<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarter period ended June 30, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________________ to _______________________
Commission file Number 0-24528
PREMIER BANCSHARES, INC.
------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1793778
(State of other jurisdiction of (I.R.S. Employer
incorporation organization) Identification No.)
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
(Address, including ZIP Code
of registrant's principal executive offices)
(404) 814-3090
(Issuer's Telephone Number,
including area code)
(Former Name, Former Address and Former Fiscal Year,
if changed from last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
x Yes ? No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
7,923,298 SHARES OF COMMON STOCK, $1.00 PAR VALUE AS OF AUGUST 14, 1997.
<PAGE>
PREMIER BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended June 30, 1997
<TABLE>
<CAPTION>
Index Page No.
----- --------
<S> <C>
PART I. Financial Information
Item 1. Consolidated Financial Statements
(a) Consolidated Balance Sheets (unaudited) at June 30, 1997 and
December 31, 1996 3
(b) Consolidated Statements of Income (unaudited for the three
and six months ended June 30, 1997 and 1996 4
(c) Consolidated Statements of Cash Flows (unaudited) for the six
months ended June 30, 1997 and 1996 6
(d) Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and 8 - 15
Results of Operations
PART II. Other Information 16
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Securities Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16 - 18
(Signatures on Page 19)
</TABLE>
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
1997 1996
-------------------------------------
(In thousands)
Assets
------
<S> <C> <C>
Cash and due from banks $ 21,806 $ 19,541
Interest-bearing deposits in banks 8,870 2,697
Federal funds sold 20,138 42,896
Securities available-for-sale 99,706 99,732
Loans held for sale 40,333 24,408
Loans 378,342 313,289
Less allowance for loan losses 6,973 6,568
------------------ ------------------
Loans, net 371,369 306,721
Premises and equipment 12,986 12,565
Goodwill and other intangibles 2,699 2,827
Other assets 9,517 8,557
------------------ ------------------
Total assets $ 587,424 $ 519,944
================== ==================
Liabilities and Stockholders' Equity
------------------------------------
Deposits
Noninterest-bearing demand $ 58,586 $ 48,272
Interest-bearing 413,770 383,626
------------------ ------------------
Total deposits 472,356 431,898
Securities sold under repurchase agreements 25,005 11,864
Federal Home Loan Bank advances 14,625 4,625
Other borrowings 19,458 18,752
Other liabilities 5,625 6,611
------------------ ------------------
Total liabilities 537,069 472,750
------------------ ------------------
Minority interest in subsidiary - 14
------------------ ------------------
Commitments and contingent liabilities
Stockholders' equity
Common stock, par value $1;20,000,000 shares authorized:
7,917,298 and 8,026,765 issued 7,917 8,027
Capital surplus 23,886 26,046
Retained earnings 18,348 15,131
Unrealized gains on securities available-for-sale,
net of tax 203 108
------------------ ------------------
50,355 48,313
Treasury stock at cost (123,494 shares) - (1,133)
------------------ ------------------
Total stockholders' equity 50,355 47,180
------------------ ------------------
Total liabilities and stockholders' equity $ 587,424 $ 519,944
================== ==================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
=================================================================================================================================
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ---------------------------
1997 1996 1997 1996
(In thousands except per share data)
<S> <C> <C> <C> <C>
Interest Income
Loans $ 10,062 $ 7,823 $ 18,735 $ 15,627
Taxable securities 1,562 1,437 3,071 2,999
Nontaxable securities 139 152 281 306
Deposits in banks 48 114 82 205
Other short-term investments 280 445 876 787
---------- ---------- ---------- ----------
Total interest income 12,091 9,971 23,045 19,904
---------- ---------- ---------- ----------
Interest expense
Deposits 5,136 4,275 10,092 8,367
Federal Home Loan Bank advances 172 79 260 243
Other borrowings 568 523 1,027 1,156
---------- ---------- ---------- ----------
Total interest expense 5,876 4,877 11,379 9,766
---------- ---------- ---------- ----------
Net interest income 6,215 5,094 11,666 10,138
Recovery of provisions for loan losses (102) (58) (130) (229)
---------- ---------- ---------- ----------
Net interest income after recovery of provisions
for loan losses 6,317 5,152 11,796 10,367
---------- ---------- ---------- ----------
Other income
Service charges on deposit accounts 463 438 898 840
Security transactions, net (6) (8) (41) 135
Mortgage income 2,857 2,040 5,376 3,926
Gain on sale of subsidiary 757 - 757 -
Other operating income 746 586 1,530 983
---------- ---------- ---------- ----------
Total other income 4,817 3,056 8,520 5,884
---------- ---------- ---------- ----------
Other expense
Salaries and employee benefits $ 4,785 $ 3,981 $ 9,024 $ 7,537
Occupancy and equipment expenses, net 970 754 1,876 1,489
Merger related expenses 348 39 394 234
Deposit insurance 34 41 46 64
Goodwill amortization 73 76 122 117
Other operating expenses 1,496 1,448 3,188 2,836
---------- ---------- ---------- ----------
7,704 6,339 14,649 12,277
---------- ---------- ---------- ----------
Income before income taxes and
minority interest in net income
of subsidiary 3,430 1,869 5,667 3,974
Income tax expense 1,201 412 1,571 1,009
---------- ---------- ---------- ----------
Net income before minority interest
in net income of subsidiary 2,229 1,457 4,096 2,965
Minority interest in net income of subsidiary 5 3 8 6
---------- ---------- ---------- ----------
Net income $ 2,224 $ 1,454 $ 4,088 $ 2,958
========== ========== ========== ==========
Per share of common stock
Net income $ .27 $ .18 $ .51 $ .37
========== ========== ========== ==========
Dividends $ .08 $ .02 $ .11 $ .16
========== ========== ========== ==========
Weighted average shares outstanding $8,095,829 $7,963,351 $8,062,259 $7,970,193
========== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1997
---------- ----------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income before minority interest
in income of subsidiary $ 4,096 $ 2,965
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation 768 557
Amortization of intangibles 122 117
Provision for loan losses (130) (229)
Net increases in loans held
for sale (15,925) (4,667)
Net realized (gains) losses on securities
available-for-sale 41 (135)
Gain on sale of subsidiary (757) -
Other operating activities (1,010) (1,507)
---------- ----------
Net cash used in operating activities (12,795) (2,899)
---------- ----------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (26,155) (20,678)
Proceeds from sales of securities
available-for-sale 15,053 12,978
Proceeds from maturities of securities
available for sale 11,224 8,921
Net decrease in Federal funds sold 22,758 4,147
Net (increase) decrease in interest-bearing
deposits in banks (6,173) 3,796
Net increase in loans (67,134) (36,775)
Purchase of premises and equipment (1,408) (2,498)
Net cash from sale of subsidiary 472 -
---------- ----------
Net cash used in investing activities (51,363) (30,109)
---------- ----------
FINANCING ACTIVITIES
Net increase in deposits 40,458 27,497
Net increase in repurchase agreements 13,141 1,306
Net increase in other borrowings 3,843 6,202
Net (increase) decrease in Federal Home
Loan Bank advances 10,000 (1,500)
Dividends paid (875) (1,322)
Dividends paid to minority shareholder (12) (15)
Proceeds from exercise of stock options 215 -
Purchase of treasury stock (348) (558)
---------- ----------
Net cash provided by financing activities 66,423 31,610
---------- ----------
</TABLE>
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
- --------------------------------------------------------------------------------
1997 1996
-------- --------
(in thousands)
Net increase (decrease) in cash and due
from banks $ 2,265 $(1,398)
Cash and due from banks at beginning of year 19,541 18,110
------- -------
Cash and due from banks at end of year $21,806 $16,712
======= =======
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest $10,974 $10,006
Income taxes $ 1,085 $ 1,054
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three-month and six-month periods ended June
30, 1997 are not necessarily indicative of the results to be expected for the
full year.
