:
(i) The willful failure by the Executive to substantially perform his duties hereunder (other than a failure resulting from Executive's incapacity because of death or disability), after notice from RFC, and a failure to cure such violation within twenty (20) days of said notice;
(ii) The willful engaging by the Executive in misconduct injurious to RFC;
(iii) Dishonesty, insubordination or gross negligence of the Executive in the performance of his duties;
(iv) Executive's breach of fiduciary duty involving personal profit;
(v) Executive's violation of any law, rule or regulation governing issuers of publicly traded securities or banks or bank officers or any regulatory enforcement actions issued by a regulatory authority against the Executive;
(vi) Conduct on the part of Executive which brings public discredit to RFC and, if the effect may be cured, a failure to cure within twenty (20) days of the date said notice is delivered to the Executive;
(vii) Executive's conviction of or plea of guilty or nolo
contendre to a felony (including conviction of or plea
of guilty or nolo contendre to a misdemeanor that was
originally charged as a felony but was reduced to a
misdemeanor as a result of a plea bargain), crime of
falsehood or a crime involving moral turpitude, or the
actual incarceration of Executive for a period of twenty
(20) consecutive days or more;
(viii) An act by the Executive affecting any of RFC's employees, customers, business associates, contractors or visitors that an independent third party decides, after reasonable investigation, constitutes unlawful discrimination or harassment or violates RFC's policy concerning discrimination or harassment;
(ix) Executive's theft or abuse of Corporation's property or the property of RFC's customers, employees, contractors, vendors or business associates;
(x) The direction or recommendation of a state or federal bank regulatory authority to remove Executive from his positions with Corporation;
(xi) Executive's willful failure to follow the good faith lawful instructions of the Board of Directors of Corporation with regard to its operations, after written notice and, if the event may be cured, a failure to cure such violation within twenty (20) days of the date said notice is delivered to the Executive;
(xii) Material breach of any contract or agreement that Executive entered with Corporation, including a breach of any of the obligations described in Sections 9 and 10 of this Agreement and, if the breach may be cured, a failure to cure such breach within twenty (20) days of the date said notice is delivered to the Executive;
(xiii) Unauthorized disclosure of the trade secrets or confidential information (as defined below) of Corporation or any of its affiliates, trade partners, or vendors.
However, Cause will not arise solely because the Executive is absent from active employment during periods of vacation, consistent with RFC's applicable vacation policy or other period of absence initiated by the Executive and approved by RFC.
Also, if, after the Executive terminates employment, RFC learns that the Executive has actively concealed conduct or an event that, if discovered before employment terminated, would have constituted "Cause," the provisions of Section 3(d) of this Agreement will be applied retroactively to the date the Executive terminated employment and RFC may recover any and all amounts paid to the Executive (or to his or her beneficiaries) under this Agreement on account of his termination.
The term "Confidential Information" shall mean any and all information (other than information in the public domain) related to RFC's or any affiliate's or subsidiary's business, including all processes, inventions, trade secrets, computer programs, technical data, drawings or designs,
information concerning pricing and pricing policies, marketing techniques, plans and forecasts, new product information, information concerning methods and manner of operations and information relating to the identity and location of all past, present and prospective customers and suppliers. Executive's conviction of or plea of guilty or nolo contendere to a felony, a crime of falsehood or a crime involving moral turpitude, or the actual incarceration of Executive for a period of fifteen (15) consecutive days or more.
If this Agreement is terminated for Cause, all of Executive's rights under this Agreement shall cease as of the effective date of such termination.
(c) Notwithstanding the provisions of Section 3(a) of this Agreement, this Agreement shall terminate automatically upon Executive's voluntary termination of employment (other than in accordance with Section 5 of this Agreement) for other than Good Reason. The term "Good Reason" shall mean:
(i) The assignment of duties and responsibilities inconsistent with Executive's status as Chief Executive Officer of RFC, unless the Executive has simultaneously been promoted to a more senior position and has been assigned substantive duties normally associated with that new position;
(ii) A reassignment which requires Executive to move his office more than fifty (50) miles from the location of Corporation's principal executive office on the effective date of this Agreement;
(iii) Any reduction in the Executive's Annual Base Salary as in effect on the date hereof or as the same may be increased from time to time, except such reductions that are the result of a national financial depression, or national or bank emergency when such reduction has been implemented for RFC's senior management, as a group;
(iv) Any action that would materially reduce the employee
benefits enjoyed by the Executive on the effective date
of this Agreement unless such reduction complies with
Section 4(d) of this Agreement;
(v) Any attempt by RFC to amend or terminate this Agreement without regard to the procedures described in Section 22 of this Agreement;
(vi) Failure at any time during the term of this Agreement (as defined in Section 3(a) of this Agreement to obtain an assumption of RFC's obligations under this Agreement by any successor to any of them, regardless of whether such entity becomes a successor to
RFC as a result of a merger, consolidation, sale of assets or any other form of reorganization; and
(vii) Any unsuccessful attempt to terminate the Executive for Cause.
At the option of the Executive, exercisable by the Executive within thirty (30) days after the occurrence of the event constituting "Good Reason," the Executive may resign from employment under this Agreement by delivering a notice in writing (the "Notice of Termination") to RFC and the provisions of this Section 3(c) of this Agreement shall thereupon apply.
(d) Notwithstanding the provisions of Section 3(a) of this Agreement, this Agreement shall terminate automatically upon Executive's Disability and Executive's rights under this Agreement shall cease as of the date of such termination; provided, however, that Executive shall nevertheless be entitled to receive any benefits that may be available under any disability plan of RFC under the terms and conditions of such plans or such benefits due Executive as a result of the benefit vesting. For purposes of this Agreement, the Executive shall have a Disability if, as a result of physical or mental injury or impairment, Executive is unable to perform all of the essential job functions of his position on a full time basis, taking into account any reasonable accommodation required by law, and without posing a direct threat to himself or others, for a period of more than one hundred eighty (180) days during any twelve (12) months, whether consecutive or not. The Executive shall have no duty to mitigate any payment provided for in this Section 3(d) by seeking other employment.
(e) Executive agrees that in the event his employment under this Agreement is terminated, regardless of the reason for termination, Executive shall resign as a director of RFC, or any affiliate or subsidiary thereof, if he is then serving as a director of any such entities unless the Board of Directors specifically requests the Executive to continue such Board membership.
4. EMPLOYMENT PERIOD COMPENSATION.
(a) Annual Base Salary. For services performed by Executive under this Agreement, RFC shall pay Executive an Annual Base Salary during the Employment Period at the rate of Two Hundred and Sixty-four Thousand Dollars ($264,000) per year (subject to applicable withholdings and deductions) payable at the same times as salaries are payable to other executive employees of RFC. RFC may, from time to time, increase Executive's Annual Base Salary, and any and all such increases shall be deemed to constitute amendments to this Section 4(a) to reflect the increased amounts, effective as of the date established for such increases by the Board of Directors of RFC or any committee of such Board in the resolutions authorizing such increases.
(b) Bonus. For services performed by Executive under this Agreement, RFC may, from time to time, pay a bonus or bonuses to Executive as RFC, in its sole discretion, deems appropriate. The payment of any such bonuses shall not reduce or otherwise affect any other obligation of RFC to Executive provided for in this Agreement.
(c) Paid Time Off and/or Vacations. During the term of this Agreement, Executive shall be entitled to paid time off in accordance with the policies as established from time to time by the Board of Directors of RFC for RFC's senior management.
(d) Employee Benefit Plans. During the term of this Agreement, Executive shall be entitled to participate in or receive the benefits of any employee benefit plan currently in effect at RFC, subject to the terms of said plan, until such time that the Board of Directors of RFC authorizes a change in such benefits. RFC shall not make any changes in such plans or benefits that would adversely affect Executive's rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executive officers of RFC and does not result in a proportionately greater adverse change in the rights of or benefits to Executive as compared with any other executive officer of RFC. Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 4(a) of this Agreement.
(e) Business Expenses. During the term of this Agreement, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him, which are properly accounted for, in accordance with the policies and procedures established by the Board of Directors of RFC for its executive officers. RFC shall reimburse Executive for any and all dues, specific investments, and reasonable related business expenses associated with the Executive's membership in a mutually agreeable country club. RFC shall supply executive with an appropriate automobile, or at the discretion of the Executive an automobile allowance, adhering to RFC policy, and pay all operating expenses for the use and maintenance of the automobile.
5. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE OF CONTROL.
(a) If a Change in Control (as defined in Section 5(b) of this Agreement), shall occur and at any time during the period beginning on the date the Board of Directors of RFC first learns of the possible Change of Control and ending one (1) year following that Change of Control, Executive is terminated other than for Cause or an event constituting Good Reason occurs, then, at the option of Executive, within ninety (90) days of the termination or event constituting Good Reason, Executive may resign
from employment with RFC (or, if involuntarily terminated,
give notice of intention to collect benefits under this
agreement) by delivering a notice in writing (the "Notice of
Termination") to RFC or its successor and the provisions of
Section 6 of this Agreement shall apply.
(b) For purposes of this Agreement, the term "Change of Control" shall mean the earliest of any of the following:
(i) Of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A or any successor rule or regulation promulgated under the Securities Exchange Act of 1934, as amended (the "Act");
(ii) A merger or consolidation of RFC with or purchase of all or substantially all of RFC's assets by another "person" or group of "persons" (as such term is defined or used in Sections 3.13(d), and 14(d) of the Act) and, as a result of such merger, consolidation or sale of assets, less than a majority of the outstanding voting stock of the surviving, resulting or purchasing person is owned, immediately after the transaction, by the holders of the voting stock of RFC before the transaction, regardless of when or how their voting stock was acquired;
(iii) Any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) becomes through any means a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of RFC representing 50% or more of the combined voting power of RFC's then outstanding securities eligible to vote for the election of RFC's Board of Directors;
(iv) Any "person" as defined above, other than RFC, the Executive or RFC's ESOP, is or becomes the "beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5, or any successor rule or regulation, promulgated under the Act), directly or indirectly, of securities of RFC which represent twenty-five percent (25%) or more of the combined voting power of the securities of RFC, then outstanding but disregarding any securities with respect to which that acquirer has filed SEC Schedule 13G indicating that the securities were not acquired and are not held for the purpose of or with the effect of changing or influencing, directly or indirectly, RFC's management or policies, unless and until that entity or person files SEC Schedule 13D, at which point this exception will not apply to such securities, including those previously subject to a SEC Schedule 13G filing;
(v) Individuals who, on the Effective Date, constituted the board of directors of RFC (the "Incumbent Directors") cease for any reason to constitute at least a majority of the members of RFC's board of directors; provided that any person becoming a director subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of RFC in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; and further provided, however, that no individual elected or nominated as a director of RFC initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than RFC's board of directors shall ever be deemed to be an Incumbent Director; and
(vi) Any other change of control of RFC similar in effect to any of the foregoing.
If more than one event that constitutes a Change of Control occurs during a Protection Period, the Executive shall be entitled to the amount that equals the largest after-tax amount generated by any of the Changes of Control.
