Exhibit 12.1
Victory State Bank
VSB Bancorp, Inc.
Victory Interim Bank (in formation)
Agreement, Plan of Reorganization and
Plan of Acquisition
This Agreement, Plan of Reorganization and Plan of Acquisition, dated as of
January 14, 2003, by and among Victory State Bank, a New York State chartered
bank (the "Bank"); VSB Bancorp, Inc., a New York corporation (the "Holding
Company"); and Victory Interim Bank, a to-be-formed New York State chartered
bank ("Interim").
The parties hereto desire to enter into an Agreement whereby the corporate
structure of the Bank will be reorganized into the holding company form of
ownership (the Reorganization"). The result of the Reorganization will be that,
immediately after the Effective Date (as defined herein), all of the issued and
outstanding shares of common stock of the Bank will be held by the Holding
Company and the holders of the issued and outstanding shares of common stock of
the Bank will become the holders of the issued and outstanding shares of common
stock of the Holding Company.
The Reorganization of the Bank will be accomplished by the following steps:
(1) the Bank has formed a wholly-owned subsidiary, VSB Bancorp, Inc.,
incorporated under the laws of the State of New York for the primary purpose of
becoming the sole stockholder of a newly-formed interim stock bank, and
subsequently becoming the sole stockholder of the common stock of the Bank; (2)
the Holding Company will issue one share of its common stock to the Bank; (3)
the Holding Company will arrange to organize Victory Interim Bank ("Interim"), a
New York State chartered bank, which will be wholly-owned by the Holding
Company; and (4) Interim will merge into the Bank (the "Merger"), with the Bank
as the surviving entity. Upon the Merger: (i) all of the issued and outstanding
shares of common stock of the Holding Company held by the Bank will be canceled;
(ii) all of the issued and outstanding shares of common stock of the Bank will
automatically be converted by operation of law, on a three new shares for two
existing share basis, into issued and outstanding shares of common stock of the
Holding Company; (iii) all of the issued and outstanding shares of common stock
of Interim will automatically be converted by operation of law into an equal
number of issued and outstanding shares of common stock of the Bank, which will
be all of the issued and outstanding stock of the Bank.
Now, Therefore, in order to consummate this Agreement, Plan of
Reorganization and Plan of Acquisition (the "Agreement"), and in consideration
of the mutual covenants herein set forth, the parties agree as follows:
Article I
Merger of Interim into the Bank and Related Matters
1.1 On the Effective Date, Interim will be merged with and into the Bank
and the separate existence of Interim shall cease, and all assets and property
(real, personal and mixed, tangible and intangible, chooses in action, rights
and credits) then owned by Interim, or which would inure to it, shall
immediately and automatically, by operation of law and without any conveyance,
transfer, or further action, become the property of the Bank. The Bank shall be
deemed to be a continuation of Interim, and the Bank shall succeed to the rights
and obligations of Interim.
1.2 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 of the duties and liabilities, of a
bank organized under Article III of the Banking Law of the State of New York.
The Organization Certificate 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 From and after the Effective Date, and subject to the actions of the
Board of Directors of the Bank, the business conducted by the Bank (whether
directly or through its subsidiaries) immediately prior to the Effective Date
will continue to be conducted by it, as a wholly-owned subsidiary of the Holding
Company, and the directors and officers of the Bank immediately prior to the
Effective Date will continue in their positions. The home office and branch
offices of the Bank in existence immediately prior to the Effective Date shall
continue to be the home office and branch offices of the Bank from and after the
Effective Date.
1.4 The directors of the Holding Company immediately after the Merger,
and their terms of office, shall be as follows:
Terms expiring at the annual meeting of stockholders in 2004:
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Terms expiring at the annual meeting of stockholders in 2005:
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Terms expiring at the annual meeting of stockholders in 2006:
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Article II
Conversion of Stock
2.1 The terms and conditions of the Merger, the mode of carrying the same
into effect, and the manner and basis of converting the common stock of the
parties to this Agreement shall be as follows:
A. On the Effective Date, all shares of common stock of the Holding
Company held by the Bank shall be canceled and shall no longer be deemed to be
issued or outstanding for any purpose.
