Exhibit 2
AGREEMENT AND PLAN OF HOLDING COMPANY REORGANIZATION AND
SHARE EXCHANGE
by and between
NORTH STATE BANK
and
NORTH STATE BANCORP
THIS AGREEMENT AND PLAN OF HOLDING COMPANY REORGANIZATION AND SHARE
EXCHANGE (hereinafter called "Agreement") is entered into as of the 10th day of
June, 2002, by and between NORTH STATE BANK (the "Bank") and NORTH STATE BANCORP
(the "Corporation").
WHEREAS, the Bank is a North Carolina banking corporation with its
principal office and place of business located in Raleigh, North Carolina, and
which is authorized by its Articles of Incorporation to issue 10,000,000 shares
of common stock, each of $5.00 par value ("Bank Stock"), of which there are
1,676,281 shares issued and outstanding and 1,000,000 shares of preferred stock
of which there are no shares issued or outstanding; and,
WHEREAS, the Corporation is a North Carolina business corporation with
its principal office and place of business located in Raleigh, North Carolina,
which is authorized by its Articles of Incorporation to issue 10,000,000 shares
of common stock, each of $1.00 par value ("Corporation Stock"), of which there
are 100 shares issued and outstanding, and 1,000,000 shares of preferred stock
of which there are no shares issued or outstanding, and which has been organized
by the Bank at the direction of its Board of Directors for the purpose of
acquiring all of the outstanding shares of the Bank's common stock and thereby
becoming the Bank's parent bank holding company; and,
WHEREAS, it is proposed that the Corporation become the Bank's parent
bank holding company through a statutory share exchange in which, subject to
approval by the Bank's shareholders and required regulatory approvals, the
outstanding shares of the Bank's common stock would be converted into and
exchanged for newly issued shares of common stock of the Corporation and the
Bank would become the wholly-owned subsidiary of the Corporation; and,
WHEREAS, such share exchange is proposed to be effected as provided in
and in accordance with the terms of this Agreement, including the plan of share
exchange contained in Article I below (the "Plan of Share Exchange"); and,
WHEREAS, the Board of Directors of the Bank has approved this
Agreement and will recommend to the Bank's shareholders approval of the Plan of
Share Exchange and transactions described herein, including, among other things,
an exchange of the outstanding shares of Bank Stock for newly issued shares of
Corporation Stock, all in the manner and upon the terms and conditions
hereinafter set forth; and,
WHEREAS, the Board of Directors of the Corporation has approved this
Agreement, the Plan of Share Exchange contained herein, and the transactions
described therein, including the issuance of shares of Corporation Stock to the
Bank's shareholders in exchange for their outstanding shares of Bank Stock, all
as hereinafter set forth.
NOW, THEREFORE, the Bank and the Corporation, for and in consideration
of the premises and their mutual promises contained herein, and subject to the
terms and conditions hereinafter contained, hereby adopt and make this Agreement
and mutually agree as follows:
ARTICLE I. PLAN OF SHARE EXCHANGE
1.1 Corporations Participating in Share Exchange. The names of the
corporations participating in the share exchange (the "Share Exchange")
contemplated by this Plan of Share Exchange (the "Plan") are NORTH STATE BANK
(the "Bank") and NORTH STATE BANCORP (the "Corporation"). The Corporation will
be the acquiring corporation in the Share Exchange and will acquire all of the
outstanding shares of the Bank pursuant to the terms and conditions of this
Plan.
1.2 Nature and Effect of Share Exchange.
(a) At the "Effective Time" (as defined in Paragraph 1.6 below), and
pursuant to and with the effect provided for under N.C. Gen. Stat.(S)(S)55-11-03
and 55-11-06, each then outstanding share of the Bank's common stock ("Bank
Stock"), will be exchanged for one (1) newly issued share of common stock of the
Corporation ("Corporation Stock") as more particularly described in Paragraph
1.3 below.
(b) The shares of Corporation Stock which are outstanding immediately
prior to the Effective Time will not be exchanged or altered in any manner as a
result of the Share Exchange, but, following the Effective Time, such
outstanding shares shall be repurchased by the Corporation from the current
holder thereof as described in Paragraph 1.5 below.
(c) As a result, and following consummation, of the Share Exchange, the
Bank shall be and operate as the wholly-owned banking subsidiary of the
Corporation and will continue to conduct the business of a North Carolina
banking corporation under the name "North State Bank" at the main office and
then legally established branch offices of the Bank.
