<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 1, 1998
REGISTRATION NO. 333-61355
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------------
LAMAR CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSISSIPPI 6022 64-0733976
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NO.)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
401 SHELBY SPEIGHTS DRIVE
PURVIS, MISSISSIPPI 39475
TELEPHONE NUMBER: 601-794-6047
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT W. ROSEBERRY
401 SHELBY SPEIGHTS DRIVE
PURVIS, MISSISSIPPI 39475
TELEPHONE: 601-794-6047
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
L. KEITH PARSONS, ESQ. WALTER G. MOELING, IV, ESQ.
WATKINS LUDLAM WINTER & STENNIS, POWELL, GOLDSTEIN, FRAZER & MURPHY
P.A. LLP
633 NORTH STATE STREET 191 PEACHTREE STREET, N.E., 16TH
JACKSON, MISSISSIPPI 39202 FLOOR
(601) 949-4701 ATLANTA, GEORGIA 30303
(404) 572-6600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement becomes
effective.
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) or
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER , 1998
1,363,636 SHARES
LOGO
COMMON STOCK
-----------
All of the 1,363,636 shares of Common Stock, $0.50 par value (the "Common
Stock") of Lamar Capital Corporation, a Mississippi corporation (the
"Company"), offered hereby are being sold by the Company. The Company is a bank
holding company headquartered in Purvis, Lamar County, Mississippi and is the
parent of Lamar Bank (the "Bank").
The Company has applied to list the Common Stock on the Nasdaq National
Market under the symbol LCCO. Prior to this Offering, there has been no public
market for the Common Stock. The initial public offering price will be
determined by negotiations between the Company and representatives of the
Underwriters. It is currently estimated that the initial public offering price
per share will be between $10.00 and $12.00. For factors to be considered in
determining the initial public offering price, see "Underwriting."
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION OF
MATERIAL RISKS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----------
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) THE COMPANY(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................... $ $ $
- --------------------------------------------------------------------------------
Total(3)................................ $ $ $
</TABLE>
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- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Calculated before deducting expenses of the Offering payable by the Company
estimated at $363,000.
(3) The Company has granted an option to the Underwriters, exercisable within
30 days of the date of this Prospectus, to purchase up to 204,545
additional shares of Common Stock on the terms set out above, less the
Underwriting Discounts and Commissions shown above, solely to cover over-
allotments, if any. If the over-allotment option is exercised in full, the
total Price to Public, Underwriting Discounts and Commissions, and Proceeds
to the Company will be $ , $ and $ , respectively. See
"Underwriting."
-----------
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if received and accepted by the Underwriters, and subject to
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the certificates for the shares of Common Stock will
be made against payment therefor in Memphis, Tennessee on or about , 1998.
-----------
MORGAN KEEGAN & COMPANY, INC.
STERNE, AGEE & LEACH, INC.
The date of this Prospectus is , 1998.
<PAGE>
[Map of the State of Mississippi and portions of surrounding states with pin
points of cities in Mississippi where Company subsidiaries are located]
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING THE MARKET PRICE OF
THE COMMON STOCK, THE PURCHASE OF COMMON STOCK TO COVER SYNDICATE SHORT
POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is not intended to be complete and is qualified in its
entirety by the more detailed information and the consolidated financial
statements and the related notes appearing elsewhere in this Prospectus. Share
information included in this Prospectus (other than the consolidated financial
statements beginning on page F-1) has been restated to reflect a twenty-for-one
stock split effected in May of 1998, a three-for-one split of the common stock
effected in August of 1998, and the issuance of 18,711 shares to the Company's
Employee Stock Ownership Plan in July of 1998. Unless otherwise indicated, all
information in this Prospectus assumes that the Underwriters' over-allotment
option is not exercised. In addition, unless otherwise indicated, all
references to "the Company" in this Prospectus refer to Lamar Capital
Corporation and its consolidated subsidiaries, including the Bank.
THE COMPANY
Lamar Capital Corporation (the "Company") is a one-bank holding company
headquartered in Purvis, Mississippi, with total consolidated assets of $305.6
million, total deposits of $268.6 million and stockholders' equity of $17.6
million at June 30, 1998. The Company, through its subsidiaries, offers a broad
line of banking and financial products and services with the personalized focus
of a community banking organization. The Company ranks 13th in size out of 59
bank holding companies headquartered in Mississippi, based on total deposits as
of June 30, 1997. As of June 30, 1997, the Bank had a 74.26% deposit market
share in Lamar County, its primary market area. Most of the Company's growth
has occurred in the last decade as management responded to opportunities
presented by the growth of the Lamar County and Hattiesburg, Mississippi market
areas. Total assets, which were $25 million in 1980, exceeded $100 million by
June of 1991, grew to $200 million by September of 1996, and passed the $300
million mark in May of 1998.
The Company derives a substantial amount of its revenue and income from the
operation of its wholly-owned subsidiary, Lamar Bank, a Mississippi state bank
founded in 1904 and domiciled in Purvis, Mississippi (the "Bank"). In 1997, the
Bank contributed 90.2% of the total net income of the Company. The Bank has
seven full-service banking locations and seven automated teller machines
("ATMs"), all located in the southeastern part of Mississippi: the main office
and a branch office in Purvis, two branches in Hattiesburg, one in Sumrall, one
in Petal and one in Prentiss. In June of 1998, the Bank acquired property which
will be used to open a new branch in Hattiesburg, Mississippi on Hardy Street,
a major thoroughfare, near the main campus of the University of Southern
Mississippi. This branch is expected to open in the second half of 1999.
In 1992, the Company expanded its product lines by organizing a finance
company, Southern Financial Services, Inc. ("SFSI"), as a subsidiary of the
Bank. In 1997, SFSI contributed 8.5% of the net income of the Company. SFSI
provides consumer loans to customers who may not be eligible to obtain
financing from the Bank. Expansion into this area of consumer loans opened up a
new market of customers for the Company and allowed the Company to offer an
additional service to its customers, thereby adding a new and profitable
segment to its market base. SFSI has locations in Purvis, Monticello,
Hattiesburg, Petal, Prentiss, Gulfport, and Poplarville, Mississippi. As of
June 30, 1998, SFSI had total loans of $6.2 million.
To expand the Company's ability to provide mortgage loans to a broader
customer base, in November of 1996, the Company organized The Mortgage Shop,
Inc. ("MSI") as a subsidiary corporation. In 1997, MSI contributed 1.3% of the
net income of the Company. MSI, located in Hattiesburg, Mississippi, began
operations in January of 1997 and is engaged in the origination of B and C
grade mortgage loans which are sold in the secondary market. Since beginning
operations, MSI has originated $4.5 million in mortgage loans through June 30,
1998.
In 1996, the Bank further expanded the types of services offered by entering
into an arrangement with a licensed broker-dealer firm to provide stock and
other securities trading services for customers of the Bank and other
investors. With this arrangement, the Company is furthering its strategy of
offering a broad range of banking and financial services with the personalized
focus of a community banking organization.
3
<PAGE>
The Company is community oriented and focuses on financial products
consisting primarily of consumer, commercial and real estate loans and deposit
services to individuals and small and medium-sized businesses. The Company,
through its subsidiaries, offers a broad line of financial products and
services while successfully retaining the local appeal and level of service of
a community bank. The Company believes that its community style of banking is
important to its success. This style allows for flexible, responsive decision
making at each banking center in the Company's network and focuses on long-
standing customer relationships and personalized service. Management believes
that its community oriented approach and commitment to customer service afford
the Company a distinct competitive advantage in its markets.
Management of the Company believes that consolidation in the banking industry
in Mississippi has disrupted customer relationships as the larger regional
financial institutions increasingly focus on large corporate clients, and
standardized loan and deposit products. Generally, these products and services
are offered through less personalized delivery systems. Consolidation has also
dislocated experienced and talented personnel as duplicate functions are
eliminated. As a result, consolidation provides the Company with the
opportunity to attract and maintain targeted customers and personnel.
Hattiesburg is the educational, retail and medical center for more than a
quarter of a million people throughout the southeast portion of Mississippi.
The Hattiesburg area has received widespread attention as an increasing number
of retirees are moving to the area. Hattiesburg's retirement program was
featured in the November 22, 1996 issue of the "Kiplinger Washington Letter"
and in the June 18, 1997 broadcast of the NBC Nightly News. The May 24, 1997
edition of The New York Times featured Hattiesburg as a place to retire touting
the high quality of life, cultural opportunities, and state-of-the-art medical
facilities. Hattiesburg was one of five cities listed as "Best Cities for
Retirement" as well as one of five cities listed as "Best Small Metro Areas" in
the 1997 Places Rated Almanac by David Savegeau and Richard Boyer and was named
one of the "20 Top Retirement Towns in North America" by MoneyExtra, a
publication of Money Magazine. With two locations in Hattiesburg, the Bank
ranked fifth in the city based on deposits as of June 30, 1997. The Bank is
focusing on expanding its current 6.0% market share in Hattiesburg, where it
competes with eight commercial banks, including several regional banks, and
other financial institutions. At June 30, 1998, approximately 26% of the Bank's
loans and 24% of the Bank's deposits were attributable to its Hattiesburg
branches.
The Company's overall business strategy is to: (i) continue to service
individuals and small and medium-sized businesses by providing personal,
responsive, quality service through its community banking network;
(ii) continue to coordinate its loan and deposit growth by gaining customers
from banks that have recently merged with larger multi-state banks or that are
in the process of doing so and thereby enrich its earning asset mix; and (iii)
continue to expand its business, particularly in the Hattiesburg area, through
internal growth and the opening of new branch offices and by selective
acquisitions in product lines or markets considered strategically attractive by
management. In implementing its strategy, management emphasizes the following:
. RELATIONSHIP BANKING. The Company's business strategy emphasizes
personal relationships and customer loyalty. The Company strives to know
its customers' families, businesses and financial needs. The Company
believes a key to establishing and maintaining long-term relationships
with its banking customers is to offer competitively priced products
tailored to meet customers' needs with personalized service and
professional delivery. The Company meets community needs by making its
facilities available for community events and by sponsoring a variety of
civic activities.
. CUSTOMER SERVICE AND CONVENIENCE. Through extended lobby and drive-up
hours, seven ATMs and experienced personnel, customers of the Bank can
obtain full banking services at any banking center. The Company strives
to develop customer loyalty by promoting a "hands-on" approach and
offering quick decision-making in its delivery of banking products and
services to existing and potential customers. Executive officers spend
time each month in banking centers assessing the needs of both customers
and the personnel serving those customers. To further enhance customer
service and convenience, the Bank plans to offer Internet banking in
1999.
4
<PAGE>
. DEDICATED BANKING PERSONNEL. The Company instills within its work force
a sales-oriented culture to promote customer service and market
penetration. The Company seeks to enhance employee performance through
training and Company-wide annual evaluations. To further promote
customer service and enhance performance, the Company provides
performance-based compensation, rewarding employees who achieve or
exceed corporate objectives.
. REAL ESTATE LENDING. The Bank originates real estate loans which consist
of residential first and second mortgage loans, residential construction
loans and home equity lines of credit and term loans secured by first
and second mortgages on the residences of borrowers for home
improvements, education and other personal expenditures. The Bank makes
real estate and mortgage loans with a variety of terms, including fixed
and floating rates. Generally, the Bank retains real estate loans with
maturities under ten years and sells mortgage loans with longer
maturities. MSI originates B and C grade mortgage loans which are sold
in the secondary market. The Bank originated and retained $36.1 million
of real estate loans during 1997 and $17.3 million of real estate loans
during the six months ended June 30, 1998. The Bank originated and sold
$10.6 million of mortgage loans during 1997 and $5.9 million of mortgage
loans during the six months ended June 30, 1998. MSI originated and sold
$2.9 million of mortgage loans during 1997 and $1.6 million of mortgage
loans during the six months ended June 30, 1998.
. CONSUMER LOANS. The Bank and SFSI offer consumer installment loans to
business owners and other individuals for personal, family and household
purposes. The Bank originated $48.9 million in consumer loans in 1997
and $32.1 million for the six months ended June 30, 1998. SFSI
originated $10.0 million in consumer loans in 1997 and $4.4 million for
the six months ended June 30, 1998.
. COMMERCIAL LOANS. The Bank's commercial loan portfolio is dispersed
among various business lines such as commercial construction, trucking,
timber, utilities, auto and recreational vehicles, farm supplies, and
heavy equipment. Such loans are primarily for the financing of accounts
receivable, property, plant and equipment and inventory. The Bank also
offers Small Business Administration guaranteed loans ("SBA loans"). The
Bank originated $30.4 million in commercial loans in 1997 and $37.3
million for the six months ended June 30, 1998.
The Company is a Mississippi corporation with its principal executive offices
located at 401 Shelby Speights Drive, Purvis, Mississippi 39475, and its
telephone number is (601) 794-6047.
THE OFFERING
<TABLE>
<C> <S>
Common Stock offered by the Company........ 1,363,636 shares
Common Stock outstanding prior to the
Offering.................................. 2,767,071 shares
Common Stock to be outstanding after the
Offering.................................. 4,130,707 shares(1)
Proposed Nasdaq National Market symbol..... LCCO
Use of Proceeds............................ The proceeds of the Offering are
expected to be used to establish
two de novo branches in
Hattiesburg, Mississippi, for the
repayment of a Company loan, for
selective acquisitions and other
general corporate purposes. See
"Use of Proceeds."
</TABLE>
- --------
(1) Excludes 200,000 shares of Common Stock reserved for issuance of options to
employees under the Company's Stock Incentive Plan, and 204,545 shares
issuable upon exercise of the Underwriters' over-allotment option.
RISK FACTORS
A number of factors should be considered by potential investors before
purchasing shares of the Common Stock in the Offering. See "Risk Factors,"
beginning on page 7.
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth certain financial information for the Company
on a consolidated historical basis. Such information should be read in
conjunction with, and is qualified in its entirety by, the consolidated
financial statements and notes appearing elsewhere in this Prospectus. The
selected financial information of the Company as of and for the years ended
December 31, 1997, 1996 and 1995, has been derived from the consolidated
financial statements of the Company audited by Ernst & Young LLP, independent
auditors, whose report with respect thereto is included elsewhere in this
Prospectus. The selected financial information of the Company as of and for the
years ended December 31, 1994 and 1993, has been derived from the consolidated
financial statements of the Company audited by McArthur, Thames, Slay and Dews,
PLLC, independent auditors. The selected financial and operating information
for the six months ended June 30, 1998 and 1997 has been derived from the
unaudited consolidated financial statements of the Company included elsewhere
in this Prospectus. The unaudited consolidated financial statements include all
adjustments (consisting of normal recurring adjustments) which management of
the Company considers necessary for a fair presentation of the consolidated
financial position and the results of operations for these periods. Operating
results for the six months ended June 30, 1998, are not necessarily indicative
of the results that may be expected for the entire year ending December 31,
1998. Factors affecting the comparability of certain indicated periods are
discussed below under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS ENDED
JUNE 30, AS OF AND FOR THE YEARS ENDED DECEMBER 31,
------------------ ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income......... $ 11,377 $ 9,221 $ 19,442 $ 16,190 $ 13,903 $ 11,357 $ 10,008
Interest expense........ 6,524 5,025 10,536 8,429 7,100 5,307 4,592
Net interest income..... 4,853 4,196 8,906 7,761 6,803 6,050 5,416
Provision for loan
losses................. 360 289 725 557 517 638 580
Non-interest income..... 1,688 1,257 2,689 2,325 1,751 1,590 1,519
Non-interest expense.... 4,041 3,649 7,677 6,890 6,146 5,491 4,697
Income before taxes..... 2,140 1,515 3,193 2,639 1,891 1,511 1,658
Net income.............. 1,605 1,110 2,339 2,028 1,474 1,189 1,293
BALANCE SHEET DATA:
Total assets............ $305,562 $231,552 $247,022 $207,330 $169,636 $151,895 $139,666
Total securities........ 86,809 55,365 58,921 41,562 33,037 32,864 36,540
Total loans, net........ 178,960 149,436 159,552 140,318 119,556 103,268 85,795
Allowance for loan
losses................. 3,386 2,913 3,101 2,837 2,529 2,427 2,140
Total deposits.......... 268,596 201,666 211,498 185,404 156,631 139,209 129,194
Other borrowed funds.... 17,720 14,000 17,620 7,000 -- -- --
Total stockholders'
equity................. 17,572 14,303 16,160 13,473 11,765 10,123 9,971
PER SHARE DATA:
Net income per share--
basic and diluted...... $ 0.59 $ 0.41 $ 0.87 $ 0.75 $ 0.54 $ 0.43 $ 0.46
Book value.............. 6.38 5.45 5.88 4.97 4.34 3.62 3.57
Cash dividends per
share.................. 0.0563 0.0476 0.1002 0.0923 0.0923 0.0895 0.0895
PERFORMANCE RATIOS:
Return on average
assets................. 1.15% 1.01% 1.02% 1.06% 0.90% 0.80% 0.98%
Return on average
equity................. 18.82 15.99 15.69 15.88 13.56 11.66 13.59
Net interest margin..... 3.74 4.13 4.20 4.41 4.50 4.92 4.89
Efficiency ratio........ 62 67 66 68 72 72 68
ASSET QUALITY RATIOS:
Allowance for loan
losses to nonperforming
loans.................. 475% 603% 777% 360% 295% 366% 571%
Allowance for loan
losses to total loans.. 1.82 1.87 1.87 1.93 2.01 2.25 2.39
Nonperforming assets to
total loans............ 0.61 0.68 0.49 1.06 0.93 0.76 0.69
Net loan charge-offs to
average loans.......... 0.04 0.14 0.30 0.19 0.38 0.36 0.17
CAPITAL RATIOS:
Leverage ratio.......... 6.21% 6.39% 6.87% 7.11% 7.19% 7.14% 7.15%
Average stockholders'
equity to average total
assets................. 6.12 6.30 6.49 6.69 6.63 6.82 7.20
Tier 1 risk-based
capital ratio.......... 9.09 9.28 9.84 9.67 10.21 10.50 11.31
Total risk-based capital
ratio.................. 10.35 10.53 11.09 10.92 11.47 9.31 12.57
Dividend payout ratio... 10 12 12 12 17 21 18
</TABLE>
6
<PAGE>
RISK FACTORS
An investment in the common stock offered hereby involves certain risks. A
prospective investor should carefully review the following risk factors as
well as the other information contained in this Prospectus before deciding to
make an investment in shares of common stock. Information contained in this
Prospectus contains "forward-looking statements" which can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "could," "should," "intend," "estimated," "projected," "contemplated"
or "anticipates" or the negative thereof or other variations or comparable
terminology. No assurance can be given that the future results covered by the
forward-looking statements will be achieved. These statements, by their terms,
involve substantial risks and uncertainties, certain of which are beyond the
Company's control. The following factors could cause actual experience to vary
materially from the future results covered in such forward-looking statements.
Other factors, such as the general state of the economy, could also cause
actual experience to vary materially from the matters covered in such forward-
looking statements.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT
ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.
RISK OF LOSS FROM ADVERSE CHANGES IN LOCAL ECONOMIC CONDITIONS
The Company's success is dependent to a significant extent upon economic
conditions in Mississippi, particularly the Lamar County and Hattiesburg
market areas. The banking industry in Mississippi is affected by general
economic conditions such as inflation, recession, unemployment and other
factors beyond the Company's control. Economic recession over a prolonged
period or other economic problems in the Company's market areas could have a
material adverse impact on the quality of the loan portfolio and the demand
for the Company's products and services. Therefore, there can be no assurance
that future adverse changes in the Company's market areas would not have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
POSSIBLE ADVERSE EFFECTS OF CHANGES IN THE INTEREST RATE ENVIRONMENT
The Company's earnings depend to a great extent on "rate differentials,"
which are the differences between interest income that the Company earns on
loans and investments and the interest expense paid on deposits and other
borrowings. These rates are highly sensitive to many factors which are beyond
the Company's control, including general economic conditions and the policies
of various government and regulatory authorities. Changes in interest rate
policy by the Board of Governors of the Federal Reserve System ("Federal
Reserve Board") affect the Company's interest income, interest expense and
investment portfolio. Also, governmental policies such as the creation of a
tax deduction for individual retirement accounts can increase savings and
affect the cost of funds. A rapid increase or decrease in interest rates could
have an adverse effect on the net interest margin and results of operations of
the Company. The nature, timing and effect of any future changes in federal
monetary and fiscal policies on the Company and its results of operations are
not predictable. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Asset/Liability Management and Market
Risk."
RISK OF LOAN LOSSES FROM A DECLINE IN CREDIT QUALITY
A significant source of risk for the Company arises from the possibility
that losses will be sustained because borrowers, guarantors and related
parties fail to perform in accordance with the terms of their loans. The
Company has adopted underwriting and credit monitoring procedures and credit
policies, including the establishment and review of the allowance for credit
losses, that management believes are appropriate to minimize this risk by
assessing the likelihood of nonperformance, tracking loan performance and
diversifying
7
<PAGE>
the Company's credit portfolio. Such policies and procedures, however, may not
prevent unexpected losses that could materially adversely affect the results
of operations of the Company. See "The Company--Lines of Business."
RISKS INHERENT IN CONSUMER AND COMMERCIAL LENDING
A substantial portion of the Company's loan portfolio consists of consumer
loans. Consumer lending presents certain unique risks. Consumer loan
repayments depend upon a borrower's financial stability and are more likely to
be adversely affected by job loss, divorce, illness and other personal
hardships. In addition, collateral such as automobiles and other personal
property securing consumer loans depreciates rapidly and sometimes is an
inadequate repayment source if a borrower defaults.
As the Company grows, it expects to increase its commercial lending
activities. Commercial lending entails greater risks than traditional, single
family residential lending. Commercial loans typically involve larger loan
balances concentrated in fewer borrowers. The analysis of commercial loans,
which requires expertise in evaluating a commercial enterprise and its
collateral, is generally more complex than the analysis required for single
family residential lending. Like consumer loans, commercial loans are subject
to adverse conditions in the economy, as well as the market for the specific
goods and services sold by the commercial borrower. Loans secured by
commercial real estate can also be affected by trends in the local real estate
market.
STRONG COMPETITORS
The banking business is highly competitive, and the profitability of the
Company depends principally upon its ability to compete in the market areas
where its banking operations are located. The Company competes with other
commercial banks, savings banks, savings and loan associations, credit unions,
mortgage companies, finance companies, mutual funds, insurance companies,
brokerage and investment banking firms, asset-based non-bank lenders and
certain other non-financial entities, including retail stores which may
maintain their own credit programs and certain governmental organizations
which may offer more favorable financing than the Company. Many of these
competitors have greater financial and other resources than the Company, and
certain larger competitors are recent entrants into the Company's markets.
Although the Company has been able to compete effectively in the past, no
assurances may be given that the Company will continue to be able to compete
effectively in the future. Various legislative acts in recent years have led
to increased competition among financial institutions. There can be no
assurance that the United States Congress or the Mississippi legislature will
not enact legislation that may further increase competitive pressures on the
Company. Competition from both financial and nonfinancial institutions is
expected to continue. See "The Company--Competition."
POTENTIAL ADVERSE EFFECT OF LOSS OF KEY PERSONNEL
The Company is dependent on its management team including Robert W.
Roseberry, Chairman and Chief Executive Officer; Kenneth M. Lott, President
and Chief Operating Officer; Jane P. Roberts, Vice Chairman and Secretary; W.
H. Macko, Senior Vice President; and Donna T. Rutland, Chief Financial Officer
and Treasurer. Each of these persons is considered to be important to the
success of the Company, and the unexpected loss of any of these persons could
have an adverse effect on the Company. Although the Company has key man
insurance on Mr. Roseberry, Mr. Lott and Ms. Roberts, the Company has not
entered into employment agreements with these employees. See "Management."
POSSIBLE ADVERSE IMPACT OF CHANGES IN REGULATION AND LEGISLATION
Bank holding companies and banks operate in a highly regulated environment
and are subject to extensive supervision and examination by several federal
and state regulatory agencies. The Company is subject to the Bank Holding
Company Act of 1956, as amended (the "BHCA"), and to regulation and
supervision by the Federal Reserve Board. The Bank, as a Mississippi state
banking corporation, is subject to regulation and supervision by the
Mississippi Department of Banking and Consumer Finance and, as a result of the
insurance
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of its deposits, by the Federal Deposit Insurance Corporation ("FDIC"). These
regulations are intended primarily for the protection of depositors and
customers, rather than for the benefit of investors. The Company and the Bank
are subject to changes in federal and state laws, as well as changes in
regulations and governmental policies, income tax laws and accounting
principles. The effects of any potential changes cannot be predicted but could
adversely affect the business and operations of the Company and the Bank in
the future. See "Supervision and Regulation."
SFSI, a subsidiary of the Bank, is a licensed small loan company subject to
the Small Loan Regulatory Law and Small Loan Privilege Tax Law of the State of
Mississippi and to regulation and supervision by the Mississippi Department of
Banking and Consumer Finance. With limited exceptions, both series of statutes
regulate any non-financial institution lender engaged in the business of
handling loans for a borrower or lending money, either directly or indirectly,
to be paid back in monthly or other regular installments. These statutes
govern the requirements for making and payment of loans as well as disclosures
to be made to consumers.
Through an arrangement with a licensed broker-dealer, the Bank provides
securities trading services for its customers and other investors. Such
activities are subject to regulation and supervision by the FDIC and the Bank
is subject to the Inter-Agency Statement on Retail Sales of Nondeposit
Investment Products ("Inter-Agency Statement"). The Inter-Agency Statement
mandates disclosures to purchasers of non-deposit investment products that
such products are not insured by the FDIC, are not deposits in or guaranteed
by the Bank and may be subject to investment risks including loss of
principal. The Inter-Agency Statement also governs disclosure, advertising,
training, sales practices and compliance.
Although the Bank is exempt from licensing requirements as a broker-dealer,
it is indirectly responsible for transactions carried out by a broker-dealer,
especially by dual employees. The Bank has adopted policies and procedures to
ensure such activities are conducted in compliance with applicable laws and
regulations and the Inter-Agency Statement.
The Federal Reserve Board has adopted a policy that requires a bank holding
company such as the Company to serve as a source of financial strength to its
banking subsidiaries. The Federal Reserve Board has required bank holding
companies to contribute cash to their troubled bank subsidiaries based upon
this "source of strength" policy, which could have the effect of decreasing
funds available for distributions to shareholders. In addition, a bank holding
company in certain circumstances could be required to guarantee the capital
plan of an undercapitalized banking subsidiary. See "Supervision and
Regulation."
RESTRICTIONS ON ABILITY TO PAY DIVIDENDS
While historically the Company has paid regular cash dividends, there is no
assurance that the Company will pay dividends on the Common Stock in the
future. The declaration and payment of dividends on the Common Stock will
depend upon the earnings and financial condition of the Company, its liquidity
and capital requirements, the general economic and regulatory climate, the
Company's ability to service any equity or debt obligations senior to the
Common Stock and other factors deemed relevant by the Company's Board of
Directors. It is the policy of the Federal Reserve Board that bank holding
companies should pay cash dividends on Common Stock only out of income
available over the past year and only if prospective earnings retention is
consistent with the organization's expected future needs and financial
condition. The policy provides that bank holding companies should not maintain
a level of cash dividends that undermines the bank holding company's ability
to serve as a source of strength to its banking subsidiaries.
The Company's principal source of funds to pay dividends will be cash
dividends that the Company receives from the Bank. The payment of dividends by
the Bank to the Company is subject to certain restrictions imposed by federal
and state banking laws, regulations and authorities. Dividends by the Bank
must be approved by the Mississippi Department of Banking and Consumer
Finance. See "Supervision and Regulation--The Bank."
The federal banking statutes prohibit federally insured banks from making
any capital distributions (including a dividend payment) if, after making the
distribution, the institution would be "undercapitalized" as
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defined by statute. In addition, the relevant federal regulatory agencies also
have authority to prohibit an insured bank from engaging in an unsafe or
unsound practice, as determined by the agency, in conducting an activity. The
payment of dividends could be deemed to constitute such an unsafe or unsound
practice, depending on the financial condition of the Bank. Regulatory
authorities could impose stricter limitations on the ability of the Bank to
pay dividends to the Company if such limits were deemed appropriate to
preserve certain capital adequacy requirements. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Capital" and
"Supervision and Regulation."
ABILITY OF EXECUTIVE OFFICERS AND DIRECTORS TO INFLUENCE CORPORATE ACTION
After the consummation of the Offering, the executive officers and directors
of the Company, collectively, will beneficially own approximately 30.4% of the
outstanding shares of Common Stock, and approximately 29.0% of such shares of
the Common Stock if the Underwriters' over-allotment option is fully
exercised. These percentages may increase to the extent directors and
executive officers of the Company purchase additional shares of the Company's
Common Stock. Accordingly, these executive officers and directors,
collectively, will have the power to block certain business combinations and
will be able to influence, to a significant extent, the outcome of all matters
required to be submitted to the Company's shareholders for approval, including
decisions relating to the election of directors of the Company, the
determination of day-to-day corporate and management policies of the Company
and other significant corporate transactions. See "Management," "Principal
Shareholders and Stock Ownership of Management" and "Description of Capital
Stock."
PROVISIONS DISCOURAGING TRANSACTIONS THAT MIGHT BENEFIT SHAREHOLDERS
Certain corporate governance and statutory provisions may inhibit changes in
control of the Company that may be viewed as favorable by the holders of a
majority of the Company's Common Stock and may have the effect of maintaining
incumbent management. The Company's Articles of Incorporation and Bylaws
contain certain provisions which may have the effect of preventing,
discouraging or delaying any change of control of the Company which may (or
may not) be in the best interest of a majority of the stockholders.
Shareholders also have Common Stock purchase rights for each outstanding share
of Common Stock which have certain anti-takeover effects. See "Description of
Capital Stock."
Individuals, alone or acting in concert with others, seeking to acquire 25%
or more of any class of voting securities of the Company must comply with the
Change in Bank Control Act, which requires the prior approval of the Federal
Reserve Board for any such acquisition. Entities seeking to acquire control of
the Company, or bank holding companies seeking to acquire 5% or more of any
class of voting securities of the Company, must obtain the prior approval of
the Federal Reserve Board under the BHCA. Acquisitions of control are also
subject to prior notice and prior approval requirements under the Mississippi
banking statutes. Accordingly, prospective investors need to be aware of and
to comply with these requirements, if applicable, in connection with any
purchase of shares of the Common Stock in the Offering. See "Supervision and
Regulation."
POTENTIAL ABSENCE OF ACTIVE, LIQUID, MARKET FOR COMMON STOCK
Prior to the Offering, there has been no public market for the shares of
Common Stock. An application has been filed to have the Common Stock approved
for quotation on the Nasdaq National Market under the symbol LCCO. The
Underwriters have advised the Company that they intend to make a market in the
Common Stock as long as the volume of trading activity in the Common Stock and
certain other market making conditions justify doing so. Nonetheless, there
can be no assurance that an active public market will develop or be sustained
after the Offering or that if such a market develops, investors in the Common
Stock will be able to resell their shares at or above the initial public
offering price. Making a market involves maintaining bid and asked quotations
for the Common Stock and being available as principal to effect transactions
in reasonable quantities at those quoted prices, subject to various securities
laws and other regulatory requirements. A public trading market having the
desired characteristics of depth, liquidity and orderliness depends upon the
presence in the marketplace of willing
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<PAGE>
buyers and sellers of the Common Stock at any given time, which presence is
dependent upon the individual decisions of investors over which neither the
Company nor any market maker has any control.
UNPREDICTABILITY AND POSSIBLE VOLATILITY OF STOCK PRICE
The initial public offering price of the shares of Common Stock will be
determined by negotiations between the Company and representatives of the
Underwriters and will not necessarily bear any relationship to the Company's
past operating results, financial condition or other established criteria of
value and may not be indicative of the market price of the Common Stock after
the Offering. Among the factors considered in these negotiations are
prevailing market and general economic conditions, the market capitalizations,
trading histories and stages of development of other comparable publicly
traded companies, book value of the Company's Common Stock, the results of
operations and the current financial position of the Company, estimates of
business potential and the present state of the Company's development, and the
level of demand for Common Stock. Additionally, consideration has been given
to the general status of the securities market, the market conditions for new
issues of securities and the demand for securities of comparable companies at
the time the Offering was made. See "Underwriting" for information relating to
the method of determining the initial public offering price. The stock market
has from time to time experienced price and volume volatility. These market
fluctuations may be unrelated to the operating performance of particular
companies whose shares are traded and may adversely affect the market price of
the Common Stock. There can be no assurance that the market price of the
Common Stock will not decline below the initial public offering price.
POTENTIAL ADVERSE EFFECT OF FUTURE SALES OF PRESENTLY OUTSTANDING SHARES
All of the shares of Common Stock sold in the Offering will generally be
freely tradable under the Securities Act of 1933 (the "Securities Act"). The
Company will have 4,130,707 shares of Common Stock outstanding after the
Offering. The Company, its executive officers and directors and certain
shareholders (who collectively will own approximately 43.1% of the outstanding
shares of Common Stock after the consummation of the Offering) have agreed
with the Underwriters not to offer, sell, contract to sell or otherwise
dispose of any of their shares of Common Stock for a period of 180 days after
the date of this Prospectus without the permission of the Underwriters.
Currently 839,880 outstanding shares of Common Stock held by existing
shareholders are not subject to such agreement, and are freely tradable in
accordance with Rule 144(k) under the Securities Act. The remaining 147,891
shares of currently outstanding Common Stock which were acquired in the past
two years pursuant to exemptions from registration under the Securities Act
are "restricted" within the meaning of Rule 144 and not currently eligible for
resale under Rule 144. These shares may be resold only pursuant to an
effective registration under the Securities Act or pursuant to an available
exemption (such as provided by Rule 144 following a one year holding period
for previously unregistered shares) from the registration requirements of the
Securities Act. No prediction can be made about the effect, if any, that
future sales of Common Stock or the availability of Common Stock for future
sale will have on the market price of the Common Stock prevailing from time to
time. Sales of a substantial number of such shares in the future, or the
perception that such sales could occur, could adversely affect the market
price of the Common Stock. See "Management," "Principal Shareholders and Stock
Ownership of Management," and "Shares Eligible for Future Sale."
POTENTIAL IMPACT OF FAILURE TO BE YEAR 2000 COMPLIANT
The Company continues to implement plans to address the Year 2000 issue. The
issue arises from the fact that many existing computer programs use only two
digits to identify a year in the computer's date field. These programs were
designed without having considered the impact of the upcoming change in the
century. If not corrected, computer applications could fail or create
inaccurate results by or at the year 2000. The Company could be negatively
impacted not only by problems with its own computer systems, but by problems
experienced by customers and by governmental and private entities with which
the Company does business. Certain employees are crucial to the Company's Year
2000 compliance program. The loss of these employees could have a material
adverse effect on the implementation of the Company's Year 2000 plan. If the
Company's subsidiaries, or governmental or private entities with which the
Company conducts business, fail to correct the Year 2000
11
<PAGE>
problem, the Company's operations as a whole could be materially and adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation--Year 2000."
UNCERTAINTY AS TO SPECIFIC ALLOCATION OF PROCEEDS
The Company intends to use substantially all of the net proceeds of the
Offering for the establishment of two de novo branches in Hattiesburg,
Mississippi, for the repayment of a Company loan, for selective acquisitions
and other general corporate purposes. Accordingly, the Company will have broad
discretion as to the application of such proceeds. See "Use of Proceeds."
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THE COMPANY
BACKGROUND
Since the establishment of the Bank (then called Lamar County Bank) in 1904
in Purvis, Mississippi, the Bank has grown to seven banking facilities in
three southeastern Mississippi counties and $305.6 million in assets at June
30, 1998. Most of this growth has occurred in the last decade as management
responded to opportunities presented by the growth of the Lamar County and
Hattiesburg, Mississippi market areas. Total assets, which were $25 million in
1980, exceeded $100 million by June of 1991, grew to $200 million by September
of 1996, and passed the $300 million mark in May of 1998.
In 1935, the Bank expanded outside of Purvis by acquiring the Sumrall Bank,
located in the extreme north end of Lamar County. In 1980, the Bank moved into
its current main office facilities. In response to the rapid growth of
northeast Lamar County, the Bank built a branch on Highway 98 West in
Hattiesburg in 1989, marking the Bank's initial entry into the Hattiesburg
market area. In 1991, the Bank expanded for the first time into another county
by purchasing the Prentiss branch of a failed savings and loan association
from the Resolution Trust Corporation. In 1994, the Bank opened a second
Hattiesburg branch in the newly constructed Turtle Creek Mall. This opening
was followed by the Bank's first entry into Forrest County, Mississippi with
the opening of the Petal branch in 1996. In June of 1998, the Bank acquired
property which will be used to open a new branch in Hattiesburg, Mississippi
on Hardy Street, a major thoroughfare, near the main campus of the University
of Southern Mississippi. This branch is expected to open in the second half of
1999.
During the 1990's, the Company also expanded its financial products and its
customer base. In 1992, the Bank established a consumer finance subsidiary,
Southern Financial Services, Inc. ("SFSI"), which makes consumer loans to
persons who may not be eligible for financing from the Bank. SFSI, which had
$6.2 million in loans outstanding at June 30, 1998, has offices in Purvis,
Hattiesburg, Petal, Prentiss, Monticello, Poplarville and Gulfport,
Mississippi. In 1997, the Company founded The Mortgage Shop, Inc. ("MSI"),
located in Hattiesburg, Mississippi. MSI originates B and C grade mortgage
loans which are sold in the secondary market. Most recently the Bank further
expanded the range of services offered by entering an arrangement with Robert
Thomas Securities, Inc. to provide stock and other securities trading services
for customers of the Bank and other investors. These services are provided in
Hattiesburg and by appointment at other locations. With the addition of these
services, the Company is executing its strategy of offering a broad range of
banking and financial services with the personalized focus of a community
banking organization.
The Company continues to look for additional expansion opportunities, either
by establishing de novo banking offices or by acquiring existing institutions
in the financial services industry. The Company intends to consider various
strategic acquisitions of banks or banking assets in those areas that
management believes would complement and increase the Company's existing
business, or expand in market areas or product lines that management considers
attractive.
LINES OF BUSINESS
Historically, the Company has extended credit and provided general banking
services through its banking center network to individuals and small and
medium-sized businesses. During the past several years the Company has sought
new lines of business to diversify its asset mix and further enhance its
profitability. While each new line of business reflects the Company's efforts
to enrich its asset mix, each of these lines of business is an outgrowth of
the community banking and lending services that the Company has performed over
the years. In keeping with the Company's operating philosophy, each of these
businesses has been carefully developed and is subject to various quality
controls. The Company's principal lines of business are:
. REAL ESTATE LENDING. The Bank's real estate loans consist of residential
first and second mortgage loans, residential construction loans and home
equity lines of credit and term loans secured by first and second
mortgages on the residences of borrowers for home improvements,
education and other personal expenditures. The Bank makes mortgage loans
with a variety of terms, including fixed and
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<PAGE>
floating rates. These loans are made consistent with the Bank's
appraisal policy and real estate lending policy which prescribe maximum
loan-to-value ratios and maturities. Management expects that these loan-
to-value ratios are sufficient to compensate for fluctuations in the
real estate market and to minimize the risk of loss that could result
from a downturn in that market. Generally, the Bank retains real estate
loans with maturities under ten years and sells mortgage loans with
longer maturities. MSI originates B and C grade mortgage loans which are
sold in the secondary market. The Bank originated and retained $36.1
million of real estate loans during 1997 and $17.3 million of real
estate loans during the six months ended June 30, 1998. The Bank
originated and sold $10.6 million of mortgage loans during 1997 and $5.9
million of mortgage loans during the six months ended June 30, 1998. MSI
originated and sold $2.9 million of mortgage loans during 1997 and $1.6
million of mortgage loans during the six months ended June 30, 1998.
. CONSUMER LENDING. The Bank and SFSI offer consumer installment loans to
business owners and other individuals for personal, family and household
purposes. The Bank originated $48.9 million in consumer loans in 1997
and $32.1 million for the six months ended June 30, 1998. SFSI
originated $10.0 million in consumer loans in 1997 and $4.4 million for
the six months ended June 30, 1998. Consumer loan repayments depend upon
a borrower's financial stability and are more likely to be adversely
affected by job loss, divorce, illness and other personal hardships. In
addition, collateral such as automobiles and other personal property
securing consumer loans depreciates rapidly and sometimes is an
inadequate repayment source if a borrower defaults. In evaluating these
loans, the Bank requires its lending officers to review the borrower's
level and stability of income, past credit history and the impact of
these factors on the borrower's ability to repay the loan in a timely
manner. In addition, the Bank requires that its banking officers
maintain an appropriate margin between the loan amount and collateral
value.
. COMMERCIAL LENDING. The Bank's commercial loan portfolio is dispersed
among various business lines such as commercial construction, trucking,
timber, utilities, auto and recreational vehicles, farm supplies and
heavy equipment. Such loans are primarily for the financing of accounts
receivable property, plant, equipment and inventory. The Bank also
offers SBA loans. The Bank originated $30.4 million in commercial loans
in 1997 and $37.3 million for the six months ended June 30, 1998.
Commercial lending entails greater risks than traditional, single family
residential lending. Commercial loans typically involve larger loan
balances concentrated in fewer borrowers. The analysis of commercial
loans, which requires expertise in evaluating a commercial enterprise
and its collateral, is generally more complex than the analysis required
for single family residential lending. Like consumer loans, commercial
loans are subject to adverse conditions in the economy, as well as the
market for the specific goods and services sold by the commercial
borrower. Loans secured by commercial real estate can also be affected
by trends in the local real estate market. In making these loans, the
Bank manages its credit risk by actively monitoring such measures as
advance rate, cash flow, collateral value and other appropriate credit
factors.
. DEPOSITS AND OTHER BORROWINGS. Deposits are a key component of the
Company's banking business, serving as a source of funding for lending
as well as for increasing customer account relationships. The Company
offers competitively priced deposit products, including checking,
savings and time deposit accounts, seeking to increase core deposits and
market share. Borrowings, principally from the Federal Home Loan Bank
("FHLB"), and lines of credit with other banks, provide other sources of
liquidity.
. BROKERAGE SERVICES. The Bank provides brokerage services through a joint
arrangement with Robert Thomas Securities, Inc., a subsidiary of Raymond
James & Associates, Inc. These services are provided in Hattiesburg and
by appointment at other locations. The Company developed brokerage
services to (1) help retain existing customers who were seeking
alternative investments, (2) attract additional, sophisticated customers
from its market areas, and (3) to enhance the Company's franchise by
offering a broader scope of financial services.
. INVESTMENTS. The Company's investment securities, together with cash and
cash equivalents, provide an important source of liquidity. The Company
uses its investments as collateral for borrowings and to
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secure public fund deposits. The investment portfolio is managed by an
internal committee chaired by the President in accordance with policies
approved by the Company's Board of Directors.
The Company's operating revenues are derived primarily from interest earned
from its loan and investment securities portfolios and fee income from loan and
deposit products. The Company is not dependent upon a single customer, or a few
customers, the loss of any one or more of which would have a material adverse
effect on the statement of condition or results of operations.
MARKET AREAS
The Bank operates principally in the Hattiesburg Metropolitan Statistical
Area (the "Hattiesburg MSA") which includes Lamar and Forrest counties in
Mississippi. The following discussion of communities in which the Bank operates
contains deposit, population and household income information available from
Sheshunoff, The Branches of Mississippi 1998. Deposit data is as of June 30,
1997. Population figures, unemployment rates and incomes are estimated as of
the date indicated based on information from the Rand McNally Commercial Atlas
and Marketing Guide and from the Mississippi Employment Security Commission's
Labor Market Information Department.
The Company has a total of seven banking offices serving five Mississippi
communities and plans to open two additional branch offices in Hattiesburg. Its
primary market area is Lamar County, including the Hattiesburg MSA, and its
secondary market area includes the city of Prentiss in Jefferson Davis County,
Mississippi and the city of Petal located in Forrest County, Mississippi
adjacent to Hattiesburg on its east side.
Lamar County. The Bank ranks first in the county by amount of deposits and
has a market share of 74.26% of deposits in Lamar County. Lamar County has five
financial institutions (four banks and one credit union) with a total of $214
million in deposits. Lamar County's population as of April of 1998 was 34,843
individuals living in 12,759 households and having an average household income
of $39,480 and an unemployment rate of 2.7%.
Hattiesburg. The Bank's largest community served is the Hattiesburg MSA, the
third largest metropolitan area in Mississippi with an estimated population of
107,832. For the twelve months ended June 30, 1997, total deposits of banks,
thrifts, and credit unions in Hattiesburg increased by 7.12%, from $830 million
to $889 million. The Bank with two locations in Hattiesburg, ranks fifth in the
city by amount of deposits. The Bank is focusing on expanding its current 6.0%
market share in Hattiesburg, where it competes with several regional banks and
other financial institutions.
Hattiesburg is the educational, retail and medical center for more than a
quarter of a million people throughout the southeast portion of Mississippi.
The Hattiesburg area has received widespread attention as an increasing number
of retirees are moving to the area. Hattiesburg's retirement program was
featured in the November 22, 1996 issue of the "Kiplinger Washington Letter"
and in the June 18, 1997 broadcast of the NBC Nightly News. The May 24, 1997
edition of The New York Times featured Hattiesburg as a place to retire touting
the high quality of life, cultural opportunities, and state-of-the-art medical
facilities. Hattiesburg was one of five cities listed as "Best Cities for
Retirement" as well as one of five cities listed as "Best Small Metro Areas" in
the 1997 Places Rated Almanac by David Savegeau and Richard Boyer and was named
one of the "20 Top Retirement Towns in North America" by MoneyExtra, a
publication of Money Magazine.
In 1995, the Ryder Relocation Report recognized Hattiesburg as the sixth most
popular destination for Americans relocating to small cities (defined as those
under 100,000). Hattiesburg's central location places it within a two hour
drive of Jackson, Mobile, New Orleans and the Mississippi Gulf Coast. Atlanta,
Birmingham and Memphis are within a day's drive.
Forrest County. The Bank has a market share of 1.56% of deposits in Forrest
County. Forrest County has 16 financial institutions (9 banks and 7 credit
unions) with a total of $935.8 million in deposits. Forrest County's population
as of April of 1998 was 73,054 individuals living in 27,282 households. Forrest
County, in which
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Hattiesburg is located, has an estimated average household income of
approximately $39,654, ranking 25th out of 82 counties in the State of
Mississippi. The unemployment rate for the county as of April of 1998 is 3.4%.
Jefferson Davis County. The Bank competes with one other financial
institution operating in the County. The Bank's market share is 28.95% of the
county's total deposits of $98.2 million. Jefferson Davis County's population
as of April 1998 was 13,966 individuals living in 4,744 households and having
an average household income of $34,985 and an unemployment rate of 15.6% as of
April of 1998.
COMPETITION
The Company competes with several local and regional commercial banks,
thrifts, credit unions and mortgage companies for deposits, loans and other
banking related financial services. There is intense competition in the Bank's
markets from other financial institutions as well as other "non-bank"
companies which engage in similar activities. Some of the Company's
competitors are not subject to the degree of regulatory review and
restrictions which apply to the Bank. In addition, the Company must compete
with much larger financial institutions which have greater financial resources
than the Company and aggressively compete for market share in the
Lamar/Forrest County market. These competitors attempt to gain market share
through their financial products mix, pricing strategies and banking center
locations. Legislative developments related to interstate branching and
banking in general, by providing large banking institutions easier access to a
broader marketplace, are creating more competitive pressure on smaller
financial institutions. The Company also competes with insurance companies,
savings banks, consumer finance companies, investment banking firms, brokerage
houses, mutual fund managers, investment advisors and credit unions. Retail
establishments compete for loans by offering credit cards and retail
installment contracts for the purchase of goods and merchandise. It is
anticipated that competition from both bank and non-bank entities will
continue to grow. The Bank, which as of June 30, 1997 had the third largest
combined deposit market share in the three counties in which it operates, has
been able to compete effectively with other financial institutions by
emphasizing customer service and local office decision-making; by establishing
long-term customer relationships and building customer loyalty; and by
providing products and services designed to address the specific needs of its
customers.
EMPLOYEE RELATIONS
As of June 30, 1998, the Bank had 120 employees of whom 105 were full-time
and 15 part-time. MSI has four full-time employees and SFSI has 23 employees
of whom 21 were full-time and two part-time. In addition to a bonus program,
the Bank currently maintains an employee benefit program providing, among
other benefits, a self-insured medical plan, a profit sharing and 401(k)
retirement plan, employee stock ownership plan and life and disability
insurance. In August of 1998, the Company adopted a stock incentive plan under
which it plans to grant stock options for selected employees. These employee
benefits, as a whole, are considered by management to be generally competitive
with employee benefits provided by other employers in Mississippi. The Company
believes the future success of its subsidiaries will depend, in part, on its
ability to continue to attract and retain skilled retail, technical, and
managerial personnel in order to maintain its quality delivery of financial
and banking services. None of the Company's employees are subject to a
collective bargaining agreement, and the Company has never experienced a work
stoppage.
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FACILITIES
The Company's executive offices and principal support and operational
functions are located at 401 Shelby Speights Drive, Purvis, Mississippi 39475.
All of the offices of the subsidiaries of the Company are located in
Mississippi.
<TABLE>
<CAPTION>
DEPOSITS
SQUARE OWNED (O)/ LOANS AS OF AS OF
BANK OFFICES FOOTAGE LEASED (L) JUNE 30, 1998 JUNE 30, 1998
- ------------ ------- ---------- -------------- --------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
PURVIS
Main Office
401 Shelby Speights Drive,
Purvis....................... 19,600 O $64,308 $87,407
#4 Highway 589, Purvis....... 11,203 O 5,953 8,952
SUMRALL
1193 Highway 42 East,
Sumrall...................... 5,000 O 21,770 36,265
HATTIESBURG
6052 Highway 98 West,
Hattiesburg*................. 16,308 O 46,735 63,478
Turtle Creek Mall Branch
Office
1000 Turtle Creek Drive,
Space 125, Hattiesburg....... 667 L 0 4,472
PETAL
535 Highway 42, Petal........ 16,810 O 30,618 26,798
PRENTISS
965 South Columbia Avenue,
Prentiss..................... 4,822 O 10,342 41,224
- --------
*Includes Mortgage & Investment Center located at 6042 Highway 98 West,
Hattiesburg.
<CAPTION>
SQUARE OWNED (O)/ LOANS AS OF
OFFICES OF SFSI FOOTAGE LEASED (L) JUNE 30, 1998
- --------------- ------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
HATTIESBURG
706 Broadway Drive,
Hattiesburg.................. 3,780 L $ 1,037
PETAL
300 New Richton Road, Petal.. 1,440 L 140
PRENTISS
951 South Columbia Avenue,
Prentiss..................... 1,440 L 685
PURVIS
70 Shelby Speights Drive,
Purvis....................... 2,160 O 1,847
MONTICELLO
863 Highway 84 West,
Monticello................... 1,100 O 841
POPLARVILLE
1235 South Main Street,
Poplarville.................. 1,500 O 951
GULFPORT
1010 Pass Road, Gulfport..... 1,100 L 747
<CAPTION>
SQUARE OWNED (O)/
THE MORTGAGE SHOP, INC. FOOTAGE LEASED (L)
- ----------------------- ------- ----------
<S> <C> <C>
HATTIESBURG
114 North 40th Avenue, Suite
H, Hattiesburg............... 950 L
</TABLE>
17
<PAGE>
The agreements for the leased facilities have unexpired terms ranging from
December 31, 1998 to the year 2003, including renewal options. The Bank also
acquired property in June of 1998 which will be used to open a new branch in
Hattiesburg, Mississippi on Hardy Street, a major thoroughfare, near the main
campus of the University of Southern Mississippi. This branch is expected to
open in the second half of 1999.
LEGAL PROCEEDINGS
SFSI is a defendant in a case filed on June 11, 1998, in the Circuit Court
of Forrest County, Mississippi. The complaint alleges that the plaintiff was
not given any choice with respect to the purchase of credit life and credit
disability insurance and that SFSI improperly forced placed property insurance
on the collateral for the plaintiff's loan with SFSI. The plaintiff asks for
actual damages of $50,000 and punitive damages of $500,000. While the ultimate
outcome of the lawsuit cannot be predicted with certainty, management believes
the case is without merit, denies all liability and believes that the ultimate
resolution of this matter will not have a material adverse effect on the
Company's financial condition.
In addition, in the ordinary course of operations, the Company's
subsidiaries are parties to various legal proceedings. In the opinion of
management, there is no proceeding pending, or to the knowledge of management
threatened, in which an adverse decision would have a material adverse effect
on the Company's financial condition.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,363,636 shares of
Common Stock, at an assumed initial public offering price of $11.00 per share
(the midpoint of the estimated range), are estimated to be approximately $13.6
million (or $15.7 million if the underwriters' over-allotment option is
exercised in full), after deducting the estimated underwriting discounts and
offering expenses payable by the Company.The net proceeds of the Offering will
be used to retire certain indebtedness of the Company, and for additional
growth capital which will, among other things, enable the Company to expand
its operations in the Hattiesburg, Mississippi market. Approximately $3.6
million of the net proceeds will be used to retire indebtedness of the
Company. This indebtedness, which was incurred in December of 1996, consists
of a variable interest rate loan from a commercial bank, with a remaining
aggregate principal balance of $3.6 million at June 30, 1998. This
indebtedness bears interest at the rate of New York Prime less 75 basis points
and the principal is payable in annual installments of $400,000 with the final
payment due on December 31, 2006. After giving effect to the sale of the
shares of Common Stock offered hereby and assuming $3.6 million of the net
proceeds will be used to retire the above described indebtedness of the
Company, the Company's pro forma basic and diluted earnings per share would
have been $.41 for the six months ended June 30, 1998 and $.63 for the year
ended December 31, 1997.
The Company expects to use approximately $3.0 million of the proceeds to
establish two de novo branches in strategic locations within the City of
Hattiesburg. This estimate includes the cost of buildings, equipment, vault
cash and other startup expenditures. This estimate may not reflect actual
costs. The Bank acquired property in June of 1998 for one of these branches.
The remaining proceeds, approximately $7.0 million, will be used for further
expansion through the acquisition of existing banks and other general
corporate purposes. The Company currently does not have any commitments or
agreements or letters of intent for any business acquisitions. Pending
application of the net proceeds of the Offering, the Company plans to invest
them in short-term, investment-grade securities, certificates of deposit or
guaranteed obligations of the United States government.
