SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the transition period from ________ to ________.
Commission file number 0-23890
First State Corporation
(Exact name of Registrant as specified in its Charter)
Georgia 58-1439347
(State of Incorporation) (I.R.S. Employer Identification No.)
333 West Broad Avenue
Albany, Georgia 31701
(Address of principal executive office, including zip code)
(912) 432-8000
(Registrant's telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the
Act: Common Stock, par value $1.00
Check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES |X| NO |_|
[Cover page continued on next page]
This Report contains a total of ____ pages; the Exhibit Index begins on Page
____.
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |X|
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant at February 26, 1997 was $137,625,037, based on an estimated market
price of $30.25 per share. Market price was estimated based on the closing price
of the Common Stock on Nasdaq as of this date.
The number of shares of the Registrant's Common Stock outstanding at
February 26, 1997 was 4,549,588 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended
December 31, 1996 are incorporated by reference into Part II.
Portions of the Proxy Statement for the Annual Meeting of Shareholders,
scheduled to be held on April 28, 1997, are incorporated by reference into Part
III.
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PART I
Item 1. Business
General
First State Corporation ("First State" or the "Company") is a two-bank
holding company incorporated in Georgia and headquartered in Albany, Georgia.
The Company has two subsidiary banks (the "Subsidiary Banks"), First State Bank
& Trust Company, Albany ("FSB Albany") and First State Bank & Trust Company,
Cordele ("FSB Cordele"). The Company also has one non-bank subsidiary,
Oglethorpe Real Estate Holding Company ("Oglethorpe"). Ownership of an
additional non-bank subsidiary, Southeastern Mortgage Corporation ("Southeastern
Mortgage"), was transferred from the Company to FSB Albany in 1994. At the close
of business on December 31, 1996, the assets and liabilities of Oglethorpe were
transferred to the Company and those of Southeastern Mortgage were transferred
to FSB Albany.
The Subsidiary Banks offer a full range of banking services principally to
individuals and to small and middle-market businesses in Southwest Georgia. At
December 31, 1996, the Company had assets of $516,499,000, deposits of
$452,451,000, and shareholders' equity of $48,130,000.
Strategy
The strategic goal of the Company is to operate as a highly profitable,
customer-oriented, independent community bank, with growth and profitability to
be generated internally and through strategic acquisitions and combinations. The
ultimate goal of the Company is to enhance the value of its shareholders'
interests. Accordingly, the Board of Directors will review all strategic
opportunities with a view toward long-term enhancement of shareholder value.
Since 1981, the Company has merged with or acquired six financial
institutions and one mortgage company. Management believes there may be
additional opportunities to acquire financial institutions or to acquire assets
and deposits that will allow the Company to enter adjacent markets or increase
market share in existing markets. Management intends to pursue acquisition
opportunities in strategic markets where its managerial, operational and capital
resources will enhance the performance of acquired institutions. There are
currently no agreements or understandings related to any acquisitions except as
discussed below under "Recent Developments."
The business strategy of the Company is to provide its customers with the
financial sophistication and breadth of products of a regional bank, while
retaining the local appeal and level of service of a community bank. The
Company's community orientation allows it to tailor products and services to
meet community and customer needs. However, the Company has established central
policies governing, among other things, lending practices, credit analysis and
approval procedures, as well as guidelines for deposit pricing and investment
portfolio management. In addition, the Company has established a centralized
audit team that regularly performs a detailed, on-site review and analysis of
each branch's business and operations to ensure the consistent application of
central policies.
The Subsidiary Banks and their branches are community-oriented and offer
services customarily provided by full-service commercial banks, including
individual and commercial demand
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and time deposit accounts, commercial and consumer loans, residential mortgages,
credit card services and safe deposit boxes. Lending is focused on small and
middle-market businesses and individuals in the local market regions.
FSB Albany's Trust Department offers a full range of investment and
fiduciary services, including traditional estate and trust administration,
investment management accounts, and pension and profit sharing plans. At
December 31, 1995 and December 31, 1996, trust assets under management totaled
$238.3 million and $286.8 million, respectively.
Recent Developments
On August 9, 1996, FSB Albany consummated its purchase of two branch
offices in Albany from First Union National Bank of Georgia. The sale included
all deposit accounts, real estate and certain other assets, excluding loans.
Market
Albany/Dougherty County is located in Southwest Georgia, an area which
comprises 22 counties. Albany/Dougherty County has a well-balanced economy which
includes manufacturing, agri-businesses, wholesaling, retailing, service
industry and the military. The diversity of the economy helps create economic
stability in the region. Southwest Georgia is located midway between the Atlanta
and Florida markets, two of the most significant markets in the nation.
Employees
As of December 31, 1996, the Company had 251 full-time equivalent
employees. The Company is not a party to any collective bargaining agreement,
and, in the opinion of management, the Company enjoys excellent relations with
its employees.
Southeastern Mortgage
Southeastern Mortgage was established in March 1989 as a wholly-owned
subsidiary of FSB Albany. Ownership of Southeastern Mortgage was transferred to
First State in 1989 and transferred back to FSB Albany in 1994 to facilitate
compliance with federal statutes relating to affiliate transactions.
Southeastern Mortgage engages in the origination and sale of mortgage loans and
the origination of construction loans throughout Georgia and Northeast Florida.
The majority of these loans are sold without recourse. Southeastern Mortgage
originated loans totaling approximately $84.8 million and $60.9 million in 1995
and 1996, respectively. Southeastern Mortgage's servicing portfolio totaled $3.8
million at December 31, 1996. As of the close of business on December 31, 1996,
all of Southeastern Mortgage's assets and liabilities were transferred to FSB
Albany under the trade name "First State Mortgage." First State Mortgage is
continuing Southeastern Mortgage's former activities relating to mortgage and
construction loans. For additional information concerning the impact of the
mortgage operations on the Company, see "Management's Discussion and Analysis -
Results of Operations." First State Mortgage leases offices in Albany at 323
Pine Avenue and in St. Mary's, Georgia.
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Oglethorpe
Oglethorpe was established in 1961 as a wholly-owned subsidiary of FSB
Albany. Its common stock was transferred to First State in 1989. It is engaged
in the business of owning certain real estate and collecting rental payments
from that real estate. It owns the Slappey Drive branch of FSB Albany and the
property at 323 Pine Avenue, which is used as the Albany location of
Southeastern Mortgage (now known as First State Mortgage) and by other
businesses which are not affiliated with the Company. The rental income received
by Oglethorpe has historically covered its operating costs. In 1995 and 1996,
Oglethorpe's net income totaled $298,109 and $160,517, respectively. As of the
close of business on December 31, 1996, all of Oglethorpe's assets and
liabilities were transferred to the Company.
Discount Brokerage
The Company offers its customers a discount brokerage service which charges
competitive fees for the execution of trades in stocks, bonds and other
securities. Settlement of sales and purchases is processed through customers'
checking or savings accounts.
Management Fees
Since January 1993, the Subsidiary Banks have paid management fees to the
Company which are determined by the relative asset size of the Subsidiary Banks.
The management fees are intended to cover the cost of the salaries paid by the
Company to certain senior officers of the Company who perform services for its
subsidiaries.
Lending Activities
The Subsidiary Banks make real estate loans, consumer loans, commercial
loans and agricultural loans. Such loans constituted 59%, 11%, 16% and 14%,
respectively, of the Company's total loans at December 31, 1995, and 62%, 12%,
13%, and 13%, respectively, at December 31, 1996.
Real Estate Loans
The Subsidiary Banks make and hold real estate loans. Southeastern Mortgage
originates loans and resells the majority of such loans to institutional
investors in the secondary market.
The Company makes single-family residential construction loans for one to
four unit family structures. It requires a first lien position on the land
associated with the construction project. First State offers these loans to
professional building contractors and homeowners. Loan disbursements require
on-site inspections to assure the project is on budget and that the loan
proceeds are being used for the construction project and not being diverted to
another project. The loan to value ratio for such loans is predominantly 80% of
the lower of the as-built appraised value or project cost, and is a maximum of
90% if the loan is amortized. Loans for construction can present a high degree
of risk to the lender, depending upon, among other things, whether the builder
can sell the home to a
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buyer, whether the buyer can obtain permanent financing, whether the transaction
produces income in the interim and the nature of changing economic conditions.
Consumer Loans
The Company makes consumer loans, consisting primarily of installment loans
to individuals for personal, family and household purposes, including loans for
automobiles, home improvements and investments. Risks associated with consumer
loans include, but are not limited to, fraud, deteriorated or non-existing
collateral, general economic downturn and customer financial problems.
Commercial Loans
Commercial lending is directed principally toward small to mid-size
businesses whose demand for funds falls within the legal lending limits of the
Subsidiary Banks. This category of loans includes loans made to individual,
partnership or corporate borrowers, and obtained for a variety of business
purposes. Risks associated with these loans can be significant. Risks include,
but are not limited to, fraud, bankruptcy, economic downturn, deteriorated or
non-existing collateral and changes in interest rates.
The Company also makes loans to small businesses with respect to which the
Small Business Administration ("SBA") guarantees repayment of up to 90% of the
loan amount, subject to certain other limitations. At its election, the Company
may sell the guaranteed portion of those loans to institutional investors in the
secondary market. On such loans, the Company retains the servicing rights and
obligations on the guaranteed portions sold. Risks associated with these loans
include, but are not limited to, credit risk, e.g., fraud, bankruptcy, economic
downturn, deteriorated or nonexisting collateral and changes in interest rates,
and operational risk, e.g., failure to adhere to SBA funding and servicing
requirements in order to secure and maintain the SBA guarantees and servicing
rights.
Agricultural Loans
The Company makes loans to agriculture-related businesses, including loans
to farmers. Risks associated with such loans include, but are not limited to,
crop failure due to poor weather or other conditions, general economic downturn,
changes in market prices of the underlying crops, fraud, bankruptcy,
deteriorated and non-existing collateral and changes in interest rates.
Investment Activities
After establishing necessary cash reserves and funding loans, the Company
invests its remaining liquid assets in investments allowed under applicable
banking laws and regulations. The Company invests primarily in obligations of
the United States, obligations of municipalities, and mortgage-backed
securities. Risks associated with these investments include, but are not limited
to, mismanagement in terms of interest rate, maturity and concentration.
Traditionally, losses associated with the investment portfolio have been
minimal.
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Asset/Liability Management
It is the objective of the Company to manage its assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash, loan, investment, borrowing and capital policies. Certain
officers of the Company are charged with the responsibility for developing and
monitoring policies and procedures that are designed to ensure acceptable
composition of the asset/liability mix. It is the overall philosophy of
management to support asset growth primarily through growth of core deposits,
which include deposits in all categories made by individuals, partnerships and
corporations. Management of the Company seeks to invest the largest portion of
the Company's assets in real-estate related loans. The Company's asset/liability
mix is monitored on a timely basis with reports reflecting the
interest-sensitive assets and interest-sensitive liabilities being prepared and
presented to its Asset/Liability Management Committee. The objective of this
policy is to control interest-sensitive assets and liabilities to minimize the
impact of substantial movements in interest rates on the Company's earnings.
Competition
First State competes for both deposit and loan customers with other
financial institutions with equal or greater resources than are available to
First State. Currently there are 14 commercial banks, at least four credit
unions, and one savings bank located in the region served by the Company, making
banking business in this market highly competitive.
Supervision and Regulation
The following discussion sets forth the material elements of the regulatory
framework applicable to banks and bank holding companies and provides certain
specific information related to the Company.
General
The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). As such, the Company
and its non-bank subsidiaries are subject to the supervision, examination, and
reporting requirements of the BHC Act and the regulations of the Federal
Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (a) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5% of the voting shares of the bank; (b) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (c) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to
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monopolize or attempt to monopolize the business of banking in any section of
the United States, or the effect of which may be substantially to lessen
competition or to tend to create a monopoly in any section of the country, or
that in any other manner would be in restraint of trade, unless the
anticompetitive effects of the proposed transaction are clearly outweighed by
the public interest in meeting the convenience and needs of the community to be
served. The Federal Reserve is also required to consider the financial and
managerial resources and future prospects of the bank holding companies and
banks concerned and the convenience and needs of the community to be served.
Consideration of financial resources generally focuses on capital adequacy,
which is discussed below.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective on September 29, 1995,
repealed the prior statutory restrictions on interstate acquisitions of banks by
bank holding companies, such that the Company, and any other bank holding
company located in Georgia may now acquire a bank located in any other state,
and any bank holding company located outside Georgia may lawfully acquire any
Georgia-based bank, regardless of state law to the contrary, in either case
subject to certain deposit-percentage, aging requirements, and other
restrictions. The Interstate Banking Act also generally provides that, after
June 1, 1997, national and state-chartered banks may branch interstate through
acquisitions of banks in other states. By adopting legislation prior to that
date, a state has the ability either to "opt in" and accelerate the date after
which interstate branching is permissible or "opt out" and prohibit interstate
branching altogether.
In February 1996, the Georgia Legislature adopted the "Georgia Interstate
Branching Act" effective June 1, 1997. The Georgia Interstate Banking Act will
permit Georgia-based banks and bank holding companies owning or acquiring banks
outside of Georgia and all non-Georgia banks and bank holding companies owning
or acquiring banks in Georgia to merge any lawfully acquired bank into an
interstate branch network. The Georgia Interstate Branching Act also allows
banks to establish de novo branches on a limited basis beginning July 1, 1996.
Beginning July 1, 1998, the number of de novo branches which may be established
will no longer be limited.
The BHC Act generally prohibits the Company from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. The BHC Act does
not place territorial limitations on permissible non-banking activities of bank
holding companies. Despite prior approval, the Federal Reserve has the power to
order a holding company or its subsidiaries to
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terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Each of the bank subsidiaries of the Company is a member of the Federal
Deposit Insurance Corporation (the "FDIC"), and as such, its deposits are
insured by the FDIC to the maximum extent provided by law. Each such subsidiary
is also subject to numerous state and federal statutes and regulations that
affect its business, activities, and operations, and each is supervised and
examined by one or more state or federal bank regulatory agencies.
The FDIC and the Georgia Department of Banking and Finance (the "Georgia
Department") regularly examine the operations of the subsidiary banks and are
given authority to approve or disapprove mergers, consolidations, the
establishment of branches, and similar corporate actions. The FDIC and the
Georgia Department also have the power to prevent the continuance or development
of unsafe or unsound banking practices or other violations of law.
Payment of Dividends
The Company is a legal entity separate and distinct from its banking and
other subsidiaries. The principal sources of cash flow of the Company, including
cash flow to pay dividends to its shareholders, are dividends by its subsidiary
banks. There are statutory and regulatory limitations on the payment of
dividends by the subsidiary banks to the Company as well as by the Company to
its shareholders.
If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such institution cease and desist
from such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-- Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
At December 31, 1996, under dividend restrictions imposed under federal and
state laws, the subsidiary banks, without obtaining governmental approvals,
could declare aggregate dividends to the Company of approximately $4.3 million.
The payment of dividends by the Company and the subsidiary banks may also
be affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
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Capital Adequacy
The Company and its subsidiary banks are required to comply with the
capital adequacy standards established by the Federal Reserve and the
appropriate federal banking regulator in the case of its banking subsidiaries.
There are two basic measures of capital adequacy for bank holding companies that
have been promulgated by the Federal Reserve: a risk-based measure and a
leverage measure. All applicable capital standards must be satisfied for a bank
holding company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.
The minimum guideline for the ratio (the "Total Risk-Based Capital Ratio")
of total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8%. At least half
of Total Capital must comprise common stock, minority interests in the equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred stock,
and a limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist of
subordinated debt, other preferred stock, and a limited amount of loan loss
reserves ("Tier 2 Capital"). At December 31, 1996, the Company's consolidated
Total Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e.,
the ratio of Tier 1 Capital to risk-weighted assets) were 14.24% and 12.98%,
respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3% for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating. All
other bank holding companies generally are required to maintain a Leverage Ratio
of at least 3%, plus an additional cushion of 100 to 200 basis points. The
Company's Leverage Ratio at December 31, 1996 was 7.99%. The guidelines also
provide that bank holding companies 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. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
The subsidiary banks are subject to risk-based and leverage capital
requirements adopted by its federal banking regulator, which are substantially
similar to those adopted by the Federal Reserve for bank holding companies.
Each of the subsidiary banks was in compliance with applicable minimum
capital requirements as of December 31, 1996. The Company has not been advised
by any federal banking
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agency of any specific minimum capital ratio requirement applicable to it or its
subsidiary depository institutions.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business. As described below,
substantial additional restrictions can be imposed upon FDIC-insured depository
institutions that fail to meet applicable capital requirements. See "-- Prompt
Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve and the FDIC have, pursuant to
FDICIA, recently adopted final regulations, which will become mandatory on
January 1, 1998, requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off- balance-sheet position) in the
evaluation of a bank's capital adequacy. The bank regulatory agencies have
concurrently proposed a methodology for evaluating interest rate risk which
would require banks with excessive interest rate risk exposure to hold
additional amounts of capital against such exposures. The market risk rules will
apply to any bank or bank holding company whose trading activity equals 10% or
more of its total assets, or whose trading activity equals $1 billion or more.
Support of Subsidiary Institutions
Under Federal Reserve policy, the Company is expected to act as a source of
financial strength for, and to commit resources to support, each of its banking
subsidiaries. This support may be required at times when, absent such Federal
Reserve policy, the Company may not be inclined to provide it. In addition, any
capital loans by a bank holding company to any of its banking subsidiaries are
subordinate in right of payment to deposits and to certain other indebtedness of
such banks. In the event of a bank holding company's bankruptcy, any commitment
by the bank holding company to a federal bank regulatory agency to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(a) the default of a commonly controlled FDIC-insured depository institution or
(b) any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the appointment of a conservator or receiver, and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC's
claim for damages is superior to claims of shareholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution. The
subsidiary depository institutions of the Company are subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of these subsidiaries would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
depository institution's banking affiliates, and a potential loss of the
Company's investment in such other subsidiary depository institutions.
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Prompt Corrective Action
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant capital level for
each category.
The capital levels established for each of the categories are as follows:
<TABLE>
<CAPTION>
=====================================================================================
Total Tier 1 Risk-
Capital Category Tier 1 Capital Risk-Based Capital Based Capital Other
=====================================================================================
<S> <C> <C> <C> <C>
Well Capitalized 5% or more 10% or more 6% or more Not subject
to a capital
directive
- -------------------------------------------------------------------------------------
Adequately 4% or more 8% or more 4% or more --
Capitalized
- -------------------------------------------------------------------------------------
Undercapitalized less than 4% less than 8% less than 4% --
- -------------------------------------------------------------------------------------
Significantly less than 3% less than 6% less than 3% --
Undercapitalized
- -------------------------------------------------------------------------------------
Critically 2% or less -- -- --
Undercapitalized tangible equity
=====================================================================================
</TABLE>
For purposes of the regulation, the term "tangible equity" includes core
capital elements counted as Tier 1 Capital for purposes of the risk-based
capital standards, plus the amount of outstanding cumulative perpetual preferred
stock (including related surplus), minus all intangible assets with certain
exceptions. A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan, subject to certain limitations.
The obligation of a controlling holding company under FDICIA to fund a capital
restoration plan is limited to the lesser of 5% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate
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federal banking agency is given authority with respect to any undercapitalized
depository institution to take any of the actions it is required to or may take
with respect to a significantly undercapitalized institution as described below
if it determines "that those actions are necessary to carry out the purpose" of
FDICIA.
At December 31, 1996, each subsidiary bank had the requisite capital levels
to qualify as well capitalized.
FDIC Insurance Assessments
Pursuant to FDICIA, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994, assigns an institution to one
of three capital categories: (a) well capitalized; (b) adequately capitalized;
and (c) undercapitalized. These three categories are substantially similar to
the prompt corrective action categories described above, with the
"undercapitalized" category including institutions that are undercapitalized,
significantly undercapitalized, and critically undercapitalized for prompt
corrective action purposes. An institution is also assigned by the FDIC to one
of three supervisory subgroups within each capital group. The supervisory
subgroup to which an institution is assigned is based on a supervisory
evaluation provided to the FDIC by the institution's primary federal regulator
and information which the FDIC determines to be relevant to the institution's
financial condition and the risk posed to the deposit insurance funds (which may
include, if applicable, information provided by the institution's state
supervisor). An institution's insurance assessment rate is then determined based
on the capital category and supervisory category to which it is assigned. Under
the final risk-based assessment system, as well as the prior transitional
system, there are nine assessment risk classifications (i.e., combinations of
capital groups and supervisory subgroups) to which different assessment rates
are applied. Assessment rates for members of both the Bank Insurance Fund
("BIF") and the Savings Association Insurance Fund ("SAIF") for the first half
of 1995, as they had during 1994, ranged from 23 basis points (0.23% of
deposits) for an institution in the highest category (i.e., "well capitalized"
and "healthy") to 31 basis points (0.31% of deposits) for an institution in the
lowest category (i.e., "undercapitalized" and "substantial supervisory
concern"). These rates were established for both funds to achieve a designated
ratio of reserves to insured deposits (i.e., 1.25%) within a specified period of
time.
Once the designated ratio for the BIF was reached in May 1995, the FDIC
reduced the assessment rate applicable to BIF deposits in two stages, so that,
beginning 1996, the deposit insurance premiums for 92% of all BIF members in the
highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size. The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable future
given the undercapitalized nature of that insurance fund.
Recognizing that the disparity between the SAIF and BIF premium rates had
adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, including reduced earnings and an impaired ability to raise
funds in capital markets and to attract deposits, on July 28, 1995, the FDIC,
the Treasury Department, and the Office of Thrift Supervision released
statements outlining a proposed plan to recapitalize the SAIF, the principal
feature of which was a special one-time assessment on depository institutions
holding SAIF-insured deposits, which was intended to recapitalize
-11-
<PAGE>
the SAIF at a reserve ratio of 1.25%. This proposal contemplated elimination of
the disparity between the assessment rates on BIF and SAIF deposits following
recapitalization of the SAIF.
A variation of this proposal designated the Deposit Insurance Funds Act of
1996 (the "Funds Act") was enacted by Congress as part of the omnibus budget
legislation and signed into law on September 30, 1996. As directed by the Funds
Act, the FDIC implemented a special one-time assessment of approximately 65.7
basis points (0.657%) on a depository institution's SAIF-insured deposits held
as of March 31, 1995 (or approximately 52.6 basis points on SAIF deposits
acquired by banks in certain qualifying transactions). The Company recorded a
charge against earnings for the special assessment in the quarter ended
September 30, 1996 in the pre-tax amount of approximately $60,000.
In addition, the FDIC proposed a revision in the SAIF assessment rate
schedule that effected, as of October 1, 1996 (a) a widening in the assessment
rate spread among institutions in the different capital and risk assessment
categories, (b) an overall reduction of the assessment rate range assessable on
SAIF deposits of from 0 to 27 basis points, and (c) a special interim assessment
rate range for the last quarter of 1996 of from 18 to 27 basis points on
institutions subject to FICO assessments. Effective January 1, 1997, FICO
assessments will be imposed on both BIF- and SAIF-insured deposits in annual
amounts presently estimated at 1.29 basis points and 6.44 basis points,
respectively. Beginning in January, 2000, BIF- and SAIF- insured institutions
will share the FICO interest costs at equal rates currently estimated 2.43 basis
points. The Company anticipates that the net effect of the decrease in the
premium assessment rate on SAIF deposits will result in a reduction in its total
deposit insurance premium assessments for the years 1997 through 1999, assuming
no further changes in announced premium assessment rates. The Funds Act further
provides that BIF and SAIF are to be merged, creating the "Deposit Insurance
Fund," on January 1, 1999, provided that bank and savings association charters
are combined by that date.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
Proposed Legislation and Regulatory Action
New regulations and statutes are regularly proposed which contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. It cannot be predicted
whether or what form any proposed regulation or statute will be adopted or the
extent to which the business of the Company may be affected by such regulation
or statute.
-12-
<PAGE>
SELECTED STATISTICAL INFORMATION OF FIRST STATE CORPORATION
The following statistical information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes included elsewhere in
this Annual Report and in the documents incorporated herein by reference.
Average Balance and Net Income Analysis
The following tables set forth the amount of the Company's interest income or
interest expense for each category of interest-earning assets and
interest-bearing liabilities and the average interest rate for total
interest-earning assets and interest-bearing liabilities, net interest spread
and net yield on average interest-earning assets. Federally tax-exempt income is
presented on a taxable-equivalent basis assuming a 34% Federal tax rate.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------------------
1996 1995 1994
---------------------------------------------------------------------------------------------
Average Average Average
Interest Yield/ Interest Yield/ Interest Yield/
Average Income/ Rate Average Income/ Rate Average Income/ Rate
Balance Expense Paid Balance Expense Paid Balance Expense Paid
--------- --------- --------- -------- --------- --------- ----------- ----------- ---------
(Dollars in Thousands)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans, net of unearned
interest $315,466 $30,527 9.68% $286,320 $28,636 10.00% $263,437 $24,064 9.13%
Investment securities:
Taxable 71,998 4,585 6.37 63,384 4,194 6.62 53,765 3,262 6.07
Tax-exempt 23,467 1,923 8.19 19,072 1,735 9.10 18,830 1,735 9.21
Federal funds sold 3,409 205 6.01 2,534 165 6.51 14,127 560 3.96
Interest-bearing
deposits 9,237 463 5.01 3,991 226 5.66 9,361 398 4.25
-------- ------- -------- ------- -------- -------
Total interest-
earning assets 423,577 37,703 8.90 375,301 34,956 9.31 359,520 30,019 8.35
-------- ------- -------- ------- -------- -------
Noninterest-earning
assets:
Cash 20,815 19,444 20,309
Allowance for loan
losses (5,188) (4,729) (4,395)
Unrealized loss on
securities
available for sale 97 (138) --
Other assets 24,565 20,517 19,548
-------- -------- --------
Total noninterest-
earning assets 40,289 35,094 35,462
-------- -------- --------
Total assets $463,866 $410,395 $394,982
======== ======== ========
</TABLE>
<PAGE>
Average Balance and Net Income Analysis (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------------------
1996 1995 1994
---------------------------------------------------------------------------------------------
Average Average Average
Interest Yield/ Interest Yield/ Interest Yield/
Average Income/ Rate Average Income/ Rate Average Income/ Rate
Balance Expense Paid Balance Expense Paid Balance Expense Paid
---------------------------------------------------------------------------------------------
(Dollars in Thousands)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Interest-bearing
liabilities:
Savings and
interest-bearing
demand deposits $131,144 $ 3,552 2.71% $125,583 $ 3,464 2.76% $132,367 $ 3,488 2.64%
Time deposits 193,536 10,725 5.54 158,570 8,589 5.42 142,996 6,165 4.31
Federal funds
purchased and
repurchase
agreements 6,559 314 4.79 3,987 255 6.40 4,045 180 4.45
Debt 2,219 160 7.21 596 39 6.54 2,341 172 7.35
-------- ------- -------- -------- -------- -------
Total interest-
bearing liabilities 333,458 14,751 4.42 288,736 12,347 4.28 281,749 10,005 3.55
-------- ------- -------- -------- -------- -------
Noninterest-bearing
liabilities and
stockholders' equity:
Demand deposits 79,985 76,876 74,282
Other liabilities 5,205 4,534 4,233
Stockholders' equity 45,218 40,249 34,718
-------- -------- --------
Total noninterest-
bearing liabilities
and stockholders'
equity 130,408 121,659 113,233
-------- -------- --------
Total liabilities and
stockholders'
equity $463,866 $410,395 $394,982
======== ======== ========
Interest rate spread 4.48% 5.03% 4.80%
==== ==== ====
Net interest income $22,952 $ 22,609 $20,014
======= ======== =======
Net interest margin 5.42% 6.02% 5.57%
==== ==== ====
</TABLE>
<PAGE>
Rate and Volume Analysis
The following table reflects the changes in net interest income resulting from
changes in interest rates and from asset and liability volume. Federally
tax-exempt interest is presented on a taxable equivalent basis assuming a 34%
Federal tax rate. The change in interest attributable to rate has been
determined by applying the change in rate between years to average balances
outstanding in the later year. The change in interest due to volume has been
determined by applying the rate from the earlier year to the change in average
balances outstanding between years. Thus, changes that are not solely due to
volume have been attributed to rate.
<TABLE>
<CAPTION>
1996 vs. 1995 1995 vs. 1994
----------------------------------- ---------------------------------
Changes Due To Changes Due To
Increase ---------------------- Increase --------------------
(Decrease) Rate Volume (Decrease) Rate Volume
-----------------------------------------------------------------------
(Dollars in Thousands)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in:
Income from earning assets:
Interest and fees on loans $1,891 $(1,024) $2,915 $4,572 $2,482 $2,090
Interest on securities:
Taxable 391 (179) 570 932 348 584
Nontaxable 188 (212) 400 -- (22) 22
Interest on Federal funds sold 40 (17) 57 (395) 65 (460)
Interest on interest-bearing deposits 237 (60) 297 (172) 56 (228)
------ ------- ------ ------ ------ ------
Total interest income 2,747 (1,492) 4,239 4,937 2,929 2,008
------ ------- ------ ------ ------ ------
Expense from interest-bearing liabilities:
Interest on savings and interest-
bearing demand deposits 88 (65) 153 (24) 155 (179)
Interest on time deposits 2,136 242 1,894 2,424 1,753 671
Interest on Federal funds purchased 59 (105) 164 75 78 (3)
Interest on debt 121 15 106 (133) (5) (128)
------ ------- ------ ------ ------ ------
Total interest expense 2,404 87 2,317 2,342 1,981 361
------ ------- ------ ------ ------ ------
Net interest income $ 343 $(1,579) $1,922 $2,595 $ 948 $1,647
====== ======= ====== ====== ====== ======
</TABLE>
<PAGE>
Asset/Liability Management
The following table sets forth the distribution of the repricing of the
Company's earning assets and interest-bearing liabilities as of December 31,
1996, the interest rate sensitivity gap (i.e., interest rate sensitive assets
less interest rate sensitive liabilities), the cumulative interest rate
sensitivity gap, the interest rate sensitivity gap ratio (i.e., interest rate
sensitive assets divided by interest rate sensitive liabilities) and the
cumulative sensitivity gap ratio. The table also sets forth the time periods in
which earnings assets and liabilities will mature or reprice in accordance with
their contractual terms. However, the table does not necessarily indicate the
impact of general interest rate movements on the net interest margin since the
repricing of various categories of assets and liabilities is subject to
competitive pressures and the needs of the banks' customers. In addition,
various assets and liabilities indicated as repricing within the same period may
in fact reprice at different times within such period and at different rates.
<TABLE>
<CAPTION>
After Three After One
Within Months Year After
Three Within Within Five
Months One Year Five Years Years Total
------------ ------------- ------------- ----------- -----------
(Dollars in thousands)
--------------------------------------------------------------------
Earning assets:
<S> <C> <C> <C> <C> <C>
Interest-bearing deposits $ 6,298 $ -- $ -- $ -- $ 6,298
Federal funds sold 875 -- -- -- 875
Investment securities 11,350 10,183 84,900 15,406 121,839
Loans 152,265 19,093 162,850 124 334,332
--------- --------- -------- -------- --------
170,788 29,276 247,750 15,530 463,344
--------- --------- -------- -------- --------
Interest-bearing liabilities:
Interest-bearing demand deposits 111,837 -- -- -- 111,837
Savings 28,380 -- -- -- 28,380
Certificates less than $100,000 43,201 88,178 39,872 -- 171,251
Certificates, $100,000 and over 24,660 20,608 5,079 -- 50,347
Other short-term borrowings 7,771 -- -- -- 7,771
Notes payable 280 87 579 2,449 3,395
--------- --------- -------- -------- --------
216,129 108,873 45,530 2,449 372,981
--------- --------- -------- -------- --------
Interest rate sensitivity gap $ (45,341) $ (79,597) $202,220 $ 13,081 $ 90,363
========= ========= ======== ======== ========
Cumulative interest rate sensitivity gap $ (45,341) $(124,938) $ 77,282 $ 90,363
========= ========= ======== ========
Interest rate sensitivity gap ratio 0.79 0.27 5.44 6.34
========= ========= ======== ========
Cumulative interest rate sensitivity gap ratio 0.79 0.62 1.21 1.24
========= ========= ======== ========
</TABLE>
<PAGE>
Investment Portfolio
The Company actively manages the mix of asset and liability maturities to
control the effects of changes in the general level of interest rates on net
interest income. Except for its effect on the general level of the interest
rates, inflation does not have a material impact on the Company due to the rate
variability and short-term maturities of its earnings assets. In particular,
approximately 51% of the loan portfolio is comprised of loans which mature or
reprice within one year or less. Mortgage loans, primarily with five to fifteen
year maturities, are also made on a variable rate basis with rates being
adjusted every one to five years. Additionally, 18% of the investment portfolio
matures or reprices within one year.
Types of Investments
The amortized cost and fair value of securities are as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands)
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------------- ------------------ -----------
<S> <C> <C> <C> <C>
Securities Available for Sale
December 31, 1996:
U.S. Treasury and government agencies $81,882 $ 299 $ (161) $82,020
Municipal securities 410 -- -- 410
Other securities 1,305 -- -- 1,305
Mortgage-backed securities 3,293 9 (11) 3,291
------- ------- -------- -------
$86,890 $ 308 $ (172) $87,026
======= ======= ======== =======
December 31, 1995:
U.S. Treasury and government agencies $27,441 $ 273 $ (18) $27,696
Municipal securities 90 -- -- 90
Other securities 976 -- -- 976
Mortgage-backed securities 405 4 -- 409
------- ------- -------- -------
$28,912 $ 277 $ (18) $29,171
======= ======= ======== =======
Securities Held to Maturity
December 31, 1996:
U.S. Treasury and government agencies $ 8,578 $ 83 $ (56) $ 8,605
Municipal securities 20,706 531 (51) 21,186
Other securities -- -- -- --
Mortgage-backed securities 5,529 144 (34) 5,639
------- ------- -------- -------
$34,813 $ 758 $ (141) $35,430
======= ======= ======== =======
December 31, 1995:
U.S. Treasury and government agencies $11,817 $ 193 $ (54) $11,956
Municipal securities 21,875 796 (36) 22,635
Other securities 998 6 -- 1,004
Mortgage-backed securities 7,698 266 (14) 7,950
------- ------- -------- -------
$42,388 $ 1,261 $ (104) $43,545
======= ======= ======== =======
</TABLE>
<PAGE>
Maturities
The amounts of investment securities in each category as of December 31, 1996
are shown in the following table according to maturity classifications (a) one
year or less, (b) after one year through five years, (c) after five years
through ten years and (d) after ten years.
<TABLE>
<CAPTION>
U.S. Treasury and
Other U.S. Agencies State and
and Corporations Political Subdivisions
--------------------------- --------------------------
Amount Amount
----------- -----------
(Dollars in (Dollars in
Thousands) Yield (1) Thousands) Yield (1)(2)
------------ --------- ------------ ------------
<S> <C> <C> <C> <C>
Maturity:
One year or less $ 14,797 6.17% $ 2,041 9.76%
After one year through five years 77,605 6.33 9,613 7.86
After five years through ten years 3,561 6.64 6,491 7.60
After ten years 4,760 6.45 2,971 8.26
-------- -------- ------- --------
$100,723 6.32% $21,116 8.02%
======== ======== ======= ========
</TABLE>
(1) Yields were computed using coupon interest, adding discount accretion or
subtracting premium amortization, as appropriate, on a ratable basis over
the life of each security. The weighted average yield for each maturity
range was computed using the carrying value of each security in that range.
(2) Yields on securities of state and political subdivisions are stated on a
tax equivalent basis, using a tax rate of 34%.
<PAGE>
LOAN PORTFOLIO
Types of Loans
The amount of loans outstanding (in Thousands of Dollars) at the indicated dates
is shown by the following table according to the type of loans.
<TABLE>
<CAPTION>
December 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Real estate - construction $ 21,996 $ 10,585 $ 8,144 $ 8,318 $ 9,576
Real estate - mortgage, other than farmland 184,884 166,999 139,274 156,924 138,604
Agricultural and real estate - farmland 43,858 41,893 41,345 34,911 27,690
Commercial and industrial 42,997 46,123 47,344 42,546 44,141
Consumer instalment 35,972 29,017 27,338 31,418 32,930
Other 4,625 4,544 3,990 1,696 2,925
-------- -------- -------- -------- --------
334,332 299,161 267,435 275,813 255,866
Less allowance for loan losses 5,062 5,037 4,501 4,105 2,851
-------- -------- -------- -------- --------
Total loans $329,270 $294,124 $262,934 $271,708 $253,015
======== ======== ======== ======== ========
</TABLE>
Maturities and Sensitivity to Changes in Interest Rates
Total loans after December 31, 1996 are shown in the following table according
to maturity or repricing opportunities (a) one year or less (b) after one year
through five years and (c) after five years.
(Dollars in
Thousands)
Maturity:
After one year or less $ 171,358
After one year through five years 162,850
After five years 124
---------
$ 334,332
=========
The following table summarizes loans at December 31, 1996 with due dates after
one year which (a) have predetermined interest rates and (b) have floating or
adjustable interest rates.
(Dollars in
Thousands)
Predetermined interest rates $ 94,262
Floating or adjustable interest rates 68,712
---------
$ 162,974
=========
Records are not available to present the above information in each category
listed under "Types of Loans" in the first paragraph above and cannot be
reconstructed without undue burden.
<PAGE>
Nonperforming Loans
The following table presents the aggregate amount of nonperforming loans (in
thousands of dollars) for the categories indicated:
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------
1996 1995 1994 1993 1992
-------- ---------- ----------- ---------- -------
(Dollars in Thousands)
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans accounted for on a nonaccrual basis $ 969 $ 601 $ 661 $ 580 $ 985
Instalment loans and term loans contractually
past due ninety days or more as to interest
or principal payments and still accruing 620 624 444 397 697
Loans, the terms of which have been
renegotiated to provide a reduction
or deferral of interest or principal because
of deterioration in the financial position
of the borrower -- -- -- -- --
Loans now current about which there are
serious doubts as to the ability of the
borrower to comply with present
loan repayment terms -- -- -- -- --
</TABLE>
In the opinion of management, any loans classified by regulatory authorities as
doubtful, substandard or special mention that have not been disclosed above: (a)
do not represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating results, liquidity or
capital resources, or (b) do not represent material credits about which
management is aware of any information which causes management to have serious
doubts as to the ability of such borrowers to comply with the loan repayment
terms. Any loans classified by regulatory authorities as loss have been charged
off.
Commitments and Lines of Credit
In the ordinary course of business, the Company has granted commitments to
extend credit to approved customers. Generally, these commitments to extend
credit have been granted on a temporary basis for seasonal, inventory or real
estate requirements and have been approved by the Banks' Board of Directors. The
Company has also granted commitments to approved customers for standby letters
of credit. These commitments are recorded in the financial statements when funds
are disbursed or the financial instruments become payable. The Company uses the
same credit policies for these off balance sheet commitments as they do for
financial instruments that are recorded in the consolidated financial
statements. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitment amounts expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements.
<PAGE>
Commitments and Lines of Credit (Continued)
The following is a summary of the commitments outstanding at December 31, 1996
and 1995.
1996 1995
---------- ---------
(Dollars in Thousands)
----------------------
Commitments to extend credit $ 69,223 $ 60,329
Standby letters of credit 1,482 1,511
Bank card commitments 13,960 1,992
$ 84,665 $ 73,832
Summary of Loan Loss Experience
The provision for possible loan losses is created by direct charges to
operations. Losses on loans are charged against the allowance in the period in
which such loans, in management's opinion, become uncollectible. Recoveries
during the period are credited to this allowance. The factors that influence
management's judgment in determining the amount charged to operating expense are
past loan experience, composition of the loan portfolio, evaluation of possible
future losses, current economic conditions and other relevant factors. The
Company's allowance for loan losses was approximately $5,062,000 at December 31,
1996, representing 1.51% of year and total loans outstanding, compared with
$5,037,000 at December 31, 1995, which represented 1.68% of year end total loans
outstanding. The allowance for loan losses is reviewed continuously based on
management's evaluation of current risk characteristics of the loan portfolio,
as well as the impact of prevailing expected economic business conditions.
Management considers the allowance for loan losses adequate to cover possible
loan losses on the loans outstanding.
Allocation for Allowance for Loan Losses
The following table sets forth the breakdown of the allowance for loan losses by
loan category for the periods indicated. Management believes the allowance can
be allocated only on an approximate basis. The allocation of the allowance to
each category is not necessarily indicative of future losses and does not
restrict the use of the allowance to absorb losses in any other category.
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------
1996 1995
----------------------- ----------------------
Percent of Percent of
Loans in Loans in
Category to Category to
Amount Total Loans Amount Total Loans
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Commercial, financial, industrial and agricultural $1,920 26% $2,123 30%
Real estate 309 62 378 59
Consumer 1,568 12 1,277 11
Unallocated 1,265 -- 1,259 --
------ --- ------ ---
$5,062 100% $5,037 100%
====== === ====== ===
</TABLE>
<PAGE>
Summary of Loan Loss Experience:
The following table presents an analysis of the Company's loan loss experience
for the periods indicated:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- -------- -------- -------- --------
(Dollars in Thousands)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average amount of loans outstanding $315,467 $286,320 $263,437 $263,531 $245,080
======== ======== ======== ======== ========
Balance of reserve for possible loan losses
at beginning of period $ 5,037 $ 4,501 $ 4,105 $ 2,851 $ 2,373
-------- -------- -------- -------- --------
Charge-offs:
Commercial, financial and agricultural 146 150 418 420 960
Real estate - mortgage 17 286 24 16 34
Consumer 409 62 255 330 380
-------- -------- -------- -------- --------
572 498 697 766 1,374
-------- -------- -------- -------- --------
Recoveries:
Commercial, financial and agricultural 63 178 193 195 252
Real estate - mortgage 23 13 45 17 84
Consumer 98 90 82 75 100
-------- -------- -------- -------- --------
184 281 320 287 436
-------- -------- -------- -------- --------
Net charge-offs 388 217 377 479 938
-------- -------- -------- -------- --------
Additions to reserve charged to operating
expenses 413 753 773 1,733 1,416
-------- -------- -------- -------- --------
Balance of reserve for possible
loan losses $ 5,062 $ 5,037 $ 4,501 $ 4,105 $ 2,851
======== ======== ======== ======== ========
Ratio of net loan charge-offs to
average loans 0.12% 0.08% 0.14% 0.18% 0.38%
======== ======== ======== ======== ========
</TABLE>
<PAGE>
Deposits
Average amount of deposits and average rate paid thereon, classified as to
noninterest-bearing demand deposits, interest-bearing demand and savings
deposits and time deposits for the period indicated are presented below.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1996 1995
-------------------------- -------------------------
Amount Rate Amount Rate
----------- ----------- ------------ ---------
(Dollars in Thousands)
-----------------------------------------------------
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits $ 79,985 --% $ 76,876 --%
Interest-bearing demand and savings deposits 131,144 2.71 125,583 2.76
Time deposits 193,536 5.54 158,570 5.42
--------- ---------
Total deposits $ 404,665 $ 361,029
========= =========
</TABLE>
The amounts of time certificates of deposit issued in amounts of $100,000 or
more as of December 31, 1996, are shown below by category, which is based on
time remaining until maturity of (a) three months or less, (b) over three months
through twelve months and (c) over twelve months.
(Dollars in
Thousands)
-----------
Three months or less $ 24,680
Over three months through twelve months 20,608
Over twelve months 5,079
---------
Total $ 50,347
=========
Return on Assets and Shareholders' Equity
The following rate of return information for the periods indicated is presented
below.
