Exhibit 2
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AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE (this
"Agreement"), made and entered into as of May 18, 2001, by and between Crescent
State Bank, a banking corporation organized under the laws of the State of North
Carolina and having its principal place of business in the City of Cary, Wake
County, North Carolina (the "Bank"), and Crescent Financial Corporation, a North
Carolina business corporation (the "Holding Company").
W I T N E S S E T H
WHEREAS, the Boards of Directors of the Bank and the Holding Company
believe that it is in the best interests of their respective shareholders that
the Bank be reorganized into a bank holding company structure pursuant to which
the shareholders of the Bank (collectively, the "Shareholders" and individually,
a "Shareholder") would receive shares of the common stock of the Holding Company
in exchange for their shares of Bank common stock.
NOW, THEREFORE, in consideration of the mutual promises and conditions
herein contained, the Bank and the Holding Company hereby mutually agree to an
exchange of shares on the terms and conditions and in the manner and on the
basis hereinafter provided:
1. THE EXCHANGE.
(a) The name of the corporation whose shares will be acquired
is "Crescent State Bank" and the name of the acquiring corporation is "Crescent
Financial Corporation."
(b) At the Effective Time (as defined in Section 2 below),
upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with Article 11 of the North Carolina Business Corporation Act, as
amended (the "NCBCA"), each share of the $5 par value common stock of the Bank
("Bank Stock") shall be exchanged (the "Exchange") for one (1) share of the
$1.00 par value common stock of the Holding Company (all such shares of Holding
Company common stock issued to the Shareholders, collectively, the "Shares").
(c) As soon as possible after the Effective Time, the Holding
Company shall furnish to each Shareholder transmittal forms and written
instructions with respect to the Exchange. Until shares of the Bank Stock are
surrendered for exchange in accordance with this Agreement, each outstanding
certificate which, prior to the Effective Time, represented shares of Bank
Stock, shall for all purposes evidence only the exchange rights established
pursuant to this Agreement or, if applicable, the rights described in Paragraph
3 of this Agreement. The Holding Company may in its discretion elect not to
treat any such unsurrendered shares as shares of common stock of the Holding
Company for purposes of the payment of dividends or other distributions. If the
Holding Company in its discretion so elects, then unless and until any
outstanding certificate evidencing Bank Stock shall be so surrendered, no
dividends payable to the holders of common stock of the Holding Company shall be
paid to the holder of the unsurrendered Bank Stock certificate; provided,
however, upon surrender and exchange of each outstanding certificate evidencing
Bank Stock for a certificate evidencing outstanding common stock of the Holding
Company, there shall be paid to the holder thereof the amount, without interest,
of all dividends and other distributions, if any, which theretofore were
declared and became payable, but were not paid, with respect to said shares.
(d) At the Effective Time, all shares of common stock of the Holding
Company outstanding immediately prior to the Effective Time shall be redeemed
from the holder(s) thereof for the sum of $ 1.00 per share.
2. CLOSING; EFFECTIVE TIME. Consummation of the Exchange and the other
transactions contemplated by this Agreement shall take place at such time and
date as the Holding Company and the Bank shall determine (the "Closing");
however, the Exchange shall take place no later than the last business day of
the month preceding the month in which the 2002 annual meeting will be held. The
Exchange shall become effective at the time specified in Articles of Share
Exchange to be filed with the Secretary of State of North Carolina (the
"Effective Time").
3. RIGHTS OF DISSENTING SHAREHOLDERS. Any Shareholder who has not voted
for the Exchange at the meeting of Shareholders called to consider the Exchange,
and who has given notice in writing at or prior to such meeting that he or she
dissents from the Exchange, and who complies with the provisions of Part 2 of
Article 13 of the North Carolina Business Corporation Act ("NCBCA"), shall be
entitled to receive the fair value of the shares held by him or her. Upon the
receipt of any notice of a Shareholder's intent to assert dissenters' rights
pursuant to the NCBCA, the Bank shall establish an escrow fund (the "Escrow
Fund") from which all payments, whether before or after the Effective Time,
necessary with respect to the exercise of such dissenters' rights shall be made.
