Agreement and Plan of Merger, dated as of January 7, 2019, by and between Northeast Bancorp and Northeast Bank

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

OF

NORTHEAST BANCORP

AND

NORTHEAST BANK

This Agreement and Plan of Merger (this “Agreement”), dated as of January 7, 2019, is by and between Northeast Bancorp, a Maine corporation (the “Company”), and Northeast Bank, a Maine-chartered bank with its main office in Lewiston, Maine, and a wholly owned subsidiary of the Company (“Bank”).

WITNESSETH:

WHEREAS, the respective Boards of Directors of the Company and Bank have each adopted this Agreement, authorizing the execution hereof and recommending that this Agreement and the merger of the Company with and into Bank (the “Merger”) contemplated hereby be submitted to the shareholders of the Company and Bank, respectively, for approval; and

WHEREAS, it is intended that the Merger for federal tax purposes qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and subject to the terms and conditions of this Agreement, the parties hereto agree as follows:

Article I

Merger

1.1     Merger. Subject to the terms and conditions of this Agreement, effective as of the Effective Time (as defined below), the Company shall be merged with and into Bank in accordance with the applicable provisions of the Maine Business Corporation Act (“MBCA”). At the Effective Time, the separate existence of the Company shall cease, and Bank, as the surviving entity (sometimes hereinafter referred to as the “Surviving Entity”), shall continue as a Maine-chartered bank governed by the laws of the State of Maine.

1.2     Effective Time. The Merger shall become effective, and the effective time shall occur, upon the date and time set forth in the articles of merger (such date and time being herein referred to as the “Effective Time”).

Article II

Articles of Incorporation, Bylaws, Etc.

2.1     Articles of Incorporation. At the Effective Time, the articles of incorporation of Bank attached as Exhibit A hereto shall be the articles of incorporation of the Surviving Entity until thereafter amended in accordance with the applicable law.

2.2     Bylaws. At the Effective Time, the bylaws of Bank attached as Exhibit B hereto shall be the bylaws of the Surviving Entity until thereafter amended in accordance with applicable law.

2.3     Directors and Officers. At the Effective Time, the directors of Bank immediately prior to the Effective Time will continue as the directors of the Surviving Entity until thereafter changed in accordance with the articles of incorporation and bylaws of the Surviving Entity. The name, address and occupation of each such director are set forth on Exhibit C hereto. At the Effective Time, the officers of the Surviving Entity will be the officers set forth on Exhibit C hereto until thereafter changed in accordance with the articles of incorporation and bylaws of the Surviving Entity.

2.4     Facilities.  The principal office of the Surviving Entity shall be located at 500 Canal Street, Lewiston, Maine 04240.  The branch offices and facilities of the Surviving Entity are set forth on Exhibit D hereto.

Article III

Conversion of Shares

3.1      Effect on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of the holder of any shares of the capital stock of the Company, Bank or Surviving Entity:

(a)      Outstanding Company Voting Common Stock. Each share of voting common stock of the Company (“Company Voting Common Stock”) issued and outstanding immediately prior to the Effective Time shall be canceled and converted into the right to receive one share of voting common stock of Bank (“Bank Voting Common Stock”). Any fraction of a share of Company Voting Common Stock shall be converted into the right to receive the same fraction of a share of Bank Voting Common Stock.

(b)      Outstanding Company Non-Voting Common Stock. Each share of non-voting common stock of the Company (“Company Non-Voting Common Stock”) issued and outstanding immediately prior to the Effective Time shall be canceled and converted into the right to receive one share of non-voting common stock of Bank (“Bank Non-Voting Common Stock”). Any fraction of a share of Company Non-Voting Common Stock shall be converted into the right to receive the same fraction of a share of Bank Non-Voting Common Stock.

(c)      Cancelation of Certificated Shares. Each holder of certificates which represent shares of Company Voting Common Stock or Company Non-Voting Common Stock (collectively, “Company Capital Stock”) immediately prior to the Effective Time shall be entitled to receive new certificates evidencing an equivalent number of shares of Bank Voting Common Stock or Bank Non-Voting Common Stock (collectively, “Bank Capital Stock”), as applicable, or an equivalent number of shares of Bank Capital Stock in book-entry form by complying with such reasonable and customary procedures as may be established by the Surviving Entity and/or its transfer agent to effectuate the intent and purposes.

(d)      Effect on Bank Capital Stock. Each share of Bank Capital Stock issued and outstanding immediately prior to the Effective Time shall be automatically cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor. The Bank Capital Stock issued in the Merger to the holders of Company Capital Stock immediately prior to the Merger shall be the only Bank Capital Stock outstanding as of the Effective Time.