18
<PAGE>
DILUTION
As of June 30, 1998, the net tangible book value of the Company was $6.34
per share. "Net tangible book value per share" is the tangible net worth
(total tangible assets less total liabilities) of the Company divided by the
number of shares of Common Stock outstanding. After giving effect to the sale
of the shares of Common Stock offered hereby (after deducting underwriting
discounts and estimated offering expenses to be paid by the Company), the pro
forma net tangible book value of the Company at June 30, 1998 would have been
$7.52 per share. This represents an immediate increase in the net tangible
book value of $1.18 per share to existing shareholders and an immediate
dilution of $3.48 per share to the new investors purchasing the shares in this
Offering. The following table illustrates this per share dilution to new
investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................... $11.00
Net tangible book value per share at June 30, 1998.............. $6.34
Increase in net tangible book value per share attributable to
new investors.................................................. 1.18
-----
Pro forma net tangible book value per share after Offering........ 7.52
------
Dilution in net tangible book value per share to new investors.... $ 3.48
======
</TABLE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1998, and as adjusted to give effect to the consummation
of the issuance of 1,363,636 shares of Common Stock by the Company in the
Offering.
<TABLE>
<CAPTION>
JUNE 30, 1998
(UNAUDITED)
-----------------------
ACTUAL AS ADJUSTED(1)
------- --------------
(IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT:
Other borrowed funds.................................. $17,720 $14,120
======= =======
STOCKHOLDERS' EQUITY:
Common stock, $0.50 par value, 50,000,000 shares
authorized; 2,767,071 shares outstanding and
4,130,707 shares, as adjusted(1)..................... $ 1,384 $ 2,065
Paid-in capital....................................... 4,364 17,270
Retained earnings..................................... 11,733 11,733
Net unrealized appreciation on securities available
for sale, net of income taxes........................ 163 163
Treasury stock, 12,000 shares......................... (72) (72)
------- -------
Total stockholders' equity.......................... $17,572 $31,159
======= =======
</TABLE>
- --------
(1) Assumes that 1,363,636 shares of Common Stock are sold by the Company at
$11.00 per share and that the net proceeds, after deducting the estimated
underwriting discount and offering expenses payable by the Company,
received by the Company from the Offering are approximately $13,587,000,
of which $3,600,000 are used for the payment of other borrowed funds. If
the Underwriters' over-allotment option is exercised in full, 204,545
shares of Common Stock would be sold by the Company resulting in net
proceeds to the Company from the Offering of $15,679,000.
19
<PAGE>
DIVIDEND POLICY
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Company's Board of Directors out of funds legally available
therefor. During 1998, 1997 and 1996, the Company declared and paid semi-
annual cash dividends per share on its Common Stock as follows:
<TABLE>
<CAPTION>
FOR SIX MONTH PERIOD ENDED DATE PAID DIVIDENDS PER SHARE
-------------------------- --------------- -------------------
<S> <C> <C>
June 30, 1998.......................... July 1, 1998 $.0567
December 31, 1997...................... January 2, 1998 .0547
June 30, 1997.......................... July 1, 1997 .0462
December 31, 1996...................... January 2, 1997 .0462
June 30, 1996.......................... July 1, 1996 .0461
</TABLE>
The Company currently intends to pay regular quarterly cash dividends on the
Common Stock beginning in the third quarter of 1998, subject to the Company's
needs for funds. However, payment of dividends is subject to the discretion of
the Company's Board of Directors. In determining whether to make dividend
payments and in establishing the amount of any dividends to be paid, the Board
will consider the Company's earnings, capital requirements and financial
condition, prospects for future earnings, federal economic and regulatory
policies, general business conditions and other relevant factors, certain of
which are beyond the control of the Company. See "Supervision and Regulation"
and "Description of Capital Stock."
The primary source of funds for dividends paid by the Company to its
shareholders is the dividend income received from the Bank. There are certain
restrictions on the payment of such dividends imposed by federal and state
banking laws, regulations and authorities. Under Mississippi law, the payment
of dividends by the Bank must be approved by the Mississippi Department of
Banking and Consumer Finance. The FDIC also has the authority to regulate the
payment of dividends and to prohibit a regulated depository institution from
engaging in what in such agency's opinion constitutes an unsafe or unsound
practice for conducting business. Depending upon the financial condition of
the depository institution, payment of dividends could be deemed to constitute
such an unsafe or unsound practice. In addition, a depository institution may
not pay a dividend or otherwise make a capital distribution if the payment
thereof would cause such institution to fail to satisfy its capital
requirements. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Capital" and "Supervision and Regulation--The
Bank."
Although management believes that the Bank will be able to generate
sufficient earnings to pay dividends to the Company in amounts sufficient to
continue the Company's current dividend policy with respect to the Common
Stock, there can be no assurance that the Bank will be able to generate such
earnings or to pay such dividends in the future.
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain financial information for the Company
on a consolidated historical basis. Such information should be read in
conjunction with, and is qualified in its entirety by, the consolidated
financial statements and notes appearing elsewhere in this Prospectus. The
selected financial information of the Company as of and for the years ended
December 31, 1997, 1996 and 1995, has been derived from the consolidated
financial statements of the Company audited by Ernst & Young LLP, independent
auditors, whose report with respect thereto is included elsewhere in this
Prospectus. The selected financial information of the Company as of and for
the years ended December 31, 1994 and 1993, has been derived from the
consolidated financial statements of the Company audited by McArthur, Thames,
Slay and Dews, PLLC, independent auditors. The selected financial and
operating information for the six months ended June 30, 1998 and 1997 has been
derived from the unaudited consolidated financial statements of the Company
included elsewhere in this Prospectus. The unaudited consolidated financial
statements include all adjustments (consisting of normal recurring
adjustments) which management of the Company considers necessary for a fair
presentation of the consolidated financial position and the results of
operations for these periods. Operating results for the six months ended June
30, 1998, are not necessarily indicative of the results that may be expected
for the entire year ending December 31, 1998. Factors affecting the
comparability of certain indicated periods are discussed below under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS ENDED
JUNE 30, AS OF AND FOR THE YEARS ENDED DECEMBER 31,
------------------ ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income......... $ 11,377 $ 9,221 $ 19,442 $ 16,190 $ 13,903 $ 11,357 $ 10,008
Interest expense........ 6,524 5,025 10,536 8,429 7,100 5,307 4,592
Net interest income..... 4,853 4,196 8,906 7,761 6,803 6,050 5,416
Provision for loan
losses................. 360 289 725 557 517 638 580
Non-interest income..... 1,688 1,257 2,689 2,325 1,751 1,590 1,519
Non-interest expense.... 4,041 3,649 7,677 6,890 6,146 5,491 4,697
Income before taxes..... 2,140 1,515 3,193 2,639 1,891 1,511 1,658
Net income.............. 1,605 1,110 2,339 2,028 1,474 1,189 1,293
BALANCE SHEET DATA:
Total assets............ $305,562 $231,552 $247,022 $207,330 $169,636 $151,895 $139,666
Total securities........ 86,809 55,365 58,921 41,562 33,037 32,864 36,540
Total loans, net........ 178,960 149,436 159,552 140,318 119,556 103,268 85,795
Allowance for loan
losses................. 3,386 2,913 3,101 2,837 2,529 2,427 2,140
Total deposits.......... 268,596 201,666 211,498 185,404 156,631 139,209 129,194
Other borrowed funds.... 17,720 14,000 17,620 7,000 -- -- --
Total stockholders'
equity................. 17,572 14,303 16,160 13,473 11,765 10,123 9,971
PER SHARE DATA:
Net income per share--
basic and diluted...... $ 0.59 $ 0.41 $ 0.87 $ 0.75 $ 0.54 $ 0.43 $ 0.46
Book value.............. 6.38 5.45 5.88 4.97 4.34 3.62 3.57
Cash dividends per
share.................. 0.0563 0.0476 0.1002 0.0923 0.0923 0.0895 0.0895
PERFORMANCE RATIOS:
Return on average
assets................. 1.15% 1.01% 1.02% 1.06% 0.90% 0.80% 0.98%
Return on average
equity................. 18.82 15.99 15.69 15.88 13.56 11.66 13.59
Net interest margin..... 3.74 4.13 4.20 4.41 4.50 4.92 4.89
Efficiency ratio........ 62 67 66 68 72 72 68
ASSET QUALITY RATIOS:
Allowance for loan
losses to nonperforming
loans.................. 475% 603% 777% 360% 295% 366% 571%
Allowance for loan
losses to total loans.. 1.82 1.87 1.87 1.93 2.01 2.25 2.39
Nonperforming assets to
total loans............ 0.61 0.68 0.49 1.06 0.93 0.76 0.69
Net loan charge-offs to
average loans.......... 0.04 0.14 0.30 0.19 0.38 0.36 0.17
CAPITAL RATIOS:
Leverage ratio.......... 6.21% 6.39% 6.87% 7.11% 7.19% 7.14% 7.15%
Average stockholders'
equity to average total
assets................. 6.12 6.30 6.49 6.69 6.63 6.82 7.20
Tier 1 risk-based
capital ratio.......... 9.09 9.28 9.84 9.67 10.21 10.50 11.31
Total risk-based capital
ratio.................. 10.35 10.53 11.09 10.92 11.47 9.31 12.57
Dividend payout ratio... 10 12 12 12 17 21 18
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations analyzes the major elements of the Company's balance sheets and
statements of income. This section should be read in conjunction with the
Company's Consolidated Financial Statements and accompanying Notes and other
detailed information appearing elsewhere in this Prospectus.
This discussion includes various forward-looking statements with respect to
credit quality (including delinquency trends and the allowance for loan
losses), corporate objectives and other financial and business matters. When
used in this discussion the words "anticipate," "project," "expect,"
"believe," and similar expressions are intended to identify forward-looking
statements. The Company cautions that these forward-looking statements are
subject to numerous assumptions, risks and uncertainties, all of which may
change over time. Actual results could differ materially from forward-looking
statements.
In addition to factors disclosed by the Company elsewhere in this
Prospectus, including those discussed under the heading "Risk Factors," the
following factors, among others, could cause actual results to differ
materially from such forward-looking statements: exposure to local economic
conditions, interest rate risk, credit quality, risks inherent in consumer and
commercial lending, competition, the extent and timing of legislative and
regulatory actions and reforms and the Year 2000 issue.
OVERVIEW
Since 1995, the Company's net income, earning assets and deposits have
increased substantially. Net income grew 44.6% from $1.1 million in the first
six months of 1997 to $1.6 million in the first six months of 1998. Net income
increased 37.6% from $1.5 million in 1995 to $2.0 million in 1996 and
increased 15.3% to $2.3 million in 1997. Total loans rose 49.7% from $119.6
million at December 31, 1995 to $179.0 million at June 30, 1998. Total
securities increased 162.8% from $33.0 million at December 31, 1995 to $86.8
million at June 30, 1998. Total deposits increased 71.5% from $156.6 million
at December 31, 1995 to $268.6 million at June 30, 1998.
The growth in net income has been caused primarily by higher income
resulting from increased volume in earning assets. Loans have increased
because of greater market penetration and strong loan demand in the Company's
market area due to economic growth. Securities have risen because of
additional funds available for investment resulting from increased deposits
and other borrowed funds. Deposits increased because of the Company's
strategies to attract new deposits and strong economic growth in the region.
The rise in net income has been partially offset by a decline in the net
interest margin from 4.50% for 1995 to 3.74% for the six months ended June 30,
1998.
The Company expects continued growth to result from the Company's plan to
increase its presence in the Hattiesburg market area through additional
banking centers and from competitive advantages arising out of the acquisition
of local banks by regional banks.
22
<PAGE>
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
RESULTS OF OPERATIONS
NET INTEREST INCOME
The principal source of the Company's revenue is net interest income. Net
interest income is the difference between interest income on interest-earning
assets, principally loans and investment securities, and the interest expense
on interest-bearing deposits and borrowings used to fund those assets. Net
interest income is impacted by both changes in the amount and composition of
interest-earning assets and interest-bearing liabilities and the level of
interest rates. The change in net interest income is typically measured by net
interest spread and net interest margin. Net interest spread is the difference
between the average yield on interest-earning assets and the average cost of
interest-bearing liabilities. Net interest margin is determined by dividing
net interest income by average interest-earning assets.
Net interest income increased 14.8% in 1997 as compared to 1996, following a
14.1% increase in 1996 as compared to 1995. The increase in 1997 is
attributable to an increase in the Company's average interest-earning assets
of 20.7%, principally in the loan and investment securities portfolios.
Interest-bearing liabilities and average cost of interest bearing liabilities
also increased limiting the growth of net interest income. The increase in
1996 was due to growth in the average interest-earning assets of 16.3%,
principally in the consumer and commercial loan portfolios. See "--Loan
Portfolio."
During 1997, average interest-bearing liabilities increased $34.7 million to
$193.4 million, an increase of 21.8% over 1996. This was primarily from
increases in other borrowed funds, time deposits and transaction accounts. In
1996, average interest-bearing liabilities increased 16.7% to $158.7 million.
This increase of $22.8 million was primarily in time deposits and transaction
accounts.
The Company's net interest margin was 4.20% in 1997, 4.41% in 1996 and 4.50%
in 1995. The reduction in net interest margin in 1997 from 1996 resulted from
a decrease in yield on interest-earning assets of 0.05% while the Company's
cost of interest-bearing liabilities increased 0.14%. The net reduction in net
interest margin in 1996 as compared to 1995 resulted from an increase in yield
on interest-earning assets of 0.01% offset by an increase in cost of interest-
bearing liabilities of 0.09%.
The net interest margin may be negatively impacted by the interest rate
environment and changes in the earning asset mix and deposit funding fix.
Approximately $10.0 million of the Company's other borrowings from the FHLB
are adjustable rate advances and are subject to changes in market interest
rates. Increased rates may negatively impact the Company's borrowing and
deposit funding costs.
23
<PAGE>
Table 1 provides detailed information as to average balances, interest
income/expense, and rates by major balance sheet category for years ended
December 31, 1997 through 1995.
TABLE 1--AVERAGE BALANCE SHEETS AND RATES FOR DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------- -------------------------- --------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------- -------- -------- ------- -------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS:
U.S. Treasury securities
and obligations of U.S.
agencies............... $ 22,110 $1,493 6.75% $ 9,875 $ 583 5.90% $ 8,548 $ 560 6.55%
Obligations of state and
political
subdivisions (1)....... 24,139 1,844 7.64 23,751 1,850 7.79 20,941 1,667 7.96
Mortgage-backed
securities............. 5,985 399 6.66 5,885 361 6.13 6,320 426 6.74
Federal Home Loan Bank
stock.................. 818 52 6.36 511 31 6.07 361 24 6.65
Federal funds sold...... 5,478 297 5.42 3,836 204 5.32 4,578 274 5.99
Total loan and fees..... 153,656 15,984 10.40 131,956 13,790 10.45 110,389 11,519 10.43
-------- ------ -------- ------ -------- ------
TOTAL EARNING ASSETS.... 212,186 20,069 9.46 175,814 16,819 9.57 151,137 14,470 9.57
Less: Allowance for loan
losses................. (3,020) (2,767) (2,494)
NON-EARNING ASSETS
Cash and due from
banks.................. 7,915 7,732 6,810
Premises and equipment,
net.................... 6,476 5,399 4,429
Other assets............ 6,043 4,687 4,073
-------- -------- --------
TOTAL ASSETS............ $229,600 $190,865 $163,955
======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
INTEREST BEARING
LIABILITIES:
Transaction accounts.... $ 53,344 2,387 4.47 $ 44,394 1,944 4.38 $ 35,384 1,414 4.00
Savings accounts........ 8,881 243 2.74 8,763 249 2.84 8,447 250 2.96
Time deposits........... 120,269 7,169 5.96 104,129 6,165 5.92 91,809 5,419 5.90
Other borrowed funds.... 10,866 737 6.78 1,418 71 5.01 311 17 5.47
-------- ------ -------- ------ -------- ------
TOTAL INTEREST BEARING
LIABILITIES............ 193,360 10,536 5.45 158,704 8,429 5.31 135,951 7,100 5.22
------ ----- ------ ----- ------ -----
NON-INTEREST BEARING
LIABILITIES:
Non-interest bearing
deposits............... 19,524 17,721 16,015
Other liabilities....... 1,813 1,669 1,116
Stockholders' equity.... 14,903 12,771 10,873
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY... $229,600 $190,865 $163,955
======== ======== ========
Net interest income..... $9,533 $8,390 $7,370
====== ====== ======
Net interest spread..... 4.01% 4.26% 4.35%
===== ===== =====
Net interest margin..... 4.49% 4.77% 4.88%
===== ===== =====
</TABLE>
- --------
Note: Calculations include non-accruing loans in the average loan amounts
outstanding.
(1) The interest earned on non-taxable securities is reflected on a tax
equivalent basis assuming a federal income tax rate of 34% for all
periods presented.
24
<PAGE>
Table 2 presents the extent to which changes in interest rates and changes
in the volume of interest-earning assets and interest-bearing liabilities
affected the Company's interest income and interest expense during the years
indicated. Information is provided in each category with respect to: (1)
changes attributable to changes in volume; (2) changes attributable to changes
in rate; and (3) net change.
TABLE 2--VOLUME/RATE VARIANCE ANALYSIS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
COMPARED TO COMPARED TO
YEAR ENDED DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1995
--------------------------------- --------------------------------
INCREASE/(DECREASE) INCREASE/(DECREASE)
DUE TO DUE TO
--------------------------------- --------------------------------
TOTAL NET TOTAL NET
CHANGE VOLUME RATE CHANGE VOLUME RATE
------------ ---------- -------- ------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME(1):
U.S. Treasury securities
and obligations of U.S.
agencies............... $ 910 $ 826 $ 84 $ 23 $ 78 $ (55)
Obligations of state and
political
subdivisions........... (6) 30 (36) 183 219 (36)
Mortgage-backed
securities............. 38 7 31 (65) (27) (38)
Federal Home Loan Bank
stock.................. 21 20 1 7 10 (3)
Federal funds sold...... 93 89 4 (70) (40) (30)
Total loans and fees.... 2,194 2,257 (63) 2,271 2,254 17
---------- ---------- -------- --------- --------- --------
TOTAL INCREASE
(DECREASE) IN INTEREST
INCOME................. 3,250 3,229 21 2,349 2,494 (145)
INTEREST EXPENSE:
Interest bearing
liabilities:
Transaction accounts.... 443 401 42 530 395 135
Saving accounts......... (6) 3 (9) (1) 9 (10)
Time deposits........... 1,004 962 42 746 729 17
Other borrowed funds.... 666 641 25 54 55 (1)
---------- ---------- -------- --------- --------- --------
TOTAL INCREASE IN
INTEREST EXPENSE....... 2,107 2,007 100 1,329 1,188 141
---------- ---------- -------- --------- --------- --------
INCREASE (DECREASE) IN
NET INTEREST INCOME.... $ 1,143 $ 1,222 $ (79) $ 1,020 $ 1,306 $ (286)
========== ========== ======== ========= ========= ========
</TABLE>
- --------
(1) Interest income for loans on non-accrual status has been excluded from
interest income.
25
<PAGE>
NON-INTEREST INCOME
Table 3 illustrates the Company's primary sources of non-interest income.
Non-interest income increased 15.7% to $2.7 million in 1997 from $2.3 million
in 1996. The non-interest income for 1996 increased $574,000 or 32.8% from
$1.8 million in 1995.
TABLE 3--ANALYSIS OF NON-INTEREST INCOME
<TABLE>
<CAPTION>
PERCENT
INCREASE
YEAR ENDED DECEMBER 31, (DECREASE)
----------------------- ---------------
1997 1996 1995 1997/96 1996/95
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Service charges on deposit accounts.... $ 1,670 $ 1,519 $ 1,075 9.9% 41.3%
Mortgage loan fees..................... 362 260 226 39.2 15.0
Commissions on credit life insurance... 391 320 269 22.2 19.0
Other operating income................. 266 226 181 17.7 24.9
------- ------- -------
Total.................................. $ 2,689 $ 2,325 $ 1,751 15.7 32.8
======= ======= =======
</TABLE>
Service charges on deposit accounts increased in 1997 as compared to 1996
and in 1996 as compared to 1995 from increased quantity of transaction
accounts. In addition, in 1995 the Company increased the fee structure for
service charges on deposit accounts.
Mortgage loan fees from 1995 to 1997 has been positively influenced by
increases in secondary market residential loan originations due to
historically low mortgage rates.
Increases in commissions on credit life insurance in 1997 as compared to
1996 and in 1996 as compared to 1995 were due to increased loan originations.
NON-INTEREST EXPENSE
As shown in Table 4, total non-interest expense increased by 11.4% to $7.7
million in 1997, as compared to $6.9 million in 1996. The non-interest expense
in 1996 increased $744,000 or 12.1% over the $6.1 million in 1995.
Non-interest expense levels are often measured using an efficiency ratio
(non-interest expense divided by the sum of net interest income and non-
interest income). The efficiency ratio measures the level of expense required
to generate one dollar of revenue. Improvement in the ratio is measured by a
reduction in the percentage reported. The Company's efficiency ratios for
1997, 1996 and 1995 were 66.2%, 68.3% and 71.8%, respectively.
TABLE 4--ANALYSIS OF NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
PERCENT
INCREASE
YEAR ENDED DECEMBER 31, (DECREASE)
----------------------- ---------------
1997 1996 1995 1997/96 1996/95
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits......... $ 4,173 $ 3,595 $ 3,068 16.1% 17.2%
Occupancy expense...................... 610 504 439 21.0 14.8
Furniture and equipment expense........ 878 787 780 11.6 0.9
Other operating expenses............... 2,016 2,004 1,859 0.6 7.8
------- ------- -------
Total.................................. $ 7,677 $ 6,890 $ 6,146 11.4 12.1
======= ======= =======
</TABLE>
26
<PAGE>
Salary and employee benefits expense increased $578,000 or 16.1% in 1997 as
compared to 1996. The increase reflects the cost of staffing MSI, which began
operations in January of 1997, and additional staffing for the Purvis banking
branch in December of 1996. Salary and employee benefit expense increased
$527,000 or 17.2% in 1996 as compared to 1995. The increase in 1995 is due in
part to the cost of staffing the Petal banking branch, which opened in May of
1996. In addition, these increases also reflect annual cost of living and
merit increases for all employees.
Occupancy expenses rose $106,000 or 21.0% in 1997 as compared to 1996 and
$65,000 or 14.8% in 1996 as compared to 1995. These increases were primarily
due to additional depreciation and building maintenance expenses attributable
to the Purvis and Petal banking branches.
Furniture and equipment expense increased $91,000 or 11.6% for 1997 from
$787,000 in 1996. The increases were primarily due to depreciation and
equipment maintenance expenses related to additional furniture and equipment
for the Purvis and Petal banking branches.
Marketing and development expenses increased 26.2% in 1997 as compared to
1996, following a 19.2% increase in 1996 as compared to 1995. The increases
primarily resulted from increased advertising and promotional expenditures
incurred to increase the number of loan and deposit customers. Marketing
expenses can fluctuate from year to year based upon the timing and scope of
various marketing initiatives.
Insurance expenses decreased 40.8% in 1997 as compared to 1996 and 31.6% in
1996 as compared to 1995. FDIC deposit insurance expense decreased principally
as a result of the federally mandated one-time assessment on the Bank's
deposits insured in the FDIC's Savings Association Insurance Fund (SAIF). The
1996 federal legislation which mandated the one-time assessment provided for a
future ongoing reduction in the FDIC's insurance rate premiums on SAIF
insurance deposits. The Company benefited from a reduction of the FDIC's
overall insurance rate premium charges that was partially offset by the one-
time charge.
INCOME TAX EXPENSE
The Company's effective income tax rate increased from 22.1% in 1995 to
23.2% in 1996 to 26.7% in 1997. The increase in the effective income tax rate
is primarily attributable to a decrease in non-taxable income as a percentage
of pretax income.
FINANCIAL CONDITION
LOAN PORTFOLIO
The Company continued to experience loan growth throughout its markets in
1997 and 1996. Total loans increased 13.2% to $166.1 million at December 31,
1997, compared to $146.8 million at December 31, 1996. The increase in loans
in 1996 was $21.2 million or 16.9% as compared to 1995.
The Company's real estate loan portfolio increased 11.9% to $88.6 million at
December 31, 1997 from $79.2 million at December 31, 1996. In 1996, the real
estate portfolio increased $7.4 million or 10.3% from December 31, 1995. The
Company's increased real estate loan demand has been principally for
residential mortgages in the Bank's market areas. Residential loans increased
$7.3 million from December 31, 1996 to December 31, 1997 and $6.9 million from
December 31, 1995 to December 31, 1996. As a result of this increased loan
demand, the Company has hired additional lending personnel. In addition,
emphasis has also been placed on acquiring the deposit relationships from
these loan customers.
The Company's commercial loans increased by 16.2% to $25.6 million at
December 31, 1997 from $22.0 million at December 31, 1996. The increase in
commercial loans was $4.9 million or 28.7% at December 31, 1996 as compared to
December 31, 1995. The increases in commercial loans have been principally due
to increased economic activities in the Company's market areas.
27
<PAGE>
The Company's consumer loans increased to $52.0 million, including $6.3
million from SFSI, at December 31, 1997 from $45.6 million, including $6.1
million from SFSI at December 31, 1996. The increase in consumer loans was
$8.9 million or 24.2% from 1995 to 1996. These increases are attributable to
increased customer demands and the Company's marketing efforts to increase the
number of consumer loan customers. Substantially all of the consumer loan
portfolio consists of secured loans, the majority of which are collateralized
by automobiles and personal property.
TABLE 5--LOANS BY TYPE
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Real estate:
Residential........................ $ 55,406 $ 48,062 $ 41,151 $ 36,005 $29,382
Mortgage loans held for sale....... 421 361 1,245 574 1,086
Construction....................... 4,226 4,680 4,479 6,428 2,706
Commercial......................... 28,591 26,125 24,946 22,291 21,244
Consumer............................ 51,965 45,555 36,678 33,668 27,626
Commercial.......................... 25,556 21,992 17,082 9,132 7,489
-------- -------- -------- -------- -------
Total Loans......................... $166,165 $146,775 $125,581 $108,098 $89,533
======== ======== ======== ======== =======
</TABLE>
The table below illustrates the Company's fixed rate maturities and
repricing frequency for the loan portfolio:
TABLE 6--SELECTED LOAN DISTRIBUTION
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------
ONE OVER ONE OVER
YEAR THROUGH FIVE
TOTAL OR LESS FIVE YEARS YEARS
-------- ------- ---------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed rate maturities....................... $158,328 $84,271 $68,307 $5,750
Variable rate repricing frequency........... 7,837 4,486 2,026 1,325
-------- ------- ------- ------
Total....................................... $166,165 $88,757 $70,333 $7,075
======== ======= ======= ======
</TABLE>
At December 31, 1997, 95.3% of the Company's loans had fixed rate
maturities. Of the fixed rate portfolio, 30.1% of those loans have maturities
of one year or less when originated or renewed. Such maturities allow the
Company to reprice its portfolio frequently.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses is regularly evaluated by management and
approved by the Board of Directors and is maintained at a level believed to be
adequate to absorb future loan losses in the Company's portfolio. The
provision for loan losses necessary to maintain an adequate allowance is based
upon an assessment of current economic conditions, delinquency trends and
ratios, changes in the mixture and levels of the various categories of loans,
historical charge-offs, recoveries, and other information. Management believes
that the allowance for loan losses at December 31, 1997 was adequate. Although
management believes it uses the best information available to make allowance
provisions, future adjustments which could be material may be necessary if
management's assumptions differ from the loan portfolio's actual future
performance.
The allowance for loan losses increased $264,000 to $3.1 million from
December 31, 1996 to December 31, 1997. The increase is primarily attributable
to an increase in the volume of loans. The Company's allowance for loan losses
to total loan ratio decreased from 2.01% at December 1995 to 1.93% at December
31, 1996 to 1.87% at December 31, 1997.
28
<PAGE>
Net charge-offs were $461,000 during 1997 compared to $249,000 and $415,000
for 1996 and 1995, respectively. Of these net charge-offs, for the same years,
$151,000, $88,000 and $245,000, respectively, pertained to SFSI. The Company's
consumer loan portfolio accounted for 59.2%, 16.5% and 84.1% of net loan
charge-offs for the years ended December 31, 1997, 1996 and 1995,
respectively.
TABLE 7--SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for loan losses at beginning
of year............................... $2,837 $2,529 $2,427 $2,140 $1,700
Charge-offs:
Real Estate.......................... -- (50) (28) -- (52)
Consumer............................. (400) (270) (516) (120) (187)
Commercial........................... (238) (168) (88) (370) (118)
------ ------ ------ ------ ------
Total.............................. (638) (488) (632) (490) (357)
Recoveries:
Real Estate.......................... 10 -- 4 14 114
Consumer............................. 127 229 167 34 21
Commercial........................... 40 10 46 91 82
------ ------ ------ ------ ------
Total.............................. 177 239 217 139 217
------ ------ ------ ------ ------
Net loan charge-offs................... (461) (249) (415) (351) (140)
Provision for loan losses.............. 725 557 517 638 580
------ ------ ------ ------ ------
Allowance for loan losses at end of
year.................................. $3,101 $2,837 $2,529 $2,427 $2,140
====== ====== ====== ====== ======
Ratios:
Allowance for loan losses to total
loans............................... 1.87% 1.93% 2.01% 2.25% 2.39%
Net loan charge-offs to average loans
outstanding for the year............ 0.30 0.19 0.38 0.36 0.17
Allowance for loan losses to non-
performing loans.................... 777 360 295 366 571
</TABLE>
The following table is management's allocation of the allowance for loan
losses by loan type. Allowance allocation is based on management's assessment
of economic conditions, past loss experience, loan volume, loan quality, past
due history and other factors. Since these factors are subject to change, the
allocation is not necessarily predictive of future portfolio performance.
TABLE 8--MANAGEMENT'S ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------------ ------------------ ------------------ ------------------ ------------------
PERCENT PERCENT PERCENT PERCENT PERCENT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
ALLOCATED TO TOTAL ALLOCATED TO TOTAL ALLOCATED TO TOTAL ALLOCATED TO TOTAL ALLOCATED TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS
--------- -------- --------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real Estate............. $ 936 53.3% $ 881 54.0% $ 817 57.2% $ 754 60.4% $ 583 60.8%
Consumer................ 1,355 31.3 1,293 31.0 1,268 29.2 925 31.2 739 30.8
Commercial.............. 546 15.4 357 15.0 160 13.6 122 8.4 201 8.4
Unallocated............. 264 -- 306 -- 284 -- 626 -- 617 --
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total................... $3,101 100.0% $2,837 100.0% $2,529 100.0% $2,427 100.0% $2,140 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
29
<PAGE>
ASSET QUALITY
Loans (including any impaired loans under SFAS 114 and 118) are placed on
non-accrual status when they become past due 90 days or more as to principal
or interest, unless they are adequately secured and in the process of
collection. When loans are placed on non-accrual status, all unpaid accrued
interest is reversed. These loans remain on non-accrual status until the
borrower demonstrates the ability to remain current or the loan is deemed
uncollectible and is charged off. SFSI consumer loans are charged off when
they reach 120 days past due.
Table 9 provides information related to non-performing assets and loans 90
days or more past due. Accruing loans contractually 90 days or more past due
decreased slightly from $387,000 at December 31, 1996, to $252,000 at December
31, 1997. Should the underlying collateral be determined to be insufficient to
satisfy the obligation, the loan is classified and the Company's allowance is
increased accordingly. Historically, the Company's security in residential
loans has been adequate and has acted to limit the Company's exposure to loss.
Loans on non-accrual status decreased from $400,000 to $147,000 from December
31, 1996 to December 31, 1997.
TABLE 9--NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1997 1996 1995 1994 1993
---- ------ ------ ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loans on non-accrual status(1)(2)........... $147 $ 400 $ 645 $313 $ 3
Loans past due 90 days or more.............. 252 387 211 351 372
---- ------ ------ ---- ----
Total non-performing loans.................. 399 787 856 664 375
Other real estate owned..................... 411 767 309 157 244
---- ------ ------ ---- ----
Total non-performing assets................. $810 $1,554 $1,165 $821 $619
==== ====== ====== ==== ====
Percentage of non-performing loans to total
loans...................................... 0.24% 0.54% 0.68% 0.61% 0.42%
Percentage of non-performing assets to total
loans...................................... 0.49 1.06 0.93 0.76 0.69
</TABLE>
- --------
(1) There were no impaired loans for the years indicated.
(2) The interest income that would have been earned and received on non-
accrual loans was not material.
INVESTMENT SECURITIES
The investment securities portfolio consists of U.S. Treasury securities,
obligations of U.S. government agencies, obligations of states and political
subdivisions and mortgage-backed securities (MBS). MBS consist of 15 year and
30 year fixed and 7 year balloon mortgage securities, underwritten and
guaranteed by FNMA, FHLMC and GNMA, government-sponsored agencies.
Securities, including those classified as held to maturity and available for
sale, increased from $33.0 million at December 31, 1995 to $41.6 million at
December 31, 1996, to $58.9 million at December 31, 1997.
30
<PAGE>
TABLE 10--DEBT SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------
AVERAGE WEIGHTED
CARRYING ESTIMATED MATURITY AVERAGE
VALUE FAIR VALUE IN YEARS YIELD
-------- ---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U. S. Treasury securities and obliga-
tions of U.S. government agencies:
Over one through five years.......... $ 2,755 $ 2,755 2.6 6.39%
Over five through ten years.......... 16,906 16,906 8.10 7.22
Over ten years....................... 4,035 4,035 14.8 7.50
------- -------
Total.............................. 23,696 23,696 7.17
Obligations of states and political
subdivision:
Within one year...................... 437 437 0.5 9.20(1)
Over one through five years.......... 2,452 2,452 3.5 6.98(1)
Over five through ten years.......... 5,036 5,036 7.8 7.70(1)
Over ten years....................... 1,833 1,833 12.3 8.23(1)
------- -------
Total.............................. 9,758 9,758 7.68(1)
Mortgage-backed securities............. 3,356 3,356 7.51
------- -------
Total debt securities available for
sale.................................. $36,810 $36,810
======= =======
</TABLE>
TABLE 11--DEBT SECURITIES HELD TO MATURITY
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------
AVERAGE WEIGHTED
CARRYING ESTIMATED MATURITY AVERAGE
VALUE FAIR VALUE IN YEARS YIELD
-------- ---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U. S. Treasury securities and obliga-
tions of U.S. government agencies:
Over one through five years.......... $ 4,413 $ 4,393 2.8 5.87%
Over five through ten years.......... 498 501 5.7 5.81
------- -------
Total.............................. 4,911 4,894 5.86
Obligations of states and political
subdivisions:
Within one year...................... 1,675 1,685 0.5 8.67(1)
Over one through five years.......... 5,968 5,987 3.1 7.11(1)
Over five through ten years.......... 4,713 4,721 7.4 7.44(1)
Over ten years....................... 2,557 2,581 12.7 8.27(1)
------- -------
Total.............................. 14,913 14,974 7.55(1)
Mortgage-backed securities............. 2,287 2,335 7.52
------- -------
Total debt securities held to maturi-
ty.................................... $22,111 $22,203
======= =======
</TABLE>
- --------
(1) The weighted average yield on non-taxable securities is reflected on a
tax equivalent basis assuming a federal income tax rate of 34% for all
periods presented.
31
<PAGE>
TABLE 11A--ANALYSIS OF DEBT SECURITIES
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. gov-
ernment agencies..................................... $23,696 $ 5,118 $ 4,342
Obligations of states and political subdivision....... 9,758 10,740 11,494
Mortgage-backed securities............................ 3,356 2,802 817
------- ------- -------
Total debt securities available for sale.............. $36,810 $18,660 $16,653
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. gov-
ernment agencies..................................... $ 4,911 $ 5,658 $ 2,284
Obligations of states and political subdivision....... 14,913 13,697 12,175
Mortgage-backed securities............................ 2,287 3,547 1,925
------- ------- -------
Total debt securities held to maturity................ $22,111 $22,902 $16,384
======= ======= =======
</TABLE>
DEPOSITS
Total deposits increased from $185.4 million at December 31, 1996 to $211.5
million at December 31, 1997. Of that increase, time deposits increased by
$16.8 million from 1996 to 1997. Management continues to seek retail and
commercial deposits through its marketing initiatives for transaction and
savings accounts and competitive rates for time deposits. As of December 31,
1997, public funds deposits totaled $25.1 million or 11.9% of total deposits.
These deposits are considered to be a stable source of funds and are targeted
in the Company's deposit marketing initiatives.
TABLE 12--DEPOSITS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Demand (NOW, SuperNOW and Money Market)...................... $ 50,765 $ 46,610
Savings...................................................... 8,877 8,384
Individual retirement accounts............................... 11,058 9,654
Time deposits, $100,000 and over............................. 35,635 29,329
Other time deposits.......................................... 81,112 70,657
-------- --------
Total interest bearing deposits.............................. 187,447 164,634
Total non-interest bearing deposits.......................... 24,051 20,770
-------- --------
Total........................................................ $211,498 $185,404
======== ========
</TABLE>
TABLE 13--MATURITY OF TIME DEPOSITS $100,000 AND OVER
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
1997
--------------
(IN THOUSANDS)
<S> <C>
Three months or less............................................. $ 8,058
Over three months through six months............................. 4,962
Over six months through twelve months............................ 6,340
Over twelve months............................................... 16,275
-------
Total............................................................ $35,635
=======
</TABLE>
32
<PAGE>
OTHER BORROWED FUNDS
Other borrowed funds from the FHLB, Bank of America and BancOne, formerly
First National Bank of Commerce, increased from $7.0 million at December 31,
1996, to $17.6 million at December 31, 1997. The $10.0 million borrowed from
the FHLB was used to purchase debt securities resulting in a favorable
interest rate spread. A $5.0 million revolving line of credit ($4.0 million
outstanding at December 31, 1997) was obtained from Bank of America during
1997 to finance part of the consumer loan portfolio of SFSI. Prior to
obtaining this line of credit, SFSI's funding was provided by the Bank. The
$4.0 million ($3.6 million at December 31, 1997) from BancOne was used to
capitalize MSI and to provide additional equity capital to the Bank.
Additional borrowings above current levels will be evaluated by management,
with consideration given to the growth of the Bank's loan portfolio, liquidity
needs, cost of retail deposits, market conditions, and other factors.
LIQUIDITY
The Company maintains sufficient liquidity to fund loan demand, deposit
withdrawals and debt repayments. Liquidity is managed by retaining sufficient
liquid assets in the form of cash and cash equivalents and core deposits to
meet such demand. Funding and cash flows can also be realized from the
investment securities portfolio and pay downs from the loan portfolio. The
Bank also provides access to the retail deposit market. In addition, the
Company has funds available under a line of credit, federal funds lines and
additional FHLB borrowings to address liquidity needs.
The Company's objectives include preserving an adequate liquidity position.
Asset/liability management is designed to ensure safety and soundness,
maintain liquidity and regulatory capital standards, and achieve an acceptable
net interest margin. The Company continues to experience strong loan demand
and management continues to monitor interest rate and liquidity risks while
implementing appropriate funding and balance sheet strategies.
Net cash provided by operating activities and deposits from customers have
historically been primary sources of liquidity for the Company. Net cash
provided by operating activities totaled $3.7 million, $3.1 million and $2.9
million in 1997, 1996 and 1995, respectively, and $1.4 million for the six
months ended June 30, 1998. The net cash provided by increases in deposits was
$26.1 million, $28.8 million and $17.4 million in 1997, 1996 and 1995,
respectively, and $57.1 million for the six months ended June 30, 1998. Net
cash used in investing activities has been primarily for funding the net
increase in loans of $20.0 million, $21.9 million and $17.2 million in 1997,
1996 and 1995, respectively, and in securities of $16.9 million, $8.8 million
and $.9 million in 1997, 1996 and 1995, respectively. The net cash used in
investing activities has been primarily for funding the net increase in loans
and securities of $19.8 million and $28.1 million, respectively in the six
months ended June 30, 1998. The Company also had net bank borrowings of $6.6
million in 1997 and $7.0 million in 1996. There were no net bank borrowings in
1995 and the six months ended June 30, 1998.
CAPITAL
Regulatory agencies measure capital adequacy within a framework that makes
capital requirements, in part, dependent on the individual risk profiles of
financial institutions. The Company improved its capital position during 1997
due to the increased retained earnings achieved during the year. The Company's
capital to average assets ratio was 7.04% at December 31, 1997 as compared to
7.06% at December 31, 1996. At December 31, 1997, the Company exceeded the
Federal Reserve Board's regulatory definition of a "well capitalized"
institution. See Note 10 to the Consolidated Financial Statements.
ASSET/LIABILITY MANAGEMENT AND MARKET RISK
Asset/liability management control is designed to ensure safety and
soundness, maintain liquidity and regulatory capital standards, and achieve
acceptable net interest income. Management considers interest rate risk to be
the Company's most significant market risk. Interest rate risk is the exposure
to adverse changes in the net interest income as a result of market
fluctuations in interest rates.
Management regularly monitors interest rate risk in relation to prospective
market and business conditions. The Company's Board of Directors sets policy
guidelines establishing maximum limits on the Company's interest rate risk
exposure. Management monitors and adjusts exposure to interest rate
fluctuations as influenced by the Company's loan, investment and deposit
portfolios.
33
<PAGE>
The Company uses an earnings simulation model to analyze net interest income
sensitivity. Potential changes in market interest rates and their subsequent
effect on interest income are then evaluated. The model projects the effect of
instantaneous movements in interest rates of 200 basis points. Assumptions
based on the historical behavior of the Company's deposit rates and balances
in relation to changes in interest rates are also incorporated into the model.
These assumptions are inherently uncertain, and as a result, the model cannot
precisely measure net interest income or precisely predict the impact of
fluctuations in market interest rates on net interest income. Actual results
will differ from the model's simulated results due to timing, magnitude and
frequency of interest rate changes, as well as changes in market conditions
and the application of various management strategies.
Interest rate risk management focuses on maintaining acceptable net interest
income within policy limits approved by the Board of Directors. The Company's
Board of Directors monitors and manages interest rate risk to maintain an
acceptable level of change to net interest income resulting from market
interest rate changes. The Company's interest rate risk policy, as approved by
the Board of Directors, is stated in terms of the change in net interest
income given a 200 basis point immediate and sustained increase or decrease in
market interest rates. The current limits approved by the Board of Directors
are plus or minus 10% of net interest income for a 200 basis point movement.
In 1996, the Company's Board of Directors determined that interest rates
were likely to decline and that this decline could cause net interest income
to fall outside of the 10% range established in the asset/liability policy
because the yield on loans would be adversely affected more than on other
earning assets or the cost of interest bearing liabilities. As a result, in
August of 1996 and January of 1997, the Company purchased interest rate
"floors" in a notional amount of $20 million, which effectively converted
approximately 12% of the Company's loans at December 31, 1997 to a minimum
fixed rate basis. A premium of $258,500 was paid for the floors and is being
amortized over the three-year term. The index used is the three-month LIBOR
rate with a 6% floor rate. The three-month LIBOR rate was 5.72% at June 30,
1998. Through June 30, 1998, the Bank has amortized $147,903 of the premium
and received $108,616, which has been recognized as adjustments to net
interest income.
The following table illustrates the Company's estimated annualized earnings
sensitivity profile as of December 31, 1997:
TABLE 14--INTEREST RATE SENSITIVITY
<TABLE>
<CAPTION>
DECREASE INCREASE
IN RATES-- IN RATES--
200 BASIS POINTS BASE 200 BASIS POINTS
---------------- ------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C>
PROJECTED INTEREST INCOME:
Loans................................. $18,653 $19,684 $21,015
Investment securities................. 4,422 4,666 4,982
Federal funds sold.................... 644 680 726
------- ------- -------
TOTAL INTEREST INCOME................. 23,719 25,030 26,723
PROJECTED INTEREST EXPENSE:
Deposits.............................. 11,635 12,658 13,718
Other borrowed funds.................. 957 1,211 1,465
------- ------- -------
TOTAL INTEREST EXPENSE................ 12,592 13,869 15,183
------- ------- -------
NET INTEREST INCOME................... $11,127 $11,161 $11,540
======= ======= =======
Change from base...................... $ (34) $ 379
% Change from base.................... (0.30)% 3.40%
</TABLE>
Given an immediate, sustained 200 basis point increase to the yield curve
used in the simulation model, it is estimated net interest income would
increase 3.40%. A 200 basis point immediate, sustained decrease to the yield
curve would decrease net interest income by an estimated 0.30%. These
potential changes in net interest income are within the policy guidelines
established by the Company's Board of Directors.
These interest rate sensitivity profiles of the Company at any point in time
will be affected by a number of factors. These factors include the mix of
interest sensitive assets and liabilities and may not be a precise measurement
of the effect of changing interest rates on the Company in the future.
34
<PAGE>
YEAR 2000
The Company continues to implement plans to address the Year 2000 issue. The
issue arises from the fact that many existing computer programs were written
to store only two digits of date-related information in order to more
efficiently handle and store data. Thus, the programs were unable to properly
distinguish between the year 1900 and the year 2000. The Company is in the
process of assessing and converting or replacing various programs, hardware
and instrumentation systems to make them Year 2000 compliant. The Company's
Year 2000 project is comprised of two components--business applications and
equipment.
In assessing the Year 2000 problem, the Company is examining its own
software and equipment, potential problems with borrowers, and potential
problems with government entities and others providing services to the
Company. In addition to computer equipment, the Company is assessing possible
problems with micro-processors embedded within operating equipment, such as
telecommunication equipment, vaults, security and alarm systems, and automated
teller machines. As to borrowers, the Company began assessing the impact of
the failure of a borrower's systems or a borrower's failure to comply with
debt covenant terms regarding Year 2000 issues on the credit quality of the
borrower's loan during 1998 by communicating with its significant existing and
new loan customers and assessing whether the customers need to include
potential remediation and/or replacement of systems as part of their Year 2000
program and when they will have that completed.
The Company's President is Chairman of its Year 2000 committee. The
Committee has developed an action plan to devote appropriate personnel
resources to achieve Year 2000 compliance in a timely manner. Such personnel
are working with the Company's Board of Directors and other members of
management in completing the plan. The Company is also subject to oversight by
the FDIC, the Federal Reserve Board and the Mississippi Department of Banking
and Finance with respect to Year 2000 compliance.
The Company has completed the Year 2000 awareness and assessment phases of
the plan and has entered into the remediation phase. Management expects the
implementation phase of the Year 2000 plan to be completed by December 31,
1998. Testing and any required corrective actions will be completed in the
fourth quarter of 1998 and in 1999. The Company had expended approximately
$10,000 through June 30, 1998 and projects the additional cost of remediation
will be from $125,000 to $150,000, of which $25,000 to $50,000 will be
incurred in 1999. To date, independent analysis of the Company's Year 2000
exposure has not been obtained. Approximately $60,000 to $70,000 is projected
to be capitalized because certain systems and equipment are being replaced and
these costs are associated with purchasing the new systems. Corrective actions
to make the Company's core operating systems Year 2000 compliant will be made
by the Company's software providers under existing licensing agreements with
the Company at no additional expense. These expenses could vary from current
estimates if the scope of the Company's Year 2000 remediation exceeds
management's projections.
The Year 2000 issue principally involves the installation of selected
software releases which are Year 2000 compliant. Certain of these
installations would have been scheduled for completion by the Year 2000 in the
normal course of business. The Year 2000 compliance of the Company's software
suppliers will be essential for the Company's successful implementation of its
Year 2000 objectives.
The Company is examining the Year 2000 issue's impact on services such as
payroll and investment securities operations that are provided by third
parties. Other vendors either have or will be contacted by Company personnel
by December 31, 1998 in order to evaluate their response capabilities and
readiness for Year 2000. Presently, the Company has no reason to believe that
its software providers, service providers and vendors will not be able to
adequately address the Year 2000 issue. To the extent the software providers',
service providers' and vendors' responses are not satisfactory, the Company
will consider new business relationships with alternate providers or vendors
as necessary and to the extent alternatives are available.
The Company is in the process of developing a contingency plan for Year 2000
issues, and intends to have such a plan established by March 31, 1999. The
planning effort includes critical Company areas such as operations, personnel,
network and business systems as well as systems external to the Company. The
plan will address various alternatives and will include assessing a variety of
scenarios that could emerge in the year 2000 and require the Company to react.
Management is also aware that the Year 2000 problem could also present
liquidity challenges as the year 2000 approaches. Assessing liquidity needs is
an integral part of the Company's Year 2000 plan, although it is too early to
determine whether additional liquidity may be needed.
35
<PAGE>
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
RESULTS OF OPERATIONS
For the six months ended June 30, 1998, net interest income increased
$657,000 over the $4.2 million earned during the first six months of 1997.
During the first six months of 1998, average interest-earning assets were
$259.7 million, an increase of $56.3 million over the first six months of 1997.
This increase was primarily due to increases in the average loans of $24.6
million and in the average investment securities portfolio of $22.9 million.
The yield on average interest-earning assets decreased from 9.07% during the
first six months of 1997 to 8.76% during the first six months of 1998,
principally as a result of lower yields on investment securities during the six
months ended June 30, 1998 as compared to the same period in 1997. Total
average interest-bearing liabilities increased from $185.5 million in the first
six months of 1997 to $236.0 million in the first six months of 1998. This
increase was due to increases in average transaction accounts of $15.5 million,
average time deposits of $25.0 million and average other borrowings of $9.7
million. The cost of average interest-bearing liabilities increased from 5.42%
during the first six months of 1997 to 5.53% in the first six months of 1998
resulting from higher costs of time deposits and other borrowings for each of
the six months ended June 30, 1998 as compared to the same period in 1997.
The Company's net interest margin was 3.74% during the first half of 1998 as
compared to 4.13% for the first half of 1997. The reduction in net interest
margin resulted from an increase in the rate on average interest-bearing
liabilities of 0.11% and a reduction in the yield on average earning assets of
0.31%. The reduction in net interest margin was partially offset by a net
increase in average earning assets over average interest bearing liabilities of
$23.7 million.
Table 15 provides detailed information as to average balance, interest
income/expense, and rates by major balance sheet category for the six months
ended June 30, 1998 and 1997.
TABLE 15--AVERAGE BALANCE SHEETS AND RATES FOR JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------- -------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
EARNING ASSETS:
U.S. Treasury securities
and obligations of U.S.
agencies............... $ 29,243 $ 983 6.72% $ 17,209 $ 570 6.62%
Obligations of state and
political
subdivisions (1)....... 29,797 1,114 7.48 23,974 917 7.65
Mortgage-backed
securities............. 12,184 320 5.26 7,152 232 6.49
Federal Home Loan Bank
stock.................. 874 15 3.43 694 9 2.59
Federal funds sold...... 14,448 390 5.40 5,795 153 5.28
Total loan and fees..... 173,127 8,934 10.32 148,540 7,652 10.30
-------- ------- -------- ------
TOTAL EARNING ASSETS.... 259,673 11,756 9.05 203,364 9,533 9.38
Less: Allowance for loan
losses................. (3,289) (2,977)
Non-earning assets:
Cash and due from
banks.................. 10,101 7,764
Premises and equipment,
net.................... 7,116 6,329
Other assets............ 5,279 6,022
-------- --------
TOTAL ASSETS............ $278,880 $220,502
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
INTEREST BEARING
LIABILITIES:
Transaction accounts.... $ 68,803 1,616 4.70 $ 53,304 1,220 4.58
Savings accounts........ 9,055 118 2.61 8,763 124 2.83
Time deposits........... 140,432 4,177 5.95 115,470 3,401 5.89
Other borrowed funds.... 17,670 613 6.94 7,950 280 7.04
-------- ------- -------- ------
TOTAL INTEREST BEARING
LIABILITIES............ 235,960 6,524 5.53 185,487 5,025 5.42
------- ----- ------ -----
NON-INTEREST BEARING
LIABILITIES:
Non-interest bearing
deposits............... 24,329 19,192
Other liabilities....... 1,533 1,940
Stockholders' equity.... 17,058 13,883
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY... $278,880 $220,502
======== ========
Net interest income..... $ 5,232 $4,508
======= ======
Net interest spread..... 3.52% 3.96%
===== =====
Net interest margin..... 4.03% 4.43%
===== =====
</TABLE>
- --------
Note: Calculations include non-accruing loans in the average loan amounts
outstanding.
(1) The interest earned on non-taxable securities is reflected on a tax
equivalent basis assuming a federal income tax rate of 34% for all
periods presented.
36
<PAGE>
The following table presents the extent to which changes in interest rates
and changes in the volume of interest earning assets and interest bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to: (i) changes attributable to changes in volume; (ii) changes
attributable to changes in rate; and (iii) the net change.
TABLE 16--VOLUME/RATE VARIANCE ANALYSIS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 COMPARED
TO SIX MONTHS ENDED
JUNE 30, 1997
----------------------
INCREASE/(DECREASE)
DUE TO
----------------------
TOTAL NET
CHANGE VOLUME RATE
--------- ------ -----
(IN THOUSANDS)
<S> <C> <C> <C>
INTEREST INCOME(1):
U.S. Treasury securities and obligations of U.S.
agencies............................................. $ 413 $ 405 $ (8)
Obligations of state and political subdivisions....... 197 218 (21)
Mortgage-backed securities............................ 88 132 (44)
Federal Home Loan Bank stock.......................... 6 3 3
Federal funds sold.................................... 237 234 3
Total loans and fees.................................. 1,282 1,329 (47)
------ ------ -----
TOTAL INCREASE (DECREASE) IN INTEREST INCOME.......... 2,223 2,321 (98)
INTEREST EXPENSE:
Interest bearing liabilities:
Transaction accounts.................................. 396 364 32
Saving accounts....................................... (6) 4 (10)
Time deposits......................................... 776 743 33
Other borrowed funds.................................. 333 337 (4)
------ ------ -----
TOTAL INCREASE IN INTEREST EXPENSE.................... 1,499 1,448 51
------ ------ -----
INCREASE (DECREASE) IN NET INTEREST INCOME............ $ 724 $ 873 $(149)
====== ====== =====
</TABLE>
- -------
(1) Interest income for loans on non-accrual status has been excluded from
interest income.
NON-INTEREST INCOME
Non-interest income was $1.7 million during the first six months of 1998, up
from $1.3 million during the first six months of 1997. This increase was
principally due to the gain on sale of securities available for sale of
$220,000 in February of 1998, which is reflected in other operating income.
Other increases in non-interest income were from increases in mortgage loan
fees from increased originations, other service charges and fees from
increased volumes in the Company's brokerage services and increased
commissions on credit life insurance resulting from increased loan volume.
Table 17 illustrates the Company's primary sources of non-interest income at
June 30, 1998 and 1997 and the changes from one period to another.
