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Agreement And Plan of Reorganization And Merger Dated February 6, 2006

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Sectors: Banking
Governing Law: North Carolina, View North Carolina State Laws
Effective Date: February 06, 2006
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Exhibit 10.A


AGREEMENT AND PLAN

OF REORGANIZATION AND MERGER

BY AND AMONG


BNC BANCORP,


BANK OF NORTH CAROLINA


AND


STERLINGSOUTH BANK & TRUST COMPANY


February 6, 2006

TABLE OF CONTENTS PAGE
ARTICLE I THE MERGER 2

1.01. Names of Merging Corporations 2

1.02. Nature of Transaction; Plan of Merger 2

1.03. Effect of Merger; Surviving Corporation 2

1.04. Assets and Liabilities of SSB 2

1.05. Conversion and Exchange of Stock 2

1.06. Articles of Incorporation, Bylaws and Management 5

1.07. Closing; Effective Time 5

1.08 Outstanding BNC Stock 6 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SSB 6

2.01. Organization; Standing; Power 6

2.02 Capital Stock 6

2.03. Principal Shareholders 7

2.04. Subsidiaries 7

2.05. Convertible Securities, Options, Etc. 7

2.06. Authorization and Validity of Agreement 7

2.07. Validity of Transactions; Absence of Required Consents or Waivers 8

2.08. Books and Records of SSB 8

2.09. Reports of SSB 8

2.10. SSB Financial Statements 9

2.11. Tax Returns and Other Tax Matters 9

2.12. Absence of Material Adverse Changes or Certain Other Events 10

2.13. Absence of Undisclosed Liabilities 10

2.14. Compliance with Existing Obligations 10

2.15. Litigation and Compliance with Law 10

2.16. Real Properties 11

2.17. Loans, Accounts, Notes and Other Receivables 12

2.18. Securities Portfolio and Investments 13

2.19. Personal Property and Other Assets 13

2.20. Patents and Trademarks 13

2.21. Environmental Matters 14

2.22. Absence of Brokerage or Finder' s Commissions 15

2.23. Material Contracts 15

2.24. Employment Matters; Employee Relations 16

2.25. Employment Agreements; Employee Benefit Plans 17

2.26. Insurance 19

2.27. Insurance of Deposits 19

2.28. Obstacles to Regulatory Approval 19

2.29. Disclosure 20 ARTICLE III REPRESENTATIONS AND WARRANTIES OF BNC AND THE BANK 20

3.01. Organization; Standing; Power 20

3.02. Capital Stock 20

3.03. Principal Shareholders 21

3.04. Subsidiaries 21

3.05. Convertible Securities, Options, Etc. 21

3.06. Authorization and Validity of Agreement 21

3.07. Validity of Transactions; Absence of Required Consents or Waivers 22

3.08. Books and Records of BNC and the Bank 22

3.09. Reports of BNC and the Bank 23

3.10. BNC Financial Statements 23

3.11. Tax Returns and Other Tax Matters 23

3.12. Absence of Material Adverse Changes or Certain Other Events 24

3.13. Absence of Undisclosed Liabilities 24

3.14. Compliance with Existing Obligations 24

3.15. Litigation and Compliance with Law 25

3.16. Real Properties 26

3.17. Loans, Accounts, Notes and Other Receivables 26

3.18. Securities Portfolio and Investments 27

3.19. Personal Property and Other Assets 28

3.20. Patents and Trademarks 28

3.21. Environmental Matters 28

3.22. Absence of Brokerage or Finder' s Commissions 30

3.23. Material Contracts 30

3.24. Employment Matters; Employee Relations 31

3.25. Employment Agreements; Employee Benefit Plans 32

3.26. Insurance 34

3.27. Insurance of Deposits 34

3.28. Obstacles to Regulatory Approval 34

3.29. Disclosure 35

ARTICLE IV COVENANTS OF SSB 35

4.01. Affirmative Covenants of SSB 35

4.02. Negative Covenants of SSB 38

ARTICLE V COVENANTS OF BNC 42

5.01. Affirmative Covenants of BNC 42

5.02. Negative Covenants of BNC 45

ARTICLE VI ADDITIONAL AGREEMENTS 46

6.01. Preparation and Distribution of Proxy Statement/Prospectus 46

6.02. Regulatory Approvals 47

6.03. Information for Proxy Statement/Prospectus and Applications for Regulatory Approvals 47

6.04. Expenses 47

6.05. Announcements 48

