EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 18, 1996 among ORIENTAL BANK
AND TRUST, a bank organized under the laws of the Commonwealth of Puerto Rico
(the "BANK"), ORIENTAL INTERIM BANK, a bank organized under the laws of the
Commonwealth of Puerto Rico (the "COMMONWEALTH") for the sole purpose of
consummating the transactions provided for herein (the "INTERIM BANK") and
ORIENTAL FINANCIAL GROUP INC., a corporation organized under the laws of the
Commonwealth of Puerto Rico ("HOLDING").
WHEREAS, the Bank is a bank duly organized under the Banking Law of the
Commonwealth, Act No. 55 of May 12, 1933, as amended (the "BANKING LAW"), with
its principal office and place of business at Hato Rey Tower, 268 Xxxxx Xxxxxx
Avenue, Suite 501, Hato Rey, Puerto Rico, with an authorized capital of
10,000,000 shares of common stock, par value $1.00 per share and 5,000,000
shares of preferred stock, par value $1.00 per share;
WHEREAS, the Interim Bank is a bank duly organized under the Banking Law,
with its principal office at the same address as that of Bank, with an
authorized capital of 500,000 shares of common stock, par value $1.00 per
share, with all of the shares of capital stock of the Interim Bank to be
issued prior to the consummation of the transactions described herein to be
held by Holding (except for any shares that may be required to be held by the
directors of the Interim Bank as directors' qualifying shares); and
WHEREAS, Holding is a general business corporation organized under the
laws of the Commonwealth, with its principal office at the same address as
that of Bank, and having an authorized capital of 20,000,000 shares of Common
Stock, par value $1.00 per share and 5,000,000 shares of Preferred Stock, par
value $1.00 per share, none of which have been issued or are currently
outstanding; and
WHEREAS, the Bank, the Interim Bank and Holding desire to establish a bank
holding company structure and in order to implement that desire, the Boards of
Directors of the Bank, the Interim Bank and Holding have each respectively
agreed unanimously to a merger of the Interim Bank into the Bank (the "MERGER")
and the issuance of shares of Holding common stock as consideration for value
received by Holding from the Merger;
NOW, THEREFORE, in consideration of the premises, the Bank, the Interim
Bank and Holding hereby make this Agreement and prescribe the terms and
conditions of the Merger and the mode of carrying it into effect, including the
rights and obligations of Holding in connection therewith, as follows:
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ARTICLE I
DEFINITIONS
Section 1.001 DEFINITIONS. The following terms, as used herein, have the
following respective meanings:
"BANK" means Oriental Bank and Trust prior to the Effective Date.
"BANK SHARES" means the shares of common stock of the Bank, par
value $1.00 per share.
"COMMISSIONER" means the Commissioner of Financial Institutions of the
Commonwealth.
"CONTINUING BANK" means Oriental Bank and Trust on and after the Effective
Date.
"DISSENTING SHARES" shall have the meaning set forth in Section 6.01.
"EFFECTIVE DATE" shall have the meaning set forth in Section 4.02.
"EXERCISE" shall have the meaning set forth in Section 2.03.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System.
"HOLDING" means Oriental Financial Group Inc., a general business
corporation organized under the laws of the Commonwealth.
"HOLDING SHARES" means the shares of common stock of Holding, par value
$1.00 per share.
"INTERIM BANK" means Oriental Interim Bank, a bank organized under the
laws of the Commonwealth for the sole purpose of consummating the
transactions provided for herein.
"OBLIGATION" means the obligation of the Continuing Bank to cause Holding
to deliver to the holder of such Obligation upon the Exercise of one Holding
Share.
"OFFERING CIRCULAR" shall have the meaning set forth in Section 3.04(b).
"PROXY STATEMENT" shall have the meaning set forth in Section 3.04(a).
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"QUALIFYING SHARES" means the Bank Shares held by the directors of the
Bank or the Continuing Bank, as the case may be, as qualifying shares as
required by Section 24 of the Banking Law.