TABLE 17--ANALYSIS OF NON-INTEREST INCOME
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, PERCENT
--------------- INCREASE
1998 1997 (DECREASE)
------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Service charges on deposit accounts.................. $ 884 $ 797 10.9%
Mortgage loan fees................................... 182 162 12.3
Commissions on credit life insurance................. 207 181 14.4
Other operating income............................... 415 117 254.7
------- -------
Total................................................ $ 1,688 $ 1,257 34.3
======= =======
</TABLE>
37
<PAGE>
NON-INTEREST EXPENSE
Total non-interest expense increased from $3.6 million in the first six
months of 1997 to $4.0 million for the first six months of 1998. The increase
for the six months ended June 30, 1998 was primarily attributable to $293,000
increase in salaries and employee benefits. The Company's staffing levels
increased by 12 full-time equivalent employees (FTEs) to 129 FTEs at June 30,
1998 as compared with 117 FTEs at June 30, 1997. The increase is related
primarily to staffing increases at the Petal banking branch, SFSI Petal
office, MSI and the brokerage services department. The Company's efficiency
ratio was 61.8% in the first six months of 1998 compared to 66.9% for the
comparable period in 1997.
TABLE 18--ANALYSIS OF NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, PERCENT
--------------- INCREASE
1998 1997 (DECREASE)
------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Salaries and employee benefits....................... $ 2,269 $ 1,976 14.8%
Occupancy expense.................................... 311 307 1.3
Furniture and equipment expense...................... 435 421 3.3
Other operating expenses............................. 1,026 945 8.6
------- -------
Total................................................ $ 4,041 $ 3,649 10.7
======= =======
</TABLE>
INCOME TAX EXPENSE
The Company's effective income tax rate decreased from 26.7% for the six
months ended June 30, 1997 to 25.0% for the six months ended June 30, 1998.
The decrease in the effective income tax rate is primarily attributable to an
increase in non-taxable income as a percentage of pretax income.
38
<PAGE>
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND DECEMBER 31, 1997
LOAN PORTFOLIO
The Company continued to experience loan growth throughout its markets in
1998. Total loans increased 11.9% to $186.0 million at June 30, 1998, compared
to $166.2 million at December 31, 1997. This increase in loans was
attributable to a $10.4 million or 40.8% increase in commercial loans, a $6.4
million or 7.2% increase in real estate loans and a $3.0 million or 5.7%
increase in consumer loans. The overall rise in loan volume was the result of
a continuing favorable interest rate environment and increased loan demand
from existing customers, particularly from commercial loan customers.
Management anticipates that continued favorable economic conditions in the
Company's market area will continue to drive demand for small and medium-sized
business loans. In addition the Company expects that consumer loan demand will
also remain strong.
TABLE 19--LOANS BY TYPE
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Real estate:
Residential.................................... $ 58,018 $ 55,406
Mortgage loans held for sale................... 781 421
Construction................................... 6,257 4,226
Commercial..................................... 30,011 28,591
Consumer........................................ 54,929 51,965
Commercial...................................... 35,978 25,556
-------- --------
Total Loans..................................... $185,974 $166,165
======== ========
</TABLE>
The table below illustrates the Company's fixed rate maturities and
repricing frequency for the loan portfolio:
TABLE 20--SELECTED LOAN DISTRIBUTION
<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
-----------------------------------
ONE OVER ONE OVER
YEAR THROUGH FIVE
TOTAL OR LESS FIVE YEARS YEARS
-------- ------- ---------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed rate maturities...................... $170,394 $82,578 $72,712 $15,104
Variable rate repricing frequency.......... 15,580 9,274 2,603 3,703
-------- ------- ------- -------
Total...................................... $185,974 $91,852 $75,315 $18,807
======== ======= ======= =======
</TABLE>
At June 30, 1998, 91.6% of the loan portfolio was classified as having fixed
rate maturities. Of the fixed rate portfolio, 46.5% of these loans had
maturities of one year or less when originated or renewed. Such maturities
allow the Company to reprice its portfolio frequently.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses is regularly evaluated by management and
approved by the Board of Directors and maintained at a level believed to be
adequate to absorb future loan losses in the Company's portfolio. The
provision for loan losses necessary to maintain an adequate allowance is based
upon an assessment of current economic conditions, delinquency trends and
ratios, changes in the mixture and levels of the various categories of loans,
historical charge-offs, recoveries, and other information. Management believes
that the allowance for loan losses at June 30, 1998 was adequate. Although
management believes it uses the best information available to make allowance
provisions, future adjustments which could be material may be necessary if
management's assumptions differ from the loan portfolio's actual future
performance.
39
<PAGE>
The allowance for loan losses increased $285,000 to $3.4 million from
December 31, 1997 to June 30, 1998. The increase is primarily attributable to
an increase in the volume of loans. The Company's allowance for loan losses to
total loan ratio decreased from 1.87% at December 31, 1997 to 1.82% at June
30, 1998.
Net charge-offs were only $75,000 during the six months ended June 30, 1998,
compared to $213,000 to the same period for 1997. Of these net charge-offs for
the same periods $58,000 and $75,000, respectively, pertained to SFSI. The
Company's consumer loan portfolio accounted for the majority of net charge-
offs for the six months ended June 30, 1998 and 1997.
TABLE 21--SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
AS OF
AND FOR THE
SIX MONTHS
ENDED JUNE 30,
----------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Allowance for loan losses at beginning of period............ $ 3,101 $ 2,837
Charge-offs:
Real Estate............................................... -- --
Consumer.................................................. (147) (204)
Commercial................................................ (40) (91)
------- -------
Total................................................... (187) (295)
Recoveries:
Real Estate............................................... 24 11
Consumer.................................................. 71 11
Commercial................................................ 17 60
------- -------
Total................................................... 112 82
------- -------
Net loan charge-offs........................................ (75) (213)
Provision for loan losses................................... 360 289
------- -------
Allowance for loan losses at end of period.................. $ 3,386 $ 2,913
======= =======
RATIOS:
Allowance for loan losses to total loans.................... 1.82% 1.87%
Net loan charge-offs to average loans outstanding for the
period..................................................... 0.04 0.14
Allowance for loan losses to non-performing loans........... 475 603
</TABLE>
The following table is management's allocation of the allowance for loan
losses by loan type. Allowance allocation is based on management's assessment
of economic conditions, past loss experience, loan volume, loan quality, past
due history and other factors. Since these factors are subject to change, the
allocation is not necessarily predictive of future portfolio performance.
TABLE 22--MANAGEMENT'S ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
------------------ ------------------
PERCENT PERCENT
OF LOANS OF LOANS
ALLOCATED TO TOTAL ALLOCATED TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS
--------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Real Estate............................... $ 953 51.1% $ 936 53.3%
Consumer.................................. 1,447 29.5 1,355 31.3
Commercial................................ 664 19.4 546 15.4
Unallocated............................... 322 -- 264 --
------ ----- ------ -----
Total..................................... $3,386 100.0% $3,101 100.0%
====== ===== ====== =====
</TABLE>
40
<PAGE>
ASSET QUALITY
Loans (including any impaired loans under SFAS 114 and 118) are placed on
non-accrual status when they become past due 90 days or more as to principal
or interest, unless they are adequately secured and in the process of
collection. When loans are placed on non-accrual status, all unpaid accrued
interest is reversed. These loans remain on non-accrual status until the
borrower demonstrates the ability to remain current or the loan is deemed
uncollectible and is charged off. SFSI consumer loans are charged off when
they reach 120 days past due.
Table 23 provides information related to non-performing assets and loans 90
days or more past due. Accruing loans contractually past due 90 days or more
were $261,000 at June 30, 1998 and $252,000 at December 31, 1997. Loans on
non-accrual status were $452,000 and $147,000 at June 30, 1998 and
December 31, 1997. At June 30, 1998, non-performing loans to total loans was
0.38%, up from 0.24% at December 31, 1997. Should the underlying collateral be
determined to be insufficient to satisfy the obligation, the loan is
classified and the Company's allowance is increased accordingly. Historically,
the Company's security in residential loans has been adequate and has limited
the Company's exposure to loss.
TABLE 23--NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
(IN THOUSANDS)
<S> <C> <C>
Loans on non-accrual status (1)(2)....................... $ 452 $147
Loans past due 90 days or more........................... 261 252
------ ----
Total non-performing loans............................... 713 399
Other real estate owned.................................. 417 411
------ ----
Total non-performing assets.............................. $1,130 $810
====== ====
Percentage of non-performing loans to total loans........ 0.38% 0.24%
Percentage of non-performing assets to total loans....... 0.61 0.49
</TABLE>
- --------
(1) There were no impaired loans during the period and year indicated.
(2) The interest income that would have been earned and received on non-
accrual loans was not material.
41
<PAGE>
INVESTMENT SECURITIES
The investment securities portfolio consists of U.S. Treasury securities,
obligations of U.S. government agencies, obligations of states and political
subdivisions and mortgage-backed securities (wMBS). MBS consist of 15 year and
30 year fixed, 30 year adjustable rate and 7 year balloon mortgage securities,
underwritten and guaranteed by FNMA, FHLMC and GNMA, government-sponsored
agencies.
Securities, including those classified as held to maturity and available for
sale, increased from $58.9 million at December 31, 1997 to $86.8 million at
June 30, 1998.
TABLE 24--DEBT SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------------------------------
AVERAGE WEIGHTED
CARRYING ESTIMATED MATURITY AVERAGE
VALUE FAIR VALUE IN YEARS YIELD
-------- ---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U. S. Treasury and U.S. government
agencies:
Over one through five years.......... $ 2,002 $ 2,002 3.1 6.54%
Over five through ten years.......... 19,709 19,709 8.1 6.72
Over ten years....................... 7,885 7,885 14.6 7.15
------- -------
Total.............................. 29,596 29,596 6.74
Obligations of states and political
subdivision:
Within one year...................... 487 487 0.4 7.74(1)
Over one through five years.......... 3,055 3,055 3.7 7.23(1)
Over five through ten years.......... 4,736 4,736 7.2 7.68(1)
Over ten years....................... 2,586 2,586 12.9 8.56(1)
------- -------
Total.............................. 10,864 10,864 7.76(1)
Mortgage-backed securities............. 13,756 13,756 6.21
------- -------
Total debt securities available for
sale.................................. $54,216 $54,216
======= =======
</TABLE>
TABLE 25--DEBT SECURITIES HELD TO MATURITY
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------------------------------
AVERAGE WEIGHTED
CARRYING ESTIMATED MATURITY AVERAGE
VALUE FAIR VALUE IN YEARS YIELD
-------- ---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U. S. Treasury and U. S. government
agencies:
Within one year...................... $ 499 $ 498 0.8 5.23%
Over one through five years.......... 6,585 6,584 2.8 5.61
Over five through ten years.......... 500 506 5.2 5.81
------- -------
Total.............................. 7,584 7,588 5.60
Obligations of states and political
subdivision:
Within one year...................... 1,709 1,713 0.6 7.21(1)
Over one through five years.......... 6,722 6,750 2.1 7.17(1)
Over five through ten years.......... 5,989 6,004 7.5 7.27(1)
Over ten years....................... 8,834 8,750 13.3 7.61(1)
------- -------
Total.............................. 23,254 23,217 7.36(1)
Mortgage-backed securities............. 1,755 1,794 6.95
------- -------
Total debt securities held to maturi-
ty.................................... $32,593 $32,599
======= =======
</TABLE>
- --------
(1) The weighted average yields on non-taxable securities is reflected on a
tax equivalent basis assuming a federal income tax rate of 34% for all
periods presented.
42
<PAGE>
DEPOSITS
Total deposits increased $57.1 million or 27.0% from $211.5 million at
December 31, 1997, to $268.6 million at June 30, 1998. Interest-bearing demand
deposits increased 54.4% to $78.4 million from December 31, 1997 to June 30,
1998 and time deposits increased $25.1 million or 21.5% to $141.9 million for
the same period. Public funds comprised $34.2 million of the increase. Public
funds constituted 22.1% of deposits at June 30, 1998. Management continues to
seek retail and commercial deposits, as well as public funds, through new
products and marketing initiatives.
TABLE 26--DEPOSITS
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Demand (NOW, SuperNOW and Money Market)......... $ 78,386 $ 50,765
Savings......................................... 9,526 8,877
Individual retirement accounts.................. 12,548 11,058
Time deposits, $100,000 and over................ 50,799 35,635
Other time deposits............................. 91,067 81,112
-------- --------
Total interest bearing deposits................. 242,326 187,447
Total non-interest bearing deposits............. 26,270 24,051
-------- --------
Total........................................... $268,596 $211,498
======== ========
</TABLE>
TABLE 27--MATURITY OF TIME DEPOSITS $100,000 AND OVER
<TABLE>
<CAPTION>
AS OF
JUNE 30, 1998
--------------
(IN THOUSANDS)
<S> <C>
Three months or less............................................. $12,841
Over three months through six months............................. 9,386
Over six months through twelve months............................ 6,119
Over twelve months............................................... 22,453
-------
Total............................................................ $50,799
=======
</TABLE>
OTHER BORROWED FUNDS
Other borrowed funds from the FHLB, Bank of America and BancOne, formerly
First National Bank of Commerce, increased from $17.6 million at December 31,
1997, to $17.7 million at June 30, 1998. Additional borrowings above current
levels will be evaluated by management, with consideration given to the growth
of the Company's loan portfolio, liquidity needs, cost of retail deposits,
market conditions and other factors.
LIQUIDITY
The Company maintains sufficient liquidity to fund loan demand, deposit
withdrawals and debt repayments. Liquidity is managed by retaining sufficient
liquid assets in the form of cash and cash equivalents and core deposits to
meet such demand. Funding and cash flows can also be realized from the
investment securities portfolio and pay downs from the loan portfolio. The
Bank also provides access to the retail deposit market. In addition, the
Company has funds available under a line of credit, federal funds lines, and
additional FHLB borrowings to address liquidity needs.
The Company's objectives include preserving an adequate liquidity position.
Asset/liability management is designed to ensure safety and soundness,
maintain liquidity and regulatory capital standards, and achieve an acceptable
net interest margin. The Company continues to experience strong loan demand
and management
43
<PAGE>
continues to monitor interest rate and liquidity risks while implementing
appropriate funding and balance sheet strategies.
CAPITAL
Regulatory agencies measure capital adequacy within a framework that makes
capital requirements, in part, dependent on the individual risk profiles of
financial institutions. The Company's capital to average assets ratio was
6.30% at June 30, 1998. At June 30, 1998, the Company exceeded the Federal
Reserve Board's regulatory definition of a "well capitalized" institution.
ASSET/LIABILITY MANAGEMENT AND MARKET RISK
The following table illustrates the Company's estimated annualized earnings
sensitivity profile as of June 30, 1998:
TABLE 28--INTEREST RATE SENSITIVITY
<TABLE>
<CAPTION>
DECREASE INCREASE
IN RATES-- IN RATES--
200 200
BASIS POINTS BASE BASIS POINTS
------------ ------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
PROJECTED INTEREST INCOME:
Loans......................................... $18,025 $19,122 $20,491
Investment securities......................... 3,871 4,106 4,400
Federal funds sold............................ 737 782 838
------- ------- -------
TOTAL INTEREST INCOME......................... 22,633 24,010 25,729
PROJECTED INTEREST EXPENSE:
Deposits...................................... 10,810 11,830 12,885
Other borrowed funds.......................... 1,113 1,218 1,327
------- ------- -------
TOTAL INTEREST EXPENSE........................ 11,923 13,048 14,212
------- ------- -------
NET INTEREST INCOME........................... $10,710 $10,962 $11,517
======= ======= =======
Change from base.............................. $ (252) $ 555
% Change from base............................ (2.30)% 5.06%
</TABLE>
The interest rate sensitivity profile of the Company at any point in time
will be affected by a number of factors. These factors include the mix of
interest sensitive assets and liabilities as well as their relative pricing
schedules. The table above may not be a precise measurement of the effect of
changing interest rates on the Company in the future.
44
<PAGE>
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of July 31, 1998 held by each
director and each executive officer named in the Summary Compensation Table,
by all directors and executive officers as a group, and by each person who is
known by the Company to own beneficially more than five percent (5%) of each
such class (who is not an executive officer or director of the Company), and
as adjusted to reflect the sale of 1,363,636 shares of Common Stock by the
Company in the Offering. Except as otherwise indicated, no person named in the
table shares voting or investment power with respect to his or her
beneficially owned shares, and the address of each shareholder is the same as
the address of the Company.
<TABLE>
<CAPTION>
PERCENT(1)
-----------------
PRIOR TO AFTER
NAME OF BENEFICIAL OWNER NUMBER OFFERING OFFERING
- ------------------------ --------- -------- --------
<S> <C> <C> <C>
Executive Officers and Directors
Robert W. Roseberry(2)............................ 422,040 15.3% 10.2%
Jane P. Roberts(3)................................ 88,500 3.2 2.1
Kenneth M. Lott(4)................................ 43,140 1.6 1.0
O. B. Black, Jr.(5)............................... 236,820 8.6 5.7
William H. Jordan................................. 185,340 6.7 4.5
James R. Pylant(6)................................ 163,440 5.9 4.0
Monty C. Roseberry................................ 100,140 3.6 2.4
All Executive Officers and Directors as a Group (9
persons)......................................... 1,255,140 45.4 30.4
Other 5% Shareholders
Donna R. Byrd(7).................................. 236,100 8.5 5.7
James E. Roseberry(8)............................. 288,060 10.4 7.0
</TABLE>
- --------
(1) The percentages prior to the Offering are calculated based on 2,767,071
shares issued and outstanding on the date hereof. Percentages after the
closing of the Offering are based on 4,130,707 shares to be issued and
outstanding upon consummation of the Offering.
(2) Includes 3,600 shares held by spouse with respect to which Mr. Roseberry
shares voting and investment power.
(3) Includes 69,120 shares held by spouse with respect to which Ms. Roberts
shares voting and investment power.
(4) Includes 2,340 shares held by spouse with respect to which Mr. Lott shares
voting and investment power.
(5) Includes 76,500 shares held by spouse as trustee of a trust with respect
to which Mr. Black shares voting and investment power and 98,400 shares
held by a family trust with respect to which Mr. Black's adult daughter is
the trustee and Mr. Black shares voting and investment power.
(6) Includes 42,900 shares held by spouse with respect to which Mr. Pylant
shares voting and investment power.
(7) Ms. Byrd is not a director or executive officer of the Company. Her
address is 1072 Talawah Road, Purvis, Mississippi 39475.
(8) Mr. Roseberry is not an executive officer or director of the Company. His
address is 122 Dean Rhyne Road, Purvis, Mississippi 39475.
45
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information concerning the executive
officers and directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
<S> <C> <C>
Robert W. Roseberry......... 48 Chairman and Chief Executive Officer, Director
Jane P. Roberts............. 61 Vice Chairman and Secretary, Director
Kenneth M. Lott............. 43 President and Chief Operating Officer, Director
W. H. Macko................. 48 Senior Vice President
Donna T. Rutland............ 31 Chief Financial Officer and Treasurer
O. B. Black, Jr............. 73 Director
William H. Jordan........... 77 Director
James R. Pylant............. 59 Director
Monty C. Roseberry.......... 58 Director
</TABLE>
Robert W. Roseberry began his career with the Bank in 1971 and has served in
numerous positions. In 1986, he became Chief Executive Officer of the Bank and
the Company. He has served as a director of the Bank since 1971 and as a
director of the Company since its formation in 1986. Robert W. Roseberry and
Monty C. Roseberry are half-brothers.
Jane P. Roberts has worked with the Bank for 35 years. She assumed her
current position of Vice Chairman in 1998. She has served as Secretary since
1986 and was the Secretary/Treasurer from 1986 to July of 1998. She has served
as a director of the Bank since 1981 and as a director of the Company since
its formation in 1986. Ms. Roberts and James R. Pylant are first cousins.
Kenneth M. Lott began his banking career at First Mississippi National Bank
in Hattiesburg in 1976. In 1988, he joined the Bank as Senior Vice President.
He assumed his present position of President and Chief Operating Officer of
the Company in July of 1998. He has served as a director of the Company since
1992.
W. H. Macko has 22 years of banking experience, including loan collections,
commercial and consumer lending, branch administration and loan operations. He
joined the Bank in 1989 as Vice President and Branch Manager and assumed his
present position of Senior Vice President of the Company in July of 1998.
Donna T. Rutland, C.P.A., worked as a staff accountant with the accounting
firm of McArthur, Thames, Slay and Dews, PLLC from 1988 to 1993. In 1993, she
joined the Bank as Internal Auditor. In 1995, Ms. Rutland became Vice
President and Controller of the Bank. In July of 1998, she assumed her present
position as Chief Financial Officer and Treasurer of the Company.
O. B. Black, Jr. has served as a director of the Company since its formation
in 1986. He was President of the Bank from 1975 to 1986 and retired as Vice
Chairman of the Bank in 1988.
William H. Jordan served as the Lamar County Engineer from 1966 to 1986. He
retired from the Mississippi National Guard in 1976 as a full Colonel. He has
served as a director of the Company since 1991.
James R. Pylant has served as a director of the Company since its formation
in 1986. He currently serves as President of Lamar County Development Corp.,
which is a manufacturing company. Mr. Pylant and Jane P. Roberts are first
cousins.
Monty C. Roseberry has served as a director of the Company since its
formation in 1986. Prior to retiring in 1995, Mr. Roseberry worked as a lab
technician for Amerada Hess Corporation. Mr. Roseberry and Robert W. Roseberry
are half-brothers.
46
<PAGE>
None of the Company's directors hold any directorships in companies with a
class of securities registered pursuant to Section 12 of the Securities
Exchange Act or subject to the requirements of Section 15(d) of such Act or
any company registered as an investment company under the Investment Company
Act of 1940, as amended.
The directors of the Company were elected at the most recent annual meeting
of shareholders held on January 29, 1998 to a one year term. The executive
officers of the Company are selected by the Board of Directors and hold office
at the discretion of the Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established an audit committee consisting of O.
B. Black, Jr., W. H. Jordan, James R. Pylant, and Monty C. Roseberry. The
audit committee recommends the appointment of auditors and oversees the
accounting and audit functions of the Company.
The Board of Directors has established a compensation committee which has
the responsibility, among other things, of establishing the salary of the
executive officers of the Company and examining periodically the compensation
structure of the Company. The members of the compensation committee are O.B.
Black, Jr., William H. Jordan and Robert W. Roseberry.
DIRECTOR COMPENSATION
Directors receive a fee of $700 for each meeting of the Board of Directors
of the Company and the Bank and for each committee meeting attended.
Historically, the Company has paid the directors an annual bonus in December
of each year. In 1997, the bonus was $4,200 per person.
EXECUTIVE COMPENSATION
Shown below is information concerning the compensation for services in all
capacities to the Company for the years ended 1997, 1996 and 1995 of the CEO
and the Company's most highly compensated officers other than the CEO:
Summary Compensation Table
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ------------
SECURITIES ALL OTHER
OTHER ANNUAL UNDERLYING COMPENSA-
NAME & PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) COMPENSATION($) OPTIONS(#) TION ($)(2)
- ------------------------- ---- ------------- --------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Roseberry..... 1997 141,530 23,200 0 0 13,308
Chairman of the Board & 1996 132,375 22,050 0 0 11,516
Chief Executive Officer 1995 123,300 21,000 0 0 15,947
Jane P. Roberts......... 1997 128,050 20,100 0 0 11,838
Vice Chairman and 1996 121,350 19,845 0 0 10,255
Secretary 1995 112,800 18,900 0 0 14,085
Kenneth M. Lott......... 1997 98,100 12,950 0 0 8,317
President and Chief 1996 92,229 12,102 0 0 7,112
Operating Officer 1995 79,569 13,772 0 0 8,306
</TABLE>
- --------
(1) Includes directors' fees.
(2) Includes profit sharing, ESOP and 401(k) plan contributions.
47
<PAGE>
EXECUTIVE SALARY CONTINUATION AGREEMENTS
The Company has entered into Executive Salary Continuation Agreements with
Mr. Roseberry, Ms. Roberts and Mr. Lott to provide incentives to these
officers to continue their employment with the Company on a long-term basis.
The agreements provide for the continuation of annual salary payments upon
retirement at age 65 or later for a period of 180 months (15 years) in the
amounts of $50,500, $44,900 and $57,200 in the case of Mr. Roseberry, Ms.
Roberts and Mr. Lott, respectively. The agreements also provide for continued
salary payments if the executive dies, becomes disabled or if the executive's
employment is terminated by the Company.
STOCK INCENTIVE PLAN
The Company has reserved 200,000 shares of Common Stock under the Company's
Stock Incentive Plan, which was adopted in August of 1998. Under this Plan,
the Board of Directors of the Company may grant options to employees of the
Company and its subsidiaries for up to ten year terms and at an option
exercise price equal to the fair market value of the stock on the date of the
grant. No options have been granted under this plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to August of 1998, the Company did not have a compensation committee.
Robert W. Roseberry, Jane P. Roberts and Kenneth M. Lott participated in
deliberations of the Company's Board of Directors concerning executive officer
compensation set forth in the Summary Compensation Table. The Board appointed
O. B. Black, Jr., William H. Jordan and Robert W. Roseberry to the
Compensation Committee in August of 1998.
48
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April of 1998, the Company purchased 12,000 shares of Common Stock at
book value for $72,170 from Jack Pylant, brother of director James R. Pylant.
Mr. Pylant repurchased these shares at book value for $75,360 in July of 1998.
In May of 1997, the Company's Board of Directors authorized the repurchase
of 33,120 shares of Common Stock at book value from Robert W. Roseberry for
approximately $175,000, 26,460 shares from James E. Roseberry, brother of
Robert W. Roseberry, for approximately $140,000 and the repurchase of 22,860
shares of stock from Donna Byrd, sister of Robert W. Roseberry, for
approximately $121,000. The purpose of these repurchases was to provide funds
for these individuals to pay estate taxes owed arising out of their
inheritance of such shares and other property.
Robert W. Roseberry, a director and executive officer, is the owner of
Roseberry Insurance Company, Inc., a credit life insurance agency which
provides credit life insurance coverage solely to customers of the Bank. These
services resulted in commissions to Roseberry Insurance Company, Inc. of
$14,225 in 1997.
The Bank from time to time makes loans to directors and executive officers,
and to personnel of directors and executive officers. All such loans are made
in the ordinary course of business, and on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and do not involve more than
normal risk of collectability or present other unfavorable features.
SUPERVISION AND REGULATION
The supervision and regulation of bank holding companies and their
subsidiaries is intended primarily for the protection of depositors, the
deposit insurance funds of the FDIC and the banking system as a whole, and not
for the protection of the bank holding company shareholders or creditors. The
banking agencies have broad enforcement power over bank holding companies and
banks including the power to impose substantial fines and other penalties for
violations of laws and regulations.
The following description summarizes some of the laws to which the Company
and the Bank are subject. References herein to applicable statutes and
regulations are brief summaries thereof, do not purport to be complete, and
are qualified in their entirety by reference to such statutes and regulations.
THE COMPANY
The Company is a bank holding company registered under the BHCA, and it is
subject to supervision, regulation and examination by the Federal Reserve
Board. The BHCA and other federal laws subject bank holding companies to
particular restrictions on the types of activities in which they may engage,
and to a range of supervisory requirements and activities, including
regulatory enforcement actions for violations of laws and regulations.
Regulatory Restrictions on Dividends; Source of Strength. It is the policy
of the Federal Reserve Board that bank holding companies should pay cash
dividends on common stock only out of income available over the past year and
only if prospective earnings retention is consistent with the organization's
expected future needs and financial condition. The policy provides that bank
holding companies should not maintain a level of cash dividends that
undermines the bank holding company's ability to serve as a source of strength
to its banking subsidiaries.
Under Federal Reserve Board policy, a bank holding company is expected to
act as a source of financial strength to each of its banking subsidiaries and
to commit resources to their support. Such support may be required at times
when, absent this Federal Reserve Board policy, a holding company may not be
inclined to provide it. As discussed below, a bank holding company in certain
circumstances could be required to guarantee the capital plan of an
undercapitalized banking subsidiary.
49
<PAGE>
In the event of a bank holding company's bankruptcy under Chapter 11 of the
U.S. Bankruptcy Code, the trustee will be deemed to have assumed and is
required to cure immediately any deficit under any commitment by the debtor
holding company to any of the federal banking agencies to maintain the capital
of an insured depository institution, and any claim for breach of such
obligation will generally have priority over most other unsecured claims.
Activities "Closely Related" to Banking. The BHCA prohibits a bank holding
company, with certain limited exceptions, from acquiring direct or indirect
ownership or control of any voting shares of any company which is not a bank
or from engaging in any activities other than those of banking, managing or
controlling banks and certain other subsidiaries, or furnishing services to or
performing services for its subsidiaries. One principal exception to these
prohibitions allows the acquisition of interests in companies whose activities
are found by the Federal Reserve Board, by order or regulation, to be so
closely related to banking or managing or controlling banks, as to be a proper
incident to banking. Some of the activities that have been determined by
regulation to be closely related to banking are making or servicing loans,
performing certain data processing services, acting as an investment or
financial advisor to certain investment trusts and investment companies, and
providing securities brokerage services. Other activities approved by the
Federal Reserve Board include consumer financial counseling, tax planning and
tax preparation, futures and options advisory services, check guaranty
services, collection agency and credit bureau services, and personal property
appraisals. In approving acquisitions by bank holding companies of companies
engaged in banking-related activities, the Federal Reserve Board considers a
number of factors, and weighs the expected benefits to the public (such as
greater convenience and increased competition or gains in efficiency) against
the risks of possible adverse effects (such as undue concentration of
resources, decreased or unfair competition or conflicts of interest). The
Federal Reserve Board is also empowered to differentiate between activities
commenced de novo and activities commenced through acquisition of a going
concern. Despite prior approval, the Federal Reserve may order a holding
company or its subsidiaries to terminate any activity, or terminate its
ownership or control of any subsidiary, when it has reasonable cause to
believe that continuation of such activity constitutes a serious risk to the
financial safety, soundness or stability of any bank subsidiary of the bank
holding company.
Securities Activities. The Federal Reserve Board has approved applications
by bank holding companies to engage, through nonbank subsidiaries, in certain
securities-related activities (underwriting of municipal revenue bonds,
commercial paper, consumer receivable-related securities and one-to-four
family mortgage-backed securities), provided that the affiliates would not be
"principally engaged" in such activities for purposes of Section 20 of the
Glass-Steagall Act. In limited situations, holding companies may be able to
use such subsidiaries to underwrite and deal in corporate debt and equity
securities.
Safe and Sound Banking Practices. Bank holding companies are not permitted
to engage in unsafe and unsound banking practices. The Federal Reserve Board's
Regulation Y, for example, generally requires a holding company to give the
Federal Reserve Board prior notice of any redemption or repurchase of its own
equity securities, if the consideration to be paid, together with the
consideration paid for any repurchases or redemptions in the preceding year,
is equal to 10% or more of the company's consolidated net worth. The Federal
Reserve Board may oppose the transaction if it believes that the transaction
would constitute an unsafe or unsound practice or would violate any law or
regulation.
The Federal Reserve Board has broad authority to prohibit activities of bank
holding companies and their nonbanking subsidiaries which represent unsafe and
unsound banking practices or which constitute violations of laws or
regulations, and can assess civil money penalties for certain activities
conducted on a knowing and reckless basis, if those activities caused a
substantial loss to a depository institution. The penalties can be as high as
$1,000,000 for each day the activity continues.
Anti-tying Restrictions. With certain limited exceptions, bank holding
companies and their affiliates are prohibited from tying the provision of
certain services, such as extensions of credit, to other services offered by a
holding company or its affiliates.
50
<PAGE>
Capital Adequacy Requirements. The Federal Reserve Board has adopted a
system using risk-based capital guidelines to evaluate the capital adequacy of
bank holding companies. Under the guidelines, specific categories of assets
are assigned different risk weights, based generally on the perceived credit
risk of the asset. These risk weights are multiplied by corresponding asset
balances to determine a "risk-weighted" asset base. The guidelines require a
minimum total risk-based capital ratio of 8.0% (of which at least 4.0% is
required to consist of Tier 1 capital elements). Total capital is the sum of
Tier 1 and Tier 2 capital. As of June 30, 1998, the Company's ratio of Tier 1
capital to total risk-weighted assets was 9.09% and its ratio of total capital
to total risk-weighted assets was 10.35%. See Note 10 to the Consolidated
Financial Statements.
In addition to the risk-based capital guidelines, the Federal Reserve Board
uses a leverage ratio as an additional tool to evaluate the capital adequacy
of bank holding companies. The leverage ratio is a company's Tier 1 capital
divided by its average total consolidated assets (less goodwill and certain
other intangible assets). Certain highly-rated bank holding companies may
maintain a minimum leverage ratio of 3.0%, but other bank holding companies
may be required to maintain a leverage ratio of up to 200 basis points above
the regulatory minimum. As of June 30, 1998, the Company's leverage ratio was
6.21%.
The federal banking agencies' risk-based and leverage ratios are minimum
supervisory ratios generally applicable to banking organizations that meet
certain specified criteria, assuming that they have the highest regulatory
rating. Banking organizations not meeting these criteria are expected to
operate with capital positions well above the minimum ratios. The federal bank
regulatory agencies may set capital requirements for a particular banking
organization that are higher than the minimum ratios when circumstances
warrant. Federal Reserve Board guidelines also provide that banking
organizations experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
Imposition of Liability for Undercapitalized Subsidiaries. Bank regulators
are required to take "prompt corrective action" to resolve problems associated
with insured depository institutions whose capital declines below certain
levels. In the event an institution becomes "undercapitalized," it must submit
a capital restoration plan. The capital restoration plan will not be accepted
by the regulators unless each company having control of the undercapitalized
institution guarantees the subsidiary's compliance with the capital
restoration plan up to a certain specified amount. Any such guarantee from a
depository institution's holding company is entitled to a priority of payment
in bankruptcy.
The aggregate liability of the holding company of an undercapitalized bank
is limited to the lesser of 5% of the institution's assets at the time it
became undercapitalized or the amount necessary to cause the institution to be
"adequately capitalized." The bank regulators have greater power in situations
where an institution becomes "significantly" or "critically" undercapitalized
or fails to submit a capital restoration plan. For example, a bank holding
company controlling such an institution can be required to obtain prior
Federal Reserve Board approval of proposed dividends, or might be required to
consent to a consolidation or to divest the troubled institution or other
affiliates.
Acquisitions by Bank Holding Companies. The BHCA requires every bank holding
company to obtain the prior approval of the Federal Reserve Board before it
may acquire all or substantially all of the assets of any bank, or ownership
or control of any voting shares of any bank, if after such acquisition it
would own or control, directly or indirectly, more than 5% of the voting
shares of such bank. In approving bank acquisitions by bank holding companies,
the Federal Reserve Board is required to consider the financial and managerial
resources and future prospects of the bank holding company and the banks
concerned, the convenience and needs of the communities to be served, and
various competitive factors.
Control Acquisitions. The Change in Bank Control Act prohibits a person or
group of persons from acquiring "control" of a bank holding company unless the
Federal Reserve Board has been notified and has not objected to the
transaction. Under a rebuttable presumption established by the Federal Reserve
Board, the acquisition of 10% or more of a class of voting stock of a bank
holding company with a class of securities
51
<PAGE>
registered under Section 12 of the Exchange Act, such as proposed by the
Company, would, under the circumstances set forth in the presumption,
constitute acquisition of control of the Company.
In addition, any company is required to obtain the approval of the Federal
Reserve Board under the BHCA before acquiring 25% (5% in the case of an
acquiror that is a bank holding company) or more of the outstanding Common
Stock of the Company, or otherwise obtaining control or a "controlling
influence" over the Company.
THE BANK
The Bank is a Mississippi chartered banking corporation, the deposits of
which are insured by the Bank Insurance Fund ("BIF") and by the Savings
Association Insurance Fund ("SAIF") of the FDIC. The SAIF insurance funds
resulted from the acquisition of thrift deposits in Purvis and Prentiss. The
Bank is not a member of the Federal Reserve System; the Bank is subject to
supervision and regulation by the FDIC and the Mississippi Department of
Banking and Consumer Finance. Such supervision and regulation subjects the
Bank to special restrictions, requirements, potential enforcement actions and
periodic examination by the FDIC and the Mississippi Department of Banking and
Consumer Finance. Because the Federal Reserve Board regulates the bank holding
company parent of the Bank, the Federal Reserve Board also has supervisory
authority which directly affects the Bank.
Equivalence to National Bank Powers. To the extent that the Mississippi laws
and regulations may have allowed state-chartered banks to engage in a broader
range of activities than national banks, the Federal Deposit Insurance Act has
been amended to limit this authority. Under that Act, no state bank or
subsidiary thereof may engage as principal in any activity not permitted for
national banks, unless the institution complies with applicable capital
requirements and the FDIC determines that the activity poses no significant
risk to the insurance fund. In general, statutory restrictions on the
activities of banks are aimed at protecting the safety and soundness of
depository institutions. However, the provisions of Miss. Code Ann. (S)81-5-
1(10) provide state-chartered banks the right to engage in activities approved
for national banks by the Comptroller of the Currency to provide parity
between state chartered and nationally chartered banks.
Branching. Mississippi law permits a Mississippi chartered bank, with prior
regulatory approval, to establish a branch office in any county in
Mississippi. In addition, a Mississippi chartered bank is permitted to combine
with any other bank or thrift regardless of its location, provided the
Mississippi institution has been in operation for at least five years. The
Mississippi banking statutes also permit a Mississippi bank, with prior
regulatory approval, to engage in an interstate merger transaction, and
thereby establish a branch office outside of Mississippi. In any case, the
transaction must also be approved by the FDIC, which considers a number of
factors, including financial history, capital adequacy, earnings prospects,
character of management, needs of the community and consistency with corporate
powers.
Restrictions on Transactions with Affiliates and Insiders. Transactions
between the Bank and its nonbanking affiliates, including the Company, are
subject to Section 23A of the Federal Reserve Act. In general, Section 23A
imposes limits on the amount of such transactions, and also requires certain
levels of collateral for loans to affiliated parties. It also limits the
amount of advances to third parties which are collateralized by the securities
or obligations of the Company or its subsidiaries.
Affiliate transactions are also subject to Section 23B of the Federal
Reserve Act which generally requires that certain transactions between the
Bank and its affiliates be on terms substantially the same, or at least as
favorable to the Bank, as those prevailing at the time for comparable
transactions with or involving other nonaffiliated persons.
The restrictions on loans to directors, executive officers, principal
shareholders and their related interests (collectively referred to herein as
"insiders") contained in the Federal Reserve Act and Regulation O apply to all
insured institutions and their subsidiaries and holding companies. These
restrictions include limits on loans to one borrower and conditions that must
be met before such a loan can be made. There is also an aggregate
52
<PAGE>
limitation on all loans to insiders and their related interests. These loans
cannot exceed the institution's total unimpaired capital and surplus, and the
FDIC may determine that a lesser amount is appropriate. Insiders are subject
to enforcement actions for knowingly accepting loans in violation of
applicable restrictions.
Restrictions on Distribution of Subsidiary Bank Dividends and
Assets. Dividends paid by the Bank have provided a substantial part of the
Company's operating funds and for the foreseeable future it is anticipated
that dividends paid by the Bank to the Company will continue to be the
Company's principal source of operating funds. Under Mississippi law, the
payment of dividends by the Bank must be approved by the Mississippi
Department of Banking and Consumer Finance. Capital adequacy requirements also
serve to limit the amount of dividends that may be paid by the Bank. Under
federal law, the Bank cannot pay a dividend if, after paying the dividend, the
Bank will be "undercapitalized." The FDIC may declare a dividend payment to be
unsafe and unsound even though the Bank would continue to meet its capital
requirements after the dividend.
Because the Company is a legal entity separate and distinct from its
subsidiaries, its right to participate in the distribution of assets of any
subsidiary upon the subsidiary's liquidation or reorganization will be subject
to the prior claims of the subsidiary's creditors. In the event of a
liquidation or other resolution of an insured depository institution, the
claims of depositors and other general or subordinated creditors are entitled
to a priority of payment over the claims of holders of any obligation of the
institution to its shareholders, including any depository institution holding
company (such as the Company) or any shareholder or creditor thereof.
Examinations. The FDIC periodically examines and evaluates insured banks.
Based upon such an evaluation, the FDIC may revalue the assets of the
institution and require that it establish specific reserves to compensate for
the difference between the FDIC-determined value and the book value of such
assets. The Mississippi Department of Banking and Consumer Finance also
conducts examinations of state banks but may accept the results of a federal
examination in lieu of conducting an independent examination.
Audit Reports. Insured institutions with total assets of $500 million or
more must submit annual audit reports prepared by independent auditors to
federal and state regulators. In some instances, the audit report of the
institution's holding company can be used to satisfy this requirement.
Auditors must receive examination reports, supervisory agreements and reports
of enforcement actions. In addition, financial statements prepared in
accordance with generally accepted accounting principles, management's
certifications concerning responsibility for the financial statements,
internal controls and compliance with legal requirements designated by the
FDIC, and an attestation by the auditor regarding the statements of management
relating to the internal controls must be submitted. For institutions with
total assets of more than $3 billion, independent auditors may be required to
review quarterly financial statements. The Federal Deposit Insurance Act
requires that independent audit committees be formed, consisting of outside
directors only. The committees of such institutions must include members with
experience in banking or financial management, must have access to outside
counsel, and must not include representatives of large customers.
Capital Adequacy Requirements. The FDIC has adopted regulations establishing
minimum requirements for the capital adequacy of insured institutions. The
FDIC may establish higher minimum requirements if, for example, a bank has
previously received special attention or has a high susceptibility to interest
rate risk.
The FDIC's risk-based capital guidelines generally require state banks to
have a minimum ratio of Tier 1 capital to total risk-weighted assets of 4% and
a ratio of total capital to total risk-weighted assets of 8%. The capital
categories have the same definitions for the Bank as for the Company. As of
June 30, 1998, the Bank's ratio of Tier 1 capital to total risk-weighted
assets was 10.28% and its ratio of total capital to total risk-weighted assets
was 11.53%. See Note 10 to the Consolidated Financial Statements.
The FDIC's leverage guidelines require state banks to maintain Tier 1
capital of no less than 5% of average total assets, except in the case of
certain highly rated banks for which the requirement is 3% of average total
assets. As of June 30, 1998, the Bank's ratio of Tier 1 capital to average
total assets (leverage ratio) was 6.88%. See Note 10 to the Consolidated
Financial Statements.
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Corrective Measures for Capital Deficiencies. The federal banking regulators
are required to take "prompt corrective action" with respect to capital-
deficient institutions. Agency regulations define, for each capital category,
the levels at which institutions are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." A "well capitalized" bank has a total risk-
based capital ratio of 10% or higher; a Tier 1 risk-based capital ratio of 6%
or higher; a leverage ratio of 5% or higher; and is not subject to any written
agreement, order or directive requiring it to maintain a specific capital
level for any capital measure. An "adequately capitalized" bank has a total
risk-based capital ratio of 8% or higher; a Tier 1 risk-based capital ratio of
4% or higher; a leverage ratio of 4% or higher (3% or higher if the bank was
rated a CAMEL 1 in its most recent examination report and is not experiencing
significant growth); and does not meet the criteria for a well capitalized
bank. A bank is "undercapitalized" if it fails to meet any one of the ratios
required to be adequately capitalized.
In addition to requiring undercapitalized institutions to submit a capital
restoration plan, agency regulations contain broad restrictions on certain
activities of undercapitalized institutions including asset growth,
acquisitions, branch establishment, and expansion into new lines of business.
With certain exceptions, an insured depository institution is prohibited from
making capital distributions, including dividends, and is prohibited from
paying management fees to control persons if the institution would be
undercapitalized after any such distribution or payment.
As an institution's capital decreases, the FDIC's enforcement powers become
more severe. A significantly undercapitalized institution is subject to
mandated capital raising activities, restrictions on interest rates paid and
transactions with affiliates, removal of management, and other restrictions.
The FDIC has only very limited discretion in dealing with a critically
undercapitalized institution and is virtually required to appoint a receiver
or conservator.
Banks with risk-based capital and leverage ratios below the required
minimums may also be subject to certain administrative actions, including the
termination of deposit insurance upon notice and hearing, or a temporary
suspension of insurance without a hearing in the event the institution has no
tangible capital.
Deposit Insurance Assessments. The Bank must pay assessments to the FDIC for
federal deposit insurance protection. The FDIC has adopted a risk based
assessment system as required by amendments made to the Federal Deposit
Insurance Act. Under this system, FDIC-insured depository institutions pay
insurance premiums at rates based on their risk classification. Institutions
assigned to higher-risk classifications (that is, institutions that pose a
greater risk of loss to their respective deposit insurance funds) pay
assessments at higher rates than institutions that pose a lower risk. An
institution's risk classification is assigned based on its capital levels and
the level of supervisory concern the institution poses to the regulators. In
addition, the FDIC can impose special assessments in certain instances.
After the one-time SAIF assessment in 1996, the assessment rate disparity
between BIF and SAIF members was eliminated. The current range of BIF and SAIF
assessments is between 0% and .27% of deposits. Institutions which qualify for
the 0% assessment category, however, still have to pay the $1,000 minimum
semi-annual assessment required by federal statute.
The FDIC established a process for raising or lowering all rates for insured
institutions semi-annually if conditions warrant a change. Under this new
system, the FDIC has the flexibility to adjust the assessment rate schedule
twice a year without seeking prior public comment, but only within a range of
five cents per $100 above or below the premium schedule adopted. Changes in
the rate schedule outside the five cent range above or below the current
schedule can be made by the FDIC only after a full rulemaking with opportunity
for public comment.
On September 30, 1996, a law was enacted that contained a comprehensive
approach to recapitalizing the SAIF and to assure the payment of the Financing
Corporation's ("FICO") bond obligations that were issued by FICO to help shore
up the ailing Federal Savings and Loan Insurance Corporation in 1987. Under
this new act, banks insured under the BIF are required to pay a portion of the
interest due on the FICO bonds. The BIF rate
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must equal one-fifth of the SAIF rate through year-end 1999, or until the
insurance funds are merged, whichever occurs first. Thereafter BIF and SAIF
payers will be assessed pro rata for the FICO bond obligations. With regard to
the assessment for the FICO obligation, the current BIF rate is 0.0122% of
annual deposits and the SAIF rate is 0.0610% of annual deposits.
Enforcement Powers. The FDIC and the other federal banking agencies have
broad enforcement powers, including the power to terminate deposit insurance,
impose substantial fines and other civil and criminal penalties and appoint a
conservator or receiver. Failure to comply with applicable laws, regulations
and supervisory agreements could subject the Company or its banking
subsidiaries, as well as officers, directors and other institution-affiliated
parties of these organizations, to administrative sanctions and potentially
substantial civil money penalties. The appropriate federal banking agency may
appoint the FDIC as conservator or receiver for a banking institution (or the
FDIC may appoint itself, under certain circumstances) if any one or more of a
number of circumstances exist, including, without limitation, the fact that
the banking institution is undercapitalized and has no reasonable prospect of
becoming adequately capitalized; fails to become adequately capitalized when
required to do so; fails to submit a timely and acceptable capital restoration
plan; or materially fails to implement an accepted capital restoration plan.
Brokered Deposit Restrictions. Well capitalized institutions may solicit and
accept, renew or roll over brokered deposits without restriction. Institutions
which are adequately capitalized, but not well capitalized, cannot accept,
renew or roll over brokered deposits except with a waiver from the FDIC, and
are subject to restrictions on the interest rates that can be paid on such
deposits. Undercapitalized institutions may not accept, renew, or roll over
brokered deposits.
Cross-guarantee Provisions. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") contains a "cross-guarantee" provision
which generally makes commonly controlled insured depository institutions
liable to the FDIC for any losses incurred in connection with the failure of a
commonly controlled depository institution.
Community Reinvestment Act. The Community Reinvestment Act of 1977 ("CRA")
and the regulations issued thereunder are intended to encourage banks to help
meet the credit needs of their service area, including low and moderate income
neighborhoods, consistent with the safe and sound operations of the banks.
These regulations also provide for regulatory assessment of a bank's record in
meeting the needs of its service area when considering applications to
establish banking centers, merger applications and applications to acquire the
assets and assume the liabilities of another bank. FIRREA requires federal
banking agencies to make public a rating of a bank's performance under the
CRA. In the case of a bank holding company, the CRA performance record of the
banks involved in the transaction are reviewed in connection with the filing
of an application to acquire ownership or control of shares or assets of a
bank or to merge with any other bank holding company. An unsatisfactory record
can substantially delay or block the transaction.
Consumer Laws and Regulations. In addition to the laws and regulations
discussed herein, the Bank is also subject to certain consumer laws and
regulations that are designed to protect consumers in transactions with banks.
While the list set forth herein is not exhaustive, these laws and regulations
include the Truth in Lending Act, the Truth in Savings Act, the Electronic
Funds Transfer Act, the Expedited Funds Availability Act, the Equal Credit
Opportunity Act, the Real Estate Settlement Procedures Act and the Fair
Housing Act, among others. These laws and regulations mandate certain
disclosure requirements and regulate the manner in which financial
institutions must deal with customers when taking deposits or making loans to
such customers. The Bank must comply with the applicable provisions of these
consumer protection laws and regulations as part of its ongoing customer
relations.
INSTABILITY OF REGULATORY STRUCTURE
Various legislation, including proposals to overhaul the bank regulatory
system, expand the powers of banking institutions and bank holding companies
and limit the investments that a depository institution may make
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with insured funds, is from time to time introduced in Congress. Such
legislation may change banking statutes and the operating environment of the
Company and its banking subsidiaries in substantial and unpredictable ways.
The Company cannot determine the ultimate effect that potential legislation,
if enacted, or implementing regulations with respect thereto, would have upon
the financial condition or results of operations of the Company or its
subsidiaries.
EXPANDING ENFORCEMENT AUTHORITY
One of the major additional burdens imposed on the banking industry by
amendments to the Federal Deposit Insurance Act is the increased ability of
banking regulators to monitor the activities of banks and their holding
companies. In addition, the Federal Reserve Board and FDIC are possessed of
extensive authority to police unsafe or unsound practices and violations of
applicable laws and regulations by depository institutions and their holding
companies. For example, the FDIC may terminate the deposit insurance of any
institution which it determines has engaged in an unsafe or unsound practice.
The agencies can also assess civil money penalties, issue cease and desist or
removal orders, seek injunctions, and publicly disclose such actions. The
Federal Deposit Insurance Corporation Improvements Act of 1991 (FDICIA),
FIRREA and other laws have expanded the agencies' authority in recent years,
and the agencies have not yet fully tested the limits of their powers.
EFFECT ON ECONOMIC ENVIRONMENT
The policies of regulatory authorities, including the monetary policy of the
Federal Reserve Board, have a significant effect on the operating results of
bank holding companies and their subsidiaries. Among the means available to
the Federal Reserve Board to affect the money supply are open market
operations in U.S. Government securities, changes in the discount rate on
member bank borrowings, and changes in reserve requirements against member
bank deposits. These means are used in varying combinations to influence
overall growth and distribution of bank loans, investments and deposits, and
their use may affect interest rates charged on loans or paid for deposits.
Federal Reserve Board monetary policies have materially affected the
operating results of commercial banks in the past and are expected to continue
to do so in the future. The nature of future monetary policies and the effect
of such policies on the business and earnings of the Company and its
subsidiaries cannot be predicted.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock having $.50 par value (the "Common Stock"). Shares of Common
Stock may be issued at such time or times and for such consideration as the
Board of Directors may deem advisable, subject to such limitations as may be
set forth in the laws of Mississippi, the Company's Articles of Incorporation
(as amended) or Bylaws (as amended) or, after the Offering, the rules of the
Nasdaq National Market. As of July 31, 1998, after adjusting for the three-
for-one stock split effective August 25, 1998, there were 2,767,071 shares of
Common Stock outstanding held by 65 shareholders of record. THE CAPITAL STOCK
OF THE COMPANY DOES NOT REPRESENT OR CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT
INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.
COMMON STOCK
Voting Rights. The holders of the Common Stock are entitled to one (1) vote
for each share of Common Stock standing in their names on the books of the
Company.
Dividends. The holders of Common Stock are entitled to receive such
dividends as may be declared, from time to time, by the Board of Directors out
of funds legally available therefor. Substantially all of the funds available
to the Company for payment of dividends on the Common Stock are derived from
dividends paid by its subsidiaries. The payment of dividends by the Company is
subject to the restrictions of Mississippi law applicable to the declaration
of dividends by a business corporation. Under such provisions, no distribution
may be made if, after giving it effect (1) the Company would not be able to
pay its debts as they become due in the usual course of business; or (2) the
Company's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if the Company were to be dissolved at
the time of the distribution, to satisfy the preferential rights upon
dissolution of stockholders whose preferential rights are superior to those
receiving the distributions.
Additionally, the Federal Reserve Board, in its Policy Statement on Cash
Dividends Not Fully Covered by Earnings, has stated that bank holding
companies should not pay dividends except out of current earnings and unless
the prospective rate of earnings retention by the holding company appears
consistent with its capital needs, asset quality and overall financial
condition.
Although historically regular cash dividends have been paid on the Common
Stock, and the Board of Directors of the Company has indicated its intention
to continue to pay regular cash dividends on the Common Stock, no assurance
can be given that any dividends will be declared or, if declared, what the
amount of the dividends will be or whether such dividends, once declared, will
continue. See "Dividend Policy."
Preemptive Rights. Holders of the Common Stock are not entitled to
preemptive rights with respect to any shares which may be issued. The Common
Stock is not subject to redemption.
Dissolution. If the Company is dissolved, the holders of the Common Stock
will be entitled to receive, pro rata based on the number of shares held, the
remaining assets of the Company after the satisfaction of the Company's
liabilities.
Because the Company is a holding company, its rights and the rights of its
creditors and shareholders to participate in the distribution of assets of a
subsidiary in its liquidation or recapitalization may be subject to prior
claims of such subsidiary's creditors except to the extent that the Company
itself may be a creditor having recognized claims against such subsidiary.
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Other Aspects. The Company has applied for listing of the Common Stock on
the Nasdaq National Market. SunTrust Bank, Atlanta will serve as registrar and
transfer agent of the Common Stock following the Offering.
CERTAIN PROVISIONS OF MISSISSIPPI LAW AND THE ARTICLES OF INCORPORATION AND
BYLAWS OF THE COMPANY AFFECTING THE RIGHTS OF SHAREHOLDERS
The rights of shareholders of the Company are governed by the Mississippi
Business Corporation Act ("MBCA") and the Articles of Incorporation and Bylaws
of the Company. The following discussion is a summary of certain material
provisions of the MBCA and the Company's Articles of Incorporation and Bylaws
affecting shareholder rights. Copies of the Articles of Incorporation and
Bylaws are filed as exhibits to the Registration Statement of which this
Prospectus is a part.
Amendment of the Articles of Incorporation and Bylaws. The affirmative vote
of the holders of a majority of votes entitled to be cast at a shareholders
meeting is required to amend any provision of the Company's Articles of
Incorporation unless the amendment would amend the Articles of Incorporation
relating to certain changes in control (as discussed below), in which case 80%
or more of the votes entitled to be cast is required.
