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EXHIBIT (2)
AGREEMENT AND PLAN OF REORGANIZATION
AND MERGER FOR FORMATION OF
ONE-BANK HOLDING COMPANY
PARTIES: CITIZENS BANK ("Citizens")
CITIZENS BANCORP ("Bancorp")
DATE: October 15, 1996
RECITALS
A. Citizens is a bank organized and existing under the laws of the State
of Oregon with its principal office at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxx, and with branches in Corvallis, Albany, Veneta, Philomath, and Junction
City, Oregon.
B. Bancorp is a newly formed Oregon corporation organized at the direction
of the Board of Directors of Citizens for the purpose of becoming the one-bank
holding company of Citizens within the meaning of ORS 715.010(2).
C. The respective members of the Board of Directors of Citizens and the
Board of Directors of Bancorp are identical.
D. Bancorp intends to form a wholly owned subsidiary, Interim Bank
Citizens, Inc. ("IBC"), under ORS 707.025 as a so-called "phantom bank" for the
purpose of effecting the plan of reorganization and merger described in this
Agreement (the "Agreement").
E. The Board of Directors of Citizens has concluded that the formation of
Bancorp and IBC, and the merger of IBC and Citizens so as to constitute Bancorp
as the holding company of Citizens, are in the best interests of the
shareholders of Citizens.
NOW, THEREFORE, THE PARTIES AGREE:
1. THE MERGER.
1.1 Merger of Citizens and IBC. Subject to the terms and conditions of the
Agreement and applicable law, on the Effective Date as defined herein Citizens
and IBC shall merge (the "Merger"). Following the Merger, Citizens shall be the
"resulting bank" as defined in ORS 711.005(5).
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1.2 Effective Date. The Merger shall become effective (the "Effective
Date") on the date specified in the Certificate of Merger issued by the Director
of the Department of Consumer and Business Services, Division of Finance and
Corporate Securities, State of Oregon (the "Director") pursuant to ORS 711.030.
The Effective Date shall be no earlier than March 1, 1997, and no later than May
31, 1997, except that the Effective Date may be extended beyond May 31, 1997, by
a written amendment to the agreement.
1.3 Effects of the Merger. On the Effective Date, Citizens shall become a
wholly owned subsidiary of Bancorp, and the existing shareholders of Citizens
shall become shareholders of Bancorp. The Merger shall not implement any change
in the places of business, business operations or personnel of Citizens other
than as expressly provided in the Agreement.
1.4 Role of IBC. IBC shall be organized under ORS 707.025 and shall apply
for a Charter solely for the purpose of serving as the "phantom bank" in the
Merger. IBC shall at no time prior to the Effective Date have any business
operations, employees, liabilities or material assets, and shall not survive the
Merger.
1.5 Bank Charter, Articles and Bylaws. The Charter of Citizens in effect
prior to the Effective Date shall be the Charter of Citizens on the Effective
Date. The Articles of Incorporation and Bylaws of Citizens in effect prior to
the Effective Date shall be the Articles of Incorporation and Bylaws of Citizens
on the Effective Date.
1.6 Directors and Officers of Citizens. The Merger shall have no effect on
the number, identity or terms of service of the directors and officers of
Citizens. All such directors and officers serving immediately prior to the
Effective Date shall be the directors and officers of Citizens on the Effective
Date, all of whom shall continue in office until their respective successors are
duly qualified and elected as provided in the Articles of Incorporation and
Bylaws of Citizens.
1.7 Directors and Officers of Bancorp. The Merger shall have no effect on
the number, identity or terms of service of the directors and officers of
Bancorp. All such directors and officers serving immediately prior to the
Effective Date shall be the directors and officers of Bancorp on the Effective
Date, all of whom shall continue in office until their respective successors are
duly qualified and elected as provided in the Articles of Incorporation and
Bylaws of Bancorp. Approval of the Merger by the shareholders of Citizens shall
constitute the election by such shareholders of the directors of Bancorp
commencing as of the Effective Date, provided that in the case of staggered
terms or otherwise, such election shall not extend any existing term of service
of such directors.
1.8 Issuance of Shares by Subsidiary. Prior to the Effective Date IBC
shall issue one (1) share of stock to Bancorp, its parent corporation and sole
shareholder. On or after the Effective Date, Citizens as the resulting Bank
shall issue shares of common stock to Bancorp, its parent corporation and sole
shareholder, and the share of stock of IBC issued prior to the Effective Date
shall be surrendered and cancelled. The shares issued to Bancorp by Citizens
shall be in an amount sufficient to preserve Citizens' capital structure prior
to the Effective Date, including the par value of Citizens' stock, surplus, and
undivided profits.