Note 2. BUSINESS COMBINATIONS
On June 23, 1997, Premier Bancshares, Inc. merged with Central and Southern
Holding Company ("Central and Southern") of Milledgeville, Georgia. Each share
of Central and Southern's common stock issued and outstanding was converted into
and exchanged for the one share of Premier Bancshares, Inc.'s common stock. The
merger was accounted for as a pooling of interests. All financial information
has been restated to reflect the combined operations of Premier and Central and
Southern.
On August 31, 1996, First Alliance Bancorp, Inc. merged with Premier Bancshares,
Inc. The merger was accounted for as a pooling of interests. All financial
information has been restated to reflect the combined operations of First
Alliance Bancorp, Inc. and Premier Bancshares, Inc.
Note 3. COMMON STOCK SPLIT
On February 24, 1997, Premier Bancshares, Inc. declared a 1.8055 stock split for
shares of record as of March 6, 1997. The number of shares to effect he stock
split times the par value of $1 was transferred from capital surplus to common
stock on March 20, 1997. All prior financial information has been restated to
reflect the stock split.
Note 4. CURRENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued SFAS No. 128, "Earnings Per
Share." SFAS No. 128 establishes standards for computing and presenting
earnings per share (EPS) and applies to entities with publicly held common stock
or potential common stock. This statement simplifies the standards for
computing earnings per share previously found in APB Opinion No. 15, Earnings
per Share, and makes them comparable to international EPS standards. It
replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
statement of income for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
The effective date of this Statement is for financial statements issued for the
periods ending after December 15, 1997. The adoption of this Statement is not
expected to have a material effect on earnings per share.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Background
Premier ("Company")was incorporated in 1988 under the laws of Georgia and is a
bank holding company registered under the regulations of the Federal Reserve,
and a registered thrift holding company under the regulations of the OTS. The
Company has two bank subsidiaries, Premier Bank and Central and Southern Bank of
Georgia. Premier Bank is a commercial bank which opened for business in 1984
known formerly as First Alliance Bank. Central and Southern Bank is a
commercial bank which opened for business in 1874. The Company has two thrift
subsidiaries, Central and Southern Bank of North Georgia and Premier Bank FSB.
The Company has one nonbank subsidiary, Premier Lending. Premier Lending
originates, processes, funds and sells residential mortgage loans, construction
loans and commercial finance loans.
<TABLE>
<CAPTION>
June 30, December 31,
------------------------- ----------------------------------------------------
Periods ended: 1997 1996 1995 1994 1993 1992
----------- ------------ ----------- ----------- ------------ ------------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C>
Interest income $23,045 $40,252 $33,575 $27,723 $31,234 $39,345
Interest expense 11,379 20,238 16,662 13,028 15,204 21,694
Net interest Income 11,666 20,014 16,913 14,695 16,030 17,651
Provision for possible loan losses (130) (418) (700) 285 3,732 12,283
Other income 8,520 13,118 9,087 4,622 6,502 7,227
Other expense 14,649 26,346 20,378 16,159 11,622 8,242
Net earnings (loss) 4,088 5,494 4,548 1,908 198 (2,829)
Per share data:
Net earnings (loss) 0.51 0.68 0.57 0.25 0.03 (0.47)
Cash dividends declared 0.11 0.24 0.09 0.07 N/A 0.04
Borrowings 59,088 35,242 34,462 21,144 4,399 300
Average total equity 47,226 46,167 43,498 37,506 35,035 33,309
Average total assets 543,548 471,340 409,992 374,707 394,999 435,715
Ratios:
Net earnings (loss) to average assets 1.52% 1.17% 1.11% 0.51% 0.05% (0.65)%
Net earnings (loss) to average equity 17.44% 11.90% 10.46% 5.09% 0.57% (8.49)%
Dividend payout ratio 21.57% 35.29% 15.79% 28.00 % N/A
Average equity to average assets 8.70% 9.79% 10.61% 10.01% 8.87% 7.64%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1996 1995 % Change
---------- ---------- --------
(in thousands except per share data)
Statement of condition:
<S> <C> <C> <C>
Assets $519,944 $445,374 16.74%
Loans held for sale 24,408 25,912 (5.80)%
Loans, net of unearned interest 313,289 246,945 26.87%
Deposits 431,898 358,927 20.33%
Stockholders' equity 47,180 46,090 2.36%
Statement of earnings:
Net interest income 20,014 16,913 18.34%
Provision for loan losses (418) (700) (40.29)%
Other income 13,118 9,087 44.36%
Other expense 26,346 20,379 29.28%
Net earnings 5,494 4,548 20.80%
Per share data
Book value 5.97 5.74 4.01%
Net earnings 0.69 0.58 19.30%
Cash dividends declared 0.24 0.09 166.67%
Performance ratios
Return on average total assets 1.17% 1.11%
Return on average total equity 11.90% 10.46%
</TABLE>
Liquidity and Capital Resources
Liquidity management involves the matching of the cash flow requirements of
customers who may be either depositors desiring to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs and the ability of the Company to meet those needs. The Company seeks to
meet liquidity requirements primarily through management of short-term
investments (principally Federal Funds sold and overnight funds), monthly
amortizing loans, repayment of single payment loans, periodic repayments of
mortgage backed securities, and draws on lines of credit. In addition, at June
30, 1997, Premier Bank and Central and Southern Bank had $14 million in
approved Federal Funds lines with correspondent banks which could provide funds
on an immediate basis if the need arose. Also, Premier Bank has access to
various Certificate of Deposit ("CD") networks which would allow it to raise
deposits from credit unions and other small banks for varying time periods at
rates comparable to the short-term U.S. Government Bond rate. These deposits are
not brokered and no fee outside of the market rate is paid.