Notwithstanding any other provision of this Agreement, the Executive will not be entitled to any amount under this Agreement if he/she acted in concert with any person or group (as defined above) to effect a Change of Control, other than at the specific direction of the board of directors and in his/her capacity as an employee of RFC.
(c) During the period of time beginning on the date the Board of Directors of RFC first learns of a possible Change of Control and the actual Change of Control, Executive's employment may not be terminated by RFC other than for Cause.
6. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT FOLLOWING CHANGE OF CONTROL.
(a) Subject to Section 409A of the Internal Revenue Code, in the event that Executive delivers a Notice of Termination (as defined in and under the circumstances set forth in Section 5(a) of this Agreement) to RFC, Executive shall be entitled to receive the compensation and benefits set forth below.
(i) Within thirty (30) days of the Executive's termination of employment, pay to the Executive a lump sum cash amount equal
to 2.99 times the Executive's Agreed Compensation (as defined in this Agreement), subject to applicable withholdings and taxes; and
(ii) Provide to the Executive (and the Executive's family, if applicable and if the Executive had elected family coverage as of the day before the date employment terminated) for a period of three (3) years continued health care, life insurance and disability insurance coverage provided, on behalf of Executive, at the same level (both separately with respect to each line of coverage and in the aggregate) and subject to the same terms that were in effect with respect to the Executive at any time during the two (2) years prior to his termination. These benefits will be provided under the insured arrangements maintained for active employees without cost to the Executive. However, if RFC or its successor after a Change of Control ("Change Entity") is unable to provide these benefits to the Executive through an insured arrangement maintained for active employees and with the same tax consequences available to active employees ("Equivalent Coverage"), RFC or the Change Entity, whichever is appropriate, will distribute to the Executive additional cash equal to the Executive's cost of procuring Equivalent Coverage ("Premium Burden"), plus an additional cash amount sufficient to ensure that after all applicable federal, state and local income, employment, wage and excise taxes (including those imposed under Section 4999 of the Internal Revenue Code with respect to this amount), the Executive has remaining cash equal to the Premium Burden. Collectively, the gross-up described in the preceding sentence and the Premium Burden are referred to as the Welfare Benefit Replacement Cost. The Executive agrees to make available to RFC or the Change Entity any information reasonably necessary to calculate the cost of this gross-up.
The Executive also will be entitled to receive any other payments or benefits to which he is then entitled under the terms of any other contract, arrangement, agreement, plan or program in which he is or has been a participant.
(b) Executive shall not be required to mitigate the amount of any payment provided for in this Section 6 by seeking other employment or otherwise. Unless otherwise agreed to in writing, the amount of payment or the benefits provided for in this Section 6 shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive's receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.
(c) The term "Agreed Compensation" shall equal the sum of (i) the average of Executive's Annual Base Salary with respect to the five (5) calendar years immediately preceding the Executive's termination and (ii) the average of the Executive's annual bonuses with respect to the five (5) calendar years immediately preceding the Executive's termination.
7. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT ABSENT CAUSE OR CHANGE OF
CONTROL. Subject to Section 409A of the Internal Revenue Code, in the event that
Executive's employment is involuntarily terminated by RFC without Cause or
Executive terminates for Good Reason as set forth in Section 3(c) of this
Agreement, and in a situation not addressed by the Change of Control provisions
set forth in Sections 5 and 6 of this Agreement, Executive shall be entitled to
receive the compensation and benefits set forth below.
(a) Pay to the Executive an amount equal to two (2) times the Executive's Agreed Compensation (as defined in Section 6(c) of this Agreement) in equal monthly installments over 24 months, subject to applicable withholdings and taxes; and
(b) Provide to the Executive (and the Executive's family, if applicable and if the Executive had elected family coverage as of the day before the date employment terminated) for a period of twelve (12) months (or until he obtains similar benefits through other employment, if earlier) continued health care, life insurance and disability insurance coverage provided, on behalf of Executive, at the same level (both separately with respect to each line of coverage and in the aggregate) and subject to the same terms that were in effect with respect to the Executive at any time during the two (2) years prior to his termination. These benefits will be provided under the insured arrangements maintained for active employees without cost to the Executive. However, if RFC or its successor after a Change of Control ("Change Entity") is unable to provide these benefits to the Executive through an insured arrangement maintained for active employees and with the same tax consequences available to active employees ("Equivalent Coverage"), RFC or the Change Entity, whichever is appropriate, will distribute to the Executive additional cash equal to the Executive's cost of procuring Equivalent Coverage ("Premium Burden"), plus an additional cash amount sufficient to ensure that after all applicable federal, state and local income, employment, wage and excise taxes (including those imposed under Section 4999 of the Internal Revenue Code with respect to this amount), the Executive has remaining cash equal to the Premium Burden. Collectively, the gross-up described in the preceding sentence and the Premium Burden are referred to as the Welfare Benefit Replacement Cost. The Executive agrees to make available to RFC or the Change Entity any information reasonably necessary to calculate the cost of this gross-up.
The Executive also will be entitled to receive any other payments or benefits to which he is then entitled under the terms of any other contract, arrangement, agreement, plan or program in which he is or has been a participant.
8 GOLDEN PARACHUTE PROVISIONS. Notwithstanding any provision in this Agreement to the contrary (other than Sections 7, 15 and 25 of this Agreement which will apply under the circumstances described in those sections and below), if, as of the date of the Change of Control, the Change Entity (after consulting with an independent accounting or compensation consulting company) ascertains that the compensation and benefits provided to the Executive pursuant to or under this Agreement (other than the Welfare Benefit Replacement Cost as defined in Section 7 of this Agreement or the amounts described in Sections 15 and 25 of this Agreement, either alone or when combined with other compensation and benefits received by the Executive, would constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code, or the regulations adopted thereunder, then the compensation and benefits payable pursuant to or under this Agreement (other than the Welfare Benefit Replacement Cost and the amounts described in Sections 15 and 25 of this Agreement) shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code ("Excise Taxes"). The Executive or any other party entitled to receive the compensation or benefits hereunder may request a determination as to whether the compensation or benefit would constitute a parachute payment and, if requested, such determination shall be made by an independent accounting or compensation consulting company (other than the entity described in the first sentence of this section) selected by the Change Entity and approved by the party requesting such determination, the fees of which will be borne solely by the Change Entity. In the event that any reduction is required under this Section 8, the Executive may select which compensation and benefits shall be reduced and the Executive's decision will be binding.
If the Internal Revenue Service subsequently and finally decides that the amount
of compensation and benefits (including after the reduction applied under this
Section 8) will generate Excise Taxes on compensation and benefits (other than
the Welfare Benefit Replacement Cost and those amounts described in Sections 15
and 25 of this Agreement), the Executive will immediately remit an additional
amount to the Change Entity equal to the difference between the amount paid
(other than the Welfare Benefit Replacement Cost and those amounts described in
Sections 15 and 25 of this Agreement) and the amount paid (other than the
Welfare Benefit Replacement Cost and those amounts described in Sections 15 and
25 of this Agreement). Also, the Executive agrees to promptly notify the Change
Entity of an assessment or inquiry from the Internal Revenue Service relating to
payments under this Agreement that would, if made final, result in imposition of
an Excise Tax and also agrees to cooperate with the Change Entity in resisting
any Excise Tax assessment. However, the Change Entity will have complete control
over resolution of any claim by the Internal Revenue Service that might generate
an Excise Tax (although it will have no dispositive power over any other tax
matter that may be subject to the same audit) and RFC will bear all costs
associated with that effort.
9. COVENANT NOT TO COMPETE. Executive hereby acknowledges and recognizes the highly competitive nature of the business of RFC. Accordingly, Executive agrees that if a Change of Control occurs and provided that Executive receives the payments described in Sections 6 and 7 of this Agreement, whichever is
appropriate, of this Agreement, then in consideration of this benefit during and for two (2) year(s) following termination of Executive's employment with Corporation, or, if applicable, with the Change Entity ("Non-Competition Period") Executive shall not:
(a) Provide financial or executive assistance to any person, firm, corporation or enterprise engaged in (i) the banking or financial services industry (including bank holding company), or (ii) any other activity in which Corporation engaged on the Date of the Change of Control, within fifty (50) miles of RFC's Main Office (the "Non-Competition Area"); or
(b) Directly or indirectly contact, solicit or induce any person, corporation or other entity who or which is a customer or referral source of Corporation during the term of Executive's employment or on the date of termination of Executive's employment, to become a customer or referral source for any person or entity other than Corporation or, if applicable, the Change Entity; or
(c) Directly or indirectly solicit, induce or encourage any employee of Corporation or its subsidiaries or, if applicable, the Change Entity or its subsidiaries, who is employed during the term of Executive's employment or on the date of termination of Executive's employment, to leave the employ of Corporation or its subsidiaries or, if applicable, the Change Entity or its subsidiaries or to seek, obtain or accept employment with any person or entity other than Corporation or its subsidiaries or, if applicable, the Change Entity or its subsidiaries.
(d) It is expressly understood and agreed that, although Executive and RFC consider the restrictions contained in Section 9(a) of this Agreement reasonable for the purpose of preserving for Corporation and, if applicable, the Change Entity, its good will and other proprietary rights, if a final judicial determination is made by a court having jurisdiction that the Non-Competition Area, the Non-Competition Period or any other restriction contained in this Section 9 is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of this Section 9 shall not be rendered void, but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.
(e) The existence of any immaterial claim or cause of action of the Executive against Corporation or, if applicable, the Change Entity, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Corporation of this covenant. The Executive agrees that any breach of the restrictions set forth in this Section 9 will result in irreparable injury to Corporation or, if applicable, the Change Entity, for which it will have no adequate remedy at law and RFC or, if applicable, the Change Entity, shall be entitled to injunctive relief in order to enforce the provisions hereof and/or seek specific performance and damages.
(f) Prior to the application of Section 10 of this Agreement, RFC and/or the Change Entity will make reasonable efforts to allocate to value the undertaking described in this section and to allocate to that calculation the maximum amount due under Section 8 of this Agreement.
10. UNAUTHORIZED DISCLOSURE. During the term of his employment hereunder, or at any later time, the Executive shall not, without the written consent of the Board or Directors of RFC or a person authorized thereby, knowingly disclose to any person, other than an employee of RFC or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of RFC, any material confidential information obtained by him while in the employ of RFC with respect to any services, products, improvements, formulas, designs or styles, processes, customers, customer lists, methods of business or any business practices of RFC or its subsidiaries or affiliates, the disclosure of which could be or will be damaging to RFC or its subsidiaries or affiliates; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive or any person with the assistance, consent or direction of the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by RFC or any information that must be disclosed as required by law.
11. MADE FOR HIRE. Any work performed by the Executive under this Agreement should be considered a "Work Made for Hire" as that phrase is defined by the U.S. patent laws and shall be owned by and for the express benefit of RFC and its subsidiaries and affiliates. In the event it should be established that such work does not qualify as a Work Made for Hire, the Executive agrees to and does hereby assign to RFC and its affiliates and subsidiaries, all of his rights, title, and/or interest in such work product, including, but not limited to, all copyrights, patents, trademarks, and proprietary rights.
