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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 January 16, 2001, by and between
GATEWAY BANK & TRUST CO., a banking corporation organized under the laws of the
State of North Carolina and having its principal place of business in the City
of ▇▇▇▇▇▇▇▇▇ City, Pasquotank County, North Carolina (the "Bank"), and GATEWAY
FINANCIAL CORPORATION, a North Carolina corporation (the "Holding Company").
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 common stock of the Bank; and
WHEREAS, the parties intend that the share exchange shall qualify as a
tax-free reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended.
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 "Gateway Bank & Trust Co." and the name of the acquiring corporation
is "Gateway Financial Corporation."
(b) At the Effective Time (as defined in Section 2 below), upon the
terms and subject to the conditions set forth in this Agreement, in accordance
with the relevant provisions of the North Carolina Business Corporation Act, as
amended (the "NCBCA"), and without any action on the part of the Bank, the
Holding Company or the holders of any of the following securities, each issued
and outstanding share of the common stock, par value $5.00 per share, of the
Bank ("Bank Stock"), other than Dissenting Shares (as defined in Section 3)
shall be exchanged (the "Share Exchange") for one (1) share (the "Exchange
Consideration") of the common stock, no par value, of the Holding Company
("Holding Company Stock"). At the Effective Time, each share of Bank Stock shall
automatically be exchanged for the Exchange Consideration, and each holder of a
certificate representing shares of Bank Stock shall cease to have any rights
with respect thereto, except the right to receive the Exchange Consideration or,
with respect to the holders of Dissenting Shares, rights provided in Article 13
of the NCBCA.
(c) At the Effective Time, all shares of Holding Company Stock
outstanding immediately prior to the Effective Time shall be redeemed from the
holder thereof for the sum of $.01 per share.
(d) The Share Exchange shall have the effects specified in the NCBCA.
2. Effective Time. As soon as practicable following the satisfaction or
waiver, if permissible, of the conditions set forth in Section 8, the Share
Exchange shall be consummated by filing with the Secretary of State of the State
of North Carolina articles of share exchange or other appropriate documents (in
any case, the "Articles of Share Exchange") in accordance with the NCBCA. The
Share Exchange shall become effective at such time as the Articles of Share
Exchange are duly filed, or at such later time as the Bank and the Holding
Company shall specify in the Articles of Share Exchange (the time the Share
Exchange becomes effective being the "Effective Time").
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3. Rights of Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, shares of Bank Stock which are held by any record
holder who (a) does not vote in favor of the Share Exchange or consent thereto
in writing and who gives timely written notice to the Holding Company of intent
to demand payment in accordance with Section 55-13-21 of the NCBCA; (b) who
demands payment and deposits share certificates in accordance with Section
55-13-23 of the NCBCA; and (c) who otherwise perfects rights of appraisal under
Article 13 of the NCBCA (the "Dissenting Shares") shall not be exchanged for the
Exchange Consideration but shall become the right to receive such consideration
as may be determined pursuant to Article 13 of the NCBCA. However, any holder of
Dissenting Shares who fails to perfect or withdraws or loses his or her rights
to appraisal of such Dissenting Shares under the NCBCA shall forfeit the right
to appraisal of such Dissenting Shares, and such Dissenting Shares shall be
deemed to have been exchanged, as of the Effective Time, for the Exchange
Consideration. Any such payments to the holders of Dissenting Shares shall be
paid from funds of the Bank, and not from funds of the Holding Company.
Notwithstanding anything to the contrary contained in this Section 3, if (i) the
Share Exchange is rescinded or abandoned or (ii) if the Shareholders revoke the
authority to effect the Share Exchange, then the right of any Shareholder to be
paid the fair value of such Shareholder's Dissenting Shares shall cease.
4. Exchange of Certificates. (a) The Holding Company shall appoint
First-Citizens Bank & Trust Company to act as exchange agent (the "Exchange
Agent") for the Share Exchange. As of the Effective Time, the Holding Company
shall deposit with the Exchange Agent for the benefit of the holders (prior to
the Effective Time) of certificates evidencing shares of Bank Stock ("Bank Stock
Certificates"), certificates representing the shares of the Holding Company
Stock ("Holding Company Certificates") issuable pursuant to Section 1 in
exchange for such shares of Bank Stock (the "Exchange Fund").
(b) Promptly after the Effective Time, the Holding Company shall cause
the Exchange Agent to mail to each person who was a record holder, as of the
Effective Time, of an outstanding Bank Stock Certificate, a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Bank Stock Certificates shall pass, only upon proper
delivery of the Bank Stock Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Bank Stock Certificates in exchange
for the Exchange Consideration. Upon surrender to the Exchange Agent of a Bank
Stock Certificate, together with such letter of transmittal duly executed and
such other documents as may be reasonably required by the Exchange Agent, the
holder of such Bank Stock Certificate shall be entitled to receive in exchange
therefor a Holding Company Certificate representing the Exchange Consideration
which such holder has the right to receive pursuant to Section 1. The
surrendered certificate shall be delivered to the Holding Company. If delivery
of a Holding Company Certificate is to be made to a person other than the person
in whose name the Bank Stock Certificate surrendered is registered, it shall be
a condition of the exchange and delivery that the Bank Stock Certificate so
surrendered be properly endorsed or otherwise be in proper form for transfer and
that the person requesting such delivery pay any transfer or other taxes
required by reason of the delivery to a person other than the registered holder
of the Bank Stock Certificate surrendered or establish to the satisfaction of
the Holding Company that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 4, each Bank Stock
Certificate (other than Bank Stock Certificates representing Dissenting Shares)
shall represent for all purposes only the exchange rights established pursuant
to this Agreement.
