EXHIBIT 2
---------
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This Agreement and Plan of Reorganization (the "Plan of Reorganization"),
dated as of November 25, 1997, is made and entered into by and between MECHANICS
SAVINGS BANK, a Connecticut stock savings bank (the "Bank") and MECH FINANCIAL,
INC., a newly formed capital stock corporation organized at the direction of the
Bank (the "Holding Company") pursuant to Section 36a-181 of the Connecticut
General Statutes.
WHEREAS, the authorized capital stock of the Bank consists of (a) 7,000,000
shares of Common Stock, par value $0.01 per share (the "Bank Common Stock"), of
which 5,293,266 shares are issued and outstanding 529,000 shares are reserved
for issuance pursuant to the Bank's various stock option and benefit plans, and
(b) 1,000,000 shares of Preferred Stock, par value $0.01 (the "Bank Preferred
Stock"), none of which are issued or outstanding or reserved for issuance.
WHEREAS, the authorized capital stock of the Holding Company shall consist
of (a) 15,000,000 shares of Common Stock, par value $0.01 per share (the
"Holding Company Common Stock"), none of which are issued and outstanding or
reserved for issuance, and (b) 1,000,000 shares of Preferred Stock, $0.01 (the
"Holding Company Preferred Stock"), none of which are issued and outstanding.
WHEREAS, the Bank and the Holding Company wish to enter into the Plan of
Reorganization whereby the Holding Company will acquire all of the issued and
outstanding shares of the Bank Common Stock (other than shares held by the
Dissenting Shareholders, as hereinafter defined) in exchange for an equal number
of shares of Holding Company Common Stock (such exchange is hereinafter referred
to as the "Reorganization").
WHEREAS, each Shareholder of Bank Common Stock (other than Dissenting
Shareholders who have validly exercised their rights under Section 36a-181(c) of
the Connecticut General Statutes) will receive one share of Holding Company
Common Stock for each share of Bank Common Stock held as of the Effective Time
(as hereinafter defined).
WHEREAS, the Bank believes that the Reorganization is desirable and in the
best interests of its shareholders.
WHEREAS, the Bank and the Holding Company intend the Reorganization to
constitute a non-taxable event to each entity and to their respective
shareholders pursuant to the
11.
Internal Revenue Code of 1986, as amended (the "Code").
WHEREAS, this Plan of Reorganization has been approved by the Board of
Directors of the Bank which has duly authorized the executive officer(s) whose
respective signature(s) appear below to execute and deliver the Plan of
Reorganization.
NOW, THEREFORE, in consideration of the mutual promises, representations,
and covenants herein contained, the Bank and the Holding Company agree as
follows:
Section 1. Approval and Filing of Plan of Reorganization.
---------------------------------------------
1.1 The Plan of Reorganization shall be submitted for the approval of
holders of Bank Common Stock at a meeting to be duly called and held on November
25, 1997, or such other date as the Bank's Board of Directors may determine in
accordance with the Bylaws of the Bank and all applicable laws and regulations
(the "Special Meeting"). Notice of the Special Meeting shall be mailed directly
to all shareholders at their last known addresses as contained on the records of
the Bank.
1.2 Subject to the approval of this Plan of Reorganization by the
affirmative vote of the holders of at least two-thirds of the outstanding voting
shares of Bank Common Stock, this Plan of Reorganization shall be submitted, in
accordance with Section 36a-181 of the Connecticut General Statutes, for the
approval of the Commissioner of Banking of the State of Connecticut (the
"Banking Commissioner"). This Plan of Reorganization shall be accompanied by a
certificate from the Bank that this Plan of Reorganization has been submitted to
and approved by two-thirds of the holders of Bank Common Stock eligible to vote
and such other documentation as may be required by law or by regulation of the
Banking Commissioner.
1.3 If the Plan of Reorganization is approved by the holders of at least
two-thirds of the shares of Bank Common Stock entitled to vote at the Special
Meeting, thereafter and until the Effective Time (as hereinafter defined), the
Bank shall issue certificates for Bank Common Stock, whether upon transfer or
otherwise, only if such certificates bear a legend indicating that this Plan of
Reorganization has been approved and that shares of Bank Common Stock evidenced
by such certificates are subject to the acquisition by the Holding Company
pursuant to this Plan of Reorganization.
Section 2. The Closing.
-----------
2.1 Subject to the terms and conditions of this Plan of
12.