Year Ended December 31,
-----------------------------
1996 1995 1994
---- ---- ----
Return on assets (1) 1.63% 1.67% 1.33%
Return on equity (2) 16.72 17.03 15.15
Dividend payout ratio (3) 26.42 21.23 21.74
Equity to assets ratio (4) 9.75 9.81 8.79
(1) Net income divided by average total assets
(2) Net income divided by average equity
(3) Dividends declared per share divided by net income per share
(4) Average equity divided by average total assets
<PAGE>
Item 2. Properties
The Company's main banking branch and its executive offices are located at
333 West Broad Street, Albany, Georgia. The Company also has the following
branches in Albany: a Third Avenue Branch at 1522 Third Avenue; an East Albany
Branch at 2415 Sylvester Road; a Dawson Road Branch at 2616 Dawson Road; a South
Slappey Branch at 1720 South Slappey Boulevard; and a North Slappey Branch at
2322 North Slappey Boulevard. The Company also has an office at 323 Pine Street
in Albany which houses its accounting division and First State Mortgage. The
Company's other branches are located in Bainbridge, Georgia at 103 N. West
Street and 1200 E. Shotwell, Street; in Cuthbert, Georgia at 302 Broad Street;
in Fort Gaines, Georgia at 215 S. Washington Street; in Leesburg, Georgia at 105
Walnut Avenue South; and in Cordele, Georgia at 123 South 7th Street and 1216
East 16th Street. The Company owns all of its properties, except its locations
at 323 Pine Street and in St. Mary's which are leased.
Item 3. Legal Proceedings
There are no material pending proceedings to which the Company is a party
or of which any of its properties are subject; nor are there material
proceedings known to the Company to be contemplated by any governmental
authority; nor are there material proceedings known to the Company, pending or
contemplated, in which any director, officer or affiliate or any principal
security holder of the Company, or any associate of the foregoing, is a party or
has an interest adverse to the Company.
On December 13, 1993, Frederick D. Ledbetter filed suit against FSB Albany
in the U.S. District Court, Albany Division. The suit alleged certain fiduciary
violations with respect to a revocable management trust established by Mr.
Ledbetter at FSB Albany. The suit was based on dissatisfaction with a number of
actions taken by the Board of Directors of the Company, including authorization
of the stock offering which commenced December 2, 1993 (Count One), the failure
of the Board of Directors to take affirmative action to sell the Company to a
third party (Count Two) and the compensation of senior management of the Company
(Count Three). The suit was later amended to add a fourth claim that the Bank
improperly resigned as trustee of plaintiff's trust (Count Four). On March 15,
1995, the district court granted to FSB Albany summary judgment and complete
dismissal of all claims. Mr. Ledbetter appealed the district court's judgment to
the United States Court of Appeals for the Eleventh Circuit. On June 25, 1996,
the Eleventh Circuit reversed the trial court's grant of summary judgment and
remanded the case for trial before a jury. The suit was tried before a jury
starting Tuesday, February 25, 1997 in U.S. District Court in Albany, Georgia.
At the conclusion of the trial, the Court decided in favor of the plaintiff as a
matter of law as to Count One, but left to the jury whether any damages should
be awarded to plaintiff under Count One. On March 6, 1997, the jury returned its
verdict in which it found the defendant not liable on Counts Two and Three of
the suit and liable on Count Four of the suit. The jury awarded no compensatory
damages under the two counts in which the jury and the Court found for
plaintiff, and awarded $100 in nominal damages and $42,000 in attorneys' fees.
In a matter related to the Ledbetter litigation discussed above, the Board
of Directors of FSB Albany and First State received a derivative demand letter
dated October 4, 1996, from Sarah Haley Hixon, a shareholder from Greenville,
South Carolina. Ms. Hixon, through her attorneys, demanded that an action be
filed against the directors of FSB Albany to indemnify FSB Albany for any
liabilities which might arise from the Ledbetter litigation. In accordance with
Georgia law, FSB Albany's Board established an independent committee to
determine whether the demand was in the best interests of FSB
-14-
<PAGE>
Albany and its shareholders. The Committee has not made any recommendations to
the Board as of this date, nor has any litigation been filed in connection with
Ms. Hixon's demand.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The response to this item is included in the Company's Annual Report to
Shareholders under the heading, "Market Price and Dividend Information" at page
9, and is hereby incorporated by reference.
Item 6. Selected Financial Data
The response to this item is included in the Company's Annual Report to
Shareholders under the heading, "Consolidated Selected Financial Data" at page
11, and is hereby incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The response to this item is included in the Company's Annual Report to
Shareholders under the heading, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" at pages 16 through 22, and is
hereby incorporated by reference.
Item 8. Financial Statements and Supplementary Data
The following financial statements are included in the Company's Annual
Report to Shareholders at pages 24 through 55, and are hereby incorporated by
reference.
Consolidated financial statements:
Independent Auditor's Report
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Income - Years ended December 31, 1996,
1995 and 1994 Consolidated Statements of Stockholders' Equity - Years
ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years ended December 31, 1996,
1995 and 1994
Notes to Consolidated Financial Statements
Item 9. Changes in Disagreements with Accountants on Accounting and Financial
Disclosure
None.
-15-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The responses to this item are included in the Company's Proxy Statement
for the Annual Meeting of Shareholders to be held on April 28, 1997 under the
headings "Proposal 1 - Election of Directors - Nominees and Continuing
Directors" at pages 2 through 4, "Executive Officers" at page 5, and "Compliance
with Section 16(a) of the Securities Exchange Act of 1934" at page 23.
Item 11. Executive Compensation
The responses to this item are included in the Company's Proxy Statement
for the Annual Meeting of Shareholders to be held on April 28, 1997 under the
headings "Executive Compensation" at pages 11 through 19, "Board Compensation
Committee Report on Executive Compensation" at pages 6 through 9, and
"Performance Graph" at page 10.
Item 12. Ownership of Certain Beneficial Owners and Management
The responses to this item are included in the Company's Proxy Statement
for the Annual Meeting of Shareholders to be held on April 28, 1997 under the
heading "Beneficial Ownership of Common Stock" at pages 19 through 23.
Item 13. Certain Relationships and Related Transactions
The responses to this item are included in the Company's Proxy Statement
for the Annual Meeting of Shareholders to be held on April 28, 1997 under the
heading "Indebtedness of Directors and Officers" at page 6.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Items filed as part of this report:
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Income for Years Ended December 31, 1996,
1995, and 1994
Consolidated Statements of Stockholders' Equity for Years Ended
December 31, 1996, 1995, and 1994
Consolidated Statements of Cash Flows for Years Ended December 31,
1996, 1995, and 1994
Notes to Consolidated Financial Statements
-16-
<PAGE>
(b) Reports on Form 8-K:
None.
(c) Exhibits Required by Item 601 of Regulation S-K
Exhibit
Number Description
3.1 Articles of Incorporation of the Registrant, as amended
through August 13, 1996
3.2 (1) Bylaws of the Registrant
*10.1 (1) First State Bank & Trust Company Supplemental
Executive Retirement Plan, dated June 1, 1990, as amended
as of March 30, 1992
*10.2 (1) Form of Salary Continuation Agreement between the
Registrant and certain officers of the Registrant (Flatt,
Lee and Wren) entered into in December 1991
*10.3 Employment Agreement, dated May 8, 1996, between Douglas
E. Wren and the Registrant
*10.4 Employment Agreement, dated May 8, 1996, between of James
L. Flatt and the Registrant
*10.5 Employment Agreement, dated May 8, 1996, between Robert E.
Lee and the Registrant
*10.6 First State Corporation 1997 Stock Incentive Plan and
related form of Incentive Stock Option Award Agreement
*10.7 (1) First State Corporation 1993 Stock Incentive Plan and
related form of Non-Qualified Stock Option Award and form
of Restricted Stock Award Agreement
*10.8 (1) First State Corporation Outside Directors Stock Option
Plan, dated August 30, 1993 and related form of
Non-Qualified Stock Option Award
*10.9 (1) Senior Management Incentive Compensation Plan of First
State Corporation, as amended August 30, 1993
*10.10 Purchase and Assumption Agreement, dated March 19, 1996,
between First State Bank & Trust Company and First Union
National Bank of Georgia
-17-
<PAGE>
*10.11 (1) Adoption Agreement for the Nonqualified Deferred
Compensation Plan for the Directors of the Citizens and
Trust Company, dated June 28, 1982
10.12 Revolving Credit and Term Loan Agreement, dated October
15, 1996, between First State Corporation and SunTrust
Bank, Atlanta and the related Note and Stock Pledge and
Security Agreement
11.1 Statement re Computation of Per Share Earnings
13.1 Financial Statements in the Company's 1996 Annual Report
to Shareholders (incorporated by reference in Item 8 of
this Report). Except with respect to those portions
specifically incorporated by reference into this Report,
the Company's 1996 Annual Report to Shareholders is not
deemed to be filed as a part of this Report.
21.1 (1) Subsidiaries of the Registrant
23.1 Consent of Mauldin & Jenkins, LLC
24.1 Power of attorney relating to this Form 10-K is set forth
on the signature pages to this Form 10-K
27.1 Financial Data Schedule (for SEC use only)
- ----------
(1) Incorporated herein by reference to Exhibit of the same number in the
Company's Registration Statement on Form S-1 (SEC File No. 33-71886).
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
(d) Additional financial statements required by Regulations S-X:
None.
-18-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), the Registrant has duly caused this
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST STATE CORPORATION
By: /s/ Morgan G. Murphy
-------------------------------
Morgan G. Murphy
Chairman of the Board and
Chief Executive Officer
Date: February 24, 1997
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Morgan G. Murphy and Douglas E. Wren, or either
of them, as his attorneys-in-fact, acting with full power of substitution for
him in his name, place and stead, in any and all capacities, to sign any
amendments to this Form 10-K and to file the same, with exhibits thereto, and
any other documents in connection therewith, with the Securities and Exchange
Commission and hereby ratifies and confirms all that said attorneys-in-fact, or
their substitute or substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Exchange Act, this Form 10-K has been
signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Morgan G. Murphy Chairman of the Board and February 24, 1997
- ---------------------------- Chief Executive Officer*
Morgan G. Murphy
/s/ Temp S. Davis, III Director February 24, 1997
- ----------------------------
Temp S. Davis, III
/s/ James D. Deal, Jr. Director February 24, 1997
- ----------------------------
James D. Deal, Jr.
-19-
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Henry M. Goodyear, Jr. Director February 24, 1997
- ----------------------------
Henry M. Goodyear, Jr.
____________________________ Director _________________
James Griffin, Jr.
/s/ G. William Hughey, III Director February 24, 1997
- ----------------------------
G. William Hughey, III
/s/ A. Collins Knight, III Director February 24, 1997
- ----------------------------
A. Collins Knight, III
/s/ John Temple Phillips, III Director February 24, 1997
- ------------------------------
John Temple Phillips, III
/s/ Joseph B. Powell, Jr. Director February 24, 1997
- ----------------------------
Joseph B. Powell, Jr.
/s/ Earle P. Spurlock Director February 24, 1997
- ----------------------------
Earle P. Spurlock
/s/ William L. Walden Director February 24, 1997
- ----------------------------
William L. Walden
/s/ Vernon H. Warren Director February 24, 1997
- ----------------------------
Vernon H. Warren
/s/ Michael J. Wetherbee Director February 24, 1997
- ----------------------------
Michael J. Wetherbee
-20-
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Douglas E. Wren Director, President and February 24, 1997
- ----------------------------
Douglas E. Wren Chief Operating Officer
/s/ Robert E. Lee Senior Vice President and February 24, 1997
- ---------------------------- Chief Financial Officer**
Robert E. Lee
* Principal executive officer
** Principal financial and accounting officer
-21-
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Description Number
3.1 Articles of Incorporation of the Registrant, as amended
through August 13, 1996 _____
3.2 (1) Bylaws of the Registrant N/A
*10.1 (1) First State Bank & Trust Company Supplemental Executive
Retirement Plan, dated June 1, 1990, as amended as of
March 30, 1992 N/A
*10.2 (1) Form of Salary Continuation Agreement between the
Registrant and certain officers of the Registrant (Flatt,
Lee and Wren) entered into in December 1991 N/A
*10.3 Employment Agreement, dated May 8, 1996, between Douglas
E. Wren and the Registrant _____
*10.4 Employment Agreement, dated May 8, 1996, between of James
L. Flatt and the Registrant _____
*10.5 Employment Agreement, dated May 8, 1996, between Robert
E. Lee and the Registrant _____
*10.6 First State Corporation 1997 Stock Incentive Plan and
related form of Incentive Stock Option Award Agreement _____
*10.7 (1) First State Corporation 1993 Stock Incentive Plan and
related form of Non-Qualified Stock Option Award and form
of Restricted Stock Award Agreement N/A
*10.8 (1) First State Corporation Outside Directors Stock Option
Plan, dated August 30, 1993 and related form of
Non-Qualified Stock Option Award N/A
*10.9 (1) Senior Management Incentive Compensation Plan of First
State Corporation, as amended August 30, 1993 N/A
*10.10 Purchase and Assumption Agreement, dated March 19, 1996,
between First State Bank & Trust Company and First Union
National Bank of Georgia _____
-22-
<PAGE>
*10.11 (1) Adoption Agreement for the Nonqualified Deferred
Compensation Plan for the Directors of the Citizens and
Trust Company, dated June 28, 1982 N/A
10.12 Revolving Credit and Term Loan Agreement, dated October
15, 1996, between First State Corporation and SunTrust
Bank, Atlanta and the related Note and Stock Pledge and
Security Agreement _____
11.1 Statement re Computation of Per Share Earnings _____
13.1 Financial Statements in the Company's 1996 Annual Report
to Shareholders (incorporated by reference in Item 8 of
this Report). Except with respect to those portions
specifically incorporated by reference into this Report,
the Company's 1996 Annual Report to Shareholders is not
deemed to be filed as a part of this Report. _____
21.1 (1) Subsidiaries of the Registrant N/A
23.1 Consent of Mauldin & Jenkins, LLC
24.1 Power of attorney relating to this Form 10-K is set forth
on the signature pages to this Form 10-K _____
27.1 Financial Data Schedule
- ----------
(1) Incorporated herein by reference to Exhibit of the same number in the
Company's Registration Statement on Form S-1 (SEC File No. 33-71886).
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of Form 10-K.
-23-
ARTICLES OF INCORPORATION EXHIBIT 3.1
I.
The name of the corporation is:
FIRST STATE CORPORATION
II.
The Corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
III.
The Corporation shall have perpetual duration.
IV.
The Corporation is organized for the purpose of doing any and all things
which a corporation may now or hereafter be authorized to do under the Georgia
Business Corporation Code or under any act amendatory thereof, supplemental
thereto, or substituted therefor, including, but not by way of limitation, the
following specific purposes:
(a) To act as a holding company and to acquire, own, hold, sell, exchange,
assign, transfer, create security interests in, pledge or otherwise dispose of
shares, or voting trust certificates or depositary receipts for shares, of
capital stock of, or any bonds, notes, debentures or other evidences of
indebtedness, options, warrants or other securities issued by, other businesses
of any lawful character, including, but not limited to, banks, insurance
agencies and companies, mortgage loan and servicing companies, trust companies,
data processing companies, courier or messenger companies and any other
businesses providing goods or services related to banking; and
(b) To operate insurance agencies, to make and acquire mortgage loans and
render mortgage loan services, to provide data processing and management
services, to provide factoring
<PAGE>
services, to provide courier or messenger services and to provide other goods or
services related to banking.
To do each and everything necessary, suitable or proper for the
accomplishment of any of the purposes or the attaintment of any one or more of
the objects herein enumerated, or which shall at any time appear conducive to or
expedient for the protection or benefit of the Corporation.
IN FURTHERANCE OF AND NOT IN LIMITATION of the general powers conferred by
the laws of the State of Georgia and the objects and purposes herein set forth,
it is expressly provided that to such extent as a corporation organized under
the Georgia Business Corporation Code may now or hereafter lawfully do, the
Corporation shall have the power to do, either as principal or agent and either
alone or in connection with other corporations, firms or individuals, all and
everything necessary, suitable, convenient or proper for, or in connection with,
or incident to, the accomplishment of any of the purposes or the attainment of
any one or more of the objects herein enumerated, or designed directly or
indirectly to promote the interests of the Corporation or to enhance the value
of its properties; and in general to do any and all things and exercise any and
all powers, rights and privileges which a corporation may now or hereafter be
authorized to do or to exercise under the Georgia Business Corporation Code or
under any act amendatory thereof, supplemental thereto or substituted therefor.
The foregoing provisions of this Article IV shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers herein specified shall, except when
otherwise provided in this Article IV, be in no wise limited or restricted by
reference to, or inference from, the terms of any provision of this or any other
Article of these Articles of Incorporation.
-2-
<PAGE>
V.
The total number of shares of capital stock which the Corporation shall
have authority to issue is 1,100,000 shares, consisting of 1,000,000 shares of
Common Stock of $10.00 par value per share and 100,000 shares of Preferred Stock
of $50.00 par value per share.
The Corporation may purchase its own shares of capital stock out of
unreserved and unrestricted earned surplus and capital surplus available
therefor and as otherwise provided by law.
The voting powers, designations, preferences and relative rights of the
classes of stock of the Corporation which are fixed by these Articles of
Incorporation and the authority expressly vested in the Board of Directors to
fix, by resolution or resolutions providing for the issue of Preferred Stock,
the voting powers (if any), designations, preferences and relative rights of the
shares of Preferred Stock which are not fixed by these Articles of
Incorporation, are as follows:
(1) Subject to the provisions of any applicable law, or of the By-Laws of
the Corporation as from time to time amended, with respect to the fixing of a
record date for the determination of shareholders entitled to vote and except as
otherwise provided by any applicable law or by the resolution or resolutions of
the Board of Directors providing for the issue of any series of Preferred Stock,
the holders of outstanding shares of Common Stock shall have and possess
exclusive voting power and rights for the election of directors and for all
other purposes, with each holder of record of shares of Common Stock being
entitled to one vote for each share of Common Stock standing in his name on the
books of the Corporation in the election of directors and on all other matters
presented to the shareholders.
(2) Except as otherwise provided by applicable law, or by the resolution or
resolutions of the Board of Directors providing for the issue of any series of
Preferred Stock, the
-3-
<PAGE>
holders of shares of Preferred Stock, as such holders, (i) shall not have any
right to vote, and are hereby specifically excluded from the right to vote, in
the election of directors or for any other purposes, and (ii) shall not be
entitled to notice of any meeting of shareholders.
(3) Before any sum of sums shall be set aside or applied to the purchase of
any outstanding Common Stock, and before any dividend shall be declared or paid
or any distribution ordered or made upon the Common Stock (other than a dividend
payable in shares of Common Stock), the Corporation shall have complied with the
dividend and sinking fund requirements (if any) set forth in any resolution or
resolutions of the Board of Directors with respect to the issue of any series of
Preferred Stock of which any shares shall at the time be outstanding.
(4) Subject to the provisions of Paragraph 3 of this Article V, and to such
other limitations as may be specified in any resolution or resolutions of the
Board of Directors providing for the issue of any series of Preferred Stock, the
holders of Common Stock shall be entitled, to the exclusion of the holders of
Preferred Stock of any and all series, to receive such dividends as may be
declared by the Board of Directors from time to time.
(5) In the event of any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of Preferred Stock of the full amount to which any series of
the Preferred Stock is entitled as set forth in the resolution or resolutions of
the Board of Directors providing for the issue thereof, the holders of Common
Stock shall be entitled, to the exclusion of the holders of Preferred Stock of
any and all series, to share in all remaining assets of the Corporation
available for distribution to its shareholders ratably according to the number
of shares of Common Stock held by them. Neither the merger nor consolidation of
the Corporation with or into any other corporation or corporations, nor the
merger or consolidation of any other corporation or corporations into or
-4-
<PAGE>
with the Corporation, nor the sale, transfer, mortgage, pledge or lease by the
Corporation of all of any part of its assets shall be deemed to be a
liquidation, dissolution or winding up of the Corporation.
(6) The Preferred Stock may be issued from time to time in one or more
series of any number of shares, except that the aggregate number of shares
issued and not cancelled of any and all such series shall not exceed the total
number of shares of Preferred Stock hereinabove authorized. Each Series of
Preferred Stock shall be distinctively designated by number, letter or
descriptive words.
(7) Authority is hereby expressly granted to and vested in the Board of
Directors to issue the Preferred Stock at any time, or from time to time, as
Preferred Stock of any one or more series, and, in connection with the
establishment of each such series, to fix by resolution or resolutions providing
for the issue of the shares thereof the voting powers, if any, and the
designation, preferences and relative rights of each such series of Preferred
Stock to the full extent now or hereafter permitted by these Articles of
Incorporation and the laws of the State of Georgia, including, without limiting
the generality of the foregoing, all of the following matters which may vary
between each series:
(a) The distinctive designation of such series and the number of shares
which constitute such series, which number may be increased or decreased either
before or subsequent to the issuance of any shares of such series (but not below
the number of shares of such series then outstanding), from time to time by
action of the Board of Directors;
(b) The dividend rate of such series, the dates of payment thereof, and any
limitations, restrictions, or conditions on the payment of dividends, including
whether dividends
-5-
<PAGE>
shall be cumulative and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on the shares of each
series;
(c) The price or prices at which, and the terms, times and conditions on
which, the shares of such series may be redeemed at the option of the
Corporation or at the option of the holder of such shares;
(d) The amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment to the
holders of shares of each series;
(e) Whether or not the shares of such series shall be entitled to the
benefit of a purchase, retirement or sinking fund to be applied to the
redemption or purchase of such series, and if so entitled, the amount of such
fund and the manner of its application, including the price or prices at which
the shares of such series may be redeemed or purchased through the application
of such fund;
(f) Whether or not the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the
Corporation, or the shares of any other series of Preferred Stock, and, if made
as convertible or exchangeable, the conversion price or prices, or the rate or
rates of exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such conversion
or exchange;
(g) Whether or not the shares of such series shall have any voting right,
and, if voting rights are so granted, the extent of such voting rights and the
terms and conditions under which such voting rights may be exercised;
-6-
<PAGE>
(h) Whether or not the issue of any additional shares of such series or of
any future series in addition to such series shall be subject to restrictions in
addition to the restrictions, if any, on the issue of additional shares imposed
in the resolution or resolutions fixing the terms of any outstanding series of
Preferred Stock theretofore issued pursuant to this Paragraph 7 and, if subject
to additional restrictions, the extent of such additional restrictions; and
(i) Whether or not the shares of such series shall be entitled to the
benefit of limitations restricting the purchase of, the payment of dividends on,
or the making of other distributions in respect of stock of any class of the
Corporation, and the terms of any such restrictions; provided, however, that
such restrictions shall not include any prohibition on the payment of dividends
or with respect to distributions in the event of voluntary or involuntary
liquidation established for any outstanding series of Preferred Stock
theretofore issued.
The Board of Directors may from time to time distribute to shareholders out
of capital surplus of the Corporation a portion of its assets, in cash or in
property.
VI.
None of the holders of any capital stock of the Corporation of any kind,
class or series now or hereafter authorized shall have preemptive rights with
respect to any shares of capital stock of the Corporation of any kind, class or
series now or hereafter authorized.
VII.
The initial registered office of the Corporation shall be at 333 Broad
Avenue, Albany, Daugherty County, Georgia 31702. The initial registered agent of
the Corporation shall be Morgan G. Murphy.
-7-
<PAGE>
VIII.
The sole, initial Director shall be Morgan G. Murphy, 333 Broad Avenue,
Albany, Georgia 31702.
IX.
The name and address of the incorporator is:
H. Holcombe Perry, Jr.
Perry, Walters, Lippitt & Custer
409 North Jackson Street
Albany, Georgia 31702
X.
The Corporation shall not commence business until it shall have received
not less than $500 in payment for the issuance of shares of its Common Stock.
IN WITNESS WHEREOF, the undersigned executed these Articles of
Incorporation.
/s/ H. Holcombe Perry Jr.
-------------------------
Incorporator
-8-
<PAGE>
FIRST STATE CORPORATION
ARTICLES OF AMENDMENT
ONE
The name of the corporation is FIRST STATE CORPORATION, a corporation
organized and existing under the laws of the State of Georgia.
TWO
The shareholders have heretofore adopted the following amendments to the
Articles of Incorporation.
AMENDMENT ONE
The Articles of Incorporation of First State Corporation are hereby amended
by inserting the following new Article XI immediately after Article X:
"ARTICLE XI
A. (1) Subject to the provisions of any series of Preferred Stock which may at
the time be outstanding and in addition to any affirmative vote required by law
or these Articles of Incorporation, and except as otherwise expressly provided
in Paragraph B. of this Article:
(a) any merger or consolidation of the Corporation or any Subsidiary (as
defined below) with any Interested Shareholder (as defined below) or any other
corporation (whether or not itself an Interested Shareholder) which is, or after
such merger or consolidation would be, an Affiliate (as defined below) of any
Interested Shareholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Shareholder, or any Affiliate of any Interested Shareholder, of any
assets of the Corporation or any
<PAGE>
Subsidiary having an aggregate Fair Market Value (as defined below) of $200,000
or more; or
(c) the issuance or transfer by the Corporation or any Subsidiary (in one
transaction or a series of transactions) of any securities of the Corporation or
any Subsidiary to any Interested Shareholder, or any Affiliate of any Interested
Shareholder, in exchange for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market Value of $200,000 or more;
or
(d) the adoption of any plan or proposal for the liquidation or dissolution
of the Corporation proposed by or on behalf of any Interested Shareholder or any
Affiliate of any Interested Shareholder; or
(e) any reclassification of securities (including any reverse stock split)
or recapitalization of the Corporation or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction (whether or
not with or into or otherwise involving an Interested Shareholder) which has the
effect, directly or indirectly, or increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by any
Interested Shareholder or any Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least eighty (80%)
percent of the then outstanding shares of common stock of the Corporation,
including the affirmative vote of the holders of at least eighty (80%) percent
of the then outstanding shares of common stock of the Corporation other than
those beneficially owned by such Interested Shareholder. Such affirmative vote
shall be required notwithstanding the fact that no vote may be required, or that
a lesser percentage may be specified, by law or in any agreement.
-2-
<PAGE>
(2) The term "Business Combination," as used in this Article XI,means any
transaction which is referred to in any one or more of clauses (a) through (e)
of subparagraph (1) of this Paragraph A.
B. The provisions of Paragraph A of this Article XI shall not be applicable to
any Business Combination, and such Business Combination shall require only such
affirmative vote as is required by law and by any other provision of these
Articles of Incorporation, if all of the conditions specified in either of the
following subparagraphs (1) or (2) are met.
(1) The Business Combination has been approved by a majority of the
Continuing Directors (as defined below); provided that such approval shall be
effective only if obtained at a meeting at which a Continuing Director Quorum
(as defined below) is present; or
(2) All of the following conditions have been met:
(a) The consideration to be received per share by holders of shares of
outstanding voting stock shall be in cash or in the same form as the
consideration given by the Interested Shareholder in acquiring shares of
voting stock within the two-year period ending on and including the date on
which the Interested Shareholder became an Interested Shareholder (the
"Determination Date"). If, within such two-year period, the Interested
Shareholder paid for shares of voting stock with different forms of
consideration, the form of consideration to be received per share by
holders of shares of outstanding voting stock shall be either cash or the
form of consideration used to acquire the largest number of shares of
voting stock acquired by the Interested Shareholder within such two-year
period. If, within such two-year period, the Interested Shareholder did not
purchase shares of voting stock, the consideration to be received per share
by holders of shares of voting stock in the Business Combination shall be
cash.
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(b) The aggregate amount of the cash and the Fair Market Value, as of
the date of the consummation of the Business Combination (the "Consummation
Date"), or the consideration other than cash to be received per share by
holders of voting stock in such Business Combination shall be at least
equal to the highest of the following:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Shareholder for any shares of voting stock
acquired by it within the two-year period immediately prior to the
date of the first public announcement of the proposal of the Business
Combination (the "Announcement Date") or in the transaction in which
the Interested Shareholder became an Interested Shareholder, whichever
is higher; or
(ii) the highest Fair Market Value pr share of voting stock for
the six-month period ending on the Announcement Date or the six-month
period ending on the Determination Date, whichever period produces the
higher value; or
(iii) (if applicable) the price per share equal to the Fair
Market Value per share of voting stock determined pursuant to
subparagraph (2)(b)(ii) above, multiplied by the ratio of (A) the
highest per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested Shareholder
for any shares of voting stock of the Corporation acquired by it
within the two year period immediately prior to the Announcement Date
to (B) the Fair Market Value per share of voting stock of the
Corporation on the first day in such two year period on which the
Interested Shareholder acquired any shares of voting stock.
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(c) The aggregate amount of the cash and the Fair Market Value, as of
the Consummation Date, of the consideration other than cash to be received
per share by holders of shares of any class or series of capital stock
other than voting stock shall be at least equal to the highest of the
following (whether or not the Interested Shareholder has previously
acquired any shares of a particular class or series of stock other than
voting stock):
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Shareholder for any shares of such class or
series of capital stock acquired by it within the two year period
immediately prior to the Announcement Date or in the transaction in
which it became an Interested Shareholder, whichever is higher; or
(ii) the highest Fair Market Value per share of such class or
series of capital stock for the one year period ending on the
Announcement Date or the Determination Date, whichever is higher; or
(iii) the highest preferential amount per share to which the
holders of shares of such class or series of capital stock are
entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
(d) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination: (i)
except as approved by a majority of the Continuing Directors, there shall
have been no failure to declare and pay at the regular date therefor any
dividends (whether or not cumulative) on any outstanding preferred stock of
the Corporation; (ii) there shall have been (A) no reduction in the annual
rate of dividends paid on voting stock (except as necessary to reflect any
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subdivision of the voting stock), except as approved by a majority of the
Continuing Directors, and (B) an increase in such annual rate of dividends
as necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of voting
stock, unless the failure to increase such annual rate is approved by a
majority of the Continuing Directors; and (iii) such Interested Shareholder
shall have not become the beneficial owner of any additional shares of
voting stock except as part of the transaction which results in such
Interested Shareholders becoming an Interested Shareholder.
(e) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder has not received the benefit,
directly or indirectly (except proportionately as a shareholder of the
Corporation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages provided by
the Corporation, whether in anticipation of, or in connection with, such
Business Combination or otherwise.
(f) A proxy statement describing the proposed Business Combination and
complying with the requirements of the Securities Exchange Act of 1934 and
the rules and regulations thereunder shall be mailed to all shareholders of
the Corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy statement is required to be mailed
pursuant to such Act or subsequent provisions to such Act).
C. For the purposes of this Article XI:
(1) The term "person" shall mean any individual, firm, partnership,
joint venture, corporation or other entity.
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(2) The term "Interested Shareholder" shall mean any person (other than the
Corporation or any Subsidiary, any employee benefit plan of the Corporation or
any Subsidiary, or any trustee of or fiduciary with respect to any such plan
when acting in such capacity, any Continuing Director and any person which would
have been an Interested Shareholder on January 28, 1985, if this Article XI had
been in effect on such date) who or which:
(a) is or was within two years prior to or after the time of proposing
the Business Combination in question the beneficial owner, directly or
indirectly, of at least twenty (20%) percent of outstanding voting stock;
or
(b) is an Affiliate of the Corporation and at any time within the two
year period immediately prior to the date of the determination was the
beneficial owner, directly or indirectly, of at least twenty (20%) percent
of the outstanding voting stock; or
(c) is an assignee of or has otherwise succeeded to any shares of
voting stock which were at any time within the two year period immediately
prior to the date of determination beneficially owned by any Interested
Shareholder, if such assignment or succession has 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 and the rules and
regulations thereunder.
(3) A person shall be a "beneficial owner" of anyvoting stock which such
person or any Affiliate or Associate (as hereinafter defined) of such person
beneficially owns, directly or indirectly, within the meaning of such term as
used in Regulation 13D-G of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on January 28, 1985, except that a
person shall be deemed to own beneficially any securities which such person has
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any right or option to acquire at any time whether or not within 60 days and
whether or not subject to the satisfaction of conditions precedent.
(4) The terms "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulation under
the Securities Exchange Act of 1934, as in effect on January 28, 1985; provided,
that the term "Associate" shall also include any person (other than any person
which would have been an Interested Shareholder on January 28, 1985, if the
provisions of this Article XI had been in effect on such date) which is a member
of any "group" (as such term is used in Section 13(d) of the Securities Exchange
Act of 1934 and Regulation 13D-G thereunder as in effect on February 1, 1985) of
which the Interested Shareholder in question or any Affiliate of such Interested
Shareholder is a member.
(5) The term "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Shareholder set forth in Subparagraph (2) of this Paragraph C, the term
"Subsidiary" shall mean only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the Corporation.
(6) The term "Continuing Director" means any member of the Board of
Directors of the Corporation (the "Board") who is unaffiliated with the
Interested Shareholder and was a member of the Board prior to the time that the
Interested Shareholder became an Interested Shareholder and any successor of a
Continuing Director who is unaffiliated with the Interested Shareholder and is
recommended to succeed a Continuing Director by a majority of Continuing
Directors then on the Board.
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<PAGE>
(7) The term "Fair Market Value" means, as of any date, the fair market
value of such stock or other property on such date as determined by the Board of
Directors of the Corporation in good faith.
(8) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used in
Subparagraphs (2)(b) and (2)(c) of Paragraph B. of this Article XI shall include
the shares of voting stock and the shares of any other class of outstanding
stock, or either, retained by the holders of such shares.
D. A majority of the Continuing Directors shall have the power to determine, on
the basis of information known to them after reasonable inquiry, all facts
necessary to determine compliance with this Article XI, including, without
limitation, (1) whether a person is an Interested Shareholder, (2) the number of
shares of voting or other stock beneficially owned by any person, (3) whether a
person in an Affiliate or Associate of another and (4) whether the applicable
conditions set forth in Subparagraph (2) of Paragraph B. have been met with
respect to any Business Combination.
AMENDMENT TWO
The Articles of Incorporation of First State Corporation are hereby amended
by inserting the following new Article XII immediately after Article XI:
"ARTICLE XII
With respect to any proposed Business Combination, as defined in Article
XI, the Board of Directors of the Corporation, in exercising their business
judgment in determining what is in the best interests of the Corporation and its
shareholders, shall give due consideration to all relevant factors, including
without limitation the consideration being offered in the Business Combination
in relating to the then-current market price, but also in relation to the
then-current
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value of the Corporation in a freely negotiated transaction and in relation to
such Board's then estimate of the future value of the Corporation as an
independent entity, and the social and economic effects on the employees,
customers, suppliers and other constituents of the Corporation and its
subsidiaries and on the communities in which the Corporation and its
subsidiaries operate or are located. However, nothing contained in this Article
XII shall be construed to relieve any Interested Shareholder, as defined in
Article XI, from any fiduciary obligation imposed by Law.
AMENDMENT THREE
The Articles of Incorporation of First State Corporation are hereby amended
by inserting the following new Article XIII immediately after Article XII:
"ARTICLE XIII
The affirmative vote of shareholders required to alter, amend or appeal
Article XI, XII or this Article XIII, or to alter, amend or repeal any other
Article of the Articles of Incorporation of the Corporation in any respect which
would or might have the effect, direct or indirect, or modifying, permitting any
action inconsistent with, or permitting circumvention of, Articles XI, XII or
this Article XIII shall be at least eighty (80%) percent of the total voting
power of all classes of stock of the Corporation entitled to vote, excluding
from the number of shares deemed to be outstanding at the time of and for the
purpose of such vote on such alteration, amendment or repeal, all shares
beneficially owned by an Interested Shareholder (as defined in Article XI), but
such shares will be deemed to be outstanding for purposes of determining whether
a quorum is present at the meeting. Such affirmative vote shall be in addition
to the vote required by any particular class or series of preferred shares
required by law, the Articles of Incorporation of the Corporation or any special
class or preferred shares designation. The affirmative vote of the
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<PAGE>
Board of Directors required to alter, amend or repeal Articles XI, XII or this
Article XIII, or to alter, amend or repeal any other Article of the Articles of
Incorporation of the Corporation in any respect which would or might have the
effect, direct or indirect, of modifying, permitting any action inconsistent
with, or permitting circumvention of, Articles XI, XII or this Article XIII
shall be at least 66 2/3 percent of the Continuing Directors, as defined in
Article XI of these Articles of Incorporation."
THREE
These amendments to the Articles of Incorporation were adopted by a vote of
the shareholders on February 25, 1985.
FOUR
There are 346,121 shares outstanding and entitled to vote. The shareholder
vote required to adopt the amendments is 173,061 shares. The shareholder vote in
favor of adopting the amendments was 288,548 shares. No shares voted against
adoption of the amendments.
FIVE
None of the amendments provide for the exchange, reclassification or
cancellation of any issued shares of the Corporation.
SIX
None of the amendments effects a change in the amount of the stated capital
of the Corporation.
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IN WITNESS WHEREOF, FIRST STATE CORPORATION has caused these Articles of
Amendment to be executed and attested by its duly authorized officers, this the
12th day of March, 1985.
FIRST STATE CORPORATION
By: /s/ Morgan G. Murphy
--------------------------
President
Attest: /s/ Morris McNeil
-----------------------
Secretary
Signed, sealed and delivered in the presence of:
/s/ Carolyn Bedinbaugh
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Unofficial Witness
/s/ Margaret V. Carver
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Notary Public
My Commission Expires: FEB. 20, 1989
(NOTARY SEAL)
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<PAGE>
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF FIRST STATE CORPORATION
SETTING FORTH THE STATEMENT OF DESIGNATIONS
OF THE 7% CUMULATIVE NON-VOTING PREFERRED STOCK
I.
The name of the corporation is FIRST STATE CORPORATION (hereinafter
referred to as the "Corporation").
II.
The Corporation hereby amends its Articles of Incorporation to incorporate
therein the designation of the rights, privileges, preferences, and limitations
of 7% Cumulative Non-Voting Preferred Stock as set forth in Attachment I to
these Articles of Amendment.
III.
The designation, rights, preferences, and limitations pertaining to the 7%
Cumulative Non-Voting Preferred Stock set forth in Attachment I hereto were duly
adopted by the Board of Directors of the Corporation on 2-22 , 1993, pursuant to
authority conferred upon the Board of Directors by the provisions of the
Articles of Incorporation, as amended, of the Corporation, which authorize the
issuance of up to One Hundred Thousand (100,000) shares of preferred stock and
by the provisions of Section 14-2-602 of the Georgia Business Corporation Code,
which do not require shareholder approval for the issuance of a series of
preferred stock.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be signed by its duly authorized officers, this 22nd day of February , 1993.
FIRST STATE CORPORATION
By: /s/ Morgan G. Murphy
---------------------------------
President, Chairman and C.E.O.
<PAGE>
ATTACHMENT I
RESOLUTIONS
OF THE BOARD OF DIRECTORS
OF FIRST STATE CORPORATION
RELATING TO 7% CUMULATIVE
NON-VOTING PREFERRED STOCK
WHEREAS, the Articles of Incorporation of the Corporation provide that the
Corporation shall have authority to issue shares of Preferred Stock (the
"Preferred Stock"); and
WHEREAS, the Articles of Incorporation of the Corporation provide that the
Board of Directors is authorized to provide for the issuance of the Preferred
Stock in one or more series and to fix for each such series the number of shares
to be included in such series, the dividends payable on the shares of such
series, the redemption price of the shares of such series, if any, and the terms
and conditions of such redemption, the terms and conditions under which the
shares of such series are convertible, if they are convertible, and other
rights, preferences and limitations pertaining to such series; and
WHEREAS, the Board of Directors, pursuant to its authority as aforesaid,
desires to create and fix the terms of one series of Preferred Stock;
BE IT RESOLVED, that a series of 25,919 shares of Preferred Stock of the
Corporation designated as "7% Cumulative Non-Voting Preferred Stock" be and the
same is hereby created;
RESOLVED FURTHER, that the designation, powers, preferences, and relative,
participating, optional, and other special rights with respect to the 7%
Cumulative Non-Voting Preferred Stock, and qualifications, limitations and
restrictions thereof, are fixed as set forth below:
7% CUMULATIVE NON-VOTING PREFERRED STOCK
1. Designation.
(a) There is hereby created a series of preferred stock of the
Corporation designated as "7% Cumulative Non-Voting Preferred Stock"
(hereinafter referred to as "7% Preferred Stock") consisting of 25,919 shares of
7% Preferred Stock, $50 per share (the "Stated Value").
(b) All shares of 7% Preferred Stock redeemed or purchased by the
Corporation shall be retired and cancelled and shall be restored to the status
of authorized but unissued shares of preferred stock, without designation as to
series, and may thereafter be issued, but not as shares of 7% Preferred Stock.
<PAGE>
2. Dividends.
(a) Entitlement. Each holder of shares of 7% Preferred Stock shall be
entitled to receive, as and when declared by the Board of Directors out of funds
legally available therefor, cash dividends ("Dividends") at the Annual Rate (as
defined in Section 2(d) hereof) from the date of issuance (the "Issue Date")
through the first to occur of (x) the Redemption Date (as defined in Section 3
hereof) or (y) the date Liquidation Payments (as defined in Section 6(a) hereof)
are set aside for holders of the 7% Preferred Stock.
(b) Priority.
(i) Dividends shall be payable to holders of 7% Preferred Stock
prior and in preference to any dividends payable on or with respect to the
common stock of the Corporation or any other class or series of capital
stock of the Corporation now or hereafter authorized ranking junior as to
dividends (collectively, the "Junior Stock") to the 7% Preferred Stock. So
long as any shares of 7% Preferred Stock shall be outstanding and unless
all Dividends to which the holders of 7% Preferred Stock shall have been
entitled for all previous Dividend Periods (as defined in Section 2(c)
below) shall have been paid or declared and a sum of money sufficient for
the payment thereof set apart, the Corporation shall not declare or pay on
any Junior Stock any dividend whatsoever, whether in cash, property or
otherwise (other than dividends payable in shares of the class or series
upon which such dividends are declared or paid, or payable in shares of
common stock with respect to Junior Stock, together with cash in lieu of
fractional shares), nor shall the Corporation make any distribution on any
Junior Stock, nor shall any Junior Stock be purchased or redeemed by the
Corporation or any subsidiary of the Corporation, nor shall any monies be
paid or made available for a sinking fund for the purchase or redemption of
any Junior Stock.
(ii) No dividend may be declared on any other class or series of
stock ranking on a parity as to dividends (the "Parity Stock") with the 7%
Preferred Stock, in respect of any Dividend Period unless (A) there shall
also be or have been declared on the 7% Preferred Stock like Dividends for
such Dividend Period, ratably in proportion to the respective annual
dividend rates fixed therefor and (B) full Dividends shall have been paid
on the 7% Preferred Stock for all Dividend Periods prior to the date of
issuance of the Parity Stock.
(c) Payment Dates. Except for March 1, 1993, Dividends shall be
payable monthly in arrears on the first day of each month or on the first
business day thereafter if that day is a Saturday, Sunday or a holiday
(individually, a "Dividend Payment Date" and collectively, the "Dividend Payment
Dates") (the period from the Issue Date to the first Dividend Payment Date and
thereafter the period between consecutive Dividend Payment Dates is a "Dividend
Period") as long as any shares of 7% Preferred Stock are outstanding to holders
of record of 7% Preferred Stock on a date, to be fixed by the Board of
Directors, not exceeding 40 days preceding each Dividend Payment Date. The first
Dividend Payment Date shall be April 1, 1993.
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(d) Dividend Rate. The annual rate of Dividends (the "Annual Rate")
paid on shares of 7% Preferred Stock shall be equal to seven percent (7%) per
annum. The monthly Dividend rate (the "Monthly Rate") shall be equal to 0.583%.
(e) Cash Dividends. On each Dividend Payment Date, Dividends shall be
paid in cash, with the amount of cash paid per share being equal to (x) the
Stated Value multiplied by (y) the applicable Monthly Rate, subject to
Regulatory Limitations (as defined in Section 2(h) hereof), and applicable
limitations of the Georgia Business Corporation Code restricting distributions
(collectively, Regulatory Limitations and such restrictions of the Georgia
Business Corporation Code are collectively referred to herein as "Legal
Restrictions"); provided, however, that on the first Dividend Payment Date of
May 1, 1993, the Dividend payable shall be (x) the Stated Value multiplied by
(y) the Annual Rate prorated based on the number of days from the Issue Date
through April 31, 1993.
(f) Payment of Dividends. Dividends shall be paid by check delivered
to the address of the holder of record as such holder's address appears in the
Corporation's register of 7% Preferred Stockholders.