1.3 Conversion and Exchange of Stock.
a. Conversion of Bank Stock. At the Effective Time, all rights of the
shareholders of the Bank with respect to the outstanding shares of Bank Stock
shall cease to exist, and, as consideration for and to effectuate the Share
Exchange, each such outstanding share of Bank Stock, including new shares
resulting from the Stock Split, shall be converted, without any action on the
part of the Bank, the Corporation, or the holder thereof, into one (1) share of
Corporation Stock.
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Certificates representing shares of Bank Stock outstanding at the
Effective Time (herein sometimes referred to as "Old Certificates") shall
thereafter evidence only the right of the registered holder thereof to receive,
and following the Effective Time may be exchanged for, either (i) certificates
for the number of whole shares of Corporation Stock to which such holders shall
have become entitled on the basis set forth above, plus cash for any fractional
share interests as provided herein, or (ii) in the case of shareholders
perfecting dissenters' rights, cash as provided in Article 13 of Chapter 55 of
the North Carolina General Statutes.
b. Issuance of Shares by the Corporation and the Bank. At the
Effective Time, the Corporation shall issue and deliver to the transfer agent of
Corporation Stock (the "Transfer Agent"), one certificate representing the
aggregate number of whole shares of Corporation Stock into which the outstanding
shares of Bank Stock have been converted and exchanged as provided above; and
the Bank shall issue and deliver to the Corporation one certificate representing
the number of shares of Bank Stock as were outstanding immediately prior to the
Effective Time and which, at such time, were converted into and exchanged for
shares of Corporation Stock.
The Transfer Agent shall divide the certificate delivered to it
by the Corporation into certificates evidencing such numbers of shares of
Corporation Stock as the respective shareholders of the Bank shall have become
entitled, and the Transfer Agent shall register such shares in the names of such
shareholders and deliver said certificates to the individual shareholders
entitled thereto upon and in exchange for the delivery to the Transfer Agent by
said individual shareholders of their Old Certificates.
c. Antidilutive Adjustments. If, prior to the Effective Time, the
Corporation or the Bank shall declare any dividend payable in shares of its
respective common stock or shall subdivide, split, reclassify or combine the
presently outstanding shares of its common stock then an appropriate and
proportionate adjustment shall be made in the number of shares of Corporation
Stock to be issued in exchange for each of the shares of Bank Stock.
d. Treatment of Fractional Shares. No scrip or certificates
representing fractional shares of Corporation Stock will be issued and no right
to vote or to receive any dividend or other distribution shall attach to any
fraction of a share of Corporation Stock resulting from the Share Exchange. In
the event the Share Exchange results in the creation of fractional shares, the
Transfer Agent shall sell the aggregate of such fractional shares at public
auction or by private sale (including a sale to the Corporation), or through a
dealer or by any other reasonable method, at its election, for the best
available price, and remit the net proceeds of such sale(s) to the Bank's
shareholders in accordance with their respective interests therein.
e. Surrender of Certificates. Subject to subparagraph 1.3.g. below,
no certificate for any shares of Corporation Stock or cash for any fractional
share shall be delivered to any shareholder of the Bank unless and until such
shareholder shall have surrendered to the Transfer Agent the Old Certificate(s)
formerly representing his or her shares of Bank Stock. Further, until such Old
Certificate(s) are so surrendered, no dividend or other distribution payable to
holders of record of Corporation Stock as of any date subsequent to the
Effective
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Time shall be delivered to the holder of such Old Certificate(s); provided,
that, upon surrender of such Old Certificate(s), the holder thereof shall be
entitled to receive the amount of any such dividends or distributions which have
accrued but remain unpaid with respect to the shares of Corporation Stock
represented by such certificate(s).
f. Dissenters. Any shareholder of the Bank perfecting dissenters'
rights with respect to the Share Exchange in the manner required by Article 13
of Chapter 55 of the North Carolina General Statutes shall be entitled to
receive payment of the fair value of his or her shares of Bank Stock in the
manner and pursuant to the procedures provided therein. Any shares of
Corporation Stock authorized to be issued pursuant to this Plan but not
exchanged for shares of Bank Stock because of the dissent or objection of a
shareholder of the Bank and the receipt by him or her of cash in lieu of shares,
may be sold by the Transfer Agent at public auction or by private sale
(including a sale to the Corporation), or through a dealer or by any other
reasonable method, at its election, for the best available price, and the net
proceeds of any such sale shall be retained by the Corporation.
g. Lost Certificates. Shareholders of the Bank whose Old Certificates
have been lost, destroyed, stolen, or are otherwise missing shall be entitled to
receive certificates representing the shares of Corporation Stock to which they
are entitled in accordance with and upon compliance with conditions imposed by
the Transfer Agent or the Corporation pursuant to North Carolina law, including
the requirement that such shareholders provide an indemnification agreement and
bond.
h. Stock Options. At the Effective Time, each then current
outstanding option to purchase shares of Bank Stock granted pursuant to the
Bank's Employee Stock Option Plan and Non-Employee Director Stock Option Plan,
(the "Stock Options") shall be converted, without any action on the part of the
Bank, the Corporation, or the holder thereof, into an option to purchase one (1)
share of Corporation Stock on the same terms and conditions as then are in
effect with respect to those outstanding Stock Options under the written
agreements pertaining thereto and the written plans under which such options
were issued.