B. On the Effective Date, shares of common stock, $5.00 par value, of
the Bank ("Bank common stock') issued and outstanding immediately prior to the
Effective Date shall, automatically by operation of law, be converted into and
shall become shares of common stock, $.01 par value, of the Holding Company on a
three-for-two basis, with the rights, privileges, preferences and voting power
incident to each share of Bank common stock prior to such Effective Date,
provided that no fractional shares shall be issued. Each person who would be
entitled to a fractional share of the Holding Company's common stock as a result
of the Reorganization, upon surrender of certificates theretofore representing
the related share of the Bank's common stock, shall receive in lieu of the
resulting one-half of a share of Holding Company common stock, an amount in cash
equal to the average of the best bid and best ask price of the Bank's common
stock on the last full trading day of the Bank's common stock prior to the
Effective Date. Each share of common stock of Interim issued and outstanding
immediately prior to the Effective Date shall, on the Effective Date,
automatically by operation of law be converted into and become one share of
common stock, $5.00 par value, of the Bank and shall not be further converted
into shares of the Holding Company common stock, so that from and after the
Effective Date, all of the issued and outstanding shares of common stock of the
Bank shall be held by the Holding Company.
C. As soon as practicable after the Effective Date, the certificates
representing the outstanding Bank common stock shall be surrendered to the
Holding Company or the designated agent of the Holding Company ("Exchange
Agent") and, upon such surrender, the Exchange Agent shall issue and deliver in
substitution therefore, cash and certificates representing the number of shares
of Holding Company common stock into which such surrendered shares have been
converted as hereinbefore provided, and cash in lieu of fractional shares
(without interest). Certificates representing Bank common stock which are not
surrendered shall be deemed for all purposes to evidence the ownership of the
number of shares of Holding Company common stock into which said shares of the
Bank shall have been converted as hereinbefore set forth and the right to
receive cash in the amount determined pursuant to Section 2.1B.; provided,
however, that any dividends declared with respect to Holding Company common
stock represented by unsurrendered certificates for Bank common stock shall be
paid by the Holding Company to the Exchange Agent and shall not be paid by the
Exchange Agent to the stockholder entitled thereto until such stockholder
surrenders such certificate, at which time the stockholder shall be paid the
amount of the dividends having a record date on or after the Effective Date
theretofore declared with respect to Holding Company common stock, without
interest. All such dividends unclaimed at the end of one year after the
Effective Date which were paid to the Exchange Agent shall be repaid by the
Exchange Agent to Holding Company, and thereafter the holders of such
outstanding certificates shall look, subject to applicable escheat, unclaimed
funds and other laws, only to Holding Company for payment thereof.
D. All shares of Holding Company common stock into which shares of Bank
common are converted pursuant to this Article shall be deemed to have been
issued in full satisfaction of all rights pertaining to such converted shares.
E. 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 Bank common stock, 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 Each option granted under the Bank's stock option plans shall become
an option to purchase three shares of Holding Company stock for each two shares
covered by the existing option, at the same terms and conditions, except that
the exercise price of the new options shall be two-thirds of the exercise price
of the existing options. The Holding Company shall further assume all the terms
and conditions of the four existing stock option plans, which shall become stock
option plans of the Holding Company.
Article III
Conditions
3.1 The obligations of the Bank, the Holding Company and Interim to
effect the Merger and otherwise consummate the transactions which are the
subject matter hereof shall be subject to satisfaction of the following
conditions:
A. To the extent required by applicable law, rules, and regulations, the
holders of the outstanding shares of Bank common stock shall, at a meeting of
the stockholders of the Bank duly called, have approved this Agreement by the
affirmative vote of two-thirds of the outstanding shares of Bank common stock.