Although certain provisions of the Company's Bylaws relating to removal of
the Company's Board of Directors require a vote of 80% of the total voting
power of the outstanding Common Stock, the remaining provisions of the
Company's Bylaws may be amended or repealed by the Board of Directors, if a
quorum is present, by the affirmative vote of majority of directors present or
by the shareholders if a quorum exists and the votes cast favoring the action
exceed the votes cast opposing the action.
Special Meetings of Shareholders. Under the Company's Bylaws, a special
meeting of the shareholders may be called, for any purpose or purposes, unless
otherwise prescribed by statute, by the Chairman, the President or by a
majority of the Board of Directors, and shall be called by the President at
the request of the holders of not less than one-tenth of all the votes
entitled to be cast on any issue proposed to be considered at the meeting.
Elimination of Certain Liabilities and Indemnification Rights. The Company's
Articles of Incorporation provide that a director shall not be liable to the
Company or its shareholders for money damages for any action taken, or any
failure to take any action, as a director, except liability for: (i) the
amount of financial benefit received by a director to which he is not
entitled; (ii) an international infliction of harm on the Company or its
shareholders; (iii) a violation of Mississippi Code Annotated Section 79-4-
8.33 (1972), as amended; or (iv) an intentional violation of criminal law.
The Company's Articles of Incorporation provide for indemnification of
officers, directors and employees in connection with a proceeding including
reasonable expenses (attorney's fees) to the fullest extent permitted by the
MBCA in effect from time to time and also provide for indemnification against
liability to the Company, liability for improperly receiving a personal
benefit and/or liability for any other reason, provided that such person's
conduct did not constitute gross negligence or willful misconduct as
determined by the Board of Directors or a committee designated by the Board,
by special legal counsel, by the shareholders or by a court.
The Company's Articles of Incorporation also provide for advances to persons
for reasonable expenses if the person furnishes a written undertaking to repay
the advance if these actions are adjudged to be grossly negligent or willful
misconduct and a determination is made that the facts known would not preclude
indemnification.
Election of Directors. The Company's Bylaws provide for cumulative voting in
the election of directors. Under cumulative voting, each shareholder is
entitled to vote the number of votes of the shares owned by him on the record
date multiplied by the number of directors to be elected. Each shareholder may
cast all of his votes for a single nominee or may distribute his votes in any
manner among as many candidates as the shareholder sees fit.
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The Company's Articles of Incorporation provide that the number of directors
will be not less than three, nor more than 25 with the exact number or
directors to be fixed in accordance with the Bylaws. The number of directors
is currently set at seven.
Changes in Control. The Company's Articles of Incorporation contain
provisions regarding the vote required to approve certain business
combinations or other significant corporate transactions involving the Company
and a substantial shareholder. Mississippi law generally requires the
affirmative vote of the holders of a majority of the shares entitled to vote
at the meeting to approve a merger, consolidation or dissolution of the
Company or a disposition of all or substantially all of the Company's assets.
Article Eleven of the Company's Articles of Incorporation raises the required
affirmative vote to 80% of the total number of votes entitled to be cast to
approve these and other significant corporate transactions ("business
combinations") if a "Substantial Shareholder" (as defined) is a party to the
transaction or its percentage equity interest in the Company will be increased
by the transaction. Two-thirds of the whole Board of Directors may, in all
such cases, determine not to require such 80% affirmative vote, but only if a
majority of the directors making such determination are "Continuing Directors"
(as defined). Such determination may only be made prior to the time the
Substantial Shareholder in question achieves such status.
A "Substantial Shareholder" generally is defined under Article Eleven as the
"beneficial owner" of more than 10% of the outstanding shares of stock of the
Company entitled to vote in the election of directors ("voting shares").
"Beneficial ownership" generally is defined in accordance with the definition
of beneficial ownership in Rule 13d-3 under the Securities Exchange Act of
1934 and includes all shares as to which the Substantial Shareholder in
question has sole or shared voting or investment power. However, for purposes
of Article Eleven, a Substantial Shareholder is also deemed to own
beneficially shares owned, directly or indirectly, by an "affiliate" or
"associate" of the Substantial Shareholder, as well as (i) shares which it or
any such "affiliate" or "associate" has a right to acquire, (ii) shares
issuable upon the exercise of options or rights, or upon conversion of
convertible securities, held by the Substantial Shareholder and (iii) shares
beneficially owned by any other person with whom the Substantial Shareholder
or any of his "affiliates" or "associates" acts as a partnership, syndicate or
other group pursuant to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of shares of capital stock
of the Company.
A "business combination" subject to Article Eleven includes, but is not
limited to, the following: a merger or consolidation involving the Company or
any of its subsidiaries and a Substantial Shareholder; a sale, lease or other
disposition of a "substantial part" of the assets of the Company or any of its
subsidiaries (i.e., assets constituting in excess of 10% of the book value of
the total consolidated assets of the Company) to a Substantial Shareholder; an
issuance of equity securities of the Company or any of its subsidiaries to a
Substantial Shareholder for consideration aggregating $5,000,000 or more; a
liquidation or dissolution of the Company; and a reclassification or
recapitalization of securities of the Company or any of its subsidiaries or a
reorganization, in any case having the effect, directly or indirectly, of
increasing the percentage interest of a Substantial Shareholder in any class
of equity securities of the Company or such subsidiary.
Article Eleven may not be amended or repealed without the affirmative vote
of 80% or more of the votes entitled to be cast by all holders of voting
shares (which 80% vote must also include the affirmative vote of a majority of
the votes entitled to be cast by all holders of voting shares not beneficially
owned by any Substantial Shareholder).
The supermajority voting provisions embodied in Article Eleven may have the
effect of discouraging any takeover or change in control of the Company. If
the holders of a majority of the Company's outstanding Common Stock desire a
takeover or change in control, and if such takeover or change in control is
opposed by the Company's management, the existing Articles of Incorporation of
the Company possibly could be used to thwart the desires of such majority.
Rights Agreement. On August 3, 1998, the Board declared a dividend
distribution of one Right for each outstanding share of Common Stock of the
Company to stockholders of record at the close of business on
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August 25, 1998 (the "Record Date"). Each Right entitles the registered
holder to purchase from the Company one share of Common Stock at a price of
$12.00 per share (the "Purchase Price"), subject to adjustment. The Purchase
Price shall be paid in cash. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and
SunTrust Bank, Atlanta, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate certificates evidencing
the Rights (the "Rights Certificates") will be distributed. Until the earliest
to occur of: (i) 10 days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding shares of Common Stock (the "Stock Acquisition Date");
(ii) 10 business days following the commencement of a tender offer or exchange
offer if, upon consummation thereof, such person or group would be the
beneficial owner of 20% or more of such outstanding shares of Common Stock; or
(iii) the close of business on the tenth day after the Board of Directors of
the Company determines that a person, who alone or together with affiliates or
associates has beneficial ownership of at least 10% of the Common Stock then
outstanding, is an Adverse Person (the earliest of such dates being called the
"Distribution Date"), the Rights will be evidenced only by Common Stock
certificates and will be transferred with and only with Common Stock
certificates. The Board of Directors, after reasonable inquiry and
investigation, may determine that a person is an Adverse Person if the Board
finds that: (i) such person intends to cause the Company to repurchase such
person's shares or intends to attempt to pressure the Company to take actions
which will result in that person's short-term financial gain under
circumstances which would not be in the best interest of the Company and the
shareholders; or (ii) ownership of the Common Stock by such person is causing
or is reasonably likely to cause a material adverse impact on the business or
prospects of the Company.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Stock outstanding as of the Record
Date will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, Rights Certificates will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and,
thereafter, such separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on August 25, 2008, unless earlier redeemed by the
Company as described below.
In the event that: (i) a Person (other than the Company and its affiliates)
becomes the beneficial owner of 20% or more of the then outstanding shares of
Common Stock; or (ii) the Board determines that a person is an Adverse Person,
the Rights Agreement provides that proper provision shall be made so that each
holder of a Right (except for any Acquiring Person or Adverse Person and
certain Affiliates, Associates and transferees of such person) will thereafter
have the right to receive, upon exercise, Common Stock (or in certain
circumstances, cash, other securities or property) having a value equal to two
(2) times the exercise price of the Right. Notwithstanding the above, the
acquisition of beneficial ownership of 20% or more of the Common Stock under
clause (ii) above shall not permit the holder of a Right to purchase Common
Stock at such discounted purchase price if such acquisition of beneficial
ownership is approved in advance by the Board of Directors of the Company.
In the event that, at any time following the Stock Acquisition Date: (i) the
Company engages in a merger or other business combination transaction in which
the Company is not the surviving corporation; (ii) the Company engages in a
merger or other business combination transaction with another person in which
the Company is the surviving corporation, but in which its Common Stock is
changed or exchanged; or (iii) 50% or more of the Company's assets or earning
power is sold or transferred, the Rights Agreement provides that proper
provision shall be made so that each holder of a Right shall thereafter have
the right to receive, upon the exercise thereof
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at the then current exercise price of the Right, common stock of the acquiring
company having a value equal to two (2) times the exercise price of the Right.
The Purchase Price payable, and the number of shares of Common Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution: (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock; (ii) upon
the grant to holders of the Common Stock of certain rights or warrants to
subscribe for Common Stock or convertible securities at less than the current
market price of the Common Stock; or (iii) upon the distribution to holders of
the Common Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common
Stock on the last trading date prior to the date of exercise.
The Rights may be redeemed by the Board in whole, but not in part, at a
price of $0.01 per Right (the "Redemption Price") at any time prior to fifteen
(15) days (plus such extensions as the Board, in its discretion, specifies)
after the Stock Acquisition Date. However, the Board of Directors may not
redeem any Rights following a determination that a person is an Adverse
Person. Immediately upon the action of the Board of Directors of the Company,
ordering redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock, or any other forms of consideration deemed appropriate by the Board of
Directors.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
Other than those provisions relating to the Redemption Price, final
expiration date and number of shares of Common Stock (and/or other securities
or property, if applicable) issuable upon exercise of the Rights, any of the
provisions of the Rights Agreement may be amended by the Board of Directors of
the Company prior to the Distribution Date; and, thereafter, the provisions of
the Rights Agreement may be amended by the Board only in order to cure any
ambiguity, to correct or supplement any provision contained in the Rights
Agreement which may be defective or inconsistent with any other provision, to
shorten or lengthen any time period or to make such other changes as do not
adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person); provided, however, that no amendment shall be made
after the Distribution Date: (i) to lengthen any time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, or benefits to, holders of Rights; or (ii) to lengthen the
redemption period at a time when the Rights are not then redeemable.
The Rights Agreement and the provisions in the Company's Articles of
Incorporation described above may have the effect of making it more difficult
for stockholders to replace or add directors, or to otherwise influence
actions taken by directors, which may discourage attempts to acquire control
of the Company which may (or may not) be in the best interest of the majority
of the stockholders.
SHARES ELIGIBLE FOR FUTURE SALE
All of the shares of Common Stock sold in the Offering will generally be
freely tradeable under the Securities Act of 1933 (the "Securities Act"). The
Company will have 4,130,707 shares of Common Stock outstanding after the
Offering. The Company, its executive officers and directors and certain
shareholders (who collectively will own approximately 1,779,300 shares or
43.1% of the outstanding shares of Common Stock after the consummation of the
Offering) have agreed with the Underwriters not to offer, sell, contract to
sell or
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otherwise dispose of any of their shares of Common Stock for a period of 180
days after the date of this Prospectus without the permission of the
Underwriters. Currently 839,880 outstanding shares of Common Stock held by
existing shareholders are not subject to such agreement, and are freely
tradable in accordance with Rule 144(k) under the Securities Act. The remaining
147,891 shares of currently outstanding Common Stock which were acquired in the
past two years pursuant to exemptions from registration under the Securities
Act are "restricted" within the meaning of Rule 144 and not currently eligible
for resale under Rule 144. These shares may be resold only pursuant to an
effective registration under the Securities Act or pursuant to an available
exemption (such as provided by Rule 144 following a holding period for
previously unregistered shares) from the registration requirements of the
Securities Act.
In general, Rule 144 provides that, subject to its provisions and other
applicable federal and state securities law requirements, any person (or
persons whose shares are aggregated), including any person who may be deemed an
"affiliate" as defined under the Securities Act, who has acquired securities
directly or indirectly from the issuer or an affiliate in a transaction not
involving a public offering ("restricted securities"), and who has beneficially
owned such restricted securities for at least one year is entitled to sell
within any three-month period, a number of such shares that does not exceed the
greater of: (i) the average weekly trading volume of the same class of
securities during the four calendar weeks preceding the filing of the notice of
the sale with the Securities and Exchange Commission ("SEC"); or (ii) 1% of the
same class of securities then outstanding, subject to certain manner-of-sale
provisions, notice requirements, and the availability of current information
concerning the Company. A person who is not deemed an "affiliate" of the
Company and who has beneficially owned shares for at least two years is
entitled to sell such shares under Rule 144 without regard to the volume
limitations and current public information, manner of sale and notice
requirements described above. Affiliates, including officers, directors and
principal shareholders of the Company, are subject to the volume limitations
and certain other requirements as to all shares owned by them, regardless of
the length of time such shares have been beneficially owned and irrespective of
whether such shares were acquired from the issuer or otherwise and whether
acquired in transaction involving a public offering.
62
<PAGE>
UNDERWRITING
Pursuant to the Underwriting Agreement, the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part,
and subject to the terms and conditions thereof, the underwriters named below
(the "Underwriters"), acting through Morgan Keegan & Company, Inc. and Sterne,
Agee & Leach, Inc., as representatives of the several Underwriters (the
"Representatives") have severally agreed to purchase from the Company the
number of shares of Common Stock set forth below opposite their respective
names.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
Morgan Keegan & Company, Inc. ................................
Sterne, Agee & Leach, Inc. ...................................
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all such shares of the Common Stock if any of such shares are
purchased. The Underwriters are obligated to take and pay for all of the
shares of Common Stock offered hereby (other than those covered by the over-
allotment option described below) if any are taken.
The Company has been advised by the Underwriters that the Underwriters
propose to offer such shares of Common Stock to the public at the initial
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may re-allow, a concession
not in excess of $ per share to certain other dealers. After the initial
public offering, the offering price and other selling terms may be changed by
the Underwriters.
Pursuant to the Underwriting Agreement, the Company has granted to the
Underwriters an option, exercisable not later than 30 days after the date of
this Prospectus, to purchase up to 204,545 additional shares of Common Stock
at the initial public offering price, less the underwriting discounts and
commissions set forth on the cover page of this Prospectus, solely to cover
over-allotments. To the extent that the Underwriters exercise such option,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares as the
number set forth next to such Underwriter's name in the preceding table bears
to the total number of shares in such table, and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters.
The Company, each of its directors and executive officers, and certain other
shareholders of the Company have agreed not to sell or otherwise dispose of
any shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of the Representatives. See "Risk
Factors--Potential Adverse Effect of Future Sales of Presently Outstanding
Shares."
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority. The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act.
Until the distribution of the Common Stock is completed, rules of the SEC
may limit the ability of the Underwriters or members of the selling group to
bid for and purchase the Common Stock. As an exception to these rules, the
Underwriters are permitted to engage in certain transactions that stabilize
the price of the Common Stock. Such transactions consist of bids or purchases
for the purpose of pegging, fixing or maintaining the price of the Common
Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offering, i.e., if they sell a greater aggregate number of
shares of Common Stock than is set forth on the cover page of this Prospectus,
the Underwriters may reduce the short position by purchasing shares of Common
Stock in the open market. The Underwriters may also elect to reduce any short
position by exercising all or part of the over-allotment option described
above.
The Underwriters may also impose a penalty bid on certain selling group
members. This means that if the Underwriters purchase Common Stock in the open
market to reduce the selling group members' short position
63
<PAGE>
or to stabilize the price of the Common Stock, they may reclaim the amount of
the selling concession from the selling group members who sold those shares of
Common Stock as part of the Offering. In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the absence of such
purchases. The imposition of a penalty bid might also have an effect on the
price of a security to the extent that it were to discourage resales of the
security.
Neither the Company nor the Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor the Underwriters make any representation
that the Underwriters will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.
Prior to the Offering, there has been no public market for the Common Stock.
Consequently, the initial public offering price for the Common Stock will be
determined by negotiations between the Company and the Representatives. Among
the factors considered in such negotiations will be prevailing market and
general economic conditions, the market capitalizations, trading histories and
stages of development of other publicly traded companies that the Company and
the Representatives believe to be comparable to the Company, the results of
operations of the Company in recent periods, the current financial position of
the Company, estimates of the business potential of the Company and the
present state of the Company's development and the availability for sale in
the market of a significant number of shares of Common Stock. Additionally,
consideration will be given to the general status of the securities market,
the market conditions for new issues of securities and the demand for
securities of comparable companies at the time the Offering is made.
At the request of the Company, the Underwriters have reserved up to five
percent of the shares of Common Stock to be offered hereby for sale at the
initial public offering price to certain Company employees, business
associates and related persons. The number of shares of Common Stock available
for sale to the general public will be reduced to the extent such persons
purchase the reserved shares. Any reserved shares that are not purchased will
be offered by the Underwriters to the general public on the same basis as the
other shares offered hereby.
Application has been made for quotation of the Common Stock on the Nasdaq
National Market.
LEGAL MATTERS
The legality of the shares of the Common Stock offered hereby will be passed
upon by Watkins Ludlam Winter & Stennis, P.A., Jackson, Mississippi, counsel
to the Company. Certain legal matters in connection with the Offering will be
passed on for the Underwriters by Powell, Goldstein, Frazer & Murphy LLP,
Atlanta, Georgia.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries at
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, appearing in this Prospectus and Registration Statement,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
McArthur, Thames, Slay and Dews, PLLC were the independent accountants for
the Company until June of 1998. The Company replaced McArthur, Thames, Slay
and Dews, PLLC with Ernst & Young LLP as the Company's independent
accountants. The Company's Board of Directors approved the change in
independent accountants. The audit reports of McArthur, Thames, Slay and Dews,
PLLC on the consolidated financial statements of the Company did not contain
any adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principles. There have
been no disagreements between the Company and McArthur, Thames, Slay and Dews,
PLLC relating to accounting principles or practices or financial statement
disclosure during the last two fiscal years or the subsequent interim period
through the date of dismissal.
64
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the SEC a Registration Statement on Form S-1
(together with all amendments and supplements, the "Registration Statement")
under the Securities Act, with respect to the Common Stock. This Prospectus
omits certain information contained in the Registration Statement, certain
items of which are contained in exhibits to the Registration Statement as
permitted by the rules and regulations of the SEC. For further information with
respect to the Company and the Common Stock, reference is made to the
Registration Statement, including the exhibits filed as a part thereof, which
may be inspected at the principal office of the SEC without charge at 450 Fifth
Street, N.W., Washington, D.C. 20549 and is available on the SEC web site at
http://www.sec.gov.
Upon consummation of this Offering, the Company will be subject to the
informational requirements of the Exchange Act and in accordance therewith will
file reports and other information with the SEC. Copies of such reports and
other information can be obtained, at prescribed rates, from the SEC by
addressing written requests for such copies to the Public Reference Section at
the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In
addition, such reports and other information can be inspected and copied at the
public reference facilities referred to above and at the regional offices of
the SEC at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding registrants, including the Company.
Copies of the Registration Statement may be obtained from the SEC at its
principal office at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of prescribed fees. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete,
and, where the contract or the document has been filed as an exhibit to the
Registration Statement, each such statement is qualified in all respects by
reference to the applicable document filed with the SEC.
Following the Offering, the shares of Common Stock will be traded on the
Nasdaq National Market under the symbol LCCO, and reports, proxy and
information statements, and other information filed by the Company following
the Offering may also be inspected at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
65
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................ F-2
Consolidated Balance Sheets as of June 30, 1998 (unaudited) and December
31, 1997 and 1996........................................................ F-3
Consolidated Statements of Income and Comprehensive Income for the six
months ended June 30, 1998 and 1997 (unaudited) and the years ended De-
cember 31, 1997, 1996 and 1995........................................... F-4
Consolidated Statements of Stockholders' Equity for the the six months
ended June 30, 1998 (unaudited) and the years ended December 31, 1997,
1996 and 1995............................................................ F-5
Consolidated Statements of Cash Flows for the six months ended June 30,
1998 and 1997 (unaudited) and the years ended December 31, 1997, 1996 and
1995..................................................................... F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders Lamar Capital Corporation
We have audited the accompanying consolidated balance sheets of Lamar
Capital Corporation and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income and comprehensive income,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Lamar Capital
Corporation at December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1997 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Jackson, Mississippi
August 11, 1998
F-2
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ------------------
1998 1997 1996
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and due from banks....................... $ 13,132 $ 7,787 $ 8,676
Federal funds sold............................ 11,565 7,950 4,700
-------- -------- --------
Cash and cash equivalents..................... 24,697 15,737 13,376
Securities available for sale (amortized
cost--$53,956 (unaudited) in 1998, $36,365 in
1997 and $18,816 in 1996).................... 54,216 36,810 18,660
Securities held to maturity (fair value--
$32,599 (unaudited) in 1998, $22,203 in 1997
and $22,674 in 1996)......................... 32,593 22,111 22,902
Loans (less allowance for loan losses of
$3,386 (unaudited) in 1998, $3,101 in 1997
and $2,837 in 1996).......................... 178,960 159,552 140,318
Accrued interest receivable................... 2,891 2,391 1,990
Premises and equipment........................ 8,315 6,638 6,218
Other real estate............................. 417 411 767
Federal Home Loan Bank stock.................. 754 963 539
Cash surrender value of life insurance........ 1,265 1,233 1,169
Deferred income taxes......................... 758 689 825
Other assets.................................. 696 487 566
-------- -------- --------
Total assets.............................. $305,562 $247,022 $207,330
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing.......................... $ 26,270 $ 24,051 $ 20,770
Interest bearing.............................. 242,326 187,447 164,634
-------- -------- --------
Total deposits............................ 268,596 211,498 185,404
Interest payable.............................. 758 812 692
Dividends payable............................. 155 150 125
Other liabilities............................. 761 782 636
Other borrowed funds.......................... 17,720 17,620 7,000
-------- -------- --------
Total liabilities......................... 287,990 230,862 193,857
STOCKHOLDERS' EQUITY
Common stock, $.50 par value (unaudited) at
June 30, 1998, $10 par value at December 31,
1997 and 1996; 50,000,000 shares (unaudited)
authorized at June 30, 1998, 100,000 shares
authorized at December 31, 1997 and 1996;
2,767,071 shares (unaudited) issued and
outstanding at June 30, 1998, 46,569.44
shares issued and outstanding at December 31,
1997 and 1996................................ 1,384 466 466
Paid-in capital............................... 4,364 5,374 5,227
Retained earnings............................. 11,733 10,283 8,219
Unrealized gain (loss) on securities available
for sale, net of income taxes................ 163 279 (98)
Treasury stock, 12,000 shares (unaudited) at
June 30, 1998 and 763.44 and 1,417.44 shares
at December 1997 and 1996.................... (72) (242) (341)
-------- -------- --------
Total stockholders' equity................ 17,572 16,160 13,473
-------- -------- --------
Total liabilities and stockholders'
equity................................... $305,562 $247,022 $207,330
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ -------------------------
1998 1997 1997 1996 1995
-------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest income
Loans, including fees........... $ 8,934 $ 7,652 $15,984 $13,790 $11,519
Federal funds sold.............. 390 153 297 204 274
Interest on securities:
Taxable......................... 1,356 842 1,956 1,029 1,052
Non-taxable..................... 697 574 1,205 1,167 1,058
-------- ------- ------- ------- -------
2,053 1,416 3,161 2,196 2,110
-------- ------- ------- ------- -------
Total interest income..... 11,377 9,221 19,442 16,190 13,903
Interest expense
Deposits........................ 5,911 4,745 9,799 8,358 7,083
Other borrowed funds............ 613 280 737 71 17
-------- ------- ------- ------- -------
Total interest expense.... 6,524 5,025 10,536 8,429 7,100
-------- ------- ------- ------- -------
Net interest income............. 4,853 4,196 8,906 7,761 6,803
Provision for loan losses....... 360 289 725 557 517
-------- ------- ------- ------- -------
Net interest income after
provision for loan losses...... 4,493 3,907 8,181 7,204 6,286
Other income
Service charges on deposit
accounts....................... 884 797 1,670 1,519 1,075
Mortgage loan fees.............. 182 162 362 260 226
Commissions on credit life
insurance...................... 207 181 391 320 269
Gain (loss) on sale of
securities available for sale.. 222 (32) (13) 10 3
Other operating income.......... 193 149 279 216 178
-------- ------- ------- ------- -------
Total other income........ 1,688 1,257 2,689 2,325 1,751
Other expense
Salaries and employee benefits.. 2,269 1,976 4,173 3,595 3,068
Occupancy expense............... 311 307 610 504 439
Furniture and equipment
expense........................ 435 421 878 787 780
Other operating expense......... 1,026 945 2,016 2,004 1,859
-------- ------- ------- ------- -------
Total other expense....... 4,041 3,649 7,677 6,890 6,146
-------- ------- ------- ------- -------
Income before income taxes...... 2,140 1,515 3,193 2,639 1,891
Income tax expense.............. 535 405 854 611 417
-------- ------- ------- ------- -------
Net income...................... 1,605 1,110 2,339 2,028 1,474
Other comprehensive income
(loss), net of income taxes
Change in unrealized gain (loss)
on securities available for
sale........................... (116) 281 757 (68) 377
Reclassification of realized
amount......................... (139) 20 8 (6) (2)
-------- ------- ------- ------- -------
Net unrealized gain (loss)
recognized in comprehensive
income......................... (255) 301 765 (74) 375
-------- ------- ------- ------- -------
Comprehensive income...... $ 1,350 $ 1,411 $ 3,104 $ 1,954 $ 1,849
======== ======= ======= ======= =======
Earnings per share--basic and
dilutive....................... $ .59 $ .41 $ .87 $ .75 $ .54
======== ======= ======= ======= =======
</TABLE>
See accompanying notes.
F-4
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
ON SECURITIES
AVAILABLE
COMMON STOCK FOR SALE, TREASURY STOCK TOTAL
-------------------- PAID-IN RETAINED NET OF ------------------ STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS INCOME TAXES SHARES AMOUNT EQUITY
------------ ------ ------- -------- ------------- ---------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995.......... 46,569.44 $ 466 $5,227 $ 5,217 $(787) -- $ -- $10,123
Net income for 1995................. 1,474 1,474
Dividend ($5.54 per share).......... (250) (250)
Purchase of treasury stock.......... 1,409.30 (339) (339)
Change in unrealized gain (loss),
net of income taxes, on securities
available for sale................. 757 757
------------ ------ ------ ------- ----- ---------- ----- -------
Balance at December 31, 1995........ 46,569.44 466 5,227 6,441 (30) 1,409.30 (339) 11,765
Net income for 1996................. 2,028 2,028
Dividend ($5.54 per share).......... (250) (250)
Purchase of treasury stock.......... 8.14 (2) (2)
Change in unrealized gain (loss),
net of income taxes, on securities
available for sale................. (68) (68)
------------ ------ ------ ------- ----- ---------- ----- -------
Balance at December 31, 1996........ 46,569.44 466 5,227 8,219 (98) 1,417.44 (341) 13,473
Net income for 1997................. 2,339 2,339
Dividend ($6.05 per share).......... (275) (275)
Purchase of treasury stock.......... 1,374.00 (436) (436)
Sale of treasury stock.............. 147 (2,028.00) 535 682
Change in unrealized gain (loss),
net of income taxes, on securities
available for sale................. 377 377
------------ ------ ------ ------- ----- ---------- ----- -------
Balance at December 31, 1997........ 46,569.44 466 5,374 10,283 279 763.44 (242) 16,160
Net income for the six months ended
June 30, 1998...................... 1,605 1,605
Dividend ($3.40 per share).......... (155) (155)
Stock split (60-for-1).............. 2,747,596.96 932 (932) 56,842.96 --
Purchase of treasury stock.......... 200.00 (72) (72)
Sale of treasury stock.............. 48 (18,711.00) 102 150
Retirement of treasury stock........ (27,095.40) (14) (126) (27,095.40) 140 --
Change in unrealized gain (loss),
net of income taxes, on securities
available for sale................. (116) (116)
------------ ------ ------ ------- ----- ---------- ----- -------
Balance at June 30, 1998 (unaudited).. 2,767,071 $1,384 $4,364 $11,733 $ 163 12,000.00 $ (72) $17,572
============ ====== ====== ======= ===== ========== ===== =======
</TABLE>
See accompanying notes.
F-5
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities
Net income................... $ 1,605 $ 1,110 $ 2,339 $ 2,028 $ 1,474
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses.... 360 289 725 557 517
Provision for losses on other
real estate................. 11 20 44 18 27
Deferred income tax benefit.. -- -- (89) (108) (70)
Depreciation and amortization
expense..................... 348 358 726 654 604
Amortization of securities
premiums.................... 121 97 167 208 185
Accretion of securities
discounts................... (12) (7) (69) (12) (28)
Increase in cash surrender
value of life insurance..... (32) (32) (64) (61) (40)
Federal Home Loan Bank
dividend.................... (14) (8) (49) (30) (17)
(Gain) loss on sales of
securities.................. (222) 32 13 (10) (3)
(Gain) loss of sales of other
real estate................. (7) (20) (12) (18) 53
Increase in interest
receivable.................. (500) (349) (401) (387) (87)
Increase (decrease) in
interest payable............ (54) (173) 120 10 393
(Increase) decrease in other
assets...................... (209) (1,326) 79 81 (134)
Increase (decrease) in other
liabilities................. (21) 304 146 203 33
-------- -------- -------- -------- -------
Net cash provided by operating
activities................... 1,374 295 3,675 3,133 2,907
Investing activities
Securities held to maturity:
Proceeds from calls,
maturities, and principal
reductions.................. 2,935 1,363 2,821 3,195 2,215
Purchase of securities....... (13,456) (952) (2,115) (9,823) (8,153)
Securities available for
sale:
Proceeds from calls,
maturities, and principal
reductions.................. -- 1,650 3,554 2,162 --
Proceeds from sales of
securities.................. 7,179 2,305 19,618 2,182 7,220
Purchases of securities...... (24,618) (17,844) (40,746) (6,536) (401)
(Purchases) sales of Federal
Home Loan Bank stock........ 223 (375) (375) (29) (463)
Net increase in loans........ (19,443) (9,189) (19,899) (22,763) (17,822)
Mortgage loan originations... (7,804) (3,826) (13,568) (11,697) (10,133)
Proceeds from sales of
mortgage loans.............. 7,494 3,608 13,508 12,581 9,478
Proceeds from sales of other
real estate................. 25 238 324 102 130
Purchases of premises and
equipment................... (2,025) (570) (1,146) (2,548) (379)
-------- -------- -------- -------- -------
Net cash used in investing
activities.................. (49,540) (23,592) (38,024) (33,174) (16,998)
Financing activities
Net increase in deposits..... 57,098 16,262 26,094 28,773 17,422
Decrease in federal funds
purchased................... -- -- -- -- (1,750)
Net increase in revolving
line of credit.............. 100 -- 4,020 -- --
Borrowings from banks........ -- 10,000 10,000 7,000 --
Payments on notes payable to
banks....................... -- (3,000) (3,400) -- --
Purchases of treasury stock.. (72) (436) (436) (2) (339)
Proceeds from sales of
treasury stock.............. 150 -- 682 -- --
Dividends paid............... (150) (125) (250) (250) (250)
-------- -------- -------- -------- -------
Net cash provided by
financing activities........ 57,126 22,701 36,710 35,521 15,083
-------- -------- -------- -------- -------
Net increase (decrease) in
cash and cash equivalents... 8,960 (596) 2,361 5,480 992
Cash and cash equivalents at
beginning of period......... 15,737 13,376 13,376 7,896 6,904
-------- -------- -------- -------- -------
Cash and cash equivalents at
end of period............... $ 24,697 $ 12,780 $ 15,737 $ 13,376 $ 7,896
======== ======== ======== ======== =======
</TABLE>
See accompanying notes.
F-6
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of Lamar Capital
Corporation (the "Company") and its wholly-owned subsidiaries, The Mortgage
Shop, Inc. ("MSI") and Lamar Bank (the "Bank") and its wholly-owned
subsidiary, Southern Financial Services, Inc. ("SFSI"). All significant
intercompany balances and transactions have been eliminated in consolidation.
Business
The Company is a one-bank holding company headquartered in Purvis,
Mississippi. The Company operates seven full service banking locations in
retail banking predominantly in Lamar and Forrest counties in southeastern
Mississippi. SFSI operates a finance company in seven locations in
southeastern Mississippi to provide consumer loans to customers who may not be
eligible to obtain financing from the Bank. The Company's consolidated results
of operations are dependent upon net interest income, which is the difference
between the interest income on interest-earning assets and the interest
expense on interest-bearing liabilities. Principal interest-earning assets are
securities and real estate, consumer and commercial loans. Interest-bearing
liabilities consist of interest-bearing deposit accounts and other borrowed
funds.
Other sources of income include fees charged to customers for a variety of
banking services such as deposit account fees and commissions on credit life
insurance. The Company also generates fees in its mortgage banking activities
from the origination and sale of loans and servicing rights of 15 year and 30
year fixed rate loans in the secondary market.
The Company's operating expenses consist primarily of salaries and employee
benefits, occupancy, furniture and equipment expenses, communications costs
and other general and administrative operating expenses. The Company's results
of operations are significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, government policies
and actions of regulatory agencies.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents are stated at cost. Federal funds sold have
maturities generally of one day. The Bank is required to maintain average
balances with the Federal Reserve Bank. The required reserve balance at
December 31, 1997 was $3,088. Cash paid for interest during the six months
ended June 30, 1998 and 1997 and the years ended December 31, 1997, 1996 and
1995 was $6,578 (unaudited) and $5,198 (unaudited), $10,416, $8,419 and
$6,707, respectively.
Securities
Debt securities available for sale are carried at estimated fair value. The
amortized cost of debt securities classified as available for sale is adjusted
for amortization of premiums and accretion of discounts to maturity.
Unrealized gains or losses on these debt securities are included in
stockholders' equity net of income taxes. Debt
F-7
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
securities which the Bank has the ability and the intent to hold until
maturity are stated at cost, adjusted for amortization of premiums and
accretion of discounts. The adjusted cost of the specific debt securities sold
is used to compute gains or losses on the sale of securities. Premiums and
discounts are recognized in interest income using the interest method over the
period to maturity.
Federal Home Loan Bank stock is not considered a marketable equity security
under SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
Securities" and, therefore, is carried at cost.
Mortgage Banking Activities
The Company originates first mortgage loans (traditional 15 year and 30 year
fixed and variable rate loans) for sale, with the servicing rights, in the
secondary market. The Company limits its interest rate risk on such loans
originated by selling individual loans immediately after the customers lock
into their rate. Origination fees and any gains or losses on the sale of the
mortgage loans and servicing rights, which are not material to the
consolidated operations for the periods presented, are included in mortgage
loan fees. Mortgage loans originated and intended for sale in the secondary
market are carried at the lower of aggregate cost or market value, based on
the subsequent sales prices of such loans.
In June of 1996, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," which requires an entity to recognize the
financial and servicing assets it controls and the liabilities it has incurred
and to cease to recognize them as financial assets when control has been
surrendered in accordance with the criteria provided in SFAS No. 125.
Subsequently, the FASB issued SFAS No. 127, "Deferral of the Effective Date of
Certain Provisions of SFAS No. 125," which deferred until January 1, 1998, the
implementation of certain aspects of the original statement. The Company
adopted the provisions of SFAS No. 125 effective January 1, 1998. The adoption
of SFAS No. 125 did not have a material impact on the consolidated financial
condition or operating results of the Company.
Loans
Loans, other than mortgage loans held for sale, are stated at the principal
amounts outstanding, less unearned income and the reserve for possible loan
losses. Interest on loans and accretion of unearned income are computed by
methods which approximate a level rate of return on recorded principal. Loan
origination fees and certain direct loan origination costs are deferred and
recognized over the average lives of the loans as an adjustment to yield.
Commercial and real estate loans are placed on non-accrual status when they
become past due 90 days or more as to principal or interest unless they are
adequately secured and in the process of collection. All commercial and real
estate nonaccrual loans are considered to be impaired in accordance with
Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan." Consumer loans are generally are not
placed on nonaccrual status but are reviewed periodically and charged off when
deemed uncollectible or any payment of principal or interest is more than 120
days delinquent. Interest payments received on nonaccrual loans are applied to
principal if in management's opinion there is doubt as to the collectibility
of the principal; otherwise, these receipts are recorded as interest income. A
loan remains on nonaccrual status until it is current as to principal and
interest and the borrower demonstrates the ability to fulfill the contractual
obligation.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level considered adequate
by management and approved by the Board of Directors to provide for potential
loan losses. Management's determination of the adequacy is
F-8
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
based on an evaluation of the portfolio, past loan loss experience, growth and
composition of the loan portfolio, economic conditions and other relevant
factors; actual losses may vary from the current estimate. The allowance is
increased by provisions for loan losses charged against income. Actual loan
losses are deducted from and subsequent recoveries are added to the allowance.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed by the modified accelerated cost recovery method for
financial reporting purposes based upon the estimated useful lives of the
assets. Expenditures for major renewals and betterments are capitalized and
those for maintenance and repairs are charged to expense when incurred.
Other Real Estate
Other real estate is stated at the lower of fair value, based on current
market appraisals, or the recorded investment in the related loan.
Long-Lived Assets
Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and Assets to be Disposed Of," which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The effect of adopting SFAS No.
121 did not have a material impact on the consolidated financial position or
operating results of the Company.
Income Taxes
The Company and its subsidiaries file a consolidated federal and state
income tax return. The Company accounts for income taxes using the liability
method. Temporary differences occur between the financial reporting and tax
bases of assets and liabilities. Deferred tax assets and liabilities are
recorded for these differences based on enacted tax rates and laws that will
be in effect when the differences are expected to reverse.
Comprehensive Income
The Company adopted the provisions of SFAS No. 130, "Reporting Comprehensive
Income," effective for the six month period ended June 30, 1998. SFAS No. 130
requires the presentation of comprehensive income and establishes standards
for reporting its components (revenue, expenses, gains and losses) in a full
set of general purpose financial statements. The periods prior to June 30,
1998 were restated to meet the current reporting formats.
Recent Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which establishes standards for the
reporting of financial information from operating segments in annual and
interim financial statements. SFAS No. 131 requires that financial information
be reported on the same basis that is reported internally for evaluating
segment performance and allocating resources to segments. Because SFAS No. 131
addresses how supplemental financial information is disclosed in annual and
interim reports, its adoption is not anticipated to have an impact on the
consolidated financial position or operating results of the Company. The
Company is required to adopt the disclosure requirements in its 1998 annual
report, and in interim periods in 1999.
In June of 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in years
beginning after June 15, 1999. Because of the Company's minimal use of
derivatives, management does not anticipate that the adoption of the new
Statement will have a significant effect on the consolidated financial
position or operations of the Company.
F-9
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net Income per Common Share
In February of 1997, the FASB issued SFAS No. 128, "Earnings per Share,"
which requires the presentation of both basic and diluted net income per
share. The Company adopted the provisions of SFAS No. 128 effective December
31, 1997. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants, and convertible securities. Diluted
earnings per share is very similar to the previously reported earnings per
share. All earnings per share amounts for all periods presented, and where
appropriate, have been restated to conform to the SFAS No. 128 requirements.
Effective May 13, 1998, the Board of Directors adopted and the shareholders
approved an amendment to the Company's Articles of Incorporation to increase
the authorized shares to 2,000,000 shares of Common Stock with a par value of
$.50 per share and completed a 20-for-1 stock split of its Common Stock. On
August 3, 1998, the Board of Directors approved a 3-for-1 stock split of its
Common Stock and an amendment to the Company's Articles of Incorporation to
increase the authorized shares to 50,000,000 shares of Common Stock with a par
value of $.50 per share. A shareholders meeting has been scheduled for
August 25, 1998 to vote on the amendment to increase the authorized shares.
Management anticipates that the amendment will be approved by the shareholders
because voting majority of the Common Stock is held by the Board of Directors.
Consolidated net income per basic and diluted common share has been restated
for each period presented in the accompanying consolidated statements of
income to reflect the shares purchased by the ESOP (see Note 14) and the stock
splits described above.
Reclassifications
Certain reclassifications have been made in the accompanying consolidated
financial statements from prior presentations.
Unaudited Financial Information
Financial information as of June 30, 1998 and the six months ended June 30,
1997 and 1998 as well as certain other information presented subsequent to
December 31, 1997 is unaudited. In the opinion of management of the Company,
all adjustments necessary for a fair presentation of such financial
information have been included. All such adjustments are of a normal recurring
nature. The consolidated statements of income and comprehensive income, cash
flows and changes in stockholders' equity for the six months ended June 30,
1998 are not necessarily indicative of the consolidated statements of income
and comprehensive income, cash flows and changes in stockholders' equity which
may be expected for the year ended December 31, 1998.
2. DEBT SECURITIES
The aggregate carrying amounts and estimated fair value of debt securities
were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Debt securities available for sale:
U.S. Treasury securities and
obligations of U.S. government
agencies........................... $29,465 $141 $ (10) $29,596
Obligations of states and political
subdivisions....................... 10,718 187 (41) 10,864
Mortgage-backed securities.......... 13,773 69 (86) 13,756
------- ---- ----- -------
Total debt securities available for
sale................................ $53,956 $397 $(137) $54,216
======= ==== ===== =======
Debt securities held to maturity:
U.S. Treasury securities and
obligations of U.S. government
agencies........................... $ 7,584 $ 8 $ (4) $ 7,588
Obligations of states and political
subdivisions....................... 23,254 159 (196) 23,217
Mortgage-backed securities.......... 1,755 40 (1) 1,794
------- ---- ----- -------
Total debt securities held to
maturity............................ $32,593 $207 $(201) $32,599
======= ==== ===== =======
</TABLE>
F-10
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Debt securities available for sale:
U.S. Treasury securities and
obligations of U.S. government
agencies........................... $23,387 $314 $ (5) $23,696
Obligations of states and political
subdivisions....................... 9,621 165 (28) 9,758
Mortgage-backed securities.......... 3,357 16 (17) 3,356
------- ---- ----- -------
Total debt securities available for
sale................................ $36,365 $495 $ (50) $36,810
======= ==== ===== =======
Debt securities held to maturity:
U.S. Treasury securities and
obligations of U.S. government
agencies........................... $ 4,911 $ 3 $ (20) $ 4,894
Obligations of states and political
subdivisions....................... 14,913 149 (88) 14,974
Mortgage-backed securities.......... 2,287 49 (1) 2,335
------- ---- ----- -------
Total debt securities held to
maturity............................ $22,111 $201 $(109) $22,203
======= ==== ===== =======
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Debt securities available for sale:
U.S. Treasury securities and
obligations of U.S. government
agencies........................... $ 5,179 $ 1 $ (62) $ 5,118
Obligations of states and political
subdivisions....................... 10,806 10 (76) 10,740
Mortgage-backed securities.......... 2,831 16 (45) 2,802
------- ---- ----- -------
Total debt securities available for
sale................................ $18,816 $ 27 $(183) $18,660
======= ==== ===== =======
Debt securities held to maturity:
U.S. Treasury securities and
obligations of U.S. government
agencies........................... $ 5,658 $ 2 $ (75) $ 5,585
Obligations of states and political
subdivisions....................... 13,697 57 (261) 13,493
Mortgage-backed securities.......... 3,547 60 (11) 3,596
------- ---- ----- -------
Total debt securities held to
maturity............................ $22,902 $119 $(347) $22,674
======= ==== ===== =======
</TABLE>
F-11
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During the six months ended June 30, 1998 and 1997 and the years ended
December 31, 1997, 1996 and 1995, available-for-sale debt securities with a
fair value at the date of sale of $7,179 (unaudited), $2,305 (unaudited),
$19,618, $2,182 and $7,220, respectively, were sold. The gross realized gains
or losses on such sales totaled $222 (unaudited), $(32) (unaudited), $(13),
$10 and $3, respectively. The amortized cost and estimated fair value of debt
securities as of December 31, 1997, by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities because borrowers
may have the right to call or prepay certain obligations with or without call
or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------- ---------
<S> <C> <C>
Debt securities available for sale:
Due in one year or less................................ $ 431 $ 437
Due after one year through five years.................. 5,199 5,207
Due after five years through ten years................. 21,578 21,942
Due after ten years.................................... 5,800 15,868
Mortgage-backed securities............................. 3,357 3,356
------- -------
$36,365 $36,810
======= =======
Debt securities held to maturity:
Due in one year or less................................ $ 1,675 $ 1,685
Due after one year through five years.................. 10,381 10,380
Due after five years through ten years................. 5,211 5,222
Due after ten years.................................... 2,557 2,581
Mortgage-backed securities............................. 2,287 2,335
------- -------
$22,111 $22,203
======= =======
</TABLE>
Debt securities having carrying amounts of $71,323 (unaudited), $38,604 and
$35,521 at June 30, 1998, December 31, 1997 and 1996, respectively, were
pledged to secure public deposits and for other purposes required or permitted
by law.
3. LOANS
Loans consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ------------------
1998 1997 1996
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Real estate:
Residential................................ $ 58,018 $ 55,406 $ 48,062
Mortgage loans held for sale............... 781 421 361
Construction............................... 6,257 4,226 4,680
Commercial................................. 30,011 28,591 26,125
Consumer..................................... 54,929 51,965 45,555
Commercial................................... 35,978 25,556 21,992
-------- -------- --------
185,974 166,165 146,775
Unearned income.............................. (3,628) (3,512) (3,620)
Allowance for loan losses.................... (3,386) (3,101) (2,837)
-------- -------- --------
Net loans.................................... $178,960 $159,552 $140,318
======== ======== ========
</TABLE>
F-12
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Loans are made principally to customers in the Company's trade area. The
economy in this trade area is primarily retail, service and medical based. The
Company's loan portfolio is primarily centered in consumer loans and real
estate; therefore, the collection of such loans are dependent on the trade
area economy. The Company's lending policy provides that loans collateralized
by real estate are normally made with loan-to-value ratios of 80% or less.
Commercial loans are typically collateralized by property, equipment,
inventories and/or receivables with loan-to-value ratios from 50% to 80%.
Consumer loans are typically collateralized by automobiles and personal
property.
Transactions in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>
AS OF AND FOR THE SIX AS OF AND FOR THE YEAR ENDED
MONTHS ENDED DECEMBER 31,
JUNE 30, -------------------------------
1998 1997 1996 1995
--------------------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Balance at beginning of
period................. $3,101 $ 2,837 $ 2,529 $ 2,427
Provision for loan
losses................. 360 725 557 517
Loans charged off....... (187) (638) (488) (632)
Recoveries of loans
previously charged
off.................... 112 177 239 217
------ --------- --------- ---------
Balance at end of
period................. $3,386 $ 3,101 $ 2,837 $ 2,529
====== ========= ========= =========
</TABLE>
Non-accrual loans at June 30, 1998, December 31, 1997 and 1996 were $452
(unaudited), $147 and $400, respectively.
Certain directors, executive officers, principal shareholders, their
immediate family members and entities in which they or their immediate family
members have principal ownership interests, are customers of and have
transactions with the Company in the ordinary course of business. Loans to
these parties are made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable third-
party transactions and do not involve more than normal risks of collectibility
or present other unfavorable features.
These related party loan transactions are summarized as follows:
<TABLE>
<CAPTION>
SIX-MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
Balance at beginning of period.............. $1,436 $1,271
New loans................................... 982 1,078
Repayments.................................. (849) (913)
------ ------
Balance at end of period.................... $1,569 $1,436
====== ======
</TABLE>
4. PREMISES AND EQUIPMENT
Premises and equipment consisted of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ----------------
1998 1997 1996
----------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
Land........................................... $ 2,321 $ 1,657 $ 1,168
Bank premises.................................. 5,789 4,923 4,738
Furniture, fixtures and equipment.............. 3,991 3,651 3,328
Computer software.............................. 728 674 550
Accumulated depreciation....................... (4,514) (4,267) (3,566)
------- ------- -------
$ 8,315 $ 6,638 $ 6,218
======= ======= =======
</TABLE>
F-13
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. OTHER REAL ESTATE
Other real estate transactions consisted of the following:
<TABLE>
<CAPTION>
AS OF AND FOR THE AS OF AND FOR THE YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
JUNE 30, -------------------------------
1998 1997 1996 1995
----------------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Beginning balance......... $ 411 $ 767 $ 309 $ 157
Transfers of loans........ 35 24 560 362
Sales..................... (18) (336) (84) (183)
Provision for losses...... (11) (44) (18) (27)
----- --------- --------- ---------
Ending balance............ $ 417 $ 411 $ 767 $ 309
===== ========= ========= =========
</TABLE>
6. INTEREST BEARING DEPOSITS
Interest bearing deposits consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -----------------
1998 1997 1996
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Demand (Now, SuperNow and money market)...... $ 78,386 $ 50,765 $ 46,610
Savings...................................... 9,526 8,877 8,384
Individual retirement accounts............... 12,548 11,058 9,654
Time deposits, $100,000 and over............. 50,799 35,635 29,329
Other time deposits.......................... 91,067 81,112 70,657
-------- -------- --------
$242,326 $187,447 $164,634
======== ======== ========
</TABLE>
Scheduled maturities of time deposits, including individual retirement
accounts, outstanding at December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998................................................................ $ 70,689
1999................................................................ 22,192
2000................................................................ 24,155
2001................................................................ 6,232
2002................................................................ 4,537
--------
$127,805
========
</TABLE>
In the normal course of business, the Company has accepted deposits from
certain directors, executive officers, principal shareholders and other
related parties on substantially the same terms, including interest rates, as
those prevailing at the time of comparable transactions with third-party
customers. Such deposits were $852 (unaudited) at June 30, 1998 and $900 at
December 31, 1997 and 1996, respectively.
7. OTHER BORROWED FUNDS
Other borrowed funds include borrowings of $4,120 (unaudited) and $4,020 at
June 30, 1998 and December 31, 1997, respectively, under a $5,000 revolving
line of credit with an unrelated bank. Borrowings accrue interest at a
variable rate (9.25% at June 30, 1998 (unaudited) and December 31, 1997,
respectively) with interest paid monthly. The revolving line of credit expires
in December 1999. Borrowings under the revolving line of credit are
collateralized by substantially all of the assets of SFSI.
F-14
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Other borrowed funds include $3,600 (unaudited) at June 30, 1998 and $3,600
and $4,000 at December 31, 1997 and 1996, respectively, to an unrelated bank.
The note bears interest at a variable rate (7.75% at June 30, 1998 (unaudited)
and December 31, 1997 and 1996, respectively) with interest paid quarterly.
The note is due on demand; however, management anticipates that the note will
be paid by annual principal payments of $400 through December of 2006. The
note is collateralized by the common stock of the Bank (book value of
approximately $18,880 at December 31, 1997).
Notes payable to banks include advances of $10,000 (unaudited) at June 30,
1998 and $10,000 and $3,000 at December 31, 1997 and 1996, respectively, from
Federal Home Loan Bank ("FHLB"). The advances accrue interest at variable
rates (5.57% (unaudited) weighted average rate at June 30, 1998 and 5.66% and
6.12% weighted average rate at December 31, 1997 and 1996, respectively) with
interest paid monthly. The advances mature in April of 2002. The advances are
collateralized by the Bank's investment in FHLB stock, which totaled $754
(unaudited) at June 30, 1998 and $963 and $539 at December 31, 1997 and 1996,
respectively, and by a blanket pledge of the Bank's eligible real estate
loans. The Bank had available collateral to borrow an additional $31,000
(unaudited) from the FHLB at June 30, 1998.
8. INCOME TAXES
Income tax expense (benefit) consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Current:
Federal......................................... $ 831 $ 627 $ 430
State........................................... 112 92 57
------- ------- -------
943 719 487
Deferred.......................................... (89) (108) (70)
------- ------- -------
$ 854 $ 611 $ 417
======= ======= =======
</TABLE>
The differences between the Bank's actual income tax expense and amounts
computed at the statutory rates are summarized as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------
1998 1997 1997 1996 1995
-------- -------- --------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Amount computed at
statutory rate on income
before income taxes..... $ 728 $ 515 $ 1,086 $ 897 $ 643
Increase (decrease) in
income taxes resulting
from:
State income taxes, net
of federal benefit.... 45 30 66 51 32
Income from non-taxable
securities............ (236) (195) (323) (319) (285)
Other.................. (2) 55 25 (18) 27
-------- -------- --------- ------- -------
$ 535 $ 405 $ 854 $ 611 $ 417
======== ======== ========= ======= =======
</TABLE>
The Company made income tax payments of $516 (unaudited) and $456
(unaudited) during the six months ended June 30, 1998 and 1997, respectively,
and $984, $762 and $285 during the years ended December 31, 1997, 1996 and
1995, respectively.
F-15
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1997 1996
------ ------
<S> <C> <C>
Allowance for loan losses................................... $ 706 $ 638
Other real estate........................................... 60 25
Deferred compensation....................................... 105 80
Net unrealized (gains) losses on securities available for
sale....................................................... (166) 58
Other....................................................... (16) 24
------ ------
Total net deferred tax assets............................... $ 689 $ 825
====== ======
</TABLE>
9. EMPLOYMENT BENEFIT PLANS
The Company has a defined contribution 401(k) plan with a profit sharing
feature which covers substantially all employees. Participants in the 401(k)
plan may contribute up to the maximum allowed by Internal Revenue Service
regulations. The Company matches participants' contributions to the 401(k)
plan up to 3% of each participant's annual salary. The Company may make a
profit sharing contribution as determined by the Company's Board of Directors.
The Company's matching and profit sharing contributions vest 20% annually
beginning with the participant's third year of service. The Company's
contributions to the 401(k) plan were $32 (unaudited) and $30 (unaudited) for
the six months ended June 30, 1998 and 1997, respectively, and $85, $206 and
$183 for the years ended December 31, 1997, 1996 and 1995, respectively.
The Company established an employee stock ownership plan ("ESOP") effective
January 1, 1997 which covers substantially all employees. The Company may make
contributions to the ESOP at the discretion of its Board of Directors and may
be made in cash or common stock. The contributions vest 20% annually beginning
with the participant's third year of service. The Company's contributions to
the ESOP were $150 for the year ended December 31, 1997.