Reorganization, the closing of the Reorganization (the "Closing") shall take
place on January 1, 1998 if, on or prior to that date, this Plan of
Reorganization is filed in the Office of the Secretary of the State of
Connecticut (the "Secretary of State"), which filing shall not occur until all
of the conditions to Closing set forth in Section 6 hereof have been satisfied.
The Plan of Reorganization shall be effective on January 1, 1998, provided
however, that in the event that the Closing does not occur on or before January
1, 1998, the President or, in his absence, any other executive officer of the
Bank may designate another time at which this Plan of Reorganization shall
become effective (the "Effective Time").
2.2 At the Closing, the Holding Company and the Bank shall deliver to
each other such certificates and other documents as are required pursuant to
this Plan of Reorganization and as are necessary and appropriate, in the
reasonable opinion of counsel for the Bank and the Holding Company, to
consummate the Reorganization.
Section 3. Actions at the Effective Time.
-----------------------------
3.1 At the Effective Time, the Holding Company shall, without any further
action by it, by the Bank, or by holders of the Bank Common Stock, automatically
and by operation of law, acquire and become the owner of all issued and
outstanding shares of Bank Common Stock (excluding shares held by the Bank as
treasury stock, all of which shall be canceled and extinguished as of the
Effective Time) and shall be entitled to have issued to it by the Bank a
certificate or certificates representing such shares. Thereafter, the Holding
Company shall have full and exclusive power to vote such shares of Bank Common
Stock, to receive dividends thereon and to exercise all rights of an owner
thereof.
3.2 At the Effective Time, each share of Bank Common Stock or fraction
thereof issued and outstanding prior to the Effective Time shall, without any
further action by Shareholders, by the Bank, or by the Holding Company,
automatically and by operation of law, be converted into an equal number of
shares of Holding Company Common Stock. Holders of the issued and outstanding
shares of Bank Common Stock (except for holders exercising dissenters' rights)
shall, automatically and by operation of law, cease to own such shares and shall
instead become the owners of an equal number of shares of Holding Company Common
Stock. Thereafter, such persons holding Holding Company Common Stock shall have
full and exclusive power to vote such shares, to receive dividends thereon,
except as otherwise provided herein, and to
13.
exercise all rights of an owner thereof. Notwithstanding any of the foregoing,
any Dissenting Shareholder shall have such rights as provided for in Section 7
hereof and by the laws of the State of Connecticut.
3.3 At the Effective Time, all previously issued and outstanding
certificates representing shares of Bank Common Stock (the "Old Certificates")
shall automatically and by operation of law cease to represent shares of Bank
Common Stock or any interest therein and each Old Certificate shall instead
represent the ownership by the holder thereof of an equal number of shares of
Holding Company Common Stock. No holder of an Old Certificate shall be entitled
to vote the shares of Bank Common Stock formerly represented by such
certificate, or to receive dividends thereon, or to exercise any other rights of
ownership in respect thereof.
Section 4. Stock Option and Benefit Plans.
------------------------------
4.1 At the Effective Time, the Holding Company shall automatically and
without further action on its part adopt and assume the rights and obligations
of the Bank under the Bank's 1996 Officer Stock Option Plan and the Bank's 1996
Director Stock Option Plan, each as amended from time to time (collectively, the
"Stock Plans"), as the Stock Plans are then in effect (subject to certain
conforming amendments necessitated by or appropriate for the change in
sponsorship of such Stock Plans). The Stock Plans shall, pursuant to their
terms, thereafter apply only to shares of Holding Company Common Stock in the
same manner as they therefore applied to shares of Bank Common Stock. The
Holding Company shall reserve for issuance a sufficient number of shares of
Holding Company Common Stock in order to fulfill its obligations pursuant to
this Section 4.1 and shall take such action as it deems necessary or advisable
to permit the issuance of such shares under applicable state and federal
securities laws and rules and regulations thereunder. Approval of the
Reorganization by the shareholders of the Bank shall be deemed to be approval of
the Stock Plans and any grants of Holding Company Common Stock thereunder by the
Holding Company.
4.2 At the Effective Time, all options then outstanding under any of the
Stock Plans, which immediately prior thereto had given the holder thereof the
right to purchase shares of Bank Common Stock shall, automatically and without
further action on the part of the holder thereof, be converted into options
giving the holder thereof the right to purchase the same number of shares of
Holding Company Common Stock at the same exercise price per share, and in
accordance with such other terms and conditions, as pertained under the options
14.
outstanding under the Stock Plans immediately prior to the Effective Time.
