As filed with the Securities and Exchange Commission on November 15, 1999
Registration No. 33-_____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
CITIZENS BANCSHARES CORPORATION
(Exact name of Registrant as specified in its charter)
Georgia 58-1631302
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
75 Piedmont Avenue, Atlanta, Georgia 30302
(Address of principal executive offices and zip code)
CITIZENS BANCSHARES CORPORATION
(Full Title of the Plan)
Beth Lanier, Esq.
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E., 16th Floor
Atlanta, Georgia 30303
(Name and address of agent for service)
(404) 572-4571
(Telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes
effective.
If the only securities being registered on this form are to be
offered pursuant to dividend or interest reinvestment plans, please
check the following box.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box.
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. _________________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. _________________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to to be Offering Price Aggregate Offering Registration
be Registered Registered Per Share Price Fee
Common Stock, 156,000 $7.00 (1) $1,092,000(1) $305.00
$1.00 par value shares (2)
(1) The average of the high and low prices of the Registrant's Common
Stock as reported by the Nasdaq Over the Counter Bulletin Board for
November 11, 1999.
(2) This Registration Statement also covers such indeterminable number
of additional shares as may become issuable in the event of a stock
split, stock dividend, or other similar transaction.
This Registrant hereby amends this registration on such date or dates
as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective with Section
8(a) of the Securities Act of 1933 or until this registration statement
shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
P R O S P E C T U S
156,000 Shares
CITIZENS BANCSHARES CORPORATION
Common Stock
____________________
This Prospectus relates to 156,000 shares of common stock,
$1.00 par value, of Citizens Bancshares Corporation, 66,000 of
which are currently owned by Fannie Mae and 90,000 of which may
be owned by Fannie Mae if the company opts to exchange all of the
90,000 shares of non-voting common stock it currently owns for
90,000 shares of voting common stock pursuant to a Stock Exchange
Agreement entered into by the parties. The shares may be offered
from time to time in transactions in the open market, in
negotiated transactions or a combination of these methods of
sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The shares may
be sold to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or
commissions from Fannie Mae and/or the purchasers of the shares
for whom such broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a
particular broker-dealer is not expected to be in excess of
customary commissions). See "Sale of Shares."
Fannie Mae acquired the shares from Citizens on
September 15, 1999 in connection with a stock purchase
transaction between Citizens and Fannie Mae.
Citizens will not receive any of the proceeds from the sale
of the shares. Citizens has agreed to bear all expenses (other
than selling commissions) in connection with the registration and
sale of the shares covered by this prospectus.
The common stock is listed on the Nasdaq Over the Counter
Bulletin Board. On November 11, 1999, the last reported sale
price of the Common Stock of Citizens reported on the Nasdaq Over
the Counter Bulletin Board was $7.00 per share.
____________________
These securities have not been approved or disapproved by the
Securities and Exchange Commission or any state securities
commission, nor has the Securities and Exchange Commission or any
state securities commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a
criminal offense.
____________________
The date of this Prospectus is _________________, 1999.
THE COMPANY
Citizens Bancshares Corporation is a Georgia corporation and
a bank holding company located in Atlanta, Georgia. Citizens
provides banking and other financial services to individuals and
businesses through its subsidiary financial institution, Citizens
Trust Bank, and its mortgage company, Citizens Trust Bank
Mortgage Services, Inc. Citizens' market area includes Fulton
County, DeKalb County and portions of Rockdale County, Georgia.
Citizens was formed in 1972 and became a bank holding
company by acquiring all of the common stock of Citizens Trust
Bank. On January 30, 1998, Citizens merged with First Southern
Bancshares, Inc., whose banking subsidiary, First Southern Bank,
simultaneously merged into Citizens Trust Bank. Citizens also
acquired Citizens Trust Bank Mortgage Services as a result of the
merger.
SELLING SHAREHOLDER
On September 15, 1999, Fannie Mae purchased 66,000 shares of
Citizens' voting common stock and 90,000 shares of Citizens' non-
voting common stock pursuant to the Stock Purchase Agreement
dated September 10, 1999. Fannie Mae purchased the shares at a
price of $9.50 per share for an aggregate purchase price of
$1,482,000. The shares, when combined with the 39,208 shares of
Citizens' voting common stock already owned by Fannie Mae,
represent less than 4.99% of the total number of shares of voting
common stock outstanding and less than 10% of Citizens' total
shareholders' equity. At a future time and only upon the sale of
some or all of the shares of Citizens' voting common stock owned
by Fannie Mae, Fannie Mae may exchange all or a portion of the
shares of non-voting common stock on a one-for-one basis into
shares of voting common stock pursuant to the Stock Exchange
Agreement entered into by the parties on November 10, 1999. At no
time, however, may the total number of Citizens' shares of voting
common stock owned by Fannie Mae exceed 4.99% of the total number
of shares of voting common stock outstanding.
Fannie Mae is a New York Stock Exchange company and the
largest non-bank financial services company in the world. It
operates pursuant to a federal charter and is the nation's
largest source of financing for home mortgages.
Fannie Mae is not affiliated with Citizens.
SALE OF THE SHARES
Fannie Mae or any of its pledgees, assignees and successors-
in-interest may sell, from time to time, any or all of its shares
of common stock on any stock exchange, market or trading facility
on which the shares are traded or in private transactions. These
sales may be at fixed or negotiated prices.
Fannie Mae may, for example, sell all or a portion of the
shares:
on the Nasdaq Over the Counter Bulletin Board, or such other
exchange on which the common stock may from time to time be
trading;
in privately negotiated transactions or otherwise;
at fixed prices that may be changed;
at market prices prevailing at the time of sale; or
at prices related to such market prices or at negotiated
prices.
The shares may be sold by Fannie Mae by one or more of the
following methods, including, without limitation:
block trades in which a broker or dealer will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
an exchange distribution in accordance with the rules of
such exchange;
ordinary brokerage transactions and transactions in which
the broker solicits purchasers;
purchases by a broker or dealer as principal and resale by
the broker or dealer for its account;
privately negotiated transactions;
short sales;
a combination of any of the above methods of sale; and
any other method permitted by applicable law.
In effecting sales, brokers and dealers engaged by Fannie
Mae, as the selling stockholder,may arrange for other brokers or
dealers to participate. Brokers or dealers may receive
commissions or discounts from Fannie Mae, or, if any broker-
dealer acts as agent for the purchaser of the shares, from the
purchaser, in amounts to be negotiated which are not expected to
exceed those customary in the types of transactions involved.
Broker-dealers may agree with Fannie Mae, as the selling
stockholder, to sell a specified number of shares at a stipulated
price per share. To the extent a broker-dealer is unable to sell
a specified number of shares acting as agent, it may purchase as
principal any unsold shares at the price required to fulfill the
broker-dealer commitment to Fannie Mae, as the selling
stockholder. Broker-dealers who acquire shares as principal may
resell the shares from time to time in transactions which may
involve block transactions of the nature described above on the
Nasdaq Over the Counter Bulletin Board, or otherwise at prices
and on terms then prevailing at the time of sale, at prices
related to the then-current market price or in negotiated
transactions. In connection with resales, broker-dealers may pay
to or receive from the purchasers of the shares commissions as
described above.