The Company maintains a self-insured medical plan. Under this plan, the
Company self-insures, in part, coverage for substantially all full-time
employees with coverage by insurance carriers for certain stop-loss provisions
for losses greater than $30 for each occurrence up to a maximum benefit of
$1,000. The Company's expenses pertaining to the self-insured medical plan,
including accruals for incurred but not reported claims, were $120 (unaudited)
and $171 (unaudited) for the six months ended June 30, 1998 and 1997,
respectively, and $323, $233 and $75 for the years ended December 31, 1997,
1996 and 1995, respectively.
The Company has deferred compensation agreements with certain officers for
payments to be made over specified periods beginning when the officers reach
age 65. Amounts accrued for these agreements are based upon deferred
compensation earned, discounted over the estimated remaining service life of
each officer. Deferred compensation expense totaled $35 (unaudited) and $33
(unaudited) for the six months ended June 30, 1998 and 1997, respectively, and
$66, $62 and $58 for the years ended December 31, 1997, 1996 and 1995,
respectively.
10. REGULATORY MATTERS
The Federal Reserve Board has adopted a system using risk-based capital
guidelines to evaluate the capital adequacy of bank holding companies. These
guidelines require a minimum total risk-based capital ratio of 8.0% (of which
at least 4.0% is required to consist of Tier 1 capital elements). The Federal
Reserve Board also utilizes
F-16
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
a leverage ratio (Tier 1 capital divided by average total consolidated assets)
to evaluate the capital adequacy of bank holding companies. The Company's
current regulatory ratios placed it in the "well-capitalized" category.
The Company's actual capital amounts and applicable ratios are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ----------------
1998 1997 1996
----------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
Capital:
Stockholders' equity......................... $17,572 $16,160 $13,473
Add (less) unrealized gains (losses) on
securities, net of income taxes............. (163) (279) 98
Intangible asset............................. (98) (102) --
------- ------- -------
Tier I capital............................... 17,311 15,779 13,571
Qualifying allowance for loan losses......... 2,390 2,009 1,760
------- ------- -------
Total capital................................ $19,701 $17,788 $15,331
======= ======= =======
Ratios:
Total capital to risk-weighted assets........ 10.35% 11.09% 10.92%
Tier I capital to risk-weighted assets....... 9.09 9.84 9.67
Tier I capital to total average assets
(leverage ratio)............................ 6.21 6.87 7.11
</TABLE>
State banking regulations require the Mississippi Department of Banking and
Consumer Finance to approve the payment of any dividends.
11. OFF-BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES
Loan commitments are made to accommodate the financial needs of the
Company's customers. Standby letters of credit commit the Company to make
payments on behalf of customers when certain specified future events occur.
They primarily are issued to support customers' trade transactions.
Both arrangements have credit risk essentially the same as that involved in
extending loans to customers and are subject to the Company's normal credit
policies. Collateral is obtained based on management's credit assessment of
the customer.
The Company's maximum exposure to credit losses for loan commitments (unused
lines of credit) outstanding at December 31, 1997 and expiring during 1998 was
$11,661.
The Company uses interest rate floor agreements to effectively convert a
portion of its loans to a minimum fixed rate basis, thus reducing the impact
of lower interest rates on the Company's net interest margin because
management believes that lower interest rates would adversely affect the yield
on loans more than on other earning assets or the cost of interest bearing
liabilities. At December 31, 1997 approximately 12.0% of the Company's loans
were effectively subject to the Company's interest rate floor agreements that
expire at various dates through January 16, 2000. The notional amount of $20.0
million for these agreements effectively fixes the Company's minimum variable
interest rate on $20.0 million of loans using a 6% three-month LIBOR rate as
the floor. At June 30, 1998 and December 31, 1997, the three-month LIBOR rate
was 5.72% (unaudited) and 5.81%, respectively. Net receipts and the
amortization of the premium for the agreements are recognized as adjustments
to interest income.
F-17
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Although the ultimate outcome of these other
actions and claims cannot be ascertained at this time, it is the opinion of
management (based on advice of legal counsel) that such litigation and claims
should be resolved without material effect on the Company's consolidated
financial position or operating results.
12. PARENT COMPANY CONDENSED FINANCIAL INFORMATION
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1996
------- -------
<S> <C> <C>
Assets:
Cash and cash equivalents................................ $ -- $ 184
Investment in subsidiaries............................... 19,069 17,044
Due from subsidiaries.................................... 660 347
Premises and equipment................................... 1,173 1,000
Other.................................................... 19 19
------- -------
Total assets......................................... $20,921 $18,594
======= =======
Liabilities:
Due to subsidiaries...................................... $ 1,010 $ 995
Other liabilities........................................ 151 126
Other borrowed funds..................................... 3,600 4,000
------- -------
Total liabilities.................................... 4,761 5,121
Stockholders' equity:
Common stock............................................. 466 466
Paid-in capital.......................................... 5,374 5,227
Retained earnings........................................ 10,283 8,219
Net unrealized gain (loss) on securities available for
sale, net of income taxes............................... 279 (98)
Treasury stock........................................... (242) (341)
------- -------
Total stockholders' equity............................. 16,160 13,473
------- -------
Total liabilities and stockholders' equity........... $20,921 $18,594
======= =======
</TABLE>
F-18
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
Statements of Income -----------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Income:
Dividends from subsidiaries........................ $ 1,110 $ 475 $ 615
Other.............................................. 23 1 --
------- ------- -------
Total income................................... 1,133 476 615
------- ------- -------
Expenses:
Interest expense................................... 392 1 --
Other.............................................. 60 59 45
------- ------- -------
Total expenses................................. 452 60 45
------- ------- -------
Income before income taxes......................... 681 416 570
Income tax benefit................................. 160 22 17
------- ------- -------
Income before equity in undistributed net income of
subsidiaries...................................... 841 438 587
Equity in undistributed net income of
subsidiaries...................................... 1,498 1,590 887
------- ------- -------
Net income......................................... $ 2,339 $ 2,028 $ 1,474
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
Statements of Cash Flows ---------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Operating activities:
Net income.................................... $ 2,339 $ 2,028 $ 1,474
Adjustments to reconcile net income to net
cash provided by operating activities:
Undistributed net income of subsidiaries... (1,498) (1,590) (887)
Depreciation expense....................... 9 -- --
(Increase) decrease in due from
subsidiaries.............................. (298) 815 (1)
Increase in other assets................... -- (14) (5)
Increase in other liabilities.............. -- 1 --
-------- -------- -------
Net cash provided by operating activities.. 552 1,240 581
Investment activities:
Capital contribution to subsidiary............ (150) (3,850) --
Purchases of premises and equipment........... (182) (1,000) --
-------- -------- -------
Net cash used in investing activities......... (332) (4,850) --
Financing activities:
Dividends paid................................ (250) (250) (250)
Borrowings from a bank........................ -- 4,000 --
Payments on note payable to a bank............ (400) -- --
Purchases of treasury stock................... (436) (2) (339)
Proceeds from sales of treasury stock......... 682 -- --
-------- -------- -------
Net cash provided by (used in) financing
activities................................... (404) 3,748 (589)
-------- -------- -------
Net increase (decrease) in cash and cash
equivalents.................................. (184) 138 (8)
Cash and cash equivalents at beginning of
year......................................... 184 46 54
-------- -------- -------
Cash and cash equivalents at end of year...... $ -- $ 184 $ 46
======== ======== =======
</TABLE>
F-19
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. FAIR VALUES OF FINANCIAL INSTRUMENTS
Generally accepted accounting principles require disclosure of fair value
information about financial instruments for which it is practicable to
estimate fair value, whether or not the financial instruments are recognized
in the financial statements. When quoted market prices are not available, fair
values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. The
derived fair value estimates cannot be substantiated through comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. Certain financial instruments and all non-
financial instruments are excluded from these disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company. The use of different market assumptions and
estimation methodologies may have a material effect on the estimated fair
value amounts.
The carrying amount of cash and cash equivalents, non-interest bearing
deposits, other borrowed funds and interest rate floors approximates the
estimated fair value of these financial instruments. The estimated fair value
of securities is based on quoted market prices, dealer quotes and prices
obtained from independent pricing services. The estimated fair value of loans
and interest-bearing deposits is based on present values using applicable
risk-adjusted spreads to the appropriate yield curve to approximate current
interest rates applicable to each category of these financial instruments. The
fair value of the loan commitments to extend credit is based on the difference
between the interest rate at which the Company's committed to make the loans
and the current rates at which similar loans would be made to borrowers with
similar credit ratings and the same maturities. The fair value is not
material.
Variances between the carrying amount and the estimated fair value of loans
reflect both credit risk and interest rate risk. The Company is protected
against changes in credit risk by the allowance for loan losses.
The fair value estimates presented are based on information available to
management as of December 31, 1997 and 1996. Although management is not aware
of any factors that would significantly affect the estimated fair value
amounts, these amounts have not been revalued for purposes of these financial
statements since those dates. Therefore, current estimates of fair value may
differ significantly from the amounts presented.
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1997 1996
----------------- -----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Securities available for sale........... $ 36,810 $ 36,810 $ 18,660 $ 18,660
Securities held to maturity............. 22,111 22,203 22,902 22,674
Loans................................... 159,552 158,116 140,318 139,448
Interest bearing deposits............... 187,447 181,355 164,634 164,864
</TABLE>
14. SUBSEQUENT EVENTS (UNAUDITED)
On July 30, 1998, the ESOP purchased 18,711 shares of the Company's Common
Stock included in treasury stock for cash which was held by the Bank in a
deposit account at June 30, 1998. The June 30, 1998 consolidated stockholders'
equity balances have been restated to reflect the treasury shares purchased by
the ESOP.
The Company intends to file a registration statement with the Securities and
Exchange Commission covering 1,568,181 shares of Common Stock to be sold by
the Company in an underwritten public offering.
F-20
<PAGE>
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. YEAR 2000 COMPLIANCE (UNAUDITED)
The Company has developed a plan to address the Year 2000 issue. The issue
arises from the fact that many existing computer programs were written to
store only two digits of date-related information in order to more efficiently
handle and store data. Thus, the programs were unable to properly distinguish
between the year 1900 and the year 2000. The Company is in the process of
assessing and converting or replacing various programs, hardware and
instrumentation systems to make them Year 2000 compatible. The Company's Year
2000 project is comprised of two components--business applications and
equipment.
In assessing the Year 2000 issue, the Company is examining its own software
and equipment and potential problems with borrowers, government entities and
others providing services to the Company. In addition to computer equipment,
the Company is assessing possible problems with micro-processors embedded
within operating equipment, such as telecommunication equipment, vaults,
security and alarm systems, and automated teller machines. The Company is
assessing the impact of the failure of a borrower's systems or a borrower's
failure to comply with debt covenant terms regarding Year 2000 issues on the
credit quality of the borrower's loan. The Company is also examining the Year
2000 issue's impact on services such as payroll and investment securities
operations that are provided by third parties.
The Company has completed the Year 2000 awareness and assessment phases of
the plan and has entered into the remediation phase. Management expects the
implementation phase of the Year 2000 plan to be completed by December 31,
1998. Testing and any required corrective actions will be completed in the
fourth quarter of 1998 and in 1999. The Company has expended approximately
$10,000 through June 30, 1998 and projects the additional cost of remediation
will be from $125,000 to $150,000, of which $25,000 to $50,000 will be
incurred in 1999. Approximately $60,000 to $70,000 is projected to be
capitalized because certain systems and equipment are being replaced because
of Company needs rather than from Year 2000 issues. Corrective actions to make
the Company's core operating systems Year 2000 compliant will be made by
software providers for those systems under existing licensing agreements with
the Company. The cost could vary from current estimates if the scope of the
Company's Year 2000 remediation exceeds management's projections. The Company
has adopted a contingency plan to address business resumption plans if the
Year 2000 plan is not completed successfully.
Management is aware that the Year 2000 problem could also present liquidity
challenges as January 1, 2000 approaches. Assessing liquidity needs is an
integral part of the Company's Year 2000 contingency plan even though it is
too early to determine whether additional liquidity may be needed.
F-21
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO OR FROM ANY PERSON TO OR
FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Summary Consolidated Financial Data...................................... 6
Risk Factors............................................................. 7
The Company.............................................................. 13
Use of Proceeds.......................................................... 18
Dilution................................................................. 19
Capitalization........................................................... 19
Dividend Policy.......................................................... 20
Selected Consolidated Financial Data..................................... 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Principal Shareholders and Stock Ownership of Management................. 45
Management............................................................... 46
Certain Relationships and Related Transactions........................... 49
Supervision and Regulation............................................... 49
Description of Capital Stock............................................. 57
Shares Eligible for Future Sale.......................................... 61
Underwriting............................................................. 63
Legal Matters............................................................ 64
Experts.................................................................. 64
Available Information.................................................... 65
Index to Consolidated Financial Statements............................... F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1,363,636 SHARES
[LOGO OF LAMAR CAPITAL CORPORATION]
COMMON STOCK
OF
LAMAR CAPITAL CORPORATION
---------------
PROSPECTUS
---------------
MORGAN KEEGAN & COMPANY, INC.
STERNE, AGEE & LEACH, INC.
[DATE]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated fees and expenses incurred by the Registrant in connection
with this Offering, other than underwriting discounts and commissions, are as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 5,552
National Association of Securities Dealers, Inc. filing fee..... 2,382
Printing and engraving expenses................................. 120,000
Legal fees and expenses of counsel for the Registrant........... 100,000
Accounting fees and expenses.................................... 125,000
Transfer Agent fees............................................. 100
Miscellaneous................................................... 9,966
--------
Total......................................................... $363,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provide for indemnification of
officers, directors and employees in connection with a proceeding including
reasonable expenses (attorney's fees) to the fullest extent permitted by the
MBCA in effect from time to time and also provide for indemnification against
liability to the Company, liability for improperly receiving a personal
benefit and/or liability for any other reason, provided that such person's
conduct did not constitute gross negligence or willful misconduct as
determined by a board of directors or committee designated by the Board, by
special legal counsel, by the shareholders or by a court.
The Company's Articles of Incorporation also provide for advances to persons
for reasonable expenses if the person furnishes a written undertaking to repay
the advance if these actions are adjudged to be grossly negligent or willful
misconduct and a determination is made that the facts known would not preclude
indemnification.
Pursuant to the Underwriting Agreement, a form of which is filed as Exhibit
1.1 to this Registration Statement, the Underwriters have agreed to indemnify
the directors, officers and controlling persons of the Registrant against
certain civil liabilities that may be incurred in connection with this
Offering, including certain liabilities under the Securities Act.
The Registrant may provide liability insurance for each director and officer
for certain losses arising from claims or changes made against them while
acting in their capabilities as directors or officers of Registrant, whether
or not Registrant would have the power to indemnify such person against such
liability, as permitted by law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following provides information as to securities of the Registrant sold
by the Registrant within the past 36 months which were not registered under
the Securities Act:
In July of 1998, the Company sold 12,000 shares of Common Stock at book
value to an individual (who is the brother of a director of the Company) for
$75,360. This individual had previously sold these shares to the Company at
book value in April of 1998 for $72,170. On July 31, 1998 the Company sold
18,711 shares of Common Stock to the Company's ESOP for an aggregate cash
consideration of approximately $150,000. In September, November, and December
of 1997 the Company sold 121,680 shares of treasury stock at book value to ten
persons who were officers of the Bank or relatives of officers of the Bank,
all of whom were residents of the State of Mississippi, for aggregate cash
consideration of $682,268. The shares in each of these transactions were sold
in reliance on the exemptions from registration provided by Section 4(2) and
Section 3(a)(11) of the Securities Act of 1933.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as exhibits to this Registration
Statement:
<TABLE>
<C> <S>
1 Form of Underwriting Agreement between Registrant and Morgan Keegan &
Company, Inc. and Sterne, Agee & Leach, Inc., on behalf of the several
underwriters named therein
3.1* Articles of Incorporation of Registrant, as amended
3.2 Amendment to Articles of Incorporation of Registrant effective
September 21, 1998
3.3* Bylaws of Registrant, as amended
4.1 Provisions of Articles of Incorporation of Registrant defining rights
of security holders (see Articles of Incorporation, as amended, of
Registrant filed as Exhibits 3.1, 3.2 and 3.3 herein)
4.2 Shareholder Rights Plan
4.3 Specimen Stock Certificate
5 Opinion of Watkins Ludlam Winter & Stennis, P.A.
10.1 Executive Salary Continuation Agreements, as amended
10.2 Stock Incentive Plan
10.3 Agreement with Robert Thomas Securities, Inc.
16 Letter from McArthur, Thames, Slay and Dews, PLLC
21* Subsidiaries of the Registrant
23.1 Consent of Watkins Ludlam Winter & Stennis, P.A. (included in Exhibit
5)
23.2 Consent of Ernst & Young LLP
23.3 Consent of McArthur, Thames, Slay and Dews, PLLC
24* Power of attorney (contained on the signature page of Form S-1
Registration Statement)
27* Financial Data Schedule
</TABLE>
- --------
* Previously filed
(b) Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officer and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, LAMAR
CAPITAL CORPORATION HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PURVIS AND STATE OF MISSISSIPPI ON SEPTEMBER 30,
1998.
Lamar Capital Corporation
/s/ Robert W. Roseberry
By: ___________________________________
ROBERT W. ROSEBERRY
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE INDICATED CAPACITIES.
SIGNATURES CAPACITIES DATE
<TABLE>
<S> <C>
/s/ O. B. Black, Jr.* Director September 30,
- ------------------------------------ 1998
O. B. BLACK, JR.
/s/ William H. Jordan* Director September 30,
- ------------------------------------ 1998
WILLIAM H. JORDAN
/s/ Kenneth M. Lott* Director September 30,
- ------------------------------------ 1998
KENNETH M. LOTT
/s/ James R. Pylant* Director September 30,
- ------------------------------------ 1998
JAMES R. PYLANT
/s/ Jane P. Roberts* Director September 30,
- ------------------------------------ 1998
JANE P. ROBERTS
/s/ Monty C. Roseberry* Director September 30,
- ------------------------------------ 1998
MONTY C. ROSEBERRY
/s/ Robert W. Roseberry Director (Principal September 30,
- ------------------------------------ Executive Officer) 1998
ROBERT W. ROSEBERRY
/s/ Donna T. Rutland* Chief Financial September 30,
- ------------------------------------ Officer (Principal 1998
DONNA T. RUTLAND Accounting and
Financial Officer)
/s/ Robert W. Roseberry
*By: _______________________________
ROBERT W. ROSEBERRY
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
AND SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE AT
BEGINNING FOR NET END
DESCRIPTION OF PERIOD LOAN LOSSES CHARGE-OFFS OF PERIOD
- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Six-months ended June 30, 1998:
Allowance for loan losses........ $3,101 $360 $ 75 $3,386
====== ==== ==== ======
Year ended December 31, 1997:
Allowance for loan losses........ $2,837 $725 $461 $3,101
====== ==== ==== ======
Year ended December 31, 1996:
Allowance for loan losses........ $2,529 $557 $249 $2,837
====== ==== ==== ======
Year ended December 31, 1995:
Allowance for loan losses........ $2,427 $517 $415 $2,529
====== ==== ==== ======
</TABLE>
S-1
<PAGE>
INDEX TO EXHIBITS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as exhibits to this Registration
Statement:
<TABLE>
<C> <S>
1 Form of Underwriting Agreement between Registrant and Morgan Keegan &
Company, Inc. and Sterne, Agee & Leach, Inc., on behalf of the several
underwriters named therein
3.1* Articles of Incorporation of Registrant, as amended
3.2 Amendment to Articles of Incorporation of Registrant effective
September 21, 1998
3.3* Bylaws of Registrant, as amended
4.1 Provisions of Articles of Incorporation of Registrant defining rights
of security holders (see Articles of Incorporation, as amended, of
Registrant filed as Exhibits 3.1, 3.2 and 3.3 herein)
4.2 Shareholder Rights Plan
4.3 Specimen Stock Certificate
5 Opinion of Watkins Ludlam Winter & Stennis, P.A.
10.1 Executive Salary Continuation Agreements, as amended
10.2 Stock Incentive Plan
10.3 Agreement with Robert Thomas Securities, Inc.
16 Letter from McArthur, Thames, Slay and Dews, PLLC
21* Subsidiaries of the Registrant
23.1 Consent of Watkins Ludlam Winter & Stennis, P.A. (included in Exhibit
5)
23.2 Consent of Ernst & Young LLP
23.3 Consent of McArthur, Thames, Slay and Dews, PLLC
24* Power of attorney (contained on the signature page of Form S-1
Registration Statement)
27* Financial Data Schedule
</TABLE>
- --------
* Previously filed
<PAGE>
EXHIBIT 1
FORM OF UNDERWRITING AGREEMENT BETWEEN
REGISTRANT AND MORGAN KEEGAN & COMPANY, INC.
LAMAR CAPITAL CORPORATION
(A MISSISSIPPI CORPORATION)
COMMON STOCK
UNDERWRITING AGREEMENT
DATED __________________, 1998
<PAGE>
LAMAR CAPITAL CORPORATION
UNDERWRITING AGREEMENT
_______________, 1998
MORGAN KEEGAN & COMPANY, INC.
STERNE, AGEE & LEACH, INC.
As Representatives of the Several
Underwriters Named in Schedule A hereto
c/o Morgan Keegan & Company, Inc.
50 Front Street
Memphis, Tennessee 38103
Dear Sirs:
Lamar Capital Corporation, a Mississippi corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule A
(collectively, the "Underwriters") an aggregate of 1,363,636 shares of Common
Stock, $0.50 par value per share (the "Common Stock"), of the Company (the "Firm
Shares"). The Firm Shares are to be sold to each Underwriter, acting severally
and not jointly, in such amounts as are set forth in Schedule A opposite the
name of such Underwriter.
The Company also grants to the Underwriters, severally and not jointly, the
option described in Section 2 to purchase, on the same terms as the Firm Shares,
up to 204,545 additional shares of Common Stock (the "Option Shares") solely to
cover over-allotments. The Firm Shares, together with all or any part of the
Option Shares, are collectively herein called the "Shares."
Section 1. Representations and Warranties of the Company. The Company
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represents and warrants to and agrees with each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-61355) with
respect to the Shares, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the applicable
rules and regulations (the "1933 Act Regulations") of the Securities and
Exchange Commission (the "Commission"), and has been filed with the
Commission; and such amendments to such registration statement as may have
been required prior to the date hereof have been filed with the Commission,
and such amendments have been similarly prepared. Copies of such
registration statement and amendment or amendments and of each related
preliminary prospectus, and the exhibits, financial statements and
schedules, as finally amended and revised, have been delivered to you. The
Company has prepared in the same manner, and proposes so to file with the
Commission, one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of
final prospectus, (ii) if the
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Company does not rely on Rule 434 of the 1933 Act, a final prospectus in
accordance with Rules 430A and 424(b) of the 1933 Act Regulations or (iii)
if the Company relies on Rule 434 of the 1933 Act, a term sheet relating to
the Shares that shall identify the preliminary prospectus that it
supplements containing such information as is required or permitted by
Rules 434, 430A and 424(b) of the 1933 Act. The Company also may file a
related registration statement with the Commission pursuant to Rule 462(b)
of the 1933 Act for the purpose of registering certain additional shares of
Common Stock, which registration statement will be effective upon filing
with the Commission. As filed, such amendment, any registration statement
filed pursuant to Rule 462(b) of the 1933 Act and any term sheet and form
of final prospectus, or such final prospectus, shall include all Rule 430A
Information (as defined below) and, except to the extent that you shall
agree in writing to a modification, shall be in all respects in the form
furnished to you prior to the date and time that this Agreement was
executed and delivered by the parties hereto, or, to the extent not
completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest preliminary prospectus) as the Company shall have previously advised
you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Time (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that
such term shall also include all Rule 430A Information contained in any
Prospectus and any Term Sheet (as hereinafter defined) and deemed to be
included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the 1933 Act
Regulations. The term "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in the preceding paragraph and any preliminary
prospectus included in the Registration Statement at the time it becomes
effective that omits Rule 430A Information. The term "Prospectus" as used
in this Agreement shall mean (a) if the Company relies on Rule 434 of the
1933 Act, the Term Sheet relating to the Shares that is first filed
pursuant to Rule 424(b)(7) of the 1933 Act, together with the Preliminary
Prospectus identified therein that such Term Sheet supplements or (b) if
the Company does not rely on Rule 434 of the 1933 Act, the prospectus
relating to the Shares in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations or, if no
filing pursuant to Rule 424(b) of the 1933 Act Regulations is required,
shall mean the form of final prospectus included in the Registration
Statement at the time such Registration Statement becomes effective. The
term "Rule 430A Information" means information with respect to the Shares
and the offering thereof permitted pursuant to Rule 430A of the 1933 Act
Regulations to be omitted from the Registration Statement when it becomes
effective. The term "462(b) Registration Statement" means any registration
statement filed with the Commission pursuant to Rule 462(b) under the 1933
Act (including the Registration Statement and any Preliminary Prospectus or
Prospectus incorporated therein at the time such registration statement
becomes effective). The term "Term Sheet" means any term sheet that
satisfies the requirements of Rule 434 of the 1933 Act. Any reference to
the "date" of a Prospectus that includes a Term Sheet shall mean the date
of such Term Sheet.
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(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and no proceedings for that
purpose have been instituted or threatened by the Commission or the state
securities or blue sky authority of any jurisdiction, and each Preliminary
Prospectus and any amendment or supplement thereto, at the time of filing
thereof, conformed in all material respects to the requirements of the 1933
Act and the 1933 Act Regulations, and did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter expressly
for use in the Registration Statement or any 462(b) Registration Statement.
(c) When the Registration Statement and any 462(b) Registration
Statement shall become effective, or any Term Sheet that is part of the
Prospectus is filed with the Commission pursuant to Rule 434, when the
Prospectus is first filed pursuant to Rule 424(b) of the 1933 Act
Regulations, when any amendment to the Registration Statement or any 462(b)
Registration Statement becomes effective, and when any supplement to the
Prospectus or any Term Sheet is filed with the Commission and at the
Closing Time and Date of Delivery (as hereinafter defined), (i) the
Registration Statement, the 462(b) Registration Statement, the Prospectus,
the Term Sheet and any amendments thereof and supplements thereto will
conform in all material respects with the applicable requirements of the
1933 Act and the 1933 Act Regulations, and (ii) neither the Registration
Statement, the 462(b) Registration Statement, the Prospectus, any Term
Sheet nor any amendment or supplement thereto will contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter expressly for use in the Registration Statement or any 462(b)
Registration Statement.
(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Mississippi
with all requisite corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus. The Company is duly qualified to transact
business as a foreign corporation and is in good standing in each of the
jurisdictions in which the ownership or leasing of its properties or the
nature or conduct of its business as described in the Registration
Statement and the Prospectus requires such qualification, except where the
failure to do so would not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined)
taken as a whole.
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(e) All of the Company's subsidiaries are named on an exhibit to the
Registration Statement (each a "Subsidiary" and collectively the
"Subsidiaries"). Each of the Subsidiaries has been duly incorporated and
is validly existing as a corporation or a bank in good standing under the
laws of the state of its incorporation with all requisite corporate power
and authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and the Prospectus.
Each such entity is duly qualified to do business and is in good standing
as a foreign corporation or bank in each other jurisdiction in which the
ownership or leasing of its properties or the nature or conduct of its
business as described in the Registration Statement and the Prospectus
conducted requires such qualification, except where the failure to do so
would not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of such
Subsidiaries.
(f) The Company has full corporate right, power and authority to
enter into this Agreement, to issue, sell and deliver the Shares as
provided herein and to consummate the transactions contemplated herein.
This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating to or
affecting creditors' rights, or by general principles of equity whether
considered at law or at equity and except to the extent enforcement of the
indemnification provisions set forth in Section 6 of this Agreement may be
limited by federal or state securities laws or the public policy underlying
such laws.
(g) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Shares, the execution, delivery and
performance of this Agreement and the consummation by the Company of the
transactions contemplated hereby has been made or obtained and is in full
force and effect, except as may be required under applicable state
securities laws.
(h) Neither the issuance, sale and delivery by the Company of the
Shares, nor the execution, delivery and performance of this Agreement, nor
the consummation of the transactions contemplated hereby will conflict with
or result in a breach or violation of any of the terms and provisions of,
or (with or without the giving of notice or the passage of time or both)
constitute a default under the articles of incorporation or bylaws of the
Company or the Subsidiaries, respectively, or under any indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the Company or the Subsidiaries, respectively, is a
party or to which the Company or the Subsidiaries, respectively, any of
their respective properties or other assets is subject; or any applicable
statute, judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to any of the foregoing or any of
their respective properties; or result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or asset of the
Company or the Subsidiaries, respectively.
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(i) The Shares to be issued and sold to the Underwriters hereunder
have been validly authorized by the Company. When issued and delivered
against payment therefor as provided in this Agreement, the Shares will be
duly and validly issued, fully paid and nonassessable. No preemptive
rights of shareholders exist with respect to any of the Shares which have
not been satisfied or waived. No person or entity holds a right to require
or participate in the registration under the 1933 Act of the Shares
pursuant to the Registration Statement which has not been satisfied or
waived; and, except as set forth in the Prospectus, no person holds a right
to require registration under the 1933 Act of any shares of Common Stock of
the Company at any other time which has not been satisfied or waived.
(j) The Company's authorized, issued and outstanding capital stock is
as disclosed in the Prospectus. All of the issued shares of capital stock
of the Company have been duly authorized and validly issued, are fully paid
and nonassessable and conform to the description of the Company's capital
stock contained in the Prospectus.
(k) All of the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and, except as disclosed in the Prospectus, are owned
directly or indirectly through another Subsidiary by the Company free and
clear of all liens, security interests, pledges, charges, encumbrances,
defects, shareholders' agreements, voting trusts, equities or claims of any
nature whatsoever. Other than the Subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other equity securities of any
other corporation or any ownership interest in any partnership, joint
venture or other association.
(l) Except as disclosed in the Prospectus, there are no outstanding
(i) securities or obligations of the Company or any of its Subsidiaries
convertible into or exchangeable for any capital stock of the Company or
any such Subsidiary, (ii) warrants, rights or options to subscribe for or
purchase from the Company or any such Subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such Subsidiary to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options.
(m) The Company and the Subsidiaries have good and marketable title
in fee simple to all real property that is material to the Company's
business, if any, and good title to all personal property owned by them
that is material to the Company's business, in each case free and clear of
all liens, security interests, pledges, charges, encumbrances, mortgages
and defects, except such as are disclosed in the Prospectus or such as do
not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries; and any real property and buildings held
under lease by the Company or any Subsidiary are held under valid, existing
and enforceable leases, with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company or such
Subsidiary.
5
<PAGE>
(n) The financial statements of the Company and its consolidated
Subsidiaries included in the Registration Statement and Prospectus present
fairly the financial position of the Company and its consolidated
Subsidiaries as of the dates indicated and the results of operations and
cash flows for the Company and its consolidated Subsidiaries for the
periods specified, all in conformity with generally accepted accounting
principles applied on a consistent basis. The financial statement
schedules included in the Registration Statement and the amounts in the
Prospectus under the captions "Prospectus Summary -- Summary Consolidated
Financial Data" and "Selected Consolidated Financial Data" fairly present
the information shown therein and have been compiled on a basis consistent
with the financial statements included in the Registration Statement and
the Prospectus.
(o) Ernst & Young LLP, who have examined and are reporting upon the
audited financial statements and schedules included in the Registration
Statement, are, and were during the periods covered by their reports
included in the Registration Statement and the Prospectus, independent
public accountants within the meaning of the 1933 Act and the 1933 Act
Regulations.
(p) None of the Company or the Subsidiaries has sustained, since
December 31, 1997, any material loss or interference with its business from
fire, explosion, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or arbitrators or court
or governmental action, order or decree- and, since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, and except as otherwise stated in the Registration Statement
and Prospectus, there has not been (i) any material change in the capital
stock, long-term debt, obligations under capital leases or short-term
borrowings of the Company, or the Subsidiaries, or (ii) any material
adverse change, or any development which could reasonably be seen as
involving a prospective material adverse change, in or affecting the
business, prospects, properties, assets, results of operations or condition
(financial or other) of the Company, or the Subsidiaries.
(q) Neither the Company nor its Subsidiaries is in violation of its
respective articles of incorporation or by-laws, and no default exists,
and, to the Company's knowledge, no event has occurred nor state of facts
exists, which, with notice or after the lapse of time to cure or both,
would constitute a default in the due performance and observance of any
material obligation, agreement, term, covenant, consideration or condition
contained in any indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument to which any such entity is a party
or to which any such entity or any of its properties is subject. None of
the Company or its Subsidiaries is in violation of, or in default with
respect to, any statute, rule, regulation, order, judgment or decree,
except as may be properly described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a material
adverse effect on the financial position, results of operations or business
of each such entity, respectively.
(r) There is not pending or threatened, any action, suit, proceeding,
inquiry or investigation against the Company, the Subsidiaries or any of
their respective officers and
6
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directors or to which the properties, assets or rights of any such entity
are subject, before or brought by any court or governmental agency or body
or board of arbitrators that are required to be described in the
Registration Statement or the Prospectus but are not described as required.
(s) The descriptions in the Registration Statement and the Prospectus
of the contracts, leases and other legal documents therein described
present fairly the information required to be shown, and there are no
contracts, leases, or other documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not described or filed as
required.
(t) The Company, owns, possesses or has obtained all material
permits, licenses, franchises, certificates, consents, orders, approvals
and other authorizations of governmental or regulatory authorities or other
entities as are necessary to own or lease, as the case may be, and to
operate its properties and to carry on its business as presently conducted,
or as contemplated in the Prospectus to be conducted, and the Company has
not received any notice of proceedings relating to revocation or
modification of any such licenses, permits, franchises, certificates,
consents, orders, approvals or authorizations.
(u) The Company owns or possesses adequate license or other rights to
use all patents, trademarks, service marks, trade names, copyrights,
software and design licenses, trade secrets, manufacturing processes, other
intangible property rights and know-how (collectively "Intangibles")
necessary to entitle the Company to conduct its business as described in
the Prospectus, and the Company has not received notice of infringement of
or conflict with (and knows of no such infringement of or conflict with)
asserted rights of others with respect to any Intangibles which could
materially and adversely affect the business, prospects, properties,
assets, results of operations or condition (financial or otherwise) of the
Company.
(v) Each of the Company's and the Subsidiaries' respective systems of
internal accounting controls taken as a whole is sufficient to meet the
broad objectives of internal accounting control insofar as those objectives
pertain to the prevention or detection of errors or irregularities in
amounts that would be material in relation to the Company's or the
Subsidiaries' financial statements; and, none of the Company, the
Subsidiaries, or any employee or agent thereof, has made any payment of
funds of the Company or the Subsidiaries, or received or retained any funds
and no funds of the Company or the Subsidiaries, have been set aside to be
used for any payment, in each case in violation of any law, rule or
regulation.
(w) Each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise
tax returns required to be filed through the date hereof and have paid all
taxes shown as due thereon; and no tax deficiency has been asserted against
any such entity, nor does any such entity know of any tax deficiency which
is likely to be asserted against any such entity which if determined
adversely to any such entity, could materially adversely affect the
business,
7
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prospects, properties, assets, results of operations or condition
(financial or otherwise) of any such entity, respectively. All tax
liabilities are adequately provided for on the respective books of such
entities.
(x) Each of the Company and its Subsidiaries maintain insurance
(issued by insurers of recognized financial responsibility) of the types
and in the amounts generally deemed adequate for their respective
businesses and, consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and its
Subsidiaries against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full
force and effect.
(y) Each of the Company, the subsidiaries, and their officers,
directors or affiliates has not taken and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in or constitute the stabilization or manipulation of
any security of the Company or to facilitate the sale or resale of the
Shares in a manner not contemplated by the terms of this Agreement.
(z) The Company is not and will not become as a result of the
transactions contemplated hereby, or will not conduct its respective
businesses in a manner in which the Company would become, "an investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 2. Sale and Delivery of the Shares to the Underwriters; Closing.
------------------------------------------------------------
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Underwriters the Firm
Shares, and each Underwriter agrees, severally and not jointly, to purchase
from the Company the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule A (the proportion which each Underwriter's
share of the total number of the Firm Shares bears to the total number of
Firm Shares is hereinafter referred to as such Underwriter's "underwriting
obligation proportion"), at a purchase price of $___________ per share.
(b) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
the Company hereby grants an option to the Underwriters, severally and not
jointly, to purchase up to an additional 204,545 Option Shares at the same
purchase price as shall be applicable to the Firm Shares. The option hereby
granted will expire if not exercised within the thirty (30) day period
after the date of the Prospectus by giving written notice to the Company.
The option granted hereby may be exercised in whole or in part (but not
more than once), only for the purpose of covering over-allotments that may
be made in connection with the offering and distribution of the Firm
Shares. The notice of exercise shall set forth the number of Option Shares
as to which the several Underwriters are exercising the option, and the
time and date of payment and delivery thereof Such time and date of
delivery (the
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"Date of Delivery") shall be determined by you but shall not be later than
three full business days after the exercise of such option, nor in any
event prior to the Closing Time. If the option is exercised as to all or
any portion of the Option Shares, the Option Shares as to which the option
is exercised shall be purchased by the Underwriters, severally and not
jointly, in their respective underwriting obligation proportions.
(c) Payment of the purchase price for and delivery of certificates in
definitive form representing the Firm Shares shall be made at the offices
of Morgan Keegan & Company, Inc., 50 Front Street, Memphis, Tennessee 38103
or at such other place as shall be agreed upon by the Company and you, at
10:00 a.m., either (i) on the third full business day after the execution
of this Agreement, or (ii) at such other time not more than ten full
business days thereafter as you and the Company shall determine (unless, in
either case, postponed pursuant to the term hereof), (such date and time of
payment and delivery being herein called the "Closing Time"). In addition,
in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for and delivery of
certificates in definitive form representing the Option Shares shall be
made at the offices of Morgan Keegan & Company, Inc. in the manner set
forth above, or at such other place as the Company and you shall determine,
on the Date of Delivery as specified in the notice from you to the Company.
Payment for the Firm Shares and the Option Shares shall be made to the
Company by wire transfer in same-day funds to the accounts designated to
the Underwriters in writing by the Company against delivery to you for the
respective accounts of the Underwriters of the Shares to be purchased by
them.
(d) The certificates representing the Shares to be purchased by the
Underwriters shall be in such denominations and registered in such names as
you may request in writing at least two full business days before the
Closing Time or the Date of Delivery, as the case may be. The certificates
representing the Shares will be made available at the offices of Morgan
Keegan & Company, Inc. or at such other place as Morgan Keegan & Company,
Inc. may designate for examination and packaging not later than 10:00 a.m.
at least one full business day prior to the Closing Time or the Date of
Delivery as the case may be.
(e) After the Registration Statement becomes effective, you intend to
offer the Shares to the public as set forth in the Prospectus, but after
the initial public offering of such Shares you may in your discretion vary
the public offering price.
Section 3. Certain Covenants of the Company. The Company covenants and
--------------------------------
agrees with each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time
that this Agreement is executed and delivered by the parties hereto). If
the Company elects to rely upon Rule 430A of the 1933 Act Regulations or
the filing of the Prospectus is otherwise required under Rule 424(b) of the
1933 Act Regulations, the Company will comply with the requirements of Rule
430A and will file the Prospectus, properly completed, pursuant to
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the applicable provisions of Rule 424(b), or a Term Sheet pursuant to and
in accordance with Rule 434, within the time period prescribed. If the
Company elects to rely upon Rule 462(b), the Company shall file a 462(b)
Registration Statement with the Commission in compliance with Rule 462(b)
by 10:00 p.m., Washington, D.C. time on the date of this Agreement, and the
Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee. The Company will notify you
immediately, and confirm the notice in writing, (i) when the Registration
Statement, 462(b) Registration Statement or any post-effective amendment to
the Registration Statement, shall have become effective, or any supplement
to the Prospectus or any amended Prospectus shall have been filed, (ii) of
the receipt of any comments from the Commission, (iii) of any request by
the Commission to amend the Registration Statement or 462(b) Registration
Statement or amend or supplement the Prospectus or for additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any 462(b)
Registration Statement or of any order preventing or suspending the use of
any Preliminary Prospectus or the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the institution or
threatening of any proceeding for any such purposes. The Company will use
every reasonable effort to prevent the issuance of any such stop order or
of any order preventing or suspending such use and, if any such order is
issued, to obtain the withdrawal thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to
the Registration Statement, or any amendment or supplement (i) to the
Prospectus, if the Company has not elected to rely upon Rule 430A, (ii) if
the Company has elected to rely upon Rule 430Ato either the Prospectus
included in the Registration Statement at the time it becomes effective or
to the Prospectus filed in accordance with Rule 424(b) or any Term Sheet
filed in accordance with Rule 434, or (iii) if the Company has elected to
rely upon Rule 462(b), to any 462(b) Registration Statement in any case if
you shall not have previously been advised and furnished a copy thereof a
reasonable time prior to the proposed filing, or if you or counsel for the
Underwriters shall object to such amendment or supplement.
(c) The Company has furnished or will furnish to you, at its expense,
as soon as available, three copies of the Registration Statement as
originally filed and of all amendments thereto, whether filed before or
after the Registration Statement becomes effective, copies of all exhibits
and documents filed therewith and signed copies of all consents and
certificates of experts, as you may reasonably request, and has furnished
or will furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto.
(d) The Company will deliver to each Underwriter, at the Company's
expense, from time to time, as many copies of each Preliminary Prospectus
as such Underwriter may reasonably request, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will deliver to each Underwriter, at the Company's expense, as soon
as the Registration Statement shall have become
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effective and thereafter from time to time as requested during the period
when the Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Prospectus (as supplemented or amended) as each
Underwriter may reasonably request. The Company will comply to the best of
its ability with the 1933 Act and the 1933 Act Regulations so as to permit
the completion of the distribution of the Shares as contemplated in this
Agreement and in the Prospectus. If the delivery of a prospectus is
required at any time prior to the expiration of nine months after the time
of issue of the Prospectus or any Term Sheet in connection with the
offering or sale of the Shares and if at such time any events shall have
occurred as a result of which the Prospectus or any Term Sheet as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made when such Prospectus or any Term Sheet is delivered not misleading,
or, if for any reason it shall be necessary during such same period to
amend or supplement the Prospectus or any Term Sheet in order to comply
with the 1933 Act or the 1933 Act Regulations, the Company will notify you
and upon your request prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Prospectus or any Term Sheet
or a supplement to the Prospectus or any Term Sheet or an amendment or
supplement to any such incorporated document which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more after the time of issue
of the Prospectus or any Term Sheet, upon your request but at the expense
of such Underwriter, the Company will prepare and deliver to such
Underwriter as many copies as you may request of an amended or supplemented
Prospectus or any Term Sheet complying with Section 10(a)(3) of the 1933
Act.
(e) The Company will use its best efforts to qualify the Shares for
offering and sale under the applicable securities laws of such states and
other jurisdictions as you may designate and to maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified or to make any undertakings in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company will
file such statements and reports as may be required by the laws of each
jurisdiction in which the Shares have been qualified as above provided.
(f) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the end of the
fiscal quarter first occurring after the first anniversary of the
"effective date of the Registration Statement" (as defined in Rule 158(c)
of the 1933 Act Regulations), an earnings statement (in reasonable detail
but which need not be audited) complying with the provisions of Section
11(a) of the 1933 Act and Rule 158 thereunder and covering a period of at
least 12 months beginning after the effective date of the Registration
Statement.
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(g) The Company will use the net proceeds received by it from the
sale of the Shares in the manner specified in the Prospectus under the
caption "Use of Proceeds."
(h) The Company will furnish to its securityholders, as soon as
practicable after the end of each respective period, annual reports
(including financial statements audited by independent public accountants)
and unaudited quarterly reports of operations for each of the first three
quarters of the fiscal year. During a period of five years after the date
hereof, the Company will furnish to you: (i) concurrently with furnishing
such reports to its securityholders, statements of operations of the
Company for each of the first three quarters in the form furnished to the
Company's securityholders; (ii) concurrently with furnishing to its
securityholders, a balance sheet of the Company as of the end of such
fiscal year, together with statements of operations, of cash flows and of
securityholders' equity of the Company for such fiscal year, accompanied by
a copy of the certificate or report thereon of independent public
accountants; (iii) as soon as they are available, copies of all reports
(financial or otherwise) mailed to securityholders; (iv) as soon as they
are available, copies of all reports and financial statements furnished to
or filed with the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD"); (v) every material
press release in respect of the Company or its affairs which is released by
the Company; and (vi) any additional information of a public nature
concerning the Company or its business that you may reasonably request.
During such five-year period, the foregoing financial statements shall be
on a consolidated basis to the extent that the accounts of the Company are
consolidated with any subsidiaries, and shall be accompanied by similar
financial statements for any significant subsidiary that is not so
consolidated.
(i) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, the
Company will not, without the prior written consent of Morgan Keegan &
Company, Inc., offer, pledge, issue, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, or announce any offer,
pledge, sale, grant of any option to purchase or other disposition,
directly or indirectly, any shares of Common Stock or securities
convertible into, exercisable or exchangeable for, shares of Common Stock,
except as provided in Section 2 of this Agreement.
(j) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which
may be the same entity as the transfer agent) for its Common Stock.
(k) The Company will cause the Shares to be listed, subject to notice
of issuance, on the Nasdaq Stock Market and will maintain the listing of
the Shares on the Nasdaq Stock Market.
(l) The Company is familiar with the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder, and has in the past
conducted its affairs, and will in the future conduct its affairs, in such
a manner so as to ensure that the Company was not and will not be an
"investment company" or an entity "controlled" by
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an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(m) The Company will not, and will use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in
the future reasonably be expected to cause or result in, the stabilization
or manipulation of the price of any security of the Company, to facilitate
the sale or resale of any of the Shares, (ii) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of the Shares or (iii)
pay or agree to pay to any person any compensation for soliciting any order
to purchase any other securities of the Company.
(n) If at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus) and after
written notice from you advising the Company to the effect set forth above,
the Company agrees to forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
(o) The Company will file timely and accurate information with the
Commission in accordance with Rule 463 of the Commission under the 1933 Act
or any successor provision.
Section 4. Payment of Expenses. The Company will pay and bear all costs,
-------------------
fees and expenses incident to the performance of its obligations under this
Agreement (excluding fees and expenses of counsel for the Underwriters, except
as specifically set forth in this Agreement), including (a) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits), as originally filed and as amended, the Preliminary
Prospectuses, the Prospectus and any Term Sheet and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters, (b) the preparation, printing and distribution of this Agreement,
the certificates representing the Shares, the Blue Sky Memoranda and any
instruments relating to any of the foregoing, (c) the issuance and delivery of
the Shares to the Underwriters, including any transfer taxes payable upon the
sale of the Shares to the Underwriters (other than transfer taxes on resales by
the Underwriters), (d) the fees and disbursements of the Company's counsel and
accountants, (e) the qualification of the Shares under the applicable securities
laws in accordance with the terms of this Agreement, including filing fees and
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the Blue Sky Memoranda, (f) all costs, fees and expenses
in connection with the notification to the Nasdaq Stock Market of the proposed
issuance of the Shares, (g) filing fees relating to the review of the offering
by the NASD, (h) the transfer agent's and registrar's fees and all miscellaneous
expenses referred to in Part II of the Registration Statement, (i) costs related
to travel and lodging incurred by the Company and its representatives relating
to
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meetings with and presentations to prospective purchasers of the Shares
reasonably determined by the Underwriters to be necessary or desirable to effect
the sale of the Shares to the public, and (j) all other costs and expenses
incident to the performance of the Company's obligations hereunder (including
costs incurred in closing the purchase of the Option Shares, if any) that are
not otherwise specifically provided for in this section. The Company, upon your
request, will provide funds in advance for filing fees in connection with "blue
sky" qualifications.
Section 5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for (i) the Firm Shares that they have
respectively agreed to purchase pursuant to this Agreement (and any Option
Shares as to which the option granted in Section 2 has been exercised and the
Date of Delivery determined by you is the same as the Closing Time) at the
Closing Time and (ii) the Option Shares at the Date of Delivery of the Option
Shares, are subject to the accuracy of the representations and warranties of the
Company contained herein as of the Closing Time or the Date of Delivery, as the
case may be, and to the accuracy of the representations and warranties of the
Company contained in certificates of any officer of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 p.m. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:30 p.m. on the first
business day following the date hereof, or at such later time or on such
later date as you may agree to in writing; if the Company has elected to
rely upon Rule 462(b), the 462(b) Registration Statement shall have become
effective by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement or any 462(b) Registration
Statement shall have been issued under the 1933 Act and no proceedings for
that purpose shall have been instituted or shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the satisfaction of counsel
for the Underwriters. If the Company has elected to rely upon Rule 430A, a
Prospectus or a Term Sheet containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A).
(b) At the Closing Time, you shall have received a favorable opinion
of Watkins Ludlam Winter & Stennis, P.A., counsel for the Company, dated as
of the Closing Time, together with signed or reproduced copies of such
opinion for each of the other Underwriters, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Mississippi with the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
the Registration Statement and the Prospectus. The Company is
qualified to transact business as a foreign
14
<PAGE>
corporation and is in good standing in each of the jurisdictions in
which the ownership or leasing of the Company's properties or the
nature or conduct of its business requires such qualification, except
where the failure to do so would not have a material adverse effect on
the condition (financial or other), business, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a
whole.
(ii) Each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation or a bank and in good standing under
the laws of the under the laws of the state of its incorporation.
Each such entity has all requisite corporate lease and operate its
properties and conduct the Registration Statement and the Prospectus.
Each such entity is duly qualified to do business and is in good
standing as a foreign corporation or bank in each other jurisdiction
in which the ownership or leasing of its properties or the nature or
conduct of its business requires such qualification, except where the
failure to do so would not have a material adverse effect on the
condition (financial or other), business, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a
whole.
(iii) The Company has the corporate power and authority to enter
into this Agreement, to issue, sell and deliver the Shares as provided
herein and to consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery by the
Underwriters, constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws affecting creditors' rights
or by general principles of equity whether considered at law or in
equity and except to the extent that enforcement of the
indemnification provisions set forth in Section 6 of this Agreement
may be limited by federal or state securities laws or the public
policy underlying such laws.
(iv) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with
any governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Shares, the execution, delivery and
performance of this Agreement and the consummation by the Company of
the transactions contemplated hereby, has been made or obtained and is
in full force and effect, except such as may be necessary under state
securities laws or required by the NASD in connection with the
purchase and distribution of the Shares by the Underwriters, as to
which such counsel need express no opinion.
(v) Neither the issuance, sale and delivery by the Company of
the Shares, nor the execution, delivery and performance of this
Agreement, nor the consummation of the transactions contemplated
hereby will conflict with or result in a breach or violation of any of
the terms and provisions of, or (with or without
15
<PAGE>
the giving notice or the passage of time or both) constitute a default
under, the articles of incorporation or bylaws of the Company or the
Subsidiaries, respectively, or, under any material indenture,
mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or the Subsidiaries,
respectively, is a party or to which the Company or the Subsidiaries,
respectively, any of their respective properties or other assets, is
subject; or, to such counsel's knowledge, any applicable statute,
judgment, decree, order, rule or regulation of any court or
governmental agency or body- or to such counsel's knowledge, result in
the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Company or the Subsidiaries,
respectively.
(vi) The Common Stock conforms in all material respects as to
legal matters to the description thereof contained in the Registration
Statement and the Prospectus under the heading "Description of Capital
Stock. "
(vii) The Shares to be issued and sold to the Underwriters
hereunder have been validly authorized by the Company. When issued
and delivered against payment therefor as provided in this Agreement,
such shares will be validly issued, fully paid and nonassessable. To
such counsel's knowledge, no preemptive rights of shareholders exist
with respect to any of the Shares which have not been satisfied or
waived. To such counsel's knowledge, no person or entity holds a
right to require or participate in the registration under the 1933 Act
of the Shares pursuant to the Registration Statement which has not
been satisfied or waived; and, except as set forth in the Prospectus,
no person holds a right to require registration under the 1933 Act of
any shares of Common Stock of the Company at any other time which has
not been satisfied or waived. The form of certificates evidencing the
Shares complies with all applicable requirements of Mississippi law.
(viii) The Company has an authorized capitalization as set forth
in the Prospectus under the caption "Capitalization." All of the
issued shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable. None
of the issued shares of capital stock of the Company has been issued
or is owned or held in violation of any preemptive rights of
shareholders. Item 15 of Part II of the Registration Statement
accurately and completely sets forth the information required to be
disclosed therein, and the shares issued as described therein were
either duly registered or exempt from the registration requirements of
applicable state securities or blue sky laws.
(ix) All of the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned directly, or indirectly through
another Subsidiary, by the Company free and clear of all liens,
security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of any
nature whatsoever.
16
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(x) Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or any of its
Subsidiaries convertible into or exchangeable for any capital stock of
the Company or any such Subsidiary, (ii) warrants, rights or options
to subscribe for or purchase from the Company or any such Subsidiary
any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any
such Subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligation, or any such
warrants, rights or options.
(xi) Neither the Company nor its Subsidiaries is in violation
of their respective articles of incorporation or by-laws, and, to such
counsel's knowledge, no material default exists, and no event has
occurred nor state of facts exist which, with notice or after the
lapse of time to cure or both, would constitute a material default in
the due performance and observance of any obligation, agreement, term,
covenant, or condition contained in any material indenture, mortgage,
deed of trust, loan agreement, note, lease or other agreement or
instrument to which any such entity is a party or to which any such
entity or any of its properties is subject.
(xii) To such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation
against the Company, the Subsidiaries or any of their respective
officers and directors or to which the properties, assets or rights of
any such entity are subject, before or brought by any court or
governmental agency or body or board of arbitrators, that are required
to be described in the Registration Statement or the Prospectus but
are not described as required.
(xiii) The descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal documents therein
described present fairly the information required to be shown and
there are no contracts, leases or other documents known to such
counsel of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required.
(xiv) The Common Stock has been approved for trading on the
Nasdaq Stock Market.
(xv) The Registration Statement and any 462(b) Registration
Statement have become effective under the 1933 Act and, to the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any 462(b) Registration Statement has
been issued and no proceeding for that purpose has been instituted or
is pending or contemplated under the 1933 Act. Other than financial
statements and other financial and operating data and schedules
contained therein, as to which counsel need express no opinion, the
Registration Statement, any 462(b) Registration Statement, all
Preliminary Prospectuses, the
17
<PAGE>
Prospectus and any amendment or supplement thereto, appear on their
face to conform as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xvi) The Company is not, or solely as a result of the
consummation of the transactions contemplated hereby will not become,
an "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(xvii) The descriptions in the Prospectus of statutes,
regulations, legal or governmental proceedings are accurate and
present fairly a summary of the information required to be shown under
the 1933 Act and the 1933 Act Regulations. The information in the
Prospectus under the caption "Shares Available for Future Sale" to the
extent that it constitutes matters of law or legal conclusions, has
been reviewed by such counsel, is correct and presents fairly the
information required to be disclosed therein under the 1933 Act and
the 1933 Act Regulations.