Premier Bank and the Central and Southern Banks are members of the Federal Home
Loan Bank system. At June 30, 1997,the Company had the ability to borrow
approximately $26 million by pledging qualifying loans and securities as
collateral.
The liquidity and capital resources of the Company are monitored on a periodic
basis by federal regulatory authorities. In addition, management performs
liquidity analyses in the same manner as the federal regulatory agencies. As of
June 30, 1997, the various liquidity ratios were considered adequate by
regulatory definitions. In management's opinion, the Company maintained
liquidity that was adequate to meet its respective needs.
<PAGE>
Premier Bank and Central and Southern Banks continue to be well-capitalized by
both industry and regulatory definitions. At June 30, 1997, The Company's
consolidated capital ratios were as follows:
<TABLE>
<CAPTION>
Minimum Regulatory
Requirement to be
June 30, 1997 Well-Capitalized
-------------------- --------------------
<S> <C> <C>
Leverage Capital Ratio 8.54% 5.00%
Risk Based Capital Ratios:
Tier #1 Capital 11.33% 6.00%
Total Capital 12.58% 10.00%
</TABLE>
Management is not aware of any current recommendations of the regulatory
authorities which, if they were implemented, would have a material effect on the
Company's liquidity, capital resources or operations.
The Company regularly evaluates business combination opportunities and conducts
due diligence activities in connection with possible business combinations. As a
result, business combination discussions and, in some cases, negotiations take
place, and future business combinations involving cash, debt or equity
securities may be expected. Any future business combination or series of
business combinations that the Company might undertake may be material, in terms
of assets acquired or liabilities assumed, to the Company's financial condition.
Asset/Liability Management
At June 30, 1997, the Company, utilizing a ''static gap'' view of interest
sensitivity, was positioned in an asset-sensitive position at three months, six
months, and a slightly liability-sensitive position at one year. This ''static
gap'' view of interest rate sensitivity at a point in time looks at the volume
of assets and liabilities that will mature or reprice within varying time
periods. Such a view 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 Company's customers. It is also probable that actual
repricing may happen at different times than estimated and at different rates
than anticipated.
Interest Rate Sensitivity
<TABLE>
<CAPTION>
Static GAP June 30, 1997
3-MONTH 6-MONTH 1-YEAR
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Rate Sensitive Assets (RSA) $299,003 $325,963 $361,416
Rate Sensitive Liabilities (RSL) 221,128 291,613 390,193
RSA minus RSL (Gap) $77,875 $34,350 $(28,777)
======== ======== ========
Cumulative Gap Ratio (RSA/RSL) 1.35 1.12 0.93
======== ======== ========
</TABLE>
<PAGE>
At December 31, 1996, the Company, utilizing a "static gap" view of interest
sensitivity, was positioned in an asset-sensitive position at three months, six
months, and a slightly liability-sensitive position at one year.
<TABLE>
<CAPTION>
Static GAP December 31, 1996
3-MONTH 6-MONTH 1-YEAR
----------------- ------------ ------------
(in thousands)
<S> <C> <C> <C>
Rate Sensitive Assets (RSA) $260,523 $287,632 $324,100
Rate Sensitive Liabilities (RSL) 209,242 276,134 345,242
RSA minus RSL (Gap) $51,281 $11,498 $(21,142)
======== ======== ========
Cumulative Gap Ratio (RSA/RSL) 1.25 1.04 0.94
======== ======== ========
</TABLE>
CHANGES IN FINANCIAL CONDITION
CASH AND SHORT-TERM ASSETS
Total assets increased by $67,500,000 at June 30, 1997 since December 31, 1996.
Non-earning cash and due from banks increased $2,300,000 at June 30, 1997 from
December 31, 1996. This change is representative of normal daily fluctuations
in cash and check clearings. Interest-earning deposits in other banks increased
$6,200,000 from December 31, 1996 to a balance of $8,870,000 at June 30, 1997.
This balance is primarily excess funds that are held at the Federal Home Loan
Bank and accrue interest at a rate approximately equal to the Federal Funds
rate. Federal Funds sold decreased $22,800,000 from December 31, 1996 to June
30, 1997. The decrease in Federal Funds is primarily the result of an increase
in loans outstanding during the first six months of 1997 and the above noted
increase in the Federal Home Loan Bank account balance.
Total assets as of December 31, 1996 increased $74,600,000 since December 31,
1995. The majority of the growth was in loans outstanding. Loan demand in the
markets served by the Company was strong during 1996.
<PAGE>
SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
June 30 December 31,
1997 1996 1995 1994
----------- ----------- ----------- ----------
( in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury and U.S. Gov't
agencies $42,491 $40,675 $46,373 $36,518
State and municipals 9,309 10,331 10,455 10,645
Mortgage-backed securities 44,776 46,302 51,595 54,212
Other 3,129 2,424 1,888 1,580
------- ------- -------- --------
Total $99,706 $99,732 $110,311 $102,955
======= ======= ======== ========
</TABLE>
All securities are held as available-for-sale and are reported at their fair
values.
MATURITIES
The amounts of securities in each category as of December 31, 1996 are shown in
the following table.