From time to time Fannie Mae may engage in short sale, short
sales against the box, puts and calls, and other transactions in
securities, and may sell and deliver the shares in connection
with these transactions or to settle securities loans. Fannie Mae
also may pledge its shares pursuant to the margin provisions of
its agreements with its brokers. Upon a default by the selling
stockholder, the broker may offer and sell the pledged shares
from time to time.
Fannie Mae may also sell the shares in accordance with Rule
144 under the Securities Act.
LEGAL MATTERS
A legal opinion to the effect that the shares are legally
issued, fully paid and nonassessable has been rendered by Powell,
Goldstein, Frazer & Murphy, LLP, Sixteenth Floor, 191 Peachtree
Street, N.E., Atlanta, Georgia 30303.
EXPERTS
The consolidated financial statements as of and for the year
ended December 31, 1998 incorporated in this prospectus by
reference from the company's Annual Report on Form 10-KSB for the
year ended December 31, 1998 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report,
which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION ABOUT CITIZENS
Citizens files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange
Commission. You can receive copies of such reports, proxy and
information statements, and other information, at prescribed
rates, from the Securities and Exchange Commission by addressing
written requests to the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. In addition, you can
read such reports, proxy and information statements, and other
information, at the public reference facilities and at the
regional offices of the Securities and Exchange Commission,
Washington, D.C., New York, New York and Chicago, Illinois.
Please call the Securities and Exchange Commission at 1-800-SEC-
0330 for further information on the public reference rooms. The
Securities and Exchange Commission also maintains a Web site that
contains reports, proxy and information statements, and other
information regarding registrants such as Citizens that file
electronically with the Securities and Exchange Commission. The
address of the Securities and Exchange Commission Web site is
http://www.sec.gov.
Citizens has filed with the Securities and Exchange
Commission a Registration Statement on Form S-3 to register the
shares covered by this prospectus. This prospectus is a part of
that Registration Statement. For further information about
Citizens and the securities offered in this prospectus, you
should review the Registration Statement. You can inspect or
copy the Registration Statement, at prescribed rates, at the
Securities and Exchange Commission's public reference facilities
at the addresses listed above.
The Securities and Exchange Commission allows Citizens to
"incorporate by reference" information into the prospectus, which
means that Citizens can disclose important information to you by
referring you to another document filed separately with the
Securities and Exchange Commission. The information incorporated
by reference is considered part of this prospectus, except for
any information superseded by information contained directly in
this prospectus or in later filed documents incorporated by
reference in this prospectus.
This prospectus incorporates by reference the documents
listed below that Citizens previously filed with the Securities
and Exchange Commission. These documents contain important
information about Citizens and its finances.
(1) Annual Report on Form 10-KSB for the year ended
December 31, 1998;
(2) Quarterly Report on Form 10-QSB for the period
ended March 31, 1999;
(3) Quarterly Report on Form 10-QSB for the period
ended June 30, 1999;
(4) Quarterly Report on Form 10-QSB for the period
ended September 30, 1999; and
(5) Registration Statement on Form 10, File No.
0-14535.
Citizens also incorporates by reference additional documents
that it may file with the Securities and Exchange Commission
between the date of this prospectus and the completion of the
offering. These additional documents include periodic reports,
such as Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
You can obtain documents incorporated by reference in this
prospectus by requesting them from:
Citizens Bancshares Corporation
75 Piedmont Avenue
Atlanta, Georgia 30302
Attention: Willard C. Lewis
Telephone: (404) 659-5959
_________________________________
No dealer, salesperson or other individual has been authorized to
give any information or to make any representations not contained
or incorporated by reference in this prospectus in connection
with the offering covered by this prospectus. If given or made,
such information or representations must not be relied upon as
having been authorized by Citizens or the selling shareholder.
This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the shares of common stock in
any jurisdiction where, or to any person to whom, it is unlawful
to make such offer or solicitation. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has not been any
change in the facts set forth in this prospectus or in the
affairs of the company since the date hereof.
_________________________________
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 1. Other Expenses of Issuance and Distribution.
Registration fee to the Securities
and Exchange Commission $ 305.00
Accounting fees and expenses $ 3,000.00
Legal fees and expenses $ 5,000.00
Miscellaneous expenses $ 200.00
Total $ 8,505.00
The foregoing items, except for the SEC registration fee,
are estimated. The Registrant has agreed to bear all expenses
(other than selling commissions) in connection with the
registration and sale of the shares.
Item 15. Indemnification of Directors and Officers.
Section 14-2-851 of the Georgia Business Corporation Code
provides that a corporation may indemnify its directors and
officers against civil and criminal liabilities. Directors and
officers may be indemnified against expenses if they acted in
good faith and in a manner reasonably believed to be in or not
opposed to the best interest of the corporation, if they have not
been adjudged liable on the basis of the improper receipt of a
personal benefit and, with respect to any criminal action, if
they had no reasonable cause to believe their conduct was
unlawful. A director or officer may be indemnified against
expenses incurred in connection with a derivative suit if he or
she acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interest of the corporation, except
that no indemnification may be made without court approval if
such person was adjudged liable for negligence or misconduct in
the performance of his or her duty to the corporation. Statutory
indemnification is not exclusive of any rights provided by any
bylaw, agreement, vote of shareholders or disinterested directors
or otherwise.
The Registrant's Bylaws provide that directors and officers
of the Registrant shall be indemnified by the Registrant against
expenses and liabilities incurred in connection with or resulting
from threatened, pending or completed actions, whether civil,
criminal, administrative or investigative, in which said person
became involved by reason of having been a director or officer of
the Registrant; provided that such person acted in good faith and
in a manner reasonably believed to be in or not opposed to the
best interests of the Registrant and in addition, with respect to
any criminal action or proceeding, did not have a reasonable
cause to believe that his conduct was unlawful. Any person who
has been wholly successful on the merits of or otherwise with
respect to any claim, action, suit or proceeding described above
shall be entitled to indemnification without any further action
or approval by the Board of Directors. In any other situation,
indemnification shall be made at the discretion of the
Registrant, but only if the Board of Directors, acting by a
majority vote of a quorum consisting of directors who are not
parties to the claim, find that the person has met the standard
of conduct described above. If no such quorum of the Board
exists, then independent legal counsel may render such opinion as
to whether the standards have been met or the holders of a
majority of the stock entitled to vote for the election of
directors shall determine by affirmative vote that such director
or officer has met the standards. However, notwithstanding the
foregoing, no officer or director who has been determined to be
liable for negligence or misconduct in the performance of his
duties to the Registrant shall be indemnified unless and except
to the extent that the court in which such action or suit was
brought shall determine that, despite the adjudication of
liability and in view of all the circumstances, such person is
fairly and reasonably entitled to be indemnified for such
expenses as the court shall deem proper.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions,
the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits.
Exhibit Description
No.
4.1 Articles of Incorporation of the Registrant
(incorporated herein by reference to
Exhibit 3.1 to the Registrant's Form 10-K
for the year ended December 31, 1987 as
filed with the Securities and Exchange
Commission).
4.2 Bylaws of the Registrant (incorporated
herein by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form
10 as filed with the Securities and
Exchange Commission (File. No. 0-14535).