ARTICLE II
THE MERGER
Section 2.001. MERGER. On the Effective Date, the Interim Bank shall be
merged into the Bank and the Bank (hereinafter referred to as the "BANK" prior
to the Effective Date and as the "CONTINUING BANK" on or after the Effective
Date) shall receive into itself the Interim Bank, pursuant to the provisions of
and with the effects provided in Section 15 of the Banking Law.
Section 2.002. CONVERSION. Upon the Effective Date:
(a) Each Bank Share issued and outstanding immediately prior to
the Effective Date shall, without any further action on the part of
the Bank, the Interim Bank, Holding, or any other person, constitute
and be converted into and there shall be allocated to the recordholder
thereof an Obligation of the Continuing Bank. In no event shall the
Bank become the holder of an Obligation. Each Obligation shall
entitle the holder thereof to cause the Continuing Bank to require
Holding to issue to such holder one Holding Share.
(i) Such conversion and allocation shall not in any way
preclude or prevent any such holder from exercising his or her
statutory right to dissent from the Merger and to receive from
the Continuing Bank payment of the value of his or her Bank
Shares and such other rights and benefits as are provided by law.
(ii) On the Effective Date, each outstanding certificate
which theretofore had represented Bank Shares, shall henceforward
be deemed for all corporate purposes as evidence of the ownership
of an equal number of Obligations of the Continuing Bank into
which the Bank Shares have been so converted.
(b) Each share of common stock of the Interim Bank issued on the
Effective Date shall without any further action on the part of the
Bank, the Interim Bank, Holding, or any other person constitute and be
converted into the right to receive $1.00 from the Continuing Bank and
such sums shall be delivered to the recordholder thereof.
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(c) On the Effective Date, the Continuing Bank shall issue to
Holding the same number of shares of its common stock as are issued
and outstanding as of the Effective Date, and shall issue and sell to
the directors of the Continuing Bank any Qualifying Shares that may be
required by, and in accordance with, the Banking Law.
Section 2.003 EXERCISE OF THE OBLIGATIONS. Immediately after the
conversion and allocation provided in Section 2.02(a), Holding shall, on
behalf of the Continuing Bank and as consideration for the benefits received
by Holding hereunder, issue to each recordholder of the Obligations of the
Continuing Bank a number of Holding Shares, equal to the number of
Obligations held by such recordholder (such event hereinafter referred to as
the "EXERCISE"):
(a) Upon the Exercise, each outstanding certificate that
prior to the Exercise had represented Obligations of the
Continuing Bank (as provided in Section 2.02(a)(ii)) shall
henceforward be deemed for all corporate purposes as evidence of
the ownership of the number of Holding Shares into which the
Obligations of the Continuing Bank have been so converted.
(b) At any time after the Exercise, any holder of one or
more of the certificates that prior to the Effective Date had
represented Bank Shares may surrender such certificate or
certificates in proper form to Holding or to its transfer agent
and receive in exchange therefor a certificate or certificates
(as the holder requests) bearing the name and representing an
identical number of Holding Shares.
Section 2.004 STOCK OPTIONS. At the Effective Date, each outstanding
option to purchase shares of the Bank under the Bank's 1988 Stock Option Plan
will be assumed by Holding. Each such option will be exercisable in
accordance with its existing terms for the same number of shares of Holding
as the number of shares of the Bank subject to such option.