12. RETURN OF COMPANY PROPERTY AND DOCUMENTS. The Executive agrees that, at the time of termination of his employment, regardless of the reason for termination, he will deliver to RFC and its subsidiaries and affiliates, any and all company property, including but not limited to, keys, security codes or passes, mobile telephones, pagers, computers, devices, confidential information (as defined in this Agreement), records, data, notes, reports, proposals, lists, correspondence, specification, drawings, blueprints, sketches, software programs, equipment, other documents or property, or reproductions of any of the aforementioned items developed or obtained by the Executive during the course of his employment.
13. LIABILITY INSURANCE. RFC shall use its best efforts to obtain insurance coverage for the Executive under an insurance policy covering officers and directors of RFC against lawsuits, arbitrations or other legal or regulatory proceedings; however, nothing herein shall be construed to require RFC to obtain such insurance, if the Board of Directors of RFC determines that such coverage cannot be obtained at a commercially reasonable price.
14. NOTICES. Except as otherwise provided in this Agreement, any notice required or permitted to be given under this Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to
Executive's residence, in the case of notices to Executive, and to the principal executive offices of RFC, in the case of notices to RFC.
15. ATTORNEY'S FEES AND COSTS.
(a) If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, each party shall bear its/his attorney's fees, costs, and necessary disbursements.
(b) RFC or the Change Entity shall pay all reasonable legal, accounting and actuarial fees and expenses incurred by the Executive in enforcing any right or benefit arising under Sections 6 and 7 of this Agreement. If it is subsequently determined that payment of these fees are excess parachute payments, the Change Entity will fully gross-up the Executive for the income, wage, employment and excise taxes associated with that payment so that, after all applicable federal, state and local, income, wage, employment and excise taxes (plus any assessed interest and penalties), the Executive will have incurred no liability (either for these fees or the taxes just listed) with respect to the matters encompassed in this section.
16. INDEMNIFICATION. RFC will indemnify the Executive, as required by its bylaws, to the extent permitted by (State) and federal law, with respect to any threatened, pending or completed legal or regulatory action, suit or proceeding brought against him by reason of the fact that he is or was a director, officer, employee or agent of RFC, or is or was serving at the request of the RFC as a director, officer, employee or agent of another person or entity.
17. ENTIRE AGREEMENT. This Agreement supersedes any and all agreements, either oral or in writing, between the parties with respect to the employment of the Executive by the RFC.
18. SUCCESSORS; BINDING AGREEMENT.
(a) RFC will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the businesses and/or assets of RFC to expressly assume and agree to perform this Agreement in the same manner and to the same extent that RFC would be required to perform it if no such succession had taken place. Failure by RFC to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute a breach of this Agreement and the provisions of Section 3 of this Agreement shall apply.
(b) This Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. If Executive should die after a Notice of Termination is delivered by Executive, or following termination of Executive's employment without Cause, and any amounts would be payable to Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designee, or, if there is no such designee, to Executive's estate.
19. NO MITIGATION OR OFFSET. The Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking employment or otherwise; nor will any amounts or benefits payable or provided hereunder be reduced in the event he does not secure employment, except as otherwise provided herein.
20. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
21. SEVERABILITY. If any provision of this Agreement is declared unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.
22. WAIVER; AMENDMENT. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and an executive officer designated by the boards of directors of Corporation or the Change Entity. No waiver by either party, at any time, of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement may be amended or canceled only by mutual agreement of the parties in writing.
23. PAYMENT OF MONEY DUE DECEASED/DISABLED EXECUTIVE. Subject to the last sentence of this section, if Executive dies or develops a permanent disability while employed, Corporation will have no obligations under this Agreement to Executive after such event and this Agreement shall terminate. For purposes of this Agreement, permanent disability shall mean a physical or mental impairment that renders Executive incapable of performing the essential functions of his job, on a full-time basis, even taking into account any reasonable accommodation required by law, as determined by a physician who is selected by the agreement of Executive and Corporation, for a period greater than 180 days. However, any amounts or benefits that become due under Section 8 of this Agreement on account of an event occurring before the Executive dies or becomes disabled will continue to be due and will be unaffected by the Executive's death or disability.
24. LIMITATION OF DAMAGES FOR BREACH OF AGREEMENT. In the event of a
breach of this Agreement by RFC, the Change Entity or the Executive, each hereby
waives to the fullest extent permitted by law the right to assert any claim
against the others for punitive or exemplary damages. Except as provided in
Section 15 of this Agreement, in no event shall any party be entitled to the
recovery of attorney's fees or costs.
25. ARBITRATION. Corporation and Executive recognize that in the event a dispute should arise between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes,
disagreements and questions of interpretation concerning this Agreement, except for any claims brought by Corporation for equitable relief or an injunction to enforce the restrictive covenants contained in Section 9 of this Agreement, are to be submitted for resolution, in Defiance County, Ohio to the American Arbitration Association (the "Association") in accordance with the Association's National Rules for the Resolution of Employment Disputes or other applicable rules then in effect ("Rules"). Corporation or Executive may initiate an arbitration proceeding at any time by giving notice to the other in accordance with the Rules. Corporation and Executive may, as a matter of right, mutually agree on the appointment of a particular arbitrator from the Association's pool. The arbitrator shall not be bound by the rules of evidence and procedure of the courts of the State of Ohio, but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice of a request for arbitration, Corporation and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein.
RFC or the Change Entity will bear all reasonable costs associated with any dispute arising under this Agreement, including reasonable accounting and legal fees incurred by the Executive in connection with the arbitration proceedings just described. If it is subsequently determined that payment of these costs are excess parachute payments, RFC or the Change Entity will fully gross-up the Executive for the income, wage, employment and excise taxes associated with that payment so that, after all applicable federal, state and local, income, wage, employment and excise taxes (plus any assessed interest and penalties), the Executive will have incurred no liability (either for these fees or the taxes just listed) with respect to the matters encompassed in this section.
If otherwise due, payments not being contested under the procedures described in this section will not be deferred during the pendency of procedures described in this section.
26. LAW GOVERNING. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to its conflicts of law principles.
27. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
28. HEADINGS. The section headings of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.
29. MISCELLANEOUS.
(a) Except as expressly provided in this Agreement, the Executive's right to receive the payments described in this Agreement will not decrease the amount of, or otherwise adversely affect, any other benefits payable to the Executive under any other plan, agreement or arrangement.
(b) Except as expressly provided elsewhere in this Agreement, the amount of any payment made under this Agreement will be reduced by amounts the Employer is required to withhold in payment (or in anticipation of payment) of any income, wage or employment taxes imposed on the payment.
(c) The right of an Executive or any other person to receive any
amount under this Agreement may not be assigned, transferred,
pledged or encumbered except by will or by applicable laws of
descent and distribution. Any attempt to assign, transfer,
pledge or encumber any amount that is or may be receivable
under this Agreement will be null and void and of no legal
effect. However, this section will not preclude payment under
Section 17 of this Agreement of any benefit to which a
deceased Executive is entitled.
(d) Subject to the preceding subsection 29(c), this Agreement inures to the benefit of and may be enforced by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
(e) If the Executive's employment relationship shifts between RFC and any related entity before a Change of Control or after a Change of Control, between the Change Entity and any entity related to the Change Entity and there has been no intervening termination, this Agreement will remain in full force and effect and for all purposes of this Agreement, the Executive's new employer will be substituted for the Executive's prior employer.
(f) If the Executive's employer is no longer related to RFC, whether or not as part of a transaction that constitutes a Change of Control, this Agreement will remain in full force and effect. However, the Executive will not be entitled to any amount under this Agreement on account of a Change of Control that solely affects RFC after that transfer and is not part of the same transaction through which the employer stopped being related to RFC.
30. ENTIRE AGREEMENT. This Agreement supersedes any and all prior agreements, either oral or in writing, between the parties (including such agreement with any subsidiary of RFC) with respect to payments upon termination after a Change of Control, and this Agreement contains all the covenants and agreements between the parties with respect to same.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
ATTEST: "RFC" /s/ Keeta J. Diller By: /s/ Steven VanDemark -------------------------------- --------------------------------- Chairman Date: March 6, 2006 WITNESS: "EXECUTIVE" /s/ Valda L. Colbart /s/ Kenneth A. Joyce -------------------------------- ------------------------------------- Date: March 5, 2006 |
EXHIBIT 10.11
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this first day of March, 2006 ("Effective Date") among Rurban Financial Corp. ("RFC"), an Ohio business corporation having a place of business at 401 Clinton Street, Defiance, Ohio, and Kenneth A. Joyce , individually ("Executive") an Executive.
WITNESSETH: The Executive has previously entered into an agreement describing amounts payable under an Executive Salary Continuation Agreement ("Prior Agreement"), which agreement is superseded and replaced by this Agreement.
WHEREAS, RFC is a registered bank holding company; and
WHEREAS, any reference to "Corporation" in this Agreement shall mean RFC, and any of their successors, including any entity with which RFC effects a Change in Control ("Change Entity"); and
WHEREAS, the Executive is employed by the Corporation as its Chief Executive Officer; and
WHEREAS, it is the consensus of the board of directors of RFC that the Executive's services to the Corporation in the past have been of exceptional merit and have constituted an invaluable contribution to the general welfare of the Corporation and in bringing it to its present status of operating efficiency, and its present position in its field of activity; and
WHEREAS, the experience of the Executive, his knowledge of the affairs of the Corporation, his reputation and contacts in the industry are so valuable that assurance of his continued services is essential for the future growth and profits of the Corporation and it is in the best interest of the Corporation to arrange terms of continued employment for the Executive so as to reasonably ensure his remaining in the Company's employment; and
WHEREAS, it is the desire of the Corporation that the Executive's services be retained as herein provided; and
WHEREAS, the Executive is willing to continue in the employ of the Company provided the Company agrees to pay to him or his beneficiaries certain benefits in accordance with the terms and conditions hereinafter set forth:
ACCORDINGLY, it is the desire of the Corporation and the Executive to enter into this Agreement under which the Corporation will agree to make certain payments to the Executive as described in (and subject to the terms of) this Agreement; and
FURTHERMORE, it is the intent of the parties hereto that this agreement be considered an unfunded arrangement maintained primarily to provide supplemental benefits for the Executive, as a member of a select group of management or highly compensated employees of the Corporation for the purposes of the Employee Retirement Income Security Act of 1974, (E.R.I.S.A.):
NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained the parties agree to the following terms and conditions:
1. DEFINITION OF CAUSE. The term "Cause" shall be defined, for purposes of this Agreement, as the occurrence of one or more of the following:
(a) The willful failure by the Executive to substantially perform his duties hereunder (other than a failure resulting from Executive's incapacity because of death or disability), after notice from the Company, and a failure to cure such violation within twenty (20) days of said notice;
(b) The willful engaging by the Executive in misconduct injurious to the Corporation;
(c) Dishonesty, insubordination or gross negligence of the Executive in the performance of his duties;
(d) Executive's breach of fiduciary duty involving personal profit;
(e) Executive's violation of any law, rule or regulation governing issuers of publicly traded securities or banks or bank officers or any regulatory enforcement actions issued by a regulatory authority against the Executive;
(f) Conduct on the part of Executive which brings public discredit to the Corporation and, if the effect may be cured, a failure to cure within twenty (20) days of the date said notice is delivered to the Executive;
(g) Executive's conviction of or plea of guilty or nolo contendre to a felony (including conviction of or plea of guilty or nolo contendre to a misdemeanor that was originally charged as a felony but was reduced to a misdemeanor as a result of a plea bargain), crime of falsehood or a crime involving moral turpitude, or the actual incarceration of Executive for a period of twenty (20) consecutive days or more;
(h) An act by the Executive affecting any of the Corporation's employees, customers, business associates, contractors or visitors that an independent third party decides, after reasonable investigation, constitutes unlawful discrimination or harassment or violates the Corporation's policy concerning discrimination or harassment;
(i) Executive's theft or abuse of Corporation's property or the property of the Corporation's customers, employees, contractors, vendors or business associates;
(j) The direction or recommendation of a state or federal bank regulatory authority to remove Executive from his positions with Corporation; or
(k) Executive's willful failure to follow the good faith lawful instructions of the board of directors of the Company with regard to its operations, after written notice and, if the event may be cured, a failure to cure such violation within twenty (20) days of the date said notice is delivered to the Executive;
(l) Material breach of any contract or agreement that Executive entered with Corporation, including a breach of any of the obligations described in Paragraphs 15 and 20 and, if the breach may be cured, a failure to cure such breach within twenty (20) days of the date said notice is delivered to the Executive;
(m) Unauthorized disclosure of the trade secrets or confidential information (as defined below) of Corporation or any of its affiliates, trade partners, or vendors.