5 Opinion of Powell, Goldstein, Frazer &
Murphy LLP with respect to the securities
being registered, including consent.
23.1 Consent of counsel (included in Exhibit 5).
23.2 Consent of Deloitte & Touche, LLP
23.3 Consent of Porter Keadle Moore, LLP
23.4 Consent of Banks, Finley, White & Co.
24 Power of Attorney (see signature pages to
this Registration Statement).
99.1 Stock Purchase Agreement dated September
10, 1999, between Citizens Bancshares
Corporation and Fannie Mae
99.2 Stock Exchange Agreement dated November 10,
1999, between Citizens Bancshares
Corporation and Fannie Mae
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction to the questions whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Atlanta, State of Georgia, on November 15, 1999.
CITIZENS BANCSHARES CORPORATION
By: /s/ James E. Young
James E. Young
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose
signature appears below constitutes and appoints JAMES E. YOUNG
and SAMUEL J. COX, and each of them, as his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and
thing requisite necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title
/s/ Herman J. Russell Chairman of the Board and Director
Herman J. Russell
/s/ Gregory T. Baranco Director
Gregory T. Baranco
/s/ Bernard H. Bronner Director
Bernard H. Bronner
/s/ Thomas E. Boland Director
Thomas E. Boland
/s/ Johnnie L. Clark Director
Johnnie L. Clark
/s/ James E. Young President, Chief Executive Officer
James E. Young and Director
(Principal Executive Officer)
/s/ Samuel J. Cox Senior Vice President and
Samuel J. Cox Assistant Treasurer
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit Description Sequential
No. Page No.
4.1 Articles of Incorporation of the
Registrant (incorporated herein by
reference to Exhibit 3.1 to the
Registrant's Form 10-K for the year
ended December 31, 1987 as filed with
the Securities and Exchange
Commission).
4.2 Bylaws of the Registrant (incorporated
herein by reference to Exhibit 3.2 to
the Registrant's Registration Statement
on Form 10 as filed with the Securities
and Exchange Commission (File.
No. 0-14535).
5 Opinion of Powell, Goldstein, Frazer &
Murphy LLP with respect to the
securities being registered, including
consent.
23.1 Consent of counsel (included in
Exhibit 5).
23.2 Consent of Deloitte & Touche, LLP
23.3 Consent of Porter Keadle Moore, LLP
23.4 Consent of Banks, Finley, White & Co.
24 Power of Attorney (see signature pages
to this Registration Statement).
99.1 Stock Purchase Agreement dated
September 10, 1999, between Citizens
Bancshares Corporation and Fannie Mae
99.2 Stock Exchange Agreement dated November
10, 1999, between Citizens Bancshares
Corporation and Fannie Mae
333163
EXHIBIT 5
November 15, 1999
Citizens Bancshares Corporation
75 Piedmont Avenue
Atlanta, Georgia 30302
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have served as counsel for Citizens Bancshares
Corporation, a Georgia corporation (the "Company"), in connection
with the registration under the Securities Act of 1933, as
amended, pursuant to a Registration Statement on Form S-3 (the
"Registration Statement"), of an aggregate of 156,000 shares (the
"Shares") of common stock, $1.00 par value per share, of the
Company to be sold by the Selling Shareholders named in the
Registration Statement.
We have examined and are familiar with originals or copies
(certified, photostatic or otherwise identified to our
satisfaction) of such documents, corporate records and other
instruments relating to the incorporation of the Company and to
the authorization for issuance of the Shares as we have deemed it
necessary and advisable.
In all such examinations, we have assumed the genuineness of
all signatures on all originals and copies of documents we have
examined, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all
certified, conformed or photostatic copies. As to questions of
fact material and relevant to our opinion, we have relied upon
certificates or representations of Company officials and of
appropriate state, local and federal officials.
We express no opinion as to matters under or involving laws
other than the laws of the State of Georgia.
Based upon and subject to the foregoing and having regard
for such legal considerations as we have deemed relevant, it is
our opinion that the Shares have been duly authorized and, when
sold as described in the Registration Statement and upon receipt
of consideration therefor as contemplated therein will be,
validly issued, fully paid and non-assessable.
We hereby consent to the reference to our Firm under the
heading "Legal Matters" in the Prospectus contained in the
Registration Statement and to the filing of this opinion as
Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Powell, Goldstein, Frazer & Murphy LLP
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
334144
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Citizens Bancshares Corporation on Form S-3 of our
report dated March 25, 1999, appearing in the Annual Report on
Form 10-KSB of Citizens Bancshares Corporation for the year ended
December 31, 1998 and to the reference to us under the heading
"Experts" in the prospectus, which is part of this Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
Atlanta, Georgia
November 15, 1999
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We have issued our report dated November 23, 1998, accompanying
the consolidated financial statements of Citizens Bancshares
Corporation and subsidiary appearing in the 1997 Annual Report of
the Company to its shareholders included in the Annual Report on
Form 10-KSB for the year ended December 31, 1997, which is
incorporated by reference in this Form S-3 Registration
Statement. We consent to the incorporation by reference in this
Form S-3 Registration Statement. of the aforementioned report and
to the use of our name as it appears under the caption "Expert."
/s/ PORTER KEADLE MOORE LLP
Atlanta, Georgia
November 15, 1999
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Citizens Bancshares Corporation on Form S-3 of our
report on the consolidated financial statement of First Southern
Bancshares, Inc. and subsidiaries as of and for the two years
ended December 31, 1997, dated February 7, 1998, appearing in the
Annual Report on Form 10-KSB of Citizens Bancshares Corporation
for the year ended December 31, 1998.
/s/ BANKS, FINLEY, WHITE & CO.
Atlanta, Georgia
November 15, 1999
EXHIBIT 99.1
EXECUTION DRAFT
STOCK PURCHASE AGREEMENT
HIS STOCK PURCHASE AGREEMENT ("Agreement") by and between
FANNIE MAE ("Purchaser" or "Fannie Mae") and CITIZENS BANCSHARES
CORPORATION ("Citizens"), a Georgia corporation, is dated
September 10, 1999.
1. PURCHASE AND SALE
1.1 Purchase of Shares.
(a) Subject to the terms and conditions of this
Agreement, Purchaser hereby agrees to purchase from Citizens, and
Citizens agrees to sell to Purchaser (i) that number of shares of
voting common stock, par value $1.00 per share of Citizens (the
"Voting Common Stock") constituting an amount that, when combined
with the 39,208 shares of Voting Common Stock already owned by
Purchaser, does not exceed 4.99% of the resulting total number of
shares of Voting Common Stock outstanding, minus the 21,703
remaining shares of Voting Common Stock that are subject to
repurchase by Citizens; and (ii) that number of shares of non-
voting common stock, par value $1.00 per share of Citizens (the
"Non-Voting Common Stock," and together with the Voting Common
Stock, the "Common Stock") constituting an amount, which together
with the Voting Common Stock, has an aggregate purchase price (as
calculated below) that does not exceed the lesser of (A) 9.99% of
the total equity of Citizens on the Closing Date, minus the
dollar decline in total equity caused by the repurchase of 21,703
shares of Voting Common Stock which are subject to repurchase by
Citizens; or (B) $1,500,000. The per share purchase price for
the Common Stock shall be the arithmetic mean of the per share
closing trading prices of Citizens' issued and outstanding common
stock, as quoted on the Over the Counter ("OTC") Bulletin Board
maintained by the NASDAQ Stock Market, calculated over the 20-day
trading period immediately preceding the Closing Date (as
hereinafter defined).