Such counsel also shall state that they have no reason to believe that
the Registration Statement, any 462(b) Registration Statement or any
further amendment thereto made prior to the Closing Time or the Date of
Delivery, as the case may be, on its effective date and as of the Closing
Time or the Date of Delivery, as the case may be, contained or contains any
untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, or any amendment
or supplement thereto made prior to the Closing Time or the Date of
Delivery, as the case may be, as of its issue date and as of the Closing
Time or the Date of Delivery, as the case may be, contained or contains any
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided that
such counsel need express no belief regarding the financial statements and
related schedules and other financial data contained in the Registration
Statement, any 462(b) Registration Statement, any amendment thereto, or the
Prospectus, or any amendment or supplement thereto).
In rendering the opinions set forth in Section 5(b), such counsel may
rely on the following:
(1) as to matters involving the application of laws other than
the laws of the United States and jurisdictions in which they are
admitted, to the extent such counsel deems proper and to the extent
specified in such opinion, upon an opinion or opinions (in form and
substance reasonably satisfactory to Underwriters' counsel) of other
counsel familiar with the applicable laws, and
(2) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and certificates
or other written statements of officers or departments of various
jurisdictions, having custody of documents
18
<PAGE>
respecting the existence or good standing of the Company provided that
copies of all such opinions, statements or certificates shall be
delivered to Underwriters' counsel. The opinion of counsel for the
Company shall state that the opinion of any other counsel, or
certificate or written statement, on which such counsel is relying is
in form satisfactory to such counsel and that you and they are
justified in relying thereon.
(c) At the Closing Time, you shall have received a favorable opinion
from Powell, Goldstein, Frazer & Murphy LLP, counsel for the Underwriters,
dated as of the Closing Time, with respect to the incorporation of the
Company, the issuance and sale of the Shares, the Registration Statement,
the Prospectus and other related matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them
to pass on such matters.
(d) At the Closing Time, (i) the Registration Statement, any 462(b)
Registration Statement, and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the 1933 Act Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations; the Company shall have complied in all material respects with
Rule 430A (if it shall have elected to rely thereon) and neither the
Registration Statement, any 462(b) Registration Statement, nor the
Prospectus, as they may then be amended or supplemented, shall contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) no action, suit or proceeding at law or in equity
shall be pending or, to the best of Company's knowledge, threatened against
the Company that would be required to be set forth in the Prospectus other
than as set forth therein and no proceedings shall be pending or, to the
best knowledge of the Company, threatened against the Company before or by
any federal, state or other commission, board or administrative agency
wherein an unfavorable decision, ruling or finding could materially
adversely affect the business, prospects, assets, results of operations or
condition (financial or otherwise) of the Company, other than as set forth
in the Prospectus, (iii) the Company shall have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Time, and (iv) the representations and
warranties of the Company set forth in Section 1 shall be accurate as
though expressly made at and as of the Closing Time. At the Closing Time,
you shall have received a certificate executed by the Chairman or President
and by the Chief Financial Officer of the Company dated as of the Closing
Time, to such effect and with respect to the following additional matters:
(A) the Registration Statement has become effective under the 1933 Act and
no stop order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Prospectus has been issued, and no
proceedings for that purpose have been instituted or are pending or, to the
best of their knowledge, threatened under the 1933 Act; and (B) they have
reviewed the Registration Statement and the Prospectus and, when the
Registration Statement and any 462(b) Registration
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Statement became effective and at all times subsequent thereto up to the
delivery of such certificate, the Registration Statement, any 462(b)
Registration Statement and the Prospectus and any amendments or supplements
thereto contained all statements and information required to be included
therein or necessary to make the statements therein not misleading and
neither the Registration Statement, any 462(b) Registration Statement, nor
the Prospectus nor any amendment or supplement thereto included any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and, since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amended or
supplemented Prospectus that has not been so set forth.
(e) You shall have received from Ernst & Young LLP letters dated,
respectively, the date hereof (or, if the Registration Statement has been
declared effective prior to the execution and delivery of this Agreement,
dated such effective date and the date of this Agreement) and the Closing
Time and the Date of Delivery, in form and substance satisfactory to you,
to the effect set forth in Annex I hereto. In the event that the letters
referred to in this subsection set forth any changes, decreases or
increases in the items specified in paragraph 3 of Annex I, it shall be a
further condition to the obligations of the Underwriters that (i) such
letters shall be accompanied by a written explanation by the Company as to
the significance thereof, unless the Underwriters deem such explanation
unnecessary, and (ii) such changes, decreases or increases do not, in your
sole judgment, make it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares as contemplated by the
Registration Statement, as amended as of the date of such letter.
(f) At the Closing Time, you shall have received from Ernst & Young
LLP a letter, in form and substance satisfactory to you and dated as of the
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) above, except that the
specified date referred to shall be a date not more than five days prior to
the Closing Time.
(g) At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
request for the purpose of enabling them to pass upon the issuance and sale
of the Shares as contemplated in this Agreement and the matters referred to
in Section 5(c) and in order to evidence the accuracy and completeness of
any of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein contained; and all proceedings taken by the
Company at or prior to the Closing Time in connection with the
authorization, issuance and sale of the Shares as contemplated in this
Agreement shall be reasonably satisfactory in form and substance to you and
to counsel for the Underwriters. The Company will furnish you with such
number of conformed copies of such opinions, certificates, letters and
documents as you shall reasonably request.
(h) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
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(i) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor any of its subsidiaries
shall have sustained (i) any loss or interference with their respective
businesses from fire, explosion, flood, hurricane or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as disclosed in or
contemplated by the Prospectus or (ii) any change, or any development
involving a prospective change (including without limitation any change in
management or control of the Company), in or affecting the position
(financial or otherwise), results of operations, net worth or business
prospects of the Company and its subsidiaries, otherwise than as disclosed
in or contemplated by the Prospectus, the effect of which, in either such
case, is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the purchase, sale and
delivery of the Shares being delivered at such time as contemplated by the
Registration Statement, as amended as of the date hereof.
(j) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political
conditions the effect of which on the financial markets of the United
States is such as to make it, in your judgment, impracticable to market the
Shares or enforce contracts for the sale of the Shares, (ii) any suspension
or limitation in trading in any securities of the Company by the Commission
or by the Nasdaq Stock Market, or trading generally on the New York Stock
Exchange or in the over-the-counter market, (iii) any downgrading in the
rating of any of the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the 1933 Act), or (iv) a banking moratorium
declared by federal or New York or Mississippi authorities.
(k) At the Closing Time, you shall have received the written
commitment of each of the Company's directors, executive officers and
shareholders set forth on Schedule B hereto not to offer, sell or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for, or any rights to purchase or acquire,
Common Stock during the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, without the prior written consent of Morgan Keegan & Company,
Inc.
The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the satisfaction on and as of any Date of Delivery for
Option Shares of the conditions set forth in this Section 5, except that, if any
Date of Delivery for Option Shares is other than the Closing Time, the
certificates, opinions and letters referred to in paragraphs (b), (c) and (d)
shall be revised to reflect the sale of Option Shares.
Section 6. Indemnification and Contribution.
--------------------------------
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject under the 1933 Act, or otherwise,
insofar as such losses, claims, damages
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or liabilities (or actions in respect thereof) (i) arise out of or are
based upon any breach of any warranty or covenant of the Company herein
contained, (ii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in (A) any
Preliminary Prospectus, the Registration Statement, any 462(b) Registration
Statement or the Prospectus, or any amendment or supplement thereto, or (B)
any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify the
Shares under the securities or blue sky laws thereof or filed with the
Commission or any securities association or securities exchange (each an
"Application"), or (iii) arise out of or are based upon the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement, any 462(b) Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement, any 462(b) Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter expressly for use therein. In addition to its other obligations
under this Section 6(a), the Company agrees that, as an interim measure
during the pendency of any such claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 6(a), it will
reimburse the Underwriters on a monthly basis for all reasonable legal and
other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety
and enforceability of the Company's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction.
Any such interim reimbursement payments that are not made to an Underwriter
within 30 days of a request for reimbursement shall bear interest at the
prime rate (or reference rate or other commercial lending rate for
borrowers of the highest credit standing) published from time to time by
The Wall Street Journal (the "Prime Rate") from the date of such request.
This indemnity agreement shall be in addition to any liabilities that the
Company may otherwise have. The Company will not, without the prior written
consent of each Underwriter, settle or compromise or consent to the entry
of any judgment in any pending or threatened action or claim or related
cause of action or portion of such cause of action in respect of which
indemnification may be sought hereunder (whether or not such Underwriter is
a party to such action or claim), unless such settlement, compromise or
consent includes an unconditional release of such Underwriter from all
liability arising out of such action or claim (or related cause of action
or portion thereof).
22
<PAGE>
The indemnity agreement in this Section 6(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the 1933
Act to the same extent as such agreement applies to the Underwriters.
(b) Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the 1933 Act, or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any breach of
any warranty or covenant by such Underwriter herein contained or any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, any 462(b) Registration
Statement or the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Underwriter expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition
to its other obligations under this Section 6(b), the Underwriters agree
that, as an interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
this Section 6(b), they will reimburse the Company on a monthly basis for
all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of their obligation to
reimburse the Company for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to
the Company within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement shall be in addition to any liabilities that the Underwriters may
otherwise have. No Underwriter will, without the prior written consent of
the Company, settle or compromise or consent to the entry of judgment in
any pending or threatened action or claim or related cause of action or
portion of such cause of action in respect of which indemnification may be
sought hereunder (whether or not the Company is a party to such action or
claim), unless such settlement, compromise or consent includes an
unconditional release of the Company from all liability arising out of such
action or claim (or related cause of action or portion thereof).
The indemnity agreement in this Section 6(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
officer and director of the
23
<PAGE>
Company and each person, if any, who controls the Company within the
meaning of the 1933 Act to the same extent as such agreement applies to the
Company.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof, no
indemnification provided for in subsection (a) or (b) shall be available to
any party who shall fail to give notice as provided in this subsection (c)
if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice, but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability that it may have to
any indemnified party otherwise than under Section 6. In case any such
action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation, except that if the
indemnified party has been advised by counsel in writing that there are one
or more defenses available to the indemnified party which are different
from or additional to those available to the indemnifying party, then the
indemnified party shall have the right to employ separate counsel and in
that event the reasonable fees and expenses of such separate counsel for
the indemnified party shall be paid by the indemnifying party; provided,
however, that if the indemnifying party is the Company, the Company shall
only be obligated to pay the reasonable fees and expenses of a single law
firm (and any reasonably necessary local counsel) employed by all of the
indemnified parties. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
(d) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Section 6(a) and (b)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts
shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of the
National Association of Securities Dealers, Inc. Any such arbitration must
be commenced by service of a written demand for arbitration or a written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized
24
<PAGE>
to do so. Any such arbitration will be limited to the operation of the
interim reimbursement provisions contained in Sections 6(a) and (b) hereof
and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for expenses that is created by the provisions of
Sections 6(a) and (b).
(e) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 6 is
for any reason judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the right of appeal) to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company, on the one hand and the Underwriters on the other shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the
nature contemplated by such indemnity incurred by the Company, and one or
more of the Underwriters, as incurred, in such proportions that (a) the
Underwriters are responsible pro rata for that portion represented by the
percentage that the underwriting discount appearing on the cover page of
the Prospectus bears to the public offering price (before deducting
expenses) appearing thereon, and (b) the Company is responsible for the
balance, provided, however, that no person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation; provided, further, that if the
allocation provided above is not permitted by applicable law, the Company,
on the one hand, and the Underwriters on the other shall contribute to the
aggregate losses in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company, on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information
supplied by the Company, on the one hand or by the Underwriters on the
other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 6(e) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this Section 6(e). The amount paid or payable by a party as a result of the
losses, claims, damages or liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending such action or claim.
Notwithstanding the provisions of this Section 6(e), no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. The
Underwriters' obligations in this Section 6(e) to contribute are several in
proportion to their respective underwriting obligations and not joint. For
purposes of this Section 6(e), each person, if any, who controls an
Underwriter
25
<PAGE>
within the meaning of Section 15 of the 1933 Act shall have the same rights
to contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company, within the meaning of Section 15
of the 1933 Act shall have the same rights to contribution as the Company.
Section 7. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
The representations, warranties, indemnities, agreements and other statements of
the Company or its officers set forth in or made pursuant to this Agreement will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Company, or any Underwriter or controlling person,
and with respect to an Underwriter or the Company will survive delivery of and
payment for the Shares or termination of this Agreement.
Section 8. Effective Date of Agreement and Termination.
-------------------------------------------
(a) This Agreement shall become effective immediately as to Sections
4 and 6 and, as to all other provisions, (i) if at the time of execution of
this Agreement the Registration Statement has not become effective, at
10:00 a.m., on the first full business day following the effectiveness of
the Registration Statement, or (ii) if at the time of execution of this
Agreement the Registration Statement has been declared effective, at 10:00
a.m. on the first full business day following the date of execution of this
Agreement; but this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the
Shares for sale to the public. For the purposes of this Section 8, the
Shares shall be deemed to have been so released upon the release of
publication of any newspaper advertisement relating to the Shares or upon
the release by you of telegrams (i) advising the Underwriters that the
Shares are released for public offering, or (ii) offering the Shares for
sale to securities dealers, whichever may occur first. By giving notice
before the time this Agreement becomes effective, you, as representative of
the several Underwriters, or the Company, may prevent this Agreement from
becoming effective, without liability of any party to any other party,
except that the Company shall remain obligated to pay costs and expenses to
the extent provided in Section 4 hereof.
(b) This Agreement may be terminated with respect to the Firm Shares
or the Option Shares in your sole discretion by notice to the Company given
prior to the Closing Time or the Date of Delivery, as the case may be, in
the event that (i) any condition to the obligations of the Underwriters set
forth in Section 5 hereof has not been satisfied or (ii) the Company shall
have failed, refused or been unable to deliver the Shares or to perform all
obligations and satisfy all conditions to be performed or satisfied
hereunder at or prior to such Closing Time or Date of Delivery, as
applicable, other than by reason of a default by any of the Underwriters.
If this Agreement is terminated pursuant to this Section 8(b), the Company
will reimburse the Underwriters severally upon demand for all out-of-pocket
expenses (including fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Shares.
26
<PAGE>
(c) If this Agreement is terminated pursuant to this Section 8, such
termination shall be without liability of any party to any other party,
except to the extent provided in this Section 8. Notwithstanding any such
termination, the provisions of Section 6 shall remain in effect.
Section 9. Default by One or More of the Underwriters. If one or more of
------------------------------------------
the Underwriters shall fail at the Closing Time to purchase the Shares that it
or they are obligated to purchase pursuant to this Agreement (the "Defaulted
Securities"), you shall have the right, within 36 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms set forth in
this Agreement; if, however, you have not completed such arrangements within
such 36-hour period, then:
(a) If the aggregate number of Firm Shares which are Defaulted
Securities does not exceed 10% of the aggregate number of Firm Shares to be
purchased pursuant to this Agreement, the non-defaulting Underwriters shall
be obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligation proportions bear to the
underwriting obligations of all non-defaulting Underwriters, and
(b) If the aggregate number of Firm Shares which are Defaulted
Securities exceeds 10% of the aggregate number of Firm Shares to be
purchased pursuant to this Agreement, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 9 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or
in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement or supplements to the
Prospectus that may thereby be made necessary. As used in this Agreement,
the term "Underwriter" includes any person substituted for an Underwriter
under this Section 9.
Section 10. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o Morgan Keegan & Company, Inc.,
50 Front Street, Memphis, Tennessee 38103, Attention: H. Wade Schuessler (with a
copy sent in the same manner to Powell, Goldstein, Frazer & Murphy LLP,
Attention: Walter G. Moeling, IV, Esq. and notices to the Company shall be
directed to it at Lamar Capital Corporation, 401 Shelby Speights Drive, Purvis,
Mississippi 39475, Attention: Robert W. Roseberry (with a copy sent in the same
manner to Watkins Ludlam Winter & Stennis, P.A., Attention: L. Keith Parsons,
Esq.).
27
<PAGE>
Section 11. Parties. This Agreement is made solely for the benefit of and
-------
is binding upon the Underwriters and the Company to the extent provided in
Section 6, any person controlling the Company or any of the Underwriters, the
officers and directors of the Company, and their respective executors,
administrators, successors and assigns and subject to the provisions of Section
6, no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser,
as such purchaser, from any of the several Underwriters of the Shares.
All of the obligations of the Underwriters hereunder are several and not
joint.
Section 12. Governing Law and Time. This Agreement shall be governed by
-----------------
the laws of the State of Tennessee. Specified time of the day refers to United
States Eastern Time. Time shall be of the essence of this Agreement.
Section 13. Counterparts. This Agreement may be executed in one or more
------------
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
28
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, and upon the acceptance
hereof by Morgan Keegan & Company, Inc., on behalf of each of the Underwriters,
this instrument will become a binding agreement among the Company and the
several Underwriters in accordance with its terms. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in the Master Agreement among Underwriters, a copy of
which shall be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
LAMAR CAPITAL CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above:
MORGAN KEEGAN & COMPANY, INC.
STERNE, AGEE & LEACH, INC.
By: Morgan Keegan & Company, Inc.
By:________________________________
(Authorized Representative)
On behalf of each of the Underwriters
29
<PAGE>
SCHEDULE A
Underwriter Number of Firm Shares to be Purchased
- ----------- -------------------------------------
Morgan Keegan & Company, Inc.
Sterne, Agee & Leach, Inc.
TOTAL
----------------
================
SCHEDULE A., Page 1
<PAGE>
SCHEDULE B
Persons Subject to Lock-up Agreements
- -------------------------------------
Robert W. Roseberry
Jane P. Roberts
Kenneth M. Lott
O.B. Black, Jr.
William H. Jordan
James R. Pylant
Monty C. Roseberry
Donna R. Byrd
James E Roseberry
SCHEDULE B., Page 1
<PAGE>
ANNEX I
Pursuant to Section 5(e) of the Underwriting Agreement, Ernst & Young LLP
shall furnish letters to the Underwriters to the effect that:
(1) they are independent public accountants with respect to the Company
and its consolidated subsidiaries within the meaning the 1933 Act and the
applicable published rules and regulations thereunder;
(2) in their opinion, the consolidated financial statements and schedules
audited by them and included in the Prospectus, the Registration Statement and
any 462(b) Registration Statement comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the related
published rules and regulations thereunder;
(3) On the basis of a reading of the latest available interim unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries, limited procedures, not constituting an audit in accordance with
generally accepted auditing standards, consisting of a reading of the unaudited
financial statements and other information referred to below, a reading of the
latest available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in the
Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(a) the unaudited consolidated condensed financial statements of the
Company and its consolidated subsidiaries included in the Registration
Statement and the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and
the related published rules and regulations thereunder or are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated financial
statements included in the Registration Statement and the Prospectus;
(b) as of a specified date not more than 5 days prior to the date of
such letter, there were any changes in the capital stock (other than the
issuance of capital stock upon exercise of options which were outstanding
on the date of the latest balance sheet included in the Prospectus) or any
increase in inventories or the long-term debt or short-term debt of the
Company and its subsidiaries, or any decreases in net current assets or net
assets or other items specified by the Underwriters, or any increases in
any items specified by the Underwriters, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described in
such letter; and
(c) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause (b)
there were any decreases in
ANNEX I, Page 1
<PAGE>
net income or operating income or the total or per share amounts of net
income or other items specified by the Underwriters, or any increases in
any items specified by the Underwriters, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Underwriters, except in each case for
increases or decreases which the Prospectus discloses have occurred or may
occur which are described in such letter; and
(4) In addition to the audit referred to in their report(s) included in
the Prospectus and the limited procedures, inspection of minute books, inquiries
and other procedures referred to in paragraph (3) above, they have carried out
certain specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Underwriters which are
derived from the general accounting records of the Company and its subsidiaries,
included in the Registration Statement and the Prospectus, or which appear in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Underwriters, and have compared certain of such amounts,
percentages and financial information with the accounting records of the Company
and its subsidiaries and have found them to be in agreement.
References to the Registration Statement and the Prospectus in this Annex I
shall include any amendment or supplement thereto at the date of such letter.
ANNEX I, Page 2
<PAGE>
EXHIBIT 3.2
ARTICLES OF AMENDMENT TO THE ARTICLES OF
INCORPORATION OF LAMAR CAPITAL CORPORATION
*******************************
Filed
09/21/98
Eric Clark
Secretary of State
State of Mississippi
*******************************
OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
P.O. BOX 136, JACKSON, MS 39205-0136 (601) 359-1333
Articles of Amendment
The undersigned persons, pursuant to Section 79-4-10.06 (if a profit
corporation) or Section 79-11-305 (if a nonprofit corporation) of the
Mississippi Code of 1972, hereby execute the following document and set forth:
1. Type of Corporation
X For Profit Nonprofit
---
2. Name of Corporation
Lamar Capital Corporation
3. The future effective date is
(Complete if applicable)
4. Set forth the text of each amendment adopted.
5. If an amendment for a business corporation provides for an exchange,
reclassification, or cancellation of issued shares, set forth the provisions
for implementing the amendment if they are not contained in the amendment
itself. (Attach page)
6. The amendment(s) was (were) adopted on
August 25, 1998
---------------
Date(s)
FOR PROFIT CORPORATION (Check the appropriate box)
Adopted by the incorporators directors without shareholder action and
shareholder action was not required.
FOR NONPROFIT CORPORATION (Check the appropriate box)
Adopted by the incorporators board of directors without member action end
member action was not required.
FOR PROFIT CORPORATION
7. If the amendment was approved by shareholders
(a) The designation, number of outstanding shares, number of votes entitled
to be cast by each voting group entitled to vote separately on the amendment,
and the number of votes of each voting group indisputably represented at
the meeting were
<TABLE>
<CAPTION>
Designation No. of outstanding No. of votes entitled No. of votes
shares to be cast indisputably represented
<S> <C> <C> <C>
Common 922,357 922,357 880,434
</TABLE>
<PAGE>
OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
P.O. BOX 136, JACKSON, MS 39205-0136 (601) 359-1333
Articles of Amendment
(b) EITHER
(i) the total number of votes cast for and against the amendment by each
class entitled to vote separately on the amendment was
Voting group Total no. of votes Total no. of votes cast
cast FOR AGAINST
Common 880,434 0
OR
(ii) the total number of undisputed votes cast for the amendment by each
voting group was
Voting group Total no. of undisputed votes cast FOR the plan
and the number of votes cast for the amendment by each voting group
was sufficient for approval by that voting group.
FOR NONPROFIT CORPORATION
8. If the amendment was approved by the members
(a) The designation number of memberships outstanding, number of votes
entitled to be cast by each class entitled to vote separately on the
amendment, and the number of votes of each class indisputably represented at
the meeting were
Designation No. of memberships No. of votes entitled No. of votes
outstanding to be cast indisputably
represented
<PAGE>
OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
P.O. BOX 136, JACKSON, MS 39205-0136 (601) 359-1333
Articles of Amendment
(b) EITHER
(i) the total number of votes cast for and against the amendment by each
class entitled to vote separately on the amendment was
Voting class Total no. of votes Total no. of votes cast
cast FOR AGAINST
OR
(ii) the total number of undisputed votes cast for the amendment by each
class was
Voting class Total no. of undisputed votes cast FOR the amendment
and the number of votes cast for the amendment by each voting group was
sufficient for approval by that voting proud.
By: /s/ Kenneth M. Lott
-------------------
(Please keep writing within block)
Printed Name Kenneth M. Lott
Title President
<PAGE>
EXHIBIT "A" TO ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
LAMAR CAPITAL CORPORATION
1. Article Four of the Articles shall be deleted in its entirety and
replaced with the following:
FOURTH: The aggregate number of shares of Common Stock which the
Corporation shall have authority to issue is fifty million
(50,000,000) of the par value of fifty cents ($.50) each.
2. A new Article Ten of the Articles shall be inserted immediately
following Article Nine of the Articles to read in its entirety as
follows:
TENTH: A director shall not be liable to the Corporation or its
shareholders for money damages for any action taken, or any failure to
take any action, as a director, except liability for: (i) the amount
of financial benefit received by a director to which he is not
entitled; (ii) an intentional infliction of harm on the Corporation or
its shareholders; (iii) a violation of Mississippi Code Annotated
Section 79-4-8.33(1972), as amended; or (iv) an intentional violation
of criminal law.
The Corporation shall indemnify any person (or the heirs, executors
and administrators of any person) who was or is a party to, or is
threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise, formal or informal (a "Proceeding"), by
reason of the fact that such person is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against any
obligation to pay a judgment, settlement, penalty, fine (including an
excise tax assessed with respect to an employee benefit plan) or
reasonable expenses (including legal fees) incurred with respect to
the Proceeding: (A) to the fullest extent permitted by the Mississippi
Business Corporation Act in effect from time to time (the "Act") and
(B) despite the fact that such person has failed to meet the standard
of conduct set forth in the Act, or would be disqualified for
indemnification under the Act for any reason, if a determination is
made by one of the following determining bodies (Collectively, the
"Determining Bodies"): (i) the board of directors by majority vote of
<PAGE>
a quorum consisting of directors not at the time parties to the
Proceeding, (ii) if a quorum cannot be obtained under (i), by majority
vote of a committee duly designated by the board of directors (in
which designation directors who are parties may participate),
consisting of two or more directors not at the time parties to the
Proceeding, (iii) by special legal counsel (a) selected by the board
of directors or its committee in the manner prescribed in (i) or (ii)
or (b) if a quorum of the board of directors cannot be obtained under
(i) and a committee cannot be designated under (ii), selected by
majority vote of the full board of directors (in which selection
directors who are parties may participate), (iv) by the shareholders
(but shares owned by or voted under the control of directors who are
at the time parties to the Proceeding may not be voted on the
determination) or (v) by a court, that the acts or omissions of the
director, officer, employee or agent did not constitute gross
negligence or willful misconduct. However the Corporation shall not
indemnify a person for: (i) an intentional infliction of harm on the
Corporation or its shareholders; (ii) a violation of Mississippi Code
Annotated Section 79-4-8.33 (1972), as amended; or for (iii) an
intentional violation of criminal law, and the Corporation shall not
indemnify a person for receipt of a financial benefit to which he is
not entitled unless ordered by a court under Mississippi Code
Annotated, Section 79-4-8.54(9)(3). The Corporation shall indemnify a
person in connection with a proceeding by or in the right of the
Corporation for reasonable expenses incurred in connection with the
Proceeding if such acts or omissions do not constitute gross
negligence or willful misconduct, and shall make further
indemnification in connection with the Proceeding if so ordered by a
court under Mississippi Code Annotated, Section 79-4-8.54(9)(3). The
Corporation upon request shall pay or reimburse such person for his
reasonable expenses (including legal fees) in advance of final
disposition of the Proceeding as long as: (i) such person furnishes
the Corporation a written undertaking, executed personally or on his
behalf, to repay the advance if he is not entitled to mandatory
indemnification under Mississippi Code Annotated, Section 79-4-8.52
and it is ultimately determined by a judgment or other final
adjudication that his acts or omissions did constitute gross
negligence or willful misconduct, which undertaking must be an
unlimited general obligation of such person, and which shall be
accepted by the Corporation without reference to the financial ability
of the person to make repayment or to collateral; (ii) such person
furnishes a written affirmation of his good faith that his acts or
omissions did not constitute gross negligence or willful misconduct;
and (iii) a determination is made by any of the Determining Bodies
that the facts then known to those making the determination would not
preclude indemnification under this Article TENTH.
Neither the amendment nor repeal of this Article TENTH, nor the
adoption or amendment of any other provision of the Corporation=s
bylaws or these Articles of Incorporation inconsistent with this
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Article TENTH, shall apply to or affect in any respect the
applicability of the preceding paragraph with respect to any act or
failure to act which occurred prior to such amendment, repeal or
adoption.
3. A new Article Eleven of the Articles shall be inserted immediately
following Article Ten of the Articles to read in its entirety as
follows:
ELEVENTH:
A. In addition to any affirmative vote required by law or under any
other provision of these Articles of Incorporation, and except as
otherwise expressly provided in this Article ELEVENTH:
1. any merger, consolidation or share exchange of this
Corporation or any Subsidiary (as hereinafter defined) with
or into (i) any Substantial Stockholder (as hereinafter
defined) or (ii) any other corporation (whether or not
itself a Substantial Stockholder) which, after such merger
or consolidation, would be an Affiliate (as hereinafter
defined) of a Substantial Stockholder, or
2. any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Substantial Stockholder of any
Substantial Part (as hereinafter defined) of a Substantial
Part of the assets of this Corporation or of any Subsidiary,
or
3. the issuance or transfer by this Corporation or by any
Subsidiary (in one transaction or a series of related
transactions) of any Equity Securities (as hereinafter
defined) of this corporation or any Subsidiary to any
Substantial Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an
aggregate fair market value of $5,000,000 or more, or
4. the adoption of any plan or proposal for the liquidation or
dissolution of this corporation if, as of the record date
for the determination of stockholders entitled to notice
thereof and to vote thereon, any person shall be a
Substantial Stockholder, or
5. any reclassification of securities (including any reverse
stock split) or recapitalization of this Corporation, or any
reorganization, merger or consolidation of this Corporation
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with any of its Subsidiaries or any similar transaction
(whether or not with or into or otherwise involving a
Substantial Stockholder), which has the effect, directly or
indirectly, of increasing the proportionate share of the
outstanding securities of any class of Equity Securities of
this corporation or any Subsidiary which is directly or
indirectly Beneficially Owned (as determined according to
the provisions of Section C.4. of this Article ELEVENTH) by
any Substantial Stockholder,
shall (except as otherwise expressly provided in these Articles)
require the affirmative vote of the holders of then outstanding
Voting Shares (as hereinafter defined) entitled to cast at least
eighty percent (80%) of the votes entitled to be cast by the
holders of all of the then outstanding Voting Shares; provided
that such affirmative vote must also include the affirmative vote
of the holders of the Voting Shares entitled to cast a majority
of the votes entitled to be cast by the holders of all then
outstanding Voting Shares not beneficially owned by any
Substantial Stockholder. Each such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
B. The provisions of this Article ELEVENTH shall not be applicable
to any Business Combination (as hereinafter defined), the terms
of which shall be approved, prior to the date the Substantial
Stockholder which is a party thereof or whose proportionate share
of the outstanding securities of any class of Equity Securities
of this Corporation or any Subsidiary is increased by reason
thereof, or, in the case of a Business Combination described in
clause (D) of paragraph (a)(1) of this Article ELEVENTH, prior to
the date any Substantial Stockholder affected by such Business
Combination, became a Substantial Stockholder, by two-thirds of
the whole board (as hereinafter defined in paragraph (c)(6) of
this Article ELEVENTH), but only if a majority of the members of
the board of directors rendering such approval shall be
continuing directors (as hereinafter defined in paragraph (c)(3)
of this Article ELEVENTH).
C. For the purpose of this Article ELEVENTH:
1. The term "Business Combination" as used in this Article
ELEVENTH shall mean any one or more transaction which is
described in Section A.1. through A.5. of this Article
ELEVENTH.
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2. A "person" shall mean any individual, firm, corporation or
other entity.
3. "Substantial Stockholder" shall mean any person (other than
this corporation or any Subsidiary) who or which, as of the
record date for the determination of stockholders entitled
to notice of and to vote on any Business Combination, or
immediately prior to the consummation of any such Business
Combination:
(a) is the Beneficial Owner (determined according to the
provisions of Section C.4. of this Article ELEVENTH),
directly or indirectly, of more than 10% of the Voting
Shares (determined solely on the basis of the total
number of Voting Shares so Beneficially Owned, and
without giving effect to the number or percentage of
votes entitled to be cast in respect of such shares, in
relation to the total number of Voting Shares issued
and outstanding), or
(b) is an Affiliate of this corporation and at any time
within three years prior thereto was the Beneficial
Owner, directly or indirectly, of more than ten percent
(10%) of the then outstanding Voting Shares (determined
as aforesaid), or
(c) is an assignee of or has otherwise succeeded to any
shares of capital stock of this corporation which were
at any time within three years prior thereof
Beneficially Owned by any Substantial Stockholder, and
such assignment or succession shall have occurred in
the course of a transaction or series of transactions
not involving a public offering within the meaning of
the Securities Act of 1933.
4. "Beneficial Ownership" (also referred to herein as the
"Beneficial Owner" or "Beneficially Owned") shall be
determined pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934 (or any successor rule or statutory
provision) or, if said Rule 13d-3 shall be rescinded and
there shall be no successor rule or statutory provision
thereto, pursuant to said Rule 13d-3 as in effect on August
1, 1998; provided, however, that a person shall, in any
event, also be deemed to be the "beneficial owner" of any
Voting Shares:
(a) which such person or any of its Affiliates or
Associates (as hereinafter defined) Beneficially Own,
directly or indirectly, or
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<PAGE>
(b) which such person or any of its Affiliates or
Associates has (1) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding (but shall not be deemed
to be the Beneficial Owner of any Voting Shares solely
by reason of an agreement, arrangement or understanding
with this corporation to effect a Business Combination)
or upon the exercise of conversion rights, exchange
rights, warrants, or options, or otherwise, or (ii)
sole or shared voting or investment power with respect
thereto pursuant to any agreement, arrangement,
understanding, relationship or otherwise (but shall not
be deemed to be the beneficial owner of any Voting
Shares solely by reason of a revocable proxy granted
for a particular meeting of stockholders, pursuant to a
public solicitation of proxies for such meeting, with
respect to shares of which neither such person nor any
such Affiliate or Associate is otherwise deemed the
Beneficial Owner), or
(c) which are Beneficially Owned, directly or indirectly,
by any other person with which such first mentioned
person or any of its Affiliates or Associates acts as a
partnership, limited partnership, syndicate or other
group pursuant to any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
this corporation;
and provided further, however, that (i) no director or
officer of this corporation, nor any Associate or Affiliate
of any such director or officer, shall, solely by reason of
any or all of such directors and officers acting in their
capacities as such, be deemed, for any purposes hereof, to
Beneficially Own any Voting Shares Beneficially Owned by any
other such director or officer (or any Associate or
Affiliate thereof), and (ii) no pension, employee stock
purchase, employee stock ownership or similar plan of this
corporation or any Subsidiary nor any trustee with respect
thereto, nor any Associate or Affiliate of any such trustee,
shall, solely by reason of such capacity of such trustee, be
deemed, for any purposes hereof, to Beneficially Own any
Voting Shares held under any such plan.
For purposes of computing the percentage Beneficial
Ownership of Voting Shares of a person in order to determine
whether such person is a Substantial Stockholder, the
outstanding Voting Shares shall include shares deemed owned
6
<PAGE>
by such person through application of subparagraph (3) of
this paragraph (c) but shall not include any other Voting
Shares which may be issuable by this corporation pursuant to
any agreement, or upon the exercise of conversion rights,
warrants or options, or otherwise. For all other purposes,
the outstanding Voting Shares shall include only Voting
Shares then outstanding and shall not include any Voting
Shares which may be issuable by this corporation pursuant to
any agreement, or upon the exercise of conversion rights,
warrants or options, or otherwise.
5. "Continuing Director" shall mean a person who was a member
of the board of directors of this corporation as of August
1, 1998 or thereafter elected by the stockholders or
appointed by the board of directors of this corporation
prior to the date as of which the Substantial Stockholder
(or Substantial Stockholders) in question became a
Substantial Stockholder (or Substantial Stockholders), or a
person designated (before his initial election or
appointment as a director) as a continuing director by a
majority of the whole board, but only if a majority of the
whole board shall then consist of continuing directors, or,
if a majority of the whole board shall not then consist of
continuing directors, by a majority of the then continuing
directors.
6. "Whole board" shall mean the total number of directors which
this corporation would have if there were no vacancies.
7. An "Affiliate" of a specified person is a person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control
with, the person specified.
8. The term "Associate" used to indicate a relationship with
any person shall mean (i) any corporation or organization
(other than this corporation or a Subsidiary) of which such
person is an officer or partner or is, directly or
indirectly, the Beneficial Owner of ten percent (10%) or
more or any class of Equity Securities, (ii) any trust or
other estate in which such person has a substantial
beneficial interest or as to which such person serves as
trustee or in a similar fiduciary capacity, or (iii) any
relative or spouse of such person, or any relative of such
spouse, who has the same home as such person, or is an
officer or director of any corporation controlling or
controlled by such person.
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9. "Subsidiary" shall mean any corporation of which a majority
of any class of Equity Security is owned, directly or
indirectly, by this corporation; provided, however, that for
the purposes of the definition of Substantial Stockholder
set forth in Section C.3. of this Article ELEVENTH, the term
"Subsidiary" shall mean only a corporation which a majority
of each class of Equity Security is owned, directly or
indirectly, by this corporation.
10. "Substantial Part" shall mean assets having a book value
(determined in accordance with generally acceptable
accounting principles) in excess of ten percent (10%) of the
book value of the total consolidated assets of this
corporation, at the end of its most recent fiscal year
ending prior to the time the determination is made.
11. "Voting Shares" shall mean any shares of capital stock of
this corporation entitled to vote generally in the election
of directors.
12. "Equity Security" shall have the meaning given to such term
by Rule 3a11-1 under the Securities Exchange Act of 1934, as
in effect on August 1, 1998.
D. A majority of the whole board shall have the power to determine,
but only if a majority of the whole board shall then consist of
continuing directors, or if a majority of the whole board shall
not then consist of continuing directors, a majority of the then
continuing directors shall have the power to determine, for the
purposes of this Article ELEVENTH, on the basis of information
known to them, (i) the number of Voting Shares Beneficially Owned
by any person, (ii) whether a person is an Affiliate or Associate
of another, (iii) whether a person has an agreement, arrangement
or understanding with another as to any matter referred to in
Section C.4. of this Article ELEVENTH, (iv) whether the assets
subject to any Business Combination constitute a Substantial Part
of the assets of the corporation in question, and (v) any other
factual matter relating to the applicability or effect of this
Article ELEVENTH.
E. A majority of the whole board shall have the right to demand, but
only if a majority of the whole board shall then consist of
continuing directors, or, if a majority of the whole board shall
not then consist of continuing directors, a majority of the then
continuing directors shall have the right to demand, that any
person who it is reasonably believed is a Substantial Stockholder
(or holds of record Voting Shares Beneficially Owned by any
Substantial Stockholder) supply this corporation with complete
information as to (i) the record owner(s) of all shares
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<PAGE>
beneficially owned by such person who it is reasonably believed
is a Substantial Stockholder, (ii) the number of, and class or
series of, shares beneficially owned by such person who it is
reasonably believed is a Substantial Stockholder and held of
record by each such record owner and the number(s) of the stock
certificate(s) evidencing such shares, and (iii) any other
factual matter relating to the applicability or effect of this
Article ELEVENTH, as may be reasonably requested of such person,
and such person shall furnish such information within ten (10)
days after receipt of such demand.
F. Any determinations made by the board of directors, or by the
continuing directors, as the case may be, pursuant to this
Article ELEVENTH in good faith and on the basis of such
information and assistance as was then reasonably available for
such purpose shall be conclusive and binding upon this
corporation and its stockholders, including any Substantial
Stockholder.
G. Any amendment, alteration, change or repeal of this Article
ELEVENTH shall, in addition to any other vote or approval
required by law or by these Articles of Incorporation, require
the affirmative vote of the holders of then outstanding Voting
Shares entitled to cast at lease eighty percent (80%) of the
votes entitled to be cast by the holders of all of the then
outstanding Voting Shares (and such affirmative vote must also
include the affirmative vote of the holders of Voting Shares
entitled to cast a majority of the votes entitled to be cast by
the holders of all Voting Shares not Beneficially Owned by any
Substantial Stockholder); provided, however, that this paragraph
(g) shall not apply to, and such eighty percent (80%) vote (and
such further majority vote) shall not be required for, any
amendment, alteration, change or repeal declared advisable by the
board of directors by the affirmative vote of two-thirds (2/3rds)
of the whole board and submitted to the stockholders for their
consideration, but only if a majority of the members of the board
of directors voting in favor of such declaration of advisability
shall be continuing directors.
H. Nothing contained in this Article ELEVENTH shall be construed to
relieve any Substantial Stockholder form any fiduciary obligation
imposed by law.
I. In the event any paragraph (or portion thereof) of this Article
ELEVENTH shall be found to be invalid, prohibited or
unenforceable for any reason, the remaining provisions (or
portions thereof) of this Article ELEVENTH shall be deemed to
remain in full force and effect, and shall be construed as if
such invalid, prohibited or unenforceable provision had been
stricken herefrom or otherwise rendered inapplicable, it being
the intent of this corporation and its stockholders that each
9
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such remaining provision (or portion thereof) of this Article
ELEVENTH remain, to the fullest extent permitted by law,
applicable and enforceable as to all stockholders, including
Substantial Stockholders, notwithstanding any such finding.
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EXHIBIT 4.2
SHAREHOLDER RIGHTS PLAN
LAMAR CAPITAL CORPORATION
AND
SunTrust Bank Atlanta
RIGHTS AGENT
SHAREHOLDER RIGHTS AGREEMENT
DATED AS OF August 3, 1998
<PAGE>
TABLE OF CONTENTS
Section 1. CERTAIN DEFINITIONS................................... 1
Section 2. APPOINTMENT OF RIGHTS AGENT........................... 4
Section 3. ISSUE OF RIGHTS CERTIFICATES.......................... 4
Section 4. FORM OF RIGHTS CERTIFICATES........................... 6
Section 5. COUNTERSIGNATURE AND REGISTRATION..................... 7
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN
RIGHTS CERTIFICATES............................................... 7
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS.................................................... 8
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES...................................................... 10
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK......... 11
Section 10. COMMON STOCK RECORD DATE............................. 12
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS........................................ 12
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES......................................................... 20
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER........................................... 20
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.............. 22
Section 15. RIGHTS OF ACTION..................................... 23
Section 16. AGREEMENT OF RIGHTS HOLDERS.......................... 24
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Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER... 24
Section 18. CONCERNING THE RIGHTS AGENT.......................... 25
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT...................................................... 25
Section 20. DUTIES OF RIGHTS AGENT............................... 26
Section 21. CHANGE OF RIGHTS AGENT............................... 28
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.................. 28
Section 23. REDEMPTION AND TERMINATION........................... 29
Section 24. NOTICE OF CERTAIN EVENTS............................. 30
Section 25. NOTICES.............................................. 31
Section 26. SUPPLEMENTS AND AMENDMENTS........................... 31
Section 27. SUCCESSORS........................................... 32
Section 28. DETERMINATION AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC.................................................... 32
Section 29. EXCHANGE............................................. 33
Section 30. BENEFITS OF THIS AGREEMENT........................... 34
Section 31. SEVERABILITY......................................... 34
Section 32. GOVERNING LAW........................................ 34
Section 33. COUNTERPARTS......................................... 35
Section 34. DESCRIPTIVE HEADINGS................................. 35
Exhibit A - Form of Rights Certificate................................. A-1
Exhibit B - Summary of Rights to Purchase Common Stock................. B-1
ii
<PAGE>
SHAREHOLDER RIGHTS AGREEMENT
SHAREHOLDER RIGHTS AGREEMENT, dated as of August 3, 1998 (the "Agreement"),
between LAMAR CAPITAL CORPORATION, a Mississippi corporation (the "Company"),
and SunTrust Bank, Atlanta (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on August 3, 1998 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of common stock, par value $.50 per
share, of the Company (the "Common Stock") outstanding at the close of business
on August 25, 1998 (the "Record Date"), and has authorized the issuance of one
Right (as such number may hereinafter be adjusted pursuant to Section 11 hereof)
for each share of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and the
Distribution Date, each Right initially representing the right to purchase one
share of Common Stock upon the terms and subject to the conditions hereinafter
set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Sect0on 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan. Notwithstanding the foregoing, no person shall become an
"Acquiring Person" as the result of an acquisition of shares of Common Stock by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the shares of Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 20% or more of
the shares of Common Stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional share of Common Stock of the
Company, then such Person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
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provisions of this paragraph (a), then such Person shall not be deemed to be or
have ever been an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event which Rights were acquired
by such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(a) hereof or Section 22
hereof (the "Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement or understanding, whether or not in writing;
PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this subparagraph (ii) as
a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act, and
(B) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (c)) or
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disposing of any voting securities of the Company; PROVIDED, HOWEVER, that
nothing in this paragraph (c) shall cause a person engaged in business as
an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of Ohio are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M., Purvis,
Mississippi time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Purvis, Mississippi time, on the next
succeeding Business Day.
(f) "Common Stock" shall mean the common stock, par value $.50 per share,
of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock (or equity security)
of such Person with the greatest voting power, or, if such Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(g) "Person" shall mean any individual, firm, corporation, partnership or
other entity.
(h) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A) or (B) hereof.
(i) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(j) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(k) "Subsidiary" shall mean, with reference to any Person, any corporation
or other entity of which voting power sufficient to elect at least a majority of
the directors (or other governing body) of such corporation or other entity is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
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(l) "Triggering Event" shall mean any Section 11(a) (ii) Event or any
Section 13 Event.
(m) "Adverse Person" shall mean any Person declared to be an Adverse Person
by the Board of Directors upon determination that the criteria set forth in
Section 11(a)(ii)(B) hereof apply to such Person.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earliest of (i) the close of business on the tenth day after
the Stock Acquisition Date, (ii) the close of business on the tenth business day
after the date that a tender offer or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 20% or more of the shares
of Common Stock then outstanding, or (iii) the close of business on the tenth
day after the Board of Directors of the Company determines, pursuant to the
criteria set forth in Section 11(a)(ii)(B) hereof, that a Person is an Adverse
Person (or such later date under clause (i), (ii) and (iii) as may be determined
by the Board of Directors of the Company; provided, however, that if such
determination occurs on or after the time there is an Acquiring Person or
Adverse Person, then such date may be extended only if there are Continuing
Directors (as such term is defined in Section 23 hereof) in office and such
extension is authorized by a majority of such Continuing Directors) (the
earliest of (i), (ii) and (iii) being herein referred to as the "Distribution
Date"), the Rights will be evidenced (subject to the provisions of paragraphs
(b) and (c) of this Section 3) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and the Rights will be transferable only in connection
with the transfer of the underlying shares of Common Stock (including a transfer
to the Company). Upon the occurrence of an event described in clauses (i), (ii)
or (iii) above, the Company shall give prompt notice thereof to the Rights
Agent. As soon as practicable after the Distribution Date, the Rights Agent
will send by first-class, insured, postage prepaid mail, to each record holder
of the Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made, at the time of
distribution of the Rights Certificates, the Company shall make the necessary
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and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit B (the "Summary of Rights") by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall also
be the registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section 7
hereof), the transfer or surrender for transfer of any certificates representing
shares of Common Stock in respect of which Rights have been issued shall also
constitute the transfer or surrender for transfer of the Rights associated with
such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights. All certificates
issued after the Record Date, whether with respect to new or to transferred
shares, shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Lamar Capital
Corporation (the "Company") and SunTrust Bank, Atlanta (the "Rights Agent")
dated as of August 3, 1998 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person, an Adverse
Person or any Affiliates or Associates thereof (as such terms are defined
in the Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
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evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
or surrender for transfer of any of such certificates shall also constitute the
transfer or surrender for transfer of the Rights associated with the Common
Stock represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall each be substantially in
the form set forth in Exhibit A hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase such
number of shares of Common Stock as shall be set forth therein at the price set
forth therein (the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by (i) an Acquiring Person or
an Adverse Person or any Associate or Affiliate of any such Person, (ii) a
transferee of an Acquiring Person or any such Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person or
an Adverse Person becomes such, or (iii) a transferee of an Acquiring Person or
an Adverse Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person or Adverse Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person or Adverse Person
to holders of equity interests in such Acquiring Person or Adverse Person or to
any Person with whom such Acquiring Person or Adverse Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Adverse Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of such Agreement.
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Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board of Directors or President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or offices designated as the appropriate place
for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any Rights Certificate
or Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of shares of Common Stock (or, following a Triggering Event,
Common Stock, other securities, cash and/or other assets, as the case may be) as
the Rights Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon, the Rights Agent shall, subject to Section 4(b), Section 7(e) and
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Section 14 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of shares (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at or
prior to the earlier of (i) the close of business on August 25, 2008 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the earlier of (i) and (ii) being herein referred to as
the "Expiration Date").
(b) The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall initially be $12.00 and shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per share of Common Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below and an amount
equal to any applicable transfer tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of
the Common Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of shares of Common Stock to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
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comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Common Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Common Stock as are to
be purchased (in which case certificates for the shares of Common Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made in cash or by certified bank check or bank draft payable
to the order of the Company. In the event that the Company is obligated to
issue other securities of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person, an Adverse Person or an Associate or Affiliate
of an Acquiring Person or Adverse Person, (ii) a transferee of an Acquiring
Person or Adverse Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person or Adverse Person becomes such, or (iii) a
transferee of an Acquiring Person or an Adverse Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Acquiring Person or Adverse Person
or to any Person with whom the Acquiring Person or Adverse Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
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respect to an Acquiring Person or an Adverse Person or any of their respective
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Common Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of any authorized
and issued shares held in its treasury), the number of shares of Common Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) If the shares of Common Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable and deliverable
upon the exercise of the Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii) hereof, or as
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soon as is required by law following the Distribution Date, as the case may be,
a registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the
Expiration Date of the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In
addition, if the Company shall determine that a registration statement is
required following a Distribution Date, the Company may temporarily suspend the
exerciseability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Common Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for shares of Common Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of the shares of Common Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for shares of
Common Stock (or Common Stock and/or other securities, as the case may be) in a
name other than that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for shares of Common Stock (or Common Stock and/or other securities,
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as the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the shares of Common Stock (or
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; PROVIDED, HOWEVER,
that if the date of such surrender and payment is a date upon which the Common
Stock (or Common Stock and/or other securities, as the case may be) transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a shareholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Stock payable in shares of
Common Stock, (B) subdivide the outstanding Common Stock, (C) combine the
outstanding Common Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of Common Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of Common
Stock or capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Common Stock
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
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(ii) In the event:
(A) Any person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
plan), alone or together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date, become the
Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, unless the event causing the 20% threshold to be crossed
is (1) a transaction set forth in Section 13(a) hereof or (2) approved
in advance by the Board of Directors (with the approval of a majority
of the Continuing Directors), or
(B) the Board of Directors of the Company shall declare any
Person to be an Adverse Person, upon a determination that such Person,
alone or together with its Affiliates and Associates, has at any time
after the Rights Dividend Declaration Date, become the Beneficial
Owner of an amount of Common Stock which the Board of Directors
determines to be substantial (which amount shall in no event be less
than 10% of the shares of Common Stock then outstanding) and a
determination by the Board of Directors, after reasonable inquiry and
investigation, including consultation with such persons as the Board
of Directors shall deem appropriate, that (1) such Beneficial
ownership by such Person is intended to cause the Company to
repurchase the Common Stock beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a
transaction or series of transactions intended to provide such Person
with short-term financial gain under circumstances where the Board of
Directors determines that the best long-term interests of the Company
and its shareholders would not be served by taking such action or
entering into such transactions or series of transactions at that time
or (2) such Beneficial Ownership is causing or reasonably likely to
cause a material adverse impact (including but not limited to,
impairment of relationships with customers, impairment of the
Company's business reputation or impairment of the Company's ability
to maintain its competitive position) on the business or prospects of
the Company,
then, promptly following the first occurrence of a Section 11(a)(ii)
Event, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, in lieu of the number of shares of Common
Stock for which a Right was theretofore exercisable, such number of
shares Common Stock as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of shares of
Common Stock for which a Right was exercisable immediately prior to
the first occurrence of the Section 11(a)(ii) Event and (y) dividing
that product (which, following such first occurrence, shall thereafter
be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the current per share market
price of the Common Stock (determined pursuant to Section 11(d)) on
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the date of the occurrence of the Section 11(a)(ii) Event (such number
of shares is herein called the "Adjustment Shares"); provided,
however, that the Purchase Price and number of Adjustment Shares shall
be further adjusted as provided in this Agreement to reflect any event
occurring after the date of such first occurrence.
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or units
of shares, of preferred stock which the Board of Directors of the Company
has deemed to have the same value as shares of Common Stock (such shares of
preferred stock, "common stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for
the authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
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has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of
the Common Stock on the Section 11(a)(ii) Trigger Date and the value of any
"common stock equivalent" shall be deemed to have the same value as the
Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to holders of Common Stock entitling them to subscribe for
or purchase (for a period expiring within forty-five (45) calendar days after
such record date) Common Stock (or shares having the same rights, privileges and
preferences as the shares of Common Stock ("equivalent common stock")) or
securities convertible into Common Stock or equivalent common stock at a price
per share of Common Stock or per share of equivalent common stock (or having a
conversion price per share, if a security convertible into Common Stock or
equivalent common stock) less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
and/or equivalent common stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Common Stock outstanding on such record date, plus the number of
additional shares of Common Stock and/or equivalent common stock to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets (other than a
dividend payable in Common Stock, but including any dividend payable in stock
other than Common Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)
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hereof) per share of Common Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights of warrants applicable to a share of
Common Stock and the denominator of which shall be such current market price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder, other than computations
made pursuant to Section 11(a)(iii) hereof, the "current market price" per share
of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the "current market price" per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share of such Common
Stock for the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the current market price per share of
the Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of the requisite thirty (30) Trading Day period or ten (10) Trading
Day period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price" shall
be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
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on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading in open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
an adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Common Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of Common Stock
(calculated to the nearest one-thousandth) obtained by (i) multiplying (x) the
number of shares covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of shares of Common Stock purchasable upon the exercise of a Right. Each
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of the Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of shares of Common Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Common Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per share and the number of shares which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the shares of Common
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the shares
of Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares or securities upon the occurrence of the event requiring such adjustment.
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(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Common Stock, (ii) issuance wholly for cash of any shares of
Common Stock at less than the current market price, (iii) issuance wholly for
cash of shares of Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Common Stock shall
not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the shareholders of the Person who
constituted, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof have received a distribution, directly or indirectly, of Rights
previously owned by such Person or any of its Affiliates or Associates.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date consolidate with, or merge with or into, any
other Person for the primary purpose of a change of domicile of the Company,
and, in connection with such consolidation or merger, all of the outstanding
shares of Common Stock shall be changed into or exchanged for shares of Common
Stock of the Surviving Corporation of such consolidation or merger (the
"Surviving Corporation"), then proper provision shall be made so that Rights
shall be associated with each share of Common Stock of the Surviving
Corporation, except as provided in Section 7(e) hereof, such that the number of
Rights associated with each share of Common Stock of the Surviving Corporation
following any such event shall equal the result obtained by multiplying the
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number of Rights associated with each share of Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of Common
Stock of the Surviving Corporation which the shares of Common Stock were changed
into or exchanged for pursuant to the consolidation or merger. Following such a
consolidation or merger, this Agreement shall remain in effect and all
references to the Company shall be deemed to be references to the Surviving
Corporation.
