Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as
of September 9, 1997, by and among SHORE BANK, a federally chartered stock
savings bank (the "Bank" or the "Surviving Bank"), SHORE FINANCIAL CORPORATION,
a Virginia corporation (the "Holding Company"), and SB INTERIM FEDERAL SAVINGS
BANK, a to be formed interim federal stock savings bank (the "Interim Bank").
The Holding Company, the Bank and the Interim Bank are collectively referred to
herein as the "Constituent Corporations".
WITNESSETH:
The parties hereto desire to enter into an Agreement and Plan of
Reorganization whereby the corporate structure of the Bank will be reorganized
into the holding company form of ownership. The result of such reorganization
will be that, immediately after the Effective Date (as defined in Article V
below), all of the issued and outstanding shares of common stock , $0.33 par
value per share, of the Bank ("Bank Common Stock") will be held by the Holding
Company, and the holders of the issued and outstanding shares of Bank Common
Stock will become the holders of the issued and outstanding shares of the common
stock, $0.33 par value per share, of the Holding Company ("Holding Company
Common Stock").
The reorganization of the Bank will be accomplished by the following
steps: (1) the formation by the Bank of a wholly owned subsidiary, the Holding
Company, for the purpose of initially becoming the sole stockholder of a newly
formed interim federal stock savings bank, and subsequently becoming the sole
stockholder of the Bank; (2) the formation of an interim federal stock savings
bank, the Interim Bank, which will be wholly owned by the Holding Company; and
(3) the merger of the Interim Bank into the Bank, with the Bank as the surviving
corporation. Pursuant to such merger: (i) all of the issued and outstanding
shares of Bank Common Stock will automatically be converted by operation of law
on a one-for-one basis into issued and outstanding shares of Holding Company
Common Stock; and (ii) all of the issued and outstanding shares of common stock
of the Interim Bank will automatically converted by operation of law on a
one-for-one basis into an equal number of issued and outstanding shares of Bank
Common Stock, which will be all of the issued and outstanding capital stock of
the Bank.
NOW THEREFORE, in consideration of the mutual agreements set forth
herein, the Constituent Corporations agree as follows:
Article I
The Merger and Related Matters
1.1 The Merger.. On the Effective Date, the Interim Bank will be merged
with and into the Bank (the "Merger"), and the separate existence of the Interim
Bank shall cease, and all the property, rights, powers and franchises then owed
by the Interim Bank , or which would inure to it, shall immediately and
automatically, by operation of law and without any conveyance, transfer or
further action, vest in the Bank. The Bank shall be deemed to be a continuation
of the Interim Bank, and the Bank shall succeed to the rights and obligations of
the Interim Bank.
1.2 Continued Existence of the Bank. Following the Merger, the
existence of the Bank shall continue unaffected and unimpaired by the Merger,
with all the rights, privileges, immunities and powers, and subject to all the
duties and liabilities, of a corporation organized under the laws of the United
States with a Federal Stock Charter and the Bylaws in the form approved by the
Office of Thrift Supervision (the "OTS"). The Federal Stock Charter and Bylaws
of the Bank, as presently in effect, shall continue in full force and effect and
shall not be changed in any manner whatsoever by the Merger.
1.3 Continued Business of the Bank; Offices. Following the Effective
Date, and subject to the actions of the Board of Directors of the Bank, the
business presently conducted by the Bank will continue to be conducted by it, as
a wholly-owned subsidiary of the Holding Company, and the present directors and
officers of the Bank will continue in their present positions. The locations of
the Main Office and branch offices of the Bank immediately prior to the
Effective Date shall continue to be the locations of the Main Office and branch
offices, respectively, of the Bank from and after the Effective Date.
1.4 Directors. A list of the directors of the Bank, their respective
residence addresses, and terms of office is attached hereto as Schedule A and is
incorporated herein by reference. The number of directors following the Merger
will be eight.
1.5 Savings Accounts. The issuance of savings accounts and other
instruments and obligations by the Bank shall not be affected by the Merger.
Article II
Conversion of Stock
2.1 Conversion of Stock. The terms and conditions of the Merger and the
manner and basis of converting the respective shares of common stock of the
parties to this Agreement shall be as follows:
(a) Holding Company Common Stock. On the Effective Date, any shares of
Holding Company Common Stock held by the Bank immediately prior to the Effective
Date shall be canceled and shall no longer be deemed outstanding for any
purpose.