(b) For purposes of this Agreement, "total equity"
shall be determined in accordance with generally accepted
accounting principles.
(c) The term "Shares" shall mean (i) the Common Stock
purchased pursuant to Section 1.1 hereby, (ii) any other shares
of capital stock of Citizens issued in respect of the Shares upon
any stock split, stock dividend, recapitalization or similar
event, and (iii) any securities issued upon any merger,
consolidation or similar event in respect of the Shares or any
other shares referred to in clause (ii) of this definition.
1.2 Closing. Upon satisfaction of all terms and conditions
of this Agreement, Purchaser shall pay to Citizens the total
purchase price for the Shares by wire transfer in same day funds
and Citizens shall deliver to Purchaser certificates representing
the Shares by overnight courier to the attention of Susan
Weintraub, Senior Investment Specialist, Community Based Lending
at 3900 Wisconsin Avenue, N.W., Washington, D.C. 20016 (such
payment and delivery hereinafter collectively referred to as the
"Closing"), all on a date and at a time mutually agreed to by
Purchaser and Citizens, which date shall be not later than
September 15, 1999 (the "Closing Date").
1.3 Use of Proceeds. Citizens agrees to use the proceeds
from the sale of the Shares to invest in Citizens Trust Bank
("Bank") and to cause the Bank to use such proceeds to conduct
business and engage in activities that will promote the
availability of affordable housing in the Bank's market area.
2. REPRESENTATION AND WARRANTIES OF PURCHASER
2.1 Private Placement. Purchaser acknowledges that the
sale of the Shares to Purchaser pursuant to this Agreement is not
and will not be registered under the Securities Act of 1933, as
amended ("Securities Act") or the securities laws of any other
jurisdiction in reliance in exemptions thereunder, and that the
Shares may not be sold, pledged, hypothecated or otherwise
transferred unless they are registered under the Securities Act
and applicable state securities law or are exempt therefrom. The
Shares have not been and will not be approved or disapproved by
the Securities and Exchange Commission (the "Commission"), the
Federal Deposit Insurance Corporation ("FDIC"), the Attorney
General of any jurisdiction or any other governmental authority
or agency of any jurisdiction. A legend to the following effect
will be placed on any certificates representing the Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
WERE ISSUED AND SOLD PURSUANT TO EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED, AND
THE REGISTRATION OR QUALIFICATION REQUIREMENTS
OF APPLICABLE STATE LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND EFFECTIVE REGISTRATION OR
QUALIFICATION UNDER SUCH STATE LAWS, OR
CITIZENS BANCSHARES CORPORATION RECEIVES AN
OPINION OF COUNSEL FROM THE HOLDER OF THESE
SECURITIES (REASONABLY SATISFACTORY TO CITIZENS
BANCSHARES CORPORATION AND ITS COUNSEL),
STATING THAT SUCH SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT AND ANY APPLICABLE STATE LAWS."
2.2 Purchaser Sophistication, Etc.
(a) Purchaser represents that it is a sophisticated
investor, it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and
risks of investment in the Shares and it is able to bear the
economic risks of such investment.
(b) Purchaser represents that (i) it is able to hold
the Shares for an indefinite period of time, (ii) it has adequate
means, other than the Shares or funds invested by it therein, of
providing for its current and foreseeable needs; (iii) it has no
foreseeable need to sell or otherwise dispose of any of the
Shares; and (iv) it has sufficient net worth to sustain a loss of
its entire investment in the Shares in the event such loss should
occur.
(c) Purchaser acknowledges that it heretofore has been
afforded the opportunity to ask questions of and receive answers
from officers of Citizens concerning the terms and conditions of
the offering and to obtain additional information from Citizens
that Purchaser deems necessary to make its investment decision.
2.3 Purchase for Investment. Purchaser represents and
warrants that it is acquiring the Shares solely for its own
account and not with a view to distribution or resale thereof.
3. REPRESENTATIONS AND WARRANTIES OF CITIZENS
Citizens represents and warrants to Purchaser that:
3.1. Corporate Organization and Authority.
(a) Citizens and each of its Subsidiaries (as defined
in Section 3.3 hereof) (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Georgia; (ii) has full power and authority and all
material licenses, permits and other governmental
authorizations necessary to own and operate its properties
and to carry on its business as now conducted and as
proposed to be conducted; and (iii) has been duly qualified
and is authorized to do business and is in good standing as
a foreign corporation in each jurisdiction where the failure
to so qualify would have a material adverse effect on its
business or operations.
(b) Citizens is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended
("BHCA"). The Bank is a Georgia chartered, commercial bank, and
Citizens Trust Bank Mortgage Services, Inc. ("Mortgage Services")
is a Georgia chartered corporation. The deposits of the Bank are
insured by the FDIC to the maximum amount permitted under
applicable law.
3.2 Capitalization. Citizens' authorized capital stock
consists of (i) 5,000,000 shares of Voting Common Stock of which
2,077,565 are issued and outstanding and 86,500 shares are held
in treasury; and (ii) 5,000,000 shares of Nonvoting Common Stock
of which no shares have been issued. 649,220 shares of Citizens
capital stock are reserved for issuance pursuant to the Citizens
Bancshares Corporation Employee Stock Purchase Plan and the
Citizens Bancshares Corporation 1999 Stock Incentive Plan. All
outstanding shares of Citizens capital stock have been duly
issued and are validly outstanding, fully paid and nonassessable.
There are no options, warrants or other rights to purchase
capital stock or other securities of Citizens that are issued or
outstanding. None of the shares of Citizens capital stock has
been issued in violation of the preemptive rights of any person.
Citizens is not subject to any obligation to redeem or repurchase
any shares of its capital stock ("Redemption Requirements"),
other than the repurchase of 108,203 shares of Voting Common
Stock announced by Citizens on August 23, 1999, of which 21,703
shares remain subject to repurchase. The shares of Voting Common
Stock are quoted and traded on the OTC Bulletin Board.
3.3 Subsidiaries and Affiliates. Except as set forth in
Schedule 3.3, no person controls Citizens within the meaning of
the BHCA or the Change in Bank Control Act ("CBCA"), or any
statutory or regulatory provision under Georgia law, or owns or
controls 5% of more of the Voting Common Stock of Citizens.
Citizens does not directly or indirectly own any capital stock or
any other equity or voting interest in any corporation,
partnership, limited liability company or other entity, other
than the Bank and Mortgage Services (collectively, the
"Subsidiaries" and each a "Subsidiary") and as set forth in
Schedule 3.3. Citizens directly or indirectly owns 100% of the
outstanding shares of capital stock of each Subsidiary, free and
clear in each case of any lien, claim or encumbrance, and all
such shares shall have been duly issued and are validly
outstanding, fully paid and nonassessable.
3.4 Sale Is Authorized. All corporate action on the part
of Citizens necessary for the authorization, execution, delivery
and performance of all obligations of Citizens under this
Agreement and for the authorization, issuance and delivery of the
Shares being sold hereunder has been taken, and this Agreement
when executed and delivered constitutes a valid, legally binding
and enforceable obligation of Citizens. The issuance of the
Shares is not subject to the preemptive rights or other
preferential rights of any holder of Citizens capital stock. The
form of the certificate used to evidence the Shares conforms to
the requirements of Georgia law and the articles of incorporation
and bylaws of Citizens.
3.5 SEC Documents; Regulatory Filings. Citizens has filed
all reports and registration statements required to be filed by
it (the "SEC Documents") pursuant to the Securities Act, the
Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder
(collectively, the "Securities Laws"). The SEC Documents
complied, as of their respective dates, in all material respects
with Securities Laws. Such documents did not, as of their
respective dates, contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
contained therein not misleading. Citizens and each of the
Subsidiaries has filed all reports required by statute or
regulation to be filed with any federal or state bank regulatory
agency, and such reports were prepared in accordance with the
applicable statutes, regulations and instructions in existence as
of the date of filing of such reports in all material respects.
3.6 Validity of Securities. The Shares, when issued, sold
and delivered in accordance with this Agreement, shall be duly
and validly issued, fully paid and nonassessable.
3.7 Governmental Consents. All consents, approvals, orders
and authorizations from, and registrations, qualifications,
designations, declarations, notices and filings with, any federal
or state governmental authority required on the part of Citizens
or any Subsidiary in connection with the consummation of the
transactions contemplated herein have been obtained or made and
shall be effective as of the Closing Date. No consent, approval,
order or authorization from, or registration, qualification,
designation, declaration, notice or filing with, any governmental
authority in the state of Georgia is required to be obtained or
made by Purchaser in connection with the consummation of the
transactions contemplated herein.
3.8 Compliance With Other Instruments and Laws. Neither
Citizens nor any of the Subsidiaries is in violation of or in
default under any provision of (i) its articles of incorporation
or bylaws, (ii) any material mortgage, indenture, lease,
agreement or other instrument to which it is a party or by which
it or any of its property or assets are bound, or (iii) any
federal or state judgment, writ, decree, order, statute, rule or
governmental regulation, other than in the cases of clauses (ii)
and (iii) such violations or defaults as would not, in the
aggregate, have a material adverse effect on the business or
operations of Citizens or a Subsidiary. The execution, delivery
and performance of this Agreement will not result in any such
violation or be in conflict with or constitute a default under
any such provision.
3.9 Pending Litigation. There are no actions, proceedings
or investigations pending, or to the knowledge of Citizens or any
of its Subsidiaries, threatened, against or affecting Citizens or
any Subsidiary in or before any court, governmental authority or
agency or arbitration board or tribunal which, if determined
adversely to Citizens or any Subsidiary, would materially and
adversely affect the business, properties, assets or condition,
financial or other, of Citizens or any Subsidiary or the ability
of Citizens to perform its obligations under this Agreement.
3.10 Information Accuracy. The Disclosure Materials
(as hereinafter defined) furnished by Citizens to Purchaser do
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained
therein not misleading. The "Disclosure Materials" means the
information provided by Citizens by cover letter dated February
3, 1999, to Purchaser to conduct its evaluation of a potential
CDFI investment in Citizens and any other materials provided by
Citizens to Purchaser.
3.11 Financial Statements; Capital.
(a) Citizens has previously furnished to Purchaser
true and complete copies of the following financial
statements of Citizens and its Subsidiaries on a
consolidated basis:
(i) Audited statements of financial condition at
December 31, 1996, December 31, 1997 and December 31, 1998; and
(ii) Audited statements of operations, changes in
stockholders' equity and cash flows for each of the years ending
December 31, 1996, December 31, 1997 and December 31, 1998.
(b) All such financial statements have been prepared
in conformity with generally accepted accounting principles
applied on a basis consistent with prior periods, and fairly
present the consolidated financial condition of Citizens and
it subsidiaries as of dates thereof, and the consolidated
results of operations of Citizens and its Subsidiaries for
the periods indicated. Neither Citizens nor any Subsidiary
is subject to any undisclosed material liability not
incurred in the ordinary course of business since December
31, 1998.
(c) Citizens and its Subsidiaries are in compliance
with all applicable regulatory capital requirements.
3.12 Absence of Certain Changes. Whether or not in the
ordinary course of business, since December 31, 1998, there has
not occurred or arisen (a) any material adverse change in the
financial condition, operations, business or prospects of
Citizens or any Subsidiary, or (b) any event, condition or state
of facts of any character that materially adversely affects, or
may materially adversely affect the financial condition,
operations, business or prospects of Citizens or any Subsidiary.
3.13 Restrictions on Citizens and Subsidiaries.
Neither Citizens nor any of the Subsidiaries is a party to any
contract or agreement, or subject to any provision in its
articles of incorporation or bylaws, that restricts the right or
ability of such entity to pay dividends, other than statutory and
regulatory restrictions generally applicable to similarly
situated organizations. Neither Citizens nor any of the
Subsidiaries is subject to any regulatory or supervisory cease
and desist order, memorandum of understanding or directive or any
written agreement, condition or commitment with any bank
regulatory authority, nor has Citizens or any of the Subsidiaries
received any communications requesting that any of them enter
into any of the foregoing. Neither Citizens nor any of the
Subsidiaries is subject to any regulatory or supervisory
agreements or commitments (a) which are in default, (b) with
which continued compliance is not anticipated or that may have
any material adverse consequences, or (c) that affect the ability
of Citizens to perform its obligations under this Agreement.
3.14 Affordable Housing. Citizens and Bank operate
their respective businesses in accordance with a business plan
that is consistent with the promotion of affordable housing in
the Bank's market area.
4. CLOSING CONDITIONS
Purchaser's obligations under subsections 1.1 and 1.2 of
this Agreement shall be subject to the following conditions:
4.1 Opinion of Counsel. Purchaser shall have received from
Powell, Goldstein, Frazer & Murphy LLP, counsel to Citizens, an
opinion addressed to Purchaser and dated as of the Closing Date
in form and substance satisfactory to Purchaser to the effect
that:
(a) Citizens and each Subsidiary has been duly
incorporated and is validly existing and in good standing
under the laws of the State of Georgia;
(b) This Agreement has been duly authorized, executed
and delivered by Citizens and constitutes a valid, legally
binding and enforceable obligation of Citizens in accordance with
its terms;
(c) The Shares have been duly authorized for issuance
and sale pursuant to this Agreement and, when issued pursuant to
the provisions of this Agreement, will be validly issued, fully
paid and nonassessable;
(d) All consents, approvals, orders and authorizations
from, and registrations, qualifications, designations,
declarations, notices and filings with, any federal or state
governmental authority required on the part of Citizens or any
Subsidiary in connection with the consummation of the
transactions contemplated by this Agreement have been obtained or
made;
(e) The execution, delivery and performance of the
Agreement will not result in any violation of or default under
any provisions of (i) the articles of incorporation or bylaws of
Citizens or any Subsidiary or (ii) any material mortgage,
indenture, lease, agreement or other instrument to which Citizens
or any Subsidiary is a party or by which Citizens or any
Subsidiary is bound; or (iii) any federal or state judgment,
write, decree, order, statue, rule or governmental regulation;
and
(f) The offer, sale, issuance and delivery of the
Shares in accordance with the terms of this Agreement will
constitute exempt transactions under the Securities Act, and
Citizens has complied with all applicable state, securities laws
with respect to the offer, sale issuance and delivery of the
Shares.