1.4. Articles, Bylaws, and Management. The Articles of Incorporation and
Bylaws of the Bank in effect at the Effective Time shall be the Articles of
Incorporation and Bylaws of the Bank as the wholly-owned subsidiary of the
Corporation, and the officers and directors of the Bank in office at the
Effective Time shall continue to hold such offices until removed as provided by
law or until the election or appointment of their respective successors.
1.5. Repurchase of Currently Outstanding Corporation Stock. At the
Effective Time, the currently outstanding shares of Corporation Stock shall be
repurchased by the Corporation at a price equal to the price originally paid
therefor and such shares shall be cancelled.
1.6. Effective Time. The Share Exchange shall become effective on the date
and at the time (the "Effective Time") so specified in the Articles of Share
Exchange which shall include the Plan contained herein and which shall be duly
executed by the Corporation as the acquiring entity and shall be presented to
and filed by the North Carolina Secretary of State in accordance with North
Carolina law.
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ARTICLE II. ADDITIONAL AGREEMENTS
2.1. "Blue Sky" Approvals. As soon as practicable following the
execution of this Agreement, the Corporation shall take all such actions under
applicable state securities laws as reasonably shall be necessary to cause the
Corporation Stock to be issued upon consummation of the Share Exchange, at the
time of the issuance thereof, to be duly qualified or registered (unless
exempt), to cause all conditions to any exemptions from qualification or
registration under applicable state securities laws to have been satisfied, and
to obtain any and all required approvals or consents to the issuance thereof
2.2. Approval of Shareholders. This Agreement and the Plan shall be
submitted for approval, ratification, and confirmation to the shareholders of
the Bank at an annual or special meeting of shareholders to be duly called and
held in accordance with the Bank's Bylaws and all applicable provisions of law
following the date hereof. The Bank will prepare and mail to its shareholders as
soon as practicable and in accordance with law a proxy statement (the "Proxy
Statement") for purposes of the solicitation of appointments of proxy for use at
the meeting. The Proxy Statement will indicate that the Board of Directors of
the Bank considers the Share Exchange to be advisable and to the advantage of
the Bank and its shareholders and, accordingly, that it recommends ratification
and approval of this Agreement and the transactions contemplated hereby.
2.3. Regulatory Approvals. Promptly following the date of this
Agreement, the Bank and the Corporation each shall prepare, submit, and file, or
cause to be prepared, submitted, and filed, all applications for regulatory
approvals and actions as may be required of them, respectively, by applicable
law and regulations with respect to or in connection with the Share Exchange.
Each such party shall cooperate with the other in the preparation of all of the
foregoing applications and shall promptly furnish upon request all documents,
information, financial statements, or other material that may be required to
complete such applications. Should the appearance of any of the officers,
directors, employees, or counsel of any of the parties hereto be requested by
any other party or by any governmental agency at any hearing in connection with
any such application, such party shall promptly use its best efforts to arrange
for such appearance.
2.5. Adoption of Stock Option Plans. Subject to consummation of the
Share Exchange, the Corporation hereby adopts, effective as of the Effective
Time, the Bank's Employee Stock Option Plan and Non-Employee Director Stock
Option Plan (the "Plans"), as its own and agrees that the options of the
Corporation into which the Bank's outstanding Stock Options are converted
pursuant to Paragraph 1.3(h) above shall be treated as stock options granted
pursuant to the terms of such Plans.
2.6. Closing. A closing and consummation of the Share Exchange (the
"Closing") shall be held on such date (the "Closing Date") and at such
reasonable time following the satisfaction of all conditions to the Share
Exchange and at such location as shall be specified by the Corporation, but in
no event later than thirty (30) business days after all conditions of the Share
Exchange have been satisfied or effectively waived.
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2.7. Further Action. The Bank and the Corporation each represents and
warrants to and covenants with each other that it or they will use its best
efforts in good faith to take or cause to be taken all action required of it
hereunder as promptly as practicable so as to permit the consummation of the
Share Exchange at the earliest possible date, and shall cooperate fully with the
other such party in delivering all documents or instruments reasonably necessary
or useful to any party hereto in carrying out such transactions.