(b) Bank Common Stock. On the Effective Date, each share of Bank Common
Stock issued and outstanding immediately prior to the Effective Date shall
automatically by operation of law be converted into and shall become one share
of Holding Company Common Stock.
(c) Interim Bank Common Stock. Each share of common stock of the
Interim Bank issued and outstanding immediately prior to the Effective Date
shall, on the Effective Date, automatically by operation of law be converted
into and shall become one share of Bank Common Stock and shall not be further
converted into shares of Holding Company Common Stock, so that from and after
the Effective Date, all of the issued and outstanding shares of Bank Common
Stock shall be held by the Holding Company.
(d) Exchange of Bank Common Stock Certificates. From and after the
Effective Date, each holder of an outstanding certificate or certificates that,
prior thereto, represented shares of Bank Common Stock shall, upon surrender of
the such certificate(s) to the designated agent of the Bank, be entitled to
receive, in exchange therefor, a certificate or certificates representing the
number of whole shares of Holding Company Common Stock into which the shares
theretofore represented by the certificate or certificates so surrendered shall
have been converted, as provided in the foregoing provisions of this Article II.
Until so surrendered, each such outstanding certificate that, prior to the
Effective Date, represented shares of Bank Common Stock shall be deemed for all
corporate purposes to evidence the ownership of the number of whole shares of
Holding Company Common Stock into which such shares of Bank Common Stock shall
have been so converted. Former holders of shares of Bank Common Stock will not
be required to exchange their Bank Common Stock certificates for new
certificates evidencing the same number of shares of Holding Company Common
Stock. If in the future the Holding Company decides to effect an exchange of
stock certificates, instructions for such exchange will be sent to all holders
of record of Holding Company Common Stock.
(e) Sole Rights, Etc. On the Effective Date, the holders of
certificates formerly representing Bank Common Stock outstanding on the
Effective Date shall cease to have any rights with respect to the stock of the
Bank, and their sole rights shall be with respect to the Holding Company Common
Stock into which their shares of Bank Common Stock shall have been converted by
the Merger.
2.2 Continued Effectiveness of Stock Option Plan. On the Effective
Date, the Shore Bank 1992 Stock Option Plan (the "Option Plan") shall
automatically, by operation of law, be continued as and become the stock option
plan of the Holding Company. On the Effective Date, each unexercised option to
purchase shares of Bank Common Stock under the Option Plan outstanding at that
time will be automatically converted into an unexercised option, with identical
price, terms and conditions, to purchase an identical number of shares of
Holding Company Common Stock. The Holding Company shall assume all of the Bank's
obligations with respect to the Option Plan. By approving this Agreement,
stockholders of the Bank will be approving the adoption by the Holding Company
of the Option Plan as the stock option plan of the Holding Company.
Article III
Conditions to the Merger; Termination
3.1 Conditions to the Merger. The obligations of the Bank, the Holding
Company and the Interim Bank to effect the Merger shall be subject to
satisfaction of the following conditions:
(a) Stockholder Approvals. To the extent required by applicable law,
the holders of a majority of the outstanding shares of Bank Common Stock shall
have approved the Agreement; the Bank, as the sole stockholder of the Holding
Company, shall have approved this Agreement; and the Holding Company, as the
sole stockholder of the Interim Bank, shall have approved this Agreement. None
of such approvals shall have been revoked at or prior to the Effective Date.
(b) Securities Registration. The shares of Holding Company Common Stock
to be issued to the holders of Bank Common Stock pursuant to the Merger shall
have been duly registered pursuant to Section 5 of the Securities Act of 1933,
as amended, and the Holding Company shall have complied with all applicable
state securities or "blue sky" laws relating to the issuance of Holding Company
Common Stock.
(c) Approvals, Consents. Any and all approvals from the OTS, the
Securities and Exchange Commission and any other governmental agency having
jurisdiction necessary for the lawful consummation of the Merger and the
issuance and delivery of Holding Company Common Stock as contemplated by this
Agreement shall have been obtained.
(d) Tax Status. The Bank shall have received either (i) a ruling from
the Internal Revenue Service or (ii) an opinion from its special legal counsel,
XxXxxxx Xxxx, A Professional Corporation, to the effect that the Merger will be
treated as a non-taxable transaction under applicable provisions of the Internal
Revenue Code of 1986, as amended, and that no gain or loss will be recognized by
the holders of Bank Common Stock upon the exchange of Bank Common Stock held by
them solely for Holding Company Common Stock.
