Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Plan of
Reorganization"), dated as of May 20, 1997, is made and entered
into by and between NORWALK SAVINGS SOCIETY, a Connecticut stock
savings bank (the "Bank") and NSS BANCORP, 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 2,442,129 shares are issued and
outstanding and 422,332 shares are reserved for issuance pursuant
to the Bank's various stock option and benefit plans, and (b)
500,000 shares of Preferred Stock, par value $0.01 (the "Bank
Preferred Stock"), none of which are issued or outstanding and
50,000 of which are reserved for issuance pursuant to a
Shareholders Rights Agreement, as more fully described below.
WHEREAS, the authorized capital stock of the Holding Company
shall consist of (a) 7,000,000 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)
500,000 shares of Preferred Stock, $0.01 (the "Holding Company
Preferred Stock"), none of which are issued and outstanding and
50,000 of which are reserved for issuance.
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 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
officers whose respective signatures 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 This 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 May 20, 1997 in accordance with the
Bylaws of the Bank and all applicable laws and regulations (the
"Annual Meeting"). Notice of the Annual Meeting shall be mailed
directly to all stockholders 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
each class of the voting securities of the Bank, 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 the required
two-thirds vote of 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
requisite number of votes of Shareholders at the Annual 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
Reorganization, the closing of the Reorganization (the "Closing")
shall take place on the date on which 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 7 hereof have
been satisfied. The Closing and this Plan of Reorganization shall
be effective at the time of such filing (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, 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 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
issued and outstanding prior to the Effective Time shall, without
any further action by Shareholders or by the Holding Company,
automatically and by operation of law, be converted into one share
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 one share of Holding Company Common Stock for
each share of Bank Common Stock held by them. 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 exercise all rights of
an owner thereof. Notwithstanding any of the foregoing, any
Dissenting Shareholder shall have such rights as provided for in
Section 8 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. Shareholders Rights Agreement.
4.1 Upon approval of the Plan of Reorganization but in any
event not later than the Effective Time, the Holding Company shall
adopt and enter into a shareholders' rights agreement which shall
be, in form and substance, acceptable to and approved by the Board
of Directors of the Bank (the "HC Agreement").
4.2 The HC Agreement shall contain terms, covenants, and
conditions which shall be as nearly identical as possible to the
terms, covenants, and conditions contained in that certain
Shareholders' Rights Agreement between the Bank and Chemical Mellon
Shareholder Services, LLC dated May 10, 1996 (the "NSS-Chemical
Agreement"), a copy of which is required to be furnished to
the Holding Company not later than ten days after the Annual
Meeting.
4.3 At the Effective Time, the Bank shall, without any
further action by the Bank or Holding Company, assign all right,
title and interest, in the NSS-Chemical Agreement to the Holding
Company and the Holding Company shall accept such assignment and
become the Bank's successor-in-interest to the NSS-Chemical
Agreement.
4.4 At the Effective Time, the Holding Company shall, in
connection with its acquisition of all issued and outstanding
shares of Bank Common Stock and without any further
action by the Holding Company or by the shareholders of the Bank,
acquire and become the holder of all Rights (as defined in the
"NSS-Chemical Agreement") issued as a dividend distribution to
holders of Bank Common Stock under the NSS-Chemical Agreement.
Thereafter, the Holding Company shall terminate the NSS-Chemical
Agreement and retire and extinguish all such Rights
acquired by it thereunder.
4.5 At the Effective Time, the Holding Company shall,
without any further action by it or by the Bank, declare a dividend
distribution to holders of Holding Company Common Stock entitling
such holders to a "Holding Company Right" (as defined in the HC
Agreement) in an amount and under such terms and conditions as are
prescribed in the HC Agreement.
4.6 At the Effective Time, Holders of Bank Common Stock
shall, automatically and by operation of law, cease to own such
Rights issued under the NSS-Chemical Agreement and, in
substitution therefor, shall, automatically and by operation of
law, be granted an equal number of Holding Company Rights.
4.7 Holding Company Rights shall be automatically traded
with Holding Company Common Stock subject to the terms and
conditions of the HC Agreement.
Section 5. Stock Option and Benefit Plans.
5.1 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 1994
Employee Stock Option Plan, the Bank's 1994 Director Stock Option
Plan, the Bank's 1995 Executive Incentive Plan, and the Bank's 1994
Employee Stock Ownership Plan, all as amended (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 theretofore
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 5.1 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.
5.2 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 outstanding under any of the Stock
Plans immediately prior to the Effective Time.
Section 6. Actions After the Effective Time.
As soon as practicable and in any event not more than thirty days
after the Effective Time:
6.1 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), 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 Old
Certificates to the Transfer Agent and receive in exchange therefor
a New Certificate 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.
6.2 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 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.
6.3 The Holding Company shall publish, in accordance with
applicable law, a 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 likewise be
given by mail to such holders at their last known addresses
as contained on the Bank's records.
Section 7. Conditions Precedent.
7.1 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 voting securities of the Bank
at the Annual 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 New York (the "Reserve Bank") in accordance
with 12 C.F.R. 225.15 and the Reserve Bank shall not have objected
to the consummation of the transaction contemplated under this Plan
of Reorganization within 30 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 the
Federal Deposit Insurance Corporation and 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 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
law.
(f) The Holding Company and the Bank shall have received
an opinion from the Bank's independent auditors 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
lesser of (i) 5% of the number of shares of Bank Common Stock
issued and outstanding at the Effective Time, or (ii) such number
of shares as in the opinion of the Bank's independent auditors
would prevent accounting for the Reorganization on a "pooling of
interests" basis in accordance with generally accepted accounting
principles.
Section 8. Rights of Dissenting Shareholders.
8.1 "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, pursuant to 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.
8.2 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 9. Termination, Abandonment, Amendment and Waiver.
9.1 This Plan may be abandoned or terminated by either the
Bank or the Holding Company at any time before the Effective Time
in the event that:
(a) The number of shares of Bank Common Stock owned
by Dissenting Stockholders, as defined in Section 8 hereof, shall
make consummation of the transactions contemplated by this 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 this Plan inadvisable in the opinion of the Bank or
the Holding Company;
(c) The Reorganization shall not have been consummated
by August 1, 1997; or
(d) For any other reason consummation of the
transactions contemplated by this Plan of Reorganization is
inadvisable in the opinion of the Bank or the Holding Company.
9.2 In the event of termination or abandonment of this Plan
of Reorganization in any manner, this 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
stockholders of either entity. In the event of such abandonment or
termination of this Plan of Reorganization, the Bank shall pay all
expenses incurred in connection with this 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.
9.3 This 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 change the form of the consideration to be delivered to
the Bank's Shareholders as contemplated by this Plan of
Reorganization. This Plan of Reorganization may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 10. Governing Law.
10.1 This plan of Reorganization shall be governed by and
construed in accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties have executed this Plan of
Reorganization as of the date first written above.
NORWALK SAVINGS SOCIETY
/s/ Robert T. Judson
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By: Robert T. Judson
Its President
NSS BANCORP, INC.
/s/ Robert T. Judson
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By: Robert T. Judson
Its President