Exhibit (2)
AGREEMENT AND PLAN OF SHARE EXCHANGE
BETWEEN
COMMUNITY FIRST FINANCIAL CORPORATION
AND
COMMUNITY FIRST BANK
THIS AGREEMENT, dated as of March 18, 2002, made between COMMUNITY FIRST
FINANCIAL CORPORATION ("CFFC"), a bank holding company organized and existing
under the laws of the Commonwealth of Virginia, with its principal office in
Lynchburg, Virginia; and COMMUNITY FIRST BANK (the "Bank"), a banking
corporation organized under the laws of the Commonwealth of Virginia, with its
principal office at Lynchburg, Virginia, each acting pursuant to a resolution of
its Board of Directors adopted by the vote of a majority of its directors,
recites and provides as follows:
WHEREAS, the parties desire to enter into a transaction providing for the
exchange of shares of the Bank for shares of CFFC, whereby each outstanding
share of common stock of the Bank will be converted into one share of common
stock of CFFC, all in connection with the creation of a bank holding company to
be the sole stockholder of the Bank;
NOW, THEREFORE, the parties hereby agree as follows:
Section 1. Exchange of Shares.
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At the effective date of the share exchange, each issued and outstanding
share of the Bank's common stock, par value $4.00, shall be exchanged for one
share of the authorized common stock of CFFC.
Section 2. Business of the Bank.
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The business of the Bank shall continue to be that of a bank and all
businesses related or incidental thereto, including without limitation the power
to engage in the business of an insurance agent incidental to its primary
purpose and as otherwise provided under Title 38.2 of the Code of Virginia,
1950, as amended. The business of the Bank will continue to be conducted through
its main office located at Lynchburg, Virginia.
Section 3. Capital of the Bank.
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The capital of the Bank shall continue to consist of capital stock of
$3,874,452.00, divided into 968,613 shares of common stock, par value $4 per
share, surplus of $5,775,975.00, retained earnings of $811,103.00, and
unrealized appreciation on investment securities available for sale (net of
income taxes) of $168.00, all as of December 31, 2001. The capital stock,
surplus and undivided profits of the Bank at December 31, 2001 will be adjusted,
however, for normal earnings and expenses between December 31, 2001 and the
effective date, together with any cash dividend declared prior to the effective
date.
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Section 4. Effect of Share Exchange.
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At the effective date of the share exchange each share of common stock of
the Bank, par value $4.00 per share, outstanding immediately prior to the
effective date shall be converted into and shall be deemed to become one share
of common stock of CFFC. The Bank's stock transfer books shall be closed, and no
further transfer of common stock of the Bank shall be permitted without the
approval of CFFC.
Section 5. Share Certificates.
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Certificates for shares of the Bank's common stock, until submitted for
exchange for certificates of CFFC common stock, will be deemed to represent
ownership of a like number of shares of CFFC common stock, and shall be deemed
for all corporate purposes to represent ownership of such number of shares of
CFFC common stock. As shares of CFFC common stock are submitted for transfer and
reissuance after the effective date, new certificates for CFFC stock will be
issued.
Section 6. Dividends and Dispositions by the Bank.
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Except for any regular dividend, the Bank shall not declare nor pay any
dividend to its stockholders between the date of this agreement and the time at
which the transaction shall become effective, nor dispose of any of its assets
in any other manner, nor engage in any transaction except in the normal course
of business and for adequate value.
Section 7. Directors of the Bank.
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The present Board of Directors of the Bank shall continue to serve as the
Board of Directors of the Bank until the next annual meeting of its stockholder
or until such time as their successors have been elected and have qualified.
Section 8. Termination.
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This agreement may be terminated by either participant in the event the
holders of more than five percent of the Bank's common stock exercise
dissenters' rights, by the mutual consent of the Boards of both participants, or
upon failure to obtain all required regulatory approvals or consents, in all
cases whether before or after the stockholders of both parties have approved the
same. If for any reason the transaction shall not have been consummated by July
31, 2002, this agreement shall terminate automatically as of that date unless
extended in writing prior to that date by action of the Boards of Directors of
both participants.
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Section 9. Approval and Effective Date.
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The transaction provided for in this agreement shall not be consummated
unless approved by the affirmative vote of the stockholders of CFFC and the Bank
owning at least two-thirds of the respective party's capital stock outstanding,
at meetings to be held on the call of the Directors, or by unanimous consent in
lieu thereof. The share exchange shall become effective at the time specified
pursuant to authorization of both Boards of Directors.
WITNESS, the signatures and seals of the parties hereto by their duly
authorized officers as of the 18th day of March, 2002:
COMMUNITY FIRST BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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President
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. Falls
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Secretary
COMMUNITY FIRST FINANCIAL
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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President
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. Falls
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Secretary
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