(q) The failure by the Board of Directors to declare a Person to be an
Adverse Person following such Person becoming the Beneficial Owner of 10% or
more of the outstanding Common Stock shall not imply that such Person is not an
Adverse Person or limit the Board of Directors' right at any time in the future
to declare such Person to be an Adverse Person.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that (i) each holder of
a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
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(disregarding any adjustment of the Purchase Price pursuant to Section 11(a)(ii)
hereof) in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable and freely traceable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of shares of Common Stock for which a Right
is exercisable immediately prior to the first occurrence of a Section 13 Event
(or if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such shares for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by (2) 50% of the current market price
(as determined pursuant to Section 11(d) hereof) per share of the Common Stock
of such Principal Party on the date of consummation of such Section 13 Event,
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, "Principal Party" shall refer to
such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of two or more of which
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are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest aggregate
market value.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
merges or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the first occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a tender offer or exchange offer
for all outstanding shares of Common Stock which was carried out pursuant to the
exception contained in clause (2) of Section 11(a)(ii)(A) hereof (or a wholly
owned subsidiary of any such Person or Persons), (ii) the price per share of
Common Stock offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such tender offer or exchange offer, and (iii) the form of
consideration being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder shall
expire.
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Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights, except,
prior to the Distribution Date as provided in Section 11(i) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of a share of
Common Stock. For purposes of this Section 14(b), the current market value of a
share of Common Stock shall be the closing price of one (1) share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
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against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; PROVIDED, HOWEVER, that the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
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Rights Certificate, as such, any of the rights of a shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent of any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; PROVIDED, HOWEVER, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
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Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
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be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or other securities
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or other securities will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Executive Vice President, the Vice
President-Finance, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; PROVIDED, HOWEVER, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate identification against such risk or liability is not reasonably assured
to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise transfer, the certificate attached to the form of assignment
or form of election to purchase, as the case may be, has either not been
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completed or indicates an affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable or
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the State of
Mississippi (or of any other state of the United States so long as such
corporation is authorized in the State of Mississippi to perform all of the
duties of the Rights Agent hereunder), in good standing, having a principal
office in the State of Mississippi, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificate. evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provision of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
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Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
PROVIDED, HOWEVER, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the earlier of (i) the close of business on the fifteenth day following
the Stock Acquisition Date (or if the Stock Acquisition Date shall have occurred
prior to the Record Date, the close of business on the fifteenth day following
the Record Date), or (ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $.01 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"); provided,
however, that if such authorization occurs on or after the date of a change
(resulting from a proxy or consent solicitation) in a majority of the directors
in office at the commencement of such solicitation, and any Person who is or was
a participant in such solicitation has stated (or if upon the commencement of
such solicitation, a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) has taken or intends to take, or may consider taking, any action
that would result in such Person becoming an Acquiring Person or that would
cause the occurrence of a Triggering Event (the existence of the circumstances
described in this proviso being referred to herein as an "Adverse Change of
Control"), then the Rights may be so redeemed only if there are Continuing
Directors (as hereinafter defined) in office and such redemption is authorized
by a majority of such Continuing Directors. "Continuing Director" shall mean (i)
any member of the board of Directors of the Company who, while such person is a
member of the Board, is not an Acquiring Person or an Adverse Person, or an
Affiliate or Associate of such Person, or a representative of an Acquiring
Person or an Adverse Person or of any such Affiliate or Associate, and was a
member of the Board prior to the Record Date, or (ii) any Person who
subsequently becomes a member of the Board who, while such Person is a member of
the Board, is not an Acquiring Person or an Adverse Person, or an Affiliate or
Associate of such Person, or a representative of an Acquiring Person or an
Adverse Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board of Directors is recommended or
approved by a majority of the Continuing Directors. Notwithstanding the
foregoing, the Board of Directors may not redeem any Rights following a
determination pursuant to Section 11(a)(ii)(B) hereof that any Person is an
Adverse Person. Notwithstanding anything contained in this Agreement to the
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contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the "current market price," as defined
in Section 11(d) hereof, of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Common Stock or to make any other distribution to the holders of Common Stock
(other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Common Stock rights
or warrants to subscribe for or to purchase any additional shares of Common
Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Common Stock (other than
a reclassification involving only the subdivision of outstanding shares of
Common Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or a series of related transactions, of assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), or (v) to effect the liquidation.
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Common
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Common Stock
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for purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Common Stock
whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Common Stock shall be deemed thereafter to refer to
Common Stock and/or other securities, if appropriate.
Section 25. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Lamar Capital Corporation
401 Shelby Speights Drive
Purvis, Mississippi 39475
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
SunTrust Bank, Atlanta
P.O. Box 4625
Atlanta, Georgia 30302
Attention: Stock Transfer Department Manager
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
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subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company shall so direct (upon the approval of a
majority of the Continuing Directors then in office), supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the rights,
interests and duties of the Rights Agent or the interests of the holders of
Rights Certificates (other than an Acquiring Person, an Adverse Person or an
Affiliate or Associate of an Acquiring Person or Adverse Person); PROVIDED,
HOWEVER, that this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable,
or (B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26 (including the Continuing
Director approval requirements set forth herein), the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, the Final Expiration Date, the Purchase Price or
the number of shares of Common Stock for which a Right is exercisable. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock. Without limiting
the foregoing, the Board of Directors of the Company may at any time prior to
such time as any Person becomes an Acquiring Person amend this Agreement to
lower the thresholds set forth in Section 1(a) and 3(a) to not less than the
greater of (i) the sum of .001% plus the largest percentage of the outstanding
shares of Common Stock then known by the Company to be beneficially owned by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan)
and (ii) 10%. Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be amended or supplemented as the Board of
Directors shall deem necessary or advisable (upon approval of a majority of the
Continuing Directors then in office), without the approval of any holders of
Right Certificates, to provide for the issuance of shares (or fractional shares)
of preferred stock of the Company in place of Common Stock which may be received
upon exercise of Rights hereunder prior to the occurrence of any Triggering
Event, and to modify or amend this Agreement in any respect to take into account
the use of such preferred stock (or fractional shares of preferred stock) in
place of such Common Stock.
Section 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
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determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the Continuing Directors), or to the Company,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to attend the Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors),
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all other parties, and
(y) not subject the Board to any liability to the holders of the Rights.
Section 29. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any time
and from time to time after the first occurrence of a Section 11(a)(ii) Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include rights that become void pursuant to the provisions of the Section
7(e) hereof) for shares of Common Stock or common stock equivalents, or any
combination thereof, at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted as determined by the Board to reflect any stock
split, stock combination, stock dividend, or other similar event after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio").
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
29 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock and/or common
stock equivalents equal to the number of such rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the holders of such
Rights at their latest addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial exchange.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
33
<PAGE>
(c) In the event that the number of shares of Common Stock which are
authorized by the Company's Articles of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 29, the Company may, at its option, take all such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the value of a whole share of Common Stock. For
purposes of this Section 29, the value of a whole share of Common Stock shall be
the "current market price" (as determined pursuant to Section 11(d) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 29, and the value of any common stock equivalent shall be deemed to have
the same value as the Common Stock on such date.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated,
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the state of Mississippi and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contract made
and to be performed entirely within such state.
34
<PAGE>
Section 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: LAMAR CAPITAL CORPORATION
-----------------
By: By:
--------------------- --------------------------------------
Name: Name:
------------------- ------------------------------------
Title: Title:
------------------- ------------------------------------
Attest: SUNTRUST BANK, ATLANTA
----------------- -----------------------------------------
By: By:
--------------------- --------------------------------------
Name: Name:
------------------- ------------------------------------
Title: Title:
------------------- ------------------------------------
35
<PAGE>
Exhibit A
Form of Rights Certificate
Certificate No. _____
Rights
NOT EXERCISABLE AFTER AUGUST 25, 2008 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHTS ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ADVERSE
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
LAMAR CAPITAL CORPORATION
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Shareholder Rights Agreement, dated as of August 3, 1998 (the "Rights
Agreement"), between Lamar Capital Corporation, a Mississippi corporation (the
"Company"), and SunTrust Bank, Atlanta (the "Rights Agent"), to purchase from
the Company at any time prior to 5:00 P.M. (Purvis, Mississippi time) on August
25, 2008 at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one fully paid, nonassessable share
of the Common Stock (the "Common Stock") of the Company, at a purchase price of
$12.00 per share (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related Certificate
duly executed. The Purchase Price shall be paid in cash. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of August 3, 1998,
based on the Common Stock as constituted at such date.
* The portion of the legend in brackets shall be inserted only, if applicable
and shall replace the preceding sentence.
A-1
<PAGE>
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person, an Adverse Person or an Affiliate
or Associate of any such Acquiring Person or Adverse Person (as such terms are
defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Adverse Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person, such Rights shall become null and void and no holder hereof shall have
any Rights with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Common Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate are subject to
notification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company, at its option, at a redemption
price of $.01 per Right at any time prior to the earlier of the close of
business on (i) the fifteenth day following the Stock Acquisition Date (as such
time period may be extended pursuant to the Rights Agreement), and (ii) the
Final Expiration Date. Notwithstanding the foregoing, the Rights evidenced by
this Rights Certificate may not be redeemed following a determination pursuant
to Section 11(a)(ii)(B) of the Rights Agreement that any Person is an Adverse
Person.
A-2
<PAGE>
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of August 25, 1998
ATTEST:
-----------------------------
By:
-------------------------------------
Title:
----------------------------------
Countersigned:
----------------------
By:
---------------------------------
Authorized Signature
A-3
<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
--------------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________ Attorney,
to transfer the within Rights Certificate on the books of the within named
Company, with full power of substitution.
Dated:
--------------------
--------------------------------------------------
Signature
Signature Guaranteed:
- ---------------------------
A-4
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
[_] (1) this Rights Certificate is/is not being sold, assigned and transferred
by or on behalf of a Person who is or was an Acquiring Person, an Adverse
Person or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement); and
[_] (2) after due inquiry and to the best knowledge of the undersigned, it
did/did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person.
Dated:
--------------------
-----------------------------------------
Signature
Signature Guaranteed:
- --------------------------------
A-5
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
A-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: LAMAR CAPITAL CORPORATION
The undersigned hereby irrevocably elects to exercise Rights represented by
this Rights Certificate to purchase the shares of Common Stock issuable upon the
exercise of the Rights (or such other securities of the Company or of any other
person which may be issuable upon the exercise of the Rights) and requests that
certificates for such shares be issued in the name of and delivered to:
---------------------------------
---------------------------------
---------------------------------
(Please print name and address)
Please insert social security
or other identifying number:
----------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
---------------------------------
---------------------------------
---------------------------------
(Please print name and address)
Please insert social security
or other identifying number:
----------------------------
Dated:
---------------------------
-----------------------------------------
Signature
Signature Guaranteed:
- ---------------------------------
A-7
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
[_] (1) the Rights evidenced by this Rights Certificate are/are not being
exercised by or on behalf of a Person who is or was an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person (as such
terms are defined pursuant to the Rights Agreement); and
[_] (2) after due inquiry and to the best knowledge of the undersigned, it
did/did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person, an Adverse Person or
an Affiliate or Associate of an Acquiring Person.
Dated:
-------------------------
-----------------------------------------
Signature
Signature Guaranteed:
- -------------------------------
A-8
<PAGE>
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-9
<PAGE>
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On August 3, 1998, the Board of Directors of Lamar Capital
Corporation (the "Company") declared a dividend distribution of one Right for
each outstanding share of common stock, par value $.50 per share (the "Common
Stock"), of the Company to stockholders of record at the close of business on
August 25, 1998 (the "Record Date"). Each Right entitles the registered
holder to purchase from the Company one share of Common Stock at a price of
$12.00 per share (the "Purchase Price"), subject to adjustment. The Purchase
Price shall be paid in cash. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and
SunTrust Bank, Atlanta, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate certificates evidencing
the Rights (the "Rights Certificates") will be distributed. Until the earliest
to occur of (i) 10 days following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), (ii) 10
business days following the commencement of a tender offer or exchange offer if,
upon consummation thereof, such person or group would be the beneficial owner of
20% or more of such outstanding shares of Common Stock, or (iii) the close of
business on the tenth day after the Board of Directors of the Company determines
that a person, who alone or together with affiliates or associates has
beneficial ownership of at least 10% of the Common Stock then outstanding, is an
Adverse Person (the earliest of such dates being called the "Distribution
Date"), the Rights will be evidenced only by Common Stock certificates and will
be transferred with and only with Common Stock certificates. The Board of
Directors, after reasonable inquiry and investigation, may determine that a
person is an Adverse Person if the Board finds that (i) such person intends to
cause the Company to repurchase such person's shares or intends to attempt to
pressure the Company to take actions which will result in that person's short-
term financial gain under circumstances which would not be in the best interest
of the Company and the shareholders or (ii) ownership of the Common Stock by
such person is causing or is reasonably likely to cause a material adverse
impact on the business or prospects of the Company.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for transfer
of any certificates for Common Stock outstanding as of the Record Date will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, Rights Certificates will be mailed to holders of record of
the Common Stock as of the close of business on the Distribution Date and,
thereafter, such separate Rights Certificates alone will evidence the Rights.
B-1
<PAGE>
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on August 25, 2008, unless earlier redeemed by the
Company as described below.
In the event that (i) a Person (other than the Company and its affiliates)
becomes the beneficial owner of 20% or more of the then outstanding shares of
Common Stock or (ii) the Board determines that a person is an Adverse Person,
the Rights Agreement provides that proper provision shall be made so that each
holder of a Right (except for any Acquiring Person or Adverse Person and certain
Affiliates, Associates and transferees of such person) will thereafter have the
right to receive, upon exercise, Common Stock (or in certain circumstances,
cash, other securities or property) having a value equal to two (2) times the
Purchase Price of the Right. Notwithstanding the above, the acquisition of
beneficial ownership of 20% or more of the Common Stock under (ii) above shall
not permit the holder of a Right to purchase Common Stock at such discounted
purchase price if such acquisition of beneficial ownership is approved in
advance by the Board of Directors of the Company (with the approval of a
majority of the Continuing Directors).
In the event that, at any time following the Stock Acquisition Date, (i)
the Company engages in a merger or other business combination transaction in
which the Company is not the surviving corporation, (ii) the Company engages in
a merger or other business combination transaction with another person in which
the Company is the surviving corporation, but in which its Common Stock is
changed or exchanged, or (iii) 50% or more of the Company's assets or earning
power is sold or transferred, the Rights Agreement provides that proper
provision shall be made so that each holder of a Right shall thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, common stock of the acquiring company having a value equal to two
(2) times the exercise price of the Right.
The Purchase Price payable, and the number of shares of Common Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock, (ii) upon the
grant to holders of the Common Stock of certain rights or warrants to subscribe
for Common Stock or convertible securities at less than the current market price
of the Common Stock, or (iii) upon the distribution to holders of the Common
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
The Rights may be redeemed by the Board in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") at any time prior to fifteen
(15) days (plus such extensions as the Board, in its discretion, specifies)
B-2
<PAGE>
after the Stock Acquisition Date. However, the Board of Directors may not
redeem any Rights following a determination that a person is an Adverse Person.
Immediately upon the action of the Board of Directors of the Company, ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price. The Company may, at
its option, pay the Redemption Price in cash, shares of Common Stock, or any
other form of considerations deemed appropriate by the Board of Directors.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Other than those provisions relating to the Redemption Price, final
expiration date and number of shares of Common Stock (and/or other securities or
property, if applicable) issuable upon exercise of the Rights, any of the
provisions of the Rights Agreement may be amended by the Board of Directors of
the Company prior to the Distribution Date; and, thereafter, the provisions of
the Rights Agreement may be amended by the Board only in order to cure any
ambiguity, to correct or supplement any provision contained in the Rights
Agreement which may be defective or inconsistent with any other provision, to
shorten or lengthen any time period or to make such other changes as do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person); PROVIDED, however, that no amendment shall be made after
the Distribution Date (a) to lengthen any time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, or
benefits to, holders of Rights or (b) to lengthen the redemption period at a
time when the Rights are not then redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement No. 333-61355 on
Form S-1. A copy of the Rights Agreement is available free of charge
from the Rights Agent. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
B-3
<PAGE>
EXHIBIT 4.3 Specimen Stock Certificate of Lamar Capital Corporation
- --------------------------------------------------------------------------------
INCORPORATED UNDER THE LAWS
OF THE STATE OF MISSISSIPPI
-----NUMBER----- -----SHARES----
LLC
LAMAR CAPITAL
COMMON STOCK CORPORATION
PAR VALUE $.50
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 512828 10 6
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Lamar Capital Corporation, transferable on the books of the Corporation by the
holder hereof in person or by duly authorized Attorney, upon surrender of this
Certificate properly endorsed. This Certificate is not valid unless
countersigned by the Transfer Agent and registered by the Registrar. Witness the
facsimile seal of the Corporation and the facsimile signatures of its duly
authorized officers.
Dated:
[CORPORATE SEAL OF
LAMAR CAPITAL CORPORATION
APPEARS HERE]
/s/ Jane P. Roberts /s/ Kenneth M. Lott
VICE CHAIRMAN AND SECRETARY PRESIDENT AND CHIEF OPERATING OFFICER
- --------------------------------------------------------------------------------
COUNTERSIGNED AND REGISTERED:
SUNTRUST BANK, ATLANTA
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
<TABLE>
<CAPTION>
LAMAR CAPITAL CORPORATION
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed
as though they were written out in full according to applicable laws or regulations:
<S> <C>
TEN COM- as tenants in common UNIF GIFT MIN ACT-________________ Custodian__________________
TEN ENT- as tenants by the entireties (Cust) (Minor)
JT TEN- as joint tenants with
right of survivorship and under Uniform Gifts to Minors
not as tenants in common
Act__________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, ____________________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------
| |
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
___________________________________________________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint______
_________________________________________________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with full power of substitution in
the premises.
Dated, _________________________________
_________________________________________________________________________________
NOTICE: The signature of this assignment must correspond with the name as written
upon the face of the certificate in every particular, without alteration or
enlargement or any change whatever.
SIGNATURE(S) GUARANTEED:
----------------------------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in the Rights Agreement between Lamar Capital Corporation (the
"Company") and SunTrust Bank, Atlanta (the "Rights Agent") dated as of August 3,
1998 (the "Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person, an Adverse
Person or any Affiliates or Associates thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void.
</TABLE>
<PAGE>
EXHIBIT 5
OPINION OF WATKINS LUDLAM WINTER & STENNIS, P.A.
(601) 949-4701
September 30, 1998
Board of Directors
Lamar Capital Corporation
401 Shelby Speights Drive
Purvis, Mississippi 39475
Ladies and Gentlemen:
We have acted as counsel to Lamar Capital Corporation ("Lamar") in connection
with the Registration Statement on Form S-1 (Registration No. 333-61355), filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933 (the "Act"), as amended by Amendment No. 1 (the "Registration Statement"),
with respect to up to a maximum of 1,568,181 shares (the "Shares") of Common
Stock, $.50 par value, of Lamar.
We have examined, among other things, the Articles of Incorporation and By-Laws
of Lamar, the Registration Statement and the form of Underwriting Agreement
filed as Exhibit 1 to the Registration Statement (the "Underwriting
Agreement"), and are familiar with the proceedings taken by Lamar relating to
its issuance of Shares as contemplated by the Registration Statement. We have
relied on certificates of officers of Lamar and of public officials and others
as to certain matters of fact relating to this opinion and have also examined
such records, certificates and other documents as we have considered necessary
or appropriate for the purposes of this opinion. We have assumed the genuineness
of all signatures, the authenticity of all documents and records submitted to us
as copies and the truthfulness of all statements of fact contained therein.
Based on the foregoing, we are of the opinion that, when the Registration
Statement has become effective and the Shares are sold in accordance with the
Underwriting Agreement, the Shares, when issued and sold pursuant to and in
accordance with the terms of the Underwriting Agreement, will be validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion, or copies thereof, as an
exhibit to the Registration Statement and to the reference to us under the
caption "Legal Matters" in the Prospectus included in Part I of the Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
WATKINS LUDLAM WINTER & STENNIS, P.A.
/s/ Watkins Ludlam Winter & Stennis, P.A.
<PAGE>
Exhibit 10.1 Executive Salary Continuation Agreements, as amended between
company and Robert W. Roseberry, Jane P. Roberts and Kenneth M. Lott.
THE LAMAR BANK
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this first day of February, 1993, by and
between The Lamar Bank, a corporation organized and existing under the laws of
the State of Mississippi, (hereinafter called "the Corporation"), and Robert W.
Roseberry (hereinafter called "the Executive").
W I T N E S S E T H:
WHEREAS, the Executive is in the employ of the Corporation serving as its
President and Chief Executive Officer; and
WHEREAS, the experience of the Executive, his knowledge of the affairs of the
Corporation, his reputation and contacts in the industry are so valuable that
assurance of his continued service is essential for the future growth and
profits of the Corporation and it is in the best interests of the Corporation to
arrange terms of continued employment for the Executive so as to reasonably
assure his remaining in the Corporation's employment during his lifetime or
until the age of retirement; and
WHEREAS, it is the desire of the Corporation that his services be retained as
herein provided; and
WHEREAS, the Executive is willing to continue in the employ of the Corporation
provided the Corporation agrees to pay him or his beneficiaries certain benefits
in accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the services to be performed in the future
as well as the mutual promises and covenants herein contained, it is agreed as
follows:
ARTICLE 1.
1.1) Beneficiary - The term Beneficiary shall mean the person or persons whom
the Executive shall designate in writing to receive the benefits provided
hereunder.
1.2) Disability - The term Disability shall mean an inability to substantially
perform the usual and regular duties performed by the Executive as an employee
of the Corporation. Such disability may be caused by either illness or injury
and includes mental disabilities. For purposes of this Agreement the
determination of the Executive's disability shall be made solely by the Board of
Directors of the Corporation without participation by the alleged disabled
<PAGE>
Executive. Such a determination by the Board of Directors shall be final and
conclusive on all parties hereto.
1.3) Named Fiduciary and Plan Administrator - The Named Fiduciary and Plan
Administrator of this plan shall be the Corporation.
ARTICLE 2.
2.1) Employment - The Corporation agrees to employ the Executive in such
capacity as the Corporation may from time to time determine. The Executive will
continue in the employ of the Corporation in such capacity and with such duties
and responsibilities as may be assigned to him, and with such compensation as
may be determined from time to time by the Board of Directors of the
Corporation.
2.2) Full Efforts - The Executive agrees to devote his full time and attention
exclusively to the business and affairs of the Corporation, except during
vacation periods, and to use his best efforts to furnish faithful and
satisfactory services to the Corporation.
2.3) Fringe Benefits - The salary continuation benefits provided by this
Agreement are granted by the Corporation as a fringe benefit to the Executive
and are not part of any salary reduction plan or any arrangement deferring a
bonus or a salary increase. The Executive has no option to take any current
payment or bonus in lieu of these salary continuation benefits.
ARTICLE 3.
3.1) Retirement - If the Executive shall continue in the employment of the
Corporation until he attains the age of sixty-five (65), he may retire from
active daily employment as of the first day of the month next following
attainment of age sixty-five (65) or upon such later date as may be mutually
agreed upon by the Executive and the Corporation.
3.2) Payment - The Corporation agrees that upon such retirement it will pay to
the Executive the annual sum of fifty thousand five hundred dollars ($50,500),
payable monthly on the first day of each month following such retirement for a
period of one hundred eighty (180) months; subject to the conditions and
limitations hereinafter set forth. The fifty thousand five hundred dollars
($50,500) annual payment amount may be adjusted as of the first year in which it
is to be paid to reflect changes in the federally determined cost-of-living
index and may be adjusted annually for each payment year thereafter to reflect
further changes in said federally determined cost-of-living
<PAGE>
index. However, the Corporation is not obligated hereunder to make any such
adjustment.
3.3) Death After Retirement - The Corporation agrees that if the Executive shall
so retire, but shall die before receiving the full amount of monthly payments to
which he is entitled hereunder, it will continue to make such monthly payments
to the Executive's designated Beneficiary for the remaining period. If a valid
Beneficiary Designation is not in effect, the payments shall be made to the
Executive's surviving spouse or, if none, said payments shall be made to the
duly qualified personal representative, executor or administrator of his estate.
ARTICLE 4.
4.1) Death Prior to Retirement - In the event the Executive should die while
actively employed by the Corporation at any time after the date of this
Agreement but prior to his attaining the age of sixty-five (65) years, the
Corporation will pay the annual sum of fifty thousand five hundred Dollars
($50,500) per year to the Executive's designated Beneficiary in equal monthly
installments for a period of one hundred eighty (180) months. If a valid
Beneficiary Designation is not in effect, the payments shall be made to the
Executive's surviving spouse or, if none, said payments shall be made to the
duly qualified personal representative, executor or administrator of her estate.
The said monthly payments shall begin the first day of the month following the
month of the decease of the Executive. Provided, however, that anything
hereinabove to the contrary notwithstanding, no death benefit shall be payable
hereunder if it is determined that the Executive's death was caused by suicide
on or before February 1, 1995.
4.2) Disability Prior to Retirement - In the event the Executive should become
disabled while actively employed by the Corporation at any time after the date
of this Agreement but prior to his attaining the age of sixty-five (65) years,
the Executive will be considered to be one hundred percent (100%) vested in the
amount set forth in Schedule A attached hereto and made a part hereof. Said
amount shall be paid to the Executive in a lump sum within three (3) months of
the determination of disability or upon such other terms as the Executive and
the Corporation may agree including, but not limited to, drawing said sum by way
of monthly benefits to begin immediately based upon the value of the vested sum
then accrued or in monthly benefits beginning when the Executive attains the age
of sixty-five (65) based upon the vested benefits then accrued plus
contributions of the Corporation
<PAGE>
at a rate or dollar amount to be determined annually by the Board or Directors
until such time as the Executive attains the age of sixty-five (65). If the
Executive elects to receive said benefits in a lump sum payment, the Executive
shall notify the Corporation in writing within forty-five (45) days of the
determination of disability. In the event that the Corporation and Executive
agree to some other form of payment of the vested benefits, it shall be done in
writing within forty-five (45) days of the determination of the disability. Said
payment (regardless of its form) shall be in lieu of any other retirement or
death benefit under this Agreement.
ARTICLE 5.
5.1) Termination of Employment - The Corporation reserves the right to terminate
the employment of the Executive at any time prior to retirement. In the event
that the employment of the Executive shall terminate prior to her attaining age
sixty-five (65), other than by reason of his disability or his death, then this
Agreement shall terminate upon the date of such termination of employment.
Provided, however, that the Executive shall be entitled to the following
benefits under the following circumstances:
(01) If the Executive has been employed by the Corporation for a period of
at least one (1) continuous year from and after the time this agreement was
entered into, the Executive will be considered to be vested in one hundred
percent (100%) of the amount set out in Schedule A attached hereto and made a
part hereof. If the Executive has been employed by the Corporation for a period
of less than one (1) continuous year from and after the time this Agreement was
entered into, the Executive will not be considered to be vested in any benefit
hereunder and shall be entitled to no benefits under this Agreement. If the
Executive's employment is terminated under the provisions of this Section 5.1,
the Corporation will pay the Executive's vested amount upon such terms and
conditions and commencing at such time as the Corporation shall determine, but
in no event commencing later than age sixty-five (65). Provided, however, the
Executive shall have the right to receive said vested amount in one (1) lump sum
payment within three (3) months of the termination of the Executive's
employment.
(02) Anything hereinabove to the contrary notwithstanding, if the Executive
is not fully vested in the amoung set forth in Schedule A, he will become fully
vested in said amount in the event of a transfer in the controlling ownership or
sale of the Corporation or its parent corporation and shall be entitled to the
full amount set forth in Schedule A, upon the terms and conditions hereof, if
<PAGE>
termination of employment thereafter occurs under this Section 5.1.
ARTICLE 6.
6.1) Termination of Agreement by Reason of Changes in Law -The Corporation is
entering into this Agreement upon the assumption that certain existing tax laws
will continue in effect in substantially their current form. In the event of any
changes in such federal laws, the Corporation shall have an option to terminate
or modify this Agreement. Provided, however, that the Executive shall be
entitled to at least the same amount as he would have been entitled to under
Section 4.2 relating to disability. The payment of said amount shall be made
upon such terms and conditions and at such time as the Corporation shall
determine, but in no event commencing later than age sixty-five (65).
ARTICLE 7.
7.1) Nonassignable - Neither the Executive, the Executive's spouse, nor any
other beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance, owed by the Executive or his
beneficiary or any of them, or be transferable by operation of law in the event
of bankruptcy, insolvency or otherwise.
ARTICLE 8.
8.1) Claims Procedure - The Corporation shall make all determinations as to
rights to benefits under this Agreement. Any decision by the Corporation denying
a claim by the Executive or his beneficiary for benefits under this Agreement
shall be stated in writing and delivered or mailed to the Executive or such
beneficiary. Such decision shall set forth the specific reasons for the denial,
written to the best of the Corporation's ability in a manner calculated to be
understood without legal or actuarial counsel. In addition, the Corporation
shall provide a reasonable opportunity to the Executive or such beneficiary for
full and fair review of the decision denying such claim.
ARTICLE 9.
9.1) Unsecured General Creditor - The Executive and his beneficiary shall have
no legal right or equitable rights, interests, or claims in or to any property
or assets of the
<PAGE>
Corporation. No assets of the Corporation shall be held under any trust for the
benefit of the Executive or his beneficiaries or held in any way as security for
the fulfilling of the obligations of the Corporation under this plan. All of the
Corporation's assets shall be and remain the general, unpledged, unrestricted
assets of the Corporation. The Corporation's obligation under this plan shall be
that of an unfunded and unsecured promise by the Corporation to pay money in the
future. Executives and their beneficiaries shall be unsecured general creditors
with respect to any benefits hereunder.
ARTICLE 10.
10.1) Reorganization - The Corporation shall not merge or consolidate into or
with another corporation, or reorganize, or sell substantially all of its assets
to another corporation, firm, or person unless and until such succeeding or
continuing corporation, firm, or person agrees to assume and discharge the
obligations of the Corporation under this Agreement. Upon the occurrence of such
event, the term "Corporation" as used in this Agreement shall be deemed to refer
to such successor or survivor corporation.
ARTICLE 11.
11.1) Benefits and Burdens - This Agreement shall be binding upon and inure to
the benefit of the Executive and his personal representatives, and the
Corporation and any successor organization which shall succeed to substantially
all of its assets and business.
ARTICLE 12.
12.1) Not a Contract of Employment - This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Corporation to discharge the Executive,
or restrict the right of the Executive to terminate his employment.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its proper officer and the Executive has hereunto set his hand at
Purvis, Mississippi, the day and year first above written.
The Lamar Bank
By:
--------------------------------
Its:
-------------------------------
EXECUTIVE:
/s/ Robert W. Roseberry
- ------------------------------------
<PAGE>
SCHEDULE_A
EXECUTIVE SALARY CONTINUATION AGREEMENT BETWEEN THE LAMAR
BANK AND ROBERT W. ROSEBERRY
Plan_Year Amount_in_Which_Vesting_Occurs
1 $ 9,289
2 19,249
3 29,930
4 41,382
5 53,662
6 66,830
7 80,950
8 96,091
9 112,327
10 129,735
11 148,403
12 168,420
13 189,884
14 212,899
15 237,579
16 264,042
17 292,418
18 322,846
19 355,474
20 390,460
21 427,975
22 468,202
<PAGE>
AMENDMENT TO THE LAMAR BANK
EXECUTIVE SALARY CONTINUATION AGREEMENT
OF ROBERT W. ROSEBERRY
THIS AMENDMENT is entered into on this 14th day of September, 1998, by and
between The Lamar Bank, a corporation organized and existing under the laws of
the State of Mississippi, (hereinafter called the "Corporation"), and Robert W.
Roseberry (hereinafter called the "Executive") and shall be effective as of the
3rd day of August, 1998.
WHEREAS, the Corporation and the Executive entered into The Lamar Bank
Executive Salary Continuation Agreement (hereinafter called the "Agreement") on
February 1, 1993 in order to retain the Executive in the employ of the
Corporation and to provide certain benefits to the Executive and his
beneficiaries; and
WHEREAS, the Corporation and the Executive now wish to amend the Agreement
to clarify when the benefits provided under the Agreement vest after a change of
control of the Corporation or the Lamar Capital Corporation, the parent
corporation of the Corporation (hereinafter called the "LCC"); and
WHEREAS, it is the desire of the Corporation and the Executive that the
Agreement, as hereby amended and with the mutual promises and covenants therein
and herein contained, continue in affect.
NOW, THEREFORE, in consideration of these premises, the Agreement is hereby
amended as follows:
1. Amend Article 5.1(02) by deleting the existing provision and substituting
the following provision:
(02) Anything hereinabove to the contrary notwithstanding, if the Executive
is not fully vested in the amount set forth in Schedule A, he will become fully
vested in said amount in the event of a Change of Control, as defined in Section
5.1(03), and shall be entitled to the full amount set forth in Schedule A, upon
the terms and conditions hereof, if termination of employment thereafter occurs
under this Section 5.1.
2. Add Article 5.1(03) as follows:
(03) A Change of Control shall occur if:
(a) any person, or more than one person acting as a group, other than the
Corporation or the LCC or any employee benefit plan sponsored by the
Corporation or the LCC, shall become the beneficial owner of, or obtain
voting control over, 20% or more of the Corporation's or the LCC's
outstanding common stock; or
5
<PAGE>
(b) the stockholders of the Corporation or the LCC shall approve (i) any
consolidation or merger of the Corporation or the LCC in which the
Corporation or the LCC, whichever applicable, is not the continuing or
surviving corporation or pursuant to which shares of common stock of the
Corporation or of the LCC would be converted into cash, securities, or
other property, other than a merger of the Corporation or the LCC in which
holders of the common stock of the Corporation or the LCC, whichever
applicable, immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after
the merger as immediately before, or (ii) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Corporation or of the LCC; or
(c) A majority of the members of the Corporation's or the LCC's Board of
Directors is replaced during any twelve month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Corporation's or LCC's Board of Directors, whichever applicable, prior to
the date of the appointment or election.
Notwithstanding the above, a Change of Control shall not occur as a result
of any sale of securities by the Corporation or the LCC under an offering
registered under the Securities Act of 1933.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed on the day and year first written above.
THE LAMAR BANK
By: /s/ Kenneth M. Lott
-------------------
Title: President
---------
EXECUTIVE
/s/ Robert W. Roseberry
-----------------------
Robert W. Roseberry
6
<PAGE>
THE LAMAR BANK
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this first day of February, 1993, by and
between The Lamar Bank, a corporation organized and existing under the laws of
the State of Mississippi, (hereinafter called "the Corporation"), and Jane P.
Roberts (hereinafter called "the Executive").
W I T N E S S E T H:
WHEREAS, the Executive is in the employ of the Corporation serving as its
Executive Vice President and Cashier; and
WHEREAS, the experience of the Executive, her knowledge of the affairs of the
Corporation, her reputation and contacts in the industry are so valuable that
assurance of her continued service is essential for the future growth and
profits of the Corporation and it is in the best interests of the Corporation to
arrange terms of continued employment for the Executive so as to reasonably
assure her remaining in the Corporation's employment during her lifetime or
until the age of retirement; and
WHEREAS, it is the desire of the Corporation that her services be retained as
herein provided; and
WHEREAS, the Executive is willing to continue in the employ of the Corporation
provided the Corporation agrees to pay her or her beneficiaries certain benefits
in accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the services to be performed in the future
as well as the mutual promises and convenants herein contained, it is agreed as
follows:
ARTICLE 1.
1.1) Beneficiary - The term Beneficiary shall mean the person or persons whom
the Executive shall designate in writing to receive the benefits provided
hereunder.
1.2) Disability - The term Disability shall mean an inability to substantially
perform the usual and regular duties performed by the Executive as an employee
of the Corporation. Such disability may be caused by either illness or injury
and includes mental disabilities. For purposes of this Agreement the
determination of the Executive's disability shall be made solely by the Board of
Directors of the Corporation without participation by the alleged disabled
<PAGE>
Executive. Such a determination by the Board of Directors shall be final and
conclusive on all parties hereto.
1.3) Named Fiduciary and Plan Administrator - The Named Fiduciary and Plan
Administrator of this plan shall be the Corporation.
ARTICLE 2.
2.1) Employment - The Corporation agrees to employ the Executive in such
capacity as the Corporation may from time to time determine. The Executive will
continue in the employ of the Corporation in such capacity and with such duties
and responsibilities as may be assigned to her, and with such compensation as
may be determined from time to time by the Board of Directors of the
Corporation.
2.2) Full Efforts - The Executive agrees to devote her full time and attention
exclusively to the business and affairs of the Corporation, except during
vacation periods, and to use her best efforts to furnish faithful and
satisfactory services to the Corporation.
2.3) Fringe Benefits - The salary continuation benefits provided by this
Agreement are granted by the Corporation as a fringe benefit to the Executive
and are not part of any salary reduction plan or any arrangement deferring a
bonus or a salary increase. The Executive has no option to take any current
payment or bonus in lieu of these salary continuation benefits.
ARTICLE 3.
3.1) Retirement - If the Executive shall continue in the employment of the
Corporation until she attains the age of sixty-five (65), she may retire from
active daily employment as of the first day of the month next following
attainment of age sixty-five (65) or upon such later date as may be mutually
agreed upon by the Executive and the Corporation.
3.2) Payment - The Corporation agrees that upon such retirement it will pay to
the Executive the annual sum of forty-four thousand nine hundred dollars
($44,900), payable monthly on the first day of each month following such
retirement for a period of one hundred eighty (180) months; subject to the
conditions and limitations hereinafter set forth. The forth-four thousand nine
hundred dollars ($44,900) annual payment amount may be adjusted as of the first
year in which it is to be paid to reflect changes in the federally determined
cost-of-living index and may be adjusted annually for each payment year
thereafter to reflect further changes in said federally determined cost-of-
living
<PAGE>
index. However, the Corporation is not obligated hereunder to make any such
adjustment.
3.3) Death After Retirement - The Corporation agrees that if the Executive shall
so retire, but shall die before receiving the full amount of monthly payments to
which she is entitled hereunder, it will continue to make such monthly payments
to the Executive's designated Beneficiary for the remaining period. If a valid
Beneficiary Designation is not in effect, the payments shall be made to the
Executive's surviving spouse or, if none, said payments shall be made to the
duly qualified personal representative, executor or administrator of her estate.
ARTICLE 4.
4.1) Death Prior to Retirement - In the event the Executive should die while
actively employed by the Corporation at any time after the date of this
Agreement but prior to her attaining the age of sixty-five (65) years, the
Corporation will pay the annual sum of forty-four thousand nine hundred Dollars
($44,900) per year to the Executive's designated Beneficiary in equal monthly
installments for a period of one hundred eighty (180) months. If a valid
Beneficiary Designation is not in effect, the payments shall be made to the
Executive's surviving spouse or, if none, said payments shall be made to the
duly qualified personal representative, executor or administrator of her estate.
The said monthly payments shall begin the first day of the month following the
month of the decease of the Executive. Provided, however, that anything
hereinabove to the contrary notwithstanding, no death benefit shall be payable
hereunder if it is determined that the Executive's death was caused by suicide
on or before February 1, 1995.
4.2) Disability Prior to Retirement - In the event the Executive should become
disabled while actively employed by the Corporation at any time after the date
of this Agreement but prior to her attaining the age of sixty-five (65) years,
the Executive will be considered to be one hundred percent (100%) vested in the
amount set forth in Schedule A attached hereto and made a part hereof. Said
amount shall be paid to the Executive in a lump sum within three (3) months of
the determination of disability or upon such other terms as the Executive and
the Corporation may agree including, but not limited to, drawing said sum by way
of monthly benefits to begin immediately based upon the value of the vested sum
then accrued or in monthly benefits beginning when the Executive attains the age
of sixty-five (65) based upon the vested benefits then accrued plus
contributions of the Corporation
<PAGE>
at a rate or dollar amount to be determined annually by the Board or Directors
until such time as the Executive attains the age of sixty-five (65). If the
Executive elects to receive said benefits in a lump sum payment, the Executive
shall notify the Corporation in writing within forty-five (45) days of the
determination of disability. In the event that the Corporation and Executive
agree to some other form of payment of the vested benefits, it shall be done in
writing within forty-five (45) days of the determination of the disability. Said
payment (regardless of its form) shall be in lieu of any other retirement or
death benefit under this Agreement.
ARTICLE 5.
5.1) Termination of Employment - The Corporation reserves the right to terminate
the employment of the Executive at any time prior to retirement. In the event
that the employment of the Executive shall terminate prior to her attaining age
sixty-five (65), other than by reason of her disability or her death, then this
Agreement shall terminate upon the date of such termination of employment.
Provided, however, that the Executive shall be entitled to the following
benefits under the following circumstances:
(01) If the Executive has been employed by the Corporation for a period of
at least one (1) continuous year from and after the time this agreement was
entered into, the Executive will be considered to be vested in one hundred
percent (100%) of the amount set out in Schedule A attached hereto and made a
part hereof. If the Executive has been employed by the Corporation for a period
of less than one (1) continuous year from and after the time this Agreement was
entered into, the Executive will not be considered to be vested in any benefit
hereunder and shall be entitled to no benefits under this Agreement. If the
Executive's employment is terminated under the provisions of this Section 5.1,
the Corporation will pay the Executive's vested amount upon such terms and
conditions and commencing at such time as the Corporation shall determine, but
in no event commencing later than age sixty-five (65). Provided, however, the
Executive shall have the right to receive said vested amount in one (1) lump sum
payment within three (3) months of the termination of the Executive's
employment.
(02) Anything hereinabove to the contrary notwithstanding, if the
Executive is not fully vested in the amount set forth in Schedule A, he will
become fully vested in said amount in the event of a transfer in the controlling
ownership or sale of the Corporation or its parent corporation and shall be
entitled to the full amount set forth in Schedule A, upon the terms and
conditions hereof, if
<PAGE>
termination of employment thereafter occurs under this Section 5.1.
ARTICLE 6.
6.1) Termination of Agreement by Reason of Changes in Law -The Corporation is
entering into this Agreement upon the assumption that certain existing tax laws
will continue in effect in substantially their current form. In the event of any
changes in such federal laws, the Corporation shall have an option to terminate
or modify this Agreement. Provided, however, that the Executive shall be
entitled to at least the same amount as he would have been entitled to under
Section 4.2 relating to disability. The payment of said amount shall be made
upon such terms and conditions and at such time as the Corporation shall
determine, but in no event commencing later than age sixty-five (65).
ARTICLE 7.
7.1) Nonassignable - Neither the Executive, the Executive's spouse, nor any
other beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance, owed by the Executive or her
beneficiary or any of them, or be transferable by operation of law in the event
of bankruptcy, insolvency or otherwise.
ARTICLE 8.
8.1) Claims Procedure - The Corporation shall make all determinations as to
rights to benefits under this Agreement. Any decision by the Corporation denying
a claim by the Executive or her beneficiary for benefits under this Agreement
shall be stated in writing and delivered or mailed to the Executive or such
beneficiary. Such decision shall set forth the specific reasons for the denial,
written to the best of the Corporation's ability in a manner calculated to be
understood without legal or actuarial counsel. In addition, the Corporation
shall provide a reasonable opportunity to the Executive or such beneficiary for
full and fair review of the decision denying such claim.
ARTICLE 9.
9.1) Unsecured General Creditor - The Executive and her beneficiary shall have
no legal right or equitable rights, interests, or claims in or to any property
or assets of the
<PAGE>
Corporation. No assets of the Corporation shall be held under any trust for the
benefit of the Executive or her beneficiaries or held in any way as security for
the fulfilling of the obligations of the Corporation under this plan. All of the
Corporation's assets shall be and remain the general, unpledged, unrestricted
assets of the Corporation. The Corporation's obligation under this plan shall be
that of an unfunded and unsecured promise by the Corporation to pay money in the
future. Executives and their beneficiaries shall be unsecured general creditors
with respect to any benefits hereunder.
ARTICLE 10.
10.1) Reorganization - The Corporation shall not merge or consolidate into or
with another corporation, or reorganize, or sell substantially all of its assets
to another corporation, firm, or person unless and until such succeeding or
continuing corporation, firm, or person agrees to assume and discharge the
obligations of the Corporation under this Agreement. Upon the occurrence of such
event, the term "Corporation" as used in this Agreement shall be deemed to refer
to such successor or survivor corporation.
ARTICLE 11.
11.1) Benefits and Burdens - This Agreement shall be binding upon and inure to
the benefit of the Executive and her personal representatives, and the
Corporation and any successor organization which shall succeed to substantially
all of its assets and business.
ARTICLE 12.
12.1) Not a Contract of Employment - This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Corporation to discharge the Executive,
or restrict the right of the Executive to terminate her employment.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its proper officer and the Executive has hereunto set her hand at
Purvis, Mississippi, the day and year first above written.
The Lamar Bank
By:
--------------------------------
Its:
-------------------------------
EXECUTIVE:
/s/ Jane P. Roberts
- -----------------------------------
<PAGE>
SCHEDULE_A
EXECUTIVE SALARY CONTINUATION AGREEMENT BETWEEN THE LAMAR
BANK AND JANE P. ROBERTS
Plan_Year Amount_in_Which_Vesting_Occurs
1 $ 34,425
2 71,338
3 110,919
4 153,362
5 198,873
6 247,674
7 300,003
8 356,115
9 416,283
<PAGE>
AMENDMENT TO THE LAMAR BANK
EXECUTIVE SALARY CONTINUATION AGREEMENT
OF JANE P. ROBERTS
THIS AMENDMENT is entered into on this 14th day of September, 1998, by and
between The Lamar Bank, a corporation organized and existing under the laws of
the State of Mississippi, (hereinafter called the "Corporation"), and Jane P.
Roberts (hereinafter called the "Executive") and shall be effective as of the
3rd day of August, 1998.
WHEREAS, the Corporation and the Executive entered into The Lamar Bank
Executive Salary Continuation Agreement (hereinafter called the "Agreement") on
February 1, 1993 in order to retain the Executive in the employ of the
Corporation and to provide certain benefits to the Executive and his
beneficiaries; and
WHEREAS, the Corporation and the Executive now wish to amend the Agreement
to clarify when the benefits provided under the Agreement vest after a change of
control of the Corporation or the Lamar Capital Corporation, the parent
corporation of the Corporation (hereinafter called the "LCC"); and
WHEREAS, it is the desire of the Corporation and the Executive that the
Agreement, as hereby amended and with the mutual promises and covenants therein
and herein contained, continue in affect.
NOW, THEREFORE, in consideration of these premises, the Agreement is hereby
amended as follows:
1. Amend Article 5.1(02) by deleting the existing provision and substituting
the following provision:
(02) Anything hereinabove to the contrary notwithstanding, if the Executive
is not fully vested in the amount set forth in Schedule A, he will become fully
vested in said amount in the event of a Change of Control, as defined in Section
5.1(03), and shall be entitled to the full amount set forth in Schedule A, upon
the terms and conditions hereof, if termination of employment thereafter occurs
under this Section 5.1.
2. Add Article 5.1(03) as follows:
(03) A Change of Control shall occur if:
(a) any person, or more than one person acting as a group, other than the
Corporation or the LCC or any employee benefit plan sponsored by the
Corporation or the LCC, shall become the beneficial owner of, or obtain
voting control over, 20% or more of the Corporation's or the LCC's
outstanding common stock; or
3
<PAGE>
(b) the stockholders of the Corporation or the LCC shall approve (i) any
consolidation or merger of the Corporation or the LCC in which the
Corporation or the LCC, whichever applicable, is not the continuing or
surviving corporation or pursuant to which shares of common stock of the
Corporation or of the LCC would be converted into cash, securities, or
other property, other than a merger of the Corporation or the LCC in which
holders of the common stock of the Corporation or the LCC, whichever
applicable, immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after
the merger as immediately before, or (ii) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Corporation or of the LCC; or
(c) A majority of the members of the Corporation's or the LCC's Board of
Directors is replaced during any twelve month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Corporation's or LCC's Board of Directors, whichever applicable, prior to
the date of the appointment or election.
Notwithstanding the above, a Change of Control shall not occur as a result
of any sale of securities by the Corporation or the LCC under an offering
registered under the Securities Act of 1933.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed on the day and year first written above.
THE LAMAR BANK
By: /s/ Kenneth M. Lott
-------------------
Title: President
---------
EXECUTIVE
/s/ Jane P. Roberts
-------------------
Jane P. Roberts
4
<PAGE>
THE LAMAR BANK
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this first day of February, 1993, by and
between The Lamar Bank, a corporation organized and existing under the laws of
the State of Mississippi, (hereinafter called "the Corporation"), and Kenneth M.
Lott (hereinafter called "the Executive").
W I T N E S S E T H:
WHEREAS, the Executive is in the employ of the Corporation serving as its Senior
Vice President; and
WHEREAS, the experience of the Executive, his knowledge of the affairs of the
Corporation, his reputation and contacts in the industry are so valuable that
assurance of his continued service is essential for the future growth and
profits of the Corporation and it is in the best interests of the Corporation to
arrange terms of continued employment for the Executive so as to reasonably
assure his remaining in the Corporation's employment during his lifetime or
until the age of retirement; and
WHEREAS, it is the desire of the Corporation that his services be retained as
herein provided; and
WHEREAS, the Executive is willing to continue in the employ of the Corporation
provided the Corporation agrees to pay him or his beneficiaries certain benefits
in accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the services to be performed in the future
as well as the mutual promises and convenants herein contained, it is agreed as
follows:
ARTICLE 1.
1.1) Beneficiary - The term Beneficiary shall mean the person or persons whom
the Executive shall designate in writing to receive the benefits provided
hereunder.
1.2) Disability - The term Disability shall mean an inability to substantially
perform the usual and regular duties performed by the Executive as an employee
of the Corporation. Such disability may be caused by either illness or injury
and includes mental disabilities. For purposes of this Agreement the
determination of the Executive's disability shall be made solely by the Board of
Directors of the Corporation without participation by the alleged disabled
<PAGE>
Executive. Such a determination by the Board of Directors shall be final and
conclusive on all parties hereto.
1.3) Named Fiduciary and Plan Administrator - The Named Fiduciary and Plan
Administrator of this plan shall be the Corporation.
ARTICLE 2.
2.1) Employment - The Corporation agrees to employ the Executive in such
capacity as the Corporation may from time to time determine. The Executive will
continue in the employ of the Corporation in such capacity and with such duties
and responsibilities as may be assigned to him, and with such compensation as
may be determined from time to time by the Board of Directors of the
Corporation.
2.2) Full Efforts - The Executive agrees to devote his full time and attention
exclusively to the business and affairs of the Corporation, except during
vacation periods, and to use his best efforts to furnish faithful and
satisfactory services to the Corporation.
2.3) Fringe Benefits - The salary continuation benefits provided by this
Agreement are granted by the Corporation as a fringe benefit to the Executive
and are not part of any salary reduction plan or any arrangement deferring a
bonus or a salary increase. The Executive has no option to take any current
payment or bonus in lieu of these salary continuation benefits.
ARTICLE 3.
3.1) Retirement - If the Executive shall continue in the employment of the
Corporation until he attains the age of sixty-five (65), he may retire from
active daily employment as of the first day of the month next following
attainment of age sixty-five (65) or upon such later date as may be mutually
agreed upon by the Executive and the Corporation.
3.2) Payment - The Corporation agrees that upon such retirement it will pay to
the Executive the annual sum of fifty-seven thousand two hundred dollars
($57,200), payable monthly on the first day of each month following such
retirement for a period of one hundred eighty (180) months; subject to the
conditions and limitations hereinafter set forth. The fifty-seven thousand two
hundred dollars ($57,200) annual payment amount may be adjusted as of the first
year in which it is to be paid to reflect changes in the federally determined
cost-of-living index and may be adjusted annually for each payment year
thereafter to reflect further changes in said federally determined cost-of-
living
<PAGE>
index. However, the Corporation is not obligated hereunder to make any such
adjustment.
3.3) Death After Retirement - The Corporation agrees that if the Executive
shall so retire, but shall die before receiving the full amount of monthly
payments to which he is entitled hereunder, it will continue to make such
monthly payments to the Executive's designated Beneficiary for the remaining
period. If a valid Beneficiary Designation is not in effect, the payments shall
be made to the Executive's surviving spouse or, if none, said payments shall be
made to the duly qualified personal representative, executor or administrator of
his estate.
ARTICLE 4.
4.1) Death Prior to Retirement - In the event the Executive should die while
actively employed by the Corporation at any time after the date of this
Agreement but prior to his attaining the age of sixty-five (65) years, the
Corporation will pay the annual sum of fifty-seven thousand two hundred Dollars
($57,200) per year to the Executive's designated Beneficiary in equal monthly
installments for a period of one hundred eighty (180) months. If a valid
Beneficiary Designation is not in effect, the payments shall be made to the
Executive's surviving spouse or, if none, said payments shall be made to the
duly qualified personal representative, executor or administrator of his estate.
The said monthly payments shall begin the first day of the month following the
month of the decease of the Executive. Provided, however, that anything
hereinabove to the contrary notwithstanding, no death benefit shall be payable
hereunder if it is determined that the Executive's death was caused by suicide
on or before February 1, 1995.
4.2) Disability Prior to Retirement - In the event the Executive should become
disabled while actively employed by the Corporation at any time after the date
of this Agreement but prior to his attaining the age of sixty-five (65) years,
the Executive will be considered to be one hundred percent (100%) vested in the
amount set forth in Schedule A attached hereto and made a part hereof. Said
amount shall be paid to the Executive in a lump sum within three (3) months of
the determination of disability or upon such other terms as the Executive and
the Corporation may agree including, but not limited to, drawing said sum by way
of monthly benefits to begin immediately based upon the value of the vested sum
then accrued or in monthly benefits beginning when the Executive attains the age
of sixty-five (65) based upon the vested benefits then accrued plus
contributions of the Corporation
<PAGE>
at a rate or dollar amount to be determined annually by the Board or Directors
until such time as the Executive attains the age of sixty-five (65). If the
Executive elects to receive said benefits in a lump sum payment, the Executive
shall notify the Corporation in writing within forty-five (45) days of the
determination of disability. In the event that the Corporation and Executive
agree to some other form of payment of the vested benefits, it shall be done in
writing within forty-five (45) days of the determination of the disability. Said
payment (regardless of its form) shall be in lieu of any other retirement or
death benefit under this Agreement.
ARTICLE 5.
