Exhibit 2
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 August 17, 2000, by and between
Carolina 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
Greensboro, Guilford County, North Carolina (the "Bank"), and Carolina Bank
Holdings, Inc., 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 "Carolina Bank" and the name of the acquiring corporation is "Carolina Bank
Holdings, Inc."
(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 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) After the Effective Time, certificates representing the
shares of the $5.00 par value Common Stock of the Bank shall, as a matter of law
and for all other purposes, represent shares of the $1.00 par value Common Stock
of the Holding Company. No action on the part of the shareholders shall be
required to effect the exchange of stock certificates of the Bank for that of
the Holding Company. As shareholders sell their shares of Common Stock after the
Effective Time, the transfer agent for the Holding Company shall cancel the old
certificate(s) properly endorsed and presented in exchange for stock
certificate(s) representing shares of Holding Company. Shareholders who desire
to effect an exchange of the Bank's stock certificate(s) for the Holding
Company's stock certificate(s) on a voluntary basis may do so by
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delivering certificate(s) representing the Bank's Common Stock, properly
endorsed, for certificates representing the Holding Company's Common Stock. The
Holding Company will treat any unsurrendered stock certificates representing
shares of the Common Stock of the Bank as if they were shares of the Common
Stock of the Holding Company for the purposes of the payment of dividends or
other distributions.
(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 10:00 a.m. at
the offices of Carolina Bank, 2604 Lawndale Avenue, Guilford County, Greensboro,
North Carolina 27408 on October 20, 2000, or at such other time and date as the
Holding Company and the Bank shall determine (such specified or other time and
date, the "Closing"). 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.
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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:
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(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.
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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.
CAROLINA BANK HOLDINGS, INC.
By: /s/ Robert T. Braswell
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Robert T. Braswell, President
ATTEST:
/s/ Charles E. Matthews
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Charles E. Matthews, Secretary
[corporate seal]
CAROLINA BANK
By: /s/ Robert T. Braswell
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Robert T. Braswell, President
ATTEST:
/s/ Charles E. Matthews
--------------------------------
Charles E. Matthews, Secretary
[corporate seal]