6.06. Real Property Matters 48

6.07. Treatment of SSB Options and Warrants 49

6.08. Treatment of 401(k)/Thrift Plan 50

6.09. Directors' and Officers' Liability Insurance 50

6.10 Tax Opinion 50

ARTICLE VII CONDITIONS PRECEDENT TO MERGER 51

7.01. Conditions to all Parties' Obligations 51

7.02. Additional Conditions to BNC' s Obligations 52

7.03. Additional Conditions to SSB' s Obligations 53

ARTICLE VIII TERMINATION; BREACH; REMEDIES 55

8.01. Mutual Termination 55

8.02. Unilateral Termination 55

8.03. Breach; Remedies 57

ARTICLE IX INDEMNIFICATION 59

9.01. Indemnification Following Termination of Agreement 59

9.02. Procedure for Claiming Indemnification 60

ARTICLE X MISCELLANEOUS PROVISIONS 61

10.01. Survival of Representations, Warranties, Indemnification and Other Agreements 61


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10.02. Waiver 61

10.03. Amendment 62

10.04. Notices 62

10.05. Further Assurance 62

10.06. Headings and Captions 62

10.07. Gender and Number 63

10.08. Entire Agreement 63

10.09. Severability of Provisions 63

10.10. Assignment 63

10.11. Counterparts 63

10.12. Governing Law 63

10.13. Previously Disclosed Information 63

10.14. Knowledge 63

10.15. Inspection 64


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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER BY AND AMONG


BNC BANCORP,

BANK OF NORTH CAROLINA

AND

STERLINGSOUTH BANK & TRUST COMPANY


THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (the " Agreement" ) is entered into as of the 6th day of February, 2006, by and among BNC BANCORP (" BNC" ), BANK OF NORTH CAROLINA (the " Bank" ), and STERLING SOUTH BANK & TRUST COMPANY (" SSB" ).


WHEREAS , BNC is a North Carolina business corporation with its principal office and place of business located in Thomasville, North Carolina, and a bank holding company registered with the Board of Governors of the Federal Reserve System and the owner of all of the issued and outstanding shares of common stock of the Bank; and

WHEREAS , the Bank is a North Carolina banking corporation with its principal office and place of business located in Thomasville, North Carolina; and,


WHEREAS , SSB is a North Carolina banking corporation with its principal office and place of business located in Greensboro, North Carolina; and,

WHEREAS , BNC and SSB have agreed that it is in their mutual best interests and in the best interests of their respective shareholders for SSB to be acquired by BNC and merged with and into the Bank in the manner and upon the terms and conditions contained in this Agreement; and,

WHEREAS , to effectuate the foregoing, BNC and SSB desire to adopt this Agreement as a plan of reorganization in accordance with the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the " Code" ); and,

WHEREAS , BNC' s and the Bank' s respective Boards of Directors have each adopted this Agreement and BNC' s Board of Directors, as the sole shareholder of the Bank, desires to approve this Agreement by authorizing the execution hereof, and BNC' s Board of Directors will recommend to BNC' s shareholders that they approve this Agreement and the transactions described herein; and,


WHEREAS , SSB' s Board of Directors has approved this Agreement and will recommend to SSB' s shareholders that they approve this Agreement and the transactions described herein.

NOW, THEREFORE , in consideration of the premises, the mutual benefits to be derived from this Agreement, and the representations, warranties, conditions, covenants and

promises herein contained, and subject to the terms and conditions hereof, BNC and SSB hereby adopt and make this Agreement and mutually agree as follows:


ARTICLE I THE MERGER

1.01. Names of Merging Corporations . The names of the corporations proposed to be merged are Bank of North Carolina and SterlingSouth Bank & Trust Company.