<TABLE>
<CAPTION>
Within One Five Years Ten Years After Ten Years
------------------ ------------------ ------------------ ------------------
Amount Yield Amount Yield Amount Yield Amount Yield
-------- ----- -------- ----- -------- ----- -------- ------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and U.S. Gov't agencies $2,410 6.24% $35,865 6.28% $2,018 6.19% $382 6.05%
State and municipal 2,294 11.13% 4,011 9.16% 3,774 9.30% 252 11.50%
Mortgage-backed securities 1,925 4.93% 13,837 6.87% 8,550 6.01% 21,990 6.14%
Other 381 7.86% --- --- 2,043 6.67%
Total $7,010 7.57% $53,713 6.65% $14,342 6.90% $24,667 6.24%
</TABLE>
(1) Includes mortgage-backed securities based on their contractual maturity
date.
(2) Yields on municipal securities have been computed on a tax equivalent
basis.
(3) 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.
The Company's investment portfolio consists of U.S. Government and agency
securities, municipal securities, various equity securities and Government
agency sponsored mortgage-backed securities. A mortgage-backed security relies
on the underlying mortgage pools of loans to provide a cash flow of principal
and interest. The actual maturities of these securities will differ from the
contractual maturities because these borrowers may have the right to prepay
obligations with or without prepayment penalties. Decreases in interest rates
will generally cause prepayments to accelerate. In a declining interest rate
environment, the Company may not be able to reinvest the proceeds from these
prepayments in assets which have comparable yields. However, because the
<PAGE>
majority of the mortgage-backed securities have adjustable rates, the negative
effects of changes in interest rates on earnings and the carrying values of
these securities are mitigated. At June 30, 1997, the Company had $10,730,000
in collateralized mortgage obligations ("CMOs") and $34,046,000 in mortgage-
backed pass-through securities of which 49% have variable interest rates and the
majority are issued by or backed by Federal agencies.
At December 31, 1996, the Company had $14,568,000 in collateralized mortgage
obligations ("CMOs") and $36,225,000 in mortgage-backed pass-through securities.
CHANGES IN SECURITIES PORTFOLIO
Securities available-for-sale decreased $26,000 on June 30, 1997 from December
31, 1996.
Securities available-for-sale on December 31, 1996 decreased $10,579,000 from
December 31, 1995. In the first quarter of 1996, Premier Bank sold
approximately $10,000,000 in securities from the available-for-sale portfolio.
These sales represented the termination of an arbitrage transaction made up of
these assets and various floating rate deposits and borrowings. These
securities were primarily floating rate collateralized mortgage obligations and
mortgage-backed passthroughs. The proceeds from the sale of securities provided
funding for the increase in loans.
LOAN PORTFOLIO
TYPES OF LOANS
Management realizes that the Company's loan portfolio is concentrated in loans
secured by real estate. Real estate loans include real estate mortgages, real
estate construction projects, and consumer home equity lines. The amount of
loans outstanding at the indicated dates are shown in the following table
according to the type of loan. The other concentration is in commercial,
financial and agricultural loans which are made primarily to businesses in the
Atlanta, Georgia metropolitan area. The following table presents this major
category of net loans for each period, excluding the allowance for loan losses
and mortgage loans held for sale.
<TABLE>
<CAPTION>
June 30 December 31,
1997 1996 1995 1994 1993 1992
-------- --------- --------- --------- -------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural 65,151 50,859 47,360 32,378 40,407 38,881
Real estate-construction 108,176 95,128 58,734 32,789 18,589 18,422
Real estate-mortgage 180,054 137,417 109,567 87,806 82,981 95,176
Consumer installment 24,961 29,885 31,284 37,808 66,195 104,203
------- ------- ------- ------ ------ -------
378,342 313,289 246,945 190,781 208,172 256,682
</TABLE>
MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
Of the loans maturing after one year, approximately $89,000,000 have fixed rates
and approximately $93,000,000 have variable rates. The maturity of real estate
<PAGE>
construction and commercial, financial and agricultural loans outstanding at
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Real estate Commercial, financial
construction and agricultural
------------ ---------------------
(in thousands)
<S> <C> <C>
In one year or less $91,441 $30,196
After one year but within five years 1,629 19,381
After five years 2,058 1,282
------- -------
Total $95,128 $50,859
======= =======
</TABLE>
CHANGES IN LOAN PORTFOLIO
Loans held for sale increased $15,925,000 from December 31, 1996 to June 30,
1997. These loans represent first mortgage loans which have been originated by
Premier Lending and have been sold to third party investors and are waiting for
funding from the investor. This balance fluctuates based on time of month, new
loan volume and length of investor closing periods. Other loans grew by
$65,000,000 at June 30, 1997 from December 31, 1996. The primary reason for this
continued growth in loans is due to the continued strong loan demand and
consolidation of regional and community banks in the Atlanta metropolitan area.
Loans grew by $66,300,000 at December 31, 1996 from December 31, 1995. In
addition, at December 31, 1996, construction loans increased $36,394,000, real
estate mortgage loans increased $27,850,000, commercial loans increased
$3,499,000, and consumer loans decreased $1,399,000 from December 31, 1995. The
primary reason for these increases was the addition of five experienced real
estate and commercial loan officers. Loan officers at Premier Lending generate
loans that are specifically underwritten by Premier Bank. In prior periods, the
majority of these loans were sold to third party financial institutions.
DEPOSITS
Average deposits and the rates paid on those deposits classified as to
noninterest-bearing demand, savings and interest-bearing demand, and time
deposits, for the years indicated are presented below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Years ended December 31,
- ---------------------------------------------------------------------------------------------------------------
1996 1995 1994
Amount Rate Amount Rate Amount Rate
----------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand
deposits $ 45,88? $ 40,497 $ 39,65?
Savings and interest-bearing
demand deposits 107,634 3.17% 90,899 3.17% 100,697 2.91%
Time deposits 236,639 5.94% 197,134 5.83% 182,380 5.16%
-------- ----- -------- ----- -------- -----
Total average deposits $390,159 4.48% $328,530 4.37% $322,733 3.83%
======== ===== ======== ===== ======== =====
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The maturities of certificates of deposit of $100,000
or more as of December 31, 1996 are presented below:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
3 months or less $21,090
Over 3 through 6 months 24,996
Over 6 through 12 months 15,101
Over 12 months 13,117
-------
$74,304
</TABLE>
CHANGES IN DEPOSITS
Total deposits grew by $40,400,000 at June 30, 1997 from December 31, 1996 as
the Company continues to gain market share through its expansion program as well
as its quality service program.