However, Cause will not arise solely because the Executive is absent from active employment during periods of vacation, consistent with the Company's applicable vacation policy or other period of absence initiated by the Executive and approved by the Company.
Also, if, after the Executive terminates employment, the Corporation learns that the Executive has actively concealed conduct or an event that, if discovered before employment terminated, would have constituted "Cause," the provisions of Paragraph 10 will be applied retroactively to the date the Executive terminated employment and the Corporation may recover any and all amounts paid to the Executive (or to his or her beneficiaries) under this Agreement.
The term "Confidential Information" shall mean any and all information (other than information in the public domain) related to the Corporation's business, including all processes, inventions, trade secrets, computer programs, technical data, drawings or designs, information concerning pricing and pricing policies, marketing techniques, plans and forecasts, new product information, information concerning methods and manner of operations and information relating to the identity and location of all past, present and prospective customers and suppliers.
2. DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, the term "Change of Control" shall mean the earliest of any of the following:
(a) Of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A or any successor rule or regulation promulgated under the Securities Exchange Act of 1934, as amended (the "Act");
(b) A merger or consolidation of RFC with or purchase of all or substantially all of RFC's assets by another "person" or group of "persons" (as such term is defined or used in Sections 3.13(d), and 14(d) of the Act) and, as a result of
such merger, consolidation or sale of assets, less than a majority of the outstanding voting stock of the surviving, resulting or purchasing person is owned, immediately after the transaction, by the holders of the voting stock of RFC before the transaction, regardless of when or how their voting stock was acquired;
(c) Any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) becomes through any means a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of RFC representing 50% or more of the combined voting power of RFC's then outstanding securities eligible to vote for the election of RFC's board of directors;
(d) Any "person" as defined above, other than the Corporation, the Executive or RFC's ESOP, is or becomes the "beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5, or any successor rule or regulation, promulgated under the Act), directly or indirectly, of securities of RFC which represent twenty-five percent (25%) or more of the combined voting power of the securities of RFC, then outstanding but disregarding any securities with respect to which that acquirer has filed SEC Schedule 13G indicating that the securities were not acquired and are not held for the purpose of or with the effect of changing or influencing, directly or indirectly, RFC's management or policies, unless and until that entity or person files SEC Schedule 13D, at which point this exception will not apply to such securities, including those previously subject to a SEC Schedule 13G filing;
(e) Individuals who, on the Effective Date, constituted the board of directors of RFC (the "Incumbent Directors") cease for any reason to constitute at least a majority of the members of RFC's board of directors; provided that any person becoming a director subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of RFC in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; and further provided, however, that no individual elected or nominated as a director of RFC initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than RFC's board of directors shall ever be deemed to be an Incumbent Director; and
(f) Any other change of control of the Corporation similar in effect to any of the foregoing.
Notwithstanding any other provision of this Agreement, the Plan will be administered without regard to this definition if the Executive acted in concert with any person or group (as defined above) to effect a Change of Control, other than at the specific direction of the board of directors and in his/her capacity as an employee of the Company.
3. DEFINITION OF DATE OF THE CHANGE OF CONTROL. For purposes of this Agreement, the "Date of the Change of Control" shall mean the date the first of any of the events described in Paragraph 2 occurs.
4. DEFINITION OF ANNUAL DIRECT SALARY. For purposes of this Agreement, Annual Direct Salary shall be defined as the highest base salary paid to the Executive for any calendar month during the 36-consecutive-calendar-month period ending on or immediately before the date on which it is being calculated, multiplied by 12. Annual Direct Salary will be determined without including any employee or fringe benefits, bonuses, incentives or other compensation (other than base salary) paid or earned during the calculation period.
5. EMPLOYMENT. The Company agrees to employ the Executive in such capacity as the Company may from time to time determine. The Executive will continue in the employ of the Company in such capacity and with such duties and responsibilities as may be assigned to him, and with such compensation as may be determined from time to time by the board of directors of the Company. Active employment shall include temporary disability not to exceed 180 days and other "leaves of absence" specifically granted by the board of directors.
6. FRINGE BENEFITS. The salary continuation benefits provided by this agreement are granted by the Company as a fringe benefit to the Executive and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Executive has no option to take any current payment or bonus in lieu of these salary continuation benefits except as set forth hereinafter.
7. RETIREMENT DATE. If Executive remains in the continuous employ of the Corporation, Executive shall retire from active employment with the Corporation on the first December 31st after his sixty-second (62) birthday, unless by action of the board of directors Executive's period of active employment shall be shortened or extended.
8. RETIREMENT BENEFIT AND POST RETIREMENT DEATH BENEFIT. Subject to
Section 409A of the Code, when the Executive reaches his/her Retirement Date,
the Corporation, commencing with the first day of the month following the date
of such retirement, shall pay Executive an annual benefit equal to 25% of
Executive's Annual Direct Salary in equal monthly installments (of 1/12 of the
annual benefit) for a period of one hundred eighty (180) months, provided that
if less than one hundred eighty (180) such monthly payments have been made prior
to the death of the Executive, the Corporation shall continue such monthly
payments to whomever the Executive shall designate in writing and filed with the
Corporation, until the full number of one hundred eighty (180) monthly payments
have been made. In the absence of any effective designation of beneficiary, any
such amounts becoming due and payable upon the death of the Executive shall be
payable to the duly qualified executor or administrator of Executive's estate.
9. BENEFIT ACCOUNTING. The Corporation shall account for this benefit using the regulatory accounting principles of the Corporation's primary federal regulator consistent with Generally Applicable Accounting Principles. The Corporation shall establish an unfunded accrued liability retirement account for the Executive.
10. OTHER TERMINATION OF EMPLOYMENT. In the event that the employment of
the Executive shall terminate prior to Retirement Date from active employment,
as provided in Paragraph 5, by Executive's voluntary action, then this Agreement
shall terminate upon the date of such termination of employment and, subject to
Section 409A of the Code, the Corporation shall pay to the Executive as Early
Retirement compensation an amount of money as of attained age under Vesting
Schedule (Paragraph 11) and subject to the payment schedule described in
Paragraph 8. If the Executive has not attained the minimum age shown is
Paragraph 11 or the Executive is discharged by the Corporation for Cause, the
Executive will have no compensation payable under this Agreement.
In the event the Executive's death should occur after such Early Retirement defined above, but prior to the completion of the monthly payments provided for in this Paragraph 10, the remaining installments shall be paid to such individual or individuals as the Executive may have designated in writing, and filed with the Corporation. In the absence of any effective designation of beneficiary, any such amounts shall be payable to the duly qualified executor or administrator of Executive's estate.
11. VESTING AND PAYMENT SCHEDULE. The benefits contemplated under this Agreement are payable in accordance with the following vesting schedule. Five years of employment and the attainment of the following ages while actively employed with the Corporation:
15 % of Executive's Annual Direct Salary at age fifty-five (55)
20 % of Executive's Annual Direct Salary at age sixty (60)
25 % of Executive's Annual Direct Salary at age sixty-two (62)
12. DEATH BENEFIT PRIOR TO RETIREMENT. In the event the Executive dies while actively employed by the Corporation at any time after the date of this Agreement but prior to his attaining the age of sixty-two years (or such later date as may be agreed upon), the Corporation will pay an annual benefit equal the amount due the Executive as if the death of the Executive was an Early Retirement as defined in Paragraph 10. The amount paid will be according to the vesting schedule of Paragraph 11 and such vesting must have occurred for payment of this death benefit as defined in this Paragraph. This payment will be based upon Executive's Annual Direct Salary in equal monthly installments (each equal to 1/12 of the annual benefit) for a period of one hundred eighty (180) months to such individual or individuals as the Executive may have designated in writing and filed with the Corporation. The said monthly payments shall begin the first day of the first month following the month of the death of the Executive. In the absence of any effective designation of beneficiary, any such amounts becoming due and payable upon the death of the executive shall be payable to the duly qualified executor or administrator of Executive's estate.
13. CHANGE OF CONTROL. In the event there is a Change of Control as defined herein, the Executive shall become 100% vested and the benefit described in Paragraph 8 (calculated on the basis of the higher of the Executive's Annual Direct Salary on the date of the Change of Control or at his date of termination) beginning on the Executive's Retirement Date and paid as provided in (and subject to) Paragraph 10.
14. PARTICIPATION IN OTHER PLANS. The benefits provided hereunder shall be in addition to Executive's annual salary as determined by the board of directors of the Company, and shall not affect the right of Executive to participate in any current or future Corporation retirement plan, group insurance, bonus, or in any supplemental compensation arrangement which constitutes a part of the Corporation's regular compensation structure.
15. NON-COMPETE. In consideration of the retirement benefits available under this Agreement:
(a) Executive hereby acknowledges and recognizes the highly competitive nature of the business of the Corporation. Accordingly, in consideration of the Benefit described in this Agreement, during and for two (2) year(s) following termination of Executive's employment with Corporation, ("Non-Competition Period") Executive shall not:
(i) Provide financial or executive assistance to any person, firm, corporation or enterprise engaged in (1) the banking or financial services industry (including bank holding company), or (2) any other activity in which Corporation engaged at the beginning of the Non-Competition Period, within fifty (50) miles of the Corporation's Main Office (the "Non-Competition Area"); or
(ii) Directly or indirectly contact, solicit or induce any person, corporation or other entity who or which is a customer or referral source of Corporation during the term of Executive's employment or on the date of termination of Executive's employment, to become a customer or referral source for any person or entity other than Corporation; or
(iii) Directly or indirectly solicit, induce or encourage any employee of Corporation or its subsidiaries, who is employed during the term of Executive's employment or on the date of termination of Executive's employment, to leave the employ of Corporation or its subsidiaries or to seek, obtain or accept employment with any person or entity other than Corporation or its subsidiaries.
(b) It is expressly understood and agreed that, although Executive and RFC consider the restrictions contained in Paragraph 15(a) reasonable for the purpose of preserving for Corporation, its good will and other proprietary
rights, if a final judicial determination is made by a court having jurisdiction that the Non-Competition Area, the Non-Competition Period or any other restriction contained in Paragraph 15 is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of Paragraph 15 shall not be rendered void, but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.
(c) The existence of any immaterial claim or cause of action of the Executive against Corporation, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Corporation of this covenant. The Executive agrees that any breach of the restrictions set forth in this Paragraph 15 will result in irreparable injury to Corporation for which it will have no adequate remedy at law and the Corporation shall be entitled to injunctive relief in order to enforce the provisions hereof and/or seek specific performance and damages.
Prior to the application of Paragraph 16 (if applicable), the Corporation will make reasonable efforts to allocate to value the undertaking described in this paragraph and to allocate to that calculation the maximum amount due under this Agreement.
16. GOLDEN PARACHUTE PROVISIONS. Notwithstanding any provision in this Agreement to the contrary (other than Paragraphs 27 and 31 which will apply under the circumstances described in those paragraphs and below), if, as of the date of the Change of Control, the Change Entity (after consulting with an independent accounting or compensation consulting company) ascertains that the compensation and benefits provided to the Executive pursuant to or under this Agreement (other than the amounts described in Paragraphs 27 and 31, either alone or when combined with other compensation and benefits received by the Executive, would constitute "parachute payments" within the meaning of Section 280G of the Code, or the regulations adopted thereunder, then:
(a) The relevant provisions of any change of control agreement to which the Corporation and the Executive are parties on the Date of the Change of Control will apply; or
(b) If the Executive and the Corporation are not parties to a change of control agreement on the Date of the Change of Control such parachute payments shall be retroactively (if necessary) reduced to the extent necessary to avoid excise taxes otherwise arising under Section 4999 of the Code. Upon written notice to Executive, together with calculations of Corporation's independent auditors, Executive shall remit to Corporation the amount of the reduction plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, if any portion of the amount herein payable to the Executive is determined to be non-deductible pursuant to the regulations promulgated
under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), the Corporation shall be required only to pay to Executive the amount determined to be deductible under Section 280G.
If the Internal Revenue Service subsequently and finally decides that the amount of compensation and benefits (including after the reduction applied under this Paragraph 16) will generate Excise Taxes on compensation and benefits (other than those amounts described in Paragraphs 27 and 31), the Executive will immediately remit an additional amount to the Change Entity equal to the difference between the amount paid (other than those amounts described in Paragraphs 27 and 31) and the amount paid (other than those amounts described in Paragraphs 27 and 31). Also, the Executive agrees to promptly notify the Corporation of an assessment or inquiry from the Internal Revenue Service relating to payments under this Agreement that would, if made final, result in imposition of an Excise Tax and also agrees to cooperate in resisting any Excise Tax assessment. However, the Corporation will have complete control over resolution of any claim by the Internal Revenue Service that might generate an Excise Tax (although it will have no dispositive power over any other tax matter that may be subject to the same audit) and the Corporation will bear all costs associated with that effort.
17. RESTRICTIONS OF FUNDING. The Corporation shall have no obligation to set aside, earmark, or entrust any specific fund or money with which to pay its obligation under this Agreement. The Corporation reserves the absolute right at its sole discretion to either fund the obligations undertaken by this Agreement or to refrain from funding the same and determine the extent, nature, and method of such funding.
18. GENERAL ASSETS OF THE CORPORATION. The rights of the Executive under this Agreement and of any beneficiary of the Executive shall be solely those of an unsecured creditor of the Corporation. If the Corporation shall acquire an insurance policy or any other asset in connection with the liabilities assumed by it hereunder, it is expressly understood and agreed that neither Executive nor any beneficiary of Executive shall have any right with respect to, or claim against, such policy or other asset. Such policy or asset shall not be deemed to be held under any trust for the benefit of Executive or his beneficiaries or to be held in any way as collateral security for the fulfilling of the obligations of the Corporation under this Agreement. It shall be, and remain, a general, unpledged, unrestricted asset of the Corporation and Executive or any of his beneficiaries shall not have a greater claim to the insurance policy or other assets, or any interest in either of them, than any other general creditor of the Corporation.
19. UNAUTHORIZED DISCLOSURE. During the term of his employment, or at any later time, the Executive shall not, without the written consent of the boards of directors of RFC or a person authorized thereby, knowingly use or disclose to any person, other than an employee of the Corporation, or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of Company any material Confidential Information obtained by him while in the employ of Corporation with respect to any of the services, products, improvements, formulas, designs or styles, processes, customers, customer lists, methods of business or any business practices of Corporation, or affiliates, the disclosure of which could be or will be damaging to Corporation, or affiliates; provided, however, that
Confidential Information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive or any person with the assistance, consent or direction of the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by Corporation or its subsidiaries or affiliates or any information that must be disclosed as required by law.
20. NO EMPLOYMENT CONTRACT. This Agreement is not an employment contract. Nothing contained herein shall guarantee or assure Executive of continued employment by Corporation.
21. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: Kenneth A. Joyce 1309 Heatherdowns Dr Defiance Ohio, 43512 If to the Corporation or Company: Michelle Baker |
Human Resource Director 401 Clinton Street Defiance, OH 43512
or to such other address as Executive or Company may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
22. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the Corporation, and Executive, their respective personal representatives, heirs, assigns or successors, provided, however, that the Executive may not commute, anticipate, encumber, dispose or assign any payment herein except as may be otherwise specified in this Agreement.
23. SEVERABILITY. If any provision of this Agreement is declared unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.
24. WAIVER; AMENDMENT. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and an executive officer specifically designated by the board of directors of RFC. No waiver by either party, at any time, of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent
time. This Agreement may be amended or canceled only by mutual agreement of the parties in writing.
25. PAYMENT OF MONEY DUE DECEASED/DISABLED EXECUTIVE. Subject to the last sentence of this paragraph, if Executive dies or develops a permanent disability while employed, Corporation will have no obligations under this Agreement to Executive after such event and this Agreement shall terminate. For purposes of this Agreement, permanent disability shall mean a physical or mental impairment that renders Executive incapable of performing the essential functions of his job, on a full-time basis, even taking into account any reasonable accommodation required by law, as determined by a physician who is selected by the agreement of Executive and Company, for a period greater than 180 days. However, any amounts or benefits that become due under this Agreement on account of an event occurring before the Executive dies or becomes disabled will continue to be due and will be unaffected by the Executive's death or disability.
26. LIMITATION OF DAMAGES FOR BREACH OF AGREEMENT. In the event of a breach of this Agreement, by either the Corporation or the Executive, each hereby waives to the fullest extent permitted by law, the right to assert any claim against the others for punitive or exemplary damages. Except as provided in Paragraph 31, no party will be entitled to the recovery of attorney's fees or costs.
27. ARBITRATION. Corporation and Executive recognize that in the event a dispute should arise between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this Agreement, except for any claims brought by Corporation for equitable relief or an injunction to enforce the restrictive covenants contained in Paragraph 15, are to be submitted for resolution, in Defiance, Ohio to the American Arbitration Association (the "Association") in accordance with the Association's National Rules for the Resolution of Employment Disputes or other applicable rules then in effect ("Rules"). Corporation or Executive may initiate an arbitration proceeding at any time by giving notice to the other in accordance with the Rules. Corporation and Executive may, as a matter of right, mutually agree on the appointment of a particular arbitrator from the Association's pool. The arbitrator shall not be bound by the rules of evidence and procedure of the courts of the State of Ohio, but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice of a request for arbitration, Corporation and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein.
The Corporation will bear all reasonable costs associated with any dispute arising under this Agreement, including reasonable accounting and legal fees incurred by the Executive in connection with the arbitration proceedings just described. If it is subsequently determined that payment of these costs are excess parachute payments, the Corporation will fully gross-up the Executive for the income, wage, employment and excise taxes associated with that payment so that, after all applicable federal, state and local, income, wage, employment and excise taxes (plus any assessed interest and
penalties), the Executive will have incurred no liability (either for these fees or the taxes just listed) with respect to the matters encompassed in this paragraph.
If otherwise due, payments not being contested under the procedures described in this paragraph will not be deferred during the pendency of procedures described in this paragraph.
28. LAW GOVERNING. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to its conflicts of law principles.
29. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
30. HEADINGS. The paragraph headings of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.
31. LEGAL FEES. The Corporation shall pay all reasonable legal, accounting and actuarial fees and expenses incurred by the Executive in enforcing any right or benefit provided by this Agreement. If it is subsequently determined that payment of these fees are excess parachute payments, will fully gross-up the Executive for the income, wage, employment and excise taxes associated with that payment so that, after all applicable federal, state and local, income, wage, employment and excise taxes (plus any assessed interest and penalties), the Executive will have incurred no liability (either for these fees or the taxes just listed) with respect to the matters encompassed in this paragraph.
32. MISCELLANEOUS.
(a) Except as expressly provided in this Agreement, the Executive's right to receive the payments described in this Agreement will not decrease the amount of, or otherwise adversely affect, any other benefits payable to the Executive under any other plan, agreement or arrangement.
(b) The Executive is not required to mitigate the amount of any payment described in this Agreement by seeking other employment or otherwise, nor will the amount of any payment or benefit provided for in this Agreement be reduced by any compensation or benefits the Executive earns, or is entitled to receive, in any capacity after termination or by reason of the Executive's receipt of or right to receive any retirement or other benefits attributable to employment.
(c) Except as expressly provided elsewhere in this Agreement, the amount of any payment made under this Agreement will be reduced by amounts the Employer is required to withhold in payment (or in anticipation of payment) of any income, wage or employment taxes imposed on the payment.
(d) The right of an Executive or any other person to receive any amount under this Agreement may not be assigned, transferred, pledged or encumbered except by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber any amount that is or may be receivable under this Agreement will be null and void and of no legal effect. However, this paragraph will not preclude payment under this Agreement of any benefit to which a deceased Executive is entitled.
(e) Subject to the preceding subparagraph (d), this Agreement inures to the benefit of and may be enforced by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
33. ENTIRE AGREEMENT. This Agreement supersedes any and all prior agreements, either oral or in writing, between the parties (including such agreement with any subsidiary of RFC) with respect to similar payments and this Agreement contains all the covenants and agreements between the parties with respect to same.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be duly executed in their respective names and, in the case of the Corporation, by its authorized representatives the day and year above mentioned.
ATTEST: RURBAN FINANCIAL CORP. /s/ Valda L. Colbart By /s/ Steven VanDemark, Chairman ------------------------------- ------------------------------ Date 3-13-06 Date 3/13/2006 WITNESS: EXECUTIVE: /s/ Valda L. Colbart /s/ Kenneth A. Joyce ------------------------------- --------------------------------- Kenneth A. Joyce Date 3-13-06 Date 3/10/2006 |
EXHIBIT 10.12
SCHEDULE A
TO
EXHIBIT 10.11
Rurban Financial Corp. (the "Registrant") has entered into Supplemental Executive Retirement Agreements with the executive officers of the Registrant identified below, which Supplemental Executive Retirement Agreements are substantially identical to the Supplemental Executive Retirement Agreement, executed March 13, 2006 and effective as of March 1, 2006, by and between the Registrant and Kenneth A. Joyce, President and Chief Executive Officer of the Registrant, a copy of which was filed as Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the "2005 Form 10-K").