3.2      Other Rights to Company Stock and Employee Benefit Plans.

(a)      At the Effective Time, by operation of this Agreement and by reason of the Merger becoming effective, the Company shall assign to Bank, and Bank, as the Surviving Entity, shall assume and agree to perform, all obligations of the Company pursuant to (i) the Company Equity Incentive Plans, (ii) the Other Plans, and (iii) the Equity Awards. Each Equity Award so assumed by Bank under this Agreement will continue to have, and be subject to, the same terms and conditions as set forth in the applicable Company Equity Incentive Plans and any grant agreements thereunder in effect immediately prior to the Effective Time, including, without limitation, the performance goals, if any, as then in effect, vesting schedules (without acceleration thereof by virtue of the Merger or the transactions contemplated thereby) and per share exercise price, as applicable.

(b)      At the Effective Time, (i) the Company Equity Incentive Plans, (ii) the Other Plans, and (iii) the Equity Awards and any grant agreements thereunder shall each automatically be deemed to be amended as necessary to provide that references to the Company in such agreements shall be read to refer to Bank. The Company and Bank agree that they will, at or promptly following the Effective Time, execute, acknowledge and deliver any and all instruments, agreements or documents necessary or desirable to effect or memorialize the assignments and assumptions contemplated by this Section 3.2.

(c)      Definitions. For purposes of this Section 3.2, the following terms shall have the meanings provided below:

i.     “Company Equity Incentive Plans” means all equity incentive compensation plans of the Company and any of its predecessors that provide for the purchase, grant or issuance of Company Capital Stock or awards convertible into or exchangeable for Company Capital Stock, which are effective at the Effective Time, including the Amended and Restated 2010 Stock Option and Incentive Plan.

ii.     “Equity Awards” means all time-based and performance-based options, restricted stock, restricted stock units, stock appreciation rights, phantom units and any other equity or equity-based awards issued under the Company Equity Incentive Plans, in any such case, which are outstanding at the Effective Time.

iii.     “Other Plans” means all compensation, retirement, benefit, incentive or other similar plans, including tax-qualified and non-qualified retirement plans, health and welfare benefit plans, excess benefit plans, deferred compensation plans, cash balance plans for directors, officers or employees of the Company (other than Company Equity Incentive Plans), and any employment, indemnification, separation and retirement, change in control or similar agreements.

Article IV

Effect of the Merger

4.1      Effect Under Maine Law. From and after the Effective Time, by virtue of the Merger, the corporate existence of the Company shall be merged into the Surviving Entity, and the Surviving Entity shall be deemed to be the same corporation as Bank. All rights, franchises and interests of the Company and Bank in and to every type of property (real, personal, and mixed) and choses in action shall be transferred to and vested in the Surviving Entity by virtue of the Merger without any deed or other transfer. The Surviving Entity, upon the Merger and without any order or other action on the part of any court or otherwise, shall hold and enjoy all rights of property, franchises, and interests, including appointments, designations, and nominations, and all other rights and interests as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, and receiver, and in every other fiduciary capacity, in the same manner and to the same extent as such rights, franchises, and interests were held or enjoyed by the Company and Bank immediately prior to the Effective Time. The Surviving Entity shall be liable for all liabilities of the Company and Bank.

Article V

Conditions to the Merger

5.1      Conditions to the Merger. The respective obligations of each of the Company and Bank to consummate the Merger are subject to the fulfillment, or written waiver by the other party entitled to satisfaction thereof prior to the Effective Time, of each of the following conditions:

(a)     This Agreement shall have been approved by holders of Company Capital Stock constituting a majority of all votes entitled to be cast on such matter at a shareholder meeting duly called and held for such purpose and shall have been ratified and confirmed by the sole shareholder of Bank, in each case, in accordance with applicable law and the articles of incorporation and the bylaws of each such entity.

(b)     Bank shall have caused the shares of Bank Voting Common Stock issued in the Merger to be authorized for quotation on the NASDAQ Global Market (“NASDAQ”), subject to official notice of issuance.

(c)     All approvals and authorizations of, filings and registrations with, and notifications to, all governmental authorities required for the consummation of the Merger, including the Superintendent of the Maine Bureau of Financial Institutions, shall have been obtained or made by the Company and Bank, and shall be in full force and effect and all waiting periods required by law shall have expired.

(d)     No governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and prohibits consummation of the transactions contemplated by this Agreement.

(e)     All third party consents and approvals required, or deemed by the Board of Directors of the Company advisable, to be obtained under any material note, bond, mortgage, deed of trust, security interest, indenture, law, regulation, lease, license, contract, agreement, plan, instrument or obligation to which the Company or any subsidiary or affiliate of the Company is a party, or by which the Company or any subsidiary or affiliate of the Company, or any property of the Company or any subsidiary or affiliate of the Company, may be bound, in connection with the Merger and the transactions contemplated thereby, shall have been obtained by the Company or its subsidiary or affiliate, as the case may be.