<PAGE>
Total deposits grew $73,00,000 at December 31, 1996 from December 31, 1995.
Premier Bank aggressively marketed for deposits in several key submarkets in the
Company's market area and entered several new markets during the period.
OTHER BORROWINGS
Other borrowings grew $23,847,000 from December 31, 1996 to June 30, 1997. The
increase was primarily due to the purchase of seasoned $15,000,000 floating rate
mortgage loans and a temporary increase of $10,000,000 in mortgage loans held
for sale at the end of the second quarter. This mortgage held for sale increase
was due to increased production and timing of investor funding on several large
sales. Management expects that these temporary increases in the held for sale
balances will occur and funding sources are in place to manage.
<TABLE>
<CAPTION>
1996 1995 1994
------------ ---------------- -------------
(in thousands)
<S> <C> <C> <C>
Balance at December 31 35,242 34,462 21,144
Weighted average interest rate at December 31 6.43% 7.88% 6.83%
Maximum month end balance during year 35,242 63,331 36,314
Average amount outstanding during the year 42,411 37,373 17,371
Weighted average interest rate during the year 6.50% 6.13% 5.49%
</TABLE>
NON-PERFORMING LOANS
The following table presents nonperforming loans at June 30, 1997 and December
31, 1996, 1995, 1994, 1993 and 1992. Nonperforming loans consist solely of
loans which are contractually past due 90 days or more as to interest or
principal payments (past-due loans) and loans accounted for on a nonaccrual
basis (nonaccrual loans).
<TABLE>
<CAPTION>
COMBINED
Past-due Nonaccrual
loans loans
---------- -----------
(in thousands)
<S> <C> <C>
June 30, 1997 $22? $ 786
December 31, 1996 -- 1,425
December 31, 1995 13 1,064
December 31, 1994 205 1,664
December 31, 1993 206 3,070
December 31, 1992 684 5,771
</TABLE>
Total interest income recognized on nonperforming loans for the year ended
December 31, 1996 was $119,000. Additional interest income of $112,000 would
have been recorded in 1996 if all nonperforming loans had performed in
accordance with their original terms.
<PAGE>
NONPERFORMING ASSETS
The following table analyzes nonperforming assets for June 30, 1997 and each of
the past three years.
<TABLE>
<CAPTION>
1997 1996 1995 1994
(in thousands)
<S> <C> <C> <C> <C>
Loans past due 90 days or more $227 $ --- $13 $205
Non accrual loans 786 1,425 1,064 1,664
------ ------ ------ ------
Total nonperforming loans 1,013 1,425 1,077 1,869
Other real estate 682 949 907 1,608
------ ------ ------ ------
Total nonperforming assets $1,695 $2,374 $1,984 $3,477
====== ====== ====== ======
Nonperforming loans/Total loans, net of unearned 0.27% 0.45% 0.44% 0.98%
Nonperforming assets/Total assets 0.29% 0.46% 0.45% 0.98%
Loan loss allowance/Total loans, net of unearned 1.84% 2.10% 2.43% 2.94%
Loan loss allowance/Nonperforming loans 688.35% 460.91% 556.36% 300.37%
</TABLE>
Accrual of interest income is normally discontinued on loans when they become 90
days past due or, in the opinion of management, collection of interest becomes
doubtful. When a loan is determined to be impaired, all interest previously
accrued but not collected is reversed against current interest income. Accrual
of interest on such loans is resumed when, in management's judgment, the
collection of interest and principal becomes probable.
In the opinion of management, any loans classified by regulatory authorities as
doubtful, substandard, or special mention that have not been included in the
table above do not represent or result from trends or uncertainties which
management reasonably expects will materially impact future operating results,
liquidity, or capital resources. These classified loans do not represent (i)
material credits about which management is aware or (ii) 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 are charged off at the time such loans are identified.
Commitments and Lines of Credit
The Company enters into residential construction and commercial loan commitments
in advance of closing to fund loans to its customers at locked-in interest rates
in the normal course of business. These instruments, to the extent they are not
covered by investor purchase commitments, involve credit and interest rate risk
in excess of the amount recognized in the financial statements.
In the normal course of business, the Company has entered into off-balance-sheet
financial instruments which are not reflected in the financial statements.
These financial instruments include commitments to extend credit and standby
letters of credit. Such financial instruments are included in the financial
statements when funds are disbursed or the instruments become payable. These
instruments involve, to varying degrees, elements of credit risk in excess of
the amount recognized in the balance sheet.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for unfunded mortgage loan commitments,
residential construction, and commercial loans commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. A summary of the Company's commitments is as follows:
<PAGE>
<TABLE>
<CAPTION>
December 31,
(in thousands)
1996 1995
---------- ----------
<S> <C> <C>
Unfunded mortgage loan commitments 20,000 31,968
Residential construction and commercial loan commitments 27,277 18,526
Commitments to extend credit 71,518 33,682
Standby letters of credit 860 1,260
</TABLE>
Summary of Loan Loss Experience
The provision for possible loan losses is created by direct charges and credits
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 the allowance. The factors that influence
management's judgment in determining the amount charged to operating expense are
past loan loss experience, composition of the loan portfolio, evaluation of
possible future losses, current economic conditions, and other relevant facts.
The allowance for loan losses is reviewed regularly based on management's
evaluation of current risk characteristics of the loan portfolio, as well as the
impact of prevailing and expected economic business conditions. Management
considers the allowance for loan loss adequate to cover possible loan losses on
the loans outstanding.
Premier is a bank holding company that is the result of the acquisition of six
financial institutions acquired over the last five years. Each institution
utilized various methodologies to determine loan loss allowance adequacy. The
methodologies utilized by current management are, in the opinion of management,
appropriate for the allowance adequacy determination at June 30, 1997.
Considering the primary factor that the economy in general and the Atlanta
metropolitan market in specific is performing in an outstanding manner,
management realizes and provides for any deterioration of the economy in the
future. At this time, management expects charge-offs in 1997 to be consistent
with 1996.