1.02. Nature of Transaction; Plan of Merger . Subject to the provisions of this Agreement, at the " Effective Time" (as defined in Paragraph 1.07 below), SSB will be merged with and into the Bank (the " Merger" ) as provided in the plan of merger (the " Plan of Merger" ) attached as Exhibit A to this Agreement.

1.03. Effect of Merger; Surviving Corporation . At the Effective Time, and by reason of the Merger, the separate corporate existence of SSB shall cease while the corporate existence of the Bank as the surviving corporation in the Merger shall continue with all of its purposes, objects, rights, privileges, powers and franchises, all of which shall be unaffected and unimpaired by the Merger. Following the Merger, the Bank shall continue to operate as a North Carolina banking corporation and will conduct its business at its then legally established branches and main office. The duration of the corporate existence of the Bank, as the surviving corporation, shall be perpetual and unlimited.


1.04. Assets and Liabilities of SSB . At the Effective Time, and by reason of the Merger, and in accordance with applicable law, all of the property, assets and rights of every kind and character of SSB (including without limitation all real, personal or mixed property, all debts due on whatever account, all other choses in action and every other interest of or belonging to or due to SSB, whether tangible or intangible) shall be transferred to and vest in the Bank, and the Bank shall succeed to all the rights, privileges, immunities, powers, purposes and franchises of a public or private nature of SSB (including all trust and other fiduciary properties, powers and rights), all without any transfer, conveyance, assignment or further act or deed; and, BNC shall become responsible for all of the liabilities, duties and obligations of every kind, nature and description of SSB (including duties as trustee or fiduciary) as of the Effective Time.


1.05. Conversion and Exchange of Stock .


(a) Merger Consideration . Except as otherwise provided in this Agreement, at the Effective Time all rights of SSB' s shareholders with respect to all outstanding shares of SSB' s $5.00 par value common stock (the " SSB Common Stock" ) shall cease to exist and, as consideration for and to effect the Merger, each such outstanding share shall be converted, without any action by BNC, SSB or any SSB shareholder, into the right to receive 1.21056 shares (the " Exchange Ratio" ) of no par value common stock issued by BNC (" BNC Common Stock" ), all in the manner and subject to the limitations described in this Agreement. The foregoing consideration, collectively and in the aggregate, shall be referred to herein as " Merger Consideration."


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(b) Adjustment to Merger Consideration . Under certain circumstances described below, the Merger Consideration may be adjusted in the following manner:

(i) if the Average BNC Common Stock Price is between $21.28 and $23.18, the Exchange Ratio shall be adjusted to equal the result obtained by dividing $25.76 by the Average BNC Stock Price;


(ii) if the Average BNC Common Stock Price is greater than $23.18, the Exchange Ratio shall be adjusted to equal 1.1113;


(iii) if the Average BNC Common Stock Price is between $14.82 and $16.72, each outstanding share of SSB Common Stock will be entitled to receive Cash Consideration per share equal to $20.24 less the product of Average BNC Common Stock Price multiplied by 1.21056, in addition to the Merger Consideration; and


(iv) if the Average BNC Common Stock Price is less than $14.82, each outstanding share of SSB Common Stock will be entitled to receive Cash Consideration per share equal to $2.30 per share of SSB Common Stock, in addition to the Merger Consideration.

As used in this paragraph 1.05(b), Cash Consideration shall mean that amount of cash paid by BNC to SSB shareholders, in addition to the Merger Consideration based on changes in the Average BNC Common Stock Price.


As used in this paragraph 1.05(b), Average BNC Common Stock Price shall mean the average closing price for BNC Common Stock, as reported on the NASDAQ Small Cap Market for the 20 trading days ending on the fifth business day prior to closing. BNC agrees to stay in a blackout period for the 20 day pricing period plus an additional 20 trading days prior to the beginning of the pricing period (the " Additional Blackout" ); provided, however, BNC shall be allowed to execute, if possible, one block trade (as defined in Rule 10b-18 of the Securities Act of 1934, as amended) for each of five-day trading period of the Additional Blackout.