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1.9 Exchange of Pre-Merger Citizens Shares for Bancorp Shares. On the
Effective Date, stockholders of Citizens will be entitled to receive one (1)
share of Bancorp common stock in exchange for one (1) share of Citizens common
stock owned by such shareholder. Bancorp or Citizens shall serve as the exchange
agent for the purpose of exchanging shares. On or promptly after the Effective
Date, Bancorp shall issue sufficient shares to effect the exchange. Bancorp may
do so either by issuing certificates or by issuing shares without certificates
under ORS 60.164. In either case stockholders of Citizens shall be requested to
surrender for cancellation all certificates representing shares of Citizens.
1.10 Conversion of Pre-Merger Citizens Shares. Each share of common stock
of Citizens which is issued and outstanding prior to the Effective Date (except
for shares held by dissenters) shall, on the Effective Date, by virtue of the
Merger and without any action on the part of the holder thereof, cease to exist
and shall be cancelled and converted into the right to receive one share of
common stock of Bancorp.
1.11 Dissenters. Any stockholders of Citizens who have exercised and
perfected their rights as dissenters pursuant to ORS 711.042 and 711.045 shall
be entitled to receive, in exchange for their shares, the amount determined in
accordance with ORS 711.045(2)-(6).
1.12 Post-Merger Transfers. After the Effective Date, there shall be no
transfers on the stock transfer books of Citizens of the shares which were
outstanding immediately prior to the Effective Date. If, after the Effective
Date, certificates representing Citizens shares are presented to Citizens, they
shall be cancelled and exchanged for shares of Bancorp. Citizens shall hold any
unissued stock in accordance with the Agreement and applicable law.
1.13 Citizens Stockholders' Meeting. The Board of Directors of Citizens
shall, in accordance with its Articles of Incorporation, Bylaws and applicable
law:
1.13.1 Present the Agreement and Merger at the 1997 annual meeting
(the "Annual Meeting") of Citizens stockholders for the purpose of allowing the
stockholders to consider and vote upon the Merger;
1.13.2 Include in the proxy statement for the Annual Meeting (the
"Proxy Statement") a statement that the Board of Directors of Citizens recommend
that stockholders vote in favor of the Merger; and
1.13.3 Use its best efforts to obtain the requisite approval the
Merger by the stockholders.
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2. CLOSING.
2.1 Closing Date. Subject to the satisfaction or waiver of all conditions
set forth in Section 5, the closing of the Merger (the "Closing") shall occur on
a date not later than thirty (30) business days after the Merger has been
approved by all applicable regulatory authorities and all required waiting
periods have elapsed.
2.2 Actions to Take Place at Closing. At the Closing, Citizens and Bancorp
shall execute and deliver the closing certificates of executive officers and
other documents required of each of them under the Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
3.1 Limitation of Representations and Warranties. The parties acknowledge
and agree that the Merger does not constitute a negotiated, arms-length
transaction between two independent entities, but rather is an organizational
device permitted by statue and by state and federal regulations to effect the
formation of a one-bank holding company. For this reason, warranties and
representations that would otherwise be appropriate or necessary between
independent entities are neither appropriate nor necessary in this instance.
Notwithstanding the foregoing, Bancorp warrants and represents, for itself and
for its subsidiary IBC, that neither of them will, at any time prior to the
Effective Date, and other than as may be necessary to consummate the Merger or
as otherwise expressly provided herein:
3.1.1 Open any branch or other offices, operate any business, incur
any material liabilities, enter into any transactions, (including transactions
with insiders or affiliates), or hire any employees, except that the directors
of Bancorp may appoint officers to serve without compensation prior to the
Effective Date;
3.1.2 Fail to perform or do any act or thing necessary to effect the
Merger;
3.1.3 Fail to comply with any applicable law or regulation pertaining
to or necessary to effect the Merger;
3.1.4 Cause the election or appointment of directors or officers of,
or cause the hiring of employees of, IBC;
3.1.5 Issue any shares of stock;
3.1.6 Do any other act or thing which would constitute an impediment
to the Merger, or which, on the Effective Date, would cause or give rise to a
material change in or to the liabilities or business operations of Citizens.