The Holding Company shall not directly or indirectly contribute any funds to the
Escrow Fund. The Bank shall deposit in the Escrow Fund an amount that it
reasonably believes is sufficient to pay fully the claims of all Shareholders
asserting dissenters' rights, and shall make additional deposits to the Escrow
Fund as it may reasonably determine to be necessary to satisfy such claims. In
the event funds remain in the Escrow Fund after all claims for payment pursuant
to dissenters' rights have finally expired, terminated, or have been finally
satisfied or settled, then any balance remaining in the Escrow Fund shall be
returned to the Bank.
4. LOST, DESTROYED, OR STOLEN CERTIFICATES. Shareholders whose
certificates evidencing shares of Bank Stock have been lost, destroyed or stolen
shall be entitled to receive certificates evidencing Shares for which such
shares of Bank Stock were exchanged pursuant to this Agreement in compliance
with the provisions of the Holding Company's bylaws.
5. STOCK OPTION AND OTHER PLANS. At the Effective Time, all outstanding
options under the Bank's existing stock option plans ("Plans") shall be
converted into options to acquire the number of shares of common stock of the
Holding Company that the holders of such options were entitled to acquire of
Bank Stock immediately prior to the
Exchange on the same terms and conditions as set forth in the Plans.
6. OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE TIME. The Bank and
the Holding Company shall, as soon as practicable take the following action:
(a) This Agreement shall be duly submitted to the Shareholders of the
Bank and the sole shareholder of the Holding Company for the purpose of
considering and acting upon the Exchange in the manner required by law and their
respective articles of incorporation and bylaws. The Bank and the Holding
Company shall use their best efforts to obtain the requisite approval of their
shareholders for the Exchange and the transactions contemplated by this
Agreement, and the Bank and the Holding Company shall, through their respective
officers, execute and file with the appropriate regulatory authorities,
including the Board of Governors of the Federal Reserve System and the North
Carolina Banking Commission, such applications, exhibits, documents and papers
as shall be necessary or appropriate to secure approval of this Agreement, the
Exchange and the other transactions contemplated hereby, as required by
applicable statutes, rules and regulations;
(b) The Holding Company shall use its best efforts to cause the
issuance of common stock of the Holding Company made pursuant to this Agreement
and the Exchange to be qualified or exempted under the Securities Act of 1933,
as amended, and the Blue Sky Laws of each state in which it deems such
qualification or exemption to be required;
(c) Until the Effective Time, neither the Bank nor the Holding
Company shall dispose of its assets except in the ordinary and normal course of
business.
7. CONDITIONS PRECEDENT TO THE EXCHANGE. The Exchange shall be subject to
the satisfaction of the following conditions:
(a) Ratification and confirmation of this Agreement by approval of a
majority of the Shareholders and by approval of the sole shareholder of the
Holding Company as required by law;
(b) Approvals by the Board of Governors of the Federal Reserve System
to the Exchange and the transactions related thereto;
(c) Approval, to the extent required, of any other governmental or
regulatory authority;
(d) Receipt of a favorable opinion with respect to the tax
consequences of the proposed Exchange from the Bank's counsel; and
(e) Expiration of any waiting period required by any supervisory
authority.
8. TERMINATION. This Agreement may be terminated prior to the Effective
Time for any of the following reasons by written notice by either the Bank or
the Holding
Company to the other upon authorization by resolution adopted by either Board of
Directors:
(a) Any condition precedent contained in Paragraph 7 has not been
fulfilled or waived;
(b) Any action, suit, proceeding, or claim has been instituted, made
or threatened, relating to the proposed Exchange that makes consummation of the
Exchange inadvisable in the opinion of the Board of Directors of either the Bank
or the Holding Company;
(c) The Board of Directors of the Bank determines that the holders of
a sufficient number of shares of Bank Stock have dissented from the Exchange so
that consummation of the Exchange is not in the best interests of the Bank;
(d) A determination by the Board of Directors of either the Bank or
the Holding Company that consummation of the Exchange is inadvisable in the
opinion of such Board of Directors.
9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the transactions contemplated hereby.
10. EFFECT OF AGREEMENT. The terms and conditions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Bank and the Holding Company have caused this Agreement
to be executed by their duly authorized officers and their corporate seals to be
affixed hereto as of the date first above written.
CRESCENT FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
[corporate seal]
CRESCENT STATE BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
[corporate seal]