(c) Fractional Shares . No fractional shares of BNC Common Stock shall be issued or delivered in connection with the Merger. In lieu of any such fractional share, subject to the terms and conditions of this paragraph 1.05, each holder of shares of SSB Common Stock who would otherwise have been entitled to a fraction of a share of BNC Common Stock shall be entitled to receive cash (without interest) in an amount equal to such fraction multiplied by an amount equal to the cash value of the Merger Consideration, adjusted, if necessary as described above plus the Cash Consideration, if any.


(d) Exchange Procedures . After the Effective Time, BNC shall cause BNC' s transfer agent (the " Exchange Agent" ), subject to the reasonable satisfaction of SSB, to mail to the shareholders of SSB Common Stock of record at the Effective Time transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the certificates representing shares of SSB Common Stock prior to such Effective Time shall pass, only upon proper delivery of such delivery of such certificates to the Exchange Agent). After such Effective Time, each holder of SSB Common Stock issued and outstanding at such


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Effective Time shall surrender the certificate or certificates representing such shares to the Exchange Agent and shall promptly upon surrender thereof receive in exchange therefor the number of shares of BNC' s Stock and any cash to which such holder is entitled hereunder in respect of rights to receive Cash Consideration or fractional shares. BNC shall not be obligated to deliver any of such payments in stock or cash for Cash Consideration or fractional shares until such holder surrenders the certificate(s) representing such holder' s SSB Common Stock. The certificate(s) so surrendered shall be duly endorsed as the Exchange Agent may require. Any other provision of this Agreement notwithstanding, neither BNC nor the Exchange Agent shall be liable to any holder of SSB Common Stock for any amounts paid or properly delivered in good faith to a public official pursuant to any applicable abandoned property law.


To the extent permitted by applicable law, former shareholders of record of SSB shall be entitled to vote after the Merger Consideration has been paid pursuant to the provisions of this Paragraph 1.05 at any meeting of BNC shareholders the number of whole shares into which their respective SSB Common Stock are converted pursuant to the Merger, regardless of whether such holders have exchanged their certificates representing such SSB Common Stock for certificates representing BNC Common Stock in accordance with the provisions of this Agreement. Whenever a dividend or other distribution is declared by BNC on BNC Common Stock, the record date of which is at or after the Effective Time of the Merger, the declaration shall include dividends or other distributions on all shares of BNC Common Stock issuable pursuant to this Agreement, but beginning at such Effective Time no dividend or other distribution payable to the holders of record of BNC Common Stock as of any time subsequent to such Effective Time shall be delivered to the holder of any certificate representing any of the SSB Common Stock issued and outstanding at such Effective Time until such holder surrenders such certificate for exchange as provided in this Paragraph 1.05. However, upon surrender of such certificate(s), both the certificate(s) representing the shares of BNC Common Stock to which such holder is entitled and any such undelivered dividends (without any interest) shall be delivered and paid with respect to each share represented by such certificates.


(e) Closing Payment . At the Effective Time or as soon thereafter as is reasonably practicable, the holders of SSB Common Stock shall surrender the certificates representing such shares to BNC and in exchange therefor, BNC shall issue and deliver to each such holder certificates representing the number of shares of BNC Common Stock to which each such holder is entitled hereunder and cash payments with respect to any Cash Consideration and fractional shares. BNC shall not be obligated to deliver any of such shares of BNC Common Stock or cash payments until such holder surrenders the certificates representing each such holder' s SSB Common Stock.


(f) Antidilutive Adjustments . If, prior to the Effective Time, SSB or BNC shall declare any dividend payable in shares of SSB Common Stock or BNC Common Stock or shall subdivide, split, reclassify or combine the presently outstanding shares of SSB Common Stock or BNC Common Stock, then an appropriate and proportionate adjustment shall be made in the number of shares of BNC Common Stock to be issued in exchange for each of the shares of SSB Common Stock.