(g) Cumulative. Dividends payable on the 7% Preferred Stock are
cumulative. If, on any Dividend Payment Date, the holders of the 7% Preferred
Stock shall not have received the full Dividends provided for in the other
provisions of this Section 2, then such Dividends shall cumulate, whether or not
earned or declared. Unpaid Dividends for any period less than a full Dividend
Period shall cumulate on a day-to-day basis and shall be computed on the basis
of a 365-day year. Accruals of Dividends shall not bear interest.
(h) Regulatory Limitations. As used herein, the term "Regulatory
Limitations" means (x) the capital levels required to be maintained by the
Corporation by regulatory authorities with supervisory responsibility for the
Corporation, and if such regulatory authorities have not established any
required capital levels to be maintained by the Corporation, the references to
"capital levels" above shall be deemed to refer to capital levels required
generally by such regulatory authorities and (y) any prior approval requirements
by such regulatory authorities which may now or hereafter exist.
3. Redemption by Corporation.
(a) Subject to any Legal Restrictions, the outstanding shares of
7% Preferred Stock may be redeemed, in whole or in part, at the option of the
Corporation for a consideration per share (the "Redemption Price") equal to (x)
the Stated Value plus (y) all accrued and unpaid Dividends. If less than all the
outstanding shares of 7% Preferred Stock are to be redeemed, the Corporation
will select the 7% Preferred Stock (in portions thereof equal to $100 or any
integral multiple thereof) to be redeemed by such method as the Corporation
shall deem fair and appropriate. Redemption of the 7% Preferred Stock shall be
made on a Dividend Payment Date designated by the Board of Directors of the
Corporation (the "Redemption Date").
(b) All redemptions will be made according to the procedures
established in Section 4 hereof. The amount of Dividends accrued on any share of
the 7% Preferred Stock as
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at any date shall be calculated as the amount of any unpaid Dividends
accumulated thereon to and including the Dividend Payment Date corresponding to
the Redemption Date, whether or not earned or declared.
4. Redemption Procedure. The Corporation may, at its option expressed by
vote of the Board of Directors, redeem all or part of the outstanding shares of
7% Preferred Stock at the Redemption Price at the time in effect upon notice
duly given as hereinafter provided. Any such redemption shall be made on such
Redemption Date and at such place or places in the Albany Metropolitan Area of
Georgia as shall likewise be determined by a resolution of the Board of
Directors. Notice of any proposed redemption shall be given by the Corporation
by mailing a copy of such notice, not more than 60 nor less than 15 days prior
to the Redemption Date, to the holders of record of the shares to be redeemed at
their respective addresses then appearing on the books of the Corporation. On
the Redemption Date, the Corporation shall, and at any time within 60 days prior
to such Redemption Date may, deposit in trust, for the account of the holder of
shares to be redeemed, funds necessary for such redemption with a bank or trust
company organized under the laws of the United States of America or of the State
of Georgia (which may be a subsidiary bank of the Corporation), doing business
in the Albany Metropolitan Area of Georgia, which shall be designated in such
notice of redemption. Notice of redemption having been duly given, or said bank
or trust company having been irrevocably authorized by the Corporation to give
such notice, and funds necessary for such redemption having been deposited, all
as aforesaid, all shares with respect to which such deposit shall have been made
shall forthwith, whether or not the date fixed for such redemption shall have
occurred or the certificates for such shares shall have been surrendered for
cancellation, be deemed no longer to be outstanding for any purpose, and all
rights with respect to such shares shall thereupon cease and terminate,
excepting only the right of the holder of the certificates for such shares to
receive, out of the funds so deposited in trust, on the Redemption Date (unless
an earlier date is fixed by the Board of Directors), the redemption funds,
without interest, to which they are entitled.
5. Restriction on Issue of Additional Preferred Stock. So long as any
shares of 7% Preferred Stock are outstanding, the Corporation shall not issue
any shares ranking senior to but may issue shares ranking on a parity with the
7% Preferred Stock as to dividends, dissolution or liquidation.
6. Liquidation Preference.
(a) In the event of a voluntary or involuntary dissolution or
liquidation or winding up of the Corporation, a holder of outstanding shares of
7% Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to shareholders an amount per share (the
"Liquidation Payment") equal to (x) the Stated Value plus (y) all accrued and
unpaid Dividends. Such Liquidation Payments shall be made to or set aside for
the holders of outstanding shares of 7% Preferred Stock, as aforesaid, before
payment or distribution shall be made to or set aside for holders of the common
stock of the Corporation or any other class or series of capital stock of the
Corporation now or hereafter authorized ranking junior to the 7% Preferred Stock
as to payments upon dissolution or liquidation or winding up. If, upon any such
dissolution or liquidation or winding up, the assets of the Corporation
available for payment and distribution to shareholders are insufficient to make
payment in full as hereinabove provided to
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the holders of shares of 7% Preferred Stock and holders of shares ranking on a
parity with the 7% Preferred Stock as to payments upon dissolution, liquidation
and winding up, then such assets shall be distributed among such holders ratably
in accordance with the respective amounts which would be payable on such shares
if all amounts payable thereon were paid in full.
(b) Each of the following events shall be construed to be a
dissolution or liquidation of the Corporation within the meaning of Section 6(a)
hereof: a consolidation, merger, or share exchange of the Corporation with or
into any other corporation in which the Corporation is not the survivor; the
purchase of all or a majority of the outstanding shares of common stock of the
Corporation; or the sale or transfer of the properties of the Corporation
substantially as an entirety.
7. No Conversion Privilege. A holder of shares of the 7% Preferred Stock
shall not have any right to convert such shares into or to exchange such shares
for shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
8. Voting Rights.
The holders of 7% Preferred Stock shall not, by virtue of their
ownership thereof, be entitled to vote upon any matter except as specifically
provided by law. In exercising such voting powers, each share of 7% Preferred
Stock shall be entitled to one vote.
9. No Purchase, Retirement or Sinking Fund.
The shares of 7% Preferred Stock shall not be subject to the
operation of any purchase, retirement or sinking fund.
10. Notices.
All notices required or permitted to be given by the Corporation with
respect to the 7% Preferred Stock shall be in writing, and if delivered by first
class United States mail, postage prepaid, to the holders of the 7% Preferred
Stock at their last addresses as they shall appear upon the register of the
Corporation, shall be conclusively presumed to have been duly given, whether or
not the shareholder actually receives such notice.
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ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
FIRST STATE CORPORATION
I.
The name of the Corporation is First State Corporation (the "Corporation").
II.
The first sentence of Article V of the Articles of Incorporation of the
Corporation is hereby deleted in its entirety and a new first sentence of
Article V reading as follows is hereby adopted:
The total number of shares of capital stock which the
Corporation shall have authority to issue is 20,100,000 shares,
consisting of 20,000,000 shares of Common Stock of $1.00 par
value per share, and 100,000 shares of Preferred Stock of $50.00
par value per share.
III.
An Article XIV which reads as follows will be added to the Articles of
Incorporation:
ARTICLE XIV
(a) A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for monetary damages, for
breach of any duty as a director, except for liability for:
(i) any appropriation, in violation of his or her duties, of any
business opportunity of the Corporation;
(ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
<PAGE>
(iii) the types of liability set forth in Section 14-2-832 of the
Georgia Business Corporation Code dealing with unlawful
distribution of corporate assets to shareholders; or
(iv) any transaction from which the director derived an improper
material tangible personal benefit.
(b) Any repeal or modification of this Article by the
shareholders of the Corporation shall be prospective only and shall
not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
(c) Unless two-thirds (2/3) of the directors then in office shall
approve the proposed change, this Article XIV may be amended or
rescinded only by the affirmative vote of the holders of at least
two-thirds (2/3) of the issued and outstanding shares of the
Corporation entitled to vote thereon, at any regular or special
meeting of the shareholders, and notice of the proposed change must be
contained in the notice of the meeting.
IV.
A resolution of the Board of Directors to so amend the Articles of
Incorporation of the Corporation was adopted on January 29, 1996.
V.
The amendment was duly approved by the shareholders of the Corporation in
accordance with the provisions of Section 14-2-1003 of the Georgia Business
Corporation Code on April 29, 1996.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these Articles of Amendment
to the Articles of Incorporation to be executed, this 18th day of July , 1996.
FIRST STATE CORPORATION
By: /s/ Douglas E. Wren
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Douglas E. Wren
President
Attest:
/s/ Robert E. Lee
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Robert E. Lee
Secretary
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EXHIBIT 10.3
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Agreement (the "Agreement") made as of the 1st
day of January, 1990, amended as of August 30, 1993 and as of January 1, 1994,
and amended and restated as of May 8, 1996, between FIRST STATE CORPORATION, a
bank holding company (hereinafter referred to as the "Corporation") and its
wholly owned bank subsidiary, FIRST STATE BANK AND TRUST COMPANY (hereinafter
referred to as the "Bank"), both organized and existing under the laws of the
State of Georgia with their principal offices and places of business being
located in Albany, Georgia, and DOUGLAS E. WREN (hereinafter referred to as
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been serving as a senior officer of the
Corporation and the Bank since January 31, 1986, and is now serving as President
and Chief Operating Officer of the Corporation and as President and Chief
Executive Officer of the Bank; and
WHEREAS, the Corporation, the Bank and the Executive entered into an
employment agreement reflecting certain terms of the Executive's employment
relationship with the Corporation and the Bank as of January 1, 1990, as amended
from time to time thereafter (the "1990 Agreement"); and
WHEREAS, the parties desire to amend and restate the 1990 Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto agree as follows:
<PAGE>
(1) Employment. The Executive hereby agrees to serve as President and Chief
Operating Officer of the Corporation and as President and Chief Executive
Officer of the Bank, or in such other executive position of similar or greater
responsibilities with the Corporation or the Bank (or an affiliated corporation)
as he may be designated to hold, for the term of this Agreement, subject to the
terms set forth herein and the provisions of the Bylaws of the Corporation and
the Bank. During his employment hereunder, the Executive shall devote his
efforts and attention, substantially on a full-time basis, to the performance of
the duties required of him as an executive of the Corporation and the Bank.
(2) Term.
(a) This Agreement and the Executive's employment hereunder shall be
effective as of January 1, 1990, and shall continue for a sixty (60) month
term initially ending on December 31, 1994. This Agreement shall
automatically be extended for successive twelve (12) month periods at the
end of each calendar year (so that this Agreement will always have a sixty
(60) month term), unless either party gives written notice to the other of
its intent not to extend this Agreement with such written notice to be
given not less than ninety (90) days prior to the end of a calendar year.
In the event such notice of nonextension is properly given, this Agreement
shall terminate at the end of the sixty (60) month term then in effect.
However, notwithstanding the provisions of this Section (2)(a), no
extension will be granted that would extend the term of this Agreement
beyond the last day of the month during which the Executive attains age
sixty-five (65).
(b) The Executive's employment hereunder may be terminated by either
party prior to the end of the sixty (60) month term hereof upon ninety (90)
days prior written notice to the other party, provided, that, in the event
of such termination, the Corporation
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and the Bank shall be obligated to make the payments and provide the
benefits, if any, described in Section (4) below.
(3) Compensation. As compensation for his services during the term of this
Agreement, the Executive shall receive the amounts and benefits set forth in
subsections (a), (b), (c), (d) and (e) below:
(a) An annual salary effective January 1, 1990, of $100,000 prorated
for any partial year of employment, subject to annual review for increases
in light of the size and performance of the Corporation and the Bank at
such time as the Corporation and the Bank conduct salary reviews for their
officers generally. The Executive's salary shall be payable bimonthly or in
accordance with the Corporation's and the Bank's regular payroll practices
in effect from time to time for officers of his level;
(b) Participation on an annual basis in the "Senior Management
Incentive Compensation Plan" (the "SMICP"), or such other successor annual
incentive compensation program as may be maintained from time to time for
the benefit, generally, of the senior management employees of the
Corporation and the Bank (the SMICP and such other successor annual
incentive compensation program(s) being hereinafter collectively referred
to as the "Incentive Compensation Program"). Any incentive compensation
award which may become payable to the Executive under the Incentive
Compensation Program shall depend upon attainment of financial performance
goals for the Corporation and the Bank and shall be expressed as a
percentage of the Executive's annual base salary then in effect and, for
any annual period, the percentage may vary depending upon the degree to
which the financial performance goals are attained. The financial
performance goals and the base salary percentage(s) which serve as a
measure of the incentive compensation award for each annual
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<PAGE>
period shall be established in advance of that annual period by the
Compensation Committee of the Board of Directors of the Corporation. Any
incentive compensation award which becomes payable under the Incentive
Compensation Program shall be payable in accordance with the terms thereof.
(c) Participation in all of the employee benefit plans maintained now
or in the future by the Corporation and the Bank for the purpose of
providing retirement benefits, deferred compensation, health care coverage,
life insurance coverage and disability coverage as well as similar pension
or welfare benefits to its employees. These employee benefit plans include,
but are not limited to, the defined benefit pension plan, the defined
contribution profit sharing plan, the defined contribution employee/thrift
and savings plan (a section 401(k) and (m) plan), the defined contribution
money purchase pension plan, group health and accident insurance, group
term life insurance and any other employee pension, welfare or incentive
benefit plans as they may now exist or exist in the future.
(d) Continued participation in the Incentive Compensation Program for
senior executives of the Corporation and the Bank, which now exists or
which may exist in the future.
(e) Reimbursement of the dues and costs of club memberships and
automobile expenses. In addition, the Corporation and the Bank will
continue to provide the Executive with an automobile of similar grade and
quality as is now being provided to the Executive.
(4) Termination Payments. Upon termination of the Executive's employment
prior to the end of the sixty (60) month term of this Agreement, the Corporation
or the Bank shall pay to the Executive in cash, within three (3) business days
after the termination of the Executive's employment, any amount payable pursuant
to subsections (a), (b) or (c) below and shall for the
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<PAGE>
period, or at the time specified, provide the other benefits, if any, described
in subsections (d) and (e) below:
(a) The payment due to Executive under this subsection (a) shall be
two and ninety-nine/one hundredths (2.99) times the Executive's "Average
Annual Compensation," as defined in subsection (f)(ii) below (the
"Severance Amount"), if: (i) the Executive's employment is terminated by
the Corporation or the Bank, other than for "Good Cause," as defined in
subsection (f)(iii) below, within three (3) years after any "Change in
Control," as defined in subsection (f)(i) below, or at the request of, or
pursuant to, an agreement with a third party who has taken steps reasonably
calculated to effect a Change in Control, or otherwise in connection with
or in anticipation of a Change in Control; or (ii) the Executive elects to
terminate his employment hereunder within one (1) year after any Change in
Control. However, if the aggregate present value (determined as of the date
of the Change in Control in accordance with the provisions of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations thereunder) of both the Severance Amount and all
other payments to Executive in the nature of compensation which are
contingent on a change in ownership or effective control of the Corporation
or Bank or in the ownership of a substantial portion of the assets of the
Corporation or the Bank (the "Aggregate Severance") would result in a
parachute payment (as determined under Code Section 280G) then the
Aggregate Severance shall not be greater than an amount equal to two and
ninety-nine/one hundredths (2.99) multiplied by Executive's base amount (as
determined under Code Section 280G) for the base period (as determined
under Code Section 280G). In the event the Aggregate Severance is required
to be reduced pursuant to this subsection (a), Executive shall be entitled
to determine which portions of the Aggregate Severance are
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<PAGE>
to be reduced so that the Aggregate Severance satisfies the limit in the
preceding sentence (the "Adjusted Aggregate Severance").
(b) The payment due to Executive under this subsection (b) shall be
two (2) times the Executive's "Average Annual Compensation" as defined in
subsection (f) below, if the Executive's employment is terminated by the
Corporation or by the Bank, other than for "Good Cause", as defined in
subsection (f) below, and such termination is not described in subsection
(a) above.
(c) If the Executive's termination of employment is not described in
either subsection (a) or (b) above, the payment due to Executive under this
subsection (c) shall be equal to any unpaid salary due to the Executive
through the date of termination.
(d) In addition to the payments provided to the Executive under (a),
(b) or (c) above, any amounts of incentive compensation deferred pursuant
to subsection (b) of section (3) above (under the Incentive Compensation
Program) shall be paid to the Executive at the same time as such other
payment, together with interest due thereon to the date of payment. If the
Executive's termination of employment is described in subsection (a) or (b)
above, the health and accident coverage and the life insurance coverage
provided to the Executive at his date of termination shall be continued at
the same level and in the same manner as if his employment had not
terminated (subject to the customary changes in such coverages if the
Executive reaches age sixty-five (65) or similar events), beginning on the
date of such termination and ending on the date thirty-six (36) months from
the date of termination; and any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for such
period on the same terms. Any costs the Executive was paying for such
coverages at the time of termination shall continue to be paid by the
Executive. If
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the terms of any benefit plan referred to in this subsection do not permit
continued participation by the Executive, as contemplated by this
subsection, then the Corporation or the Bank will reimburse the Executive
for the cost of insurance coverages for the Executive and dependents of the
Executive that are substantially equivalent to the health and accident and
life insurance coverages provided to the employees of the Corporation or
the Bank and their eligible dependents during the thirty-six (36) month
period described herein. Reimbursement for the cost of coverage of a
dependent of the Executive shall be reimbursable only if the dependent
would be deemed a dependent eligible for coverage under the substantially
equivalent benefit plan then maintained by the Corporation or the Bank had
the Executive continued in the employ of the Corporation and the Bank.
However, the obligation of the Corporation and the Bank to provide the
health and accident coverage and the life insurance coverage described in
this Section 4(d) shall abate and be considered satisfied to the extent the
Executive receives employer provided coverage under an accident and health
plan or a life insurance plan maintained by a subsequent employer.
(e) The Corporation and the Bank agree that there will be no change
made during the term of the Executive's employment hereunder which
adversely affects the Executive's rights under any stock option or
restricted stock award which may be conferred upon the Executive under any
stock option or restricted stock awards plan which may be maintained from
time to time by the Corporation or the Bank.
(f) For purposes of this Agreement, the following definitions shall
apply:
(i) "Change in Control" shall mean the occurrence of (A), (B) or
(C) below:
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<PAGE>
(A) The acquisition by any person, entity or "group", within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act") (excluding, for this
purpose, any employee benefit plan maintained by the Corporation
or the Bank, or by any subsidiary of either, which acquires
beneficial ownership of voting securities of the Corporation or
the Bank) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of either the then outstanding shares of Common
Stock or the combined voting power of the Corporation's or the
Bank's then outstanding voting securities entitled to vote
generally in the election of directors.
(B) (i) The acquisition by any person, entity or "group", within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act (excluding, for this purpose, any employee benefit
plan of the Corporation or the Bank, or any subsidiary of either,
which acquires beneficial ownership of voting securities of the
Corporation or the Bank) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
thirty percent (30%) or more of either the then outstanding
shares of Common Stock or the combined voting power of the
Corporation's or the Bank's then outstanding voting securities
entitled to vote generally in the election of directors; and
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<PAGE>
(ii) The failure for any reason of individuals who
constitute the Incumbent Board to continue to constitute at least
two-thirds (2/3rds) of the Board within any thirteen (13) month
period.
(C) Approval by the stockholders of the Corporation or the Bank
of (i) a reorganization, merger or consolidation, with respect to
which persons who were the stockholders of the Corporation or the
Bank immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged
or consolidated company's then outstanding voting securities, or
(ii) a liquidation or dissolution of the Corporation or the Bank
or the sale of all or substantially all of the assets of the
Corporation or the Bank.
(ii) "Average Annual Compensation" shall be the average of the
Executive's annual compensation received from the Bank and the Corporation
and includable in the Executive's gross income for federal income tax
purposes during the base period. However, the term "Average Annual
Compensation" shall also include amounts not included in gross income for
federal income tax purposes by virtue of Code Sections 125, 402(a)(8) and
402(h)(1)(B). Also, for purposes of this Agreement, the term "Average
Annual Compensation" shall specifically include any amounts paid and
includable in the Executive's gross income during the base period under the
Incentive Compensation Program or under any other incentive or bonus
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<PAGE>
arrangement maintained by the Corporation or the Bank. For purposes of this
subsection (ii), the base period for determining "Average Annual
Compensation" shall be the Executive's most recent five (5) consecutive
taxable years ending before the date of the Change in Control.
(iii) "Good Cause" shall mean and be limited to (A) an act or acts of
personal dishonesty taken by the Executive and intended to result in
substantial personal enrichment of the Executive at the expense of the
Corporation or the Bank, (B) repeated violations by the Executive of the
Executive's obligations under Section (1) of this Agreement which are
demonstrably willful and deliberate on the Executive's part and which are
not remedied in a reasonable period of time (which shall not be less than
thirty (30) days nor more than sixty (60) days) after receipt of written
notice from the Corporation or the Bank, (C) serious and substantial
improper conduct by the Executive which is clearly inconsistent with the
Executive's position of trust and authority with the Corporation and the
Bank and which detrimentally affects the reputation and good standing in
the community of the Corporation and the Bank, or (D) the conviction of the
Executive of a felony.
(iv) The "Board" shall mean the Board of Directors of the Corporation
and the Bank.
(v) The "Incumbent Board" shall mean the members of the Board as of
January 1, 1996, and any person becoming a member of the Board after such
date whose election, or nomination for election, was approved by a vote of
at least two-thirds (2/3rds) of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in
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connection with an actual or threatened election contest relating to the
election of the directors of the Corporation or the Bank, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act.)
(g) If, after the exhaustion of all administrative and judicial
appeals as the Corporation determines in its sole discretion to pursue, the
Internal Revenue Service determines that Code Section 280G prohibits the
Corporation or the Bank from deducting all of the Aggregate Severance or
Adjusted Aggregate Severance, as applicable, paid to the Executive and
reported on its federal income tax return, the Executive shall have an
obligation to pay the Corporation or the Bank upon demand an amount equal
to the sum of (i) the excess of the amount of the Aggregate Severance or
Adjusted Aggregate Severance, as applicable, over the maximum amount that
could have been paid to Executive without any portion of such payments not
being deductible by reason of Code Section 280G; and (ii) interest on the
amount set forth in this subsection at the rate provided in Code Section
1274(b)(2)(B) from the date of Executive's receipt of the amount set forth
in this subsection until the date of repayment.
(5) Nondisclosure; Confidentiality. The Executive agrees that if his
employment terminates during the term of this Agreement, he will not for one (1)
year after such termination, directly or indirectly disclose or give to others
any confidential fact or information not generally available to the public
concerning the Corporation's or the Bank's financial operations and businesses,
including but not limited to the provision of financial data processing services
to banks, thrift institutions, credit unions and mortgage servicers, and the
providing of merchant credit card authorization, settlement and related
services, data imaging, micrographic, and electronic data management services to
others generally. Such financial information, financial systems, financing
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<PAGE>
arrangements, trade secret or confidential business information includes
business plans, financial information, financial systems, financing
arrangements, and any other secret or confidential work, knowledge, "know-how,"
trade secret or confidential information including confidential information
relating to customer accounts, customer needs, organization, strategy, research
and development, design, drawings, specifications, techniques, processes,
procedures, "know-how," marketing techniques and materials, marketing and
development plans, fee lists, fee policies or any other confidential information
relating to customers.
(6) Noncompetition. In the event the Executive voluntarily terminates his
employment before the end of the term (including extensions) of this Agreement
and receives a payment in accordance with the provisions of Section (4)(a)(ii),
the Executive will not accept employment within a one (1) year period after such
termination of employment with any of the following described organizations
located within a fifty (50) mile radius of Albany, Georgia: a Commercial bank
(as defined in Section 7-1-4(12) of the Official Code of Georgia Annotated
[hereinafter "OCGA"]); a Bank (as defined in Section 7-1-4(7) of the OCGA); a
Building and loan association (as defined in Section 7-1-4(8) of the OCGA); a
Credit union (as defined in Section 7-1-4(15) of the OCGA); a Federal credit
union (as defined in Section 7-1-4(19) of the OCGA); a Savings and loan
association (as defined in Section 7-1-4(31) of the OCGA); a Savings bank (as
defined in Section 7-1-4(32) of the OCGA); a National Bank (as defined in
Section 7-1-4(23) of the OCGA); a Trust company (as defined in Section 7-1-4(40)
of the OCGA); or a Broker/Dealer (as defined in Sections 3(a)(4) and 3(a)(5) of
the Exchange Act). However, for purposes of this Section (6), the term
"Broker/Dealer" does not include a corporation, company, firm or person that is
primarily engaged in providing consulting services and products with respect to
financial, tax, management, insurance or business matters and that is not
primarily engaged in either effecting transactions in securities for the account
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of others or buying and selling securities for its own account. Accordingly, the
noncompetition provisions of this Section (6) shall not prohibit employment of
the Executive at any time by a corporation, company, firm or person that is
described in the preceding sentence and is, therefore, considered not to be a
"Broker/Dealer" for purposes of this Section (6) by virtue of being described in
such preceding sentence.
(7) Damages and Injunctive Relief. The Executive agrees that the breach of
any of his obligations under Section (5) or Section (6) of this Agreement: (a)
may cause injury to the Corporation and the Bank and that the Corporation and
the Bank are entitled to seek and obtain compensation and damages; and (b) may
cause irreparable injury to the Corporation and the Bank and that, accordingly,
the Corporation and the Bank may seek and obtain injunctive relief against the
breach or threatened breach of those provisions in addition to other remedies at
law or in equity which may be available; provided, however, that no such claim
by the Corporation or the Bank shall permit the Corporation or the Bank to
offset, reduce, suspend or withhold any of the payments or benefits provided
under Section (4) or to seek an injunction providing for such offset, reduction,
suspension or withholding.
(8) Assignment; Successors.
(a) The rights and benefits of the Executive under this Agreement are
personal to him and shall not be assignable, except with the prior written
consent of the Corporation or the Bank.
(b) This Agreement shall not be assignable by the Corporation or the
Bank provided that, with the consent of the Executive, the Corporation may
assign this Agreement to another corporation wholly-owned by it, either
directly or through one or more other
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corporations, or to any corporate successor of the Corporation or the Bank
or any such other corporation.
(c) Notwithstanding the foregoing, any business entity succeeding to
substantially all of the business of the Corporation or the Bank by
purchase, merger, consolidation, sale of assets or otherwise shall be bound
by and shall adopt and assume this Agreement and the Corporation and the
Bank shall obtain the express assumption of this Agreement by such
successor.
(9) Notices. Any notices or other communications under this Agreement shall
be in writing, signed by the party making the same, and shall be delivered
personally or sent by certified or registered mail, postage prepaid, addressed
as follows:
If to the Executive: Douglas E. Wren
First State Corporation
333 Broad Avenue
Albany, Georgia 31703
If to the Corporation or
the Bank: Morgan G. Murphy
First State Corporation
333 Broad Avenue
Albany, Georgia 31703
Copy to:
Perry, Walters & Lippitt
409 N. Jackson Street
Albany, Georgia 31701
Hall, Moorhead & Garvey, P.C.
314 Residence Avenue
Albany, Georgia 31701
or to such other address or agent as may hereafter be designated by either party
hereto. All such notices shall be deemed given on the date personally delivered
or mailed.
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(10) Full Settlement and Legal Expenses. The Corporation's and the Bank's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Corporation or the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement. The Corporation or the Bank agree to pay, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Corporation or the Bank or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive with respect to the amount of any payment pursuant to Section (4) of
this Agreement), plus in each case interest at the applicable Federal rate
provided for in Code Section 7872(f)(2).
(11) Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Georgia.
(12) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any one
or more of the provisions contained in this Agreement shall be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions of this Agreement shall not be in any way impaired.
(13) Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter contained herein. There are no
restrictions, promises, covenants, or undertakings between the Corporation or
the Bank and the Executive other than those
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expressly set forth herein or contained in the Corporation's or the Bank's
employee welfare or pension benefit plans or incentive compensation plans
covering the Executive. This Agreement supersedes the Employment Contract
between the Executive and the Corporation and the Bank, dated May 15, 1986. This
Agreement may not be amended or modified except by a writing executed by the
parties.
(14) Arbitration. Any controversy or claim arising out of or relating to
the parties' rights and obligations under this Agreement shall be settled by
arbitration in accordance with the Commercial Arbitration Rules (the "Rules") of
the American Arbitration Association (the "AAA"). Arbitration shall be initiated
by a party by giving notice in the manner set forth herein to the other party or
parties of its intention to arbitrate, which notice shall contain a statement
setting forth the nature of the dispute, the amount claimed, if any, and the
remedy sought. The initiating party shall then file a copy or copies of the
notice as set forth under the Rules. Any arbitration hearing shall be held in
Albany, Georgia. The Corporation or the Bank and the Executive shall agree upon
and appoint three (3) arbitrators in accordance with the Commercial Arbitration
Rules of the AAA within twenty (20) days of the effective date of notice of
arbitration; provided, however, that if the parties fail to make such
designation within twenty (20) days, the AAA shall appoint the arbitrators. The
determinations of the arbitrators will be final and binding upon the parties to
the arbitration, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction, or application may be made to any such
court for a judicial acceptance of the award and an order of enforcement, as the
case may be. The arbitrators shall apply the laws of the State of Georgia as to
both substantive and procedural questions.
[Signatures Appear on Next Page]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement this 14th
day of May, 1996.
FIRST STATE CORPORATION
By: /s/ Morgan G. Murphy
------------------------------
Attest: /s/ James L. Flatt
--------------------------
FIRST STATE BANK AND TRUST COMPANY
By: /s/ Morgan G. Murphy
------------------------------
Attest: /s/ James L. Flatt
--------------------------
/s/ Louise B. Murphy
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Witness
/s/ Elisabeth S. Driskell
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Witness
/s/ Douglas E. Wren
----------------------------------
DOUGLAS E. WREN
/s/ Louise B. Murphy
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Witness
/s/ Elisabeth S. Driskell
- -----------------------------
Witness
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EXHIBIT 10.4
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Agreement (the "Agreement") made as of the 1st
day of May, 1993, amended as of August 30, 1993, and amended and restated as of
May 8, 1996, between FIRST STATE CORPORATION, a bank holding company
(hereinafter referred to as the "Corporation") and its wholly owned bank
subsidiary, FIRST STATE BANK AND TRUST COMPANY (hereinafter referred to as the
"Bank"), both organized and existing under the laws of the State of Georgia with
their principal offices and places of business being located in Albany, Georgia,
and JAMES L. FLATT (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been serving as Executive Vice President of the
Bank since February 22, 1993 and is now serving as Senior Vice President of the
Corporation and as Executive Vice President and Chief Operating Officer of the
Bank; and
WHEREAS, the Bank desires to retain the Executive and the Executive desires
to continue his employment relationship with the Bank; and
WHEREAS, the Corporation and the Bank entered into an employment agreement
reflecting certain terms of Executive's employment relationship with the Bank as
of May 1, 1993, as amended thereafter (the "1993 Agreement"); and
WHEREAS, the parties desire to amend and restate the 1993 Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto agree as follows:
<PAGE>
(1) Employment. The Executive hereby agrees to serve as Senior Vice
President of the Corporation and as Executive Vice President and Chief Operating
Officer of the Bank, or in such other executive position of similar or greater
responsibilities with the Corporation and the Bank (or an affiliated
corporation) as he may be designated to hold, for the term of this Agreement,
subject to the terms set forth herein and the provisions of the Bylaws of the
Corporation and the Bank. During his employment hereunder, the Executive shall
devote his efforts and attention, substantially on a fulltime basis, to the
performance of the duties required of him as an executive of the Corporation and
the Bank.
(2) Term.
(a) This Agreement and the Executive's employment hereunder shall be
effective as of May 1, 1993, and shall continue for a sixty (60) month term
ending on April 30, 1998. This Agreement shall automatically be renewed for
successive twelve (12) month terms at the end of the initial term unless either
party gives written notice to the other of its intent to terminate this
Agreement with such written notice to be given not less than ninety (90) days
prior to the commencement of any such twelve (12) month renewal term. In the
event such notice to terminate is properly given, this Agreement shall terminate
at the end of the initial sixty (60) month term or at the end of the twelve (12)
month renewal term then in effect.
(b) The Executive's employment hereunder may be terminated by either
party prior to the end of the initial term hereof (including any renewal term)
upon ninety (90) days prior written notice to the other party, provided that, in
the event of such termination, the Corporation and the Bank shall be obligated
to make the payments and provide the benefits, if any, described in Section (4)
below.
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<PAGE>
(3) Compensation. As compensation for his services during the term of this
Agreement, the Executive shall receive the amounts and benefits set forth in
subsections (a), (b), (c), (d) and (e) below:
(a) An annual salary effective May 1, 1993, of $89,400 prorated for
any partial year of employment, subject to annual review for increases in light
of the size and performance of the Corporation and the Bank at such time as the
Corporation and the Bank conduct salary reviews for their officers generally.
The Executive's salary shall be payable bimonthly or in accordance with the
Corporation's and the Bank's regular payroll practices in effect from time to
time for officers of his level;
(b) Participation on an annual basis in the "Senior Management
Incentive Compensation Plan" (the "SMICP"), or such other successor annual
incentive compensation program as may be maintained from time to time for the
benefit, generally, of the senior management employees of the Corporation and
the Bank (the SMICP and such other successor annual incentive compensation
program(s) being hereinafter collectively referred to as the "Incentive
Compensation Program"). Any incentive compensation award which may become
payable to the Executive under the Incentive Compensation Program shall depend
upon attainment of financial performance goals for the Corporation and the Bank
and shall be expressed as a percentage of the Executive's annual base salary
then in effect and, for any annual period, the percentage may vary depending
upon the degree to which the financial performance goals are attained. The
financial performance goals and the base salary percentage(s) which serve as a
measure of the incentive compensation award for each annual period shall be
established in advance of that annual period by the Compensation Committee of
the Board of
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<PAGE>
Directors of the Corporation. Any incentive compensation award which becomes
payable under the Incentive Compensation Program shall be payable in accordance
with the terms thereof.
(c) Participation in all of the employee benefit plans maintained now
or in the future by the Corporation and the Bank for the purpose of providing
retirement benefits, deferred compensation, health care coverage, life insurance
coverage and disability coverage as well as similar pension or welfare benefits
to its employees. These employee benefit plans include, but are not limited to,
the defined benefit pension plan, the defined contribution profit sharing plan,
the defined contribution employee/thrift and savings plan (a section 401(k) and
(m) plan), the defined contribution money purchase pension plan, group health
and accident insurance, group term life insurance and any other employee
pension, welfare or incentive benefit plans as they may now exist or exist in
the future.
(d) Continued participation in the Incentive Compensation Program for
senior executives of the Corporation and the Bank, which now exists or which may
exist in the future.
(e) Reimbursement of the dues and costs of club memberships and
automobile expenses. In addition, the Corporation and the Bank will continue to
provide the Executive with an automobile of similar grade and quality as is now
being provided to the Executive.
(4) Termination Payments. Upon termination of the Executive's employment
prior to the end of the sixty (60) month term of this Agreement (including any
renewal term), the Corporation or the Bank shall pay to the Executive in cash,
within three (3) business days after the termination of the Executive's
employment, any amount payable pursuant to subsections (a) or (b) below and
shall for the period, or at the time specified, provide the other benefits, if
any, described in subsection (d):
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<PAGE>
(a) The payment due to Executive under this subsection (a) shall be
two and ninety-nine/one hundredths (2.99) times the Executive's "Average Annual
Compensation," as defined in subsection (d) below (the "Severance Amount"), if:
the Executive's employment is terminated by the Corporation or the Bank, other
than for "Good Cause," as defined in subsection (d) below, within three (3)
years after any "Change in Control," as defined in subsection (d) below, or at
the request of, or pursuant to, an agreement with a third party who has taken
steps reasonably calculated to effect a Change in Control, or otherwise in
connection with or in anticipation of a Change in Control. However, if the
aggregate present value (determined as of the date of the Change in Control in
accordance with the provisions of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and the rules and regulations thereunder) of both
the Severance Amount and all other payments to Executive in the nature of
compensation which are contingent on a change in ownership or effective control
of the Corporation or Bank or in the ownership of a substantial portion of the
assets of the Corporation or the Bank (the "Aggregate Severance") would result
in a parachute payment (as determined under Code Section 280G) then the
Aggregate Severance shall not be greater than an amount equal to two and
ninety-nine/one hundredths (2.99) multiplied by Executive's base amount (as
determined under Code Section 280G) for the base period (as determined under
Code Section 280G). In the event the Aggregate Severance is required to be
reduced pursuant to this subsection (a), Executive shall be entitled to
determine which portions of the Aggregate Severance are to be reduced so that
the Aggregate Severance satisfies the limit in the preceding sentence (the
"Adjusted Aggregate Severance").
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<PAGE>
(b) If the Executive's termination of employment is not described in
subsection (a) above, the payment due to Executive under this subsection (b)
shall be equal to any unpaid salary due to the Executive through the date of
termination.
(c) In addition to the payments provided to the Executive under (a) or
(b) above, any amounts of incentive compensation deferred pursuant to subsection
(b) of section (3) above (under the Incentive Compensation Program) shall be
paid to the Executive at the same time as such other payment, together with
interest due thereon to the date of payment. If the Executive's termination of
employment is described in subsection (a) above, the health and accident
coverage and the life insurance coverage provided to the Executive at his date
of termination shall be continued at the same level and in the same manner as if
his employment had not terminated (subject to the customary changes in such
coverages if the Executive reaches age sixty-five (65) or similar events),
beginning on the date of such termination and ending on the date thirty-six (36)
months from the date of termination; and any additional coverages the Executive
had at termination, including dependent coverage, will also be continued for
such period on the same terms. Any costs the Executive was paying for such
coverages at the time of termination shall continue to be paid by the Executive.
If the terms of any benefit plan referred to in this subsection do not permit
continued participation by the Executive, as contemplated by this subsection,
then the Corporation or the Bank will reimburse the Executive for the cost of
insurance coverages for the Executive and dependents of the Executive that are
substantially equivalent to the health and accident and life insurance coverages
provided to the employees of the Corporation or the Bank and their eligible
dependents during the thirty-six (36) month period described herein.
Reimbursement for the cost of coverage of a dependent of the Executive shall
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<PAGE>
be reimbursable only if the dependent would be deemed a dependent eligible for
coverage under the substantially equivalent benefit plan then maintained by the
Corporation or the Bank had the Executive continued in the employ of the
Corporation and the Bank. However, the obligation of the Corporation and the
Bank to provide the health and accident coverage and the life insurance coverage
described in this Section 4(c) shall abate and be considered satisfied to the
extent the Executive receives employer provided coverage under an accident and
health plan or a life insurance plan maintained by a subsequent employer. The
Executive agrees to provide the Bank with the information necessary to enable
the Bank to comply with the provisions of this subsection (c).
(d) For purposes of this Agreement, the following definitions shall
apply:
(i) "Change in Control" shall mean the occurrence of (A), (B) or
(C) below:
(A) The acquisition by any person, entity or "group", within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act")
(excluding, for this purpose, any employee benefit plan
maintained by the Corporation or the Bank, or by any
subsidiary of either, which acquires beneficial ownership of
voting securities of the Corporation or the Bank) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than fifty
percent (50%) of either the then outstanding shares of
Common Stock or the combined voting power of the
Corporation's or the Bank's then
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<PAGE>
outstanding voting securities entitled to vote generally in
the election of directors.
(B) (i) The acquisition by any person, entity or "group",
within the meaning of Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act (excluding, for this purpose, any
employee benefit plan of the Corporation or the Bank, or any
subsidiary of either, which acquires beneficial ownership of
voting securities of the Corporation or the Bank) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30%)
or more of either the then outstanding shares of Common
Stock or the combined voting power of the Corporation's or
the Bank's then outstanding voting securities entitled to
vote generally in the election of directors; and
(ii) The failure for any reason of individuals who
constitute the Incumbent Board to continue to constitute at
least two-thirds (2/3rds) of the Board within any thirteen
(13) month period.
(C) Approval by the stockholders of the Corporation or the
Bank of (i) a reorganization, merger or consolidation, with
respect to which persons who were the stockholders of the
Corporation or the Bank immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, own more than fifty
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<PAGE>
percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized,
merged or consolidated company's then outstanding voting
securities, or (ii) a liquidation or dissolution of the
Corporation or the Bank or the sale of all or substantially
all of the assets of the Corporation or the Bank.
(ii) "Average Annual Compensation" shall be the average of the
Executive's annual compensation received from the Corporation and the Bank
and includable in the Executive's gross income for federal income tax
purposes during the base period. However, the term "Average Annual
Compensation" shall also include amounts not included in gross income for
federal income tax purposes by virtue of Code Sections 125, 402(a)(8) and
402(h)(1)(B). Also, for purposes of this Agreement, the term "Average
Annual Compensation" shall specifically include any amounts paid and
includable in the Executive's gross income during the base period under the
Incentive Compensation Program or under any other incentive or bonus
arrangement maintained by the Corporation or the Bank. For purposes of this
subsection (ii), the base period for determining "Average Annual
Compensation" shall be the Executive's most recent five (5) consecutive
taxable years ending before the date of the Change in Control. However, if
the Executive was not employed by the Corporation or the Bank for the
entire five (5) year period described in the preceding sentence, then the
base period shall be the portion of such five (5) year period during which
the Executive was employed by the Corporation or the Bank.
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<PAGE>
(iii) "Good Cause" shall mean and be limited to (A) an act or
acts of personal dishonesty taken by the Executive and intended to result
in substantial personal enrichment of the Executive at the expense of the
Corporation or the Bank, (B) repeated violations by the Executive of the
Executive's obligations under Section (1) of this Agreement which are
demonstrably willful and deliberate on the Executive's part and which are
not remedied in a reasonable period of time (which shall not be less than
thirty (30) days nor more than sixty (60) days) after receipt of written
notice from the Corporation or the Bank, (C) serious and substantial
improper conduct by the Executive which is clearly inconsistent with the
Executive's position of trust and authority with the Corporation or the
Bank and which detrimentally affects the reputation and good standing of
the Corporation or the Bank in the community, or (D) the conviction of the
Executive of a felony.
(iv) The "Board" shall mean the Board of Directors of the
Corporation and the Bank.
(v) The "Incumbent Board" shall mean the members of the Board as
of January 1, 1996, and any person becoming a member of the Board after
such date whose election, or nomination for election, was approved by a
vote of at least two-thirds (2/3rds) of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of
the Corporation or the Bank, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act.)
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<PAGE>
(e) If, after the exhaustion of all administrative and judicial
appeals as the Corporation determines in its sole discretion to pursue, the
Internal Revenue Service determines that Code Section 280G prohibits the
Corporation or the Bank from deducting all of the Aggregate Severance or
Adjusted Aggregate Severance, as applicable, paid to the Executive and reported
on its federal income tax return, the Executive shall have an obligation to pay
the Corporation or the Bank upon demand an amount equal to the sum of (i) the
excess of the amount of the Aggregate Severance or Adjusted Aggregate Severance,
as applicable, over the maximum amount that could have been paid to Executive
without any portion of such payments not being deductible by reason of Code
Section 280G; and (ii) interest on the amount set forth in this subsection at
the rate provided in Code Section 1274(b)(2)(B) from the date of Executive's
receipt of the amount set forth in this subsection until the date of repayment.
(5) Nondisclosure; Confidentiality. The Executive agrees that if his
employment terminates during the term of this Agreement, he will not for one (1)
year after such termination, directly or indirectly disclose or give to others
any confidential fact or information not generally available to the public
concerning the Corporation's or the Bank's financial operations and businesses,
including but not limited to the provision of financial data processing services
to banks, thrift institutions, credit unions and mortgage servicers, and the
providing of merchant credit card authorization, settlement and related
services, data imaging, micrographic, and electronic data management services to
others generally. Such financial information, financial systems, financing
arrangements, trade secret or confidential business information includes
business plans, financial information, financial systems, financing
arrangements, and any other secret or confidential work, knowledge, "know-how,"
trade secret or confidential information
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<PAGE>
including confidential information relating to customer accounts, customer
needs, organization, strategy, research and development, design, drawings,
specifications, techniques, processes, procedures, "know-how," marketing
techniques and materials, marketing and development plans, fee lists, fee
policies or any other confidential information relating to customers.