4.2 Representations and Warranties. The representations
and warranties contained in Section 3 shall be true on and as of
the Closing Date.
4.3 Compliance with This Agreement. Citizens shall have
performed and complied with all agreements and conditions
contained herein which are required to be performed or complied
with by Citizens on or before the Closing Date.
4.4 Officer's Certificate. Purchaser shall have received a
certificate dated as of the Closing Date and signed by the Chief
Executive Officer of Citizens certifying that the conditions
specified in Sections 4.2, 4.3, 4.6, 4.7 and 4.8 have been
satisfied and fulfilled.
4.5 Legality. As of the Closing Date, the Shares shall
qualify as a legal investment for Purchaser and Purchaser shall
have received such certificates or such other evidence as
Purchaser may reasonably request to establish compliance with
this condition.
4.6 Investment Limitations. Purchaser shall have received
evidence satisfactory to Purchaser that on the Closing Date (i)
the Voting Common Stock being purchased by Purchaser pursuant to
this Agreement, when combined with the 39,208 shares of Voting
Common Stock already owned by Purchaser, will represent no more
than 4.99% of the total number of outstanding shares of Voting
Common Stock, minus the 21,703 remaining shares of Voting Common
Stock that are subject to repurchase by Citizens; and (ii) the
aggregate purchase price for the Shares will represent less than
10% of Citizens' total equity, minus the dollar decline in total
equity caused by the repurchase of the 21,703 shares of Common
Stock which are subject to repurchase by Citizens, in each case
calculated after giving effect to the issuance of the Shares to
the Purchaser pursuant to this Agreement.
4.7 Regulatory Approvals. All regulatory approvals
required for the sale of the Shares pursuant hereto shall have
been received and shall be in full force and effect. Copies of
all such approvals shall have been provided to Purchaser.
4.8 Transactions with Purchaser. The Board of Directors of
Citizens shall have adopted appropriate resolutions to require
that all transactions between Purchaser and Citizens or any
Subsidiary, including, without limitation, all mortgage loan
purchases or securitization transactions and transactions
involving the purchase of securities of Purchaser or the use of
Purchaser's technology of software products, are conducted on an
arms'-length basis with market terms, and shall have assigned
responsibility for compliance with such resolutions to an
appropriate officer who is familiar with such transactions.
4.9 Affiliate Certification. Purchaser shall have received
a certificate of any person or group of persons or any entity who
controls Citizens (as defined by the BHCA or the CBCA) that such
person(s) or entity has established or promptly will establish
procedures to require that (a) any transactions between Purchaser
and such person(s) or entity or any affiliate thereof (other than
Citizens or any Subsidiary, as to which section 4.8 hereof
applies) are conducted on an arms'-length basis with market terms
and (b) if such person(s) or entity or any affiliate thereof
(other than Citizens or any Subsidiary) applies to Purchaser for
approval to sell or service mortgage loans to or on behalf of
Purchaser, the application shall clearly disclose that such
applicant is an affiliate of Citizens and that such disclosure is
required by the terms of this Agreement, and a copy of any such
application shall be sent to the Vice President for Community
Based Lending of the Purchaser at 3900 Wisconsin Avenue, N.W.,
Washington, D.C. 20016.
4.10 Further Assurances. Citizens shall have furnished
to Purchaser such other certificates and documents as Purchaser
reasonably shall deem necessary in connection with making the
investment pursuant to this Agreement.
5. COVENANTS
5.1 No Redemptions. Citizens covenants and agrees that it
shall not:
(a) redeem, purchase or otherwise reduce the number of
outstanding shares of its Common Stock or other securities
or take any other action after the Closing Date (which, for
purposes of this Section 5.1, would not include incurring
losses) if such redemption, purchase, reduction or other
action would cause (i) the value of the Shares to represent
10% or more of Citizens' total equity, or (ii) the Voting
Common Stock (including the 39,208 shares of Voting Common
Stock already owned by Purchaser), to represent 5% or more
of Citizens' total outstanding Voting Common Stock, in
either case after giving effect to all Redemption
Requirements as may exist at any time in the future;
(b) become subject to any Redemption Requirement that,
if given effect, and after giving effect to all other Redemption
Requirements, would cause the Shares to exceed the limitations
set forth in Section 5.1(a); or
(c) take any action after the Closing Date, including,
without limitation, any action described in paragraph (a) or (b)
of this Section 5.1, that would, either alone or after giving
affect to any Redemption Requirements, result in Purchaser being
(i) in violation of the BHCA, or any other law or regulation
governing the acquisition of control of financial institutions,
as a result of Purchaser's ownership of the Shares or (ii) either
required to file an application or notice with the Federal
Reserve Board for approval to own any Shares held by it or
required to divest any Shares to avoid violation of the BHCA or
any other law or regulation.
5.2 Assistance in Sales. Without limiting any other remedy
Purchaser may have for violation of Section 5.1, if (a) for any
reason Citizens fails to comply with the covenant contained in
Section 5.1; (b) Purchaser is required to dispose of any Shares
as a result of any change in law, regulation or policy of
regulatory authorities (clause (a) and (b) of this Section 5.2
being referred to as a "Required Disposition Event"), or (c)
Purchaser elects to dispose of any Shares, Citizens will
cooperate and assist in a sale of the Shares by Purchaser,
including by providing reasonable and customary information
regarding Citizens to potential purchasers.
5.3 Damages.
If Citizens fails to comply with the covenant contained in
Section 5.1 and Purchaser divests itself of any Shares, Citizens
shall pay to Purchaser an amount equal to the aggregate purchase
price paid by Purchaser for any Shares divested less the amount
received, if any, by Purchaser upon a sale of such Shares.
5.4 Notices. Citizens covenants and agrees that it shall
deliver to Purchaser:
(a) simultaneously with delivery to any other holder
of capital stock in Citizens, copies of any information or
documentation delivered to any such holder, including but
not limited to notices of shareholder meetings and proxy
solicitations;
(b) prompt notice of any cease and desist order,
memorandum of understanding or directive or any written agreement
or commitment with any regulatory authority to which Citizens,
any Subsidiary or any other financial institution directly or
indirectly controlled by Citizens may become subject or any
violation or non-compliance with any of the foregoing;
(c) prompt notice of any change in the outstanding
capital stock of Citizens that has the effect of increasing the
percentage of the Common Stock owned by Purchaser, which notice
shall be delivered to Purchaser within two business days after
the change and shall include the applicable percentage of the
Common Stock then owned by Purchaser;
(d) prompt notice of any change in the total equity of
Citizens that has the effect of causing the value of the Shares
to exceed 10% of Citizens' total equity, which notice shall be
delivered to Purchaser no later than two business days after the
filing of a report with the appropriate federal banking agency
reflecting such change;
(e) copies of the Bank's call reports promptly after
such reports have been filed with the FDIC;
(f) if not already provided pursuant to Section
5.4(a), copies of annual audited and quarterly unaudited
consolidated financial statements of Citizens; and
(g) upon Purchaser's request, periodic reports on the
Bank's activities that promote affordable housing in the Bank's
market area.