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(g) Dissenters . Any shareholder of SSB who properly exercises the right of dissent and appraisal with respect to the Merger as provided in Section 55-13-02 of the North Carolina General Statutes (" Dissenter' s Rights" ) shall be entitled to receive payment of the fair value of his or her shares of SSB Common Stock in the manner and pursuant to the procedures provided therein. Shares of SSB Common Stock held by persons who exercise Dissenter' s Rights shall not be converted as described in Paragraph 1.05(a). However, if any shareholder of SSB who exercises Dissenter' s Rights shall fail to perfect those rights, or effectively shall waive or lose such rights, then each of his or her shares of SSB Common Stock shall be deemed to have been converted into the right to receive the Merger Consideration or Merger Consideration and Cash Consideration to the extent that Cash Consideration is paid to SSB shareholders.

(h) Lost Certificates . Shareholders of SSB whose SSB Certificates have been lost, destroyed, stolen or otherwise are missing shall be entitled to receive the cash and/or BNC Common Stock to which they are entitled in accordance with and upon compliance with reasonable conditions imposed by BNC, including without limitation a requirement that those shareholders provide lost instruments indemnities or surety bonds in form, substance and amounts satisfactory to BNC.

(i) SSB Stock Options and Warrants . At the Effective Time of the Merger, each unexercised option for SSB Common Stock (" Stock Option" ), other than Stock Options owned by employees of SSB who remain employed at BNC and/or the Bank and SSB directors who are elected to the BNC Board of Directors, and all unexercised warrants to purchase shares of SSB Common Stock (" Warrant" ), shall be deemed canceled, and as consideration therefor shall be converted into the right to receive solely a cash payment amount equal to (A) the cash value of the Merger Consideration, adjusted, if necessary, as determined in paragraph 1.05(b) plus the Cash Consideration, if any, as determined in Paragraph 1.05(b) less the exercise price per share of SSB Common Stock or Warrant covered by the Stock Option or Warrant, multiplied by (B) the total number of shares of SSB Common Stock covered by the Stock Option or Warrant. Treatment of Stock Options held by employees continuing employment with BNC and/or the Bank and SSB directors who are elected to the BNC Board of directors is described in Paragraph 6.07(a).


1.06. Articles of Incorporation, Bylaws and Management . The Articles of Incorporation and the Bylaws of BNC in effect at the Effective Time will remain in effect until otherwise amended in accordance with law and the BNC Bylaws. 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 surviving corporation of the Merger. The directors and officers of BNC and 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.

1.07. Closing; Effective Time . The closing of the Merger and other transactions contemplated by this Agreement (the " Closing" ) shall take place at the offices of BNC, in Thomasville, North Carolina, or at such other place as BNC and SSB may agree, on a date mutually agreeable to BNC and SSB (the " Closing Date" ) after receipt of all required approvals of the Merger by governmental or regulatory authorities and the expiration of any and all required waiting periods following the effective date of such required approvals of the Merger


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(but in no event more than sixty (60) days following the expiration of all such required waiting periods). At the Closing, BNC and SSB shall each take such actions (including without limitation the delivery of certain closing documents and the execution of Articles of Merger under North Carolina law) as are required in this Agreement and as otherwise shall be required by law to consummate the Merger and cause it to become effective.


Subject to the terms and conditions set forth in this Agreement, the Merger shall become effective on the date and at the time (the " Effective Time" ) specified in Articles of Merger, containing the appropriate certificate of approval of the North Carolina Commissioner of Banks, executed by the Bank, and filed by it with the North Carolina Secretary of State in accordance with applicable law; provided, however, that the Effective Time shall in no event be more than ten (10) days following the Closing Date.


1.08 Outstanding BNC Common Stock . The status of shares of BNC Common Stock outstanding immediately prior to the Effective Time shall not be affected by the Merger.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SSB


Except as otherwise specifically described in this Agreement or as " Previously Disclosed" (as defined in Paragraph 10.13) by SSB to BNC, SSB hereby makes the following representations and warranties to BNC.