In accordance with Rule 12b-31 promulgated under the Securities Exchange Act of 1934 and Item 601(b)(10)(iii) of Regulation S-K, the following table identifies those executive officers of the Registrant with whom the Registrant has entered into Supplemental Executive Retirement Agreements similar to that included as Exhibit 10.11 to the 2005 Form 10-K:
EFFECTIVE DATE EXECUTION DATE NAME CURRENT OFFICES HELD WITH REGISTRANT OF AGREEMENT OF AGREEMENT Duane L. Sinn Executive Vice President and Chief March 1, 2006 March 9, 2006 Financial Officer of Rurban Financial Corp.; Treasurer and Director of Rurban Operations Corp. Henry R. Thiemann President, Chief Executive Officer and March 1, 2006 March 9, 2006 Director of Exchange Bank; President, Chief Executive Officer and Director of RFCBC, Inc.; President and Director of Rurban Mortgage Company Jeffrey D. Sewell President, Chief Executive Officer and March 1, 2006 March 10, 2006 Director of Rurban Operations Corp.; Director of Rurbanc Data Services, Inc.; Director of Reliance Financial Services, N.A. Mark K. Klein President, Chief Executive Officer and March 1, 2006 March 9, 2006 Director of The State Bank and Trust Company and Director of Rurban Operations Corp. |
EXHIBIT 10.13
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this first day of March, 2006 ("Effective Date"), among Rurban Financial Corp. ("RFC"), an Ohio business corporation having a place of business at 401 Clinton Street, Defiance, Ohio, and Duane L. Sinn, individually ("Executive"), an Executive.
WITNESSETH: The Executive previously entered into an agreement describing amounts payable upon a change of control ("Prior Agreement"), which agreement is superseded and replaced by this Agreement.
WHEREAS, RFC is a registered bank holding company; and
WHEREAS, any reference to "Corporation" in this Agreement shall mean RFC; and
WHEREAS, the Executive is employed by the Corporation as Executive Vice President and Chief Financial Officer; and
WHEREAS, it is the consensus of the board of directors of RFC that the Executive's services to the Corporation in the past have been of exceptional merit and have constituted an invaluable contribution to the general welfare of the Corporation and in bringing it to its present status of operating efficiency and its present position in its field of activity; and
WHEREAS, the experience of the Executive, his knowledge of the affairs of the Corporation, his reputation and contacts in the industry are so valuable that assurance of his continued services is essential for the future growth and profits of the Corporation and it is in the best interest of the Corporation to arrange terms of continued employment for the Executive so as to reasonably ensure his remaining in the Corporation's employment; and
WHEREAS, this Agreement will become operative only upon a Change of Control (as defined herein); and
WHEREAS, the purpose of this Agreement is to define certain severance benefits that will be paid in the circumstances described in the Agreement by the Corporation or the entity resulting from a Change of Control or succeeding to RFC's interests as a result of a Change of Control (the Corporation or such successors are referred to in this Agreement as the "Change Entity"), but is not intended to affect, nor does it affect, the terms of the Executive's status as an employee at will; and
WHEREAS, the Corporation believes that the Executive will play a critical role in any Change of Control; and
WHEREAS, the Corporation does not believe that the Executive should be forced to sacrifice his financial security in order to fulfill his responsibilities to the Corporation's Shareholders;
NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained the parties agree to following terms and conditions:
1. TERM. The Term of this Agreement shall be from the Effective Date through the end of the 36th consecutive calendar month beginning on or immediately after the Effective Date. However, and unless the Corporation notifies the Executive in writing to the contrary at least 90 days before the end of the 12th consecutive calendar month beginning after the Effective Date (and, thereafter, anniversaries of the Effective Date) the Term of this Agreement will automatically be extended for an additional 12 calendar month period. However, no such notice of nonrenewal may be delivered during any Protection Period and this Agreement will not expire (except as specifically provided below) and will remain in effect throughout any Protection Period regardless of whether that Protection Period ends after the date the Agreement otherwise would expire. Notwithstanding the foregoing, this Agreement will terminate on the earliest of the following to occur:
(a) The Executive's employment terminates before the beginning of the Protection Period;
(b) Before the beginning of a Protection Period, the Executive is reassigned to a more junior position than that held on the date of this Agreement; however, if the more junior position is in an employee classification, the majority of whose members have change of control agreements, this Agreement will remain in effect, although benefit levels will automatically be adjusted to the level established under those agreements;
(c) The Executive agrees, in writing, to terminate this Agreement, whether or not it is replaced with a similar agreement; or
(d) All payments due under this Agreement have been fully paid.
2. DEFINITION OF CAUSE. The term "Cause" shall be defined, for purposes of this Agreement, as the occurrence of one or more of the following:
(a) The willful failure by the Executive to substantially perform his duties hereunder (other than a failure attributable to an event that constitutes Good Reason or resulting from Executive's incapacity because of death or disability), after notice from the Corporation, and a failure to cure such violation within twenty (20) days of said notice;
(b) The willful engaging by the Executive in misconduct injurious to the Corporation or the Change Entity;
(c) Dishonesty, insubordination or gross negligence of the Executive in the performance of his duties;
(d) Executive's breach of fiduciary duty involving personal profit;
(e) Executive's violation of any law, rule or regulation governing issuers of publicly traded securities or banks or bank officers or any regulatory enforcement actions issued by a regulatory authority against the Executive;
(f) Conduct on the part of Executive which brings public discredit to the Corporation or the Change Entity and, if the effect may be cured, a failure to cure within twenty (20) days of the date said notice is delivered to the Executive;
(g) Executive's conviction of, or plea of guilty or nolo contendre to, a felony (including conviction of or plea of guilty or nolo contendre to a misdemeanor that was originally charged as a felony but was reduced to a misdemeanor as a result of a plea bargain), crime of falsehood or a crime involving moral turpitude, or the actual incarceration of Executive for a period of twenty (20) consecutive days or more;
(h) An act by the Executive affecting any of the Corporation's or the Change Entity's employees, customers, business associates, contractors or visitors that an independent third party decides, after reasonable investigation, constitutes unlawful discrimination or harassment or violates the Corporation's or the Change Entity's policy concerning discrimination or harassment;
(i) Executive's theft or abuse of the Corporation's or the Change Entity's property or the property of the Corporation's or the Change Entity's customers, employees, contractors, vendors or business associates;
(j) The direction or recommendation of a state or federal bank regulatory authority to remove Executive from his positions with Corporation or the Change Entity;
(k) Executive's willful failure to follow the good faith lawful instructions of the board of directors of Corporation or of the Change Entity with regard to its operations, after written notice and, if the event may be cured, a failure to cure such violation within twenty (20) days of the date said notice is delivered to the Executive;
(l) Material breach of any contract or agreement that Executive entered with Corporation or the Change Entity, including breach of any of the obligations described in Sections 9 and 11 and, if the breach may be cured, a failure to cure such breach within twenty (20) days of the date said notice is delivered to the Executive;
(m) Unauthorized disclosure of the trade secrets or confidential information (as defined in below) of Corporation, the Change Entity or any of their affiliates, trade partners or vendors;
(n) Any intentional cooperation with any party attempting to effect a Change of Control unless (i) the Corporation's board of directors has approved or ratified that action before the Change of Control or (ii) that cooperation is required by law.
However, Cause will not arise solely because the Executive is absent from active employment during periods of vacation, consistent with the Corporation's or the Change Entity's applicable vacation policy or other period of absence initiated by the Executive and approved by the Corporation or the Change Entity.
Also, if, after the Executive terminates employment, the Corporation or the Change Entity learn that the Executive has actively concealed conduct or an event that, if discovered before employment terminated, would have constituted "Cause," the provisions of Section 8(a) will be applied retroactively to the date the Executive terminated employment and the Corporation or the Change Entity may recover any and all amounts paid to the Executive (or to his or her beneficiaries) under this Agreement.
The term "Confidential Information" shall mean any and all information (other than information in the public domain) related to the Corporation's or the Change Entity's or any Related Entity's business, including all processes, inventions, trade secrets, computer programs, technical data, drawings or designs, information concerning pricing and pricing policies, marketing techniques, plans and forecasts, new product information, information concerning methods and manner of operations and information relating to the identity and location of all past, present and prospective customers and suppliers.
3. DEFINITION OF GOOD REASON. For purposes of this Agreement, the term "Good Reason" shall mean any of the following which occur during the Protection Period, to which the Executive has not consented in writing:
(a) The assignment of duties and responsibilities inconsistent with Executive's status as Chief Financial Officer of the Corporation, unless the Executive has simultaneously been promoted to a more senior position and has been assigned substantive duties normally associated with that new position;
(b) A reassignment which requires Executive to move his office more than fifty (50) miles from the location of Corporation's principal executive office as existing on the first day of the Protection Period;
(c) Any reduction in the Executive's Annual Direct Salary as in effect on the date hereof or as the same may be increased from time to time, except such reductions that are the result of a national financial depression, or
national or bank emergency when such reduction has been implemented for the Corporation's or the Change Entity's senior management, as a group;
(d) Any action that would materially reduce the employee benefits enjoyed by the Executive on the first day of the Protection Period unless such reduction is part of a reduction applicable to all employees;
(e) Any attempt by the Corporation or the Change Entity to amend or terminate this Agreement without regard to the procedures described in Section 16;
(f) Failure at any time during the Protection Period to obtain an assumption of RFC's or the Change Entity's obligations under this Agreement by any successor to any of them, regardless of whether such entity becomes a successor to RFC or the Change Entity as a result of a merger, consolidation, sale of assets or any other form of reorganization; and
(g) Any unsuccessful attempt to terminate the Executive for Cause.
4. DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, the term "Change of Control" shall mean the earliest of any of the following:
(a) Of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A or any successor rule or regulation promulgated under the Securities Exchange Act of 1934, as amended (the "Act");
(b) A merger or consolidation of RFC with or purchase of all or substantially all of RFC's assets by another "person" or group of "persons" (as such term is defined or used in Sections 3.13(d), and 14(d) of the Act) and, as a result of such merger, consolidation or sale of assets, less than a majority of the outstanding voting stock of the surviving, resulting or purchasing person is owned, immediately after the transaction, by the holders of the voting stock of the Corporation before the transaction, regardless of when or how their voting stock was acquired;
(c) Any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) becomes through any means a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of RFC representing 50% or more of the combined voting power of RFC's then outstanding securities eligible to vote for the election of RFC's board of directors;
(d) Any "person" as defined above, other than the Corporation, the Executive or RFC's ESOP, is or becomes the "beneficial owner" (as defined in Rule 13 d-3 and Rule 13 d-5, or any successor rule or regulation, promulgated under the Act), directly or indirectly, of securities of RFC which represent twenty-five percent (25%) or more of the combined voting power of the securities of RFC, then outstanding but disregarding any securities with respect to which that acquirer has filed SEC Schedule 13G indicating that the securities were not acquired and are not held for the purpose of or with the effect of changing or influencing, directly or indirectly, RFC's management or policies, unless and until that entity or person files SEC Schedule 13D, at which point this exception will not apply to such securities, including those previously subject to a SEC Schedule 13G filing;
(e) Individuals who, on the Effective Date, constituted the board of directors of RFC (the "Incumbent Directors") cease for any reason to constitute at least a majority of the members of RFC's board of directors; provided that any person becoming a director subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of RFC in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; and further provided, however, that no individual elected or nominated as a director of RFC initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than RFC's board of directors shall ever be deemed to be an Incumbent Director; and
(f) Any other change of control of the Corporation similar in effect to any of the foregoing.