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3.2 Organization. Each duty is duly organized, validly existing and in
good standing under the laws of the state of Oregon, and has all requisite
corporate power and authority to own and operate its properties and assets, to
lease the leased properties used in its business, and to carry on its business
as now conducted. Each owns or possesses all franchises, licenses, permits,
branch certificates, consents, approvals, waivers and other authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
not conducted, non of which will lapse or be adversely affected by reason of the
consummation of the transactions contemplated by the Agreement. Each is duly
qualified and licensed to do business and is in good standing in every
jurisdiction in which such qualification or license is required or with respect
to which the failure to be so qualified or licensed could result in liability or
adversely affect the business or operations of either party in any material
respect.
3.3 Execution and Performance of Agreement. Each party has all requisite
corporate power and authority to execute and deliver the Agreement and to
consummate the transactions contemplated by the Agreement. The execution and
delivery of the Agreement, compliance with its terms and the consummation of the
transactions contemplated by the Agreement have been duly and validly authorized
by each Board of Director, and no other corporate proceedings are necessary to
authorize the Agreement or to consummate the transactions contemplated other
than stockholder approval of the Merger.
3.4 Binding Obligation. This Agreement has been duly and validly executed
and delivered by the parties and constitutes the valid, legal and binding
agreement of each, enforceable against each of them in accordance with its
terms.
3.5 No Violations. Neither the execution and delivery of the Agreement nor
the consummation of the transactions contemplated hereby, nor compliance by the
parties with any of the provisions hereof will (I) conflict with or result in
any breach of any provision of their respective Articles of Incorporation or
Bylaws, (ii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, agreement or
other instrument or obligation of either party or by which either party or any
of their properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, statue, rule, or regulation applicable to either party, or
any of their properties or assets.
3.6 Regulatory Applications and Approvals. Citizens and Bancorp shall, as
soon as reasonably practicable after the date of the Agreement, prepare and file
with the Federal Deposit Insurance Corporation (the "FDIC"), the Federal Reserve
Board ("FRB"), the Director or any other governmental agency that may have or
assert jurisdiction over the transaction or the actions contemplated herein,
appropriate applications for approval to effect the Merger, and such other
documents, instruments, and notices as may be necessary or desirable to assist
in the securing of approval of the applicable governmental agencies.
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3.7 Capital Structure of Citizens. The authorized capital stock of
Citizens consists of 5,000,000 shares of common stock, par value of $5.00 per
share (the "Shares"), of which 899,198 Shares were issued and outstanding as of
June 30, 1996. All issued and outstanding Shares have been duly authorized and
validly issued in compliance with applicable law including, without limitation,
federal and state securities laws. All issued and outstanding shares are fully
paid and nonassessable. None of the Shares has been issued in violation of the
preemptive rights of any stockholder.
3.8 Capital Structure of Bancorp. The authorized capital stock of Bancorp
consists of 5,000,000 shares of common stock, no par value. No shares of Bancorp
stock have been or shall be issued prior to the Effective Date.
3.9 Further Assurances. Each party shall use its best efforts to promptly
to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
the Agreement.
4. EMPLOYEES.
4.1 Employees. The employees of Bancorp, if any, and of Citizens who are
employed immediately prior to the Effective Date shall be the employees of
Bancorp and of Citizens on the Effective Date, all of whom shall continue such
employment on the same terms and conditions as existed prior to the Effective
Date. The Merger shall effect no modifications to the terms of any employment
agreements to which Citizens is a party existing prior to the Effective Date.
4.2 Employee Benefit Plans. The Merger shall effect no modifications to
the terms of any employee benefit, profit sharing or retirement plans of
Citizens or Bancorp existing prior to the Effective Date.
5. CONDITIONS PRESENT
5.1 Conditions Precedent to Parties' Obligations. The obligation of the
parties to effect the Merger contemplated by the Agreement shall be subject to
the satisfaction or waiver of each of the following conditions on or before the
Effective Date:
5.1.1 Stockholder Approval. The Agreement and the Merger shall have
been duly and validly authorized, approved and adopted at the Annual Meeting,
duly and properly called for such purpose, by the holders of not less than
two-thirds of the then outstanding shares of stock of Citizens which are
entitled to vote on the Merger. The notice for the Annual Meeting shall be
accompanied by the Proxy Statement in form and substance satisfactory to
Citizens and its counsel. The parties' obligation to proceed with the Merger is
conditioned upon not more than six percent (6%) of all shares of Citizens
entitled to vote on the Merger exercising and perfecting their dissenters'
rights of appraisal under applicable Oregon law. If more than six percent (6%)
of all shares entitled to vote on the Merger exercise and perfecting their
rights as dissenters, either party may terminate the Agreement.