2.01. Organization; Standing; Power . SSB (i) is duly organized and incorporated, validly existing and in good standing as a banking corporation under the laws of the State of North Carolina; (ii) has all requisite power and authority (corporate and other) to own, lease and operate its properties and to carry on its business as it now is being conducted; (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned, leased or operated by it therein, or in which the transaction of its business, makes such qualification necessary, except where failure so to qualify would not have a material adverse effect on SSB; and (iv) is not transacting business or operating any properties owned or leased by it in violation of any provision of federal, state or local law or any rule or regulation promulgated thereunder, except where such violation would not have a material adverse effect on SSB. SSB is an " insured depository institution" as defined in the Federal Deposit Insurance Act and applicable regulations thereunder. SSB is a member of the Federal Home Loan Bank (" FHLB" ) of Atlanta.

2.02 Capital Stock .

SSB' s authorized capital stock consists of 5,000,000 shares of common stock, $5.00 par value per share (" SSB Common Stock" ), of which 1,273,276 shares are issued and outstanding as of the date of this Agreement.


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As of the date of this Agreement, SSB has 184,164 shares of SSB Common Stock reserved for issuance under employee and director stock option plans, pursuant to which options covering 175,782 shares of SSB Common Stock are outstanding.

As of the date of this Agreement, SSB has 352,217 shares of SSB Common Stock reserved for issuance pursuant to 352,217 outstanding warrants.


Each of the issued and outstanding shares of SSB Common Stock (i) has been duly authorized and is validly issued and outstanding, and is fully paid and nonassessable (except to the extent provided in Section 53-42 of the North Carolina General Statutes), and (ii) has not been issued in violation of the preemptive rights of any shareholder. The SSB Common Stock has been registered with the Federal Deposit Insurance Corporation (" FDIC" ) under the Securities Exchange Act of 1934, as amended (the " 1934 Act" ) and SSB is subject to the registration and reporting requirements of the 1934 Act.


2.03. Principal Shareholders . Except as Previously Disclosed, no person or entity is known to management of SSB to beneficially own, directly or indirectly, more than 5% of the outstanding shares of SSB Common Stock.


2.04. Subsidiaries . Except as Previously Disclosed, SSB has no subsidiaries, direct or indirect, and, except for equity securities included in its investment portfolio at December 31, 2005, does not own any stock or other equity interest in any other corporation, service corporation, joint venture, partnership or other entity.

2.05. Convertible Securities, Options, Etc . Except as Previously Disclosed, SSB does not have any outstanding (i) securities or other obligations (including debentures or other debt instruments) which are convertible into shares of SSB Common Stock or any other securities of SSB; (ii) , options, warrants, rights, calls or other commitments of any nature which entitle any person to receive or acquire any shares of SSB Common Stock or any other securities of SSB; or (iii) plans, agreements or other arrangements pursuant to which shares of SSB Common Stock or any other securities of SSB, or options, warrants, rights, calls or other commitments of any nature pertaining to any securities of SSB, have been or may be issued.

2.06. Authorization and Validity of Agreement . This Agreement has been duly and validly approved by the Board of Directors of SSB. Subject only to approval of the shareholders of SSB in the manner required by law and receipt of all required approvals of governmental or regulatory authorities having jurisdiction over BNC or SSB (collectively, the " Regulatory Authorities" ) of the transactions described herein, (i) SSB has the corporate power and authority to execute and deliver this Agreement and to perform its obligations and agreements and carry out the transactions described in this Agreement, (ii) all corporate proceedings and approvals required to authorize SSB to enter into this Agreement and to perform its obligations and agreements and carry out the transactions described herein have been duly and properly completed or obtained, and (iii) this Agreement constitutes the valid and binding agreement of SSB enforceable in accordance with its terms (except to the extent enforceability may be limited by (A) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect which affect creditors' rights generally, (B) legal and equitable limitations on


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the availability of injunctive relief, specific performance and other equitable remedies, (C) general principles of equity and applicable laws or court decisions limiting the enforceability of indemnification provisions, and (D) the rights of the United States under the Federal Tax Lien Act of 1966, as amended).


2.07. Validity of Transactions; Absence of Required Consents or Waivers . Except where the same would not ha
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