5.1) Termination of Employment - The Corporation reserves the right to
terminate the employment of the Executive at any time prior to retirement. In
the event that the employment of the Executive shall terminate prior to his
attaining age sixty-five (65), other than by reason of his disability or his
death, then this Agreement shall terminate upon the date of such termination of
employment. Provided, however, that the Executive shall be entitled to the
following benefits under the following circumstances:
(01) If the Executive has been employed by the Corporation for a period of
at least one (1) continuous year from and after the time this agreement was
entered into, the Executive will be considered to be vested in one hundred
percent (100%) of the amount set out in Schedule A attached hereto and made a
part hereof. If the Executive has been employed by the Corporation for a period
of less than one (1) continuous year from and after the time this Agreement was
entered into, the Executive will not be considered to be vested in any benefit
hereunder and shall be entitled to no benefits under this Agreement. If the
Executive's employment is terminated under the provisions of this Section 5.1,
the Corporation will pay the Executive's vested amount upon such terms and
conditions and commencing at such time as the Corporation shall determine, but
in no event commencing later than age sixty-five (65). Provided, however, the
Executive shall have the right to receive said vested amount in one (1) lump sum
payment within three (3) months of the termination of the Executive's
employment.
(02) Anything hereinabove to the contrary notwithstanding, if the
Executive is not fully vested in the amoung set forth in Schedule A, he will
become fully vested in said amount in the event of a transfer in the controlling
ownership or sale of the Corporation or its parent corporation and shall be
entitled to the full amount set forth in Schedule A, upon the terms and
conditions hereof, if
<PAGE>
termination of employment thereafter occurs under this Section 5.1.
ARTICLE 6.
6.1) Termination of Agreement by Reason of Changes in Law - The Corporation is
entering into this Agreement upon the assumption that certain existing tax laws
will continue in effect in substantially their current form. In the event of any
changes in such federal laws, the Corporation shall have an option to terminate
or modify this Agreement. Provided, however, that the Executive shall be
entitled to at least the same amount as he would have been entitled to under
Section 4.2 relating to disability. The payment of said amount shall be made
upon such terms and conditions and at such time as the Corporation shall
determine, but in no event commencing later than age sixty-five (65).
ARTICLE 7.
7.1) Nonassignable - Neither the Executive, the Executive's spouse, nor any
other beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance, owed by the Executive or her
beneficiary or any of them, or be transferable by operation of law in the event
of bankruptcy, insolvency or otherwise.
ARTICLE 8.
8.1) Claims Procedure - The Corporation shall make all determinations as to
rights to benefits under this Agreement. Any decision by the Corporation denying
a claim by the Executive or her beneficiary for benefits under this Agreement
shall be stated in writing and delivered or mailed to the Executive or such
beneficiary. Such decision shall set forth the specific reasons for the denial,
written to the best of the Corporation's ability in a manner calculated to be
understood without legal or actuarial counsel. In addition, the Corporation
shall provide a reasonable opportunity to the Executive or such beneficiary for
full and fair review of the decision denying such claim.
ARTICLE 9.
9.1) Unsecured General Creditor - The Executive and her beneficiary shall have
no legal right or equitable rights, interests, or claims in or to any property
or assets of the
<PAGE>
Corporation. No assets of the Corporation shall be held under any trust for the
benefit of the Executive or her beneficiaries or held in any way as security for
the fulfilling of the obligations of the Corporation under this plan. All of the
Corporation's assets shall be and remain the general, unpledged, unrestricted
assets of the Corporation. The Corporation's obligation under this plan shall be
that of an unfunded and unsecured promise by the Corporation to pay money in the
future. Executives and their beneficiaries shall be unsecured general creditors
with respect to any benefits hereunder.
ARTICLE 10.
10.1) Reorganization - The Corporation shall not merge or consolidate into or
with another corporation, or reorganize, or sell substantially all of its assets
to another corporation, firm, or person unless and until such succeeding or
continuing corporation, firm, or person agrees to assume and discharge the
obligations of the Corporation under this Agreement. Upon the occurrence of such
event, the term "Corporation" as used in this Agreement shall be deemed to refer
to such successor or survivor corporation.
ARTICLE 11.
11.1) Benefits and Burdens - This Agreement shall be binding upon and inure to
the benefit of the Executive and her personal representatives, and the
Corporation and any successor organization which shall succeed to substantially
all of its assets and business.
ARTICLE 12.
12.1) Not a Contract of Employment - This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Corporation to discharge the Executive,
or restrict the right of the Executive to terminate his employment.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its proper officer and the Executive has hereunto set his hand at
Purvis, Mississippi, the day and year first above written.
The Lamar Bank
By:
--------------------------------
Its:
-------------------------------
EXECUTIVE:
/s/ Kenneth M. Lott
- ------------------------------------
<PAGE>
SCHEDULE_A
EXECUTIVE SALARY CONTINUATION AGREEMENT BETWEEN THE LAMAR BANK AND KENNETH M.
LOTT
Plan_Year Amount_in_Which_Vesting_Occurs
1 $ 6,867
2 14,230
3 22,125
4 30,591
5 39,669
6 49,403
7 59,841
8 71,033
9 83,035
10 95,904
11 109,703
12 124,501
13 140,367
14 157,381
15 175,625
16 195,187
17 216,164
18 238,657
19 262,776
20 288,639
21 316,371
22 346,108
23 377,995
24 412,187
25 448,850
26 488,164
27 530,320
<PAGE>
EXHIBIT 10.1
AMENDMENT TO THE LAMAR BANK
EXECUTIVE SALARY CONTINUATION AGREEMENT
OF KENNETH M. LOTT
THIS AMENDMENT is entered into on this 14th day of September, 1998, by and
between The Lamar Bank, a corporation organized and existing under the laws of
the State of Mississippi, (hereinafter called the "Corporation"), and Kenneth M.
Lott (hereinafter called the "Executive") and shall be effective as of the 3rd
day of August, 1998.
WHEREAS, the Corporation and the Executive entered into The Lamar Bank
Executive Salary Continuation Agreement (hereinafter called the "Agreement") on
February 1, 1993 in order to retain the Executive in the employ of the
Corporation and to provide certain benefits to the Executive and his
beneficiaries; and
WHEREAS, the Corporation and the Executive now wish to amend the Agreement
to clarify when the benefits provided under the Agreement vest after a change of
control of the Corporation or the Lamar Capital Corporation, the parent
corporation of the Corporation (hereinafter called the "LCC"); and
WHEREAS, it is the desire of the Corporation and the Executive that the
Agreement, as hereby amended and with the mutual promises and covenants therein
and herein contained, continue in affect.
NOW, THEREFORE, in consideration of these premises, the Agreement is hereby
amended as follows:
1. Amend Article 5.1(02) by deleting the existing provision and substituting
the following provision:
(02) Anything hereinabove to the contrary notwithstanding, if the Executive
is not fully vested in the amount set forth in Schedule A, he will become fully
vested in said amount in the event of a Change of Control, as defined in Section
5.1(03), and shall be entitled to the full amount set forth in Schedule A, upon
the terms and conditions hereof, if termination of employment thereafter occurs
under this Section 5.1.
2. Add Article 5.1(03) as follows:
(03) A Change of Control shall occur if:
(a) any person, or more than one person acting as a group, other than the
Corporation or the LCC or any employee benefit plan sponsored by the
Corporation or the LCC, shall become the beneficial owner of, or obtain
voting control over, 20% or more of the Corporation's or the LCC's
outstanding common stock; or
1
<PAGE>
(b) the stockholders of the Corporation or the LCC shall approve (i) any
consolidation or merger of the Corporation or the LCC in which the
Corporation or the LCC, whichever applicable, is not the continuing or
surviving corporation or pursuant to which shares of common stock of the
Corporation or of the LCC would be converted into cash, securities, or
other property, other than a merger of the Corporation or the LCC in which
holders of the common stock of the Corporation or the LCC, whichever
applicable, immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after
the merger as immediately before, or (ii) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Corporation or of the LCC; or
(c) A majority of the members of the Corporation's or the LCC's Board of
Directors is replaced during any twelve month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Corporation's or LCC's Board of Directors, whichever applicable, prior to
the date of the appointment or election.
Notwithstanding the above, a Change of Control shall not occur as a result
of any sale of securities by the Corporation or the LCC under an offering
registered under the Securities Act of 1933.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed on the day and year first written above.
THE LAMAR BANK
By: /s/ Jane P. Roberts
-------------------
Title: Secretary
---------
EXECUTIVE
/s/ Kenneth M. Lott
-------------------
Kenneth M. Lott
2
<PAGE>
EXHIBIT 10.2
THE LAMAR CAPITAL CORPORATION STOCK INCENTIVE PLAN
ARTICLE I
Purpose, Scope and Administration of the Plan
1.1 Purpose. The purpose of the Lamar Capital Corporation Stock Incentive Plan
-------
is to provide incentives and rewards for employees of Lamar Capital
Corporation and its subsidiaries and affiliates to encourage such employees
to continue with Lamar Capital Corporation and to render superior
performance during their service with Lamar Capital Corporation.
1.2 Definitions. Unless the context includes otherwise, for purposes of this
-----------
Plan the following terms shall have the meanings set forth below:
(a) "Award" means an award of any one or more of the following:
Nonqualified Stock Option or Restricted Stock.
(b) "Award Agreement" or "Agreement" means the agreement between the
Corporation and a Grantee under which the Grantee is granted an Award
pursuant to the Plan.
(c) "Corporation" means Lamar Capital Corporation or any of its
subsidiaries or affiliates.
(d) "Board of Directors" or "Board" means the Board of Directors of Lamar
Capital Corporation.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(f) "Committee" means a committee of the Board of Directors, which
committee may be appointed by the Board to administer the Plan.
(g) "Common Stock" means the common stock of Lamar Capital Corporation,
$.50 par value per share, or such other class of shares or other
securities to which the provisions of the Plan may be applicable by
reason of the operation of Section 6.1 hereof.
(h) "Fair Market Value" means the average of the highest and lowest market
price of the Common Stock if traded on any established stock exchange
or exchanges or any automated quotation system which provides sales
quotations on the date of the grant of the Option or Restricted Stock;
or, if the Common Stock is not actively traded on
<PAGE>
such exchanges, or quoted, such fair market value shall be established
by the Board based upon a good faith effort to value the Common Stock.
(i) "Grant Date", as used with respect to a particular Option or
Restricted Stock Award means the date as of which such award is
granted by the Board pursuant to the Plan.
(j) "Grantee" means the employee to whom an Option and\or Restricted Stock
Award is granted by the Board pursuant to the Plan.
(k) "Incentive Stock Option" means an Option that qualifies as an
Incentive Stock Option under Section 422 of the Code.
(l) "Nonqualified Stock Option" or "Option" means any Option granted under
the Plan pursuant to Article II to purchase the shares of Common Stock
of the Corporation and which that does not qualify as an Incentive
Stock Option.
(m) "Option Period" means, with respect to any Option granted hereunder, a
period not to exceed ten years, specifically designated in the Award
Agreement, during which the Option may be exercised pursuant to the
provisions of Section 2.2(b) hereof.
(n) "Plan" means the Lamar Capital Corporation Stock Incentive Plan as set
forth herein and as amended from time to time.
(o) "Restricted Stock" or "Restricted Shares" means one or more shares of
Common Stock which are granted by the Board pursuant to Article III
hereof and which are restricted against sale or other transfer and
which are subject to a "substantial risk of forfeiture" (within the
meaning of Section 83(c) of the Code) in a manner and for a specified
period of time determined by the Board (said specified period of time
herein defined as the "Restriction Period").
(p) "Restricted Stock Award" means an award of Restricted Stock.
(q) "Restriction Period" means, with respect to any Restricted Stock Award
granted hereunder, the period beginning on the Grant Date and ending
at such time as the Board, in its sole discretion, shall determine and
during which the shares of Restricted Stock are restricted against
sale or other transfer and are subject to a "substantial risk of
forfeiture" (within the meaning of Section 83(c) of the Code) in a
manner determined by the Board.
(r) "Retirement" means retirement from active employment with the
Corporation at or after age 65. The determination of the Board as to
an individual's Retirement shall be conclusive on all parties.
2
<PAGE>
(s) "Total and Permanent Disability," as applied to a Grantee, means that
the Grantee (1) has established to the satisfaction of the Board that
the Grantee is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12 months
(all within the meaning of Section 22(e)(3) of the Code), and (2) has
satisfied any requirement imposed by the Board with regard to evidence
of such disability.
1.3 Other Definitions. In addition to the above definitions, certain words and
-----------------
phrases used in the Plan and any Award Agreement may be defined in other
portions of the Plan or in an Award Agreement.
1.4 Conflicts in Plan. In the case of any conflict in the terms of the Plan,
-----------------
or between the Plan and an Award Agreement, relating to an Award, the
provisions in the Article of the Plan which specifically grants an Award
shall control those in a different Article or in such Award Agreement.
1.5 Aggregate Limitation.
--------------------
(a) The aggregate number of shares of Common Stock with respect to which
Options and Restricted Stock Awards may be granted under this Plan
shall not exceed 200,000 shares of common stock, subject to
adjustments in accordance with Section 6.1 hereof.
(b) Any shares of Common Stock issued pursuant to a Restricted Stock Award
or which are to be delivered by the Corporation upon the exercise of
the Options may, at the discretion of the Board of Directors, be
issued from the Corporation's authorized but unissued shares of Common
Stock or be transferred from any available treasury stock.
(c) In the event that any Option expires or otherwise terminates prior to
being fully exercised, the Board may grant new Options hereunder to
any eligible employee for the shares with respect to which the expired
or terminated Option was not exercised.
1.6 Administration of the Plan.
---------------------------
(a) The Plan shall be administered by the Board. The Board may, however,
delegate all or any portion of such administrative responsibilities
set forth in Section 1.6 and Section 1.7 hereof to the Committee.
Such delegation shall, if made, confer upon the Committee all powers
necessary or appropriate to enable it to properly administer the Plan
to the extent of such delegation, and in the event of such delegation,
wherever the term "Board" is used in this Plan, the term "Committee"
shall be substituted therefore as the context may require; provided,
however, notwithstanding the
3
<PAGE>
foregoing, that no such delegation or substitution shall be made with
regard to the final award of an Option (including the specific terms
of the Option), the powers of the Board as set forth in Section 6.10
hereof related to Amendment, Suspension and Termination of the Plan,
or with regard to Section 4.3 hereof related to the revocation of
Awards. In administering the Plan, the Board shall have the power:
(1) To determine which employees are eligible to participate in the
Plan, to determine those employees of the Corporation to whom,
and the times at which, Options, and Restricted Stock should be
granted, taking into consideration the nature of the services
rendered by the particular employee, the employee's potential
contribution to the long-term success of the Corporation and such
other factors as the Board in its discretion shall deem relevant;
(2) To interpret and construe the provisions of the Plan and to
establish rules and regulations relating to it;
(3) To prescribe the terms, conditions and provisions of, and
restrictions relating to, each Award granted (which need not be
identical) in accordance and consistent with the requirements of
the Plan;
(4) To determine content and form of all Award Agreements;
(5) To accelerate the exercise of any Option or Restricted Stock
Award;
(6) To cancel any Option or Restricted Stock Award granted under the
Plan if a Grantee conducts himself in a manner which the Board
determines to be inimical to the best interests of the
Corporation;
(7) To determine and establish the performance goals related to the
Restricted Stock Award;
(8) To correct any defect, supply any omission or reconcile any
inconsistency in the Plan, or in any granted Option or Restricted
Stock Award in the manner and to the extent it shall be deemed
necessary;
(9) To maintain accounts, records and ledgers relating to Awards and
maintain records concerning its decisions and proceedings;
(10) Employ agents, attorneys, accounts or other persons for such
purposes as the Corporation considers necessary or desirable; and
4
<PAGE>
(11) To make all other determinations necessary or advisable to
administer the Plan in a proper and effective manner.
(b) All decisions and determinations of the Board in the administration of
the Plan and in response to questions or other matters concerning the
Plan or any Award shall be final, conclusive and binding on all
persons, including, without limitation, the Corporation, the
shareholders and directors of the Corporation and any persons having
any interest in any Awards which may be granted under the Plan.
(c) The Board's determination under the Plan (including without limitation
its determinations of the persons to receive Awards, the form, amount
and timing of such Awards, and the terms and provisions of such
Awards) need not be uniform and may be made by it selectively among
persons who receive or are eligible to receive awards under the Plan,
whether or not such persons are similarly situated.
(d) All decisions made by the Board, or (unless the Board has specified an
appeal process to the contrary) any other person or persons to whom
the Board has delegated authority, pursuant to the provisions hereof,
shall be final and binding on all persons.
1.7 Eligibility for Awards. The employees eligible to participate in the Plan
----------------------
shall be the employees of the Corporation; provided, however, that in no
event may a member of the Board who is not an employee of the Corporation
be granted an Option or Restricted Stock Award under this Plan. The Board
shall designate from time to time from those employees eligible to
participate in the Plan, the employees of the Corporation whom it
determines, in its sole discretion, shall be granted Awards as a result of
said employee's significant contributions toward the overall success of the
Corporation.
1.8 Effective Date and Duration of Plan. The Plan shall become effective upon
-----------------------------------
its adoption by the Board of Directors. Awards may be granted from time to
time under the terms and conditions of the Plan. The Plan shall remain in
effect until terminated pursuant to Section 6.10.
ARTICLE II
Stock Options
2.1 Grant of Options. The Board may from time to time, subject to the
----------------
provisions of the Plan, grant Options to employees under appropriate Award
Agreements to purchase shares of Common Stock up to the aggregate number of
shares of Common Stock set forth in Section 1.5(a) herein.
5
<PAGE>
2.2 Option Terms and Conditions. Each Option granted under the Plan shall be
---------------------------
evidenced by a written Award Agreement in a form approved by the Board,
specifying the number of shares of Common Stock that may be purchased by
its exercise and containing the following provisions and such other terms
and conditions consistent with the Plan as the Board shall determine to be
applicable to that particular Option:
(a) Price. The option price per share of Common Stock shall be
-----
established by the Board. In no event shall the option price be less
than one hundred percent of the Fair Market Value of a share of Common
Stock on the Grant Date.
(b) Period. Each Option granted under the Plan shall be exercisable
------
during an Option Period, not to exceed ten years, established by the
Board. An Option shall expire by its terms at the expiration of the
Option Period. The Board may provide in the Award Agreement for the
expiration or termination of the Option prior to the expiration of the
Option Period, upon the occurrence of any event specified by the
Board.
(c) Time of Exercise. Unless otherwise provided by the Board in the Award
----------------
Agreement, an Option may be exercised during the Option Period. The
Board may permit or require an Option to be exercisable in
installments.
(d) Exercise. An Option, or any portion thereof, shall be exercised by
--------
delivery to the Corporation of a written notice of exercise by the
Grantee of the full option price of the shares being exercised. A
Grantee shall have none of the rights of a shareholder until the
shares of Common Stock represented by an exercised Option are issued
to such Grantee.
(e) Payment. The price of an exercised Option, or any portion thereof,
-------
shall be paid either:
(i) in cash, in United States dollars, or by check, bank draft or
money order payable to the order of the Corporation;
(ii) in the sole discretion of the Board, by the delivery of shares
of Common Stock having an aggregate Fair Market Value equal to
the option price, provided such tendered shares have been owned
by the Grantee for at least the minimum period required by law
for capital gains tax treatment; or
(iii) in the sole discretion of the Board, by any combination of (i)
and (ii) above or any other method of payment approved by the
Board and specifically set forth in an Award Agreement.
6
<PAGE>
(f) Termination of Employment.
-------------------------
(i) Unless the Board, in its own discretion, provides otherwise in
the Award Agreement, the Grantee's termination of employment
shall result in the concurrent termination of any unexercised
Option granted under the Plan to such Grantee, regardless of
whether such Option has become exercisable.
(ii) For purposes of this subsection 2.2, a Grantee shall not be
deemed to have terminated employment during any leave of absence
of the Grantee authorized by the Corporation under the
Corporation's personnel practices.
(g) Transferability. Unless otherwise specified in an Award Agreement,
---------------
(i) no Option granted under this Plan may be transferred or assigned
by the Grantee to whom it is granted other than by will or pursuant to
the laws of descent and distribution, and (ii) an Option granted under
this Plan may be exercised, during the Grantee's lifetime, only by the
Grantee or by the Grantee's guardian or legal representative.
(h) Other Terms and Conditions. Options may also contain such other
--------------------------
provisions, which shall not be inconsistent with any of the foregoing
terms, as the Board shall deem appropriate. No option, however, nor
anything contained in the Plan, shall confer upon any Grantee any
right to continue in the Corporation's employ or service nor limit in
any way the Corporation's right to terminate his or her employment or
service at any time.
ARTICLE III
Restricted Stock Awards
3.1 Grant of Restricted Stock Awards. The Board may, from time to time,
--------------------------------
subject to the provisions of the Plan, grant Restricted Stock Awards to a
Grantee under an appropriate Award Agreement.
3.2 Restricted Stock Award Terms and Conditions.
-------------------------------------------
(a) The Restricted Stock Award shall be evidenced by an Award Agreement
which specifies the number of shares of Common Stock that are awarded
and contains such terms and conditions consistent with the Plan as the
Board shall determine to be applicable to that particular award,
including the following terms and conditions:
(1) Shares awarded pursuant to Restricted Stock Awards shall be
subject to: (i) such Restriction Period or Periods, and (ii) such
other conditions, terms and
7
<PAGE>
restrictions (including, for example, continuation of employment
in the same or in a higher level position), as may be determined
by the Board.
(2) Unless the Board provides otherwise in the Award Agreement, the
Restricted Shares shall be nontransferable.
(3) Unless the Board provides otherwise in the Award Agreement, the
Restricted Shares awarded and the right to vote such shares and
to receive dividends thereon, may not be sold, assigned,
transferred, exchanged, pledged, hypothecated, or otherwise
encumbered during the Restriction Period. However, a Grantee
awarded Restricted Stock shall have all the other rights of a
stockholder, including the right to receive dividends and the
right to vote such shares.
(4) The Award Agreement shall specify the terms and the conditions,
as determined by the Board, upon which any restrictions upon the
shares awarded under the Plan shall lapse. Upon lapse of such
restrictions, shares of Common Stock free of any restrictive
legend shall be issued and delivered to the Grantee or his legal
representative.
(b) Each certificate issued in respect of the Common Stock awarded to a
Grantee shall be deposited with the Corporation, or its designee, or
in the Board's discretion to the Grantee, and shall bear an
appropriate legend noting the existence of restrictions upon the
transfer of such Common Stock.
(c) The computation of shares of Common Stock to be issued under this
Article shall be rounded to the nearest full share. No fractional
shares may be issued.
(d) The Board, in its sole discretion, may waive any or all restrictions
with respect to Restricted Stock.
ARTICLE IV
Modification or Termination of Awards
4.1 General. Subject to the provisions of Section 4.2, the amendment or
-------
termination of the Plan shall not adversely affect a Participant's rights
to or under any Award granted prior to such amendment or termination.
4.2 Board's Right. Except as may be provided in an Award Agreement, any Award
-------------
granted may be converted, modified, forfeited or canceled, prospectively or
retroactively, in whole or in part, by the Board in its sole discretion,
but, subject to Section 4.3, no such action may
8
<PAGE>
impair the rights of any Participant without his or her consent. Except as
may be provided in an Agreement, the Board may, in its sole discretion, in
whole or in part, waive any restrictions or conditions applicable to, or
accelerate the vesting of, any Award.
4.3 Termination of Awards under Certain Conditions. The Board in its sole
----------------------------------------------
discretion may cancel any unexpired or unpaid Award at any time if the
Participant is not in compliance with all applicable provisions of this
Plan or with any Agreement or if the Participant, whether or not he or she
is currently employed by the Corporation, acts in a manner contrary to the
best interests of the Corporation or any Affiliate.
ARTICLE V
Cash Payment
The Board, in its sole discretion, may make a cash payment, directly to the
Grantee, in an amount equal to the tax liability of the Grantee that results
from the exercise of the Option or the vesting of the Restricted Shares. The
Board, in its sole discretion, may require, as a condition to receiving the cash
payment, that the Grantee provide verification by a Certified Public Accountant,
or other tax expert approved by the Board, of the tax liability. The Board may
require the Grantee to pay the costs of obtaining the verification. In
determining the amount to be paid pursuant to this Article, the Board may adopt
such methods and assumptions as it considers appropriate.
ARTICLE VI
General Provisions
6.1 Adjustment Provisions.
---------------------
(a) If there shall be any increase or reduction in the number of shares of
Common Stock outstanding by reason of any stock dividends, stock
splits or other readjustments, or if there is any material change in
the capital structure of the Corporation by reason of any
reclassification, reorganization, or recapitalization, there shall be
a proportionate and equitable adjustment of the number and class of
shares or other securities which shall be subject to an Option or
Restricted Stock Award and/or the purchase price per share which must
be paid thereafter upon exercise of any Option; provided, however, any
fractional shares resulting from any such adjustment shall be
eliminated. Any such adjustments made by the Board shall be final,
conclusive and binding upon all persons, including, without
limitation, the Corporation, the shareholders and directors of the
Corporation and any persons having any interest in any award which may
be granted under the Plan. Outstanding Awards shall be amended as to
number, price and other terms if necessary.
9
<PAGE>
(b) Except as provided in paragraph (a) immediately above, issuance by the
Corporation of shares of stock of any class or securities convertible
into shares of stock of any class shall not affect the Options and
Restricted Stock granted under the Plan.
6.2 Change of Control.
-----------------
(a) An Option shall become immediately exercisable in full and a
Restricted Share Award shall immediately vest upon a Change in
Control, as defined below.
(b) A Change of Control shall occur if:
(1) any person, or more than one person acting as a group, other than
the Corporation or any employee benefit plan sponsored by the
Corporation shall become the beneficial owner of, or obtain
voting control over, 20% or more of the Corporation's outstanding
Common Stock; or
(2) the stockholders of the Corporation shall approve (A) any
consolidation or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or
pursuant to which shares of Common Stock would be converted into
cash, securities, or other property, other than a merger of the
Corporation in which holders of Common Stock immediately prior to
the merger have the same proportionate ownership of common stock
of the surviving corporation immediately after the merger as
immediately before, or (B) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transaction)
of all or substantially all the assets of the Corporation; or
(3) A majority of the members of the Corporation's Board of Directors
is replaced during any twelve month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Corporation's Board of Directors prior to the date
of the appointment or election.
Notwithstanding the above, a Change of Control shall not occur as a result
of any sale of securities by the Corporation under an offering registered
under the Securities Act of 1933.
Notwithstanding the provisions of this Section 6.2, the Board may, prior to
a Change of Control, by unanimous vote, revoke the benefits of this Section
6.2. The Board may, after a Change of Control, revoke the benefits of this
Section 6.2 but such revocation shall only be applicable to an outstanding
Award if the Grantee approves such revocation in writing.
10
<PAGE>
6.3 Additional Conditions. Any shares of Common Stock issued or transferred
---------------------
under any provision of the Plan may be issued or transferred subject to
such conditions, in addition to those specifically provided in the Plan, as
the Board may impose.
6.4 No Rights as Shareholder or to Employment. No Grantee or any other person
-----------------------------------------
authorized to purchase Common Stock upon exercise of an Option shall have
any interest in or shareholder rights with respect to any shares of the
Common Stock which are subject to any Option until such shares have been
issued and delivered to the Grantee or any such person pursuant to the
exercise of such Option. Furthermore, the Plan shall not confer upon any
Grantee any rights of employment with the Corporation, including without
limitation any right to continue in the employ of the Corporation, or
affect the right of the Corporation to terminate the employment of a
Grantee at any time, with or without cause.
6.5 General Restrictions. Each Option granted under the Plan shall be subject
--------------------
to the requirement that, if at any time the Board shall determine that (a)
the listing, registration or qualification of the shares of the Common
Stock subject or related thereto upon any securities exchange or under any
state or federal law, or (b) the consent or approval of any government
regulatory body, or (c) an agreement by the recipient of an Option with
respect to the disposition of shares of Common Stock, is necessary or
desirable as a condition of, or in connection with, the granting of such
Option or the issue or purchase of shares of Common Stock thereunder, such
option may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Board. A
participant shall agree, as a condition of receiving any Option under the
Plan, to execute any documents, make any representations, agree to
restrictions on stock transferability and take any actions which in the
opinion of legal counsel to the Corporation are required by any applicable
law, ruling or regulation. The Corporation is in no event obligated to
register any such shares or to take any other action which may be required
in order to permit, or to remedy or remove any prohibition or limitation
on, the issuance or sale of such shares to any Grantee or other authorized
person.
6.6 Rights Unaffected. The existence of the Options and Restricted Stock Award
-----------------
shall not affect: the right or power of the Corporation or its shareholders
to make adjustments, recapitalizations, reorganizations or other changes in
the Corporation's capital structure or its business; any issue of bonds,
debentures, preferred or prior preference stocks affecting the Common Stock
or the rights thereof; the dissolution or liquidation of the Corporation or
sale or transfer of any part or all of its assets or business; or any other
corporate act, whether of a similar character or otherwise.
6.7 Withholding Taxes. As a condition of exercise of an Option or the grant of
-----------------
a Restricted Stock Award, the Corporation may, in its sole discretion,
withhold or require the Grantee to pay or reimburse the Corporation for any
taxes which the Corporation determines are
11
<PAGE>
required to be withheld in connection with the grant of a Restricted Stock
Award or any exercise of an Option.
6.8 Choice of Law.
-------------
(a) The validity, interpretation and administration of the Plan and of any
rules, regulations, determinations or decisions made thereunder, and
the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in
accordance with the laws of the State of Mississippi.
(b) Without limiting the generality of the foregoing, the period within
which any action in connection with the Plan must be commenced shall
be governed by the laws of the State of Mississippi, without regard to
the place where the act or omission complained of took place, the
residence of any party to such action or the place where the action
may be brought or maintained.
6.9 Unfunded Plan. Except as may otherwise be provided in the Plan, the Plan
-------------
shall be unfunded. Neither the Corporation shall be required to segregate
any assets that may be represented by Options or Restricted Stock Award,
and neither the Corporation shall be deemed to be a trustee of any amounts
to be paid under an Option or Restricted Stock Award. Any liability of
the Corporation to pay any Participant with respect to an Option or
Restricted Stock Award shall be based solely upon any contractual
obligations created pursuant to the provisions of the Plan; no such
obligation shall be deemed to be secured by any pledge or encumbrance on
any property of the Corporation.
6.10 Amendment, Suspension and Termination of the Plan. The Plan may from time
-------------------------------------------------
to time, be terminated, suspended or amended by the Board of Directors in
such respects as it shall deem advisable; provided, however, that any
amendment shall be subject to shareholder approval if the Board of
Directors, based upon the advice of counsel, determines that shareholder
approval is required by applicable law.
As Approved By The Board Of Directors of Lamar Capital Corporation On August 25,
1998.
LAMAR CAPITAL CORPORATION
By: /s/ Robert W. Roseberry
----------------------------------
Chairman of the Board
12
<PAGE>
EXHIBIT 10.3
Agreement with Robert Thomas Securities, Inc. regarding broker/dealer management
FINANCIAL INSTITUTIONS DIVISION
ROBERT THOMAS
SECURITIES, INC.
----------------------------------------------
Member NASD/SIPC, a wholly-owned subsidiary of
Raymond James Financial, Inc. (NYSE-RJF)
NONDEPOSIT INVESTMENT PRODUCT
MARKETING AGREEMENT
BETWEEN
THE FINANCIAL INSTITUTIONS DIVISION,
ROBERT THOMAS SECURITIES, INC.
AND
THE LAMAR BANK
<PAGE>
The following agreement between The Financial Institutions Division (FID),
Robert Thomas Securities, Inc. (RTS), and The Lamar Bank (Institution) (the
Agreement) shall be effective as of January 1, 1996 subject to receipt of
applicable regulatory approval, if required.
RECITALS
A. FID is a division of RTS with its principal place of business in
Kansas City, Missouri. RTS is a Broker-Dealer registered with the Securities and
Exchange Commission (SEC) and is a member of the National Association of
Securities Dealers, Inc. (NASD). RTS is a Florida corporation wholly owned by
Raymond James Financial, Inc. (RJF). RTS is a sister corporation of Raymond
James & Associates, Inc. (RJA), a broker-dealer registered with the SEC and a
member of the NASD and New York Stock Exchange (NYSE). FID and RTS intend to
provide Institution's customers brokerage services for the purchase and sale of
nondeposit investment and/or insurance products.
B. Institution is a banking organization or subsidiary thereof chartered
or incorporated under the laws of the State of Mississippi and duly authorized
by its board of directors and under applicable regulations to enter into this
Agreement and perform the obligations set out herein. It wishes to avail its
customers of the brokerage services of FID and RTS directly and RJA indirectly.
COVENANTS AND UNDERTAKINGS
In consideration of their mutual covenants and undertakings, the parties
agree:
1. Clearing Agreement.
RTS has entered into a clearing agreement with RJA whereby all customer
securities transactions shall be cleared on a fully disclosed basis through RJA.
2. Customer Accounts.
As used in this Agreement, the term customer or customer account refers to
customers of RTS who are introduced by Institution. Customer accounts shall be
the property of RTS. Orders for such accounts shall be transmitted to the order
desk by the RTS Registered Representative servicing the account. RTS shall not
accept an order for an account until the necessary information has been obtained
and the account has been opened. Customer accounts and transactions shall be
solicited and serviced only by RTS NASD-Registered Representatives.
3. Customer Funds.
Customers shall deliver or send all funds, securities or property to the
RTS home office directly or to the RTS office on the premises of Institution.
2
<PAGE>
4. Responsibilities of Institution.
Institution shall:
A. Provide space in the lobby of its main building and, upon agreement
between the parties, in the lobbies of its branches for RTS brokerage services.
The space provided is set out in Schedule A and shall be used solely for the
purpose of marketing nondeposit investment products, including permissible
insurance products, approved by Institution and RTS and providing brokerage
services. The space shall be in a physical location distinct from the retail
deposit-taking area of Institution. Signage and decor shall be used to minimize
customer confusion with deposit products. All sales or recommendations of
nondeposit investment products by registered or non-registered personnel, on
Institution's premises, shall take place in the designated area;
B. Provide furniture compatible with the design and quality of other
adjacent office furniture sufficient for the needs of the RTS Registered
Representative, which shall include a minimum of a desk, desk lamp, desk chair,
credenza or 2-3 drawer file cabinet, two client chairs, and literature rack.
All furniture supplied by Institution shall remain its property if this
Agreement is terminated;
C. Provide telephone extension(s) from the Institution's switchboard
which shall be answered "Robert Thomas Securities" the cost of which service
shall be paid by the Institution;
D. Provide access to its vault, if necessary, or other secured locations
for holding securities received by RTS in the normal course of business;
E. Indemnify and hold FID, RTS, RJA, and RJF harmless against any losses,
claims, damages, liabilities, and expenses (including attorney's fees) which
result from the negligence, recklessness, or intentional conduct of Institution
or its employees or agents providing services described in this Agreement or
from loss to customer property prior to receipt by RTS;
F. Compensate Institution employees who perform any brokerage related
activities permissible under this Agreement. Institution may, at its
discretion, establish an incentive program for customer referrals which pays
non-registered Institution employees a one-time nominal fee of a fixed dollar
amount for each customer referral. The payment of this referral fee shall not
depend on whether the referral results in a transaction.
G. Prohibit non-registered Institution employees from holding themselves
out to the public as representatives of RTS including, but not limited to,
ensuring that tellers or other employees, while located in the routine deposit-
taking area, do not make general or specific investment recommendations
regarding nondeposit investment products, qualify a customer as eligible to
purchase such products, or accept orders for such products, even if unsolicited.
Institution employees or agents may perform only certain clerical and
ministerial functions with respect to the marketing of nondeposit investment
products. They may refer customers to
3
<PAGE>
registered personnel who are specifically designated and trained to assist
customers interested in RTS or insurance services. Non-registered Institution
employees will receive instruction and training from an RTS registered principal
or designee on the performance of their limited role in assisting customers.
This role shall include:
i. Informing customers that a comprehensive brokerage service is
available through RTS and providing customers who express an interest
a package of literature and account opening forms prepared and
approved by RTS;
ii. Assisting customers, upon request, in obtaining general
information about their accounts at RTS; however, such information may
not address specific customer questions such as the status of orders
or positions in an account;
iii. Forwarding customers' securities certificates to RTS promptly
upon request in accordance with customers' directions and RTS'
procedures as set forth in the Manual which requires that Institution
employees provide the customer with a receipt that identifies the
certificates. Customers must endorse certificates to appoint RJA as
the attorney to transfer the stock on the books of the issuer company.
A copy of the receipt must be maintained by Institution with a copy
given to RTS. Delivery of the certificates by Institution to RTS
shall occur on the same day or by noon of the next business day.
Institution shall be responsible for safekeeping the certificates
prior to delivery. Institution employees accepting such certificates
shall be fully bonded.
H. Adopt a written statement summarizing the policies and procedures
governing responsibilities and the activities of its employees under this
Agreement and addressing the concerns described in the Interagency Statement On
Retail Sales of Nondeposit Investment Products (February 15, 1994) (the
Statement). The Statement shall be adopted and reviewed periodically by
Institution's board of directors. (This requirement shall not apply where
Institution is a subsidiary of an insured state nonmember bank.)
5. Responsibilities of FID/RTS. FID/RTS shall:
A. Comply with all applicable laws and regulations and act consistently
with the Statement giving special attention to customer disclosures required
thereunder including, but not limited to, obtaining from the customer the
Acknowledgment attached hereto as Exhibit A;
B. Assist in recruiting and training, obtain licenses or registration,
and supervise Registered Representatives to provide brokerage services on
Institution's premises. Such persons shall be independent contractors of FID/RTS
and may be employees of Institution if permitted under applicable state
regulations. Registered Representatives shall be required to execute and fully
comply with the Registered Representative/Independent Contractor Agreement
attached hereto as Exhibit B;
4
<PAGE>
C. Pay Institution in consideration of the use of the premises in
accordance with the terms selected and set out in Schedule B and Schedule C
attached hereto. The terms of Schedule B and C shall be subject to amendment by
FID/RTS upon 60 days written notice to Institution during the term of this
Agreement. Payment shall be on or before the 20th day of each calendar month
following the month in which a brokerage transaction settles and shall be
accompanied by a summary of customer transactions;
D. Provide to Institution for its customers, promotional material
outlining RTS brokerage services which clearly identify RTS as the entity
providing such services and include all necessary disclosures as required by the
Statement;
E. Assist Institution in fulfilling its compliance responsibilities under
the Statement including providing Institution with a Supervisory Manual which
includes operational policies and procedures of RTS;
F. Provide procedures for safeguarding customer funds and securities
which are transferred between Institution customers and RTS;
G. Maintain books and records for the securities accounts of each
customer serviced by RTS as required by SEC Rule 17a-3a and other applicable
laws, rules and regulations.
H. Indemnify and hold Institution and its parent, if any, harmless
against any losses, claims, damages, liabilities and expenses (including
attorney's fees) which result from the negligence, recklessness, or intentional
conduct of RTS or its representatives providing services described in this
Agreement;
I. Provide or make available to Institution the following written reports
on the basis indicated to assist management in fulfilling its oversight
responsibilities:
i. A list of all customer complaints and their resolution (monthly);
ii. A list of all new account openings and descriptions of the
initial trades (monthly);
iii. A list of significant or unusual (for the customer) individual
sales during a reporting period (monthly);
iv. A list of sales by product, salesperson, and location as
designated on Schedule A (monthly);
v. Reports of internal compliance reviews of customer accounts
originated at Institution and reports furnished to RTS by its
regulators (annually).
5
<PAGE>
J. Authorize Institution to monitor RTS and periodically review and
verify that RTS and its Registered Representatives are complying with the terms
of this Agreement;
K. Authorize Institution and the appropriate banking agency, upon
reasonable notice, to have access to such records of RTS as are necessary or
appropriate to evaluate such compliance. Customer account records shall be
provided upon customer's written authorization;
L. Provide for installation of appropriate RTS signage compatible with
the Institution's interior space and design.
6. Exchange of Data.
Each party agrees to provide the other with information necessary to
perform their responsibilities pursuant to this Agreement.
7. Advertising.
Institution may distribute promotional material which shall state that RTS
will be performing the brokerage services. RTS shall have final approval of
such promotional literature. Institution shall be responsible for expenses for
such literature including production and mailing where Institution name or logo
is used.
8. Independent Status.
Nothing contained in this Agreement shall be deemed or construed to create
a partnership, joint venture or agency relationship between the parties or cause
Institution to be responsible in any way for the debts or obligations of RTS, it
being the intention of the parties the only relationship hereunder is solely
that of landlord and tenant.
9. Exclusivity.
Institution and its parent, if any, shall not enter into an agreement with
any other vendor to provide the services to be performed under this Agreement
during its term. This restriction shall apply to direct relationships with
mutual funds or insurance providers, however shall not restrict Institution's
trust department or that of its parent, if any, from executing securities
transactions through other brokers, direct relationships with mutual funds or
insurance providers.
10. Customer Solicitation.
RTS shall not engage in the solicitation of any securities business from
any customer account, or from any person whose name becomes known to RTS
Registered Representatives through Institution as a potential customer if this
Agreement is terminated. If, however,
6
<PAGE>
Institution does not enter into a successor relationship for the provision of
the services provided hereunder, RTS may continue to provide brokerage services.
It is acknowledged, in any case, that RTS may continue to provide brokerage
services to customers who desire to maintain their account with RTS or, as an
accommodation, while the account remains on the books of RJA. RTS shall retain
all original customer account records following termination.
11. Notices.
Financial Institutions Division: Robert Thomas Securities:
Robert Thomas Securities Robert Thomas Securities
4050 Pennsylvania, Ave., Suite 135 880 Carillon Parkway
Kansas City, Missouri 64111 St. Petersburg, Florida 33716
Attn: Mr. Brewster Ellis Attn: Mr. J. Stephen Putnam
Telephone (816) 753 -7859 Telephone: (813) 573-8195
Facsimile: (816) 753 - 7992 Facsimile (813) 573-8271
Institution:
The Lamar Bank
401 Shelby Speights Drive
Purvis, Mississippi 39475
Attn: Mr. Robert W. Roseberry
Telephone: (601) 794-8026
Facsimile: (601) 794-3101
12. Term/Commitment Fee.
This Agreement shall continue for three (3) years from the effective date
and automatically renew for successive three (3) year periods. It may be
terminated at any time upon ninety (90) days notice by any party. Upon
termination, Institution shall return to FID the Supervisory and other Manuals,
signs, original client and compliance files, promotional and all other RTS
materials in its possession. In consideration of RTS and FID's commitment and
start-up costs, Institution shall pay FID a non-refundable commitment Fee of One
Thousand Five Hundred Dollars ($1,500) at the time this Agreement is executed.
13. General.
This Agreement:
A. Contains the entire understanding of the parties and may be modified
only in writing executed by all parties. If any of its provisions are held
unenforceable, the remaining provisions shall not be invalidated.
7
<PAGE>
B. Any dispute or claim over the performance or interpretation of this
Agreement that cannot be resolved by mutual agreement of the parties shall be
submitted to arbitration under the rules and procedures of the NASD. If the
nature of the dispute or claim is such that arbitration is prohibited by law,
the parties agree to submit to the jurisdiction of the United States District
Court located in Pinellas County, Florida and have that court apply the law of
the State of Florida without regard to the principles of conflicts of laws.
C. May not be assigned without the consent of the nonassigning parties.
Any assignment shall be subject to the requisite review of any regulatory or
self-regulatory agency having jurisdiction.
D. May be amended by RTS at any time, if necessary, to comply with
applicable banking or securities laws, rules or regulations.
Executed in __________________, ________________ on ___________________, 199__
and in Kansas City, Missouri on December 27, 1995, and in St. Petersburg,
Florida on January 2, 1996.
Financial Institutions Division: Robert Thomas Securities, Inc.
By: /s/ Brewster Ellis By: /s/ J. Stephen Putnam
------------------ ---------------------
Brewster Ellis, President J. Stephen Putnam, President
By: /s/ Robert W. Roseberry
-----------------------
Robert W. Roseberry, President
8
<PAGE>
Attachments
Schedule A - Designated Space
Schedule B - Payment Method
Schedule C - Compensation Schedule
Schedule D - Support Service Schedule
Exhibit A - Customer Acknowledgment
Exhibit B - Registered Representative/Independent Contractor Agreement
9
<PAGE>
EXHIBIT A
CUSTOMER ACKNOWLEDGMENT
Date:
--------------
Account #:
---------
The undersigned hereby acknowledges that all brokerage services, whether
securities or insurance, provided at the Robert Thomas Securities, Inc. (RTS)
Investment Center located at _____________________________________ are offered
solely by RTS or its insurance affiliate, Planning Corporation of America (PCA),
and are the sole responsibility of RTS and its clearing broker, Raymond James &
Associates, Inc. or, if insurance, PCA. The products offered, unless otherwise
indicated:
. Are not FDIC insured.
. Are not a deposit or other obligation of the depository
institution.
. Are not guaranteed by the depository institution.
. Are subject to investment risks, including the possible loss of
the principal amount invested.
- --------------------------------------------------------------------------------
Client(s) full name:
-----------------------------------------------------------
-----------------------------------------------------------
Signature(s):
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
Signature of Registered Representative
Financial Institutions Division
A Service of
Robert Thomas Securities, Inc, member NASD/SIPC
------------------------------------
is not a registered broker/dealer
10
<PAGE>
EXHIBIT B
Registered Representative/Independent Contractor Agreement
Between
Robert Thomas Securities, Inc.
and
The Lamar Bank
Rep. Number 4180/4181
Branch Number 44L
Social Security Number ###-##-####
The following agreement between Robert Thomas Securities, Inc. (RTS) and
Julie Roberts (Representative), (the Agreement) shall be effective as of 9-1,
1996.
RECITALS
A. This Agreement is entered into in connection with the Nondeposit
Investment Product Marketing Agreement between the Financial Institutions
Division (FID), RTS and the financial institution (Institution) designated below
(the Marketing Agreement). Both parties acknowledge the receipt of a copy of
the Marketing Agreement.
B. RTS is a Broker-Dealer registered with the Securities and Exchange
Commission (SEC) and is a member of the National Association of Securities
Dealers, Inc. (NASD). FID is a division of RTS.
C. Representative desires to place his/her securities licenses with RTS
and insurance licenses, if any, with Planning Corporation of America (PCA),
RTS's affiliate, and provide independent contractor services as a Registered
Representative as that term is used in Schedule C to Article II of the Bylaws of
the NASD.
COVENANTS AND UNDERTAKINGS
1. Representative's Duties.
Representative's duties and obligations under this Agreement shall be to
execute the brokerage services described in the Marketing Agreement.
Representative agrees to comply with the terms and spirit of the Marketing
Agreement in providing brokerage services to Institution's customers.
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2. Registration.
RTS will assist Representative and Representative shall agree to use
his/her best efforts to qualify, and upon qualification to maintain his/her
status with the NASD and all applicable state regulatory authorities as a
Registered Representative of RTS. If the sale of insurance products is
permitted under the Marketing Agreement, RTS will assist Representative in
placing his/her insurance license with its insurance affiliate. The cost of
obtaining and maintaining such qualifications and licenses shall be paid by
Representative.
3. Observance of Regulatory Requirements.
Representative agrees to faithfully observe statutes, rules, and
regulations applicable to brokerage activities including but not limited to, the
Rules of Fair Practice of the NASD and the Compliance and Supervisor Manuals of
RTS. Representative further agrees to observe and follow such written
procedures as are issued by RTS pursuant to Section 27 of Article III of the
Rules of Fair Practice of the NASD, including such requirements of written
approval, review of activities, and annual inspection as RTS shall require
pursuant to said Section 27. Representative agrees to abide by the direction of
FID and the Registered Principal in his/her Office of Supervisory Jurisdiction,
as such terms are defined by the NASD.
4. Breach of Obligations.
Any failure of Representative to faithfully observe applicable statutes,
rules and regulations, or to fail to comply through negligence or otherwise with
the terms and conditions of this Agreement shall be considered a breach of this
Agreement and RTS may immediately, without notice, take any such action as is
necessary to discontinue Representative's status as a Registered Representative
of RTS. The remedy provided by this paragraph for any such breach is separate
and in addition to any and all other rights of RTS, whether granted by statute,
law or agreement, all of which shall be cumulative and exercisable concurrently,
to include without limitation the right to take legal action for damages which
may arise by reason of the Representative's breach or failure to observe this
Agreement. As an additional remedy, RTS shall have the right to seek an
injunction in a court of competent jurisdiction to prevent any default of this
Agreement by Representative.
5. Commissions.
Representative shall receive a percentage of commissions generated by
his/her brokerage activities as agreed between Representative and RTS and
adjusted from time to time. Commissions shall be listed on the signature page
of this Agreement and shall be adjusted only in writing signed by both parties.
Commissions will be paid to FID for distribution to Representative only if they
are received by RTS and Representative agrees to waive any claim to commissions
before that time. From said commission shall be deducted all costs advanced by
RTS or FID on your behalf. These costs shall include such things as rent,
utilities, maintenance, quotation systems, telephone and any other direct
expenses.
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6. Sale of Securities Other Than in the Normal Course of Business.
In the event Representative is presented with an opportunity to sell any
type of securities or any insurance product, other than offered through RTS or
PCA, by public offering or through the private placement exemptions, other than
in the ordinary course of business, such sales must be approved in writing by
RTS prior to their consummation. RTS shall charge a percentage of the total
commission for reviewing such transactions which percentage shall be determined
and agreed to by a written instrument by a negotiation prior to the transaction.
In the event it is determined that Representative has made such a sale without
obtaining the requisite prior approval or that Representative has engaged in
"Selling Away" from RTS as that term is defined in NASD releases, it shall be
cause for immediate termination of this Agreement and of Representative's status
as a Registered Representative. Representative shall offer a right of rescission
to any purchasers in an unpermitted sale; and Representative will indemnify,
defend and hold RTS and its affiliates and their employees, officers and
stockholders harmless from any and all costs, claims, actions, damages or
losses, including without limitation, fees of RTS' counsel arising directly or
indirectly from such a sale. Representative's participation in any sale of a
mutual fund through a direct relationship between Institution or its affiliate
and the mutual fund shall be considered a breach of his Agreement and any
commission received by Representative for such sale shall be paid over to RTS.
7. Termination.
In addition to immediate termination for breach of the provisions of this
Agreement by Representative as provided elsewhere herein, this Agreement shall
also terminate as follows:
(a) At any time and without cause upon thirty days written notice from
either party to the other;
(b) Immediately and without notice upon the termination of the Marketing
Agreement with Institution provided however, that RTS will give Representative
thirty days written notice if it has notice of such termination.
8. Relationship.
The parties acknowledge and agree that this Agreement shall not be deemed
to create an agency, employment, partnership or joint venture between RTS and
Representative. The only relationship intended is that of independent
contractor. It is understood and agreed between the parties that Representative
may be an employee of Institution which shall place no responsibilities or
obligations upon RTS other than those specifically addressed herein.
9. Indemnification.
Representative hereby indemnifies and agrees to defend and hold harmless
FID, RTS and its affiliates and their employees, officers and stockholders from
and against any and all claims,
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actions, costs, damages, and losses incurred by or asserted against said
indemnified parties or any of them as a direct or indirect result of any
violation of the terms of this Agreement by Representative or based on any sale
or transaction entered into by or through the services of Representative.
10. Confidentiality.
Representative acknowledges and agrees that all materials and information
provided to Representative by RTS or obtained by the Representative during the
term of the Representative's relationship with FID or RTS is the sole property
of FID or RTS. Representative agrees that such materials and information may be
used by Representative only during the term of this Agreement. Such information
and materials shall include, without limitation, lists of clients and
information concerning such clients and their accounts. Representative agrees to
return all such items to the owner thereof on the termination of this Agreement
and shall not disclose or permit others to disclose such information.
11. Non-Compete.
During the term of this Agreement and for a period of six months following
its termination, Representative shall not directly or indirectly compete or
attempt to compete with the FID program within a fifty mile radius of any FID
location by (i) providing brokerage services for, soliciting, or interfering in
RTS's relationships with Institution, its affiliates or its customers, or
clients of RTS or (ii) recruiting or instructing any independent contractor or
employee of RTS, Institution or its affiliates to terminate or otherwise cease
his/her relationship with RTS, Institution or its affiliates.
12. General.
This Agreement:
a) Contains the entire understanding of the parties and may be modified
only in writing executed by all parties. If any of its provisions are held
unenforceable, the remaining provisions shall not be invalidated;
b) Any dispute or claim over the performance or interpretation of this
Agreement that cannot be resolved by mutual agreement of the parties shall be
submitted to arbitration under the rules and procedures of the NASD. If the
nature of the dispute or claim is such that arbitration is prohibited by law,
the parties agree to submit to the jurisdiction of the United States District
Court located in Pinellas County, Florida and have that court apply the law of
the State of Florida without regard to the principles of conflicts of laws.
c) May not be assigned without the consent of the nonassigning parties.
Any assignment shall be subject to the requisite review of any regulatory or
self-regulatory agency having jurisdiction.
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d) May be amended by RTS at any time, if necessary, to comply with
applicable banking or securities laws, rules or regulations.
Executed in Purvis, MS, on 9-1, 1996 and in St. Petersburg, Florida on
__________________, 1996.
Representative: Robert Thomas Securities, Inc.
Julie Roberts
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Name
/s/ Julie Roberts By: /s/ J. Stephen Putnam
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Signature President, J. Stephen Putnam
Financial Institution: Lamar Bank
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Commissions:
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EXHIBIT 16
[LETTER FROM MCARTHUR, THAMES, SLAY AND DEWS, PLLC]
September 30, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Lamar Capital Corporation (the "Company")
Ladies and Gentlemen:
We have read and agree with the statement made by the Company in its Amendment
No. 1 to Registration Statement No. 333-61355 on Form S-1, in response to Item
304 of Regulation S-K.
Sincerely yours,
McArthur, Thames, Slay and Dews, PLLC
Hattiesburg, Mississippi
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts,"
"Summary Consolidated Financial Data" and "Selected Consolidated Financial Data"
and to the use of our report dated August 11, 1998, in Amendment No. 1 to the
Registration Statement (Form S-1, No. 333-61355) and related Prospectus of Lamar
Capital Corporation for the registration of 1,568,181 shares of its common
stock.
Our audits also included the financial statement schedule of Lamar Capital
Corporation listed in Item 16(b). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Jackson, Mississippi
September 30, 1998
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EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary Consolidated
Financial Data" and "Selected Consolidated Financial Data" in Amendment No. 1 to
the Registration Statement (Form S-1, No. 333-61355) and related Prospectus of
Lamar Capital Corporation for the registration of 1,568,181 shares of its common
stock.
/s/ McArthur, Thames, Slay and Dews, PLLC
Hattiesburg, Mississippi
September 30, 1998