Section 2.005. EFFECTS OF THE MERGER. Upon the Effective Date:
(a) The name of the Continuing Bank shall be Oriental Bank
and Trust. The main office, principal place of business, officers and
other personnel of the Continuing Bank shall be the same as the main
office, principal place of business, officers and other personnel of the
Bank immediately prior to the Effective Date;
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(b) The articles of incorporation of the Continuing Bank shall be
the articles of incorporation of the Bank, and the by-laws of the
Continuing Bank shall be the by-laws of the Bank;
(c) The Bank and the Interim Bank shall be considered as one sole
corporate entity under the name of the Continuing Bank, and the Continuing
Bank shall thenceforth enjoy all the rights, privileges and franchises and
shall be subject to all the restrictions, obligations and duties of the
Bank and the Interim Bank, except for the alterations provided herein;
(d) Each and all the property, shares, rights, franchises, powers
and privileges of the Bank and the Interim Bank shall become the
property of the Continuing Bank, and the Continuing Bank shall have, as
regards such property, shares, rights, franchises, powers and
privileges, the same rights as the Interim Bank and the Bank each
possessed;
(e) The Continuing Bank shall assume each and every obligation of
the Bank and the Interim Bank and shall have all the obligations and
shall be liable for all debts and the fulfillment of all contracts and
obligations of the Bank and the Interim Bank, just as they were prior to
the Effective Date. Any reference to the Bank or the Interim Bank in
any contract, will or document, whether executed or taking effect before
or after the Merger, shall be considered a reference to the Continuing
Bank if not inconsistent with the other provisions of the contract, will
or document. The stockholders of the Bank and the Interim Bank shall
continue to be subject to the same obligations, claims and demands as
existed against them, if any, on or before the Effective Date;
(f) All suits, actions or other proceedings pending in any court on
the Effective Date shall continue to their termination just as if no
merger had taken place; provided, however, that the Continuing Bank may
be substituted in place of either the Bank or the Interim Bank by order
of the court taking cognizance of the proceedings;
(g) The directors of the Continuing Bank shall consist of the
directors of the Bank on and as of the Effective Date (the names and
addresses of the current directors of the Bank as of the date hereof are
listed in Appendix I attached hereto), which directors shall hold office
in the Continuing Bank, unless sooner removed or disqualified, until
their successors are elected at the next annual meeting of the
stockholders of the Continuing Bank or are appointed in
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accordance with the by-laws of the Continuing Bank and have qualified;
and
(h) All deposit accounts of the Bank shall be and will become
deposits in the Continuing Bank without change in their respective terms,
interest rates, maturities, minimum required balances or withdrawal rates.
After the Effective Date, the Continuing Bank will continue to issue
deposit accounts on the same basis as the Bank immediately prior to the
Effective Date.
ARTICLE III
UNDERTAKINGS
Section 3.001. BANK STOCKHOLDER APPROVAL. The Bank undertakes to submit
this Agreement for consideration to its shareholders at a meeting called for
this purpose pursuant to Section 15(b) of the Banking Law, or in any other
manner permitted by law. Without limiting the preceding sentence, the Bank
agrees (unless such action is not required by law):
(a) To send to the post-office address of each of the holders of
issued and outstanding Bank Shares written notice of such meeting not less
than thirty days prior to the date fixed for the meeting. The notice shall
specify the place and purpose of the meeting at which this Agreement will
be considered;
(b) To hold a vote of the shareholders at said meeting, in which
each Bank Share shall entitle each holder thereof to one vote to be cast
by the stockholder himself or by proxy;
(c) To cause its secretary to certify under seal of the Bank that
(i) this Agreement has been approved by the vote of the directors of the
Bank, and (ii) this Agreement has been approved by the votes of at least
three-fourths of the Bank Shares; and
(d) To submit the Agreement as certified pursuant to subsection (c)
of this Section 3.01 to the Commissioner for his approval or disapproval.
Section 3.002. INTERIM BANK STOCKHOLDER APPROVAL. Holding will vote all
of its shares of common stock of the Interim Bank in favor of the approval of
this Agreement.
Section 3.003 REGULATORY APPROVALS. Each of Holding, the Bank and the
Interim Bank shall (i) proceed expeditiously and cooperate fully in
determining which filings are required to be made prior to the Effective Date
with, and which consents, approvals, permits or authorizations are required
to be obtained
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prior to the Effective Date from, governmental or regulatory authorities of
the Commonwealth and the United States (collectively, the "REGULATORY
APPROVALS") in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby; and (ii) timely
make all such filings and timely seek all Regulatory Approvals; and take all
other action and do all things necessary, proper or appropriate to consummate
and make effective all transactions contemplated by this Agreement as soon as
possible.
Section 3.004 SECURITIES MATTERS.
(a) The Bank undertakes to prepare and file promptly a proxy
statement (the "PROXY STATEMENT") which complies with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder by the FDIC, and which complies with all applicable federal, state
and Puerto Rico law requirements for the purpose of submitting this Agreement
to its shareholders for approval, ratification and confirmation;
(b) Holding undertakes to prepare an offering circular (the
"OFFERING CIRCULAR") related to the Holding Shares, which shall be
distributed to the shareholders of the Bank; and
(c) Holding and the Bank shall each provide promptly to the other
such information concerning its business and financial condition and affairs
as may be required or appropriate for inclusion in the Offering Circular or
the Proxy Statement and shall cause its counsel and auditors to cooperate in
the preparation of the Offering Circular and the Proxy Statement, and the
Bank shall distribute the Proxy Statement and the Offering Circular to the
Bank's shareholders in accordance with applicable federal and state law
requirements.
Section 3.005 OTHER UNDERTAKINGS. If at any time (whether before or
after the Effective Date) the Bank or the Continuing Bank considers that any
further assignment, conveyances or assurances in law are necessary or
desirable to vest, perfect or confirm of record in the Continuing Bank the
title to any property or rights of the Bank or the Interim Bank, or otherwise
to carry out the provisions hereof, the Bank and the Interim Bank hereby
undertake through their proper officers and directors to execute and deliver
immediately any and all proper deeds, assignments and assurances in law, and
to do all things necessary or proper to vest, perfect or confirm title to
such property or rights in the Continuing Bank and otherwise to carry out the
provisions hereof.
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ARTICLE IV
CONDITIONS PRECEDENT
Section 4.001. CONDITIONS PRECEDENT TO THE MERGER. The consummation of
the Merger contemplated by this Agreement is subject to the satisfaction of the
following conditions:
(a) The votes of at least three-fourths (3/4) of the issued and
outstanding Bank Shares shall have been cast (whether cast by holders of
such shares in person or by proxy) in favor of this Agreement at a meeting
of the Bank's stockholders called pursuant to Section 3.01;
(b) All Regulatory Approvals (or waiver or exemption therefrom) and
satisfaction of all other requirements prescribed by law which are
necessary to the consummation of the transactions contemplated by this
Agreement shall have been obtained and all statutory waiting periods shall
have expired, without the imposition of any condition or requirements that
would materially and adversely affect the operations or business prospects
of Holding or the Continuing Bank following the Effective Date so as to
render inadvisable the consummation of such transaction.
(c) The Bank shall have received a ruling or rulings from the
appropriate tax authorities and/or an opinion letter from XxXxxxxxx
Xxxxxx, counsel to the Bank, satisfactory to the Bank in form and
substance, with respect to the Puerto Rico and United States income tax
consequences of the Merger; and
(d) The Holding Shares shall have been approved for listing by the
New York Stock Exchange.
Section 4.002. EFFECTIVE DATE. The Merger provided for herein shall
become effective on the date (the "EFFECTIVE DATE") as soon as practicable
after each condition precedent listed in Section 4.01 shall have been
satisfied. The Merger shall become effective at the time this Agreement is
properly perfected and filed in accordance with the Banking Law.
ARTICLE V
TERMINATION AND DEFERRAL
Section 5.001 TERMINATION OF THE MERGER. Prior to the Effective Date,
this Agreement may be terminated at any time by written notice by either the
Bank or the Interim Bank to the other that its Board of Directors is of the
opinion that:
(a) The number of Bank Shares that voted against approval of this
Agreement, the number of Bank Shares with respect to which the holders
thereof recorded their
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opposition to the Merger or the number with respect
to which demand for payment of shares has been made is such that the
consummation of the Merger is, in the sole opinion of such Board of
Directors, inadvisable;
(b) Any action, suit, proceeding, or claim is commenced or
threatened or any claim is made that could make consummation of the
Merger, in the sole opinion of such Board of Directors, inadvisable;
(c) It is likely that a Regulatory Approval, in the sole opinion of
such Board of Directors, will not be obtained, or if obtained, will
contain or impose any condition or requirement that would materially and
adversely affect the operations or business prospects of Holding or the
Continuing Bank following the Effective Date so as to render inadvisable
the consummation of the Merger; or
(d) Any other reason exists that makes consummation of the Merger in
the sole opinion of such Board of Directors, inadvisable.