(6) Damages and Injunctive Relief. The Executive agrees that the breach of
any of his obligations under Section (5) of this Agreement: (a) may cause injury
to the Corporation and the Bank and that the Corporation and the Bank are
entitled to seek and obtain compensation and damages; and (b) may cause
irreparable injury to the Corporation and the Bank and that, accordingly the
Corporation and the Bank may seek and obtain injunctive relief against the
breach or threatened breach of those provisions in addition to other remedies at
law or in equity which may be available; provided, however, that no such claim
by the Corporation or the Bank shall permit the Corporation or the Bank to
offset, reduce, suspend or withhold any of the payments or benefits provided
under Section (4) or to seek an injunction providing for such offset, reduction,
suspension or withholding.
(7) Assignment; Successors.
(a) The rights and benefits of the Executive under this Agreement are
personal to him and shall not be assignable, except with the prior written
consent of the Corporation or the Bank.
(b) This Agreement shall not be assignable by the Corporation or the
Bank provided that, with the consent of the Executive, the Corporation may
assign this Agreement to another corporation wholly-owned by it, either directly
or through one or more other
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<PAGE>
corporations, or to any corporate successor of the Corporation or the Bank or
any such other corporation.
(c) Notwithstanding the foregoing, any business entity succeeding to
substantially all of the business of the Corporation or the Bank by purchase,
merger, consolidation, sale of assets or otherwise shall be bound by and shall
adopt and assume this Agreement and the Corporation and the Bank shall obtain
the express assumption of this Agreement by such successor.
(8) Notices. Any notices or other communications under this Agreement shall
be in writing, signed by the party making the same, and shall be delivered
personally or sent by certified or registered mail, postage prepaid, addressed
as follows:
If to the Executive: James L. Flatt
First State Corporation
333 Broad Avenue
Albany, Georgia 31703
Copy to: ________________________
________________________
________________________
________________________
________________________
If to the Corporation or
the Bank: Morgan G. Murphy
First State Corporation
333 Broad Avenue
Albany, Georgia 31703
Copy to:
Perry, Walters & Lippitt
409 N. Jackson Street
Albany, Georgia 31701
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<PAGE>
or to such other address or agent as may hereafter be designated by either party
hereto. All such notices shall be deemed given on the date personally delivered
or mailed.
(9) Full Settlement and Legal Expenses. The Corporation's and the Bank's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Corporation or the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement. The Corporation or the Bank agree to pay, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Corporation or the Bank or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive with respect to the amount of any payment pursuant to Section (4) of
this Agreement), plus in each case interest at the applicable Federal rate
provided for in Code Section 7872(f)(2).
(10) Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Georgia.
(11) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any one
or more of the provisions contained in this Agreement shall be invalid, illegal
or unenforceable in any respect for any
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<PAGE>
reason, the validity, legality and enforceability of any such provisions in
every other respect and of the remaining provisions of this Agreement shall not
be in any way impaired.
(12) Entire Agreement. This Agreement contains the entire agreements of the
parties hereto with respect to the subject matter contained herein. There are no
restrictions, promises, covenants, or undertakings between the Corporation or
the Bank and the Executive other than those expressly set forth herein or
contained in the Corporation's or the Bank's employee welfare or pension benefit
plans or incentive compensation plans covering the Executive. This Agreement may
not be amended or modified except by a writing executed by the parties.
(13) Arbitration. Any controversy or claim arising out of or relating to
the parties' rights and obligations under this Agreement shall be settled by
arbitration in accordance with the Commercial Arbitration Rules (the "Rules") of
the American Arbitration Association (the "AAA"). Arbitration shall be initiated
by a party by giving notice in the manner set forth herein to the other party or
parties of its intention to arbitrate, which notice shall contain a statement
setting forth the nature of the dispute, the amount claimed, if any, and the
remedy sought. The initiating party shall then file a copy or copies of the
notice as set forth under the Rules. Any arbitration hearing shall be held in
Albany, Georgia. The Corporation or the Bank and the Executive shall agree upon
and appoint three (3) arbitrators in accordance with the Commercial Arbitration
Rules of the AAA within twenty (20) days of the effective date of notice of
arbitration; provided, however, that if the parties fail to make such
designation within twenty (20) days, the AAA shall appoint the arbitrators. The
determinations of the arbitrators will be final and binding upon the parties to
the arbitration, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction, or application may be made to any
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<PAGE>
such court for a judicial acceptance of the award and an order of enforcement,
as the case may be. The arbitrators shall apply the laws of the State of Georgia
as to both substantive and procedural questions.
[Signatures Appear on Next page]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
FIRST STATE CORPORATION
By: /s/ Morgan G. Murphy
-------------------------------
Attest: /s/ Douglas E. Wren
---------------------------
FIRST STATE BANK AND TRUST COMPANY
By: /s/ Morgran G. Murphy
-------------------------------
Attest: /s/ Douglas E. Wren
---------------------------
/s/ Louise B. Murphy
- -----------------------------
Witness
/s/ Elisabeth S. Driskell
- -----------------------------
Witness
/s/ James L. Flatt
-----------------------------------
JAMES L. FLATT
/s/ Jenny A. Sledge
- -----------------------------
Witness
/s/ Josephine M. Donovan
- -----------------------------
Witness
-17-
EXHIBIT 10.5
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Agreement (the "Agreement") made as of the 1st
day of May, 1993, amended as of August 30, 1993, and amended and restated as of
May 8, 1996, between FIRST STATE CORPORATION, a bank holding company
(hereinafter referred to as the "Corporation") and its wholly owned bank
subsidiary, FIRST STATE BANK AND TRUST COMPANY (hereinafter referred to as the
"Bank"), both organized and existing under the laws of the State of Georgia with
their principal offices and places of business being located in Albany, Georgia,
and ROBERT E. LEE (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been serving as Executive Vice President of the
Bank since February 22, 1993 and is now serving as Senior Vice President and
Controller of the Corporation and as Executive Vice President and Chief
Financial Officer of the Bank; and
WHEREAS, the Corporation and the Bank entered into an employment agreement
reflecting certain terms of Executive's employment relationship with the Bank as
of May 1, 1993, as amended thereafter (the "1993 Agreement"); and
WHEREAS, the parties desire to amend and restate the 1993 Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto agree as follows:
(1) Employment. The Executive hereby agrees to serve as Senior Vice
President and Controller of the Corporation and as Executive Vice President and
Chief Financial Officer of the
<PAGE>
Bank, or in such other executive position of similar or greater responsibilities
with the Corporation and the Bank (or an affiliated corporation) as he may be
designated to hold, for the term of this Agreement, subject to the terms set
forth herein and the provisions of the Bylaws of the Corporation and the Bank.
During his employment hereunder, the Executive shall devote his efforts and
attention, substantially on a fulltime basis, to the performance of the duties
required of him as an executive of the Corporation and the Bank.
(2) Term.
(a) This Agreement and the Executive's employment hereunder shall be
effective as of May 1, 1993, and shall continue for a sixty (60) month term
ending on April 30, 1998. This Agreement shall automatically be renewed for
successive twelve (12) month terms at the end of the initial term unless either
party gives written notice to the other of its intent to terminate this
Agreement with such written notice to be given not less than ninety (90) days
prior to the commencement of any such twelve (12) month renewal term. In the
event such notice to terminate is properly given, this Agreement shall terminate
at the end of the initial sixty (60) month term or at the end of the twelve (12)
month renewal term then in effect.
(b) The Executive's employment hereunder may be terminated by either
party prior to the end of the initial term hereof (including any renewal term)
upon ninety (90) days prior written notice to the other party, provided that, in
the event of such termination, the Corporation and the Bank shall be obligated
to make the payments and provide the benefits, if any, described in Section (4)
below.
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<PAGE>
(3) Compensation. As compensation for his services during the term of this
Agreement, the Executive shall receive the amounts and benefits set forth in
subsections (a), (b), (c), (d) and (e) below:
(a) An annual salary effective May 1, 1993, of $73,750 prorated for
any partial year of employment, subject to annual review for increases in light
of the size and performance of the Corporation and the Bank at such time as the
Corporation and the Bank conduct salary reviews for their officers generally.
The Executive's salary shall be payable bimonthly or in accordance with the
Corporation's and the Bank's regular payroll practices in effect from time to
time for officers of his level;
(b) Participation on an annual basis in the "Senior Management
Incentive Compensation Plan" (the "SMICP"), or such other successor annual
incentive compensation program as may be maintained from time to time for the
benefit, generally, of the senior management employees of the Corporation and
the Bank (the SMICP and such other successor annual incentive compensation
program(s) being hereinafter collectively referred to as the "Incentive
Compensation Program"). Any incentive compensation award which may become
payable to the Executive under the Incentive Compensation Program shall depend
upon attainment of financial performance goals for the Corporation and the Bank
and shall be expressed as a percentage of the Executive's annual base salary
then in effect and, for any annual period, the percentage may vary depending
upon the degree to which the financial performance goals are attained. The
financial performance goals and the base salary percentage(s) which serve as a
measure of the incentive compensation award for each annual period shall be
established in advance of that annual period by the Compensation Committee of
the Board of
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<PAGE>
Directors of the Corporation. Any incentive compensation award which becomes
payable under the Incentive Compensation Program shall be payable in accordance
with the terms thereof.
(c) Participation in all of the employee benefit plans maintained now
or in the future by the Corporation and the Bank for the purpose of providing
retirement benefits, deferred compensation, health care coverage, life insurance
coverage and disability coverage as well as similar pension or welfare benefits
to its employees. These employee benefit plans include, but are not limited to,
the defined benefit pension plan, the defined contribution profit sharing plan,
the defined contribution employee/thrift and savings plan (a section 401(k) and
(m) plan), the defined contribution money purchase pension plan, group health
and accident insurance, group term life insurance and any other employee
pension, welfare or incentive benefit plans as they may now exist or exist in
the future.
(d) Continued participation in the Incentive Compensation Program for
senior executives of the Corporation and the Bank, which now exists or which may
exist in the future.
(e) Reimbursement of the dues and costs of club memberships and
automobile expenses. In addition, the Corporation and the Bank will continue to
provide the Executive with an automobile of similar grade and quality as is now
being provided to the Executive.
(4) Termination Payments. Upon termination of the Executive's employment
prior to the end of the sixty (60) month term of this Agreement (including any
renewal term), the Corporation or the Bank shall pay to the Executive in cash,
within three (3) business days after the termination of the Executive's
employment, any amount payable pursuant to subsections (a) or (b) below and
shall for the period, or at the time specified, provide the other benefits, if
any, described in subsection (d):
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<PAGE>
(a) The payment due to Executive under this subsection (a) shall be
two and ninety-nine/one hundredths (2.99) times the Executive's "Average Annual
Compensation," as defined in subsection (d) below (the "Severance Amount"), if:
the Executive's employment is terminated by the Corporation or the Bank, other
than for "Good Cause," as defined in subsection (d) below, within three (3)
years after any "Change in Control," as defined in subsection (d) below, or at
the request of, or pursuant to, an agreement with a third party who has taken
steps reasonably calculated to effect a Change in Control, or otherwise in
connection with or in anticipation of a Change in Control. However, if the
aggregate present value (determined as of the date of the Change in Control in
accordance with the provisions of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and the rules and regulations thereunder) of both
the Severance Amount and all other payments to Executive in the nature of
compensation which are contingent on a change in ownership or effective control
of the Corporation or Bank or in the ownership of a substantial portion of the
assets of the Corporation or the Bank (the "Aggregate Severance") would result
in a parachute payment (as determined under Code Section 280G) then the
Aggregate Severance shall not be greater than an amount equal to two and
ninety-nine/one hundredths (2.99) multiplied by Executive's base amount (as
determined under Code Section 280G) for the base period (as determined under
Code Section 280G). In the event the Aggregate Severance is required to be
reduced pursuant to this subsection (a), Executive shall be entitled to
determine which portions of the Aggregate Severance are to be reduced so that
the Aggregate Severance satisfies the limit in the preceding sentence (the
"Adjusted Aggregate Severance").
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<PAGE>
(b) If the Executive's termination of employment is not described in
subsection (a) above, the payment due to Executive under this subsection (b)
shall be equal to any unpaid salary due to the Executive through the date of
termination.
(c) In addition to the payments provided to the Executive under (a) or
(b) above, any amounts of incentive compensation deferred pursuant to subsection
(b) of section (3) above (under the Incentive Compensation Program) shall be
paid to the Executive at the same time as such other payment, together with
interest due thereon to the date of payment. If the Executive's termination of
employment is described in subsection (a) above, the health and accident
coverage and the life insurance coverage provided to the Executive at his date
of termination shall be continued at the same level and in the same manner as if
his employment had not terminated (subject to the customary changes in such
coverages if the Executive reaches age sixty-five (65) or similar events),
beginning on the date of such termination and ending on the date thirty-six (36)
months from the date of termination; and any additional coverages the Executive
had at termination, including dependent coverage, will also be continued for
such period on the same terms. Any costs the Executive was paying for such
coverages at the time of termination shall continue to be paid by the Executive.
If the terms of any benefit plan referred to in this subsection do not permit
continued participation by the Executive, as contemplated by this subsection,
then the Corporation or the Bank will reimburse the Executive for the cost of
insurance coverages for the Executive and dependents of the Executive that are
substantially equivalent to the health and accident and life insurance coverages
provided to the employees of the Corporation or the Bank and their eligible
dependents during the thirty-six (36) month period described herein.
Reimbursement for the cost of coverage of a dependent of the Executive shall
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<PAGE>
be reimbursable only if the dependent would be deemed a dependent eligible for
coverage under the substantially equivalent benefit plan then maintained by the
Corporation or the Bank had the Executive continued in the employ of the
Corporation and the Bank. However, the obligation of the Corporation and the
Bank to provide the health and accident coverage and the life insurance coverage
described in this Section 4(c) shall abate and be considered satisfied to the
extent the Executive receives employer provided coverage under an accident and
health plan or a life insurance plan maintained by a subsequent employer. The
Executive agrees to provide the Bank with the information necessary to enable
the Bank to comply with the provisions of this subsection (c).
(d) For purposes of this Agreement, the following definitions shall
apply:
(i) "Change in Control" shall mean the occurrence of (A), (B) or
(C) below:
(A) The acquisition by any person, entity or "group", within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act")
(excluding, for this purpose, any employee benefit plan
maintained by the Corporation or the Bank, or by any
subsidiary of either, which acquires beneficial ownership of
voting securities of the Corporation or the Bank) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than fifty
percent (50%) of either the then outstanding shares of
Common Stock or the combined voting power of the
Corporation's or the Bank's then
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<PAGE>
outstanding voting securities entitled to vote generally in
the election of directors.
(B) (i) The acquisition by any person, entity or "group",
within the meaning of Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act (excluding, for this purpose, any
employee benefit plan of the Corporation or the Bank, or any
subsidiary of either, which acquires beneficial ownership of
voting securities of the Corporation or the Bank) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30%)
or more of either the then outstanding shares of Common
Stock or the combined voting power of the Corporation's or
the Bank's then outstanding voting securities entitled to
vote generally in the election of directors; and
(ii) The failure for any reason of individuals who
constitute the Incumbent Board to continue to constitute at
least two-thirds (2/3rds) of the Board within any thirteen
(13) month period.
(C) Approval by the stockholders of the Corporation or the
Bank of (i) a reorganization, merger or consolidation, with
respect to which persons who were the stockholders of the
Corporation or the Bank immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, own more than fifty
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<PAGE>
percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized,
merged or consolidated company's then outstanding voting
securities, or (ii) a liquidation or dissolution of the
Corporation or the Bank or the sale of all or substantially
all of the assets of the Corporation or the Bank.
(ii) "Average Annual Compensation" shall be the average of the
Executive's annual compensation received from the Corporation and the Bank
and includable in the Executive's gross income for federal income tax
purposes during the base period. However, the term "Average Annual
Compensation" shall also include amounts not included in gross income for
federal income tax purposes by virtue of Code Sections 125, 402(a)(8) and
402(h)(1)(B). Also, for purposes of this Agreement, the term "Average
Annual Compensation" shall specifically include any amounts paid and
includable in the Executive's gross income during the base period under the
Incentive Compensation Program or under any other incentive or bonus
arrangement maintained by the Corporation or the Bank. For purposes of this
subsection (ii), the base period for determining "Average Annual
Compensation" shall be the Executive's most recent five (5) consecutive
taxable years ending before the date of the Change in Control. However, if
the Executive was not employed by the Corporation or the Bank for the
entire five (5) year period described in the preceding sentence, then the
base period shall be the portion of such five (5) year period during which
the Executive was employed by the Corporation or the Bank.
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<PAGE>
(iii) "Good Cause" shall mean and be limited to (A) an act or
acts of personal dishonesty taken by the Executive and intended to result
in substantial personal enrichment of the Executive at the expense of the
Corporation or the Bank, (B) repeated violations by the Executive of the
Executive's obligations under Section (1) of this Agreement which are
demonstrably willful and deliberate on the Executive's part and which are
not remedied in a reasonable period of time (which shall not be less than
thirty (30) days nor more than sixty (60) days) after receipt of written
notice from the Corporation or the Bank, (C) serious and substantial
improper conduct by the Executive which is clearly inconsistent with the
Executive's position of trust and authority with the Corporation or the
Bank and which detrimentally affects the reputation and good standing of
the Corporation or the Bank in the community, or (D) the conviction of the
Executive of a felony.
(iv) The "Board" shall mean the Board of Directors of the
Corporation and the Bank.
(v) The "Incumbent Board" shall mean the members of the Board as
of January 1, 1996, and any person becoming a member of the Board after
such date whose election, or nomination for election, was approved by a
vote of at least two-thirds (2/3rds) of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of
the Corporation or the Bank, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act.)
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<PAGE>
(e) If, after the exhaustion of all administrative and judicial
appeals as the Corporation determines in its sole discretion to pursue, the
Internal Revenue Service determines that Code Section 280G prohibits the
Corporation or the Bank from deducting all of the Aggregate Severance or
Adjusted Aggregate Severance, as applicable, paid to the Executive and reported
on its federal income tax return, the Executive shall have an obligation to pay
the Corporation or the Bank upon demand an amount equal to the sum of (i) the
excess of the amount of the Aggregate Severance or Adjusted Aggregate Severance,
as applicable, over the maximum amount that could have been paid to Executive
without any portion of such payments not being deductible by reason of Code
Section 280G; and (ii) interest on the amount set forth in this subsection at
the rate provided in Code Section 1274(b)(2)(B) from the date of Executive's
receipt of the amount set forth in this subsection until the date of repayment.
(5) Nondisclosure; Confidentiality. The Executive agrees that if his
employment terminates during the term of this Agreement, he will not for one (1)
year after such termination, directly or indirectly disclose or give to others
any confidential fact or information not generally available to the public
concerning the Corporation's or the Bank's financial operations and businesses,
including but not limited to the provision of financial data processing services
to banks, thrift institutions, credit unions and mortgage servicers, and the
providing of merchant credit card authorization, settlement and related
services, data imaging, micrographic, and electronic data management services to
others generally. Such financial information, financial systems, financing
arrangements, trade secret or confidential business information includes
business plans, financial information, financial systems, financing
arrangements, and any other secret or confidential work, knowledge, "know-how,"
trade secret or confidential information
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<PAGE>
including confidential information relating to customer accounts, customer
needs, organization, strategy, research and development, design, drawings,
specifications, techniques, processes, procedures, "know-how," marketing
techniques and materials, marketing and development plans, fee lists, fee
policies or any other confidential information relating to customers.
(6) Damages and Injunctive Relief. The Executive agrees that the breach of
any of his obligations under Section (5) of this Agreement: (a) may cause injury
to the Corporation and the Bank and that the Corporation and the Bank are
entitled to seek and obtain compensation and damages; and (b) may cause
irreparable injury to the Corporation and the Bank and that, accordingly the
Corporation and the Bank may seek and obtain injunctive relief against the
breach or threatened breach of those provisions in addition to other remedies at
law or in equity which may be available; provided, however, that no such claim
by the Corporation or the Bank shall permit the Corporation or the Bank to
offset, reduce, suspend or withhold any of the payments or benefits provided
under Section (4) or to seek an injunction providing for such offset, reduction,
suspension or withholding.
(7) Assignment; Successors.
(a) The rights and benefits of the Executive under this Agreement are
personal to him and shall not be assignable, except with the prior written
consent of the Corporation or the Bank.
(b) This Agreement shall not be assignable by the Corporation or the
Bank provided that, with the consent of the Executive, the Corporation may
assign this Agreement to another corporation wholly-owned by it, either directly
or through one or more other
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<PAGE>
corporations, or to any corporate successor of the Corporation or the Bank or
any such other corporation.
(c) Notwithstanding the foregoing, any business entity succeeding to
substantially all of the business of the Corporation or the Bank by purchase,
merger, consolidation, sale of assets or otherwise shall be bound by and shall
adopt and assume this Agreement and the Corporation and the Bank shall obtain
the express assumption of this Agreement by such successor.
(8) Notices. Any notices or other communications under this Agreement shall
be in writing, signed by the party making the same, and shall be delivered
personally or sent by certified or registered mail, postage prepaid, addressed
as follows:
If to the Executive: Robert E. Lee
First State Corporation
333 Broad Avenue
Albany, Georgia 31703
Copy to: ________________________
________________________
________________________
________________________
________________________
If to the Corporation or
the Bank: Morgan G. Murphy
First State Corporation
333 Broad Avenue
Albany, Georgia 31703
Copy to:
Perry, Walters & Lippitt
409 N. Jackson Street
Albany, Georgia 31701
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<PAGE>
or to such other address or agent as may hereafter be designated by either party
hereto. All such notices shall be deemed given on the date personally delivered
or mailed.
(9) Full Settlement and Legal Expenses. The Corporation's and the Bank's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Corporation or the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement. The Corporation or the Bank agree to pay, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Corporation or the Bank or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive with respect to the amount of any payment pursuant to Section (4) of
this Agreement), plus in each case interest at the applicable Federal rate
provided for in Code Section 7872(f)(2).
(10) Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Georgia.
(11) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any one
or more of the provisions contained in this Agreement shall be invalid, illegal
or unenforceable in any respect for any
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<PAGE>
reason, the validity, legality and enforceability of any such provisions in
every other respect and of the remaining provisions of this Agreement shall not
be in any way impaired.
(12) Entire Agreement. This Agreement contains the entire agreements of the
parties hereto with respect to the subject matter contained herein. There are no
restrictions, promises, covenants, or undertakings between the Corporation or
the Bank and the Executive other than those expressly set forth herein or
contained in the Corporation's or the Bank's employee welfare or pension benefit
plans or incentive compensation plans covering the Executive. This Agreement may
not be amended or modified except by a writing executed by the parties.
(13) Arbitration. Any controversy or claim arising out of or relating to
the parties' rights and obligations under this Agreement shall be settled by
arbitration in accordance with the Commercial Arbitration Rules (the "Rules") of
the American Arbitration Association (the "AAA"). Arbitration shall be initiated
by a party by giving notice in the manner set forth herein to the other party or
parties of its intention to arbitrate, which notice shall contain a statement
setting forth the nature of the dispute, the amount claimed, if any, and the
remedy sought. The initiating party shall then file a copy or copies of the
notice as set forth under the Rules. Any arbitration hearing shall be held in
Albany, Georgia. The Corporation or the Bank and the Executive shall agree upon
and appoint three (3) arbitrators in accordance with the Commercial Arbitration
Rules of the AAA within twenty (20) days of the effective date of notice of
arbitration; provided, however, that if the parties fail to make such
designation within twenty (20) days, the AAA shall appoint the arbitrators. The
determinations of the arbitrators will be final and binding upon the parties to
the arbitration, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction, or application may be made to any
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<PAGE>
such court for a judicial acceptance of the award and an order of enforcement,
as the case may be. The arbitrators shall apply the laws of the State of Georgia
as to both substantive and procedural questions.
[Signatures Appear on Next page]
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<PAGE>
May 14, 1996
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
FIRST STATE CORPORATION
By: /s/ Morgan G. Murphy
------------------------------
Attest: /s/ Douglas E. Wren
--------------------------
FIRST STATE BANK AND TRUST COMPANY
By: /s/ Morgan G. Murphy
------------------------------
Attest: /s/ Douglas E. Wren
--------------------------
/s/ Louise B. Murphy
- -----------------------------
Witness
/s/ Elisabeth S. Driskell
- -----------------------------
Witness
/s/ Robert E. Lee
----------------------------------
ROBERT E. LEE
/s/ Margaret V. Carver
- -----------------------------
Witness
/s/ Darlene S. Fambro
- -----------------------------
Witness
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EXHIBIT 10.6
FIRST STATE CORPORATION
1997 STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS............................................... 1
1.1 Definitions.............................................. 1
SECTION 2 THE STOCK INCENTIVE PLAN.................................. 5
2.1 Purpose of the Plan...................................... 5
2.2 Stock Subject to the Plan................................ 5
2.3 Administration of the Plan............................... 5
2.4 Eligibility and Limits................................... 6
SECTION 3 TERMS OF STOCK INCENTIVES................................. 6
3.1 Terms and Conditions of All Stock Incentives............. 6
3.2 Terms and Conditions of Options.......................... 7
(a) Option Price....................................... 8
(b) Option Term........................................ 8
(c) Payment............................................ 8
(d) Conditions to the Exercise of an Option............ 8
(e) Termination of Incentive Stock Option.............. 9
(f) Special Provisions for Certain Substitute Options.. 9
3.3 Terms and Conditions of Stock Appreciation Rights........ 9
(a) Settlement.......................................... 9
(b) Conditions to Exercise.............................. 9
3.4 Terms and Conditions of Stock Awards..................... 10
3.5 Terms and Conditions of Dividend Equivalent Rights....... 10
(a) Payment............................................ 10
(b) Conditions to Payment.............................. 10
3.6 Terms and Conditions of Performance Unit Awards.......... 10
(a) Payment............................................ 10
(b) Conditions to Payment.............................. 11
3.7 Terms and Conditions of Phantom Shares................... 11
(a) Payment............................................ 11
(b) Conditions to Payment.............................. 11
3.8 Treatment of Awards Upon Termination of Service.......... 11
SECTION 4 RESTRICTIONS ON STOCK..................................... 11
4.1 Escrow of Shares......................................... 11
4.2 Forfeiture of Shares..................................... 12
4.3 Restrictions on Transfer................................. 12
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<PAGE>
SECTION 5 GENERAL PROVISIONS........................................ 12
5.1 Withholding.............................................. 12
5.2 Changes in Capitalization; Merger; Liquidation........... 13
5.3 Cash Awards.............................................. 13
5.4 Compliance with Code..................................... 14
5.5 Right to Terminate Service............................... 14
5.6 Restrictions on Delivery and Sale of Shares; Legends..... 14
5.7 Non-alienation of Benefits............................... 14
5.8 Termination and Amendment of the Plan.................... 14
5.9 Stockholder Approval..................................... 14
5.10 Choice of Law............................................ 15
5.11 Effective Date of Plan................................... 15
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<PAGE>
FIRST STATE CORPORATION
1997 STOCK INCENTIVE PLAN
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall be
deemed to include the feminine, and the singular to include the plural, unless
the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:
(a) "Board of Directors" means the board of directors of the Company.
(b) "Cause" has the same meaning as provided in the employment
agreement between the Participant and the Company or, if applicable, any
affiliate of the Company on the date of Termination of Service, or if no such
definition or employment agreement exists, "Cause" means conduct amounting to
(1) fraud or dishonesty against the Company or its affiliates, (2) Participant's
willful misconduct, repeated refusal to follow the reasonable directions of the
board of directors of the Company or its affiliates, or knowing violation of law
in the course of performance of the duties of Participant's service with the
Company or its affiliates, (3) repeated absences from work without a reasonable
excuse, (4) repeated intoxication with alcohol or drugs while on the Company or
affiliates' premises during regular business hours, (5) a conviction or plea of
guilty or nolo contendere to a felony or a crime involving dishonesty, or (6) a
breach or violation of the terms of any agreement to which Participant and the
Company or its affiliates are party.
(c) "Change in Control" means any one of the following events which
may occur without the approval of the Board of Directors:
(1) the acquisition by any person, entity or "group," within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act
of 1934 (excluding, for this purpose, any employee benefit plan maintained by
the Company or any affiliate), which acquires beneficial ownership of voting
securities of the Company (or of such other Company affiliates as may be
identified in the Stock Incentive Agreement or otherwise designated by the
Committee) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of more than fifty percent (50%) of
either the then outstanding shares of Stock or the combined voting power of the
Company's (or of such other Company affiliates') (as may be identified in the
Stock Incentive Agreement or otherwise designated by the Committee) then
outstanding voting securities entitled to vote generally in the election of
directors;
(2) the acquisition by any person, entity or "group," within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act
of 1934 (excluding, for this purpose, any employee benefit plan maintained by
the Company or any affiliate), which acquires beneficial ownership of voting
securities of the Company (or of such other Company affiliates as may be
identified in the Stock Incentive Agreement or otherwise designated by the
Committee) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of more than thirty percent (30%) or
more of either the then outstanding shares of Stock or the combined voting power
of the Company's (or of such other Company affiliates') (as
<PAGE>
may be identified in the Stock Incentive Agreement or otherwise designated by
the Committee) then outstanding voting securities entitled to vote generally in
the election of directors and the failure for any reason of individuals who
constitute the Incumbent Board to continue to constitute at least two-thirds of
the Board of Directors within any thirteen (13) month period. For purposes of
this Section 1.1(c)(2), the term "Incumbent Board" shall mean the members of the
Board of Directors as of the date this Plan is adopted by the Board of Directors
and any person becoming a member of the Board of Directors after that date whose
election, or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934); or
(3) the approval by the stockholders of the Company (or of such
other Company affiliates as may be identified in the Stock Incentive Agreement
or otherwise designated by the Committee) of a reorganization, merger or
consolidation, with respect to which persons who were the stockholders of the
Company (or of such other Company affiliates as may be identified in the Stock
Incentive Agreement or otherwise designated by the Committee) immediately prior
to such reorganization, merger or consolidation do not, immediately thereafter,
own more than fifty percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or a liquidation or
dissolution of the Company (or of such other Company affiliates as may be
identified in the Stock Incentive Agreement or otherwise designated by the
Committee) or the sale of all or substantially all of the assets of the Company
(or of such other Company affiliates as may be identified in the Stock Incentive
Agreement or otherwise designated by the Committee).
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the committee appointed by the Board of
Directors to administer the Plan pursuant to Plan Section 2.3.
(f) "Company" means First State Corporation, a Georgia corporation.
(g) "Disability" has the same meaning as provided in the long-term
disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company for
the Participant. If no long-term disability plan or policy was ever maintained
on behalf of the Participant or, if the determination of Disability relates to
an Incentive Stock Option, Disability shall mean that condition described in
Code Section 22(e)(3), as amended from time to time. In the event of a dispute,
the determination of Disability shall be made by the Board of Directors and
shall be supported by advice of a physician competent in the area to which such
Disability relates.
(h) "Disposition" means any conveyance, sale, transfer, assignment,
pledge or hypothecation, whether outright or as security, inter vivos or
testamentary, with or without consideration, voluntary or involuntary.
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<PAGE>
(i) "Dividend Equivalent Rights" means certain rights to receive cash
payments as described in Plan Section 3.5.
(j) "Fair Market Value" refers to the determination of value of a
share of Stock. If the Stock is actively traded on any national securities
exchange or any Nasdaq quotation or market system, Fair Market Value shall mean
the closing price at which sales of Stock shall have been sold on the most
recent trading date immediately prior to the date of determination, as reported
by any such exchange or system selected by the Committee on which the shares of
Stock are then traded. If the shares of Stock are not actively traded on any
such exchange or system, Fair Market Value shall mean the arithmetic mean of the
bid and asked prices for the shares of Stock on the most recent trading date
within a reasonable period prior to the determination date as reported by such
exchange or system. If there are no bid and asked prices within a reasonable
period or if the shares of Stock are not traded on any exchange or system as of
the determination date, Fair Market Value shall mean the fair market value of a
share of Stock as determined by the Committee taking into account such facts and
circumstances deemed to be material by the Committee to the value of the Stock
in the hands of the Participant; provided that, for purposes of granting awards
other than Incentive Stock Options, Fair Market Value of a share of Stock may be
determined by the Committee by reference to the average market value determined
over a period certain or as of specified dates, to a tender offer price for the
shares of Stock (if settlement of an award is triggered by such an event) or to
any other reasonable measure of fair market value and provided further that, for
purposes of granting Incentive Stock Options, Fair Market Value of a share of
Stock shall be determined in accordance with the valuation principles described
in the regulations promulgated under Code Section 422.
(k) "Incentive Stock Option" means an incentive stock option, as
defined in Code Section 422, described in Plan Section 3.2.
(l) "Non-Qualified Stock Option" means a stock option, other than an
option qualifying as an Incentive Stock Option, described in Plan Section 3.2.
(m) "Option" means a Non-Qualified Stock Option or an Incentive Stock
Option.
(n) "Over 10% Owner" means an individual who at the time an Incentive
Stock Option is granted owns Stock possessing more than 10% of the total
combined voting power of the Company or one of its Parents or Subsidiaries,
determined by applying the attribution rules of Code Section 424(d).
(o) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, with respect to
Incentive Stock Options, at the time of granting of the Option, each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
(p) "Participant" means an individual who receives a Stock Incentive
hereunder.
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<PAGE>
(q) "Performance Unit Award" refers to a performance unit award
described in Plan Section 3.6.
(r) "Phantom Shares" refers to the rights described in Plan Section
3.7.
(s) "Plan" means the First State Corporation 1997 Stock Incentive
Plan.
(t) "Stock" means the Company's common stock, $1.00 par value.
(u) "Stock Appreciation Right" means a stock appreciation right
described in Plan Section 3.3.
(v) "Stock Award" means a stock award described in Plan Section 3.4.
(w) "Stock Incentive Agreement" means an agreement between the Company
and a Participant or other documentation evidencing an award of a Stock
Incentive.
(x) "Stock Incentive Program" means a written program established by
the Committee pursuant to which Stock Incentives, other than Options or Stock
Appreciation Rights, are awarded under the Plan under uniform terms, conditions
and restrictions set forth in such written program and distributed among
eligible officers, employees and directors.
(y) "Stock Incentives" means, collectively, Dividend Equivalent
Rights, Incentive Stock Options, Non-Qualified Stock Options, Performance Unit
Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards.
(z) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, with respect to
Incentive Stock Options, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
(aa) "Termination of Service" means the termination of the service
relationship, whether employment or otherwise, between a Participant and the
Company and its affiliates, regardless of the fact that severance or similar
payments are made to the Participant for any reason, including, but not by way
of limitation, a termination by resignation, discharge, death, Disability or
retirement. The Committee shall, in its absolute discretion, determine the
effect of all matters and questions relating to Termination of Service,
including, but not by way of limitation, the question of whether a leave of
absence constitutes a Termination of Service, or whether a Termination of
Service is for Cause.
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<PAGE>
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
officers, employees, directors and consultants of the Company and its affiliates
to stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
officers, employees, directors and consultants by providing them with a means to
acquire a proprietary interest in the Company by acquiring shares of Stock or to
receive compensation which is based upon appreciation in the value of Stock; and
(c) provide a means of obtaining and rewarding key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 5.2, 230,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At no time shall
the Company have outstanding Stock Incentives and shares of Stock issued in
respect of Stock Incentives in excess of the Maximum Plan Shares. The shares of
Stock attributable to the nonvested, unpaid, unexercised, unconverted or
otherwise unsettled portion of any Stock Incentive that is forfeited or
cancelled or expires or terminates for any reason without becoming vested, paid,
exercised, converted or otherwise settled in full shall again be available for
purposes of the Plan.
2.3 Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall have full authority in its discretion to
determine the officers, employees, directors and consultants of the Company or
its affiliates to whom Stock Incentives shall be granted and the terms and
provisions of Stock Incentives, subject to the Plan. Subject to the provisions
of the Plan, the Committee shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Stock Incentive
Agreements or Stock Incentive Programs and to make all other determinations
necessary or advisable for the proper administration of the Plan. The
Committee's determinations under the Plan 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). The
Committee's decisions shall be final and binding on all Participants.
As to any matter involving a Participant who is not a "reporting person"
for purposes of Section 16 of the Securities Exchange Act of 1934, the Committee
may delegate to any member of the Board of Directors or officer of the Company
the administrative authority to (a) interpret the provisions of the
Participant's Stock Incentive Agreement and (b) determine the treatment of Stock
Incentives upon a Termination of Service, as contemplated by Plan Section 3.8.
The Committee shall consist of at least two members of the Board of
Directors. The Board of Directors shall consider the advisability of complying
with the disinterested standards contained in both Code Section 162(m) and Rule
16b-3(b)(3) (promulgated under the Securities Exchange Act of 1934) when
appointing members to, or otherwise considering the composition of, the
Committee. The Board of Directors may from time to time remove members from or
add members to the Committee. Vacancies on the Committee shall be filled by the
Board of Directors.
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2.4 Eligibility and Limits. Stock Incentives may be granted only to
officers, employees, directors and consultants of the Company or an affiliate;
provided, however, that an Incentive Stock Option may only be granted to an
employee of the Company or any Parent or Subsidiary. In the case of Incentive
Stock Options, the aggregate Fair Market Value (determined as at the date an
Incentiv ired under Code Section 162(m) and regulations thereunder for
compensation to be treated as qualified performance-based compensation, the
maximum number of shares Stock with respect to which Options or Stock
Appreciation Rights may be granted during any single fiscal year of the Company
to any Participant who is a "covered employee," within the meaning of Code
Section 162(m) and the regulations promulgated thereunder (a "Covered
Employee"), shall not exceed 100,000.
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives.
(a) The number of shares of Stock as to which a Stock Incentive shall
be granted shall be determined by the Committee in its sole discretion, subject
to the provisions of Section 2.2 as to the total number of shares available for
grants under the Plan. If a Stock Incentive Agreement so provides, a Participant
may be granted a new Option to purchase a number of shares of Stock equal to the
number of previously owned shares of Stock tendered in payment of the Exercise
Price (as defined below) for each share of Stock purchased pursuant to the terms
of the Stock Incentive Agreement.
(b) Each Stock Incentive shall be evidenced either by a Stock
Incentive Agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine is appropriate or be made subject to
the terms of a Stock Incentive Program, containing such terms, conditions and
restrictions as the Committee may determine is appropriate. Each Stock Incentive
Agreement or Stock Incentive Program shall be subject to the terms of the Plan
and any provision in a Stock Incentive Agreement or Stock Incentive Program that
is inconsistent with the Plan shall be null and void.
(c) The date a Stock Incentive is granted shall be the date on which
the Committee has approved the terms and conditions of the Stock Incentive
Agreement or Stock Incentive Program and has determined the recipient of the
Stock Incentive and the number of shares covered by the Stock Incentive and has
taken all such other action necessary to complete the grant of the Stock
Incentive.
(d) The Committee may provide in any Stock Incentive Agreement or
pursuant to any Stock Incentive Program (or subsequent to the award of a Stock
Incentive but prior to its expiration or cancellation, as the case may be) that,
in the event of a Change in Control, the Stock
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Incentive shall or may be cashed out on the basis of any price not greater than
the highest price paid for a share of Stock in any transaction reported by any
market or system selected by the Committee on which the shares of Stock are then
actively traded during a specified period immediately preceding or including the
date of the Change in Control or offered for a share of Stock in any tender
offer occurring during a specified period immediately preceding or including the
date the tender offer commences; provided that, in no case shall any such
specified period exceed one (1) year (the "Change in Control Price"). For
purposes of this Subsection, the cash-out of a Stock Incentive shall be
determined as follows:
(1) Options shall be cashed out on the basis of the excess, if
any, of the Change in Control Price (but not more than the Fair Market Value of
the Stock on the date of the cash-out in the case of Incentive Stock Options)
over the Exercise Price with or without regard to whether the Option may
otherwise be exercisable only in part;
(2) Stock Awards and Phantom Shares shall be cashed out in an
amount equal to the Change in Control Price with or without regard to any
conditions or restrictions otherwise applicable to any such Stock Incentive; and
(3) Stock Appreciation Rights, Dividend Equivalent Rights and
Performance Unit Awards shall be cashed out with or without regard to any
conditions or restrictions otherwise applicable to any such Stock Incentive and
the amount of the cash out shall be determined by reference to the number of
shares of Stock that would be required to pay the Participant in kind for the
value of the Stock Incentive as of the date of the Change in Control multiplied
by the Change in Control Price.
(e) Any Stock Incentive may be granted in connection with all or any
portion of a previously or contemporaneously granted Stock Incentive. Exercise
or vesting of a Stock Incentive granted in connection with another Stock
Incentive may result in a pro rata surrender or cancellation of any related
Stock Incentive, as specified in the applicable Stock Incentive Agreement or
Stock Incentive Program.
(f) Stock Incentives shall not be transferable or assignable except by
will or by the laws of descent and distribution and shall be exercisable, during
the Participant's lifetime, only by the Participant; in the event of the
Disability of the Participant, by the legal representative of the Participant;
or in the event of the death of the participant, by the personal representative
of the Participant's estate or if no personal representative has been appointed,
by the successor in interest determined under the Participant's will.
3.2 Terms and Conditions of Options. Each Option granted under the Plan
shall be evidenced by a Stock Incentive Agreement. At the time any Option is
granted, the Committee shall determine whether the Option is to be an Incentive
Stock Option or a Non-Qualified Stock Option, and the Option shall be clearly
identified as to its status as an Incentive Stock Option or a Non-Qualified
Stock Option. At the time any Incentive Stock Option is exercised, the Company
shall be entitled to place a legend on the certificates representing the shares
of Stock purchased pursuant to the Option to clearly identify them as shares of
Stock purchased upon exercise of an Incentive
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Stock Option. An Incentive Stock Option may only be granted within ten (10)
years from the earlier of the date the Plan is adopted by the Board of Directors
or approved by the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance with Section 5.2
and the other provisions of this Section 3.2, the exercise price (the "Exercise
Price") per share of Stock purchasable under any Option shall be as set forth in
the applicable Stock Incentive Agreement. With respect to each grant of an
Incentive Stock Option to a Participant who is not an Over 10% Owner or to each
grant of any Option to a Participant who is then a Covered Employee, the
Exercise Price per share shall not be less than the Fair Market Value on the
date the Option is granted. With respect to each grant of an Incentive Stock
Option to a Participant who is an Over 10% Owner, the Exercise Price shall not
be less than 110% of the Fair Market Value on the date the Option is granted.
(b) Option Term. The term of an Option shall be as specified in the
applicable Stock Incentive Agreement; provided, however that any Incentive Stock
Option granted to a Participant who is not an Over 10% Owner shall not be
exercisable after the expiration of ten (10) years after the date the Option is
granted and any Incentive Stock Option granted to an Over 10% Owner shall not be
exercisable after the expiration of five (5) years after the date the Option is
granted.
(c) Payment. Payment for all shares of Stock purchased pursuant to
exercise of an Option shall be made in any form or manner authorized by the
Committee in the Stock Incentive Agreement or by amendment thereto, including,
but not limited to, cash or, if the Stock Incentive Agreement provides, (1) by
delivery to the Company of a number of shares of Stock which have been owned by
the holder for at least six (6) months prior to the date of exercise having an
aggregate Fair Market Value of not less than the product of the Exercise Price
multiplied by the number of shares the Participant intends to purchase upon
exercise of the Option on the date of delivery; (2) in a cashless exercise
through a broker; or (3) by having a number of shares of Stock withheld, the
Fair Market Value of which as of the date of exercise is sufficient to satisfy
the Exercise Price. In its discretion, the Committee also may authorize (at the
time an Option is granted or thereafter) Company financing to assist the
Participant as to payment of the Exercise Price on such terms as may be offered
by the Committee in its discretion. Payment shall be made at the time that the
Option or any part thereof is exercised, and no shares shall be issued or
delivered upon exercise of an option until full payment has been made by the
Participant. The holder of an Option, as such, shall have none of the rights of
a stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted under
the Plan shall be exercisable by whom, at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of an Option, the Committee, at any time before complete termination
of such Option, may accelerate the time or times at which such Option may be
exercised in whole or in part, including, without limitation, upon a Change in
Control and may permit the Participant or any other designated person to
exercise the Option, or any portion thereof, for all or
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part of the remaining Option term notwithstanding any provision of the Stock
Incentive Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect to an
Incentive Stock Option, in the event of the Termination of Service of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Service;
provided, however, that in the case of a holder whose Termination of Service is
due to death or Disability, one (1) year shall be substituted for such three (3)
month period. For purposes of this Subsection (e), Termination of Service of the
Participant shall not be deemed to have occurred if the Participant is employed
by another corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the Incentive Stock Option of the Participant in
a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options. Notwithstanding
anything to the contrary in this Section 3.2, any Option issued in substitution
for an option previously issued by another entity, which substitution occurs in
connection with a transaction to which Code Section 424(a) is applicable, may
provide for an exercise price computed in accordance with such Code Section and
the regulations thereunder and may contain such other terms and conditions as
the Committee may prescribe to cause such substitute Option to contain as nearly
as possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued option being
replaced thereby.
