EXHIBIT 2.1
WAKE FOREST FEDERAL SAVINGS & LOAN ASSOCIATION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated November 16, 1998, is by
and among WAKE FOREST FEDERAL SAVINGS & LOAN ASSOCIATION, a federal stock
savings association (the "Association"); WAKE FOREST BANCSHARES, INC., a
federally-chartered corporation (the "Stock Holding Company"), and WAKE INTERIM
SAVINGS BANK, a to-be-formed interim federal stock savings association
("Interim").
The parties hereto desire to enter into an Agreement and Plan of
Reorganization whereby the corporate structure of the Association will be
reorganized into the stock holding company form of ownership. The result of such
reorganization will be that immediately after the Effective Date (as defined in
Article V below), all of the issued and outstanding shares of common stock, par
value $0.01 per share, of the Association will be held by the Stock Holding
Company, and the holders of the issued and outstanding shares of common stock of
the Association will become the holders of the issued and outstanding shares of
common stock of the Stock Holding Company.
The reorganization of the Association will be accomplished by the following
steps: (1) the formation by the Association of the Stock Holding Company as a
wholly owned subsidiary; (2) the formation of Wake Forest Interim Savings Bank
("Interim"), an interim federal stock savings association which will be wholly
owned by the Stock Holding Company; and (3) the merger of Interim into the
Association, with the Association as the surviving corporation. Pursuant to such
merger: (i) each of the issued and outstanding shares of common stock of the
Association will be converted by operation of law into an equal number of issued
and outstanding shares of common stock of the Stock Holding Company; and (ii)
each of the issued and outstanding shares of common stock of Interim will
automatically be converted by operation of law into an equal number of issued
and outstanding shares of common stock of the Association. Notwithstanding any
other provision herein, at any time prior to the Effective Date, the Association
shall be entitled to revise the structure of the merger or other transactions
contemplated hereby or the manner of effecting such transactions; provided, that
each of the transactions comprising such revised structure or manner shall not,
as a result of such revision, subject any of the stockholders of the Association
to adverse tax consequences. This agreement and any related documents shall be
appropriately amended in order to reflect any such revised structure.
NOW, THEREFORE, in order to consummate this Agreement and Plan of
Reorganization, and in consideration of the mutual covenants herein set forth.
the parties agree as follows:
ARTICLE I
MERGER OF INTERIM INTO
THE ASSOCIATION AND RELATED MATTERS
1.1 On the Effective Date, Interim will be merged with and into the
Association (the "Merger") and the separate existence of Interim shall cease,
and all assets and property (real, personal and mixed, tangible and intangible,
choses in action, rights and credits) then owned by Interim, or which would
inure to it, shall immediately and automatically, by operation of law and
without any conveyance, transfer, or
1
further action, become the property of the Association. The Association shall be
deemed to be a continuation of Interim, and the Association shall succeed to the
rights and obligations of Interim.
1.2 Following the Merger, the existence of the Association shall continue
unaffected and unimpaired by the Merger, with all the rights, privileges,
immunities and powers, and subject to all the duties and liabilities, of a
corporation organized under federal law. The Charter and Bylaws of the
Association, as presently in effect, shall continue in full force and effect and
shall not be changed in any manner whatsoever by the Merger.
1.3 From and after the Effective Date, and subject to the actions of the
Board of Directors of the Association, the business presently conducted by the
Association will continue to be conducted by it, as a wholly owned subsidiary of
Stock Holding Company, and the present directors and officers of the Association
will continue in their present positions. The home office of the Association in
existence immediately prior to the Effective Date shall continue to be the home
office of the Association from and after the Effective Date.
ARTICLE II
CONVERSION OF STOCK
2.1 The terms and conditions of the Merger, the mode of carrying the same
into effect, and the manner and basis of converting the common stock of the
Association into common stock of the Stock Holding Company pursuant to this
Agreement shall be as follows:
A. On the Effective Date, each share of common stock, par value $0.01
per share, of the Association issued and outstanding immediately prior to the
Effective Date shall automatically by operation of law be converted into and
shall become one share of common stock, par value $0.01 per share, of the Stock
Holding Company (the "Stock Holding Company Common Stock"). Each share of common
stock of Interim issued and outstanding immediately prior to the Effective Date
shall, on the Effective Date, automatically by operation of law be converted
into and become one share of common stock, $0.01 par value per share, of the
Association and shall not be further converted into shares of the Stock Holding
Company, so that from and after the Effective Date, all of the issued and
outstanding shares of common stock of the Association shall be held by the Stock
Holding Company.
B. On the Effective Date, the current stock option plans and
recognition plans of the Association (collectively, the "Benefit Plans") shall
automatically, by operation of law, be continued as Benefit Plans of the
Association and/or the Stock Holding Company. Each option to purchase shares of
the Association common stock under the Association's stock option plan
outstanding at that time will be automatically converted into an identical
option, with identical price, terms and conditions, to purchase an identical
number of shares of Stock Holding Company Common Stock in lieu of shares of the
Association common stock. The Stock Holding Company and the Association may make
appropriate amendments to the Benefit Plans to reflect the adoption of the
Benefit Plans as the plans of the Stock Holding Company, without adverse effect
on the Benefit Plans and their participants.