3.2 Termination. This Agreement may be terminated at any time prior to
the Effective Date at the election of any of the parties hereto if any one or
more of the conditions to the obligations of any of them hereunder shall not
have been satisfied and shall have become incapable of fulfillment and shall not
be waived. This Agreement may also be terminated at any time prior to the
Effective Date by the mutual consent of the respective Boards of Directors of
the parties.
3.3 No Further Obligation. Upon termination for any reason, this
Agreement shall be void and of no further effect, and there shall be no
liability by reason of this Agreement or the termination thereof on the part of
any of the parties hereto or their respective directors, officers, employees,
agents or stockholders.
3.4 Costs and Expenses. The Bank shall pay all costs and expenses
incurred by it, the Holding Company and the Interim Bank in connection with this
Agreement and the transactions contemplated hereunder.
Article IV
Effective Date of the Merger
Upon satisfaction or waiver (in accordance with the provisions of this
Agreement) of each of the conditions set forth in Article III, the parties
hereto shall execute and cause to be filed Articles of Combination, and such
certificates or further documents as shall be required by the OTS, with the
Secretary of the OTS and shall cause to be filed with such other federal or
state regulatory agencies all such certificates and other documents as may be
required in the opinion of special counsel to the Bank and the Holding Company.
Upon approval by the OTS and endorsement of such Articles of Combination by the
Secretary of the OTS, the Merger and other transactions contemplated by this
Agreement shall become effective. The "Effective Date" for all purposes
hereunder shall be the date of such endorsement by the Secretary of the OTS.
Article V
Miscellaneous
5.1 Waiver. Any of the terms or conditions of this Agreement that may
legally be waived may be waived at any time by any party which is entitled to
the benefit thereof, or any of such terms or conditions may be amended or
modified in whole or in part at any time, to the extent authorized by applicable
law, by an agreement in writing, executed in the same manner as this Agreement.
5.2 Amendment. Any of the terms or conditions of this Agreement may be
amended or modified in whole or in part at any time, to the extent permitted by
applicable law, rules and regulations, by an amendment in writing, provided that
any such amendment or modification is not materially adverse to the Bank, the
Holding Company or their stockholders. In the event that any governmental agency
requests or requires that the transactions contemplated herein be modified in
any respect as a condition of providing a necessary regulatory approval or
favorable ruling , or that in the opinion of special counsel to the Bank such
modification is necessary to obtain such approval or ruling, this Agreement may
be modified, at any time before or after adoption thereof by the stockholders of
the Bank by an instrument in writing, provided that the effect of such amendment
would not be materially adverse to the Bank, the Holding Company or their
stockholders.
5.3 Execution by the Interim Bank. The Bank and the Holding Company
acknowledge that, as of the date hereof, the charter of the Interim Bank has not
been issued by the OTS. Accordingly, the Interim Bank does not have the legal
capacity to execute this Agreement. The Holding Company, as the organizer and
sole stockholder of the Interim Bank, agrees to cause the Interim Bank to
execute this Agreement promptly following the corporate organization of the
Interim Bank. The Bank and the Holding Company agree to be bound by this
Agreement prior to and following such execution by the Interim Bank.
5.4 Counterparts. This Agreement may be executed by the parties hereto
in any number of separate counterparts, each of which shall be an original, but
such counterparts together shall constitute but one and the same instrument.
5.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, except insofar as the
federal law of the United States is deemed to apply.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Reorganization as of the date first above written.
SHORE BANK
By: /s/ Xxxxx X. Harvard
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Xxxxx X. Harvard
President
SHORE FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx, Xx .
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Xxxxx X. Xxxxxx, Xx.
Chairman of the Board
SB INTERIM FEDERAL SAVINGS BANK
By: /s/ Xxxxx X. Harvard
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Xxxxx X. Harvard
President
SCHEDULE A
DIRECTORS OF SHORE BANK
Term
Name Addresses to Expire
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Xxxxxxx X. Xxxx, III RFD Mt. Xxxxxx 2000
Accomac, Virginia 23301
Xxxxx X. Harvard P. O. Box 322 2000
Xxxxxxxxxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxxx 0000 Xxxx Xxxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxx 00000
D. Page Xxxxxx 0000 Xxxxxxxxxx Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
X. Xxxxxxx Xxxxx 00000 Xxxx Xxxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxx, Xx. 00000 Xxxxxxxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxx, Xx. 00000 Xxxx Xxxxxx 0000
Xxxxx Xxxxx, Xxxxxxxx 00000
X. Xxxxx Xxxxxxxxxxx P. O. Box 187 1999
Xxxxxxxxxx, Xxxxxxxx 00000