5.5 Confidentiality. Citizens covenants and agrees that,
except to the extent required by law or regulatory authorities or
with Purchaser's prior written consent, neither Citizens nor any
Subsidiary shall (i) disclose the terms of this Agreement,
including, without limitation, the purchase price for the Shares,
or (ii) use Purchaser's name (a) in any advertising, publicity or
promotion for the benefit of Citizens or any Subsidiary, (b) to
express or imply any endorsement by Purchaser of Citizens or any
Subsidiary or any of their products or services, (c) in response
to disclosure requirements regarding unregistered sales of
securities, or (d) in any other manner.
5.6 Transactions with Purchaser. Citizens covenants and
agrees, and will cause each of its Subsidiaries to agree, to
maintain and monitor the procedures established pursuant to
Section 4.8 hereof. Citizens further covenants and agrees that
if any subsidiary of Citizens applies to Purchaser for approval
to sell or service mortgage loans to or on behalf of Purchaser,
the application shall clearly disclose that such subsidiary is an
affiliate of Citizens and that such disclosure is required by the
terms of this Agreement, and a copy of any such application shall
be sent to the Vice President for Community Based Lending of the
Purchaser at 3900 Wisconsin Avenue, N.W., Washington, D.C. 20016.
5.7 Registration Rights. As expeditiously as reasonably
possible after the Closing Date but in no event later than thirty
(30) days after the Closing Date, Citizens shall cause to be
filed with the Commission a registration statement on Form S-3
under the Securities Act (or in the event that Citizens is
ineligible to use such form, such other form as Citizens is
eligible to use under the Securities Act) covering the Shares
("Registration Statement"), and to the extent allowable under the
Securities Act and the rules promulgated thereunder, such
indeterminate number of additional shares of Common Stock as may
become issuable to Purchaser as a result of stock splits, stock
dividends or similar transactions. Citizens shall use its best
efforts to cause such Registration Statement to become effective
within 120 days after the Closing Date and to thereafter remain
effective, including in each case by filing any amendments or
supplements thereto that may be required to comply with the
provisions of the Securities Act, and so notify the Purchaser of
such effectiveness.
(b) Citizens shall allow Purchaser to review the
Registration Statement or any amendment or supplement
thereto prior to filing. In this connection, Purchaser
agrees to furnish to Citizens information concerning
Purchaser and any distribution and/or sale proposed by
Purchaser as shall be reasonably required.
(c) Citizens agrees to provide Purchaser with such
number of copies of the prospectus included in the Registration
Statement, the Registration Statement itself and any amendment or
supplement thereto, and any documents incorporated by reference
therein and such other documents as Purchaser may reasonably
request in connection with any proposed disposition of the
Shares.
(d) Citizens shall notify Purchaser immediately if the
Commission issues any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings
for that purpose. Citizens shall use its best efforts to prevent
the issuance of any stop order, and if any stop order is issued,
to obtain the lifting thereof at the earliest possible time.
Citizens also shall notify Purchaser immediately of the happening
of any event that results in the prospectus included in the
Registration Statement, as then in effect, having an untrue
statement of material fact or omitting to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing, and shall use its best efforts to promptly update
and/or correct such prospectus.
(e) Citizens agrees to use its best efforts to
register and qualify the securities covered by the Registration
Statement under the securities or "Blue Sky" laws of those
jurisdictions reasonably requested by Purchaser. Citizens also
agrees to use it best efforts to notify the NASD that such
securities may be traded on the OTC Bulletin Board or any other
securities exchanges or markets on which the Common Stock is then
listed or quoted.
5.8 Rule 144. Citizens shall file in a timely manner all
reports and other documents required of Citizen under the
Securities Laws and shall make and keep current public
information available, as those terms are understood and defined
in Rule 144 under the Securities Act ("Rule 144"). Upon the
request of Purchaser, Citizen shall furnish promptly to Purchaser
a written statement as to Citizens' compliance with the reporting
requirements of Rule 144 and of the Securities Laws, a copy of
the most recent Citizen annual or quarterly report, and such
other reports and documents of Citizens and other information to
the possession of or reasonably obtainable by Citizens as
Purchaser may reasonably request in availing itself of any rule
or regulation allowing the sale of Shares without registration.
5.9 Certain Other Limitations. Without the prior, express
written consent of Purchaser, Citizens shall not, after the date
hereof, change, modify or alter in any way the rights,
preferences and privileges of the Shares.
6. MISCELLANEOUS
6.1 Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Georgia
applicable to agreements made and entirely to be performed within
such jurisdiction.
6.2 Notices.
(a) Except as otherwise provided herein, all
communications under this Agreement shall be in writing and
shall be mailed by first class, certified or registered
mail, delivered personally or by overnight courier service,
or sent by telecopy, facsimile or similar electronic
transmission to the parties hereto at the addresses listed
below:
(i) if to Purchaser
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20026
Attention: Roger L. Williams
Vice President
FAX: (202) 752-2829
with a copy to:
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Attention: David E. Kalinski, Esq.
FAX: (202) 752-5023
or at such other appropriate address or number as Purchaser may
have furnished to Citizens by notice hereunder; and
(ii) if to Citizens:
Citizens Bancshares Corporation
75 Piedmont Avenue
Atlanta, Georgia 30303
Attention: James E. Young, President and
Chief Executive Officer
FAX: (404) 653-2883
with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia 30303
Attention: Beth Lanier, Esq.
FAX: (404) 572-6999
or at such other appropriate address or number as Citizens may
have furnished to Purchaser by notice hereunder;
(b) Any notice so addressed shall be deemed to be given
when so mailed, delivered or sent.
6.3 Survival. All representations, warranties and
covenants made by either party to this Agreement herein or in any
certificate delivered by it or on its behalf at the Closing under
this Agreement shall be considered to have been relied upon by
the other party regardless of any investigation made by such
other party or on such other party's behalf and shall survive the
delivery to Purchaser of the Shares.
6.4 Amendment and Waiver. This Agreement may be amended
and the observance of any term of this Agreement may be waived
only with the written consent of the parties hereto.
6.5 Duplicate Originals. Two or more duplicate originals
of this Agreement may be signed by the parties, each of which
shall be an original but all of which together shall constitute
one and the same instrument.
6.6 Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of Purchaser and Citizens, and
their respective successors and assigns; provided, however, that
Citizens may not assign or otherwise transfer this Agreement
without the prior, express written consent of Purchaser.
IN WITNESS WHEREOF, Purchaser and Citizens have duly
executed and delivered this Agreement as of the date first above
written.
FANNIE MAE
By: /s/ Roger L. Williams
Roger L. Williams
Vice President
CITIZENS BANCSHARES CORPORATION
By: /s/ James E. Young
James E. Young
President and Chief
Executive Officer
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
This Amendment No. 1 ("Amendment") to the Stock
Purchase Agreement, dated September 10, 1999 ("Agreement")
by and between FANNIE MAE (the "Purchaser" or "Fannie Mae")
and CITIZENS BANCSHARES CORPORATION ("Citizens"), a Georgia
corporation is dated October 12, 1999. Capitalized terms
used herein without definition shall have the meanings set
forth in the Agreement.