Upon such determination, this Agreement shall be void and there shall be
no liability hereunder or on account of such termination on the part of the
Bank, the Interim Bank, Holding, or the directors, officers, employees,
agents or stockholders or any of them, except that in such event the Bank
will pay fees and expenses incurred by itself, the Interim Bank and Holding
in connection with the proposed reorganization.
Section 5.002 DEFERRAL OF EFFECTIVE DATE. Consummation of the Merger
herein provided may be deferred by the Board of Directors of the Bank for a
reasonable period of time if the Board of Directors determines, in its sole
discretion, that such deferral would be in the best interests of the Bank and
the shareholders of the Bank.
ARTICLE VI
APPRAISAL RIGHTS
Section 6.001 DISSENTERS' RIGHTS. Any stockholder of the Bank who
complies with all applicable provisions of law, including without limitation
Section 15(d) of the Banking Law, shall be entitled to receive the value of
the Bank Shares held by such stockholder as provided by Section 15(d) of the
Banking Law, provided that:
(a) Any Bank Shares held by a holder who has demanded appraisal
of his Bank Shares and as of the Effective Date has neither
effectively withdrawn nor lost his right to such appraisal (the
"DISSENTING SHARES") shall not be converted in the manner set forth
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in Section 2.02, but the holder thereof shall only be entitled to such
rights as are granted by the Banking Law.
(b) Notwithstanding the provisions of paragraph (i) of this
Section 6.01, if any holder of Dissenting Shares shall effectively
withdraw or lose (through failure to perfect or otherwise) his right
to appraisal, then as of the Effective Date or the occurrence of such
event, whichever later occurs, such Dissenting Shares shall
automatically be converted as provided in Section 2.02.
ARTICLE VII
MISCELLANEOUS
Section 7.001 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth.
Section 7.002 AMENDMENT. This Agreement and the Exhibits hereto may be
amended by the parties hereto, by action taken by or on behalf of their
respective Board of Directors at any time before or after approval by the
stockholders of the parties; provided, however, that after such approval, no
amendment, modification or waiver shall affect the consideration to be received
by any party or their respective shareholders. Any such amendment, modification
or waiver must be by an instrument in writing and signed on behalf of each of
the parties.
IN WITNESS WHEREOF, the Bank, the Interim Bank and Holding have caused
this Agreement to be executed in multiple copies, by their duly authorized
officers, and have caused their corporate seals to be hereunto affixed, as of
the date first above written.
ORIENTAL BANK AND TRUST
By: \s\ XXXX X. XXXXXXXXX
________________________________
Title: Chairman of the Board
ORIENTAL INTERIM BANK
By: \s\ XXXX X. XXXXXXXXX
________________________________
Title: President
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ORIENTAL FINANCIAL GROUP INC.
By: \s\ XXXX X. XXXXXXXXX
________________________________
Title: President
APPENDIX I
NAMES AND RESIDENCES OF CURRENT DIRECTORS OF THE BANK
NAME OF DIRECTOR ADDRESS
Xxxxx Xxxxxxx San Xxxx, Puerto Rico
Xxxxxx Xxxxxxxx San Xxxx, Puerto Rico
Xxxx X. Xxxxxxxxx San Xxxx, Puerto Rico
Xxxxxx Xxxxxx San Xxxx, Puerto Rico
Xxxxx Xxxxxxx San Xxxx, Puerto Rico
Alberto Xxxxx Xxxxxxxx San Xxxx, Puerto Rico
Xxxxxx Xxxxxxxxx San Xxxx, Puerto Rico