3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan shall be evidenced by a Stock
Incentive Agreement. A Stock Appreciation Right may be granted in connection
with all or any portion of a previously or contemporaneously granted Stock
Incentive or not in connection with a Stock Incentive. A Stock Appreciation
Right shall entitle the Participant to receive the excess of (a) the Fair Market
Value of a specified or determinable number of shares of the Stock at the time
of payment or exercise over (b) a specified price (1) which, in the case of a
Stock Appreciation Right granted in connection with an Option, shall be not less
than the Exercise Price for that number of shares and (2) which, in the case of
a Stock Appreciation Right that is granted to a Participant who is then a
Covered Employee, shall not be less than the Fair Market Value of the Stock at
the time of the award. A Stock Appreciation Right granted in connection with a
Stock Incentive may only be exercised to the extent that the related Stock
Incentive has not been exercised, paid or otherwise settled. The exercise of a
Stock Appreciation Right granted in connection with a Stock Incentive shall
result in a pro rata surrender or cancellation of any related Stock Incentive to
the extent the Stock Appreciation Right has been exercised.
(a) Settlement. Upon settlement of a Stock Appreciation Right, the
Company shall pay to the Participant the appreciation in cash or shares of Stock
(valued at the aggregate Fair Market Value on the date of payment or exercise)
as provided in the Stock Incentive Agreement or, in the absence of such
provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right granted
under the Plan shall be exercisable or payable at such time or times, or upon
the occurrence of such event or events, and in such amounts, as the Committee
shall specify in the Stock Incentive Agreement; provided,
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however, that subsequent to the grant of a Stock Appreciation Right, the
Committee, at any time before complete termination of such Stock Appreciation
Right, may accelerate the time or times at which such Stock Appreciation Right
may be exercised or paid in whole or in part.
3.4 Terms and Conditions of Stock Awards. The number of shares of Stock
subject to a Stock Award and restrictions or conditions on such shares, if any,
shall be as the Committee determines, and the certificate for such shares shall
bear evidence of any restrictions or conditions. Subsequent to the date of the
grant of the Stock Award, the Committee shall have the power to permit, in its
discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
The Committee may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment.
3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
Equivalent Right shall entitle the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends paid on a
specified number of shares of Stock to Company stockholders of record during the
period such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent Right may be
made by the Company in cash or shares of Stock (valued at Fair Market Value on
the date of payment) as provided in the Stock Incentive Agreement or, in the
absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right granted
under the Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify in the
Stock Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Dividend Equivalent Right, the Committee, at any
time before complete termination of such Dividend Equivalent Right, may
accelerate the time or times at which such Dividend Equivalent Right may be paid
in whole or in part.
3.6 Terms and Conditions of Performance Unit Awards. A Performance Unit
Award shall entitle the Participant to receive, at a future date, payment of an
amount equal to all or a portion of the value of a number of units (stated in
terms of a designated dollar amount per unit) granted by the Committee, all as
the Committee shall specify in the Stock Incentive Agreement or Stock Incentive
Program. At the time of the grant, the Committee must determine the base value
of each unit, the number of units subject to a Performance Unit Award, the
performance factors applicable to the determination of the ultimate payment
value of the Performance Unit Award and the period over which Company
performance shall be measured. The Committee may provide for an alternate base
value for each unit under certain specified conditions.
(a) Payment. Payment in respect of Performance Unit Awards may be made
by the Company in cash or shares of Stock (valued at Fair Market Value on the
date of payment) as
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provided in the Stock Incentive Agreement or Stock Incentive Program or, in the
absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Performance Unit Award granted under
the Plan shall be payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
Stock Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Performance Unit Award, the Committee, at any time
before complete termination of such Performance Unit Award, may accelerate the
time or times at which such Performance Unit Award may be paid in whole or in
part.
3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall entitle
the Participant to receive, at a future date, payment of an amount equal to all
or a portion of the Fair Market Value of a number of shares of Stock at the end
of a certain period, all as the Committee shall specify in the Stock Incentive
Agreement or Stock Incentive Program. At the time of the grant, the Committee
shall determine the factors which will govern the portion of the rights so
payable, including, at the discretion of the Committee, any performance criteria
that must be satisfied as a condition to payment.
(a) Payment. Payment in respect of Phantom Shares may be made by the
Company in cash or shares of Stock (valued at Fair Market Value on the date of
payment) as provided in the Stock Incentive Agreement or Stock Incentive Program
or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Phantom Share granted under the Plan
shall be payable at such time or times, or upon the occurrence of such event or
events, and in such amounts, as the Committee shall specify in the Stock
Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Phantom Share, the Committee, at any time before
complete termination of such Phantom Share, may accelerate the time or times at
which such Phantom Share may be paid in whole or in part.
3.8 Treatment of Awards Upon Termination of Service. Except as otherwise
provided by Plan Section 3.2(e), any award under this Plan to a Participant who
suffers a Termination of Service may be cancelled, accelerated, paid or
continued, as provided in the Stock Incentive Agreement or Stock Incentive
Program or, in the absence of such provision, as the Committee may determine.
The portion of any award exercisable in the event of continuation or the amount
of any payment due under a continued award may be adjusted by the Committee to
reflect the Participant's period of service from the date of grant through the
date of the Participant's Termination of Service or such other factors as the
Committee determines are relevant to its decision to continue the award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock
issued under the Plan shall be issued in the Participant's name, but, if the
Stock Incentive Agreement or Stock Incentive Program so provides, the shares of
Stock shall be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian shall appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive
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Agreement or Stock Incentive Program, with full power and authority in the
Participant's name, place and stead to transfer, assign and convey to the
Company any shares of Stock held by the Custodian for such Participant, if the
Participant forfeits the shares under the terms of the applicable Stock
Incentive Agreement or Stock Incentive Program. During the period that the
Custodian holds the shares subject to this Section, the Participant shall be
entitled to all rights, except as provided in the applicable Stock Incentive
Agreement or Stock Incentive Program, applicable to shares of Stock not so held.
Any dividends declared on shares of Stock held by the Custodian shall, as the
Committee may provide in the applicable Stock Incentive Agreement or Stock
Incentive Program, be paid directly to the Participant or, in the alternative,
be retained by the Custodian until the expiration of the term specified in the
applicable Stock Incentive Agreement or Stock Incentive Program and shall then
be delivered, together with any proceeds, with the shares of Stock to the
Participant or to the Company, as applicable.
4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set forth in
any Stock Incentive Agreement or Stock Incentive Program, in the event that the
Participant violates a noncompetition agreement as set forth in the Stock
Incentive Agreement or Stock Incentive Program, all Stock Incentives and shares
of Stock issued to the holder pursuant to the Plan shall be forfeited; provided,
however, that the Company shall return to the holder the lesser of any
consideration paid by the Participant in exchange for Stock issued to the
Participant pursuant to the Plan or the then Fair Market Value of the Stock
forfeited hereunder.
4.3 Restrictions on Transfer. The Participant shall not have the right to
make or permit to exist any Disposition of the shares of Stock issued pursuant
to the Plan except as provided in the Plan or the applicable Stock Incentive
Agreement or Stock Incentive Program. Any Disposition of the shares of Stock
issued under the Plan by the Participant not made in accordance with the Plan or
the applicable Stock Incentive Agreement or Stock Incentive Program shall be
void. The Company shall not recognize, or have the duty to recognize, any
Disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
shall continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash distributions under
the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company shall have the right to require the recipient to remit to the Company an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares or the vesting of such Stock Award. A Participant may pay the withholding
tax in cash, or, if the applicable Stock Incentive Agreement or Stock Incentive
Program provides, a Participant may elect to have the number of shares of Stock
he is to receive reduced by, or with respect to a Stock Award, tender back to
the Company, the smallest number of whole shares of Stock which, when multiplied
by the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state and local, if any,
withholding taxes arising from exercise or payment of a Stock Incentive (a
"Withholding Election"). A Participant may make a Withholding Election only if
both of the following conditions are met:
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(a) The Withholding Election must be made on or prior to the date on
which the amount of tax required to be withheld is determined (the "Tax Date")
by executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable; however, the
Committee may in its sole discretion disapprove and give no effect to the
Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant of Options,
Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares, Stock
Appreciation Rights and Stock Awards; the number of shares of Stock reserved for
issuance upon the exercise or payment, as applicable, of each outstanding
Option, Dividend Equivalent Right, Performance Unit Award, Phantom Share and
Stock Appreciation Right and upon vesting or grant, as applicable, of each Stock
Award; the Exercise Price of each outstanding Option and the specified number of
shares of Stock to which each outstanding Dividend Equivalent Right, Phantom
Share and Stock Appreciation Right pertains shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Stock resulting
from a subdivision or combination of shares or the payment of an ordinary stock
dividend in shares of Stock to holders of outstanding shares of Stock or any
other increase or decrease in the number of shares of Stock outstanding effected
without receipt of consideration by the Company.
(b) In the event of any merger, consolidation, extraordinary dividend
(including a spin-off), reorganization or other change in the corporate
structure of the Company or its Stock or tender offer for shares of Stock, the
Committee, in its sole discretion, may make such adjustments with respect to
awards and take such other action as it deems necessary or appropriate to
reflect or in anticipation of such merger, consolidation, extraordinary
dividend, reorganization, other change in corporate structure or tender offer,
including, without limitation, the substitution of new awards, the termination
or adjustment of outstanding awards, the acceleration of awards or the removal
of restrictions on outstanding awards. Any adjustment pursuant to this Section
5.2 may provide, in the Committee's discretion, for the elimination without
payment therefor of any fractional shares that might otherwise become subject to
any Stock Incentive.
(c) The existence of the Plan and the Stock Incentives granted
pursuant to the Plan shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification, reorganization or
other change in its capital or business structure, any merger or consolidation
of the Company, any issue of debt or equity securities having preferences or
priorities as to the Stock or the rights thereof, the dissolution or liquidation
of the Company, any sale or transfer of all or any part of its business or
assets, or any other corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its discretion,
grant to any holder of a Stock Incentive the right to receive, at such times and
in such amounts as determined by the Committee in its discretion, a cash amount
which is intended to reimburse such person for all or a portion of the federal,
state and local income taxes imposed upon such person as a consequence of the
receipt of the Stock Incentive or the exercise of rights thereunder.
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5.4 Compliance with Code. All Incentive Stock Options to be granted
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all Incentive Stock Options granted hereunder shall be construed in
such manner as to effectuate that intent.
5.5 Right to Terminate Service. Nothing in the Plan or in any Stock
Incentive Agreement or Stock Incentive Program shall confer upon any Participant
the right to continue as an employee, officer, director or consultant of the
Company or any of its affiliates or affect the right of the Company or any of
its affiliates to terminate the Participant's service at any time.
5.6 Restrictions on Delivery and Sale of Shares; Legends. Each Stock
Incentive is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Stock Incentive upon any securities exchange or under
any state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Stock Incentive or the purchase or delivery
of shares thereunder, the delivery of any or all shares pursuant to such Stock
Incentive may be withheld unless and until such listing, registration or
qualification shall have been effected. If a registration statement is not in
effect under the Securities Act of 1933 or any applicable state securities laws
with respect to the shares of Stock purchasable or otherwise deliverable under
Stock Incentives then outstanding, the Committee may require, as a condition of
exercise of any Option or as a condition to any other delivery of Stock pursuant
to a Stock Incentive, that the Participant or other recipient of a Stock
Incentive represent, in writing, that the shares received pursuant to the Stock
Incentive are being acquired for investment and not with a view to distribution
and agree that the shares will not be disposed of except pursuant to an
effective registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such requirement under
the Securities Act of 1933 and any applicable state securities laws. The Company
may include on certificates representing shares delivered pursuant to a Stock
Incentive such legends referring to the foregoing representations or
restrictions or any other applicable restrictions on resale as the Company, in
its discretion, shall deem appropriate.
5.7 Non-alienation of Benefits. Other than as specifically provided with
regard to the death of a Participant, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.
5.8 Termination and Amendment of the Plan. The Board of Directors at any
time may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. No such termination or
amendment without the consent of the holder of a Stock Incentive shall adversely
affect the rights of the Participant under such Stock Incentive.
5.9 Stockholder Approval. The Plan shall be submitted to the stockholders
of the Company for their approval within twelve (12) months before or after its
adoption by the Board of Directors. If such approval is not obtained, any Stock
Incentive granted under the Plan shall be void.
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5.10 Choice of Law. The laws of the State of Georgia shall govern the Plan,
to the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective upon the date
the Plan is approved by the Board of Directors.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
27th day of January , 1997.
FIRST STATE CORPORATION
By: /s/ Douglas E. Wren
-------------------
Title: President
----------------
Attest:
/s/ Robert E. Lee
- -----------------
Secretary
[CORPORATE SEAL]
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INCENTIVE STOCK OPTION AWARD PURSUANT TO THE
FIRST STATE CORPORATION 1997 STOCK INCENTIVE PLAN
THIS AWARD is made as of the Grant Date by FIRST STATE CORPORATION (the
"Company") to ________________________________________ (the "Optionee").
Upon and subject to the Terms and Conditions attached hereto and
incorporated herein by reference, the Company hereby awards as of the Grant Date
to Optionee an incentive stock option (the "Option"), as described below, to
purchase the Option Shares.
A. Grant Date: _________________, 1997.
B. Type of Option: Incentive stock option issued under the First State
Corporation 1997 Stock Incentive Plan.
C. Option Shares: All or any part of ___________________ shares of the
Company's common stock, $1.00 par value per share ("Common Stock"),
subject to adjustment as provided in the attached Terms and
Conditions.
D. Exercise Price: $____ per share of Common Stock (no less than 100%
(110% in the case of an Over 10% Owner) of fair market value as of the
Grant Date), subject to adjustment as provided in the attached Terms
and Conditions.
E. Option Period: The Option may be exercised as to all or any portion of
the Option Shares, but only during the Option Period, which commences
sixth (6) months following the Grant Date and ends, generally, on the
earliest of (a) the tenth (10th) (or fifth (5th) in the case of an
Over 10% Owner) anniversary of the Grant Date; (b) thirty (30) days
following the date of the Optionee's Termination of Employment for any
reason other than due to death or Disability; or (c) one (1) year
following the date of the Optionee's Termination of Employment due to
death or Disability; provided that the Option may be exercised as to
no more than the vested Option Shares, determined pursuant to the
Vesting Schedule attached as Schedule 1. Note that other limitations
to exercising the Option, as described in the attached Terms and
Conditions, may apply.
F. Vesting Schedule: The Option Shares shall become vested in accordance
with the attached Vesting Schedule. All or a portion of the Option
Shares may become vested on an earlier date as provided in the
attached Terms and Conditions.
IN WITNESS WHEREOF, the Company has executed and sealed this Award as of
the Grant Date set forth above.
FIRST STATE CORPORATION
By:________________________________________________
Title: ____________________________________________
Page 1 of 5
<PAGE>
TERMS AND CONDITIONS TO THE
INCENTIVE STOCK OPTION AWARD
PURSUANT TO FIRST STATE CORPORATION
1997 STOCK INCENTIVE PLAN
1. Exercise of Option. Subject to the provisions provided herein or in the
Award made pursuant to the Plan:
(a) the Option may be exercised with respect to all or any portion of
the vested Option Shares at any time during the Option Period by the
delivery to the Company, at its principal place of business, of a written
notice of exercise in substantially the form attached hereto as Exhibit 1,
which shall be actually delivered to the Company no earlier than thirty
(30) days and no later than ten (10) days prior to the date upon which
Optionee desires to exercise all or any portion of the Option; and
(b) payment to the Company of the Exercise Price multiplied by the
number of Option Shares being purchased (the "Purchase Price") as provided
in Section 2.
(c) Notwithstanding anything to the contrary in the Terms and
Conditions or the Award, the Option shall not become exercisable until
after the date of stockholder approval of the Plan and if such stockholder
approval is not obtained within twelve months following the adoption of the
Plan by the Board of Directors, the Option shall be rendered null and void.
Upon acceptance of such notice and receipt of payment in full of the Purchase
Price, the Company shall cause to be issued a certificate representing the
Option Shares purchased.
2. Purchase Price. Payment of the Purchase Price for all Option Shares
purchased pursuant to the exercise of an Option shall be made in cash or
certified check or, alternatively, as follows:
(a) by delivery to the Company of a number of shares of Common Stock
which have been owned by the Optionee for at least six (6) months prior to
the date of the Option's exercise having a fair market value, as determined
under the Plan, on the date of exercise either equal to the Purchase Price
or in combination with cash or a certified check to equal the Purchase
Price; or
(b) by receipt of the Purchase Price in cash from a broker, dealer or
other "creditor" as defined by Regulation T issued by the Board of
Governors of the Federal Reserve System following delivery by the Optionee
to the Committee of instructions in a form acceptable to the Committee
regarding delivery to such broker, dealer or other creditor of that number
of Option Shares with respect to which the Option is exercised.
3. Vested Option Shares. The Option Shares shall become vested in the
manner provided in the Vesting Schedule attached hereto; provided, however, that
all Option Shares shall become vested no later than the date of a Change in
Control, or any earlier date specified by the
Page 2 of 5
<PAGE>
Committee in writing to the Optionee subsequent to or contemporaneously with a
determination by the Committee that a Change in Control is imminent.
4. Rights as Shareholder. Until the stock certificates reflecting the
Option Shares accruing to the Optionee upon exercise of the Option are issued to
the Optionee, the Optionee shall have no rights as a shareholder with respect to
such Option Shares. The Company shall make no adjustment for any dividends or
distributions or other rights on or with respect to Option Shares for which the
record date is prior to the issuance of that stock certificate, except as the
Plan or the attached Award otherwise provides.
5. Restriction on Transfer of Option and of Option Shares. The Option
evidenced hereby is nontransferable other than by will or the laws of descent
and distribution and shall be exercisable during the lifetime of the Optionee
only by the Optionee (or in the event of his disability, by his personal
representative) and after his death, only by his legatee or the executor of his
estate.
6. Changes in Capitalization.
(a) If the number of shares of Common Stock shall be increased or
decreased by reason of a subdivision or combination of shares of Common
Stock, the payment of a stock dividend in shares of Common Stock or any
other increase or decrease in the number of shares of Common Stock
outstanding effected without receipt of consideration by the Company, an
appropriate adjustment shall be made by the Committee, in a manner
determined in its sole discretion, in the number and kind of Option Shares
and in the Exercise Price.
(b) Subject to any other action which the Committee is authorized to
take pursuant to Section 5.2(b) of the Plan, in the event of any merger,
consolidation, extraordinary dividend (including a spin-off),
reorganization, other change in corporate structure or tender offer,
including a Change in Control, pursuant to which the Company is not the
surviving entity and the surviving entity does not agree to the assumption
of the Option, the Committee may elect to terminate the Option Period as of
the date of the event in consideration of the payment to the Optionee of
the sum of the difference between the then Fair Market Value of the Common
Stock and the Exercise Price for each Option Share as to which the Option
has not been exercised as of the date of the event.
(c) The existence of the Plan and the Option granted pursuant to this
Agreement shall not affect in any way the right or power of the Company to
make or authorize any adjustment, reclassification, reorganization or other
change in its capital or business structure, any merger or consolidation of
the Company, any issue of debt or equity securities having preferences or
priorities as to the Common Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of its
business or assets, or any other corporate act or proceeding. Any
adjustment pursuant to this Section may provide, in the Committee's
discretion, for the elimination without payment therefor of any fractional
shares that might otherwise become subject to any Option.
7. Special Limitation on Exercise. No purported exercise of the Option
shall be effective without the approval of the Committee, which may be withheld
to the extent that the exercise, either
Page 3 of 5
<PAGE>
individually or in the aggregate together with the exercise of other previously
exercised stock options and/or offers and sales pursuant to any prior or
contemplated offering of securities, would, in the sole and absolute judgment of
the Committee, require the filing of a registration statement with the United
States Securities and Exchange Commission or with the securities commission of
any state. If a registration statement is not in effect under the Securities Act
of 1933 or any applicable state securities law with respect to shares of Common
Stock purchasable or otherwise deliverable under the Option, the Optionee (a)
shall deliver to the Company, prior to the exercise of the Option or as a
condition to the delivery of Common Stock pursuant to the exercise of an Option
exercise, such information, representations and warranties as the Company may
reasonably request in order for the Company to be able to satisfy itself that
the Option Shares are being acquired in accordance with the terms of an
applicable exemption from the securities registration requirements of applicable
federal and state securities laws and (b) shall agree that the shares of Common
Stock so acquired will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an opinion of
counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities law.
8. Legend on Stock Certificates. Certificates evidencing the Option Shares,
to the extent appropriate at the time, shall have noted conspicuously on the
certificates a legend intended to give all persons full notice of the existence
of the conditions, restrictions, rights and obligations set forth herein and in
the Plan.
9. Governing Laws. This Award and the Terms and Conditions shall be
construed, administered and enforced according to the laws of the State of
Georgia.
10. Successors. This Award and the Terms and Conditions shall be binding
upon and inure to the benefit of the heirs, legal representatives, successors
and permitted assigns of the Optionee and the Company.
11. Notice. Except as otherwise specified herein, all notices and other
communications under this Award shall be in writing and shall be deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.
12. Severability. In the event that any one or more of the provisions or
portion thereof contained in the Award and these Terms and Conditions shall for
any reason be held to be invalid, illegal or unenforceable in any respect, the
same shall not invalidate or otherwise affect any other provisions of the Award
and these Terms and Conditions, and the Award and these Terms and Conditions
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
13. Entire Agreement. Subject to the terms and conditions of the Plan, the
Award and the Terms and Conditions express the entire understanding of the
parties with respect to the Option.
Page 4 of 5
<PAGE>
14. Violation. Any transfer, pledge, sale, assignment, or hypothecation of
the Option or any portion thereof shall be a violation of the terms of the Award
or these Terms and Conditions and shall be void and without effect.
15. Headings and Capitalized Terms. Section headings used herein are for
convenience of reference only and shall not be considered in construing the
Award or these Terms and Conditions. Capitalized terms used, but not defined, in
either the Award or the Terms and Conditions shall be given the meaning ascribed
to them in the Plan.
16. Specific Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of the Award and
these Terms and Conditions, the party or parties who are thereby aggrieved shall
have the right to specific performance and injunction in addition to any and all
other rights and remedies at law or in equity, and all such rights and remedies
shall be cumulative.
17. No Right to Continued Retention. Neither the establishment of the Plan
nor the award of Option Shares hereunder shall be construed as giving the
Optionee the right to continued employment with the Company or any affiliate.
Page 5 of 5
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
FIRST STATE CORPORATION
Name ___________________________________
Address ________________________________
________________________________________
Date ___________________________________
First State Corporation
330 Broad Street
P.O. Box 8
Albany, Georgia 31705
Attention: President
Re: Exercise of Incentive Stock Option
Gentlemen:
Subject to acceptance hereof by First State Corporation (the "Company")
pursuant to the provisions of the First State Corporation 1997 Stock Incentive
Plan (the "Plan"), I hereby give notice of my election to exercise options
granted to me to purchase ______________ shares of common stock of the Company
("Common Stock") under the Incentive Stock Option Award (the "Award") dated as
of _____________________. The purchase shall take place as of
______________________, 199__ (the "Exercise Date").
On or before the Exercise Date, I will pay the applicable purchase price as
follows:
[ ] by delivery of cash or a certified check for $___________ for the
full purchase price payable to the order of First State Corporation.
[ ] by delivery of cash or a certified check for $___________
representing a portion of the purchase price with the balance to
consist of shares of Common Stock that I have owned for at least six
months and that are represented by a stock certificate I will
surrender to the Company with my endorsement. If the number of
shares of Common Stock represented by such stock certificate exceed
the number to be applied against the purchase price, I understand
that a new stock certificate will be issued to me reflecting the
excess number of shares.
Exhibit 1 - Page 1 of 4
<PAGE>
[ ] by delivery of a stock certificate representing shares of Common
Stock that I have owned for at least six months which I will
surrender to the Company with my endorsement as payment of the
purchase price. If the number of shares of Common Stock represented
by such certificate exceed the number to be applied against the
purchase price, I understand that a new certificate will be issued
to me reflecting the excess number of shares.
[ ] by delivery of the purchase price by _________________________, a
broker, dealer or other "creditor" as defined by Regulation T issued
by the Board of Governors of the Federal Reserve System. I hereby
authorize the Company to issue a stock certificate for the number of
shares indicated above in the name of said broker, dealer or other
creditor or its nominee pursuant to instructions received by the
Company and to deliver said stock certificate directly to that broker
dealer or other creditor (or to such other party specified in the
instructions received by the Company from the broker, dealer or other
creditor) upon receipt of the purchase price.
As soon as the stock certificate is registered in my name, please deliver
it to me at the above address.
If the Common Stock being acquired is not registered for issuance to and
resale by the Optionee pursuant to an effective registration statement on Form
S-8 (or successor form) filed under the Securities Act of 1933, as amended (the
"1933 Act"), I hereby represent, warrant, covenant, and agree with the Company
as follows:
The shares of the Common Stock being acquired by me will be acquired
for my own account without the participation of any other person, with the
intent of holding the Common Stock for investment and without the intent of
participating, directly or indirectly, in a distribution of the Common
Stock and not with a view to, or for resale in connection with, any
distribution of the Common Stock, nor am I aware of the existence of any
distribution of the Common Stock;
I am not acquiring the Common Stock based upon any representation,
oral or written, by any person with respect to the future value of, or
income from, the Common Stock but rather upon an independent examination
and judgment as to the prospects of the Company;
The Common Stock was not offered to me by means of publicly
disseminated advertisements or sales literature, nor am I aware of any
offers made to other persons by such means;
I am able to bear the economic risks of the investment in the Common
Stock, including the risk of a complete loss of my investment therein;
I understand and agree that the Common Stock will be issued and sold
to me without registration under any state law relating to the registration
of securities for sale, and will be issued and sold in reliance on the
exemptions from registration under the 1933 Act, provided by Sections 3(b)
and/or 4(2) thereof and the rules and regulations promulgated thereunder;
Exhibit 1 - Page 2 of 4
<PAGE>
The Common Stock cannot be offered for sale, sold or transferred by me
other than pursuant to: (A) an effective registration under the 1933 Act or
in a transaction otherwise in compliance with the 1933 Act; and (B)
evidence satisfactory to the Company of compliance with the applicable
securities laws of other jurisdictions. The Company shall be entitled to
rely upon an opinion of counsel satisfactory to it with respect to
compliance with the above laws;
The Company will be under no obligation to register the Common Stock
or to comply with any exemption available for sale of the Common Stock
without registration or filing, and the information or conditions necessary
to permit routine sales of securities of the Company under Rule 144 under
the 1933 Act are not now available and no assurance has been given that it
or they will become available. The Company is under no obligation to act in
any manner so as to make Rule 144 available with respect to the Common
Stock;
I have and have had complete access to and the opportunity to review
and make copies of all material documents related to the business of the
Company, including, but not limited to, contracts, financial statements,
tax returns, leases, deeds and other books and records. I have examined
such of these documents as I wished and am familiar with the business and
affairs of the Company. I realize that the purchase of the Common Stock is
a speculative investment and that any possible profit therefrom is
uncertain;
I have had the opportunity to ask questions of and receive answers
from the Company and any person acting on its behalf and to obtain all
material information reasonably available with respect to the Company and
its affairs. I have received all information and data with respect to the
Company which I have requested and which I have deemed relevant in
connection with the evaluation of the merits and risks of my investment in
the Company;
I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of the purchase of the
Common Stock hereunder and I am able to bear the economic risk of such
purchase; and
The agreements, representations, warranties and covenants made by me
herein extend to and apply to all of the Common Stock of the Company issued
to me pursuant to this Award. Acceptance by me of the certificate
representing such Common Stock shall constitute a confirmation by me that
all such agreements, representations, warranties and covenants made herein
shall be true and correct at that time.
I understand that the certificates representing the shares being purchased
by me in accordance with this notice shall bear a legend referring to the
foregoing covenants, representations and warranties and restrictions on
transfer, and I agree that a legend to that effect may be placed on any
certificate which may be issued to me as a substitute for the certificates being
acquired by me in
Exhibit 1 - Page 3 of 4
<PAGE>
accordance with this notice. I further understand that capitalized terms used in
this Notice of Exercise without definition shall have the meanings given to them
in the Plan.
Very truly yours,
_______________________________
AGREED TO AND ACCEPTED:
FIRST STATE CORPORATION
By: ____________________________________
Title: _________________________________
Number of Shares
Exercised: _____________________________
Number of Shares Remaining: ____________ Date: ____________
Exhibit 1 - Page 4 of 4
<PAGE>
[Name of Optionee]
SCHEDULE 1
TO FIRST STATE CORPORATION
INCENTIVE STOCK OPTION AWARD
Vesting Schedule
"Vested Shares" means only that percentage of the Option Shares as to which
the Option becomes exercisable following completion of the years of service
indicated in the schedule first set forth below.
Percentage of Option Shares Years of Service
Which are Vested Shares after Grant Date
--------------------------- ----------------
0% Less than 1
20% 1
40% 2
60% 3
80% 4
100% 5 or more
- ----------
1. Construction. (a) For purposes of the Vesting Schedule, Optionee shall
be granted a year of service for each consecutive twelve-consecutive-month
period following the Grant Date and during which Optionee continues, at all
times, as an employee of the Company or a Subsidiary.
(b) The right of Optionee to vest in Common Stock shall cease upon the
termination of his or her service as an employee with the Company and any
Subsidiaries. Thereafter, no further shares shall become Vested Shares. The
Option shall be exercisable only as to Vested Shares during the Option Period
specified in the Award.
Schedule 1 - Page 1 of 1
EXHIBIT 10.10
PURCHASE AND ASSUMPTION AGREEMENT
This Agreement, dated March 19, 1996, is between First State Bank & Trust
Company, a state bank organized under the laws of Georgia and having its
principal place of business in Albany, Georgia ("Buyer"), and First Union
National Bank of Georgia, a national banking association having its principal
place of business in Atlanta, Georgia ("Seller").
RECITALS
A. Seller desires to dispose of certain assets and liabilities of its
Branches, as hereinafter defined, upon the terms and conditions provided in this
Agreement.
B. Buyer has proposed to purchase such assets and liabilities upon the
terms and conditions provided in this Agreement.
AGREEMENT
In consideration of the mutual promises set forth herein, Buyer and Seller
agree as follows:
I. DEFINITIONS
1.1 Certain Defined Terms.
Some of the capitalized terms appearing in this Agreement are
defined below. The definition of a term expressed in the singular also applies
to that term as used in the plural and vice versa.
"Affiliate" means a Person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, a specified Person, except in those cases where the controlling Person
exercises control solely in a fiduciary capacity.
"Amount of Premium" has the meaning set forth in Section 3.1 of this
Agreement.
"Assets" has the meaning set forth in Section 2.1 of this Agreement.
"Benefit Plan" means any pension, profit-sharing, or other employee
benefit, fringe benefit, severance or welfare plan maintained or with respect to
which contributions are made by Seller or any of its Affiliates in connection
with Seller's employees.
<PAGE>
"Branches" means those branch offices of Seller listed on Schedule
1.1A to this Agreement.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday, or
Friday on which Seller is open for business.
"Cash Reserve Lines of Credit" means those consumer lines of credit
made available to customers of the Branches as a protection against overdrafts
on Deposit Accounts.
"Capital Management Account" or "CAP Account" means First Union's
asset management account which combines certain banking and investment services
into one account.
"Cash Reserve Loans" means those loans outstanding at the Closing
made pursuant to Cash Reserve Lines of Credit.
"Closing" means the transfer of the Assets and the assumption of the
Liabilities on the Closing Date.
"Closing Date" has the meaning set forth in Section 9.1 of this
Agreement.
"Deposit Accounts" means those existing deposit accounts at the
Branches, the balances of which are included in the Deposits or would be so
included if the account had a positive balance.
"Deposits" means all deposits as defined in 12 U.S.C. Section
1813(1) which are booked at the Branches on the Closing Date, including in each
case accrued but unpaid interest and both collected and uncollected funds, but
excluding (i) deposits held in accounts for which Seller acts as fiduciary
(other than deposits held by Retirement Plans),(ii) deposits constituting
official checks, travelers checks, money orders, or certified checks, (iii)
deposits held in Capital Management Accounts, (iv) deposits held in self
directed IRAs.
"Equipment Leases" means those operating and financial leases and
conditional sales contracts covering Fixed Assets which Seller may assign to
Buyer without restriction or with the lessor's written consent.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any entity that is considered one employer
with Seller under Section 4001 of ERISA or Section 414 of the Internal Revenue
Code.
"Federal Funds Rate" means, for any day, the rate per annum
(expressed on a basis of calculation of actual days in a
2
<PAGE>
year) equal to the "near closing bid" federal funds rate published in The Wall
Street Journal on the Monday following the Closing Date.
"Fixed Assets" means all fixtures (including existing signage
poles), leasehold improvements, furnishings, vaults, safe deposit boxes,
equipment (including, for example, all ATM machines, but excluding any computer
or telecommunications equipment), supplies (other than forms and other supplies
which bear Seller's logo), and other personal property, which are owned or (to
the extent of the lessee's interest) leased by Seller, which are located at the
Branches at the Closing.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government having authority in the United
States, whether federal, state or local.
"Leased Branches" means all premises of the Branches which are
demised under the Real Property Leases.
"Liabilities" has the meaning set forth in Section 2.2 of this
Agreement.
"Mediator" means the firm of KPMG Peat Marwick or if that firm
declines to perform the functions of the Mediator specified in this Agreement,
then another firm of certified public accountants mutually agreeable to Seller
and Buyer.
"Overdrafts" means those overdrafts of the book balance of any
Deposit Accounts which are not subject to a preexisting line of credit.
"Person" means an association, a corporation, an individual, a
partnership, a trust, or any other entity or organization, including a
Governmental Entity.
"Real Property" means the land (including the improvements thereon)
owned by Seller on which any Branches are located.
"Retirement Plans" means those non-discretionary individual
retirement accounts and qualified retirement plan accounts relating to the
Deposits for which Seller acts as custodian or trustee.
"Self-Directed IRA" means an Individual Retirement Account which
permits the customer to select a portfolio from a variety of investment options.
3
<PAGE>
"Welfare Benefit Plans" means those Benefit Plans which are "welfare
benefit plans" as defined by ERISA.
II. TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Sale of Assets.
Seller will sell, assign and transfer possession of and all right,
title, and interest of Seller in and to the following assets to Buyer (the
"Assets") as of the close of business on the Closing Date:
(a) the Real Property;
(b) the Fixed Assets;
(c) cash on hand in the Branches;
(d) the Cash Reserve Loans;
(e) the Overdrafts;
(f) Seller's rights under the Cash Reserve Lines of Credit; and
(g) any safe deposit box rental agreements relating to safe
deposit boxes located at the Branches.
2.2 Assumption of Liabilities.
Buyer agrees, as of the close of business on the Closing Date, to
assume, pay, perform and discharge the following liabilities of Seller (the
"Liabilities"):
(a) the Deposits and all terms and agreements relating to the
Deposit Accounts as such terms and agreements are in effect at Closing;
(b) all Seller's responsibilities relating to the Deposits with
respect to (i) the abandoned property laws of any state, (ii) any legal
process which is served on Seller on or before the Closing Date with
respect to claims against or for the Deposits, or (iii) any other
applicable law;
(c) Seller's obligations with respect to the Equipment Leases;
(d) Seller's duties and responsibilities with respect to all Cash
Reserve Lines of Credit;
(e) Seller's duties and responsibilities with respect to customer
safe deposit boxes located at the Branches; and
4
<PAGE>
(f) Seller's duties and responsibilities with respect to the
Retirement Plans.
(g) Notwithstanding other provisions of this Agreement to the
contrary, Buyer shall not be responsible or liable for liabilities of
Seller resulting from Seller's negligent or tortious conduct.
2.3 Transfer of Records.
(a) Seller also shall transfer to Buyer possession and all right,
title and interest of Seller in and to (i) all books and records relating
to the Assets and the Liabilities which are maintained at the Branches,
including any signature cards and Retirement Plan agreements (other than
Self-Directed IRAs), (ii) all signature cards for the Deposit Accounts
which are not held at the Branches, (iii) all Retirement Plan Agreements
(other than Self Directed IRAs) and disclosure statements relating to the
Retirement Plans which are not held at the Branches, (iv) the Equipment
Leases.
(b) Any books and records relating to the Assets, the Liabilities,
or the Branches (including historical information on Deposit Accounts)
held by either Seller or Buyer after Closing shall be maintained in
accordance with (and for the period provided in) that party's standard
recordkeeping policies and procedures. Throughout that period, the party
holding any such books and records shall comply with the reasonable
request of the other party to provide copies of specified documents, at
the expense of the requesting party. The requesting party shall give
reasonable notice of any such request. Except for the destruction by
Seller or Buyer in the ordinary course of records which are commingled
with records relating to assets and liabilities which are not related to
the Branches, neither party will destroy any books or records relating to
the Assets, the Liabilities, or the Branches before the fifth anniversary
of the Closing without providing at least forty-five (45) days written
notice to the other party. Subject to any obligation of Seller or Buyer to
keep the records confidential, the party receiving the notice shall be
permitted to inspect any such records, and to take possession of them,
provided that it shall reimburse the party providing the notice for any
out-of-pocket expense incurred in that regard.
2.4 Tax Matters.
(a) Notwithstanding Section 2.6, Buyer shall pay to Seller or the
relevant taxing jurisdiction (as appropriate under the circumstances), or
reimburse to Seller if Seller
5
<PAGE>
shall have paid, any sales and use taxes and any interest and penalties
thereon which are payable or arise as a result of this Agreement or the
consummation of the transactions contemplated by this Agreement. Seller
shall deposit and/or pay over to the relevant taxing jurisdiction amounts
received from Buyer at the time required by law so as to avoid such
interest or penalties. The purchase price of the Fixed Assets shall be the
amount set forth in Section 3.2(a).
(b) Notwithstanding Section 2.6, Buyer shall pay to Seller or the
relevant taxing jurisdiction (as appropriate under the circumstances), or
reimburse to Seller if Seller shall have paid, all real property transfer,
recording, and similar documentary taxes arising out of the transfer,
transfer of title to or assignment of the Cash Reserve Loans, the Real
Property and the Fixed Assets. Seller shall deposit and/or pay over to the
relevant taxing jurisdiction such amounts received from Buyer at the time
required by law so as to avoid any such interest or penalties.
2.5 Matters Relating to the Sale of the Fixed Assets and the Real
Property.
(a) The purchase price of the Fixed Assets shall be Net Book Value
as of the Closing Date.
(b) The purchase price of the Real Property shall be $700,000.00 for
the Westover Crossing branch and $600,000.00 for the Albany Main branch.
2.6 Proration of Certain Expenses.
Subject to the provisions of Section 2.4, all rentals, real estate
taxes, personal property taxes (tangible or intangible), utility, water and
sewer charges and assessments, as well as semiannual assessments paid to the
Bank Insurance Fund, with respect to the Deposits, shall be adjusted on a pro
rata basis as of the close of business on the Closing Date.
2.7 Back Office Conversion.
Seller and Buyer shall cooperate with each other and shall use their
reasonable best efforts (as consistent with their internal day-to-day
operations) in order to cause the timely transfer of information concerning the
Assets and Liabilities which is maintained on Seller's data processing systems
so that Buyer can incorporate the Deposits and the Cash Reserve Loans onto its
deposit and loan accounting system no later than the opening of business on the
Business Day following the Closing Date. Upon Buyer's reasonable request, Seller
also shall provide Buyer from time to time before Closing with proposed detailed
6
<PAGE>
record layouts and file descriptions and with computer tapes in Seller's
computer format as may be reasonably necessary to conduct test conversions.
Within fifteen (15) days after the date of this Agreement, Seller and Buyer
shall each designate an appropriate officer to be responsible for the necessary
cooperation of the parties and to act as an initial contact for questions and
requests for information.
2.8 Processing of Certain Items After Closing.
A sample of the written practices and procedures under which Seller
shall handle all items (including, for example, automated clearing house and
electronic funds transfer items) relating to the Assets or the Deposits which
are presented or returned to Seller following the Closing Date are attached to
this Agreement as Exhibit A, including certain other matters relating to
consummation of the Acquisition (the "Working Agreement"). Within ten (10) days
of the execution of this Agreement, the parties will confer and finalize the
Working Agreement, and thereafter the parties will comply with the same, as well
as all applicable regulations, clearing house rules, and agreements.
2.9 Information Returns.
Buyer shall file all required information returns with the Internal
Revenue Service with respect to interest paid on the Deposits after the Closing
Date, interest received on Cash Reserve Loans after the Closing Date, and any
other information return required with respect to the Deposits, Cash Reserve
Loans, Real Property, and any other transferred Assets and Liabilities for the
period beginning after the Closing Date. Seller will file all required
information returns with the Internal Revenue Service and any information return
required by state or local tax authorities with respect to interest paid on the
Deposits on or before the Closing Date, interest received on Cash Reserve Loans
on or before the Closing Date, and any other information return required with
respect to the Deposits, Cash Reserve Loans, Real Property, and any other
transferred Assets and Liabilities for any period ending on or before the
Closing Date. The parties shall cooperate upon request in preparing these
information returns.
III. BID AMOUNT AND PAYMENTS
3.1 Amount of Premium.
In further consideration of Seller entering into this Agreement,
Buyer will pay to Seller, as described in Sections 3.2 and 3.3 of this
Agreement, an amount equal to nine and fifty three one hundredths percent
(9.53%) of the Average Deposits (the "Amount of Premium"). The Average Deposits
shall be calculated
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by averaging the monthly Deposit Average for the three calendar months
immediately preceding the month during which the closing takes place. The
monthly Deposit Average is the average Deposit balance for the Branches as
determined by Seller for the month for which the calculation is being made.
3.2 Payment by Seller.
In consideration of Buyer's purchase of the Assets and its
assumption of the Liabilities, Seller shall pay to Buyer an amount equal to the
Deposits, as at the close of business on the Closing Date, less the sum of the
following, calculated as of the close of business on the Closing Date:
(a) the purchase price of the Fixed Assets and the Real Estate set
forth in Sections 2.5(a) and (b);
(b) the aggregate principal amounts outstanding plus any accrued
interest on the Cash Reserve Loans as recorded on Seller's books;
(c) the amount of cash on hand at the Branches;
(d) the principal amount of the Overdrafts as recorded on Seller's
books;
(e) the net amount (which may be a negative amount) of taxes payable
by Buyer and Seller under Section 2.4 (i.e., the amount payable by Buyer
less the amount payable by Seller);
(f) the net amount (which may be a negative amount) of any
adjustments under Section 2.6 (i.e., the amount payable by Buyer less the
amount payable by Seller); and
(g) the Amount of Premium.
3.3 Settlement.
(a) Not less than two (2) Business Days before the Closing Date,
Seller shall deliver to Buyer a proposed Preliminary Closing Statement,
together with supporting documentation reasonably satisfactory to Buyer,
certified by an officer of Seller. The Preliminary Closing Statement shall
be prepared in accordance with Seller's customary practices and procedures
used in preparing financial statements, in the form of Exhibit B to this
Agreement, completed as of the close of business on the Friday before the
Closing Date. The parties shall agree upon the Preliminary Closing
Statement before the Closing Date, and it shall be the basis of a
preliminary payment to be made to Buyer's account on the Closing Date (the
"Preliminary
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Payment"). A party's agreement to the Preliminary Closing Statement shall
not be binding with respect to the Final Closing Statement.