If more than one event that constitutes a Change of Control occurs during a Protection Period, the Executive shall be entitled to the amount that equals the largest after-tax amount generated by any of the Changes of Control.
Notwithstanding any other provision of this Agreement, the Executive will not be entitled to any amount under this Agreement if he/she acted in concert with any person or group (as defined above) to effect a Change of Control, other than at the specific direction of the board of directors and in his/her capacity as an employee of the Corporation.
5. DEFINITION OF DATE OF THE CHANGE OF CONTROL. For purposes of this Agreement, the "Date of the Change of Control" shall mean the date the first of any of the events described in Section 4 occurs.
6. DEFINITION OF ANNUAL DIRECT SALARY. For purposes of this Agreement, Annual Direct Salary shall be defined as the highest base salary paid to the Executive for any calendar month during the 36-consecutive-calendar-month period ending on or immediately before the date on which it is being calculated, multiplied by 12. Annual Direct Salary will be determined without including any employee or fringe benefits, bonuses, incentives or other compensation (other than base salary) paid or earned during the calculation period.
7. PROTECTION PERIOD. For purposes of this Agreement, Protection Period
shall be defined as (a) the period beginning on the first date the Corporation's
board of directors learns of an event that, if completed, would result in a
Change of Control and ending on the last day of the twelfth complete calendar
month beginning after the Change of Control or, if longer, (b)(i) 60 days after
the date the Executive learns of an event within the definition of Good Reason
and that arose or occurred during the Protection Period (as defined in Section
7(a)) and which the Corporation or the Change Entity concealed or (ii) 60 days
after the conclusion of an unsuccessful attempt to terminate the Executive for
Cause.
8. PAYMENTS UPON TERMINATION. Subject to applicable restrictions arising under Section 4094 of the Internal Revenue Code of 1986, as amended ("Code"):
(a) If Executive's employment is terminated for Cause or Executive voluntarily terminates his employment without Good Reason, as defined herein, all rights of the Executive under this Agreement shall cease as of the effective date of such termination, except that Executive (i) shall be entitled to receive accrued salary through the date of such termination and (ii) shall be entitled to receive the payments and benefits to which he is then entitled under the employee benefit plans of the Corporation or the Change Entity as of the date of such termination.
(b) If the Executive is involuntarily terminated (other than for Cause) in connection with a Change of Control (or an event associated with a Change of Control) during a Protection Period or the Executive voluntarily terminates employment for Good Reason during a Protection Period, then the Corporation or the Change Entity shall:
(i) Within thirty (30) days of the Executive's termination of employment, pay to the Executive a lump sum cash amount equal to two(2) times the Executive's Annual Direct Salary, subject to applicable withholdings and taxes; and
(ii) Provide to the Executive (and the Executive's family, if applicable and if the Executive had elected family coverage as of the day before the date employment terminated) for a period of two (2) years continued health care, life insurance and disability insurance coverage provided, on behalf of Executive, at the same level (both separately with respect to each line of coverage and in the aggregate) and subject to the same terms that were in effect on the
first day of the Protection Period. These benefits will be provided under the insured arrangements maintained for active employees without cost to the Executive. However, if the Corporation or the Change Entity is unable to provide these benefits to the Executive through an insured arrangement maintained for active employees and with the same tax consequences available to active employees ("Equivalent Coverage"), the Corporation or the Change Entity, whichever is appropriate, will distribute to the Executive additional cash equal to the Executive's cost of procuring Equivalent Coverage ("Premium Burden"), plus an additional cash amount sufficient to ensure that after all applicable federal, state and local income, employment, wage and excise taxes (including those imposed under Section 4999 of the Internal Revenue Code with respect to this amount), the Executive has remaining cash equal to the Premium Burden. Collectively, the gross-up described in the preceding sentence and the Premium Burden are referred to as the Welfare Benefit Replacement Cost. The Executive agrees to make available to the Corporation or the Change Entity any information reasonably necessary to calculate the cost of this gross-up.
The Executive also will be entitled to receive any other payments or benefits to which he is then entitled under the terms of any other contract, arrangement, agreement, plan or program in which he is or has been a participant.
9. NON-COMPETE.
(a) Executive hereby acknowledges and recognizes the highly competitive nature of the business of the Corporation. Accordingly, Executive agrees that if a Change of Control occurs and provided that Executive receives the payments described in Section 8(a) or (b), whichever is appropriate, of this Agreement, then in consideration of this benefit during and for two (2) year(s) following termination of Executive's employment with Corporation, or, if applicable, with the Change Entity ("Non-Competition Period") Executive shall not:
(i) Provide financial or executive assistance to any person, firm, corporation or enterprise engaged in (1) the banking or financial services industry (including bank holding company), or (2) any other activity in which Corporation engaged on the Date of the Change of Control, within fifty (50) miles of the Corporation's Main Office (the "Non-Competition Area"); or
(ii) Directly or indirectly contact, solicit or induce any person, corporation or other entity who or which is a customer or referral source of Corporation during the term of Executive's employment or on the date of termination of Executive's employment, to
become a customer or referral source for any person or entity other than Corporation or, if applicable, the Change Entity; or
(iii) Directly or indirectly solicit, induce or encourage any employee of Corporation or its subsidiaries or, if applicable, the Change Entity or its subsidiaries, who is employed during the term of Executive's employment or on the date of termination of Executive's employment, to leave the employ of Corporation or its subsidiaries or, if applicable, the Change Entity or its subsidiaries or to seek, obtain or accept employment with any person or entity other than Corporation or its subsidiaries or, if applicable, the Change Entity or its subsidiaries.
(b) It is expressly understood and agreed that, although Executive and RFC consider the restrictions contained in Section 9(a) reasonable for the purpose of preserving for Corporation and, if applicable, the Change Entity, its good will and other proprietary rights, if a final judicial determination is made by a court having jurisdiction that the Non-Competition Area, the Non-Competition Period or any other restriction contained in Section 9 is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of Section 9 shall not be rendered void, but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.
(c) The existence of any immaterial claim or cause of action of the Executive against Corporation or, if applicable, the Change Entity, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Corporation of this covenant. The Executive agrees that any breach of the restrictions set forth in this Section 9 will result in irreparable injury to Corporation or, if applicable, the Change Entity, for which it will have no adequate remedy at law and the Corporation or, if applicable, the Change Entity, shall be entitled to injunctive relief in order to enforce the provisions hereof and/or seek specific performance and damages.
Prior to the application of Section 10, the Corporation and/or the Change Entity
will make reasonable efforts to allocate to value the undertaking described in
this section and to allocate to that calculation the maximum amount due under
Section 8.
10. GOLDEN PARACHUTE PROVISIONS. Notwithstanding any provision in this Agreement to the contrary (other than Sections 8(b)(ii), 19 and 23 which will apply under the circumstances described in those sections and below), if, as of the date of the Change of Control, the Change Entity (after consulting with an independent accounting or compensation consulting company) ascertains that the compensation and benefits provided to the Executive pursuant to or under this Agreement (other than the Welfare Benefit Replacement Cost as
defined in Section 8(b)(ii) or the amounts described in Section 19 and/or 23,
either alone or when combined with other compensation and benefits received by
the Executive, would constitute "parachute payments" within the meaning of
Section 280G of the Code, or the regulations adopted thereunder, then the
compensation and benefits payable pursuant to or under this Agreement (other
than the Welfare Benefit Replacement Cost and the amounts described in Sections
19 and 23) shall be reduced to the extent necessary so that no portion thereof
shall be subject to the excise tax imposed by Section 4999 of the Code ("Excise
Taxes"). The Executive or any other party entitled to receive the compensation
or benefits hereunder may request a determination as to whether the compensation
or benefit would constitute a parachute payment and, if requested, such
determination shall be made by an independent accounting or compensation
consulting company (other than the entity described in the first sentence of
this section) selected by the Change Entity and approved by the party requesting
such determination, the fees of which will be borne solely by the Change Entity.
In the event that any reduction is required under this Section 10, the Executive
may select which compensation and benefits shall be reduced and the Executive's
decision will be binding.
If the Internal Revenue Service subsequently and finally decides that the amount of compensation and benefits (including after the reduction applied under this Section 10) will generate Excise Taxes on compensation and benefits (other than the Welfare Benefit Replacement Cost and those amounts described in Sections 19 and 23), the Executive will immediately remit an additional amount to the Change Entity equal to the difference between the amount paid (other than the Welfare Benefit Replacement Cost and those amounts described in Sections 19 and 23) and the amount paid (other than the Welfare Benefit Replacement Cost and those amounts described in Sections 19 and 23). Also, the Executive agrees to promptly notify the Change Entity of an assessment or inquiry from the Internal Revenue Service relating to payments under this Agreement that would, if made final, result in imposition of an Excise Tax and also agrees to cooperate with the Change Entity in resisting any Excise Tax assessment. However, the Change Entity will have complete control over resolution of any claim by the Internal Revenue Service that might generate an Excise Tax (although it will have no dispositive power over any other tax matter that may be subject to the same audit) and the Corporation will bear all costs associated with that effort.
11. UNAUTHORIZED DISCLOSURE. During the term of Executive's employment, or at any later time, the Executive shall not, without the written consent of the board of directors of the Corporation (or, if applicable, the Change Entity) or a person authorized by them knowingly use or disclose to any person, other than an authorized employee of the Corporation (or, if applicable, the Change Entity), or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of Corporation (or, if applicable, the Change Entity), any material Confidential Information obtained by him while in the employ of Corporation (or, if applicable, the Change Entity) with respect to any of the services, products, improvements, formulas, designs or styles, processes, customers, customer lists, methods of business or any business practices of Corporation (or, if applicable, the Change Entity) or affiliates, the disclosure of which could be or will be damaging to Corporation (or, if applicable, the Change Entity) or affiliates; provided, however, that Confidential Information shall not include any information known generally to the
public (other than as a result of unauthorized disclosure by the Executive or any person with the assistance, consent or direction of the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by Corporation or its subsidiaries or affiliates or any information that must be disclosed as required by law.
12. NO EMPLOYMENT CONTRACT. This Agreement is not an employment contract. Nothing contained herein shall guarantee or assure Executive of continued employment by Corporation or the Change Entity.
13. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: Duane L. Sinn /s/ Duane L. Sinn _____________________________ If to the Corporation: Rurban Financial Corp, Human Resource Director 401 Clinton Street Defiance, OH 43512 If to the Change Entity At the address provided |
or to such other address as Executive, Corporation or the Change Entity may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
14. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the Corporation, the Change Entity and Executive, their respective personal representatives, heirs, assigns or successors; provided, however, that the Executive may not commute, anticipate, encumber, dispose of or assign any payment herein except as specifically set forth in Sections 14 and 24(e) of this Agreement.
15. SEVERABILITY. If any provision of this Agreement is declared unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.
16. WAIVER; AMENDMENT. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and an executive officer designated by the boards of directors of Corporation or the Change Entity. No waiver by either party, at any time, of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement may be amended or canceled only by mutual agreement of the parties in writing.
17. PAYMENT OF MONEY DUE DECEASED/DISABLED EXECUTIVE. Subject to the last sentence of this section, if Executive dies or develops a permanent disability while employed, Corporation will have no obligations under this Agreement to Executive after such event and this Agreement shall terminate. For purposes of this Agreement, permanent disability shall mean a physical or mental impairment that renders Executive incapable of performing the essential functions of his job, on a full-time basis, even taking into account any reasonable accommodation required by law, as determined by a physician who is selected by the agreement of Executive and Corporation, for a period greater than 180 days. However, any amounts or benefits that become due under Section 8 on account of an event occurring before the Executive dies or becomes disabled will continue to be due and will be unaffected by the Executive's death or disability.
18. LIMITATION OF DAMAGES FOR BREACH OF AGREEMENT. In the event of a breach of this Agreement, by the Corporation, the Change Entity or the Executive, each hereby waives to the fullest extent permitted by law the right to assert any claim against the others for punitive or exemplary damages. In no event shall any party be entitled to the recovery of attorney's fees or costs.
19. ARBITRATION. Corporation and Executive recognize that in the event a dispute should arise between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this Agreement, except for any claims brought by Corporation for equitable relief or an injunction to enforce the restrictive covenants contained in Section 9, are to be submitted for resolution, in Defiance County, Ohio to the American Arbitration Association (the "Association") in accordance with the Association's National Rules for the Resolution of Employment Disputes or other applicable rules then in effect ("Rules"). Corporation or Executive may initiate an arbitration proceeding at any time by giving notice to the other in accordance with the Rules. Corporation and Executive may, as a matter of right, mutually agree on the appointment of a particular arbitrator from the Association's pool. The arbitrator shall not be bound by the rules of evidence and procedure of the courts of the State of Ohio, but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice of a request for arbitration, Corporation and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein.
The Corporation or the Change Entity will bear all reasonable costs associated with any dispute arising under this Agreement, including reasonable accounting and legal fees incurred by the Executive in connection with the arbitration proceedings just described. If it is subsequently
determined that payment of these costs are excess parachute payments, the Corporation or the Change Entity will fully gross-up the Executive for the income, wage, employment and excise taxes associated with that payment so that, after all applicable federal, state and local, income, wage, employment and excise taxes (plus any assessed interest and penalties), the Executive will have incurred no liability (either for these fees or the taxes just listed) with respect to the matters encompassed in this section.
If otherwise due, payments not being contested under the procedures described in this section will not be deferred during the pendency of procedures described in this section.
20. LAW GOVERNING. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to its conflicts of law principles.
21. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
22. HEADINGS. The section headings of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.
23. LEGAL FEES. The Corporation or the Change Entity shall pay all reasonable legal, accounting and actuarial fees and expenses incurred by the Executive in enforcing any right or benefit provided by this Agreement. If it is subsequently determined that payment of these fees are excess parachute payments, the Change Entity will fully gross-up the Executive for the income, wage, employment and excise taxes associated with that payment so that, after all applicable federal, state and local, income, wage, employment and excise taxes (plus any assessed interest and penalties), the Executive will have incurred no liability (either for these fees or the taxes just listed) with respect to the matters encompassed in this section.
24. MISCELLANEOUS.
(a) Except as expressly provided in this Agreement, the Executive's right to receive the payments described in this Agreement will not decrease the amount of, or otherwise adversely affect, any other benefits payable to the Executive under any other plan, agreement or arrangement.
(b) The Executive is not required to mitigate the amount of any payment described in this Agreement by seeking other employment or otherwise, nor will the amount of any payment or benefit provided for in this Agreement be reduced by any compensation or benefits the Executive earns, or is entitled to receive, in any capacity after termination or by reason of the Executive's receipt of or right to receive any retirement or other benefits attributable to employment.
(c) Except as expressly provided elsewhere in this Agreement, the amount of any payment made under this Agreement will be reduced by amounts the Employer is required to withhold in payment (or in anticipation of payment) of any income, wage or employment taxes imposed on the payment.
(d) The right of an Executive or any other person to receive any
amount under this Agreement may not be assigned, transferred,
pledged or encumbered except by will or by applicable laws of
descent and distribution. Any attempt to assign, transfer,
pledge or encumber any amount that is or may be receivable
under this Agreement will be null and void and of no legal
effect. However, this section will not preclude payment under
Section 17 of any benefit to which a deceased Executive is
entitled.
(e) Subject to the preceding subsection (d), this Agreement inures to the benefit of and may be enforced by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
(f) If the Executive's employment relationship shifts between the Corporation and any related entity before a Change of Control or after a Change of Control, between the Change Entity and any entity related to the Change Entity and there has been no intervening termination, this Agreement will remain in full force and effect and for all purposes of this Agreement, the Executive's new employer will be substituted for the Executive's prior employer.
(g) If the Executive's employer is no longer related to RFC, whether or not as part of a transaction that constitutes a Change of Control, this Agreement will remain in full force and effect. However, the Executive will not be entitled to any amount under this Agreement on account of a Change of Control that solely affects RFC after that transfer and is not part of the same transaction through which the employer stopped being related to RFC.
25. ENTIRE AGREEMENT. This Agreement supersedes any and all prior agreements, either oral or in writing, between the parties (including such agreement with any subsidiary of RFC) with respect to payments upon termination after a Change of Control, and
this Agreement contains all the covenants and agreements between the parties with respect to same.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be duly executed in their respective names and, in the case of the Corporation, by its authorized representatives the day and year above mentioned.
ATTEST: RURBAN FINANCIAL CORP. /s/ Valda L. Colbart By /s/ Kenneth A. Joyce -------------------------- ---------------------------------- Kenneth A. Joyce Date 3-9-06 Date 3/9/06 |
WITNESS: EXECUTIVE: /s/ Valda L. Colbart By /s/ Duane L. Sinn ------------------------------- ---------------------------------- Duane L. Sinn Date 3-9-06 Date 3-9-06 |
EXHIBIT 10.14
SCHEDULE A
TO
EXHIBIT 10.13
Rurban Financial Corp. (the "Registrant") has entered into Change in Control Agreements with the executive officers of the Registrant identified below, which Change in Control Agreements are substantially identical to the Change in Control Agreement, executed March 9, 2006 and effective as of March 1, 2006, by and between the Registrant and Duane L. Sinn, Executive Vice President and Chief Financial Officer of the Registrant, a copy of which was filed as Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the "2005 Form 10-K").
In accordance with Rule 12b-31 promulgated under the Securities Exchange Act of 1934 and Item 601(b)(10)(iii) of Regulation S-K, the following table identifies those executive officers of the Registrant with whom the Registrant has entered into Supplemental Executive Retirement Agreements similar to that included as Exhibit 10.13 to the 2005 Form 10-K:
CURRENT OFFICES HELD WITH EFFECTIVE DATE EXECUTION DATE NAME THE REGISTRANT AND ITS SUBSIDIARIES OF AGREEMENT OF AGREEMENT Henry R. Thiemann President, Chief Executive Officer and March 1, 2006 March 9, 2006 Director of Exchange Bank; President, Chief Executive Officer and Director of RFCBC, Inc.; President and Director of Rurban Mortgage Company Jeffrey D. Sewell President, Chief Executive Officer and March 1, 2006 March 10, 2006 Director of Rurban Operations Corp.; Director of Rurbanc Data Services, Inc.; Director of Reliance Financial Services, N.A. Mark K. Klein President, Chief Executive Officer and March 1, 2006 March 9, 2006 Director of The State Bank and Trust Company and Director of Rurban Operations Corp. |
.
.
.
EXHIBIT 21
LIST OF SUBSIDIARIES
Name State of Incorporation ----------------------------------- ------------------------------------------- The State Bank and Trust Company Ohio The Exchange Bank Ohio RFCBC, Inc. Ohio Reliance Financial Services, N.A. * Nationally Chartered Trust Company Rurban Mortgage Company* Ohio Rurbanc Data Services, Inc. Ohio Rurban Operations Corp. Ohio Rurban Statutory Trust I Declaration of Trust - State of Connecticut Rurban Statutory Trust II Declaration of Trust - State of Delaware |
EXHIBIT 23.1
We consent to the incorporation by reference and use of our report dated February 13, 2006 on the consolidated financial statements of Rurban Financial Corp. and Subsidiaries, which appears in Rurban Financial Corp.'s Form 10-K for the year ended December 31, 2005, in Rurban Financial Corp.'s Registration Statement on Form S-8 (SEC Registration No. 333-46989), filed February 27, 1998, pertaining to the Rurban Financial Corp. Stock Option Plan.
/s/ BKD, LLP ------------------------------------- BKD, LLP Cincinnati, Ohio March 24, 2006 |
108.
EXHIBIT 31.1
CERTIFICATION
I, Kenneth A, Joyce, certify that:
1. I have reviewed this Annual Report on Form 10-K of Rurban Financial Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures ((as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
c. disclosed in this report any change in the registrant's internal control over financial reporting that has occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a. all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: March 24, 2006 By: /s/ Kenneth A. Joyce --------------------------------- Kenneth A. Joyce President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Duane L. Sinn, certify that:
1. I have reviewed this Annual Report on Form 10-K of Rurban Financial Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures ((as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
c. disclosed in this report any change in the registrant's internal control over financial reporting that has occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a. all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: March 24, 2006 By: /s/ Duane L. Sinn ------------------------------------------------ Duane L. Sinn Executive Vice President and Chief Financial Officer |
EXHIBIT 32.1
SECTION 1350 CERTIFICATION
In connection with the Annual Report of Rurban Financial Corp. (the "Company") on Form 10-K for the fiscal year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Kenneth A. Joyce, President and Chief Executive Officer of the Company, and Duane L. Sinn, Executive Vice President and Chief Financial Officer of the Company, each certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:
(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Kenneth A. Joyce /s/ Duane L. Sinn --------------------------------------- ------------------------------------ Kenneth A. Joyce, Duane L. Sinn President and Chief Executive Officer Executive Vice President and Chief Financial Officer Dated: March 24, 2006 Dated: March 24, 2006 |
* This certification is being furnished as required by Rule 13a-14(b) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Section 1350 of Chapter 63 of Title 18 of the United States Code, and
shall not be deemed "filed" for purposes of Section 18 of the Exchange Act
or otherwise subject to the liability of that Section. This certification
shall not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act, except to the extent the
Company specifically incorporates it by reference in such filing.
113.