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5.1.2 Regulatory Approvals and Consents. Orders, consents, and
approvals, in form and substance satisfactory to the parties, shall have been
entered by the FRB, the FDIC, the Director, and such other regulatory
authorities having jurisdiction over the parties and the transactions
contemplated hereby, granting the authority necessary for the consummation of
the transaction contemplated by the Agreement; all other requirements prescribed
by law or by the rules and regulations of any other regulatory authority have
jurisdiction over such transactions shall have been satisfied; and the parties
shall have received evidence satisfactory to them of the satisfaction of the
foregoing conditions. No order or approval shall contain any term, provision, or
condition that either party deems materially burdensome.
5.1.3 No Litigation. The absence of any material suit, action or
proceeding (made or threatened) against Bancorp or Citizens or any of their
directors or officers seeking to challenge, restrain, enjoin or otherwise affect
the Agreement or the transactions contemplated by the Agreement; seeking to
restrict the rights of the parties or the operation of the business of Bancorp
or Citizens after the consummation of the Agreement; or seeking to subject the
parties hereto or any of their officers or directors to any liability, fine,
forfeiture, or penalty on the grounds that the parties hereto or their directors
of officers have violated or will violate their fiduciary duties or will violate
any applicable laws or regulations in connection with the transactions
contemplated by the Agreement.
6. TERMINATION AND AMENDMENT.
6.1 Termination. Prior to the Effective Date, the Agreement may be
terminated and the Merger abandoned at any time notwithstanding approval by the
stockholders of Citizens or by any of the applicable regulatory authorities:
6.1.1 Through written consent of the Board of Directors of Bancorp and
Citizens;
6.1.2 By the parties if the Effective Date shall not have occurred on
or before May 31, 1997, unless the Boards of Directors of Bancorp and Citizens
have agreed to extend the time in which the Merger may be consummated;
6.1.3 By the parties if any court of competent jurisdiction or any
governmental agency has issued an order, decree, or ruling or taken any other
action restraining, enjoining, or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
6.1.4 By the parties if the conditions set forth in Section 5 have not
been complied with or performed in any material respect and such noncompliance
or nonperformance has not been cured or eliminated (or by its nature cannot be
cured or eliminated) by Citizens or Bancorp on or before the Effective Date;
6.1.5 Upon the final disapproval of any of the FRB, the FDIC, the
Director, or any other regulatory authority whose approval is required, in whole
or in part, of the transactions contemplated by the Agreement.
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6.2 Amendment. The Agreement may not be amended except by a subsequent
written agreement signed by all parties hereto.
6.3 Regulation Y, Section 225.15 Compliance. In order to assure compliance
with the notice and approval procedures of the FRB set forth in Section 225.15
of Regulation Y, the parties agree that the Merger will terminate unless,
following the vote on the Merger by Citizens' shareholders at the Annual
Meeting, (I) the shareholders of Citizens who control at least 80 percent (80%)
of the shares of Bancorp in substantially the same proportion, except for
changes in shareholders' interests resulting form the exercise of dissenters'
rights, and (ii) no shareholders acting in concert would, after the Effective
Date, own or control 10 percent (10%) or more of any class of voting shares of
Bancorp, where such ownership or control is not authorized under federal law.
7. MISCELLANEOUS.
7.1 Governing Law. Each and every portion of the Agreement is contractual
and not a mere recital, and all recitals shall be deemed incorporated into the
Agreement. The Agreement shall be governed by and interpreted according to
Oregon law and any applicable federal law.
7.2 Integration. The Agreement contains the entire understanding and
agreement of the parties with respect to the parties' relationship, and all
prior negotiations, discussions or understandings, oral or written, are hereby
integrated herein. No prior negotiations, discussions or agreements not
contained herein or in such documents shall be binding or enforceable against
the parties.
7.3 Counterparts. The Agreement may be signed in several counterparts. The
signature of one party on any counterpart shall bind such party just as if all
parties had signed that counterpart. Each counterpart shall be considered an
original. All counterparts of the Agreement shall together constitute one
original document.
7.4 Expenses. All expenses of the Merger, including without limitation
attorneys' fees, accounting fees, application fees, publication costs, and
printing and mailing costs, shall be paid by Bancorp. In accordance with Section
23A of the Federal Reserve Act, no such expenses shall be paid by Citizens.
CITIZENS BANK CITIZENS BANCORP
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Board Chairman Board Chairman
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Chief Executive Officer Chief Executive Officer
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