(b) The parties shall cooperate in the preparation of a proposed
Final Closing Statement, together with supporting documentation reasonably
satisfactory to Buyer, to be certified by an appropriate officer of Seller
within thirty (30) days after the Closing Date (or on a different date
agreed upon by the parties), and the parties shall use their best efforts
to agree upon the Final Closing Statement promptly. The Final Closing
Statement shall be prepared in accordance with Seller's customary
practices and procedures used in preparing financial statements, in the
form of Exhibit C to this Agreement, and it shall be completed as of the
close of business on the Closing Date. On the Business Day after Buyer and
Seller agree to the Final Closing Statement, or Seller receives notice of
any determination of the Final Closing Statement under subsection (d) (the
"Final Settlement Date"), Seller shall pay to Buyer (or Buyer shall pay to
Seller, as the case may be) an amount (the "Adjustment Payment") equal to
the amount due stated on the Final Closing Statement, plus interest from
the day after the Closing Date until the calendar day before the
Adjustment Payment is made at a rate per annum (calculated daily based on
a 360-day year) equal to the Federal Funds Rate.
(c) If the parties are unable to agree on a Final Closing Statement
within fifty (50) days after Closing, then subject to Section 11.3(b),
either party may submit the matter to the Mediator, which shall determine
all disputed portions of the Final Closing Statement in accordance with
the terms and conditions of this Agreement within thirty (30) days after
the submission. The parties shall each pay half of the fees and expenses
of the Mediator, except that the Mediator may assess the full amount of
its fees and expenses against either party if it determines that party
negotiated the Final Closing Statement in bad faith. The Final Closing
Statement, as agreed upon by the parties and/or determined under this
subsection, shall be final and binding upon the parties.
(d) The Preliminary Payment and the Adjustment Payment shall all be
made by wire transfer of immediately available Federal Reserve Funds to
the account of the party receiving the payment, which account shall be
identified by the party receiving the funds to the other party not less
than two (2) Business Days prior to the Closing.
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IV. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties to Buyer.
4.1 Power and Authority.
(a) Seller has the corporate power and authority to enter into and
perform this Agreement. The execution and delivery of this Agreement has
been duly authorized by all necessary corporate action by Seller. Upon
execution and delivery by both parties, this Agreement will constitute a
valid and binding obligation of Seller, enforceable in accordance with its
terms, subject to conservatorship, receivership, and a court's right under
general principles of equity to refuse to direct specific performance.
(b) The performance of this Agreement by Seller will not violate any
provision of the Articles of Association or By-Laws of Seller, or any
applicable law, rule, regulation, or order or any contract or instrument
by which Seller is bound except for such violations which, in the
aggregate, would not reasonably be expected to have a material adverse
effect on the financial condition, business, or operations of the
Branches, taken as a whole, or the consummation of the transactions
contemplated by this Agreement (a "Seller Material Adverse Effect").
4.2 Litigation and Regulatory Proceedings.
There are no actions, complaints, petitions, suits or other
proceedings, or any decree, injunction, judgment, order or ruling, entered,
promulgated or pending or (to Seller's knowledge) threatened against Seller or
any of the Assets, Liabilities, or Branches, which alone, or taken in the
aggregate, reasonably would be expected to have a Seller Material Adverse
Effect. No governmental agency has notified Seller that it would oppose or not
approve or consent to the transactions contemplated by this Agreement and Seller
knows of no reason for any such opposition, nonapproval, or nonconsent.
4.3 Consents and Approvals.
Except for the regulatory approvals mentioned in Section 9.4(a) of
this Agreement, no consents or approvals, or filings or registrations with any
third party or any public body, agency, or authority are necessary in connection
with Seller's consummation of the transactions contemplated by this Agreement
other than any necessary lessor's consents to the assignment of the Equipment
Leases and as may be necessary as a result of any facts or circumstances
relating solely to Buyer.
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4.4 Real Property and Fixed Assets.
(a) Schedule 4.4 contains a list of all the Real Property.
(b) Seller has good and marketable title to the Real Property and
Fixed Assets (except for leased equipment, in which case it has the right
to assign such leases in accordance with and subject to the terms and
conditions thereof), free and clear of all encumbrances, except for
easements and restrictions of record, applicable zoning laws, the rights
of landlords under any ground leases relating to the Real Property, the
rights of any tenants, and imperfections or irregularities of title,
claims, charges, security interests, liens or encumbrances, if any, which
do not materially detract from the value of or interfere with the use of
the Real Property or Fixed Assets, as the case may be, current taxes and
assessments not delinquent, or liens incurred in the ordinary course of
Seller's business at the Branches.
(c) Except as expressly set forth herein, Buyer does hereby
acknowledge and agree that: (a) Buyer is expressly purchasing the Real
Property in its existing condition "AS IS, WHERE IS, AND WITH ALL FAULTS"
with respect to any facts, circumstances, conditions and defects; (b)
Seller has no obligation to repair or correct any such facts,
circumstances, conditions or defects or to compensate Buyer for same; (c)
Seller has specifically bargained for the assumption by Buyer of all
responsibility to inspect and investigate the Real Property and of all
risk of adverse conditions; and (d) Buyer has or will have prior to the
Closing undertaken all such physical inspections and examinations of the
Real Property as Buyer deems necessary or appropriate as to the condition
of the Real Property. Except as expressly set forth herein, Buyer
acknowledges that Seller has made no representations or warranties and
shall have no liability to Buyer (and Buyer hereby waives any right to
recourse against Seller) with respect to the conditions of the soil, the
existence or non-existence of hazardous substances, any past use of the
Real Property, the economic feasibility of the Real Property, or the Real
Property's compliance or non-compliance with all laws, rules or
regulations affecting the Real Property.
4.5 Ownership of Cash Reserve Loans.
Seller has full power and authority to hold each Cash Reserve Loan;
and has good title to the Cash Reserve Loans free and clear of all liens and
encumbrances, except for liens and encumbrances (i) which do not detract from
the Cash Reserve Loans' value or interfere with the Cash Reserve Loans' use, or
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(ii) are, in aggregate amounts, not material to the value of the Cash Reserve
Loans as a whole. Seller is authorized to sell and assign the Cash Reserve Loans
to Buyer and, upon such assignment, Buyer will have the rights of a lender with
respect to the Cash Reserve Loans.
4.6 Taxes.
Seller either has paid all payroll, withholding, property, sales,
use, transfer, documentary, backup withholding, license and similar taxes
imposed by any taxing authority which are due and payable by Seller with respect
to the activities conducted by the Branches, Assets, Liabilities, or Seller's
employees, has properly accrued for the same by reserves shown on Seller's books
and records of account, or will have done one or the other of the foregoing on
or before the Closing Date. Subject to Sections 2.4, 2.5 and 2.6, all taxes for
which Seller has properly accrued by reserves on Seller's books and records of
account shall be paid by Seller on its own behalf or on behalf of the Buyer.
Notwithstanding any other provision in this Agreement, Seller shall retain all
right to any refund with respect to any such tax paid by Seller.
4.7 Compliance with Certain Laws.
The Deposit Accounts and the Cash Reserve Lines of Credit were
opened, extended or made, and have been maintained, in accordance with all
applicable federal and state laws, regulations, rules, and orders, and the
Branches have been operated in compliance with Seller's policies and procedures
and all applicable federal and state laws, regulations, rules, and orders,
except for such instances of noncompliance which have not had, and are not
reasonably likely to have, a Seller Material Adverse Effect.
4.8 FDIC Insurance.
The Deposits are insured by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund to the extent permitted by law, and
all premiums and assessments required in connection therewith have been paid
when due by Seller.
4.9 Offering Memorandum Information.
The information contained in the Branch Sale Offering Memorandum
provided to Buyer is true and correct in all material respects.
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V. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer makes the following representations and warranties to Seller.
5.1 Power and Authority.
(a) Buyer has the corporate power and authority to enter into and
perform this Agreement. The execution and delivery of this Agreement has
been duly authorized by all necessary corporate action by Buyer. Upon
execution and delivery by both parties, this Agreement will constitute a
valid and binding obligation of Buyer, enforceable in accordance with its
terms subject to conservatorship, receivership, and a court's right under
general principles of equity to refuse to direct specific performance.
(b) The performance of this Agreement by Buyer will not violate any
provision of the Articles of Association, By-laws or similar governing
documents of Buyer, or any applicable law, rule, regulation, or order or
any contract or instrument by which Buyer is bound except for such
violations which, in the aggregate, would not reasonably be expected to
have a material adverse effect on the consummation of the transactions
contemplated by this Agreement (a "Buyer Material Adverse Effect").
5.2 Litigation and Regulatory Proceedings.
There are no actions, complaints, petitions, suits or other
proceedings, or any decree, injunction, judgment, order or ruling, entered,
promulgated or pending or (to Buyer's knowledge) threatened against Buyer or any
of its properties or assets which alone, or taken in the aggregate, reasonably
would be expected to have a Buyer Material Adverse Effect. No governmental
agency has notified Buyer that it would oppose or not approve or consent to the
transactions contemplated by this Agreement, and Buyer knows of no reason for
any such opposition, nonapproval, or nonconsent.
5.3 Consents and Approvals.
Except for the regulatory approvals mentioned in Section 9.3(a) of
this Agreement, no consents or approvals, or filings or registrations with any
third party or any public body, agency, or authority are necessary in connection
with Buyer's consummation of the transactions contemplated by this Agreement
other than what may be necessary as a result of any facts or circumstances
relating solely to Seller.
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5.4 Financing.
Buyer has sufficient funds available to it to purchase the Assets
and assume the Liabilities in accordance with this Agreement.
VI. ADDITIONAL AGREEMENTS OF SELLER
6.1 Access to Seller's Premises, Records, and Personnel.
(a) Upon execution of this Agreement, Seller shall give Buyer and
its representatives and counsel reasonable access to the Branches as Buyer
may reasonably request, provided that Buyer does not unreasonably
interfere with the Branches' business operations. Seller shall not be
required to provide access to or to disclose information where such access
or disclosure might violate or prejudice the rights of any customer or
employee or would be contrary to law, rule, regulation or any legal or
regulatory order or process or any fiduciary duty or binding agreement
entered into prior to the date of this Agreement.
(b) Anything contained in this Agreement to the contrary
notwithstanding, Seller shall not be required to disclose, or to cause the
disclosure to Buyer or its representatives (or provide access to any
offices, properties, books or records of Seller, that could result in the
disclosure to such Persons or others), of any tax returns and/or any work
papers relating thereto or any other confidential information relating to
income or franchise taxes or other taxes of Seller or of trade secrets or
patent or trademark applications, or product research and development
belonging to or performed by or for Seller, nor shall Seller be required
to permit or to cause others to permit Buyer or its representatives to
copy or remove from the offices or properties of Seller any documents,
drawings or other materials that might reveal any such confidential
information; provided, however, Buyer shall have access to tax returns to
the extent that liability for the taxes at issue could be imposed on
Buyer.
(c) At Buyer's request, Seller shall authorize and permit certain of
its officers and members of management to engage in discussions with Buyer
for the purposes of discussing the Branches' business and negotiating and
concluding management employment contracts, employee benefit plans, and
new incentive plans and Buyer shall maintain the confidentiality of any
information furnished by such officers or members of management of Seller
pursuant to such discussions with Buyer.
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6.2 Matters Relating to Branch Closing.
In the event that Buyer intends to close any of the Branches on the
Closing Date or before ninety (90) days thereafter, Buyer and Seller agree to
the following:
(a) Subject to Section 6.2(b), Seller and Buyer shall prepare Branch
closing notices to Seller's customers, to be mailed by Seller, at Buyer's
request and expense, at such time as shall be mutually agreed upon between
Buyer and Seller. Seller and Buyer also shall prepare another notice to
Seller's customers, to be mailed by Seller, at Buyer's expense, of Buyer's
impending acquisition of the Branches within ten (10) Business Days
following Seller's receipt of notice that Buyer has obtained any and all
required regulatory approvals for the transactions contemplated by this
Agreement or such earlier date as Seller and Buyer may mutually agree
upon. After Seller mails this notice, Buyer shall be permitted to provide
to Seller material to be sent, at Buyer's expense, to the depositors,
borrowers and other customers of the Branches concerning the proposed
transaction and Buyer's products. Each party's communication shall be
subject to the approval of the other party, which approval shall not be
refused unreasonably.
(b) Unless Buyer shall certify in writing at the time that (x) Buyer
is not aware of the occurrence of any event or condition, which, if not
corrected, would be reasonably expected to result in the failure of any
condition to Closing under Sections 9.3 or 9.4; (y) Buyer has no reason to
believe that any regulatory approval required under Section 9.3(a) will
not be forthcoming, and (z) no challenge has been threatened or filed and
is pending with respect to any such regulatory approval:
(i) Buyer shall not take any action with respect to any of
the Branches which would require that notices be posted or provided
to customers or regulators, as required by 12 U.S.C. Section
1831r-1, on or prior to the Closing Date; and
(ii) Seller shall not be required to participate in the
closing of any Branch or in any notice to customers relating to such
a closing.
6.3 Regulatory Approvals.
Seller shall use its best efforts to obtain promptly any regulatory
approval on which its consummation of the transactions contemplated by this
Agreement is conditioned. Seller also shall cooperate fully and promptly with
Buyer in obtaining any regulatory approval which Buyer must obtain before
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Closing. Seller shall notify Buyer promptly of any significant development with
respect to any application it files under this Section. Seller also shall
provide Buyer with a copy of any regulatory approval it receives under this
Section, promptly after Seller's receipt of the same.
6.4 Conduct of Business.
Except as provided in this Agreement and as may be agreed upon
otherwise with Buyer, Seller will continue to carry on the business at the
Branches until Closing in the ordinary course of business, consistent with
prudent business practices. Seller shall not terminate the operation of any
Branch, unless those operations cease due to events beyond Seller's control.
Seller will notify Buyer of any event of which Seller obtains knowledge which
would make any of Seller's representations under Article IV of this Agreement
false in any material respect.
The foregoing agreement of Seller to conduct its business in the
ordinary course shall include, but not be limited to, the following negative
covenants: From the date hereof until the Closing Date, Seller will not at its
Albany, Georgia Branches: grant any increases in compensation to its employees
except for normal merit raises in the ordinary course of business, or bonuses
relating to deposit retention programs established by Seller; will not hire any
additional employees, except as may be necessary in order to maintain ordinary
and customary service at its Branches; will not sell or dispose of or acquire
any assets other than in the ordinary course of business; fail to pursue
collection in the ordinary course of business any unpaid Overdrafts or Cash
Reserve Loan balances; or open any Deposits at a rate of interest greater than
would be available under Seller's normal pricing policy for Albany, Georgia for
comparable deposits. Seller's agreement to conduct its business in the ordinary
course shall include, but not limited to, the following affirmative covenants:
Seller will provide its best efforts to preserve in tact at its Albany Branches,
its goodwill and assets and to maintain its customer base; and, prior to
Closing, it will write off all Overdrafts and Cash Reserve Loans where
collectibility is doubtful in accord with its normal practices.
VII. ADDITIONAL AGREEMENTS OF BUYER
7.1 Regulatory Approvals.
Buyer agrees to use its reasonable best efforts to complete and file
within twenty (20) days after the date of this Agreement every application
necessary to obtain any regulatory approval on which Buyer's consummation of the
transactions contemplated by this Agreement is conditioned and to use its
reasonable best efforts to obtain all such approvals promptly.
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Buyer also shall cooperate fully and promptly with Seller in obtaining any
regulatory approval which Seller must obtain before Closing. Buyer shall notify
Seller promptly of any significant development with respect to any application
it files under this Section. Buyer also shall provide Seller with a copy of any
regulatory approval it receives under this Section, promptly after Buyer's
receipt of the same.
7.2 Change of Name, Etc.
Immediately after Closing, Buyer will (a) change the name and/or
logo on all documents and facilities relating to the Assets, Liabilities and
Branches to Buyer's name and/or logo, (b) notify all persons whose Cash Reserve
Loans or Deposits are transferred under this Agreement of the consummation of
the transactions contemplated by this Agreement, and (c) provide all appropriate
notices to the Federal Deposit Insurance Corporation and any other appropriate
regulatory authorities required as a result of the consummation of these
transactions. Buyer agrees not to use any forms and other documents bearing
Seller's name or logo after Closing without the prior written consent of Seller,
and, if such consent is given, Buyer agrees that all such forms or other
documents to which such consent relates will be stamped or otherwise marked in
such a way that identifies Buyer as the party using the form or other document.
As soon as practicable and, in any event, within seven (7) calendar days after
the Closing Date, Buyer will issue new checks reflecting its transit and routing
number to customers of the Branches with checking privileges. Buyer shall use
its best efforts to encourage these customers to begin using these checks and
cease using checks bearing Seller's name.
VIII. SELLER'S EMPLOYEES
8.1 Transferred Employees.
(a) Buyer will offer to employ all of Seller's employees who are
employed at the Branches on the Closing Date ("Transferred Employees"), at
a salary or hourly wage comparable to that earned by them at the time of
Closing.
(b) Seller is responsible for the filing of Forms W-2 with the
Internal Revenue Service and any required filing with state tax
authorities, with respect to wages and benefits paid to each Transferred
Employee for periods ending on or prior to the Closing Date.
8.2 Employee Benefits.
(a) (i) Following the Closing, Buyer shall not have any liability or
obligation under Seller's Benefit Plans or any other program or
arrangement of Seller or an ERISA Affiliate
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thereof under which any current or former employee of Seller or any of its
Affiliates has any right to any benefits.
(ii) Upon the Closing, the participation of Transferred Employees
in Seller's Benefit Plans shall cease in accordance with the terms of such
plans.
(iii) Buyer shall not under any circumstances be responsible for
any welfare benefits, or claims by, current or former employees of Seller
or any of its Affiliates arising as a result of events occurring prior to
the Closing Date. Seller shall, solely with respect to such employees,
continue to be responsible after the Closing Date for any welfare benefits
or claims which will, by reason of events which take place on or prior to
the Closing Date, become payable under the terms of any group insurance,
workers' compensation, or self-funded welfare or fringe benefits program,
plan, coverage, obligation, or practice affecting such employees. With
respect to Transferred Employees, Buyer shall be responsible for any
welfare benefits or claims which will, by reason of events that take place
after the Closing Date, become payable under the terms of any group
insurance, worker's compensation, or self-funded welfare or fringe
benefits program, plan, coverage, obligation or practice of Buyer or any
of its Affiliates affecting the Transferred Employees, and Seller shall
under no circumstances be responsible for any benefits or claims arising
by reason of events that take place following the Closing Date; provided,
however, that Seller shall remain responsible for all benefits or claims
arising under disability or workers' compensation plans which are or
become payable after the Closing Date which result from any disabilities
or injuries occurring prior to the Closing Date.
(b) (i) On and after the Closing Date, Buyer shall provide the
Transferred Employees with the employee benefits, if any, provided to
employees of Buyer and its Affiliates, subject to the terms of Buyer's
benefit plans.
(ii) Buyer will grant for purposes of vacation benefits, severance
pay, and all welfare benefit plans (as defined in ERISA) past service
credit to all Transferred Employees for periods of time credited to such
Transferred Employees under the Seller's Welfare Benefit Plans. To the
extent that any Transferred Employee has satisfied in whole or in part any
annual deductible under a Welfare Benefit Plan, or has paid any
out-of-pocket expenses pursuant to any Welfare Benefit Plan co-insurance
provision, such amount shall be counted toward the satisfaction of any
applicable deductible or out-of-pocket expense maximum, respectively,
under the benefit plans and programs provided to Transferred
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Employees by Buyer, and such plans and programs shall be applied without
regard to any limitations relating to preexisting conditions or required
physical examinations that would not otherwise apply under the respective
Welfare Benefit Plans to the extent that such Transferred Employees are
covered by Seller's Welfare Benefit Plans on the Closing Date.
Pre-existing conditions excluded under Seller's plans and programs may
also be excluded under the terms of Buyer's plans and programs.
(iii) Buyer shall take whatever action is necessary, including
amendment of its defined contribution pension plan, to grant to each
Transferred Employee past service credit for all purposes (including any
waiting period) under Buyer's defined contribution pension plan for all
periods of service credited to each such Transferred Employee under the
Seller's defined contribution pension plan. Within forty-five (45) days
after the Closing Date, Seller shall provide to Buyer such information as
Buyer reasonably requires to establish the service for the Transferred
Employees credited under the Seller's defined contribution pension plan.
Provided, that entry into Buyer's Pension Plan shall occur at normal plan
entry dates.
(iv) Buyer will grant to each Transferred Employee past service
credit for service which has been granted under Seller's pension plan, for
all purposes, other than benefit accrual, under Buyer's defined benefit
pension plan.
8.3 Training.
Seller shall permit Buyer to train the Transferred Employees before
Closing with regard to Buyer's operations, policies, and procedures at Buyer's
sole cost and expense. This training shall take place outside of business hours
and may, at Buyer's option, take place at the Branches.
IX. CLOSING AND CONDITIONS TO CLOSING
9.1 Time and Place of Closing.
The closing ("Closing") shall be a date mutually agreed upon by the
parties (the "Closing Date") which shall be on a Friday and shall be no more
than sixty (60) days after the last regulatory approval necessary for the
Closing has been obtained (without regard to any statutory waiting periods
following such approval). Closing shall take place at Seller's offices located
at 999 Peachtree Street, Atlanta, Georgia, at 10:00 A.M. on the Closing Date, or
at a time and place otherwise determined by mutual agreement of the parties.
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9.2 Exchange of Closing Documents.
The parties shall exchange drafts of all documents to be delivered
at Closing (other than the Preliminary Closing Statement) at least ten (10)
Business Days prior to the Closing Date.
9.3 Buyer's Conditions to Closing.
Buyer's obligations to purchase the Assets and assume the
Liabilities is contingent upon and subject to the fulfillment of the following
conditions in all material respects:
(a) The parties obtaining all regulatory approvals which are
necessary for them to proceed with the transactions contemplated by this
Agreement and the expiration of any required waiting period without the
commencement of adverse proceedings by any governmental authority with
jurisdiction over the transactions contemplated by this Agreement;
(b) Each express representation, covenant and warranty of Seller in
this Agreement being true and correct in all material respects as of the
Closing Date and all covenants and conditions of Seller to be performed or
met by Seller on or before the Closing Date having been performed or met
in all material respects;
(c) Seller's delivery to Buyer of the following documents in form
and substance satisfactory to counsel for Seller and Buyer:
(i) The executed Preliminary Closing Statement;
(ii) Special warranty deeds conveying the Real Property;
(iii) Bills of sale, assignments, and other instruments of
transfer sufficient to convey to Buyer all of Seller's right, title,
and interest in and to the remaining Assets;
(iv) A certificate executed by an appropriate officer of
Seller attesting, to the officer's best knowledge, to Seller's
compliance with the conditions set forth in Section 9.3; and
(v) Estoppel certificates executed by the lessors of the
Leased Branches; and
(d) Buyer's receipt of the Preliminary Payment as provided in
Section 3.3.
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9.4 Seller's Conditions to Closing.
Seller's obligation to sell the Assets and transfer the Liabilities
to Buyer is contingent upon and subject to the fulfillment of the following
conditions in all material respects:
(a) The parties' obtaining all regulatory approvals which are
necessary for them to proceed with the transactions contemplated by this
Agreement and the expiration of any required waiting period without the
commencement of adverse proceedings by any governmental authority with
jurisdiction over the transactions contemplated by this Agreement;
(b) Each express representation, covenant and warranty of Buyer in
this Agreement being true and correct in all material respects as of the
Closing Date and all covenants and conditions of Buyer to be performed or
met by Buyer on or before the Closing Date having been performed or met in
all material respects; and
(c) Buyer's delivery to Seller of the following documents in form
and substance reasonably satisfactory to counsel for Seller and Buyer:
(i) One or more executed assumptions of the Real Property
Leases;
(ii) One or more executed instruments assuming the remaining
Liabilities; and
(iii) A certificate executed by an appropriate officer of
Buyer attesting, to the officer's best knowledge, to Buyer's
compliance with the conditions set forth in Section 9.4(b).
9.5 Survival of Representations and Warranties.
Unless specifically provided otherwise in this Agreement, each and
every one of Buyer's and Seller's representations, warranties and covenants
under this Agreement or contained in any certificate or instrument delivered by
either party at Closing shall survive for a period of one (1) year following the
Closing Date.
9.6 Environmental Audit.
This transaction is contingent upon the parties obtaining a Phase II
Environmental Assessment from a mutually acceptable environmental engineering
consulting firm satisfactory to both Buyer and Seller. If such report reveals
conditions requiring remediation by Seller, and such remediation may be
21
<PAGE>
accomplished by Seller at a cost not to exceed $100,000.00, Seller shall effect
such remediation. If such remediation shall require an expenditure greater than
$100,000.00, Seller may elect to either perform such remediation work or
terminate this Agreement.
X. TERMINATION
10.1 Termination by Either Party.
Either party may terminate this Agreement upon written notice to the
other if:
(a) as a result of any material breach of any representation,
warranty, or covenant, the party terminating the Agreement would be
justified in not proceeding to Closing, but only if the breach, by its
nature, cannot be cured substantially by the Closing;
(b) the Closing does not occur within one hundred eighty (180) days
after the date of this Agreement, notwithstanding the reasonable best
efforts of the party terminating this Agreement; or
(c) the other party so agrees in writing.
The termination of this Agreement under subsection (a) shall not
absolve the breaching party from any liability to the other party arising out of
its breach of this Agreement.
XI. MISCELLANEOUS
11.1 Continuing Cooperation.
(a) On and after the Closing Date, Seller agrees to give such
further reasonable assurances and to execute, acknowledge and deliver such
bills of sale, deeds, acknowledgments and other instruments of conveyance
and transfer as in Buyer's judgment are reasonably necessary and
appropriate to vest effectively in Buyer the full legal and equitable
title to all the Assets and Liabilities.
(b) On and after the Closing Date, Buyer shall execute, acknowledge,
and deliver any documents or instruments as in Seller's judgment may be
reasonably necessary and appropriate to relieve and discharge Seller from
its obligations with respect to the Liabilities.
(c) Seller and Buyer shall cooperate fully with each other in
connection with any examination conducted by any tax authority subsequent
to the Closing Date by promptly providing upon request information
relating to the tax
22
<PAGE>
liability of any business operated by Seller or Buyer with respect to the
Branches and promptly informing the other of the institution of, any
material developments concerning, and the outcome of, the same.
(d) Except as provided in Section 7.2, no interest in or right to
use First Union National Bank of Georgia's logo or the name "First Union"
or any other similar word, name, symbol or device in which Seller has any
interest by itself or in combination with any other word, name, symbol or
device, or any similar variation of any of the foregoing (collectively,
the "Retained Names and Marks") is being transferred to Buyer pursuant to
the transactions contemplated hereby. Unless permitted pursuant to Section
7.2, Buyer shall not after the Closing Date in any way knowingly use any
materials or property, whether or not in existence on the Closing Date,
that bear any Retained Name or Mark. Buyer agrees that Seller shall have
no responsibility for claims by third parties arising out of, or relating
to, the use by the Buyer thereof of any Retained Name or Mark after the
Closing Date, and Buyer agrees to indemnify and hold harmless Seller from
any and all claims (and all expenses, including reasonable attorneys' fees
and disbursements incurred in connection with any such claim) that may
arise out of the use thereof by Buyer.
11.2 Merger and Amendment.
This Agreement sets out the complete agreement of the parties with
respect to the matters discussed in this Agreement, and it supersedes all prior
agreements between the parties, whether written or oral, which apply to these
matters. No provision of this Agreement may be changed or waived except as
expressly stated in a document executed by both parties.
11.3 Dispute Resolution; Indemnification Procedure.
(a) Neither Seller nor Buyer shall assert any claim arising out of
or relating to this Agreement (except with respect to claims to be handled
under the Working Agreement in Section 2.8 or submitted to the Mediator
under Section 3.3(c)unless:
(i) except for claims arising under or in respect of Sections
2.4, 2.5, 2.6 or 11.1(d), the amount in dispute with respect to any
claim exceeds $5,000.00;
(ii) except for claims arising in respect of Sections 2.4, 2.5
or 2.6, the aggregate amount of all claims by Buyer or Seller (as
the case may be) which satisfy the preceding clause exceeds
$25,000.00, in
23
<PAGE>
which case a claim may be asserted only to the extent that such
threshold has been exceeded;
(iii) the aggregate amount of all liabilities and damages
collected by Buyer or Seller (as the case may be) shall not exceed
the Amount of Premium; and
(iv) except for claims arising in respect of Sections 2.4, 2.5
or 2.6, the notification required by Section 11.3(b) (if any) is
given on or before the first anniversary of the Closing Date, and,
if no notification is required by Section 11.3(b) written notice of
the claim is given on or before the third anniversary of the Closing
Date.
(b) The parties shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiations, as
provided in this Subsection (b). Either party may give the other party
written notice of any dispute not resolved in the normal course of
business. Executives of both parties at comparable levels at least one
step above the personnel who have previously been involved in the dispute
shall meet at a mutually acceptable time and place within ten (10) days
after delivery of such notice, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve
the dispute. If the matter has not been resolved by these persons within
thirty (30) days of the disputing party's notice, or if the parties fail
to meet within ten (10) days, the dispute shall be referred to more senior
executives of both parties who have authority to settle the dispute and
who shall likewise meet to attempt to resolve the dispute. All
negotiations under this Subsection (b) are confidential and shall be
treated as compromise and settlement negotiations for purposes of the
Federal Rules of Evidence, applicable State rules of evidence, and common
law. The procedures set forth above will be followed in advance of
litigation of any dispute between the parties; nevertheless, either party
may seek a preliminary injunction or other provisional judicial relief if
in its judgment such an action is necessary to avoid irreparable damage or
to preserve the status quo. Despite any such action, the parties will
continue to participate in good faith in the procedures set forth in this
Subsection (b). Notwithstanding anything to the contrary in the foregoing,
a claim brought pursuant to Section 2.8 shall fall under the terms of this
Subsection (b) only if the parties cannot reach an agreement on the
payment of such claim pursuant to the Working Agreement.
(c) Neither party shall have any liability for lost profits or
punitive damages with respect to any claim
24
<PAGE>
arising out of or relating to this Agreement. The sole recourse and remedy
of a party hereto for breach of this Agreement by the other party hereto
shall be against such other party and its assets, and no officer,
director, employee, stockholder or affiliate of any party shall be liable
at law or in equity for the breach by such party of any of its obligations
under this Agreement.
11.4 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which will constitute an original, but all of which taken together shall
constitute one and the same instrument.
11.5 Exhibits and Schedules.
All exhibits and schedules referred to in this Agreement shall
constitute a part of this Agreement.
11.6 Assignment.
This Agreement is not assignable by either party without the written
consent of the other party which shall not be unreasonably withheld.
11.7 Headings.
The headings contained in this Agreement are inserted for
convenience only and shall not affect the meaning of this Agreement or any of
its provisions.
11.8 Notices.
Any notice under this Agreement shall be made in writing and shall
be deemed given when delivered in person, when delivered by first class mail
postage prepaid (in which case the notice shall be deemed given on the third
Business Day following the date on which the notice is postmarked), or when
delivered by facsimile transmission, which transmission also shall be sent by
first class mail, postage prepaid before the second Business Day following the
transmission (in which case the notice shall be deemed given on the day
transmitted if transmitted before or during normal business hours or, otherwise,
on the next succeeding Business Day) to the parties at the respective addresses
set forth below or at such other addresses as each party shall inform the other
in writing.
25
<PAGE>
If to Seller to: Steve Parker
Chief Financial Officer
First Union National Bank of Georgia
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
with a copy to: Keith D. Lembo, Esq.
Senior Vice President
and Deputy General Counsel
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0603
If to Buyer to: Robert E. Lee
Chief Financial Officer
First State Corporation
323 Pine Avenue, 3rd Floor
Albany, Georgia 31703
with a copy to: Walt Moeling
Powell, Goldstein, Frazer & Murphy
16th Floor
191 Peachtree Street, N.W.
Atlanta, Georgia 30303
11.9 Expenses.
Unless specifically stated to the contrary in this Agreement, each
party will assume and pay for the expenses it incurs with respect to the
purchase and sale of the Assets and assumption of the Liabilities under this
Agreement, provided, however, that Buyer shall pay all fees and expenses
associated with the regulatory application process. Each party shall be
responsible for any fee payable to any agent, broker or finder acting on its
behalf in this transaction.
11.10 Public Announcements.
Each party shall consult with the other before making any
announcement or other public communication with respect to the transactions
contemplated by this Agreement and shall furnish a copy of the text to the other
party of the announcement or other communication.
11.11 Governing Law; Jurisdiction.
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Georgia
applicable to contracts made and to be performed entirely within the State of
Georgia.
26
<PAGE>
11.12 Severability.
If any provision of this Agreement is determined to be invalid,
illegal, or unenforceable by any Governmental Entity, the remaining provisions
of this Agreement to the extent permitted by applicable law, rule or regulation
shall remain in full force and effect provided that the economic and legal
substance of the transactions contemplated is not affected in any manner
materially adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith with a view to replacing this Agreement
with a new agreement which would fulfill as closely as possible the original
intents and purposes hereof.
11.13 No Third Party Beneficiaries.
The parties intend that this Agreement shall not benefit or create
any right or cause of action in or on behalf of any Person other than Seller and
Buyer, except as may otherwise be provided explicitly in this Agreement.
11.14 Risk of Loss
Risk of casualty loss to the Real Property and Fixed Assets shall
remain with the Seller until Closing.
27
<PAGE>
IN WITNESS WHEREOF, each of the parties to this Agreement has caused this
Agreement to be executed by a duly authorized officer as of the date written on
page one of this Agreement.
FIRST STATE BANK & TRUST COMPANY
By: /s/ Robert E. Lee
-----------------------------
Its: CFO
----------------------------
FIRST UNION NATIONAL BANK
OF GEORGIA
By: /s/ Steven L. Parker
-----------------------------
Its: CFO
----------------------------
28
<PAGE>
EXHIBIT B
FORM OF PRELIMINARY CLOSING STATEMENT
Amount of Liabilities Preliminary
- --------------------- -----------
Principal Amount of Deposits ___________________________
Accrued Interest ___________________________
(Less) Value of Assets
and Amount of Premium
Real Property* (_________________________)
Value of Fixed Assets* (_________________________)
Cash on Hand (_________________________)
Cash Reserve Loans* (_________________________)
Overdrafts* (_________________________)
Amount of Premium* (_________________________)
(Less) Plus Taxes* (_________________________)
(Less) Plus Prorated Tax and Expense Items* (_________________________)
===========================
Payment Amount ___________________________
*See Attached Schedules for Calculations
I hereby certify that I am a ___________________ Vice President of First
Union National Bank of ______________ and that this Preliminary Closing
Statement and the Schedules attached, as well as the financial information on
which both are based, are accurate and complete and have been prepared in
accordance with GAAP and Seller's customary practices and procedures used in
preparing financial statements.
____________________________
Name:_______________________
Title:______________________
29
<PAGE>
EXHIBIT C
FORM OF FINAL CLOSING STATEMENT
Amount of Liabilities Preliminary Final
- --------------------------------------------------------------------------------
Principal Amount of Deposits ____________ ____________
Accrued Interest ____________ ____________
____________ ____________
(Less) Value of Assets
and Amount of Premium
- ---------------------
Real Property* (__________) (__________)
Value of Fixed Assets* (__________) (__________)
Cash on Hand (__________) (__________)
Cash Reserve Loans* (__________) (__________)
Overdrafts* (__________) (__________)
Amount of Premium* (__________) (__________)
(Less) Plus Taxes* (__________) (__________)
(Less) Plus Prorated Tax and
Expense Items* (__________) (__________)
Payment Amount ____________ ____________
- --------------
Prior Payment Amount ----- ____________
Increase (Decrease) from
Prior Payment Amount ----- ____________
Reimbursement of Seller's
Severance Expense ----- ____________
Total Increase (Decrease)
and Reimbursement ----- ____________
Interest ----- ____________
Amount Due from Seller
(Buyer) (Total Adjustment Payment) ----- ____________
*See Attached Schedules for Calculations
C-1
<PAGE>
I certify that I am a _______________ Vice President of First Union
National Bank of ____________ and that this Final Closing Statement and the
Schedules attached, as well as the financial information on which both are
based, are accurate and complete and have been prepared in accordance with GAAP
and with Seller's customary practices and procedures used in preparing financial
statements.
_____________________________
Name:________________________
Title:_______________________
C-2
<PAGE>
SCHEDULE 1.1A
BRANCHES
Albany Main
241 Pine Avenue
Albany, Georgia 31708
Westover Crossing
701 N. Westover Blvd.
Albany, Georgia 31707
C-3
<PAGE>
SCHEDULE 4.4
REAL PROPERTY
The real property owned by the Seller at:
Albany Main
241 Pine Avenue
Albany, Georgia 31708
Westover Crossing
701 N. Westover Blvd.
Albany, Georgia 31707
EXHIBIT 10.12
================================================================================
REVOLVING CREDIT AND TERM LOAN AGREEMENT
$10,000,000
By and Between
FIRST STATE CORPORATION
and
SUNTRUST BANK, ATLANTA
Dated: October 15, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS ................................ -1-
Section 1.01. Defined Terms .................................. -1-
Section 1.02. Accounting Terms ............................... -5-
ARTICLE II AMOUNT AND TERMS OF THE LOAN ................................... -5-
Section 2.01. Revolving Credit ............................... -5-
Section 2.02. Interest on the Revolving Credit ............... -5-
Section 2.03. Method of Making Advances and Selection of
Interest Rates Under the Revolving Credit ..... -6-
Section 2.04. Repayment of Principal Under the Revolving
Credit ........................................ -6-
Section 2.05. Renewals and Conversion of Advances Under
the Revolving Credit........................... -6-
Section 2.06. Failure to Select Interest Rates Under the
Revolving Credit .............................. -6-
Section 2.07. Payment of Principal Pursuant to the Term
Loan .......................................... -6-
Section 2.08. Selection of Interest Rates Applicable to
the Term Loan .................................. -7-
Section 2.09. Revolving Credit and Term Note ................. -7-
Section 2.10. Method of Payment .............................. -7-
Section 2.11. Use of Proceeds ................................ -7-
Section 2.12. Illegality ..................................... -8-
Section 2.13. Disaster ....................................... -8-
Section 2.14. Increased Cost ................................. -8-
Section 2.15. Risk-Based Capital ............................. -9-
ARTICLE III CONDITIONS PRECEDENT .......................................... -9-
Section 3.01. Condition Precedent to the Initial Advances .... -9-
Section 3.02. Conditions Precedent to Subsequent Advances .... -10-
Section 3.03. Conditions Precedent to the Term Loan .......... -10-
ARTICLE IV REPRESENTATIONS AND WARRANTIES ................................. -11-
Section 4.01. Incorporation, Good Standing, and Due
Qualification .................................. -11-
Section 4.02. Corporate Power and Authority .................. -11-
Section 4.03. Legally Enforceable Agreement .................. -11-
Section 4.04. Financial Statements ........................... -11-
Section 4.05. Labor Disputes and Acts of God ................. -11-
Section 4.06. Other Agreements ............................... -12-
Section 4.07. Litigation ..................................... -12-
Section 4.08. No Defaults on Outstanding Judgments or Orders . -12-
Section 4.09. Ownership and Liens ............................ -12-
Section 4.10. Subsidiaries and Ownership of Stock ............ -12-
Section 4.11. ERISA .......................................... -12-
Section 4.12. Operation of Business .......................... -12-
Section 4.13. Taxes .......................................... -13-
Section 4.14. Absence of Undisclosed Liabilities ............. -13-
Section 4.15. Environment .................................... -13-
Section 4.16. Governmental Approval .......................... -13-
Section 4.17. Regulatory Compliance .......................... -13-
<PAGE>
ARTICLE V AFFIRMATIVE COVENANTS ........................................... -13-
Section 5.01. Use of Proceeds ................................ -13-
Section 5.02. Maintenance of Existenc ........................ -13-
Section 5.03. Maintenance of Records ......................... -13-
Section 5.04. Maintenance of Properties ...................... -14-
Section 5.05. Conduct of Business ............................ -14-
Section 5.06. Maintenance of Insurance ....................... -14-
Section 5.07. Compliance with Laws ........................... -14-
Section 5.08. Right of Inspection ............................ -14-
Section 5.09. Reporting Requirements ......................... -14-
Section 5.10. Environment .................................... -16-
Section 5.11. Composite Rating ............................... -16-
Section 5.12. Capital Adequacy ............................... -16-
ARTICLE VI NEGATIVE COVENANTS ............................................. -16-
Section 6.01. Liens .......................................... -16-
Section 6.02. Debt ........................................... -17-
Section 6.03. Mergers, Acquisitions, Etc ..................... -17-
Section 6.04. Leases ......................................... -17-
Section 6.05. Sale and Leaseback ............................. -18-
Section 6.06. Dividends ...................................... -18-
Section 6.07. Sale of Assets ................................. -18-
Section 6.08. Guaranties, Etc ................................ -18-
Section 6.09. Transactions with Affiliates ................... -18-
ARTICLE VII FINANCIAL COVENANTS ........................................... -18-
Section 7.01. Capital Expenditures ........................... -18-
Section 7.02. Borrower Capital ............................... -18-
Section 7.03. Subsidiary Capital ............................. -19-
Section 7.05. Return on Assets ............................... -19-
Section 7.06. Efficiency Ratio ............................... -19-
Section 7.07. Reserves ....................................... -19-
Section 7.08. Adverse Classifications ........................ -19-
ARTICLE VIII EVENTS OF DEFAULT ............................................ -19-
Section 8.01. Events of Default .............................. -19-
Section 8.02. Remedies upon Event of Default ................. -21-
ARTICLE IX MISCELLANEOUS .................................................. -22-
Section 9.01. Amendments, Etc ................................ -22-
Section 9.02. Notices, Etc ................................... -22-
Section 9.03. No Waiver ...................................... -22-
Section 9.04. Successors and Assigns ......................... -22-
Section 9.05. Costs, Expenses, and Taxes ..................... -23-
Section 9.06. Integration .................................... -23-
Section 9.07. Indemnity ...................................... -23-
Section 9.08. Governing Law .................................. -23-
Section 9.09. Severability of Provisions ..................... -23-
Section 9.10. Headings ....................................... -23-
Section 9.11. Jury Trial Waiver .............................. -23-
-2-
<PAGE>
EXHIBITS
Schedule I
Exhibit A - Note
Exhibit B - Stock Pledge and Security Agreement
Exhibit C - Form of Opinion of Counsel for Borrower
Exhibit D - Officer's Certificate
Exhibit E - Schedule of Litigation
Exhibit F - Certificate of No Default and Related Matters
Exhibit G - Permitted Liens
Exhibit H - Permitted Debts
<PAGE>
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT (the "Agreement")
dated as of October 15, 1996 between FIRST STATE CORPORATION, a Georgia
corporation, whose principal place of business is at 333 W. Broad Avenue,
Albany, Georgia (the "Borrower") and SUNTRUST BANK, ATLANTA, a Georgia banking
corporation whose principal place of business is at 25 Park Place, Atlanta,
Georgia 30303 (the "Bank"). The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement, the
following terms have the following meanings (terms defined in the singular to
have same meaning when used in the plural and vice versa):
"Advance" shall mean either a CD Advance, a LIBOR Advance, or a
Prime Advance made pursuant to the Revolving Credit, collectively referred to as
"Advances."
"Affiliate" means any Person (1) which directly or indirectly
controls, or is controlled by, or is under common control with the Borrower or a
Subsidiary; (2) which directly or indirectly beneficially owns or holds (a) five
percent (5.0%) or more of any class of voting stock of the Borrower or any
Subsidiary or (b) five percent (5.0%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Borrower or a
Subsidiary. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person whether through the ownership of voting securities, by contract, or
otherwise.