Section 5. Actions After the Effective Time.
--------------------------------
As soon as practicable and in any event not more than thirty days after the
Effective Time:
5.1 The Holding Company shall deliver to the transfer agent for the Bank
and the Holding Company (the "Transfer Agent"), as agent for the holders of the
Old Certificates (other than Old Certificates representing shares of Bank Common
Stock as to which Dissenting Shareholders' appraisal rights shall have been
properly exercised, if any), a certificate or certificates for the aggregate
number of shares of Holding Company Common Stock (the "New Certificates"), to
which such holders shall be entitled. Each such holder may, but shall not be
required to, surrender his or her Old Certificates to the Transfer Agent and
receive in exchange therefor New Certificates for an equal number of shares of
Holding Company Common Stock. Until so surrendered, each Old Certificate shall
be deemed, for all corporate purposes, to evidence the ownership of the number
of shares of Holding Company Common Stock which the holder thereof would be
entitled to receive upon its surrender, except that the Holding Company may in
its sole discretion, deny the holders of such shares voting rights thereon and
withhold from the holder of shares represented by such Old Certificate,
distribution of any or all dividends declared by the Holding Company on such
shares until such time as such Old Certificate shall be surrendered in exchange
for one or more New Certificates, at which time dividends so withheld by the
Holding Company with respect to such shares shall be delivered (without interest
thereon and less the amount of taxes, if any, which may have been imposed or
paid thereon or which are required by law to be withheld in respect thereof), to
the shareholder to whom such New Certificates are issued.
5.2 If any certificate for shares of Holding Company Common Stock is to
be issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer as the Holding Company in its sole discretion may
specify and that such transfer otherwise be proper and that the person
requesting such transfer pay to the Transfer Agent any transfer or other taxes
or other fee payable by reason of the issuance of such New Certificate in any
name other than the registered holder of the certificate surrendered, or
establish to the
15.
satisfaction of the Transfer Agent that such tax has been paid or is not payable
or that any fee has been paid to the party to which it is due and waived by such
party.
5.3 The Holding Company, in accordance with applicable law, shall provide
written notice to the holders of all Old Certificates, specifying the Effective
Time of this Plan of Reorganization and notifying such holders that they may
present their Old Certificates to the Transfer Agent for exchange. Such notice
shall be given by mail to such holders at their last known addresses as
contained on the Bank's records.
Section 6. Conditions Precedent.
--------------------
6.1 The Plan of Reorganization and the transactions provided for herein
shall not become effective unless all of the following conditions shall have
occurred, none of which may be waived:
(a) This Plan of Reorganization and the transactions contemplated
hereby shall have been approved by the affirmative vote of at least two-thirds
of the issued and outstanding voting Shares of Bank Common Stock at the Special
Meeting or at any adjournment thereof.
(b) The Plan of Reorganization shall have been approved by the Banking
Commissioner, and the Reorganization and the other transactions contemplated
hereby shall have been approved by any other bank regulatory agency of competent
jurisdiction, and all notice and waiting periods after the granting of any such
approval shall have expired.
(c) The Holding Company shall have provided notice to the Federal
Reserve Bank of Boston (the "Reserve Bank") in accordance with 12 C.F.R. 225.17
and the Reserve Bank shall not have objected to the consummation of the
transaction contemplated under this Plan of Reorganization within thirty days
after the Reserve Bank's receipt of such notice or, alternatively, the Reserve
Bank or the Board of Governors of the Federal Reserve System pursuant to section
3(a)(1) of the Bank Holding Company Act of 1956, as amended, shall have approved
the application of the Holding Company to become a bank holding company upon
consummation of the Reorganization and any and all applicable waiting periods
shall have expired.
(d) Unless otherwise waived, all approvals from any other state or
federal government agency having jurisdiction for the lawful consummation of the
transactions contemplated by this Plan of Reorganization shall have been
obtained, all conditions imposed by such regulatory approvals shall have
16.
been satisfied, and all waiting periods required in connection with such
approvals shall have expired.
(e) The Shares of Holding Company Common Stock to be issued to holders
of Bank Common Stock pursuant to the Plan of Reorganization shall have been
registered or qualified for such issuance without registration to the extent
required under the Securities Act of 1933 and under all applicable state
securities laws and regulations.