2.8. "Affiliates" of the Bank. The Bank shall, if requested by the
Corporation following the execution and delivery of this Agreement, promptly
deliver to the Corporation a list of persons deemed by it and its counsel to be
"affiliates" of the Bank as that term is defined in Rule 405 promulgated under
the Securities Act of 1933 (which such list shall be subject to the review and
concurrence of the Corporation and its counsel), and, thereafter, the Bank
agrees that, if requested by the Corporation, each such affiliate (as well as
such additional persons as shall be deemed by the Corporation or its counsel to
be affiliates of the Bank, including certain persons, trusts, estates,
corporations, or other entities related to persons deemed to be affiliates of
the Bank) shall execute and deliver to the Corporation a written agreement
("Affiliates' Agreement") in form and content satisfactory to the Corporation
relating to restrictions on shares of Corporation Stock to be received by such
affiliates pursuant to this Agreement. In such event, certificates for the
shares of Corporation Stock issued to affiliates of the Bank shall bear a
restrictive legend (substantially in the form as shall be set forth in the
Affiliates' Agreement) with respect to the restricted nature of such shares.
ARTICLE III. CONDITIONS PRECEDENT TO SHARE EXCHANGE
The obligations of the parties to this Agreement to consummate the
Share Exchange shall be conditioned upon the satisfaction of the following
conditions precedent on or prior to the Closing Date.
3.1. Material Adverse Change. There shall not have occurred any
material adverse change in the financial condition, business, properties,
assets, or operations of the Bank or the Corporation, nor shall any event have
occurred, which, with the lapse of time or otherwise, may or could cause, create
or result in any such material adverse change.
3.2. Adverse Proceedings, Injunction, Etc. There shall not be any
order, decree, or injunction of any court or agency of competent jurisdiction
which enjoins or prohibits consummation of the Share Exchange or any of the
parties hereto from consummating such transaction, nor any pending or threatened
investigation of such transactions by the United States Department of Justice,
or any suit, action, or proceeding instituted by any governmental,
administrative, or regulatory agency, pending or threatened before any court or
govermnental agency, seeking to restrain or prohibit the Bank or the Corporation
from carrying out any of the terms or provisions of this Agreement.
3.3. Approval by Governmental or Regulatory Authorities; No
Disadvantageous Conditions. (i) The Share Exchange shall have been approved, to
the extent required by law, by all governmental or regulatory agencies or
authorities having jurisdiction over such transaction;
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(ii) no governmental or regulatory agency or authority shall have withdrawn its
approval of such transaction or imposed any condition on such transaction or
conditioned its approval thereof, which condition is reasonably deemed by the
Corporation or the Bank to be disadvantageous or burdensome; (iii) all required
waiting periods following necessary approvals by governmental or regulatory
agencies or authorities for review of such transaction by the United States
Department of Justice shall have expired; and (iv) all other consents,
approvals, and permissions and the satisfaction of all of the requirements
prescribed by law necessary to the carrying out of such transaction shall have
been procured (including without limitation any required approval of the North
Carolina Commissioner of Banks (the "Commissioner of Banks") or the Federal
Deposit Insurance Corporation ("FDIC") for the payment of cash to shareholders
of the Bank, if any, who perfect dissenters' rights as provided in Article 13,
Chapter 55 of the North Carolina General Statutes).
3.4. Approval by Boards of Directors and Shareholders. The Boards of
Directors of the Bank and the Corporation shall have duly approved and adopted
this Agreement by appropriate resolutions, and the shareholders of the Bank
shall have duly approved, ratified, and confirmed this Agreement to the extent
required by and in accordance with this Agreement and the North Carolina General
Statutes).
3.5. Compliance with Agreements. Unless waived by the other parties
hereto in accordance with Paragraph 5.1. below, the Bank and the Corporation
each shall have performed in all material respects their respective obligations,
covenants, and agreements hereunder to be performed before or at Closing of the
parties hereto, by and through their respective Presidents or Chief Executive
Officers, shall have executed and delivered to the other parties a certificate,
dated as of the Closing Date, with regard to the foregoing and such other
matters as may be reasonably requested.
3.6. Compliance with "Blue Sky" Requirements. The Corporation Stock to
be issued upon consummation of the Share Exchange shall have been duly qualified
or registered (unless exempt) by the Corporation under applicable state
securities laws, all conditions to any exemptions from qualification or
registration shall have been satisfied, and any and all required approvals or
consents to the issuance of such Corporation Stock shall have been obtained.
3.7. Favorable Federal Tax Aspects of Share Exchange. The parties
hereto shall have received favorable assurances which are satisfactory to the
Bank and the Corporation, either in the form of a favorable opinion of
independent certified public accountants or of legal counsel, to the effect that
the Share Exchange will be treated for tax purposes under the Internal Revenue
Code of 1986, as amended, as a tax-free reorganization.
3.8. Agreements from Affiliates of the Bank. If requested by the
Corporation, it shall have received the written Affiliates' Agreements in form
and content satisfactory to the Corporation signed by all persons who are deemed
by the Corporation or its counsel to be "affiliates" of the Bank as provided in
Paragraph 2.8 above.
3.9. No Termination or Abandonment. This Agreement shall not have been
terminated by any party hereto.
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3.10 Articles of Share Exchange; Other Actions. Articles of Share
Exchange in the form described in Paragraph 1.6. above shall have been duly
executed by the Corporation as provided in that Paragraph.
ARTICLE IV. TERMINATION
At any time prior to the Effective Time, and whether before or after
approval hereof by the shareholders of the Bank, this Agreement may be
terminated by the mutual consent of a majority of the members of each of the
Boards of Directors of the Bank and the Corporation; or, otherwise, by the
majority vote of the Board of Directors of either the Corporation or the Bank in
the event that:
(i) This Agreement and the transactions described herein are not
approved, ratified, and affirmed by the shareholders of the Bank in the manner
required by law at the meeting of shareholders held for that purpose as herein
provided;
(ii) The Share Exchange shall not have become effective on or before
December 31, 2002, unless such date is extended as evidenced by the written
mutual agreement of the parties hereto. or
(iii) Such Board of Directors shall determine that consummation of the
Share Exchange for any reason is not in the best interests of the Bank or its
shareholders.
ARTICLE V. MISCELLANEOUS PROVISIONS
5.1. Waiver. Any term or condition of this Agreement may be waived
(except as to matters of regulatory approvals and approvals required by law),
either in whole or in part, at any time by the party which is, and whose
shareholders are, entitled to the benefits thereof, provided, however, that any
such waiver shall be effective only upon a determination by the waiving party
(through action of its Board of Directors) that such waiver would not adversely
affect the interests of the waiving party or its shareholders; and, provided
further, that no waiver of any term or condition of this Agreement by any party
shall be effective unless such waiver is in writing and signed by the waiving
party, or be construed to be a waiver of any succeeding breach of the same term
or condition. No failure or delay of any party to exercise any power, or to
insist upon a strict compliance by any other party of any obligation, and no
custom or practice at variance with any terms hereof, shall constitute a waiver
of the right of any party to demand a full and complete compliance with such
terms.
5.2. Amendment. This Agreement may be amended, modified, or
supplemented at any time or from time to time prior to the Effective Time, and
either before or after its approval by the shareholders of the Bank, by an
agreement in writing approved by a majority of the Boards of Directors of the
Corporation and the Bank and executed in the same manner as this Agreement;
provided, however, that except as authorized herein, no change in the exchange
ratio specified herein may be made following shareholder ratification except
with such shareholder approval of that change.
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5.3. Further Assurance. The Bank and the Corporation each agrees to
furnish to the other such further assurances with respect to the matters
contemplated herein and their respective agreements, covenants, representations,
and warranties contained herein, as such other party may reasonably request.
5.4. Headings and Captions. Headings and captions of the sections and
paragraphs of this Agreement have been inserted for convenience of reference
only and do not constitute a part hereof.
5.5. Entire Agreement. This Agreement contains the entire agreement of
the Bank and the Corporation with respect to the transactions contemplated
herein and supersedes any and all other oral or written agreement(s) heretofore
made, and there are no representations or inducements by or to any party hereto
or any provisions other than those contained herein.
5.6. Severability of Provisions. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement, or other
provision hereof shall in no way affect the validity or enforceability of any
other provision or part hereof.
5.7. Counterparts. Any number of counterparts of this Agreement may be
signed and delivered, each of which shall be considered an original and which
together shall constitute one agreement.
5.8. Governing Law. This Agreement is made in and shall be construed
and enforced in accordance with the laws of North Carolina.
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IN WITNESS WHEREOF, the Bank and the Corporation each has caused this
Agreement to be executed in its name by its duly authorized officers as of the
date first above written.
NORTH STATE BANK
ATTEST: By: ________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief
Executive Officer
_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
NORTH STATE BANCORP
ATTEST: By: ________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief
Executive Officer
_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
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