(c) At any time more than one year after the Effective Time, the
Holding Company shall be entitled to require the Exchange Agent to deliver to it
the Holding Company Certificates which had been made available to the Exchange
Agent and not exchanged for Bank Stock Certificates. Thereafter, holders of
shares of Bank Stock shall look only to the Holding Company (subject to the
terms of this Agreement, abandoned property, escheat and other similar laws) as
general creditors thereof with respect
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to any Exchange Consideration that may be payable upon due surrender of the Bank
Stock Certificates held by them. If any Bank Stock Certificates shall not have
been surrendered prior to three years after the Effective Time (or immediately
prior to such time on which any Exchange Consideration would otherwise escheat
or become the property of any governmental unit or agency), the Exchange
Consideration in respect of such Bank Stock Certificates shall, to the extent
permitted by applicable law, become the property of the Holding Company, free
and clear of all claims or interest of any person previously entitled thereto.
Notwithstanding the foregoing, none of the Bank, the Holding Company nor the
Exchange Agent shall be liable to any holder of a share of Bank Stock for any
Exchange Consideration delivered in respect of such share of Bank Stock to a
public official pursuant to any abandoned property, escheat or other similar
law.
(d) The Holding Company may, in its discretion, elect not to treat any
unsurrendered shares of Bank Stock as shares of Holding Company Stock for
purposes of the payment of dividends or other distributions. If the Holding
Company in its discretion so elects, then unless and until any outstanding Bank
Stock Certificates shall be so surrendered, no dividends payable to the holders
of Holding Company Stock shall be paid to the holder of the unsurrendered Bank
Stock Certificate; provided, however, upon surrender and exchange of each
outstanding Bank Stock Certificate for a Holding Company Certificate, there
shall be paid to the holder thereof the amount, without interest, of all
dividends and other distributions, if any, which were declared and became
payable, but were not paid, with respect to said shares.
5. 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 of Holding Company
Stock for which such shares of Bank Stock were exchanged pursuant to this
Agreement in compliance with the provisions of the Holding Company's bylaws.
6. Stock Option And Other Plans. At the Effective Time, all outstanding
options under the Bank's existing stock option plans (the "Plans") shall be
converted into options to acquire the number of shares of Holding Company Stock
that the holders of such options were entitled to acquire of Bank Stock
immediately prior to the Share Exchange on the same terms and conditions as set
forth in the Plans and the agreements issued pursuant to the Plans. The Holding
Company shall file a registration statement on Form S-8 covering all shares of
Holding Company Stock issuable with respect to existing stock options under the
Plans no later than ten days after the Closing Date, and the Holding Company
shall cause such registration statement to become effective and remain effective
for as long as such options are outstanding.
7. 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 Share 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 Share 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
Share 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 pursuant to the Share Exchange
to be qualified or exempted under the Securities Act of 1933, as amended, and
the securities and blue sky laws of each state in which it deems such
qualification or exemption to be required; and
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(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.
8. Conditions Precedent to The Share Exchange. The Share Exchange shall
be subject to the satisfaction of the following conditions:
(a) Ratification and confirmation of this Agreement by affirmative vote
of Shareholders holding a majority of the shares of Bank Stock entitled to be
cast on the Share Exchange and by consent of the sole shareholder of the Holding
Company as required by law;
(b) Approvals to the extent required, by the Board of Governors of the
Federal Reserve System and the North Carolina Banking Commission of the Share
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 Share Exchange from the Bank's public accountants;
(e) Expiration of any waiting period required by any supervisory
authority of the Bank or the Holding Company; and
(f) Neither the Bank nor the Holding Company shall be subject as of the
Effective Time to any order, decree or injunction of a court of competent
jurisdiction that enjoins or prohibits the consummation of the Share Exchange,
nor shall there be pending an action, suit or proceeding by any governmental
authority that seeks injunctive or other relief in connection with the
transactions contemplated hereby.
9. 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 the
Board of Directors of either the Bank or the Holding Company:
(a) Any condition precedent contained in Section 8 has not been
fulfilled or waived;
(b) Any order, decree, injunction, action, suit, proceeding, or claim
has been instituted, made or threatened, relating to the proposed Share
Exchange, that makes consummation of the Share 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
more than ten percent of the shares of Bank Stock have dissented from the Share
Exchange so that consummation of the Share Exchange is not in the best interests
of the Bank; or
(d) A determination by the Board of Directors of either the Bank or the
Holding Company that consummation of the Share Exchange is inadvisable in the
opinion of such Board of Directors.
10. Entire Agreement. This Agreement contains the entire agreement of
the parties with respect to the transactions contemplated hereby.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12. Effect of the 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.
13. Parties in Interest. Nothing in this Agreement, express or implied,
other than the right to receive the Exchange Consideration pursuant to Section
1, is intended to or shall confer upon any person other than the parties hereto
any rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement.
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14. Interpretation. The section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
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.
GATEWAY BANK & TRUST CO.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
[Corporate Seal] President and Chief Executive Officer
GATEWAY FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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[Corporate Seal] ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer