EXHIBIT 2
AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Plan"), is made this
9th day of June of 2003, by and between Xxxxxxxxx County Bank, a Maryland
commercial bank (the "Bank"), and Xxxxxxxxx County Bancorp, Inc., a Maryland
corporation (the "Corporation").
BACKGROUND OF THE PLAN
The Boards of Directors of the Bank and the Corporation desire to
establish a holding company structure whereby the Bank will become a
wholly-owned subsidiary of the Corporation. The Boards of Directors of the Bank
and the Corporation have deemed advisable an exchange of shares between the Bank
and the Corporation in order to establish the Bank as a wholly-owned subsidiary
of the Corporation in the manner and upon the terms and conditions herein set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Exchange of Shares. On the Effective Date (as hereinafter defined),
each of the issued and outstanding shares of Common Stock of the Bank, par value
$10.00 per share (the "Bank Common Stock"), shall be exchanged for one share of
Common Stock of the Corporation, par value $.01 per share (the "Corporation
Common Stock"), in a statutory share exchange pursuant to Section 3-102(a)(7) of
the Maryland General Corporation Law, and in the manner set forth in Section 3
hereof. As a result of such share exchange, the Corporation shall become the
sole stockholder of the Bank and the holders of all of the issued and
outstanding Bank Common Stock shall become the holders of all the issued and
outstanding Corporation Common Stock.
2. Effective Date. The Plan shall become effective at the later of (i)
date and time at which the Maryland State Department of Assessments and Taxation
accepts the Articles of Share Exchange for record, and (ii) the date and time
set forth in the Articles of Share Exchange.
3. Manner of Exchange. The manner and basis of exchanging the Bank
Common Stock to be acquired for the Corporation Common Stock is as follows:
On the Effective Date, each share of Bank Common Stock then
issued and outstanding shall, without any action on the part of the
holder thereof, be converted into one share of Corporation Common
Stock; certificates representing Bank Common Stock shall thereafter
represent the right to receive certificates representing Corporation
Common Stock in the aforementioned proportions; such Bank Common Stock
certificates may at any time thereafter be exchanged by the holders
thereof for new certificates for the appropriate number of Corporation
Common Stock.
4. Manner of Converting Rights. The manner and basis of converting
options, warrants or other rights to acquire Bank Common Stock into options,
warrants or other rights to acquire Corporation Common Stock is as follows:
On the Effective Date, all rights with respect to Bank Common Stock
existing pursuant to stock options granted by the Bank under the Bank's
2001 Stock Option Plan (the "Bank Plan"), which are outstanding on the
Effective Date, whether or not then exercisable, shall be converted
into and become options with respect to Corporation Common Stock, and
the Corporation shall assume each of such option in accordance with the
terms of the Bank Plan and the certificate or agreement by which it is
evidenced. On the Effective Date, the Bank Plan shall be converted into
and shall become the Xxxxxxxxx County Bancorp, Inc. 2001 Stock Option
Plan and the Corporation shall administer such Plan in accordance with
its terms. From and after the Effective Date, (i) each such Bank Plan
option, may be exercised solely for shares of Corporation Common Stock,
(ii) the number of shares of Corporation Common Stock subject to such
Bank option shall be equal to the number
of shares of Bank Common Stock subject to such Bank Plan option
immediately prior to the Effective Date, and (iii) the per share
exercise price under each such Bank Plan option shall remain the same
exercise price for each Corporation option into which the Bank Plan
option was converted. It is intended that the foregoing assumption
shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 425 of the Internal Revenue Code
as to any stock option, which is an "incentive stock option."
5. Assumption of Bank Plan. At the Effective Date, the Corporation
shall adopt, and shall be deemed to have adopted, the Xxxxxxxxx County Bank 2001
Stock Option Plan and the options issued thereunder. References contained in
such plans to the Bank shall, at and after the Effective Date, be deemed to
refer to the Corporation, except that the class of persons eligible to receive
awards under the plans shall be employees or directors of the Corporation or any
direct or indirect subsidiary of the Corporation .
6. Conditions. Consummation of the share exchange provided for herein
shall, except as may be waived by the Board of Directors of both parties hereto,
be subject to the fulfillment of each of the following conditions:
(a.) the Board of Governors of the Federal Reserve System
shall have approved an application, or not objected to a notice under Section
225.17 of Regulation Y, for the Corporation to become a bank holding company:
(b) the Commissioner of the Maryland Department of Financial
Regulation shall have approved applications for the Corporation to acquire
control of the Bank and to have an affiliate, or not objected to the
consummation following notice in accordance with Section 5-904 of the Maryland
Financial Institutions Code;
(c) the receipt of all permits, approvals and consents of any
governmental body or agency or third party which the Bank or the Corporation may
reasonably deem necessary or appropriate;
(d) the Bank and the Corporation shall have received an
opinion of counsel as to the tax free character of the share exchange, which
opinion shall be in form and substance satisfactory to each of them;
(e) the stockholders of the Bank shall have approved this Plan
by a vote of not less than two thirds of the outstanding shares of Bank Common
Stock and in the manner required by the Bank's Charter and the Maryland General
Corporation Law; and
(f) holders of not more than 5% of the outstanding shares of
Bank Common Stock shall have provided written notice of objection to the
transaction in connection with the exercise of rights as an objecting
shareholder under Section 3-201 et. seq. of the Maryland General Corporation
Law.
7. Termination and Abandonment. The Plan may be terminated without
liability to either party hereto and the transactions abandoned at any time
prior to the Effective Date, whether before or after approval by the
stockholders of the Bank:
(a) by the Board of Directors of either the Bank or the
Corporation in the event that the conditions referred to in Section 6 hereof
have not been fulfilled or waived on or prior to June 30, 2004;
(b) by mutual agreement of the Boards of Directors of the Bank
and the Corporation if for any other reason consummation of the share exchange
is inadvisable in the opinions of the respective Boards.
8. Amendment and Waiver. This Plan may be amended by the parties hereto
at any time. This Plan may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Any term, condition or provision
of this Plan may be waived in writing at any time by the party which is, or
whose shareholders are, entitled to the benefits thereof.
9. Expenses. All of the expenses relating to the Plan and the
transactions contemplated thereby shall be borne by the Bank.
IN WITNESS WHEREOF, the Bank and the Corporation have caused the Plan
to be duly executed and their corporate seals to be hereunto affixed and
attested as of the date first above written.
ATTEST: [SEAL] XXXXXXXXX COUNTY BANK
/s/ Xxxxxxx X. Xxxxxx, Xx. /s/ Xxxxxx X. Xxxxxx
-------------------------------------------- ----------------------------
Xxxxxxx X. Xxxxxx, Xx., Assistant Secretary Xxxxxx X. Xxxxxx, President
ATTEST: [SEAL] XXXXXXXXX COUNTY BANCORP, INC
/s/ Xxxxxxx X. Xxxxxx, Xx. /s/ Xxxxxx X. Xxxxxx
-------------------------------------------- ----------------------------
Xxxxxxx X. Xxxxxx, Xx., Assistant Secretary Xxxxxx X. Xxxxxx, President