WHEREAS, Purchaser and Citizens entered into the
Agreement, providing for the purchase by Purchaser of shares
of Citizens Voting Common Stock and Nonvoting Common Stock;
WHEREAS, the Agreement required Citizens to register
the Shares of Common Stock within thirty days of the Closing
of the purchase;
WHEREAS, the parties wish to amend the Agreement to,
among other things, allow Citizens additional time to
register the Shares of Common Stock;
NOW THEREFORE, in consideration of the mutual covenants
contained in this Amendment and intending to be legally
bound, the parties agree to amend the Agreement as follows:
1. REGISTRATION RIGHTS.
(a) The second line of Section 5.7(a) of the Agreement is
hereby amended to delete the phrase "thirty (30) days" and
to replace it with the phrase "sixty (60) days." In
addition, the second line of the last sentence of Section
5.7(a) of the Agreement is hereby amended to delete the
phrase "120 days" and to replace it with the phrase "150
days."
(b) A new subsection (f) is hereby added to Section 5.7 of
the Agreement, as follows:
"(f) The parties agree that, prior to the filing
of the registration statement pursuant to
subsection (a), the parties shall enter into a
valid and binding agreement ("Exchange
Agreement"), providing for the exchange of shares
of Nonvoting Common Stock owned by Purchaser to
shares of Voting Common Stock under certain
limited circumstances, as long as the Purchaser's
total investment in Voting Common Stock does not
exceed 4.99% of the total number of Citizens' then
issued and outstanding Voting Common Stock."
2. EFFECT OF AMENDMENT. The amendments stated herein
shall supersede any contrary or inconsistent provisions of
the Agreement. In all other respects, the Agreement shall
continue in effect in accordance with its terms.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be executed and delivered by their duly
authorized representatives as of the date and year first
written above.
FANNIE MAE
BY: /s/ Roger L. Williams
Roger L. Williams
Vice President
CITIZENS BANCSHARES CORPORATION
BY: /s/ James E. Young
James E. Young
President and Chief
Executive Officer
EXHIBIT 99.2
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("Exchange Agreement") by and
between Fannie Mae ("Fannie Mae") and Citizens Bancshares
Corporation ("Citizens"), a Georgia corporation, is dated
November 10, 1999.
WHEREAS, Fannie Mae and Citizens entered into a Stock
Purchase Agreement dated September 10, 1999, and amended October
12, 1999 ("Purchase Agreement"), pursuant to which Fannie Mae
purchased 66,000 shares of Citizens voting common stock ("Voting
Stock") and 90,000 shares of Citizens non-voting common stock
("Non-Voting Stock") (collectively, the "Common Stock");
WHEREAS, the Purchase Agreement required Citizens to
register the shares of Common Stock under the Securities Act of
1933;
WHEREAS, to facilitate registration of the shares, the
parties now wish to enter into this Exchange Agreement, whereby
certain shares of the Non-Voting Stock owned by Fannie Mae may,
from time to time, be exchanged for shares of Voting Stock solely
under the limited circumstance described below;
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Exchange Agreement, the parties agree as
follows:
1. Exchange Right. Upon the sale by Fannie Mae of any number
of shares of Voting Stock that results in Fannie Mae's ownership
of such Voting Stock being less than 4.99% of the then
outstanding shares of Voting Stock, Fannie Mae may request that
Citizens exchange a like number of shares of Non-Voting Stock
held by Fannie Mae, on a one-for-one basis, for shares of Voting
Stock to be issued by Citizens. At no time, however, may Fannie
Mae exchange shares of Non-Voting Stock for shares of Voting
Stock which, when aggregated with the shares of Voting Stock
owned by Fannie Mae at the time of the exchange, would result in
Fannie Mae owning more than 4.99% of the then outstanding shares
of Voting Stock. Other than as set forth in this Section 1, the
Non-Voting Stock shall not be exchangeable into shares of Voting
Stock of Citizens.
2. Registration of Shares. As expeditiously as reasonably
possible after the execution of this Exchange Agreement, but in
no event later than November 15, 1999, Citizens shall cause to be
filed with the Securities and Exchange Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as
amended, registering the 66,000 shares of Voting Stock purchased
by Fannie Mae on September 15, 1999, plus 90,000 additional
shares of Voting Stock, being a number sufficient to provide for
all shares of Voting Stock to which Fannie Mae may be entitled
after exchange of all the shares of Non-Voting Stock held by it
for Voting Stock pursuant to the terms of this Agreement.
Citizens also agrees to expeditiously undertake its remaining
obligations under Section 5.7 of the Purchase Agreement.
3. Exchange Procedure. Within ten days after receipt of a
written notification from Fannie Mae of its desire to exchange a
specific number of shares of Non-Voting Stock held by it for
Voting Stock, together with certificates evidencing the number of
shares of Non-Voting Stock to be exchanged, Citizens' transfer
agent, SunTrust Bank, Atlanta, Georgia, shall issue to Fannie Mae
certificates evidencing a like number of shares of Voting Stock
which Fannie Mae is entitled to receive pursuant to this Exchange
Agreement. Citizens shall be responsible for any transaction
costs associated with the exchange, other than the costs related
to the delivery by Fannie Mae of shares of Non-Voting Stock to
Citizens.
4. Governing Law. This Exchange Agreement shall be construed
and enforced in accordance with the laws of the State of Georgia.
5. Notices.
(a) Except as otherwise provided herein, all
communications under this Exchange Agreement shall be in writing
and shall be mailed by first class, certified or registered mail,
delivered personally or by overnight courier service, or sent by
telecopy, facsimile or similar electronic transmission to the
parties hereto at the addresses listed below:
If to Fannie Mae:
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Attention: Roger L. Williams
Vice President
FAX: (202) 752-2829
with a copy to:
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Attention: David E. Kalinski, Esq.
FAX: (202) 752-5023
or at such other appropriate address or number as Fannie Mae may
have furnished to Citizens by notice hereunder; and
If to Citizens:
Citizens Bancshares Corporation
75 Piedmont Avenue
Atlanta, Georgia 30303
Attention: James E. Young, President and
Chief Executive Officer
FAX: (404) 653-2883
with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia 30303
Attention: Beth Lanier, Esq.
FAX: (404) 572-6999
or at such other appropriate address or number as Citizens may
have furnished to Fannie Mae by notice hereunder.
1. (b) Any notice so addressed shall be deemed to be
given when so mailed, delivered or sent.
6. Amendment. This Exchange Agreement may be amended and the
observance of any term of this Exchange Agreement may be waived
only with the written consent of the parties hereto.
7. Counterparts. Two or more duplicate originals of this
Exchange Agreement may be signed by the parties, each of which
shall be an original but all of which together shall constitute
one and the same instrument.
8. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of Fannie Mae and Citizens, and their
respective successors and assigns; provided, however, that Fannie
Mae may not assign or otherwise transfer this Exchange Agreement
without the prior, express written consent of Citizens.
IN WITNESS WHEREOF, Fannie Mae and Citizens have duly
executed and delivered this Agreement as of the date first above
written.
FANNIE MAE
By:/s/ Roger L. Williams
Roger L. Williams
Vice President
CITIZENS BANCSHARES CORPORATION
By:/s/ James E. Young
James E. Young
President and Chief Executive
Officer
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