The allowance for loan losses could be allocated in the following manner for
June 30, 1997 and at December 31, for the following years:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992
--------- --------- ---------- --------- ---------- ---------
(in housands)
<S> <C> <C> <C> <C> <C> <C>
Allowance allocation by loan category
Commercial, financial and agriculture $1,132 $1,066 $1,149 $953 $1,215 $986
Consumer installment 666 627 759 1,113 1,991 2,642
Real estate 5,175 4,875 4,084 3,549 3,055 2,881
------ ------ ------ ------ ------ ------
$6,973 $6,568 $5,992 $5,613 $6,262 $6,509
Percent of loans by category to total loans
Commercial, financial and agriculture 17% 16% 19% 17% 19% 15%
Consumer installment 7% 10% 13% 20% 32% 41%
Real estate 76% 74% 68% 63% 49% 44%
------ ------ ------ ------ ------ ------
100% 100% 100% 100% 100% 100%
</TABLE>
<PAGE>
The following table summarizes average loan balances for June 30, 1997 and for
five prior year ends, changes in the allowance for loan losses arising from
loans charged off, recoveries on loans previously charged off, additions to the
reserve which have been charged to operating expense, and the ratio of net
charge-offs during the period to average loans.
<TABLE>
<CAPTION>
June 30 Years ended December 31,
1997 1996 1995 1994 1993 1992
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Amount of loans,excluding held for sale,
net of unearned income & allowance
for loan losses $371,369 $306,721 $240,953 $185,167 $199,541 $249,600
======== ========= ======== ======== ======== ========
Average loans, including held for sale,
net of unearned income $371,168 $300,618 $242,985 $204,352 $231,781 $268,465
======== ========= ======== ======== ======== ========
Allowance for loan losses at
beginning of period $6,568 $ 5,992 $5,614 $6,262 $6,509 $3,991
Loans charged off:
Commercial, financial, and agricultural 10 68 316 1,030 1,574 1,893
Real estate loans 13 49 412 1,139 819 4,203
Consumer installment 143 398 897 1,745 3,899 5,507
-------- --------- -------- -------- -------- --------
Total loans charged off 166 515 1,625 3,914 6,292 11,603
Recoveries of loans previously charged off:
Commercial, financial, and agricultural 343 195 456 573 21 44
Real estate loans 52 200 175 242 143 111
Consumer installment 380 1,114 1,778 2,166 1,955 1,223
-------- --------- -------- -------- -------- --------
Total loans recovered 775 1,509 2,409 2,981 2,313 1,378
Net (recoveries) charge-offs (609) (994) (784) 933 3,979 10,225
Allowance acquired (disposed of) in
business combinations (74) - 294 460
Provision for loan losses (130) (418) (700) 285 3,732 12,283
Allowance for loan losses at end of period $6,973 $ 6,568 $5,992 $5,615 $6,261 $6,509
======== ========= ======== ======== ======== ========
Ratio of net charge-offs
(recoveries) to average net loans
outstanding 0.164% (0.331)% (0.32)% 0.46% 1.72% 3.81%
</TABLE>
PROVISION FOR LOAN LOSSES
Under normal circumstances, this expense is used to establish the allowance for
loan losses. Actual loan losses, net of recoveries, are charged directly to the
allowance. Expense recorded is a reflection of actual losses experienced during
the year and management's judgment as to the adequacy of the allowance to absorb
future losses.
<PAGE>
The Company did not make a provision for loan losses during 1996. Instead, the
Company made negative provisions which amounted to $418,000 for the year. The
negative provisions were based on the net recovery stream of previously charged
off loans which amounted to $994,000 for the year.
The Company did not make a provision for loan losses during 1995. Instead, the
Company made negative provisions which amounted to $700,000 for the year. The
negative provisions were based on the net recovery stream of previously charged
off loans which amounted to $784,000 for the year.
Management's analysis of the allowance for loan losses, nonperforming assets,
and net recoveries on a monthly basis concluded that the allowance was more than
adequate given the risk resident within the loan portfolio. The allowance as a
percent of total loans is 1.84%, nonperforming loans to total loans are .27%,
and net recoveries as a percent of average loans (net of unearned interest) were
.16% for the six months ended June 30, 1997.
RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1997 was $2,224,000 as compared
to $1,454,000 for the three months ended June 30, 1996. On a per share basis,
net income was $.27 in the three months ended June 30, 1997 versus $.18 in the
three months ended June 30, 1996. This $.09 represents an increase of 50% in
per share income.
Net income for the first six months of 1997 was $4,088,000 as compared to
$2,959,000 for the first six months of 1996. Included in the first six months
of 1997 net income was $402,000 of utilized net operating loss carryforwards. On
a per share basis, net income was $.051 in the first six months of 1997 versus
$.37 in the first six months of 1996. This $.14 increase represents an increase
of 38% in per share earnings.
The Company reported record annual earnings of $5,494,000 for the year ended
December 31, 1996. This amount was an increase of $946,000 or 21% from the
previous year's net income. This figure included merger expenses, data
processing conversion expenses, severance expenses, as well as the special SAIF
fund recapitalization assessment.
INTEREST INCOME AND INTEREST EXPENSE
The following table sets forth the amount of the Company's average balances,
interest income (fully taxable equivalent), and interest expense for each
category of interest-earning assets and interest-bearing liabilities, average
interest rates for interest-earning assets and interest yields for interest-
bearing liabilities, net interest spread, and net yield on average interest-
earning assets.