(f) The Holding Company and the Bank shall have received an opinion
from the Bank's independent accountant to the effect that the Reorganization
will qualify for pooling-of-interests accounting treatment.
(g) The number of shares of Bank Common Stock as to which the
Dissenting Shareholders shall have exercised their rights to be paid the value
of such Bank Common Stock shall not exceed the number of shares of Bank Common
Stock issued and outstanding at the Effective Time.
Section 7. Rights of Dissenting Shareholders.
---------------------------------
7.1 "Dissenting Shareholders" shall mean those holders of Bank Common
Stock who file with the Bank, before the taking of the vote on this Plan of
Reorganization and the transactions contemplated hereby, written objection
thereto, in accordance with the procedure set forth in Section 36a-181(c) of the
Connecticut General Statutes, which written objection states that they intend to
demand payment for their shares of Bank Common Stock if the Reorganization is
consummated and whose shares are not voted in favor of the Reorganization.
7.2 Dissenting Shareholders who comply with the provisions of Section 36a-
181(c) of the Connecticut General Statutes and all other applicable provisions
of law shall be entitled to receive from the Bank payment of the value of their
shares of Bank Common Stock upon surrender by such holders of the certificates
which previously represented shares of Bank Common Stock. Certificates so
obtained by the Bank, upon payment of the value of such shares as provided by
law, shall be canceled. Shares of Holding Company Common Stock to which
Dissenting Shareholders would have been entitled had they not dissented, shall
be deemed to constitute authorized but unissued shares of Holding Company Common
Stock and may be sold or otherwise disposed of by the Holding Company at the
discretion of, and at such time and on such terms as may be fixed by, its Board
of Directors.
Section 8. Termination, Abandonment, Amendment and Waiver.
----------------------------------------------
17.
8.1 This Plan of Reorganization may be abandoned or terminated by either
the Bank or the Holding Company, in the sole discretion of each entity, at any
time before the Effective Time in the event that:
(a) The number of shares of Bank Common Stock owned by Dissenting
Shareholders, as defined in Section 7 hereof, shall make consummation of the
transactions contemplated by the Plan of Reorganization inadvisable in the
opinion of the Bank or the Holding Company;
(b) Any action, suit, proceeding or claim has been instituted, made or
threatened relating to this Plan of Reorganization which shall make consummation
of the transactions contemplated by the Plan of Reorganization inadvisable in
the opinion of the Bank or the Holding Company;
(c) The Reorganization shall not have been consummated by January 1,
1998; or
(d) For any other reason consummation of the transactions contemplated
by the Plan of Reorganization is inadvisable in the opinion of the Bank or the
Holding Company.
8.2 In the event of termination or abandonment of the Plan of
Reorganization in any manner, the Plan of Reorganization shall be terminated and
shall be of no further force or effect and there shall be no liability hereunder
or on account of such abandonment or termination on the part of the Bank or the
Holding Company or the Directors, officers, employees, agents or shareholders of
either entity. In the event of such abandonment or termination of the Plan of
Reorganization, the Bank shall pay all expenses incurred in connection with the
Plan of Reorganization and the proposed transactions contemplated hereby. If
either party hereto gives written notice of abandonment or termination to the
other party pursuant to this, the party giving such written notice shall
simultaneously furnish a copy thereof to the Banking Commissioner.
8.3 The Plan of Reorganization may be amended by the parties hereto, by
action taken by or on behalf of their respective Boards of Directors, at any
time before or after approval of the Reorganization by the Shareholders of the
Bank; provided, however, that any material change in the Plan of Reorganization
subsequent to the approval thereof by Shareholders shall require the additional
approval of Shareholders of any such material change or amendment, and, provided
further, that after the initial Shareholder approval, no such amendment shall be
submitted for the approval of Shareholders which has the effect of reducing the
amount or
18.
change the form of the consideration to be delivered to the Bank's Shareholders
as contemplated by the Plan of Reorganization. The Plan of Reorganization may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 9. Governing Law.
-------------
9.1 The Plan of Reorganization shall be governed by and construed in
accordance with the laws of the State of Connecticut.
19.
IN WITNESS WHEREOF, the parties have executed the Plan of Reorganization as
of the date first written above.
MECHANICS SAVINGS BANK
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
Its President
MECH FINANCIAL, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
Its President
20.