(f)     The Board of Directors of the Company shall have received evidence in form and substance reasonably satisfactory to it that holders of Company Capital Stock will not recognize gain or loss for United States federal income tax purposes as a result of the Merger.

Article VI

Covenants

6.1      Shareholder Approvals.

(a)     The Company shall take, in accordance with applicable laws of the State of Maine and its articles of incorporation and bylaws, all action necessary to convene a meeting of holders of Company Capital Stock (the “Company Shareholders Meeting”) as promptly as practicable to consider and vote upon the approval of this Agreement.

(b)     Bank shall take, in accordance with applicable laws of the State of Maine and its articles of incorporation and bylaws, all action necessary to obtain the approval of this Agreement by its sole shareholder.

6.2      Proxy Statement. For the purpose of holding the Company Shareholders Meeting, the Company shall draft and prepare, and Bank shall cooperate in the preparation of, a proxy statement. For the purpose of offering the Bank Capital Stock to shareholders of the Company, Bank shall draft and prepare, and the Company shall cooperate in the preparation of, an offering circular.

6.3      Registration of Bank Capital Stock. As soon as practicable after the execution of this Agreement, Bank shall prepare and file with the Federal Deposit Insurance Corporation (the “FDIC”) a registration statement or such other filing as required by the FDIC (the “Registration Statement”) to register the Bank Voting Common Stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will use its commercially reasonable efforts to cause the Registration Statement to become effective.

6.4      Stock Exchange Listing and Delisting. As soon as practicable after the Effective Time, the Surviving Entity shall use its commercially reasonable efforts to cause the shares of Bank Capital Stock issued in the Merger each to be approved for quotation on NASDAQ, subject to official notice of issuance. The Surviving Entity shall use its commercially reasonable efforts to cause the Company Common Stock to no longer be quoted on the NASDAQ and deregistered under the Exchange Act as soon as practicable following the Effective Time.

6.5      Notes. Upon the Effective Time, Bank shall expressly assume the due and punctual payment on each of the 6.75% Fixed-to-Floating Rate Subordinated Notes due July 1, 2026 (the “Notes”) issued by the Company pursuant to the applicable note purchase agreement and the performance or observance of every covenant of such note purchase agreements on the part of the Company to be performed or observed. In connection therewith, the Company and Bank shall execute and deliver any documents required to make such assumptions effective.

6.6      Other Actions. During the period from the date of this Agreement and continuing until the Effective Time, each of the parties hereto agrees to use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement.

6.7     Further Documents. If at any time the Surviving Entity shall consider or be advised that any further deeds, assignments, conveyances or assurances in law are necessary or desirable to vest, perfect or confirm of record in the Surviving Entity the title to any property or rights of the constituent entities, or otherwise to carry out the provisions hereof, the persons who were the proper officers and directors of the constituent entities immediately prior to the Effective Time (or their successors in office) shall execute and deliver any and all proper deeds, assignments, conveyances and assurances in law, and do all things necessary or desirable, to vest, perfect or confirm title to such property or rights in the Surviving Entity and otherwise to carry out the provisions hereof.

6.8     Tax Treatment. It is intended that for United States federal income tax purposes (i) the Merger will qualify as a “reorganization” within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) this Agreement will constitute a plan of reorganization within the meaning of Treasury Regulation Section 1.368-2(g). Neither the Company nor Bank will take any action inconsistent with the treatment of the Merger as a reorganization within the meaning of Section 368(a)(1) of the Code.

Article VII

Termination

7.1     Termination. This Agreement may be terminated at any time prior to the Effective Time by an instrument executed by each of the parties hereto.

Article VIII

Miscellaneous

8.1     Representations and Warranties. Each of the parties hereto represents and warrants that this Agreement has been duly authorized, executed and delivered by such party and constitutes the legal, valid and binding obligation of such party, enforceable against it in accordance with the terms hereof.

8.2     Entire Agreement. This Agreement (including the documents and instruments referred to herein and attached hereto) constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

8.3     Counterparts. This Agreement may be executed in counterparts (including by facsimile or other electronic means), each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

8.4     Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement and the parties hereto shall use their reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purposes and intents of this Agreement.

8.5     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maine, without regard to choice of law principles.

8.6     Assignment; Third-Party Beneficiaries. This Agreement shall not be assignable by operation of law or otherwise. Any purported assignment in contravention hereof shall be null and void. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement.

8.7     Nonsurvival of Agreements. None of the agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time or termination of this Agreement as provided in Article VII.

8.8     Amendment. This Agreement may not be amended, except by an instrument in writing signed on behalf of each of the parties hereto.

[Signature page to follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on their behalf by their respective officers thereunto duly authorized as of the day and year first written above.