<PAGE>
Distribution of Assets, Liabilities, and Stockholders' Equity Interest Rates and
Interest Differentials
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------- ---------------------------- --------------------------------
Yield/ Yield/ Yield/
Avg.Bal. Int. Rate Avg.Bal. Int. Rate Avg.Bal. Int. Rate
-------- ------- ------ -------- ------- ------ -------- ------- ------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, net of unearned interest $300,618 $31,734 10.56% $242,985 $25,077 10.32% $204,352 $19,868 9.72%
Interest-bearing deposits other
banks 9,113 427 4.69% 3,925 174 4.43% 523 18 3.44%
Investment securities:
Taxable 95,809 5,910 6.17% 100,589 6,266 6.23% 104,616 5,700 5.45%
Non-taxable 9,892 901 9.11% 9,894 1,017 10.28% 13,690 1,380 10.08%
Federal funds sold 28,144 1,543 5.49% 23,731 1,388 5.85% 28,790 1,227 4.26%
-------- ------- ------ -------- ------- ------ -------- ------- ------
Total interest earning assets $443,576 $40,516 9.13% $381,124 $33,922 8.90% $351,971 $28,193 8.01%
Allowance for loan losses (6,396) (5,982) (6,241)
Other assets 34,160 34,850 28,977
-------- -------- --------
Total assets $471,340 $409,992 $374,707
LIABILITIES AND STOCKHOLDERS'
EQUITY
Savings and interest-bearing
Demand deposits $107,634 $3,417 3.17% $ 90,898 $2,880 3.17% $100,697 $2,932 2.91%
Time deposits 236,639 14,065 5.94% 197,134 11,492 5.83% 182,380 9,418 5.16%
Other borrowings 30,448 2,756 9.05% 34,093 2,290 6.72% 12,075 678 5.61%
-------- ------- -------- ------- -------- -------
Total interest-bearing liabilities $374,721 $20,238 5.40% $322,125 $16,662 5.17% $295,152 $13,028 4.41%
Demand deposits 45,886 40,497 39,656
Other liabilities 4,566 3,872 2,393
-------- -------- --------
Total liabilities 425,173 366,494 337,201
Total stockholders' equity 46,167 43,498 37,506
-------- -------- --------
Total liabilities and
stockholders' equity $471,340 $409,992 $374,707
Net interest income $20,278 $17,260 $15,165
Net interest margin 4.57% 4.53% 4.31%
Net interest spread 3.73% 3.73% 3.60%
</TABLE>
(1) Average balances were determined using the daily average balances.
(2) Average taxable securities represent securities available-for-sale are
based on their fair values.
<PAGE>
Average loans include nonaccrual loans and are stated net of unearned income.
Income on nonaccrual loans is recognized on the cash basis.
Nontaxable securites income is presented on a fully taxable equivalent basis.
Net interest income increased $1,121,000 in the second quarter of 1997 compared
with the second quarter of 1996. The primary reason for the increased income
was an increase of $79,396,000 in average earning assets as compared with June
30, 1996. The net interest margin increased to 4.83% from 4.70% in comparable
periods.
Net interest income increased $1,528,000 in the first six months of 1997
compared with the first six months of 1996. The primary reason for the
increased income was an increase of $77,449,000 in average earning assets as
compared with June 30, 1996. The net interest margin increased to 4.67% from
4.50% for the comparable periods.
Net interest income increased by $3,018,000 during fiscal 1996. The following
table reflects the changes in net interest income resulting from changes in
interest rates and from asset and liability volume. The change in interest
attributable to rate has been determined by applying the change in rate between
years to average balances outstanding in the earlier year. The change in
interest due to volume has been determined by applying the rate from the earlier
year to change in average balances outstanding between years. Thus, changes
that are not solely due to rate or volume have been consistently allocated
between rate and volume.
<TABLE>
<CAPTION>
1996 versus 1995 1995 versus 1994
------------------------------------- --------------------------------------
Increase (decrease) due to change in: Increase (decrease) due to change in:
Volume Yield/ Volume Yield/
Outstanding Rate Total Outstanding Rate Total
----------- ------- --------- ------------ ----- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interestr income on:
Deposits with other banks 243 10 253 149 7 156
Loans 6,072 585 6,657 3,930 1,279 5,209
Investment securities:
Taxable (295) (61) (356) (226) 792 566
Non-taxable -- (116) (116) (390) 26 (364)
Federal funds sold 246 (90) 156 (241) 402 161
----- --- ----- ----- ----- -----
Total interest income 6,266 328 6,594 3,222 2,506 5,728
----- --- ----- ----- ----- -----
Interest expense on:
Saving and interest-bearing
demand deposits 531 6 537 (299) 247 (52)
Time deposits 2,344 229 2,573 800 1,274 2,074
Other borrowings (275) 741 466 1,455 157 1,612
----- --- ----- ----- ----- -----
Total interest expense 2,600 976 3,576 2,032 1,678 3,634
Net interest income 3,666 (648) 3,018 1,190 828 2,018
===== ==== ===== ===== ===== =====
</TABLE>
NON-INTEREST INCOME
Non-interest income increased $1,761,000 for the three months ended June 30,
1997 as compared to the same period in 1996. The increase was due to an
$817,000 increase in mortgage income and the sale of Alliance Finance, an 80%
owned non bank subsidiary with assets of approximately $3,000,000,which
resulted in a gain of $757,000.
<PAGE>
Non-interest income increased $2,636,000 for the first six months of 1997 versus
the same period in 1996. The increase was due to increases in mortgage
originations and sales of mortgages of $1,450,000 and the sale of Alliance
Finance.
Total non-interest income increased $4,031,000 in fiscal 1996 over fiscal 1995.
This was primarily due to the increase in mortgage loan activity resulting in an
increase in related income of $2,934,000
NON-INTEREST EXPENSE
Non-interest expense increased $1,365,000 in the three months ended June 30,
1997 over the same period in 1996. Salaries, commissions and employee benefits
were up $804,000. The majority of this increase was due to commissions on the
increased mortgage loan activity. Occupancy and equipment expense was up
$216,000 due to expansion of banking facilities. Merger related expenses were
up $310,000 in comparing the two quarters.
Non-interest expense increased $2,372,000 in the first six months of 1997 over
the same period in 1996. Salaries, commissions and employee benefits were up
$1,487,000 mainly due to the mortgage related activity..
Non-interest expense increased $5,968,000, or 29% in fiscal 1996 over fiscal
1995. The Company absorbed the cost of associated mergers and the opening of
several new branches during this period.
Income Taxes
Consolidated income taxes increased $789,000 in the three months ended June 30,
1997 as compared to the same period of 1996. The effective tax rate for the
Company has reached 35% as tax credits have been utilized as well as a
declining tax free securities portfolio.
Consolidated income taxes were up $562,000 in the first six months of 1997
versus the first six months of 1996. The Company has utilized the majority of
all tax credits and net operating loss carryforwards from prior periods.
Consolidated income taxes decreased in 1996 by $62,500 as compared to 1995. The
Company was able to utilize NOL carryforwards of $237,000 in Premier Bank and
Premier Lending which had been incurred and not utilized in 1994 and 1995.