B. The shares of Holding Company common stock to be issued to the Bank
stockholders pursuant to the Merger shall have been, if required by law, duly
registered pursuant to the Securities Act of 1933, as amended, and the Bank
shall have complied with all applicable state securities or "blue sky" laws
relating to the issuance of the Holding Company common stock.
C. Any and all approvals from the Board of Governors of the Federal
Reserve System (the "Board"), the Federal Deposit Insurance Corporation, the New
York State Superintendent of Banks, the New York State Banking Board, 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 the Holding Company common stock as contemplated by
this Agreement shall have been obtained.
D. The Bank shall have received either (i) a ruling from the Internal
Revenue Service or (ii) an opinion from its legal counsel, to the effect that
the Reorganization will be treated as a non-taxable transaction under applicable
provisions of the Internal Revenue Code and that no gain or loss will be
recognized by the stockholders of the Bank upon the exchange of Bank common
stock held by them for Holding Company common stock.
E. The number of shares of common stock of the Bank with respect to
which the right to receive payment for such shares pursuant to Section 6022 of
the New York Banking Law had been duly exercised does not exceed 7,000 shares or
such other number of shares as would, upon payment therefor, cause any other
stockholder of the Bank to own, upon consummation of the Merger, 10% or more of
the issued and outstanding shares of stock of the Holding Company.
Article IV
Effective Date of Merger
Upon satisfaction or waiver (in accordance with the provisions of this
Agreement) of each of the conditions set forth herein, the parties hereto shall
execute and cause to be filed such certificates or further documents as shall be
required by the New York Superintendent of Banks, and with such other federal or
state regulatory agencies as may be required. Upon approval by the New York
Superintendent of Banks, and the completion of the required filings by the
Superintendent pursuant to Section 601-b(1) of the New York Banking Law, 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 filing.
Article V
Amendment and Termination
5.1 The Bank, the Holding Company and Interim, by mutual consent of their
respective Boards of Directors or Organizers, as the case may be, to the extent
permitted by law, may amend, modify, supplement and interpret this Agreement in
such manner as may be mutually agreed upon by them at any time before or after
the approval and adoption thereof by the stockholders of the Bank; provided,
however, that no such amendment, modification, supplement or interpretation
shall have a materially adverse impact on the Bank or its stockholders except
with the approval of the stockholders of the Bank or as required by any
regulatory authority having jurisdiction over the Bank, the Holding Company or
Interim.
5.2 This Agreement may be terminated 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 have been satisfied and become incapable of fulfillment and
shall have not been 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.
5.3 In the event of the termination of this Agreement pursuant to any of
the foregoing provisions, no party shall have any further liability or
obligation of any nature to any other party under this Agreement.
Article VI
Miscellaneous
6.1 Any of the terms or conditions of this Agreement (other than the
necessary approvals of stockholders and government authorities) may be waived at
any time by any party hereto which is entitled to the benefit thereof, by action
taken by its Board of Directors; provided, however, that such action may be
taken after approval of the stockholders of the Bank pursuant to Section 3.1A
hereof if, in the judgment of the Board of Directors of the bank, such waiver
will not have a materially adverse effect on the benefits intended under this
Agreement to be afforded to the stockholders of the Bank.
6.2 This Agreement embodies the entire agreement among the parties and
there have been and are no agreements, representations or warranties among the
parties other than those set forth or provided for herein.
6.3 Any number of counterparts hereof may be executed and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one instrument.
6.4 Any notice or waiver to be given to any party shall be in writing and
shall be deemed to have been duly given if delivered, mailed, or sent by prepaid
telegram, addressed to such party at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, , ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
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6.5 The captions contained in this Agreement are solely for convenient
reference and shall not be deemed to affect the meaning or interpretation of any
paragraph hereof.
6.6 The Bank will pay all fees and expenses incurred in connection with
the transactions contemplated by this Agreement prior to the consummation of the
Reorganization.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
Victory State Bank
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇, President
VSB Bancorp, Inc.,
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇, President
Victory Interim Bank (in formation)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇, President