"Agreement" means this Revolving Credit and Term Loan Agreement, as
amended, supplemented, or modified from time to time.
"Assessment Rate" means, for any Interest Period for any CD Credit,
the average rate (rounded upward, if necessary, to the nearest 1/100th of 1%) at
which premiums for deposit insurance are then charged by the Federal Deposit
Insurance Corporation (or any successor) during such Interest Period to the Bank
for Dollar time deposits with the Bank at its Principal Office as estimated by
the Bank in good faith.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks in Georgia are authorized or required to close
under the laws of the State of Georgia and, if the applicable day relates to a
LIBOR Credit, the LIBOR Interest Period, or notice with respect to a LIBOR
Credit, a day on which dealings in Dollar deposits are also carried on in the
London interbank market and banks are open for business in London.
"Capital Lease" means all leases which have been or should be
capitalized on the books of the lessee in accordance with generally accepted
accounting principles.
"CD Advance" means any Advance bearing interest at the CD Rate,
collectively referred to as CD Advances.
"CD Credit" shall collectively refer to CD Advances and the CD Term
Loan.
"CD Term Loan" shall mean the Term Loan during any Interest Period
at which interest is accruing at the CD Rate.
<PAGE>
"Certificate of Deposit Base Rate" means the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) determined by the Bank on
the first day of the Interest Period for any CD Credit to be the average of the
bid rates for certificates of deposit of major United States money center banks
in an amount comparable to the principal amount of the CD Credit and having a
maturity comparable to the Interest Period applicable to such CD Credit, as
reported by the Wall Street Journal for the first day of such Interest Period.
"CD Rate" for each CD Credit means the interest rate per annum which
is one percent (1%) in excess of that rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) determined by the Bank to be equal to
the sum of (1) the quotient of (a) the Certificate of Deposit Base Rate for such
CD Credit for such Interest Period divided by (b) one minus the Certificate of
Deposit Reserve Requirement for such CD Credit for such Interest Period; plus
(2) the Assessment Rate.
"Certificate of Deposit Reserve Requirement" means, for any CD
Credit for any Interest Period therefor, the daily average of the stated maximum
rate (expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in Atlanta, Georgia with deposits exceeding one billion Dollars and with a
maturity comparable to the Interest Period for such CD Credit.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations and published interpretations thereof.
"Collateral" means all property which is subject to the Lien granted
by any Loan Document, including, without limitation, the real and personal
property identified and described on Schedule I attached hereto and incorporated
herein.
"Commitment" means the Bank's obligation to make the Loan to the
Borrower under this Agreement.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or 414(c) of the Code.
"Debt" means (1) indebtedness or liability of Borrower or any
Subsidiaries for borrowed money; (2) obligations of Borrower or any Subsidiaries
evidenced by bonds, debentures, notes, or other similar instruments; (3)
obligations of Borrower or any Subsidiaries for the deferred purchase price of
property or services (including trade obligations); (4) obligations of Borrower
or any Subsidiaries as lessee under Capital Leases; (5) liabilities of Borrower
or any Subsidiaries in respect of unfunded vested benefits under Plans covered
by ERISA; (6) all guarantees, endorsements (other than for collection or deposit
in the ordinary course of business), interest rate swaps, and other contingent
obligations of Borrower or any Subsidiaries to purchase, to provide funds for
payment, to supply funds to invest in any Person or entity, or otherwise to
assure a creditor against loss (except loans or letters of credit made or issued
in the ordinary course of business); and (7) obligations of Borrower or any
Subsidiaries, other than obligations as a lender, secured by any Liens, whether
or not the obligations have been assumed. The term "Debt" does not include any
deposit liabilities of any bank Subsidiary.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations and published interpretations
thereof.
"Eurocurrency Reserve Requirement" means, for any LIBOR Credit for
any Interest Period therefor, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by the Bank against "Eurocurrency
Liabilities" (as such term is used in Regulation D) but without benefit or
credit of proration, exemptions, or offsets that might otherwise be available to
the Bank from time to time under Regulation D. Without limiting the effects of
the foregoing, the Eurocurrency Reserve Requirement shall
-2-
<PAGE>
reflect any other reserves required to be maintained by the Bank against (1) any
category of liabilities that includes deposits by reference to which the LIBOR
Interest Rate for LIBOR Credit is to be determined; or (2) any category of
extension of credit or other assets that include LIBOR Credit.
"Event of Default" means any of the events specified in Section
8.01, provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"GAAP" means generally accepted accounting principles in the United
States.
"Interest Period" means (1) with respect to any LIBOR Advance, the
period commencing on the date such Advance is made and with respect to the LIBOR
Term Loan any day upon which the LIBOR Interest Rate shall begin to accrue, and
ending, as the Borrower may select, pursuant to this Agreement, on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, except that each such Interest Period that commences on the
last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month;
and (2) with respect to any CD Advance, the period commencing on the date such
Advance is made and with respect to any CD Term Loan any day upon which the CD
Rate shall begin to accrue, and ending, as the Borrower may select, pursuant to
this Agreement, one, two, three or six months thereafter; provided that all of
the foregoing provisions relating to Interest Periods are subject to the
following:
(a) No Interest Period during the Revolving Credit may extend
beyond the Revolving Maturity Date and no Interest Period
during the Term Loan may extend beyond the Term Loan Maturity
Date;
(b) If an Interest Period would end on a day that is not a
Business Day, such Interest Period shall be extended to the
next Business Day unless, in the case of a LIBOR Credit, such
Business Day would fall in the next calendar month, in which
event such Interest Period shall end on the immediately
preceding Business Day.
"LIBOR Interest Rate" applicable to each LIBOR Credit means one
percent (1%) per annum in excess of the rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) determined by the Bank to be equal to
the quotient of (1) the London Interbank Offered Rate for such LIBOR Credit for
such Interest Period divided by (2) one minus the Eurocurrency Reserve
Requirement for such Interest Period.
"LIBOR Advance" means any Advance bearing interest at the LIBOR
Interest Rate.
"LIBOR Credit" shall collectively refer to LIBOR Advances and the
LIBOR Term Loan.
"LIBOR Term Loan" shall mean the Term Loan during such Interest
Periods at which interest is accruing at the LIBOR Interest Rate.
"Lien" means the charge, encumbrance, security interest, or right of
the Bank in property created by any Loan Document or any other mortgage, deed of
trust, pledge, security interest, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority, or
other security agreement or preferential arrangement, charge, or encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as of the foregoing, or the filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).
"Loan" shall collectively refer to the Revolving Credit and the Term
Loan.
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"Loan Document" means this Agreement, the Note, the Security
Agreement, or any deed to secure debt, mortgage, deed of trust, pledge
agreement, security agreement, or other agreement evidencing or securing the
Loan (two or more of the foregoing being also referred to collectively herein as
the "Loan Documents").
"London Interbank Offered Rate" applicable to any Interest Period
for any LIBOR Credit means the rate per annum (rounded upward, if necessary, to
the nearest 1/100th of 1%) at which deposits in immediately available funds in
United States Dollars are available in the London interbank eurodollar market,
as reported by the Wall Street Journal two Business Days prior to the first day
of such Interest Period, for a period, and in an amount, comparable to the
Interest Period and principal amount of the LIBOR Credit which shall be made by
the Bank and outstanding during such Interest Period.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA.
"Non-Performing Loans" shall have the meaning assigned to such term
in Section 7.07.
"Note" shall mean the Revolving Credit and Term Note described in
Section 2.09.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
"Plan" means any pension plan which is covered by Title IV of ERISA
and in respect of which the Borrower or a Commonly Controlled Entity is an
"employer" as defined in Section 3(5) of ERISA.
"Prime Advance" shall mean any Advance when and to the extent that
the interest rate therein is determined by reference to the Prime Rate.
"Prime Rate" means the rate of interest announced by the Bank from
time to time as its prime commercial lending rate, which rate is not necessarily
the lowest rate of interest charged by the Bank to its borrowers.
"Prime Term Loan" shall mean the Term Loan during such periods as
interest is accruing thereon at the Prime Rate.
"Principal Office" means the Bank's office at 25 Park Place,
Atlanta, Georgia 30303.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
"Real Estate Owned" shall mean real property acquired pursuant to
foreclosure of a lien in favor of Borrower or any Subsidiary or by deed in lieu
of foreclosure.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Revolving Credit" shall have the meaning assigned to such term in
Section 2.01.
"Revolving Maturity Date" shall mean December 31, 1997.
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"Risk-Weighted Assets" shall mean the total risk-weighted balance
sheet assets and the total riskweighted off balance sheet credit equivalent
amounts, as such assets and amounts are determined and defined from time to time
by the federal banking regulator having primary jurisdiction over the Borrower
or any bank Subsidiary.
"Security Agreement" means the Stock Pledge and Security Agreement
in substantially the form of Exhibit B, to be delivered by the Borrower under
the terms of this Agreement.
"Subsidiary" means, as to the Borrower, a corporation of which
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are, at the time,
owned, or the management of which corporation is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by the Borrower.
"Term Loan" shall have the meaning assigned to such term in Section
2.07.
"Term Loan Maturity Date" shall mean December 31, 2005.
"Tier I Capital" means those components of the equity capital of the
Borrower or of any bank Subsidiary which, in the aggregate, constitute the core
or primary capital of the Borrower or bank Subsidiary, as those components are
determined and defined from time to time by the federal banking regulator having
primary jurisdiction over the Borrower or any bank Subsidiary.
"Tier II Capital" means those components of the equity capital of
the Borrower or of any bank Subsidiary which, in the aggregate, constitute the
supplementary capital of the Borrower or bank Subsidiary, as those components
are determined and defined from time to time by the federal banking regulator
having primary jurisdiction over the Borrower or any bank Subsidiary.
"Total Capital" means the total amounts of Tier I Capital and Tier
II Capital that qualify, under the applicable regulations of the federal banking
regulator having primary jurisdiction over the Borrower or any Bank subsidiary,
for inclusion in the computation of leverage capital requirements and
risk-weighted capital requirements.
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.04, and all financial data
submitted pursuant to this Agreement shall be prepared in accordance with such
principles.
ARTICLE II
AMOUNT AND TERMS OF THE LOAN
Section 2.01. Revolving Credit. Subject to and upon the terms and
conditions set forth in this Agreement, the Bank hereby establishes until the
Revolving Maturity Date a revolving credit facility in favor of the Borrower not
to exceed TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) in aggregate principal
amount at any one time outstanding (the "Revolving Credit"). Within the limits
of the Revolving Credit, the Borrower may borrow, repay and reborrow under the
terms of this Agreement; provided, however, the Borrower may neither borrow nor
reborrow should there exist an Event of Default.
Section 2.02. Interest on the Revolving Credit. The Borrower shall
pay interest upon each Advance comprising the unpaid principal balance from time
to time outstanding under the Revolving Credit from the date hereof until the
Revolving Maturity Date, whether by acceleration or otherwise, at a rate per
annum
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calculated on the basis of a 360 day year and upon the actual days elapsed,
equal to any one of the following described rates, any of which may be selected
by the Borrower in accordance with the terms hereinafter provided:
(a) The Prime Rate for such Prime Advances as the Borrower shall
request. Unpaid interest accruing at the Prime Rate will be
due and payable on March 31, June 30, September 30, and
December 31 of each year and upon the Revolving Maturity Date.
(b) The LIBOR Interest Rate for the Interest Period selected by
the Borrower with respect to the LIBOR Advance. The interest
rate accruing on LIBOR Advances shall remain fixed during the
Interest Period applicable thereto at the LIBOR Interest Rate
established on the first day of the applicable Interest
Period. Unpaid interest accruing at the LIBOR Interest Rate
shall be due and payable on March 31, June 30, September 30,
and December 31 of each year and upon the Revolving Maturity
Date; or
(c) The CD Rate for the Interest Period selected by the Borrower
with respect to CD Advances. The interest rate accruing on CD
Advances shall remain fixed during the Interest Period
applicable thereto at the CD Rate established on the first day
of the applicable Interest Period. Unpaid interest accruing at
the CD Rate shall be due and payable on March 31, June 30,
September 30, and December 31 of each year and upon the
Revolving Maturity Date.
Section 2.03. Method of Making Advances and Selection of Interest
Rates Under the Revolving Credit. When the Borrower desires an Advance under the
Revolving Credit, or if the Borrower desires to renew or convert an Advance
pursuant to Section 2.04 below, the Borrower shall advise the Bank as to the
amount of such Advance, renewal or conversion, and the interest rate to be
applicable thereto by giving to the Bank either written or telephonic notice
thereof in accordance with the following terms and conditions:
(a) If the Borrower shall elect the LIBOR Interest Rate or the CD
Rate, notification of such election and the duration of the
Interest Period to be applicable thereto shall be given to the
Bank by the Borrower before two o'clock p.m. on the second
Business Day prior to the first day of the applicable Interest
Period.
(b) If the Borrower shall elect the Prime Rate, notification of
such election shall be given to the Bank by the Borrower
before two o'clock p.m. on the Business Day on which the Prime
Advance or conversion is desired.
Section 2.04. Repayment of Principal Under the Revolving Credit. The
Borrower shall pay the entire outstanding principal balance relative to each
LIBOR Advance and CD Advance on the last Business Day of the applicable Interest
Period. The Borrower shall pay the entire outstanding principal balance relative
to each Prime Advance on the Revolving Maturity Date or such earlier date upon
which the Borrower desires to convert a Prime Advance to a LIBOR Advance or a CD
Advance.
Section 2.05. Renewals and Conversion of Advances Under the
Revolving Credit. The Borrower may on any Business Day, renew or convert any
outstanding Advance into an Advance of the same or another type in the same
aggregate principal amount provided that (a) renewal or conversion of a LIBOR
Advance or a CD Advance shall be made only on the last Business Day of the then
current Interest Period applicable thereto and (b) the Bank is advised of the
Borrower's election to renew or convert such Advance in accordance with the
provisions set forth in Section 2.03 above.
Section 2.06. Failure to Select Interest Rates Under the Revolving
Credit. If no interest rate basis has been elected for any Advance or for the
principal balance outstanding under the Revolving Credit prior
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to the Revolving Maturity Date, or if such election shall not be timely or shall
be deemed cancelled as herein provided, then the Borrower shall be deemed to
have selected the same interest rate election, with the same Interest Period,
that was in effect on the last Business Day of the immediately preceding
Interest Period, established in accordance with the interest rates prevailing on
such date.
Section 2.07. Payment of Principal Pursuant to the Term Loan. The
unpaid principal balance of the Revolving Credit on the Revolving Maturity Date
shall constitute the principal balance of a term loan (the "Term Loan"), the
principal balance of which shall be repaid in thirty-two (32) equal quarterly
installments of principal on March 31, June 30, September 30, and December 31 of
each year with the first such principal installment being due and payable on
March 31, 1998 and the last such principal installment being due and payable on
December 31, 2005 which shall be the date upon which the entire remaining unpaid
principal balance of the Term Loan and all accrued but unpaid interest thereon
shall be due and payable. Each such quarterly principal installment will be in
an amount equal to one-thirty second (1/32nd) of the unpaid principal balance of
the Revolving Credit on the Revolving Maturity Date.
Section 2.08. Selection of Interest Rates Applicable to the Term
Loan. The entire unpaid principal balance of the Term Loan shall bear interest
at a single interest rate selected by the Borrower in accordance with the
following provisions:
(a) On the Revolving Maturity Date, the Borrower shall select (1)
whether the Term Loan shall initially bear interest at the
Prime Rate, the LIBOR Interest Rate or the CD Rate, and (2) in
the event the Borrower selects the LIBOR Interest Rate or the
CD Rate, the Borrower shall also select the initial Interest
Period applicable thereto.
(b) The Borrower may elect from time to time to convert the
interest rate applicable to the Term Loan into a different
interest rate or to renew the interest rate applicable thereto
by giving the Bank notice at least two (2) Business Days prior
to the date of conversion or renewal, specifying: (1) the
renewal or conversion date; (2) in the event of conversion,
the new interest rate to be applicable to the Term Loan; and
(3) in the case of renewals or conversions into the LIBOR
Interest Rate or the CD Rate, the duration of the Interest
Period applicable thereto; provided that (i) if the Term Loan
is bearing interest at the LIBOR Interest Rate or the CD Rate,
conversions can occur only on the last Business Day of the
Interest Period applicable thereto, and (ii) if the Term Loan
bears interest based on the Prime Rate, then such rate must be
in effect for a minimum of thirty (30) consecutive days. If
the Borrower shall fail to give the Bank notice for the
renewal or conversion of the LIBOR Interest Rate or CD Rate
prior to the end of the Interest Period applicable thereto,
the Borrower shall be deemed to have selected the same
interest rate election, with the same Interest Period, that
was in effect on the last Business Day of the immediately
preceding Interest Period, established in accordance with the
interest rates prevailing on such date.
(c) Accrued but unpaid interest on the Term Loan shall be due and
payable on March 31, June 30, September 30, and December 31 of
each year and on the Term Loan Maturity Date.
(d) Each notice under this Section 2.08 shall be given
telephonically (promptly confirmed in writing) by an officer
of the Borrower designated to give such notice by its Board of
Directors. All notices under this Section 2.08 shall be
irrevocable and shall be given not later than 2:00 p.m.
(Atlanta, Georgia time) on the day which is not less than the
number of Business Days specified above for such notice.
Section 2.09. Revolving Credit and Term Note. The obligations of the
Borrower to the Bank under the Revolving Credit and the Term Loan will be
evidenced by a Revolving Credit and Term Note substantially in the form attached
hereto and marked Exhibit A.
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Section 2.10. Method of Payment. The Borrower shall make each
payment under this Agreement and under the Note on the date when due in lawful
money of the United States to the Bank at its Principal Office in immediately
available funds. The Borrower hereby authorizes the Bank, if and to the extent
payment is not made when due under this Agreement and under the Note, to charge
from time to time against any account of the Borrower with the Bank any amount
so due. Whenever any payment to be made under this Agreement or under the Note
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest.
Section 2.11. Use of Proceeds. The proceeds of the Loan shall be
used for general corporate purposes. The Borrower will not, directly or
indirectly, use any part of such proceeds for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or to extend credit to any Person for
the purpose of purchasing or carrying any such margin stock, or for any purpose
which violates, or is inconsistent with, Regulation X of such Board of
Governors.
Section 2.12. Illegality. Notwithstanding any other provision in
this Agreement, if the Bank determines that any applicable law, rule, or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank, or comparable agency shall
make it unlawful or impossible for the Bank to (1) maintain its Commitment, then
upon notice to the Borrower by the Bank the Commitment of the Bank shall
terminate; or (2) maintain or fund any LIBOR Credit, then upon notice to the
Borrower by the Bank the outstanding principal amount of such LIBOR Credit,
together with interest accrued thereon, shall be repaid (a) immediately upon
demand of the Bank if such change or compliance with such request, in the
judgment of the Bank, requires immediate payment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
Section 2.13. Disaster. Notwithstanding anything to the contrary
herein, if the Bank determines (which determination shall be conclusive) that:
(1) Quotations of interest rates for the relevant deposits
referred to in the definition of LIBOR Interest Rate or CD
Rate, as the case may be, are not being provided in the
relevant amounts or for the relative maturities for purposes
of determining the rate of interest on a LIBOR Credit or CD
Credit as provided in this Agreement; or
(2) The relevant rates of interest referred to in the definition
of LIBOR Interest Rate or CD Rate, as the case may be, upon
the basis of which the rate of interest for any such type of
loan is to be determined do not accurately cover the cost to
the Bank of making or maintaining such LIBOR Credit or CD
Credit respectively;
then the Bank shall forthwith give notice thereof to the Borrower, whereupon (a)
the obligation of the Bank to make available either LIBOR Credit or CD Credit,
as the case may be, shall be suspended until the Bank notifies the Borrower that
the circumstances giving rise to such suspension no longer exist; and (b) the
Borrower shall repay in full the then outstanding principal amount of such LIBOR
Credit or CD Credit, as the case may be, together with accrued interest thereon,
on the last day of the then current Interest Period applicable thereto.
Section 2.14. Increased Cost. The Borrower shall pay to the Bank
from time to time such amounts as the Bank may determine to be necessary to
compensate the Bank for any costs incurred by the Bank which the Bank determines
are attributable to its making or maintaining any LIBOR Credit or CD Credit
hereunder or its obligation to make any LIBOR Credit or CD Credit hereunder, or
any reduction in any amount receivable by the Bank under this Agreement or the
Note in respect of any such LIBOR Credit or CD Credit or such obligation
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(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any change after the date of this
Agreement in U.S. federal, state, municipal, or foreign laws or regulations
(including Regulation D), or the adoption or making after such date of any
interpretations, directives, or requirements applying to a class of banks
including the Bank of or under any U.S. federal, state, municipal, or any
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof ("Regulatory Change"), which: (1) changes the basis of
taxation of any amounts payable to the Bank under this Agreement or the Note in
respect of any of such LIBOR Credit or CD Credit (other than taxes imposed on
the overall net income of the Bank or of its Principal Office for any of such
LIBOR Credit or CD Credit by the jurisdiction where the Principal Office is
located); or (2) imposes or modifies any reserve, special deposit, compulsory
loan, or similar requirements relating to any extensions of credit or other
assets of, or any deposit with or other liabilities of, the Bank (including any
of such LIBOR Credit or CD Credit or any deposits referred to in the definition
of LIBOR Interest Rate or CD Rate); or (3) imposes any other condition affecting
this Agreement or the Note (or any of such extensions of credit or liabilities).
The Bank will notify the Borrower of any event occurring after the date of this
Agreement which will entitle the Bank to compensation pursuant to this Section
2.14 as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation; provided, however, any such Additional
Cost shall not be effective until the Interest Period subsequent to the Interest
Period in which the Bank provides such notification to the Borrower.
Determinations by the Bank for purposes of this Section 2.14 of the effect of
any Regulatory Change on its costs of making or maintaining LIBOR Credit or CD
Credit or on amounts receivable by it in respect of thereto, and of the
additional amounts required to compensate the Bank in respect of any Additional
Costs, shall be conclusive, provided that such determinations are made on a
reasonable basis.
Section 2.15. Risk-Based Capital. In the event the Bank determines
that (1) compliance with any judicial, administrative, or other governmental
interpretation of any law or regulation or (2) compliance by the Bank or any
corporation controlling the Bank with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law)
has the effect of requiring an increase in the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank,
and the Bank determines that such increase is based upon its obligations
hereunder, and other similar obligations, the Borrower shall pay to the Bank
such additional amount as shall be certified by the Bank to be the amount
allocable to the Bank's obligations to the Borrower hereunder. The Bank will
notify the Borrower of any event occurring after the date of this Agreement that
will entitle the Bank to compensation pursuant to this Section 2.15 as promptly
as practicable after it obtains knowledge thereof and determines to request such
compensation; provided, however, any such additional compensation shall not be
effective until the Interest Period subsequent to the Interest Period in which
the Bank provides such notification to the Borrower. Determinations by the Bank
for purposes of this Section 2.15 of the effect of any increase in the amount of
capital required to be maintained by the Bank and of the amount allocable to the
Bank's obligations to the Borrower hereunder shall be conclusive, provided that
such determinations are made on a reasonable basis.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Condition Precedent to the Initial Advances. The
obligation of the Bank to make the initial Advances to Borrower hereunder is
subject to the condition precedent that the Bank shall have received on or
before the day of such Advances each of the following, in form and substance
satisfactory to the Bank and its counsel:
(1) Note. The Note duly executed by the Borrower;
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(2) Security Agreement. A Security Agreement executed and
delivered by Borrower to Bank substantially in the form of
Exhibit B attached hereto pursuant to which Borrower shall
agree to pledge and assign to Bank and to grant to Bank a
first-priority security interest in, all right, title, and
interest of the Borrower in and to all common stock of First
State Bank and Trust Company in Cordele, registered in the
name of (or in street name or otherwise) or owned by Borrower
and all proceeds of such shares, together with such stock
certificates, stock papers, and financing statements as Bank
deems necessary to perfect the security interest of Bank in
the Collateral;
(3) Evidence of All Corporate Action by the Borrower. Certified
(as of the date of this Agreement) copies of all corporate
action taken by the Borrower, including resolutions of its
Board of Directors authorizing the execution, delivery, and
performance of (i) the Loan Documents to which it is a party
and (ii) each other document to be delivered pursuant to this
Agreement;
(4) Incumbency and Signature Certificate of the Borrower. A
certificate (dated as of the date of this Agreement) of the
Secretary of Borrower certifying the names and true signatures
of officers of the Borrower authorized to sign (i) the Loan
Documents to which it is a party and (ii) each other document
to be delivered by the Borrower under this Agreement;
(5) Opinion of Counsel for the Borrower. A favorable opinion of
Perry & Walters, counsel for the Borrower, in substantially
the form of Exhibit C, and as to such other matters as the
Bank may reasonably request;
(6) Officer's Certificate. A certificate signed by a duly
authorized officer of Borrower dated the date of this
Agreement, in substantially the form of Exhibit D;
(7) Additional Documentation. Such other approvals, opinions, or
documents as the Bank may reasonably request; and
(8) Regulatory Approval. Copies of any and all necessary
governmental regulatory approvals.
Section 3.02. Conditions Precedent to Subsequent Advances. The
obligation of the Bank to make subsequent Advances under the Revolving Credit is
subject to the conditions precedent that the Bank shall have received, in form
and substance satisfactory to it, each of the following documents, and that each
of the conditions described below is fulfilled to the satisfaction of the Bank
at the time of each subsequent Advance: (i) a request for Advance pursuant to
Section 2.03 hereof; and (ii) the representations and warranties contained in
Article IV hereof and each of the other Loan Documents shall be correct on and
as of the date of the request for the Advance and as of the date of the Advance,
with the same effect as though made on and as of those dates, except to the
extent that such representations and warranties relate solely to an earlier
date, and on each of such dates, no event, act, or condition shall have occurred
or be continuing, or would result from the Advance requested, which constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse, or both. The submission by the
Borrower of an oral or written request for an Advance shall constitute a
representation and warranty as to the correctness of the above facts, and if
requested by the Bank with respect to the Advance requested, the Borrower shall
furnish to the Bank a written certificate of an officer of the Borrower,
satisfactory in form and substance to the Bank, as to the correctness of the
above facts as a condition precedent to such Advance.
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Section 3.03. Conditions Precedent to the Term Loan. The obligation
of the Bank to make the Term Loan shall be subject to the conditions precedent
that the Bank shall have received on or before the Revolving Maturity Date each
of the following, in form and substance satisfactory to the Bank and its
counsel:
(1) Opinion of counsel for Borrower. A favorable opinion of Perry
& Walters, counsel for the Borrower, or other counsel for the
Borrower satisfactory to the Bank, dated the date of the Term
Loan, in substantially the form of Exhibit C, and as to such
other matters as the Bank may reasonably request;
(2) Officer's certificate, etc. The following statements shall be
true and the Bank shall have received a certificate signed by
a duly authorized officer of the Borrower dated the date of
the Term Loan stating that
(a) The representations and warranties contained in Article
IV of this Agreement and Section 3 of the Security
Agreement are correct on and as of the date of the Term
Loan as though made on and as of such date; and
(b) No Default or Event of Default has occurred and is
continuing, or would result from the Term Loan; and
(3) Additional documentation. The Bank shall have received such
other approvals, opinions, or documents as the Bank may
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into the Agreement and to
disburse the proceeds of the Loan, the Borrower represents and warrants to the
Bank that:
Section 4.01. Incorporation, Good Standing, and Due Qualification.
The Borrower and each of its non-bank Subsidiaries is a corporation duly
incorporated, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. First State Bank and Trust Company in Cordele
is a Commercial Bank duly organized, validly existing, and in good standing
under the laws of the State of Georgia. The Borrower and each of its
Subsidiaries has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged; and
is duly qualified as a foreign corporation and in good standing under the laws
of each other jurisdiction in which such qualification is required.
Section 4.02. Corporate Power and Authority. The execution,
delivery, and performance by the Borrower of the Loan Documents and the creation
of the security interest provided for under the Security Agreement are within
the Borrower's corporate powers and have been duly authorized by all necessary
corporate action and do not and will not (1) require any consent or approval of
the stockholders of the Borrower; (2) contravene such the Borrower's charter or
bylaws; (3) violate any provision of any law, rule, regulation (including,
without limitation, Regulations U and X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination, or
award presently in effect having applicability to the Borrower; (4) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease, or instrument to which such corporation
is a party or by which it or its properties may be bound or affected; (5) result
in, or require, the creation or imposition of any Lien, except as contemplated
by the Security Agreement, upon or with respect to any of the properties now
owned or hereafter acquired by the Borrower; and (6) cause the Borrower to be in
default under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination, or award of any such indenture, agreement, lease, or
instrument.
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Section 4.03. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents are, the legal, valid and binding obligations
of the Borrower, enforceable against the Borrower in accordance with their
respective terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws affecting creditors'
rights generally.
Section 4.04. Financial Statements. The consolidated balance sheet
of the Borrower and its Subsidiaries as of December 31, 1995, and the related
consolidated statements of income, shareholder's equity, and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, and the
accompanying footnotes, together with the opinion thereon, dated December 31,
1995 of Mauldin & Jenkins, CPAs, independent certified public accountants,
copies of which have been furnished to the Bank, are complete and correct and
fairly present the financial condition of the Borrower and its Subsidiaries as
at such dates and the results of the operations of the Borrower and its
Subsidiaries for the periods covered by such statements, all in accordance with
GAAP; and since December 31, 1995, there has been no material adverse change in
the condition (financial or otherwise), business, or operations of the Borrower
or any Subsidiary. There are no liabilities of the Borrower or any Subsidiary,
fixed or contingent, which are material but are not reflected in the financial
statements or in the notes thereto, other than liabilities arising in the
ordinary course of business since December 31, 1995. No information, exhibit, or
report furnished by the Borrower to the Bank in connection with the approval of
the Loan or negotiation of this Agreement contains any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading.
Section 4.05. Labor Disputes and Acts of God. Neither the business
nor the properties of the Borrower or any Subsidiary are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance) materially and adversely affecting such
business or properties or the operation of the Borrower or such Subsidiary.
Section 4.06. Other Agreements. Neither the Borrower nor any
Subsidiary is a party to any indenture, loan, credit agreement, regulatory
agreement or imposition, or to any lease or other agreement or instrument, or
subject to any charter or corporate restriction which could have a material
adverse effect on the business, properties, assets, operations, or conditions,
financial or otherwise, of the Borrower or any Subsidiary or the ability of the
Borrower to carry out its obligations under the Loan Documents to which it is a
party. Neither the Borrower nor any Subsidiary is in material default in any
respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument
to which it is a party.
Section 4.07. Litigation. Except as is set forth expressly on
Exhibit E attached hereto, no action or proceeding is pending or, threatened
against, or affecting, the Borrower or any of its Subsidiaries before any court,
board, commission, governmental agency, or arbitrator, which may, in any one
case or in the aggregate, materially adversely affect the financial condition,
operations, properties, or business of the Borrower or any Subsidiary or the
ability of the Borrower to perform its obligation under the Loan Documents to
which it is a party.
Section 4.08. No Defaults on Outstanding Judgments or Orders. The
Borrower and its Subsidiaries have satisfied all judgments, and neither the
Borrower nor any Subsidiary is in default with respect to any judgment, writ,
injunction, decree, rule, or regulation of any court, arbitrator, federal,
state, municipal, or other governmental authority, commission, board, bureau,
agency, or instrumentality, domestic or foreign.
Section 4.09. Ownership and Liens. The Borrower and each Subsidiary
have title to, or valid leasehold interests in, all of their properties and
assets, real and personal, including the properties and assets and leasehold
interest reflected in the financial statements referred to in Section 4.04
(other than any properties or assets disposed of in the ordinary course of
business), and none of the properties and assets owned by the Borrower or any
Subsidiary and none of their leasehold interests is subject to any Lien, except
such as may be permitted pursuant to Section 6.01 of this Agreement.
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Section 4.10. Subsidiaries and Ownership of Stock. The Borrower's
audited and consolidated financial statement, as provided to Bank, represent a
complete and accurate list of the Subsidiaries of the Borrower. All of the
outstanding capital stock of each Subsidiary has been validly issued, is fully
paid and nonassessable, and is owned by the Borrower free and clear of all
Liens.
Section 4.11. ERISA. With respect to each plan maintained by
Borrower and each Subsidiary, the Borrower and each Subsidiary are in compliance
in all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan; no notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated; no circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower nor any Commonly Controlled Entity has completely or
partially withdrawn from a Multiemployer Plan; the Borrower and each Commonly
Controlled Entity have met their minimum funding requirements under ERISA with
respect to all of their Plans, and the present value of all vested benefits
under each Plan exceeds the fair market value of all Plan assets allocable to
such benefits, as determined on the most recent valuation date of the Plan and
in accordance with the provisions of ERISA; and neither the Borrower nor any
Commonly Controlled Entity has incurred any liability to the PBGC under ERISA.
Section 4.12. Operation of Business. The Borrower and its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and the Borrower and its Subsidiaries are not to Borrower's
knowledge, in violation of any valid rights of others with respect to any of the
foregoing.
Section 4.13. Taxes. The Borrower and each of its Subsidiaries have
filed all tax returns (federal, state, and local) required to be filed and have
paid all taxes, assessments, and governmental charges and levies shown thereon
to be due, including interest and penalties. The federal income tax liabilities
of the Borrower and its Subsidiaries have been audited by the Internal Revenue
Service and have been finally determined and satisfied for all taxable years up
to and including the taxable year ended December 31, 1990.
Section 4.14. Absence of Undisclosed Liabilities. Except as
reflected in the audited consolidated balance sheet of Borrower at December 31,
1995 (including the notes thereto), as of December 31, 1995, neither Borrower
nor any Subsidiary had any material liability or obligation whatsoever, whether
accrued, absolute, contingent, or otherwise that should, in accordance with
GAAP, have been disclosed in such financial statements and notes thereto. Since
December 31, 1995, neither Borrower nor any Subsidiary has incurred any material
liability or obligation, except for liabilities and obligations incurred in the
ordinary course of business or that will not have a material adverse effect on
Borrower.
Section 4.15. Environment. The Borrower and each Subsidiary have
duly complied with, and their businesses, operations, assets, equipment,
property, leaseholds, other real estate owned, or other facilities are in
compliance in all material respects with, the provisions of all federal and
state, environmental, health, and safety laws, codes, and ordinances, and all
rules and regulations promulgated thereunder. Neither the Borrower nor any
Subsidiary has received notice of, nor knows of or suspects, facts which might
constitute any violations of any federal or state environmental, health, or
safety laws, codes, or ordinances, and any rules or regulations promulgated
hereunder with respect to its businesses, operations, assets (including but not
limited to real property loan collateral), equipment, property, leaseholds, or
other facilities.
Section 4.16. Governmental Approval. All permits, consents,
authorizations, approvals, declarations, notifications, filings or registrations
with any governmental or regulatory authority or any third party which are
necessary in connection with the consummation of this transaction have been
obtained on or before the date hereof.
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Section 4.17. Regulatory Compliance. The Borrower and each
Subsidiary are in compliance in all material respects with all laws, statutes,
ordinances, and governmental rules, regulations, or requirements relating to or
affecting their business or operations.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or any amounts are available
or remain unpaid pursuant to the Revolving Credit or the Term Loan, the Borrower
will:
Section 5.01. Use of Proceeds. Use the proceeds of the Loan only for
the purpose set forth herein, and will furnish the Bank such evidence as it may
reasonably require with respect to such use.
Section 5.02. Maintenance of Existence. Preserve and maintain, and
cause each Subsidiary to preserve and maintain, its corporate existence and good
standing in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each Subsidiary to qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
required.
Section 5.03. Maintenance of Records. Keep, and cause each
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting
all financial transactions of the Borrower and its Subsidiaries.
Section 5.04. Maintenance of Properties. Maintain, keep, and
preserve, and cause each Subsidiary to maintain, keep, and preserve, all of its
properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
Section 5.05. Conduct of Business. Continue, and cause each
Subsidiary to continue, to engage in a business of the same general type as now
conducted by it on the date of this Agreement.
Section 5.06. Maintenance of Insurance. Maintain and see that its
Subsidiaries maintain, or cause to be maintained, insurance coverages including,
but not limited to, bankers' blanket bonds, public liability insurance, and fire
and extended coverage insurance on all assets owned by them, all in such form
and amounts, and with such insurers, as are satisfactory to the Bank.
Section 5.07. Compliance with Laws. Comply, and cause each
Subsidiary to comply, in all material respects with all applicable laws, rules,
regulations, orders, and material agreements to which they are subject, such
compliance to include, without limitation, maintaining adequate cash reserves
for the payment of, and paying before the same become delinquent, all taxes,
assessments, and governmental charges imposed upon it or upon its property
except as contested in good faith.
Section 5.08. Right of Inspection. At any reasonable time and from
time to time, permit the Bank or any agent or representatives thereof to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any Subsidiary, and to discuss the
affairs, finances, and accounts of the Borrower and any Subsidiary with any of
their respective officers and directors and the Borrower's independent
accountants.
Section 5.09. Reporting Requirements. Furnish to the Bank:
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(1) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Borrower, interim unaudited consolidated and
unconsolidated balance sheets of Borrower, and related statements of income,
shareholders equity and cash flows of the Borrower for the prior quarter
prepared in accordance with GAAP, and call reports or other regulatory financial
reports of the bank Subsidiaries of the Borrower, containing financial
statements of each such Subsidiary as required by regulatory authorities as of
the end of such quarter, all in reasonable detail and all prepared in accordance
with regulatory accounting principles consistently applied and signed by the
chief financial officer of each such Subsidiary;
(2) Annual Financial Statements. As soon as available and in any
event within one hundred twenty (120) days after the end of each fiscal year of
the Borrower, consolidated and unconsolidated balance sheets of the Borrower and
its Subsidiaries as of the end of such fiscal year and consolidated and
unconsolidated statements of income, shareholder's equity, and cash flows of the
Borrower and its Subsidiaries for such fiscal year, all in reasonable detail and
stating in comparative form the respective figures for the corresponding date
and period in the prior fiscal year and all prepared in accordance with GAAP and
accompanied by an opinion thereon acceptable to the Bank by Mauldin & Jenkins,
CPAs, or other accountants selected by the Borrower and acceptable to the Bank;
(3) Certificate of No Default. Within forty-five (45) days after the
end of each of the quarters of each fiscal year of the Borrower, a certificate
of the chief financial officer of the Borrower, substantially in the form of
Exhibit F attached hereto and made a part hereof (a) certifying, inter alia,
that (i) the representations and warranties contained in Article IV hereof and
in each of the Loan Documents remain true and correct (except to the extent that
such representations and warranties relate solely to an earlier date), (ii) the
Borrower and Subsidiaries are in compliance with the covenants set forth herein,
and (iii) that no Event of Default has occurred and is continuing or, if an
Event of Default has occurred and is continuing, a statement as to the nature
thereof and the action which is proposed to be taken with respect thereto; and
(b) with computations demonstrating compliance with the covenants contained in
Article VII;
(4) Accountant's Report. Simultaneously with the delivery of the
annual financial statements referred to in Section 5.09(2), such statements to
the effect that, in making the examination necessary for the audit of such
statements, they have obtained no knowledge of any condition or event which
constitutes an Event of Default, or if such accountants shall have obtained
knowledge of any such condition or event, specifying in such certificate each
such condition or event, of which they have knowledge and the nature and status
thereof;
(5) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower or any Subsidiary which, if determined adversely
to the Borrower or such Subsidiary, could have a material adverse effect on the
financial condition, properties, or operations of the Borrower or such
Subsidiary;
(6) Notice of Events of Default. The Borrower will notify the Bank
immediately if it becomes aware of the occurrence of any Event of Default or of
any fact, condition, or event that only with the giving of notice or passage of
time, or both, could become an Event of Default, or of the failure of the
Borrower to observe any of their respective undertakings hereunder;
(7) ERISA Reports. As soon as possible, and in any event within
thirty (30) days after the Borrower knows or has reason to know that any
circumstances exist that constitute grounds entitling the PBGC to institute
proceedings to terminate a Plan with respect to the Borrower or any Commonly
Controlled Entity, and promptly, but in any event within two (2) Business Days
of receipt by the Borrower or any Commonly Controlled Entity of notice that the
PBGC intends to terminate a Plan or appoint a trustee to administer the same,
and promptly, but in any event within five (5) Business Days of the receipt of
notice concerning the imposition of withdrawal
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liability in excess of One Hundred Thousand and 00/100ths Dollars ($100,000.00)
with respect to the Borrower or any Commonly Controlled Entity, the Borrower
will deliver to the Bank a certificate of the chief financial officer of the
Borrower setting forth all relevant details and the action which the Borrower
proposes to take with respect thereto;
(8) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished by Borrower or any
Subsidiary (except such statements or reports furnished by Borrower or any
Subsidiary in the ordinary course of their respective business as lenders) to
any other party pursuant to the terms of any indenture, loan, credit, or similar
agreement and not otherwise required to be furnished to the Bank pursuant to any
other clause of this Section 5.09;
(9) Proxy Statements, Etc. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements, and reports which
the Borrower or any Subsidiary sends to its stockholders, and copies of all
regular, periodic, and special reports, and all registration statements which
the Borrower or any Subsidiary files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or with any
national securities exchange;
(10) Reports to Regulatory Agencies. Promptly after the sending or
filing of the same, copies of all call reports and other reports, including
without limitation responses to administrative enforcement actions, and
modifications or amendments thereto, that the Borrower or its Subsidiaries sends
or files with any regulatory agency; and
(11) Other Financial Data. As soon as available and in any event
within forty-five (45) days after the end of each of the first three (3)
quarters and one hundred twenty (120) days after the end of the fiscal year, for
the Borrower and each Subsidiary, sufficient information to enable Bank to
ascertain whether or not Borrower is in compliance with the Financial Covenants
set forth in Article VII hereof;
(12) Adverse Changes. Promptly after the occurrence thereof and in
no event later than ten (10) days thereafter, full disclosures of any material
adverse changes in the finances or business of Borrower or any of its
Subsidiaries.
(13) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower or any
Subsidiary as the Bank may from time to time reasonably request.
Section 5.10. Environment. Be and remain, and cause each Subsidiary
to be and remain, in all material respects, in compliance with the provisions of
all federal and state environmental, health, and safety laws, codes and
ordinances, and all rules and regulations issued thereunder; and notify the Bank
immediately of any notice of an environmental complaint received from any
governmental agency or any other party.
Section 5.11. Composite Rating. Maintain, and cause each bank
Subsidiary to maintain, the applicable composite rating (i.e., CAMEL, BOPEC,
MACRO, or such other applicable composite rating) of safety and soundness of any
banking regulator charged with examining the Borrower or any bank Subsidiary,
which is not less than the composite rating which exists at the date of this
Agreement.
Section 5.12. Capital Adequacy. Maintain, and cause each bank
Subsidiary to maintain, at all times, the minimum levels of regulatory capital
necessary to maintain the regulatory capital classification of "Adequately
Capitalized," as such term is defined by the applicable primary banking
regulator.
Section 5.13. Financial Institution Stock Purchased with Proceeds of
Loan. In the event any proceeds of the Loan are used by the Borrower to purchase
all or any part of the outstanding voting stock of any financial institution,
and such financial institution is maintained as a separate and distinct
subsidiary of Borrower, then within thirty (30) days after the purchase of such
stock the Borrower will deliver possession of such stock to
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the Bank and execute such documents as the Bank might reasonable request in
order to grant to the Bank a first priority security interest in said stock to
secure repayment of the Secured Obligations (as defined in the Security
Agreement).