C. From and after the Effective Date, each holder of an outstanding
certificate or certificates that, prior thereto, represented shares of the
Association common stock, shall, upon surrender of the same to the designated
agent of the Association, be entitled to receive in exchange therefor a
certificate
2
or certificates representing the number of whole shares of Stock Holding Company
Common Stock into which the shares theretofore represented by the certificate or
certificates so surrendered shall have been converted, as provided in the
foregoing provisions of this Section 2.1. Until so surrendered, each such
outstanding certificate which, prior to the Effective Date, represented shares
of Association common stock shall be automatically deemed for all purposes to
evidence the ownership of the equal number of whole shares of Stock Holding
Company Common Stock. Former holders of shares of Association common stock will
not be required to exchange their Association common stock certificates for new
certificates evidencing the same number of shares of Stock Holding Company
Common Stock. If in the future the Stock Holding Company determines to effect an
exchange of stock certificates, instructions will be sent to all holders of
record of Stock Holding Company Common Stock.
D. All shares of Stock Holding Company Common Stock into which shares
of the Association common stock shall have been converted pursuant to this
Article II shall be deemed to have been issued in full satisfaction of all
rights pertaining to such converted shares.
E. On the Effective Date, the holders of certificates formerly
representing the Association common stock outstanding on the Effective Date
shall cease to have any rights with respect to the stock of the Association
common stock, and their sole rights shall be with respect to the Stock, Holding
Company Common Stock into which their shares of the Association common stock
shall have been converted by the Merger.
ARTICLE III
CONDITIONS
3.1 The obligations of the Association, Stock Holding Company and Interim
to effect the Merger and otherwise consummate the transactions which are the
subject matter hereof shall be subject to satisfaction of the following
conditions:
A. To the extent required by applicable law, rules and regulations,
the holders of the outstanding shares of the Association common stock shall, at
a meeting of the stockholders of the Association duly called, have approved this
Agreement by the affirmative vote of a majority of the shares of the Association
common stock.
B. Any and all approvals from the OTS, the Securities and Exchange
Commission and any other federal governmental agency having jurisdiction
necessary for the lawful consummation of the Merger and the issuance and
delivery of Stock Holding Company Common Stock as contemplated by this Agreement
shall have been obtained.
C. The Association shall have received either (i) a ruling from the
Internal Revenue Service or (ii) an opinion from its legal counsel, to the
effect that the Merger will be treated as a non-taxable transaction under
applicable provisions of the Internal Revenue Code of 1986, as amended, and that
no gain or loss will be recognized by the stockholders of the Association upon
the exchange of the Association common stock held by them solely for Stock
Holding Company Common Stock.
3
ARTICLE IV
TERMINATION
4.1 This Agreement may be terminated at the election of any of the parties
hereto if any one or more of the conditions to the obligations of any of them
hereunder shall not have been satisfied and shall have become incapable of
fulfillment and shall not be waived. This Agreement may also be terminated at
any time prior to the Effective Date by the mutual consent of the respective
Boards of Directors of the parties.
4.2 In the event of the termination of this Agreement pursuant to any of
the foregoing provisions, no party shall have any further liability or
obligation of any nature to any other party under this Agreement.
ARTICLE V
EFFECTIVE DATE OF MERGER
5.1 Upon satisfaction or waiver (in accordance with the provisions of this
Agreement) of each of the conditions set forth in Article III, the parties
hereto shall cause to be filed with the OTS Articles of Combination and such
certificates or further documents as shall be required by the OTS, and with such
other federal regulatory agencies as may be required. Upon approval by the OTS
and endorsement of such Articles of Combination by the OTS, the Merger and other
transactions contemplated by this Agreement shall become effective. The
Effective Date for all purposes hereunder shall be the date of such endorsement
by the OTS.
ARTICLE VI
MISCELLANEOUS
6.1 Any of the terms or conditions of this Agreement, which may legally be
waived, may be waived at any time by any party hereto that is entitled to the
benefit thereof, or any of such terms or conditions may be amended or modified
in whole or in part at any time, to the extent authorized by applicable law, by
an agreement in writing, executed in the same manner as this Agreement.
6.2 Any of the terms or conditions of this Agreement may be amended or
modified in whole or in part at any time, to the extent permitted by applicable
law, rules, and regulations, by an amendment in writing, provided that any such
amendment or modification is not materially adverse to the Association, the
Stock Holding Company or their stockholders. In the event that any governmental
agency requests or requires that the transactions contemplated herein be
modified in any respect as a condition of providing a necessary regulatory
approval or favorable ruling, or that in the opinion of counsel such
modification is necessary to obtain such approval or ruling, this Agreement may
be modified, at any time before or after adoption thereof by the stockholders of
the Association, by an instrument in writing, provided that the effect of such
amendment would not be materially adverse to the Association, Stock Holding
Company or their stockholders.
4
6.3 This Agreement shall be governed by and construed under the laws of the
United States.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
and Plan of reorganization as of the date first above written.
WAKE FOREST FEDERAL SAVINGS & LOAN
ASSOCIATION
By: /s/ Anna O. Sumerlin
-------------------------------------
Anna O. Sumerlin
President and Chief Executive Officer
WAKE FOREST BANCSHARES, INC.
By: /s/ Anna O. Sumerlin
-------------------------------------
Anna O. Sumerlin
President and Chief Executive Officer
WAKE FOREST INTERIM SAVINGS BANK
By: /s/ Anna O. Sumerlin
-------------------------------------
Anna O. Sumerlin
President and Chief Executive Officer
5