ARTICLE VI
NEGATIVE COVENANTS
So long as the Note shall remain unpaid, the Borrower will not:
Section 6.01. Liens. Create, incur and assume, or suffer to exist,
or permit any Subsidiary to create, incur, assume, or suffer to exist, any Lien
upon or with respect to any of its properties, now owned or hereafter acquired,
except:
(1) Liens in favor of the Bank;
(2) Liens for taxes or assessments or other governmental charges or
levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(3) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, securing obligations incurred
in the ordinary course of business which are not yet due and payable or which
are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
(4) Liens under workers' compensation, unemployment insurance,
Social Security, or similar legislation;
(5) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance, or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(6) Judgment and other similar Liens arising in connection with
court proceedings, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;
(7) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Borrower or any Subsidiary of the property
or assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
(8) Liens incidental to the conduct of banking business, not
incurred in connection with the borrowing of money, arising out of transactions
in federal funds, repurchaser agreements, interbank credit facilities, bank
deposits, or other obligations to customers or depositors of the Borrower's
Subsidiaries, as such, arising under the leases of real and personal property,
or arising out of transactions by the Borrower or any of its Subsidiaries as
trustee.
(9) Liens securing obligations of a Subsidiary to the Borrower or
another Subsidiary;
(10) Liens incurred in connection with the borrowing by a Subsidiary
from the Federal Reserve Bank, or any correspondent bank, in the ordinary course
of business; and
(11) Those Liens specified in Exhibit G attached hereto and made a
part hereof.
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Section 6.02. Debt. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any Debt,
except:
(1) Debt of the Borrower under this Agreement or the Note;
(2) Debt described in Exhibit H, but no voluntary prepayments,
renewals, extensions, or refinancings thereof;
(3) Debt of a Subsidiary to the Federal Reserve Bank, or a
correspondent bank, in the ordinary course of business;
(4) Debt of the Borrower to any Subsidiary or of any Subsidiary to
the Borrower or other Subsidiary;
(5) Accounts payable to trade creditors for goods or services which
are not aged more than sixty (60) days from the billing date and current
operating liabilities (other than for borrowed money) which are not more than
sixty (60) days past due, in each case incurred in the ordinary course of
business, as presently conducted, and paid within the specified time, unless
contested in good faith and by appropriate proceedings.
Section 6.03. Mergers, Acquisitions, Etc. (1) Wind up, liquidate, or
dissolve itself, (2) reorganize, merge, or consolidate with or into any Person
unless Borrower is the surviving entity, (3) allow or cause First State Bank and
Trust Company of Cordele to reorganize, merge or consolidate with any Person,
unless First State Bank and Trust Company of Cordele is the surviving entity,
(4) convey, sell, assign, transfer, lease, or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person, provided that
Bank, in its sole discretion, may consent in writing to specific exceptions to
the covenants contained in this Section 6.03.
Section 6.04. Leases. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except: (1) leases existing on the date of this Agreement and any extensions or
renewals thereof; (2) leases (other than Capital Leases) which do not in the
aggregate require the Borrower and its Subsidiaries on a consolidated basis to
make payments (including taxes, insurance, maintenance, and similar expense
which the Borrower or any Subsidiary is required to pay under the terms of any
lease) in any fiscal year of the Borrower in excess of Five Hundred Thousand and
00/100ths Dollars ($500,000.00); (3) leases between the Borrower and any
Subsidiary or between any Subsidiaries. The Bank, in its sole discretion, may
consent in writing to additional exceptions.
Section 6.05. Sale and Leaseback. Sell, transfer, or otherwise
dispose of, or permit any Subsidiary to sell, transfer, or otherwise dispose of,
any real or personal property to any Person and thereafter directly or
indirectly lease back the same or similar property.
Section 6.06. Dividends. After the date hereof, the Borrower shall
not make, or permit any Subsidiary to make, any distribution in respect of its
capital stock or purchase, or redeem or otherwise acquire any shares of its
outstanding capital stock unless such action has been approved by the necessary
regulatory authorities and will not impair the Borrower's ability to perform its
obligations hereunder or otherwise result in an Event of Default hereunder.
Section 6.07. Sale of Assets. Sell, lease, assign, transfer, or
otherwise dispose of, or permit any Subsidiary to sell, lease, assign, transfer,
or otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of
Subsidiaries, receivables, and leasehold interest), except: (1) inventory
disposed of in the ordinary course of business; (2) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
(3) that any Subsidiary may sell, lease, assign, or otherwise transfer its
assets to the Borrower; and (4) sales of Loan in the ordinary course of business
and sales of Real Estate Owned. The Bank, in its sole discretion, may consent in
writing to additional exceptions.
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Section 6.08. Guaranties, Etc. Assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable, or permit
any Subsidiary to assume, guarantee, endorse, or otherwise be or become directly
or contingently responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods, or services, or to
supply or advance any funds, assets, goods, or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net
worth, or otherwise to assure the creditors of any person against loss) for
obligations of any Person, except guaranties by endorsement of negotiable
instruments for deposits or collection or similar transactions in the ordinary
course of business and except pursuant to letters of credit issued by bank
Subsidiaries in the ordinary course of business.
Section 6.09. Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any services, with any Affiliate, or permit any
Subsidiary to enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business, upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate,
and in compliance with all applicable regulatory and statutory requirements.
ARTICLE VII
FINANCIAL COVENANTS
So long as the Note shall remain unpaid:
Section 7.01. Capital Expenditures. Neither the Borrower nor the
Borrower's bank Subsidiaries will make any expenditures for fixed or capital
assets if, after giving effect thereto, the aggregate of all such expenditures
made by the Borrower or any bank Subsidiary would exceed Nine Hundred Thousand
Dollars ($900,000) during any fiscal year. Bank may, in its sole discretion,
approve in writing exceptions to this restriction.
Section 7.02. Borrower Capital. Borrower shall maintain, on a
consolidated basis, tangible equity capital, as determined under GAAP, in an
amount which is the greater of (i) Twenty Five Million Five Hundred Thousand
Dollars ($25,500,000), (ii) an amount equal to seven percent (7.0%) of the total
assets stated in the most recent financial statements of the Borrower, or (iii)
the minimum amount of Total Capital required by applicable law or regulation.
Section 7.03. Subsidiary Capital. The Borrower's bank Subsidiaries
each will maintain, at all times, tangible equity capital, as determined under
GAAP, in an amount which is not less than the greater of (i) seven percent
(7.0%) of assets, or (ii) the minimum amount of Total Capital required by
applicable law or regulation.
Section 7.04. Risk-Based Capital Ratios. The Borrower will maintain
on a consolidated basis a minimum Tier I Capital to Risk-Weighted Assets ratio
of 8% and a minimum Tier 1 plus Tier 2 Capital to RiskWeighted Assets ratio of
11%.
Section 7.05. Return on Assets. Income from operations after taxes,
divided by average assets, for each of Borrower's bank Subsidiaries shall be not
less than one and one-tenth percent (1.10%).
Section 7.06. Efficiency Ratio. The non-interest expense divided by
the net interest income plus non-interest income for each of Borrower's bank
Subsidiaries shall not be greater than seventy percent (70%).
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Section 7.07. Reserves. The Borrower's bank Subsidiaries shall each
maintain at all times reserves equal to the greater of (i) one and one-half
percent (1.5%) of total loans, (ii) one hundred fifty percent (150%) of total
Non-Performing Loans, or (iii) the minimum amount required by its primary
regulator. For purposes of this Section 7.07, the term "Non-Performing Loans"
shall mean all non-accrual loans plus all loans that are ninety (90) days or
more past due but are continuing to accrue interest.
Section 7.08. Adverse Classifications. The ratio of (i) loans ninety
(90) days or more in arrears, plus non-accrual loans, plus Real Estate Owned, to
(ii) total net loans plus other Real Estate Owned for each of the Borrower's
bank Subsidiaries shall not exceed two percent (2.0%).
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default. An Event of Default shall be deemed
to exist if any of the following events shall occur:
(1) The Borrower shall fail to pay the principal of, or interest on,
the Note, or any fee, when due;
(2) Any representation, warranty or certification made or deemed
made by the Borrower in this Agreement, the Security Agreement, or any of the
other Loan Documents, or which is contained in any certificate, document,
opinion, or financial or other statement furnished at any time under or in
connection with any Loan Document, shall prove to have been incorrect,
incomplete, or misleading in any respect on or as of the date made or deemed
made;
(3) The Borrower shall fail to perform or observe any term,
covenant, condition or agreement contained herein or in any other of the Loan
Documents;
(4) Any Event of Default as defined herein or in any other of the
Loan Documents shall occur;
(5) The Borrower or any of its Subsidiaries shall (a) fail to pay
any indebtedness for borrowed money (other than the Note) of the Borrower or
such Subsidiary, as the case may be, or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise); or (b) fail to perform or observe any term, covenant, or
condition on its part to be performed or observed under any agreement or
instrument relating to any such indebtedness, when required to be performed or
observed, if the effect of such failure to perform or observe is to accelerate,
or to permit the acceleration of, after the giving of notice or passage of time,
or both, the maturity of such indebtedness, whether or not such failure to
perform or observe shall be waived by the holder of such indebtedness; or any
such indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof and Borrower or its Subsidiaries fails to pay such
indebtedness in full;
(6) The Borrower or any of its Subsidiaries (a) shall generally not
pay, or shall be unable to pay, or shall admit in writing its inability to pay
its debts as such debts become due; or (b) shall make an assignment for the
benefit of creditors, or petition or apply to any tribunal for the appointment
of a custodian, receiver, or trustee for it or a substantial part of its assets;
or (c) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (d) shall have had any
such petition or application filed or any such proceeding commenced against it
in which an order for relief is entered or an adjudication or appointment is
made, and which remains undismissed for a period of thirty (30) days or more; or
(e) shall take any corporate action indicating its consent to, approval of, or
acquiescence in any such petition, application, proceeding, or order for relief
or the appointment of a custodian, receiver, or trustee for all or any
substantial part of its properties; or (f)
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<PAGE>
shall suffer any such custodianship, receivership, or trusteeship to continue
undischarged for a period of thirty (30) days or more;
(7) One or more judgments, decrees, or orders for the payment of
money in excess of One Hundred Thousand Dollars ($100,000) in the aggregate
shall be rendered against the Borrower or any of its Subsidiaries, the amount of
said judgment(s) not covered by Borrower's or Subsidiaries' insurance is in
excess of Fifty Thousand Dollars ($50,000), and such judgments, decrees, or
orders shall continue unsatisfied and in effect for a period of thirty (30)
consecutive days without being vacated, discharged, satisfied, or stayed or
bonded pending appeal;
(8) The Security Agreement shall at any time after its execution and
delivery and for any reason cease (a) to create a valid and perfected first
priority security interest in and to the property purported to be subject to
such Security Agreement; or (b) to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by the Borrower, or the Borrower shall deny it has any further
liability or obligation under the Security Agreement, or the Borrower shall fail
to perform any of its obligations under the Security Agreement;
(9) Any of the following events shall occur or exist with respect to
the Borrower and any Commonly Controlled Entity under ERISA; any Reportable
Event shall occur; complete or partial withdrawal from any Multiemployer Plan
shall take place; any Prohibited Transaction shall occur; a notice of intent to
terminate a Plan shall be filed, or a Plan shall be terminated; or circumstances
shall exist which constitute grounds entitling the PBGC to institute proceedings
to terminate a Plan, or the PBGC shall institute such proceedings; and in each
case above, such event or condition, together with all other events or
conditions, if any, could subject the Borrower to any tax, penalty, or other
liability which in the aggregate may exceed Fifty Thousand Dollars ($50,000);
(10) If the Bank received its first notice of a hazardous discharge
or an environmental complaint relating to Borrower or a Subsidiary from a source
other than the Borrower, and the Bank does not receive notice (which may be
given in oral form, provided same is followed with all due dispatch by written
notice given by Certified Mail, Return Receipt Requested) of such hazardous
discharge or environmental complaint from the Borrower within twenty-four (24)
hours of the time the Bank first receives said notice from a source other than
the Borrower; or if any federal, state, or local agency asserts or creates a
Lien upon any or all of the assets, equipment, property, leaseholds, or other
facilities of the Borrower by reason of the occurrence of a hazardous discharge
or any environmental complaint; or if any federal, state, or local agency
asserts a claim against the Borrower and/or its assets, equipment, property,
leaseholds, or other facilities for damages or cleanup costs relating to a
hazardous discharge or an environmental complaint; provided, however, that such
claim shall not constitute a default if, within ten (10) Business Days of the
occurrence giving rise to the claim, (a) the Borrower can prove to the Bank's
satisfaction that the Borrower has commenced and is diligently pursuing either:
(i) a cure or correction of the event which constitutes the basis for the claim,
and continues diligently for any injunction, a restraining order, or other
appropriate emergency relief preventing such agency or agencies from asserting
such claim, which relief is granted within ten (10) Business Days of the
occurrence giving rise to the claim and the injunction, order, or emergency
relief is not thereafter resolved or reversed on appeal; and (b) in either of
the foregoing events, the Borrower has posted a bond, letter of credit, or other
security satisfactory in form, substance, and amount to both the Bank and the
agency or entity asserting the claim to secure the proper and complete cure or
correction of the event which constitutes the basis for the claim;
(11) If the Borrower or any of its bank Subsidiaries, or the
directors, officers, or employees thereof, becomes subject to any regulatory
enforcement action, which includes without limitation a memorandum of
understanding, written agreement, supervisory directive, capital directive,
removal action, or cease and desist order, which regulatory enforcement action
limits or restricts the ability of Borrower or such Subsidiary to engage in its
normal business;
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<PAGE>
(12) Borrower shall fail to maintain senior management having
sufficient skill and experience in Borrower's industry to manage Borrower and
each Subsidiary competently and efficiently;
(13) If the ownership of Borrower as presently constituted shall
change such that more than five percent (5%) of the outstanding voting stock
shall be transferred to any Person other than (i) an existing shareholder who
prior to the transfer owned not less than five percent (5%) of the outstanding
voting stock of Borrower or (ii) an immediate family member of the transferring
shareholder; or
(14) Any bank Subsidiary shall be unable or shall be deemed to be
unable to declare and distribute dividends as a result of restrictions imposed
by applicable regulation or by any banking regulator having jurisdiction over
the bank Subsidiary.
Section 8.02. Remedies upon Event of Default.
Upon the occurrence of an Event of Default, the Bank may:
(1) By notice to the Borrower, declare the Note, all interest
thereon, and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Note, all such interest, and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest,
or further notice of any kind, all of which are hereby expressly waived by the
Borrower;
(2) At any time and from time to time, without notice to the
Borrower (any such notice being expressly waived by the Borrower), set off and
apply (i) any and all deposits (general or special, time or demand, provisional
or final) at any time held by the Bank, and (ii) other indebtedness at any time
owing by the Bank to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower, now or hereafter existing under
this Agreement or the Note or any other Loan Document, irrespective of whether
or not the Bank shall have made any demand under this Agreement or the Note or
under any other of the Loan Documents and although such obligations may be
unmatured;
(3) Exercise from time to time any and all rights and remedies
available to a secured party when a debtor is in default under a security
agreement as provided in the Uniform Commercial Code of Georgia, or available to
Bank under any other applicable law or in equity, including without limitation
the right to any deficiency remaining after disposition of the Collateral;
(4) At its option, and without notice or demand of any kind,
exercise from time to time any and all other rights and remedies available to it
under this Agreement or any of the other Loan Documents;
(5) Borrower shall pay all of the reasonable costs and expenses
incurred by Bank in enforcing its rights under this Agreement and the other Loan
Documents. In the event any claim under this Agreement or under any of the other
Loan Documents is referred to an attorney for collection, or collected by or
through an attorney at law, Borrower will be liable to Bank for all expenses
incurred by it in seeking to enforce its rights hereunder, under any other of
the Loan Documents or in the Collateral, including without limitation reasonable
attorneys' fees; and
(6) Any proceeds from disposition of any of the Collateral may be
applied by Bank first to the payment of all expenses and costs incurred by Bank
in enforcing the rights of Bank under each of the Loan Documents and in
collecting, retaking, holding, preparing the Collateral for and advertising the
sale or other disposition of and realizing upon the Collateral, including
without limitation reasonable attorneys' fees actually incurred, as well as all
other legal expenses and court costs. Any balance of such proceeds may be
applied by Bank toward the payment of the Loan and in such order of application
as the Bank may from time to time elect. Bank shall pay the surplus, if any, to
Borrower. Borrower shall pay the deficiency, if any, to Bank.
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<PAGE>
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments, Etc. No amendment, modification,
termination, or waiver of any provision of any Loan Document to which the
Borrower is a party, nor consent to any departure by the Borrower from any Loan
Document to which it is a party, shall in any event be effective unless the same
shall be in writing and signed by the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
Section 9.02. Notices, Etc. All notices and other communications
provided for under this Agreement and under the other Loan Documents shall be in
writing (including telegraphic, telex, and facsimile transmissions) and mailed
or transmitted or delivered as follows:
If to the Borrower:
P.O. Box 8
Albany, Georgia 31703
Attention: Robert E. Lee
If to the Bank:
25 Park Place
Atlanta, Georgia 30302
Attention: Edward T. Summers
Southeastern Financial Institutions
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 9.02. Except as otherwise provided in this Agreement, all such
notices and communications shall be effective when deposited in mails or
delivered to the telegraph company, or sent, answerback received, respectively,
addressed as aforesaid, except that notices to the Bank pursuant to the
provisions of Section 3.02 shall not be effective until received by the Bank.
Section 9.03. No Waiver. No failure or delay on the part of the Bank
in exercising any right, power, or remedy granted hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any other right, power, or remedy hereunder.
Section 9.04. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights under any Loan Document to which the Borrower is a
party without the prior written consent of the Bank.
Section 9.05. Costs, Expenses, and Taxes. The Borrower agrees to pay
all costs and expenses, including court costs, incurred in connection with
enforcement of the Loan Documents, or any amendments, modification, or
supplement thereto, whether by negotiation, legal proceedings, or otherwise. In
addition, the Borrower shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing, and recording of any of the Loan Documents and the other documents to be
delivered under any such Loan Documents, and agrees to hold the Bank harmless
from and against any and all
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<PAGE>
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees. This provision shall survive termination of this
Agreement.
Section 9.06. Integration. This Agreement and the Loan Documents
contain the entire agreement between the parties relating to the subject matter
hereof and supersede all oral statements and prior writing with respect thereto.
Section 9.07. Indemnity. The Borrower hereby agrees to defend,
indemnify, and hold the Bank harmless from and against any and all claims,
damages, judgments, penalties, costs, and expenses (including attorney's fees
and court costs now or hereafter arising from the aforesaid enforcement of this
clause) arising directly or indirectly from the activities of the Borrower and
its Subsidiaries, and its predecessors in interest, or arising directly or
indirectly from the Borrower's or any Subsidiaries', or any predecessors in
interest's, violation of any environmental protection, health, or safety law,
whether such claims are asserted by any governmental agency or any other person.
This indemnity shall survive termination of this Agreement.
Section 9.08. Governing Law. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of Georgia.
Section 9.09. Severability of Provisions. Any provision of any Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
Section 9.10. Headings. Article and Section headings in the Loan
Documents are included in such Loan Documents for the convenience of reference
only and shall not constitute a part of the applicable Loan Documents for any
other purpose.
Section 9.11. Jury Trial Waiver. THE BANK AND THE BORROWER HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER
IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED
TO THIS AGREEMENT OR THE LOAN DOCUMENTS. NO OFFICER OF THE BANK HAS AUTHORITY TO
WAIVE, CONDITION, OR MODIFY THIS PROVISION.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
FIRST STATE CORPORATION
By: /s/ Robert E. Lee
---------------------------------
Title: CFO
--------------------------
[CORPORATE SEAL]
Attest: /s/ Steven E. Laine
-----------------------------
Title: VP - Finance & Acct'g
----------------------
SUNTRUST BANK, ATLANTA
By: /s/ Edward T. Summers
---------------------------------
Title: First Vice President
--------------------------
Attest: /s/ W. G. Daniel, Jr.
-----------------------------
Title: First Vice President
----------------------
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<PAGE>
SCHEDULE I
100,000 shares of the capital stock of FIRST STATE BANK AND TRUST COMPANY IN
CORDELE registered in the name of FIRST STATE CORPORATION represented by
Certificate No. 1.
<PAGE>
$10,000,000 October 15, 1996
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, FIRST STATE CORPORATION, a
Georgia corporation (the "Borrower"), hereby promises to pay to the order of
SUNTRUST BANK, ATLANTA (the "Bank"), at its Principal Office located at 25 Park
Place, Atlanta, Georgia the principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) or so much thereof as may be from time to time disbursed
hereunder, in lawful money of the United States and in immediately available
funds.
Prior to December 31, 1997 (the "Revolving Maturity Date") this Note
shall evidence a revolving credit facility (the "Revolving Credit Facility").
Prior to the Revolving Maturity Date the Borrower may request Advances to be
made pursuant to this Note and repay such Advances in accordance with the
provisions of the Loan Agreement. Interest shall accrue and be paid upon such
Advances in accordance with the Loan Agreement.
The unpaid principal balance of the Revolving Credit on the
Revolving Maturity Date shall constitute the original principal balance of the
Term Loan. The first day of the Term Loan shall be the Revolving Maturity Date.
The principal balance of the Term Loan shall be repaid in thirty-two (32) equal
quarterly installments of principal on March 31, June 30, September 30, and
December 31 of each year with the first such principal installment being due and
payable on March 31, 1998 and the last such principal installment being due and
payable on December 31, 2005 which shall be the date upon which the entire
remaining unpaid principal balance of the Term Loan shall be due and payable.
Each such quarterly principal installment will be in an amount equal to
one-thirty second (1/32nd) of the original principal balance of the Revolving
Credit on the Revolving Maturity Date. Interest shall accrue and be paid on the
Term Loan in accordance with the Loan Agreement.
Any amount of principal hereof which is not paid when due (giving
effect to any applicable grace period), whether at stated maturity, by
acceleration, or otherwise, shall bear interest from the date when due until
said principal amount is paid in full, payable on demand, at a rate per annum
equal at all times to two percent (2%) above the Prime Rate. Any change in the
interest rate resulting from a change in the Prime Rate shall be effective at
the beginning of the day on which such change in the Prime Rate shall become
effective.
If any payment pursuant to this Note becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
Terms used herein which are defined in the Loan Agreement shall have
their defined meanings when used herein. The Loan Agreement, among other things,
contains provisions for acceleration of the maturity of this Note upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity of this Note upon the terms and
conditions specified in the Loan Agreement. This Note is secured by a Security
Agreement referred
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<PAGE>
to in the Loan Agreement, reference to which is hereby made for a description of
the collateral provided for under the Security Agreement and the rights of the
Borrower and the Bank with respect to such collateral.
In addition to and not in limitation of the foregoing and the
provisions of the Loan Agreement, the Borrower further agrees to pay all
expenses of collection, including reasonable attorneys' fees, if this Note shall
be collected by law or through an attorney at law, or in bankruptcy,
receivership, or other court proceedings.
TIME IS OF THE ESSENCE UNDER THIS NOTE. This Note has been delivered
in Atlanta, Georgia, and shall be governed by and construed under the laws of
Georgia.
PRESENTMENT, PROTEST, AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY
THE BORROWER.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized officer as of the date first above written.
FIRST STATE CORPORATION
By: /s/ Robert E. Lee
-------------------------------------
Title: CFO
------------------------------
Attest: /s/ Steven E. Laine
---------------------------------
Title: VP - Acct'g & Finance Div
--------------------------
(CORPORATE SEAL)
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<PAGE>
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AGREEMENT made and entered into as of October 15,
1996 between FIRST STATE CORPORATION, a Georgia corporation, having its
principal place of business at 333 W. Broad Avenue, Albany, Georgia ("Pledgor"),
and SUNTRUST BANK, ATLANTA a Georgia banking corporation, having its principal
place of business in Atlanta, Georgia ("Bank").
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit and Term Loan Agreement, dated
of even date herewith (the "Loan Agreement"), between Pledgor and the Bank, the
Bank has agreed to extend a $10,000,000 revolving credit and term loan facility
(the "Loan") to Pledgor, as evidenced by the Promissory Note of the Pledgor
evidencing the obligations of the Pledgor under the Loan Agreement (the "Note");
and
WHEREAS, Pledgor desires to secure the due and punctual payment of the
Loan, and to secure the due and punctual performance under the Loan Agreement;
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Secured Obligations. This Stock Pledge and Security Agreement (the
"Stock Pledge Agreement") is given to secure (i) the due and punctual payment
and performance of the Pledgor's obligations under the Loan as evidenced by the
Note, including all indebtedness arising upon any extensions and renewals of the
Loan; (ii) the due and punctual payment and performance of Pledgor's obligations
under the Loan Agreement; and (iii) all other further indebtedness of any amount
which is now or may be hereafter owed by Pledgor to Bank, whether individually
or jointly with others not parties hereto and whether direct or indirect, as
maker, endorser, guarantor, surety, or otherwise (collectively, or any portion
thereof, the "Secured Obligations").
2. Pledge and Security Interest.
a. Pledgor hereby pledges and grants to Bank a security interest
in (i) 100,000 shares of First State Bank and Trust Company in Cordele (which
shares shall be evidenced by the stock certificates which Pledgor has
contemporaneously herewith delivered to Bank), and (ii) any additional shares
hereafter at any time and from time to time acquired by Pledgor together with
all dividends, stock dividends, stock splits, warrants, options, stock purchase
rights, and all other property at any time and from time to time distributed in
respect of, or in exchange for, or in substitution of, any and all of said
shares, and all proceeds thereof, whether now existing or at any time hereafter
acquired or issued (all of which shall be referred to herein collectively as the
"Stock Collateral"); provided, however, prior to the occurrence of any Event of
Default hereunder, Pledgor
<PAGE>
shall be entitled to receive and retain all dividends of cash and noncash
property (other than stock dividends, stock splits, warrants, options, and stock
purchase rights), and such dividends shall not constitute part of the Stock
Collateral. Upon delivery to the Bank, any security now or thereafter included
in the Stock Collateral shall be accompanied by executed stock powers in blank
and by such other documents or instruments as Bank may reasonably request. Each
delivery of certificates for such Stock Collateral shall be accompanied by a
schedule showing the number of shares and the numbers of certificates
theretofore and then being pledged hereunder, which schedule shall be attached
hereto and made a part hereof.
b. Upon the request of Bank, Pledgor will execute such financing
statements and other documents, pay the cost of filing or recording the same in
all public offices deemed necessary or appropriate by Bank, and do such other
acts and things as Bank may from time to time reasonably request, including
delivery of the Stock Collateral to the Bank, to establish and maintain a valid
security interest in all the Stock Collateral, free of all other liens and
claims except those expressly permitted or granted herein.
3. Representations and Warranties. Pledgor hereby represents and warrants
to Bank as follows:
a. The stock certificate(s) identified in Section 2 hereof and
delivered to the Bank contemporaneously herewith are genuine and in all respects
what they purport to be;
b. Pledgor is the legal, registered owner of the Stock Collateral
and holds full and absolute beneficial title to the Stock Collateral, free and
clear of all liens, charges, encumbrances, security interest, and voting trust
restrictions of every kind and nature;
c. That no consent or approval of any person, entity, or
government or regulatory authority is necessary to the validity of the pledge
contained in this Agreement, except such as have been obtained;
d. That Pledgor has full corporate power and authority to pledge
the Stock Collateral to Bank as security for the Secured Obligations, and will
defend its title thereto against the claims of all persons whomsoever;
e. That Pledgor has granted to Bank a security interest in the
Stock Collateral which is at the time hereof valid and of first priority under
applicable law, and no financing statement, security interest, or other lien or
encumbrance covering the Stock Collateral or its proceeds is outstanding or on
file in any public office, except any that may have been filed in favor of the
Bank;
f. That Pledgor has revoked all proxies heretofore given and
covenants not to extend further proxies or powers of attorney with respect to
the Stock Collateral so long as this Stock Pledge Agreement remains in full
force and effect; and
g. That Pledgor has the full corporate power and authority to
enter into this Stock Pledge Agreement and to perform its obligations hereunder,
and this Stock Pledge
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<PAGE>
Agreement constitutes the valid, binding, and enforceable agreement of Pledgor,
enforceable against it in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, or other similar laws affecting the rights
of creditors generally, and except with respect to the applicability of general
equitable principals which may limit the availability of specific performance or
other equitable remedies.
4. Registration in Nominee Name; Denominations. Bank shall have the
right (in its sole and absolute discretion) to have the stock certificate(s)
representing the Stock Collateral assigned in blank in favor of Bank. Upon an
Event of Default under this Stock Pledge Agreement, Bank may have such Stock
Collateral registered in the name of Bank or any nominee or nominees of Bank.
Bank shall at all times have the right to exchange the stock certificate(s)
representing the Stock Collateral for stock certificate(s) of smaller or larger
denominations for any purpose consistent with its performance of this Stock
Pledge Agreement.
5. Covenants. So long as any of the Secured Obligations remain unpaid
or unperformed, Pledgor covenants and agrees with Bank as follows:
a. Pledgor shall keep the Stock Collateral free from all security
interests, liens, levies, attachments, voting restrictions, and all other
encumbrances, except for the interest of Bank herein granted;
b. Pledgor shall not assign, sell, transfer, deliver, or
otherwise dispose of any of the Stock Collateral or any interest therein; and
c. Pledgor shall pay all taxes, assessments, and all other
charges of any nature which may be levied or assessed with respect to the Stock
Collateral; provided that Pledgor shall have the right to contest in good faith
any tax assessments or other charges.
d. Pledgor shall deliver to Bank, immediately upon Pledgor's
receipt of same, any and all stock certificates representing the Stock
Collateral which Pledgor shall hereinafter acquire. The delivery of such after
acquired Stock Collateral to Bank shall be accompanied by a Power of Attorney To
Transfer Stock executed in blank in a form promulgated by Bank and shall be
deemed to be a reaffirmation by Pledgor of all of the terms and provisions of
this Stock Pledge Agreement.
6. Voting Rights: Dividends, Etc.
a. Unless and until an Event of Default hereunder shall have
occurred:
(i) Pledgor shall be entitled to exercise any and all voting
and consensual rights and powers accruing to an owner of the Stock Collateral or
any part thereof for any purpose not inconsistent with the terms of this Stock
Pledge Agreement;
(ii) Pledgor shall be entitled to receive and retain any and
all cash dividends payable on the Stock Collateral. Any and all stock or
liquidating dividends, stock warrants, stock options, stock purchase rights,
other distribution in property, return of capital, or
-3-
<PAGE>
distribution made on or in respect of the Stock Collateral, whether resulting
from a subdivision, combination, or reclassification of capital stock or
received in exchange for the Stock Collateral, or any part thereof, or as a
result of any merger, consolidation, acquisition, or other exchange or assets
shall be and become part of the Stock Collateral pledged hereunder and, if
received by Pledgor, shall forthwith and immediately be delivered to Bank to be
held subject to the terms of this Stock Pledge Agreement, except to the extent
permitted to be retained by Pledgor pursuant to Section 2 hereof; and
(iii) Bank shall execute and deliver to Pledgor, or cause to
be executed and delivered to Pledgor, as appropriate, all such proxies, powers
of attorney, and other instruments as Pledgor may reasonably request for the
purpose of enabling Pledgor to exercise the voting and consensual rights and
powers which it is entitled to exercise pursuant to clause (i).
b. Upon the occurrence and during the continuance of any Event of
Default, and provided Bank has given Pledgor written notice of said Event of
Default:
(i) Pledgor agrees to deliver immediately to Bank any and
all cash, checks, drafts, items, or other instruments for the payment of money
which may be received after such default by Pledgor as dividends or otherwise
with respect to the Stock Collateral, duly endorsed and assigned to Bank;
(ii) Pledgor agrees to deliver to Bank immediately upon
Pledgor's receipt thereof, any and all stock, stock dividends, stock splits,
warrants, and stock purchase rights received with respect to any of the Stock
Collateral, together with stock powers duly executed in blank with respect to
all stock and other certificates evidencing same; and
(iii) All rights of Pledgor to exercise the voting and
consensual rights and powers which it is entitled to exercise pursuant to
Section 6(a)(i) hereof shall cease, and all such rights shall thereupon become
vested in Bank, which shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers.
7. Performance of Pledgor's Obligations. At its option, Bank may (but
shall not be obligated to) from time to time perform any agreement of Pledgor
hereunder which Pledgor shall fail to perform, and may take any other reasonable
action which Bank deems necessary for the maintenance or preservation of the
value of the Collateral or its interest therein.
8. Attorney-in-Fact. Pledgor hereby irrevocably constitutes and
appoints Bank as Pledgor's agent and attorney-in-fact, upon the occurrence and
continuance of an Event of Default, for the purposes of carrying out the
provisions of this Stock Pledge Agreement and taking any action and executing
any interest which Bank or Pledgor may deem necessary or advisable to accomplish
the purposes hereof. Without limiting the generality of the foregoing, upon the
occurrence and continuance of an Event of Default, Bank shall have the right and
power upon notice to Pledgor to receive, endorse, and collect all checks and
other orders for the payment of money made payable to Pledgor, representing any
interest or dividend or other distribution payable in respect of the Stock
Collateral or any part thereof, and give full discharge for the same. The
foregoing power of attorney
-4-
<PAGE>
is coupled with an interest and shall be terminated only upon payment in full of
the Secured Obligations.
9. Events of Default. An Event of Default shall occur under this Stock
Pledge Agreement upon the occurrence of any one or more of the following events:
(i) any Event of Default shall occur under, and as defined in, the Loan
Agreement; or (ii) upon the breach by Pledgor of any of the covenants set forth
herein; or (iii) upon default by Pledgor in the performance or observance of any
other of the agreements, terms, or conditions herein contained, which default
shall not be fully cured within ten (10) days after Pledgor receives written
notice thereof; or (iv) any of the representations or warranties herein made by
Pledgor shall prove to be false or misleading in any material respect.
10. Rights and Remedies on Default. Upon the occurrence of an Event of
Default under this Stock Pledge Agreement, Bank may, in its sole discretion and
without further notice or demand, (i) declare all the Secured Obligations to be
immediately due and payable; (ii) proceed immediately to exercise any and all of
Bank's rights, powers, and privileges with respect to the Stock Collateral,
including, without limitation, the right to sell or otherwise dispose of the
Stock Collateral or any part thereof at private or public sale, in such manner
as Bank shall deem reasonable; and (iii) exercise any other right or remedy
available to Bank under the applicable Uniform Commercial Code or otherwise
available by agreement or under federal or state law. All rights and remedies
herein specified are cumulative and are in addition to such other rights and
remedies as may be available to Bank.
Bank shall act as the authorized agent and attorney-in-fact of Pledgor
in disposing of the Stock Collateral, and in that capacity is authorized to take
such action on behalf of Pledgor as will further such a disposition, including,
without limitation, any necessary endorsement or signature in its own name.
Pledgor expressly acknowledges that compliance with federal or state securities
and other laws may limit the disposition of the Stock Collateral by Bank. No
disposition of the Stock Collateral by Bank upon an Event of Default shall be
deemed to be a breach of any duty to Pledgor or to be commercially unreasonable
because a better sales price might have been attained through an alternative
disposition, if Bank in good faith has determined that the alternative
disposition might constitute a violation of state or federal laws. Without
limiting the generality of the foregoing, Bank may at any sale of the Stock
Collateral restrict the prospective bidders or purchasers of the Stock
Collateral to persons who will represent and agree that they are purchasing the
Stock Collateral for their own account for investment, and not with a view to
distribution or sale. Any purchaser at a sale conducted pursuant to the terms of
this Stock Pledge Agreement shall hold the property sold absolutely, free from
any claim or right on the part of Pledgor, and Pledgor hereby waives any right
of redemption, stay, or appraisal under present or future law. Each and every
purchaser of any of the Stock Collateral shall be vested with all shareholder's
rights provided by the stock purchased, including, without limitation, all
voting and dividend rights. Pledgor agrees that Bank may purchase the Stock
Collateral or any part thereof at any sale. Any requirement imposed by law
regarding the giving to Pledgor of prior notice of any sale or other disposition
of the Stock Collateral shall be deemed reasonable if given by Bank in writing
at least ten (10) days prior to such sale or other disposition specifying the
time and place thereof.
-5-
<PAGE>
11. Application of Proceeds. The proceeds derived from a disposition
of the Stock Collateral shall be applied toward payment of the Secured
Obligations, in such order of application as Bank may from time to time elect,
and any remaining balance shall be paid to Pledgor.
12. Term of Agreement. This Stock Pledge Agreement shall terminate
upon payment in full of the Secured Obligations, at which time Bank shall
reassign and deliver to Pledgor, or to such person or persons as Pledgor may in
writing designate, against receipt, any Stock Collateral still held by Bank,
together with appropriate instruments of reassignment and release. Such
reassignment shall be without recourse upon or warranty by Bank.
13. Securities. In view of the position of Pledgor in relation to the
Stock Collateral, or because of other present or future circumstances, a
question may arise under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, as now or hereafter in effect, or
any similar statute hereafter enacted analogous in purpose or effect (such Act
and any such similar statute as from time to time in effect being hereinafter
called the "Federal Securities Laws") with respect to any disposition of the
Stock Collateral permitted hereunder. Pledgor understands that compliance with
the Federal Securities Laws may very strictly limit the course of conduct of
Bank if Bank were to attempt to dispose of all or any part of the Stock
Collateral and may also limit the extent to which or the manner in which any
subsequent transferee of any Stock Collateral may dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting Bank
in any attempt to dispose of all or any part of the Stock Collateral under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Under applicable law, in the absence of an agreement to the
contrary, Bank may perhaps be held to have certain general duties and
obligations to Pledgor to make some effort towards obtaining a fair price even
though the Secured Obligations and other obligations may be discharged or
reduced by the proceeds of a sale at a lesser price. Pledgor clearly understands
that Bank is not to have any such general duty and obligation to Pledgor, and
Pledgor will not attempt to hold Bank responsible for selling all or any part of
the Stock Collateral at an inadequate price even if Bank shall accept the first
offer received or does not approach more than one possible purchaser, provided
Bank acts in a commercially reasonable manner. Without limiting the generality
of the foregoing, the provisions of this paragraph would apply if, for example,
Bank were to place all or any part of the Stock Collateral for sale by an
investment banking firm, or if such investment banking firm purchased all or any
part of the Stock Collateral for its own account or if Bank placed all or any
part of the Stock Collateral with a purchaser or purchasers. The provisions of
this paragraph will apply notwithstanding the existence of a public or private
market upon which the quotations or sale prices may exceed substantially the
price at which Bank sells.
14. Miscellaneous.
a. Notices. All notices and other communications to Pledgor under
this Stock Pledge Agreement shall be deemed to have been effectively given when
delivered in person to Pledgor or five (5) days after sending thereof, by first
class U.S. Mail, postage prepaid, to the following address:
-6-
<PAGE>
If to Pledgor:
First State Corporation
P.O. Box 8
Albany, Georgia 31703
Attention: Robert E. Lee
If to Bank:
SunTrust Bank, Atlanta
25 Park Place
Center Code: 121
Atlanta, Georgia 30303
Attention: Edward T. Summers (Center 121)
or to such other address as Pledgor has notified Bank in writing to be the
appropriate address for the sending of notices under this Stock Pledge
Agreement.
b. Survival. All representations, warranties, covenants, and
agreements herein contained shall survive the execution and delivery of this
Stock Pledge Agreement.
c. No Waiver. No failure on the part of Bank to exercise, and no delay
in exercising, any right, power, or remedy granted hereunder, or available at
law, in equity, or otherwise, shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power, or remedy by Bank preclude
any other or further exercise thereof, or the exercise of any other right,
power, or remedy.
d. Entire Agreement. This Stock Pledge Agreement, the Loan Agreement,
and the Loan Documents (as defined in the Loan Agreement) contain the entire
agreement between the parties with respect to the pledge of and security
interest in the Stock Collateral and supersede any prior agreements or
understandings.
e. Amendments. This Stock Pledge Agreement may be amended only by
written agreement between the parties hereto.
f. Time of Essence. Time is of the essence under this Stock Pledge
Agreement.
g. Governing Law. This Stock Pledge Agreement and the construction and
enforcement hereof shall be governed in all respects by the laws of the State of
Georgia.
h. Successors and Assigns. This Stock Pledge Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective heirs, administrators, legal representatives, successors, and
assigns, except that Pledgor shall not be permitted to assign its obligations
under this Agreement or any interest herein or otherwise pledge,
-7-
<PAGE>
encumber, or grant any options with respect to all or any of the cash,
securities, certificates, instruments, or other property held as Stock
Collateral under this Stock Pledge Agreement.
i. Severability. If any provision of this Stock Pledge
Agreement or any portion thereof shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such invalidity
or unenforceability only, without in any way affecting the remaining parts of
such provision or other remaining provisions.
j. Further Assurances. Pledgor agrees to do such further
acts, and to execute and deliver such additional conveyances, assignments,
agreements, and instruments as Bank may at any time request in connection with
the administration and enforcement of this Stock Pledge Agreement or relative to
the Stock Collateral or any part thereof, or in order better to assure and
confirm to Bank its rights, powers, and remedies hereunder.
k. Execution in Counterparts. This Stock Pledge Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original and all of which, taken together, shall constitute one and the
same instrument.
l. Headings and Capitalized Terms. The descriptive headings
of the several paragraphs are for convenience only and are not to affect the
construction of or to be taken into consideration in interpreting this Stock
Pledge Agreement. Capitalized terms used herein and not otherwise defined shall
have the meanings described to them in the Loan Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, Pledgor and Bank have caused this Stock Pledge
Agreement to be duly executed and delivered under hand and seal, as of the day
and year first above written.
FIRST STATE CORPORATION
By: /s/ Robert E. Lee
------------------------------
Title: CFO
-----------------------
[CORPORATE SEAL]
Attest: /s/ Steven E. Laine
--------------------------
Title: VP - Finance & Acct'g
--------------------
SUNTRUST BANK, ATLANTA
By: /s/ Edward T. Summers
----------------------------
Title: First Vice President
--------------------
Attest: /s/ W. G. Daniel Jr.
---------------------------
Title: First Vice President
--------------------
-9-
Exhibit 11.1 Computation of Per Share Earnings
1996 1995 1994
---- ---- ----
Net Earnings $7,561,000 $6,854,000 $5,258,000
Less: Preferred Dividends 0 0 (31,000)
Adjusted Net Earnings 7,561,000 $6,854,000 $5,227,000
Weighted Average Shares Outstanding*
Primary 4,711,789 4,641,113 4,558,725
Fully Diluted 4,719,506 4,652,483 4,561,528
Net Income per Common Share*
Primary $ 1.60 $ 1.48 $ 1.15
Fully Diluted $ 1.60 $ 1.47 $ 1.15
* Adjusted to reflect the two-for-one common stock split effective July 1, 1994,
the 10% stock dividend effective May 3, 1995 and the 50% stock dividend
effective July 1, 1996.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC AUDITORS
We consent to the incorporation by reference in Registration Statement Nos.
33-99576, 33-99312 and 33-99314 of First State Corporation on Forms S-8 of our
report dated January 24, 1997, appearing in this Annual Report on Form 10-K of
First State Corporation for the year ended December 31, 1996.
MAULDIN & JENKINS, LLC
Albany, Georgia
March 20, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS OF FIRST STATE CORPORATION FOR THE YEAR ENDED 12-31-96 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 30151
<INT-BEARING-DEPOSITS> 6298
<FED-FUNDS-SOLD> 875
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 87026
<INVESTMENTS-CARRYING> 34813
<INVESTMENTS-MARKET> 35430
<LOANS> 334332
<ALLOWANCE> 5062
<TOTAL-ASSETS> 516499
<DEPOSITS> 452451
<SHORT-TERM> 7771
<LIABILITIES-OTHER> 5002
<LONG-TERM> 3145
0
0
<COMMON> 4550
<OTHER-SE> 43580
<TOTAL-LIABILITIES-AND-EQUITY> 516499
<INTEREST-LOAN> 30527
<INTEREST-INVEST> 5854
<INTEREST-OTHER> 668
<INTEREST-TOTAL> 37049
<INTEREST-DEPOSIT> 14277
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<INCOME-PRETAX> 11040
<INCOME-PRE-EXTRAORDINARY> 11040
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7561
<EPS-PRIMARY> 1.60
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<YIELD-ACTUAL> 8.90
<LOANS-NON> 969
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<ALLOWANCE-OPEN> 5037
<CHARGE-OFFS> 570
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</TABLE>