<PAGE>
Return on Equity and Assets
The following rate of return information for June 30, 1997 and the years
indicated is presented below.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1997 1996 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Return on assets(1) 1.52% 1.17% 1.11% 0.51%
Return on equity(2) 17.44% 11.90% 10.46% 5.09%
Cash dividend payout ratio(3) 21.57% 35.29% 15.79% 28.00%
Equity to assets ratio(4) 8.70% 9.79% 10.61% 10.01%
</TABLE>
________________
(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Cash dividends declared divided by net income.
(4) Average equity divided by average total assets.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material legal proceedings commenced or terminated during the
second quarter of fiscal 1997.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The annual meeting of the Company was held on June 16, 1997. At the annual
meeting, all of the incumbent directors were reelected. Such directors are
Darrell D. Pittard, J. Edward Mulkey, Jr., James E. Freeman, Billy H. Martin,
James L. Coxwell, N. Michael Anderson, William M. Evans, Jr., and Robin R.
Howell. Other matters presented to shareholders at the meeting including (i)
the proposal to adopt the Agreement and Plan of Reorganization by and between
the Company and the Central and Southern Holding Company; (ii) the proposal to
adopt the Premier Bancshares, Inc. Directors' Stock Option Plan; and (iii) the
proposal to adopt the Premier Bancshares, Inc. 1997 Stock Option Plan.
The proposal to approve the Agreement and Plan of Reorganization was approved
with 3,001,758 shares or 70.64% voting for the proposal, 6,493 or voting against
the proposal, 2,983 or .07% abstaining from the proposal. There were 49,112 or
1.16% broker non-votes in connection with this proposal.
With regard to the proposal to elect the incumbent directors, 3,050,338 or
71,78% voted for the proposal, 2,512 or .06% voted against this proposal and
7,496 or .18% abstained.
With regard to the proposal to approve the 1997 Stock Option Plan, 2,937,824 or
69.14% voted for the proposal, 65,829 or 1.55% voted against the proposal, and
7,580 or .17% abstained. There were 49,112 or 1.16% of broker non-votes in
connection with this proposal.
With regard to the proposal to approve the Directors' Stock Option Plan,
2,945,105 or 69.31% voted for the proposal, 65,571 or 1.64% voted against the
proposal, and 8,232 shares or .19% abstained. There were 37,438 or .88% broker
non-votes in connection with this proposal.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following are the Exhibits required by Item 601 of Regulation S-K:
<PAGE>
<TABLE>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
2.1 Agreement and Plan of Reorganization dated June 24, 1997, between Premier and
Citizens Gwinnett Bankshares, Inc.
2.2 Amendment to Agreement and Plan of Reorganization dated July 24, 1997, between
Premier and Citizens.
3.1 Articles of Incorporation of the Registrant, as amended, through February 6, 1997.
(Incorporated by reference as Exhibit 3.1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996).
3.2 Articles of Amendment dated February 6, 1997 (Incorporated by reference as Exhibit
3.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
3.3 Bylaws of the Registrant (Incorporated by reference as Exhibit 3.2 from the
Registrant's Form 10-QSB for the quarter ended September 30, 1996).
4.1 Form of Stock Certificate (Incorporated by reference as Exhibit 4.1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.1 Individual Director's Defined Benefit Plan Agreements, dated January 1, 1994,
between First Alliance Bank and each of its directors. (Incorporated by reference
as Exhibit 10.6 to the Registrant's Form 10-KSB for the year ended December 31,
1996).
10.2 Employment Agreement dated as of July 1, 1995 by and among Premier, First Alliance
Bank and J. Edward Mulkey, Jr. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-KSB for the fiscal year ended December 31, 1995).1
10.3 First Alliance Bank 1995 Stock Option Plan, dated as of August 8, 1995 and amended
as of March 12, 1996, and related form of employee incentive stock option agreement.
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.4 Guaranty, dated March 25, 1996 by Premier relating to a $2,000,000 loan made by The
Bankers Bank to Interim Alliance Corporation (d/b/a Alliance Finance).
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.5 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and George S. Phelps. (Incorporated by reference as Exhibit 10.4 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.6 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Michael W. Lane. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996).1
10.7 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Brian D. Schmitt. (Incorporated by reference as Exhibit 10.6 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).1
</TABLE>
<PAGE>
<TABLE>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
10.8 Amendment to Employment Agreement dated as of January 1, 1997 by and between First
Alliance/Premier Bancshares, Inc. and Darrell D. Pittard. (Incorporated by
reference as Exhibit 10.7 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996)./1/
10.9 Form of Employment Agreement by and among Premier Bancshares, Inc., Premier Lending
Corporation and Darrell D. Pittard. (Incorporated by reference as Exhibit 10.8 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.10 Amended and Restated Stock Purchase Agreement by and between Premier Bancshares,
Inc. (formerly known as First Alliance/Premier Bancshares, Inc.) and Net.B@nk, Inc.
dated December 19, 1996. (Incorporated by reference as Exhibit 10.9 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.11 First Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@nk, Inc. dated December 19, 1996. (Incorporated
by reference as Exhibit 10.10 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1996.)
10.12 Second Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@nk, Inc. dated May 31, 1997.
10.13 Purchase and Assumption Agreement by and between Premier Bank, FSB and First
Alliance Bank dated December 19, 1996. (Incorporated by reference as Exhibit 10.11
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.14 First Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 13, 1997. (Incorporated by reference as
Exhibit 10.12 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.15 Second Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 25, 1997. (Incorporated by reference as
Exhibit 10.13 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.16 Third Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated May 31, 1997.
10.17 Premier Bancshares, Inc. 1997 Stock Option Plan./1/ (Incorporated by reference from
Appendix D to the Joint Proxy Statement/Prospectus contained in Premier's Form S-4
Registration Statement No. 333-24537.)
10.18 Premier Bancshares, Inc. Directors' Stock Option Plan./1/ (Incorporated by
reference from Appendix E to the Joint Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement No. 333-24537.)
10.19 Agreement and Plan of Reorganization, dated February 3, 1997, between Premier and
Central and Southern Holding Company (included as Appendix A to the Joint Proxy
Statement/Prospectus contained in Premier's Form S-4 Registration Statement No.
333-24537).
</TABLE>
<PAGE>
<TABLE>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
10.20 Amendment to Agreement and Plan of Reorganization dated March 26, 1997, between
Premier and Central and Southern Holding Company (included as Appendix 'A' to the
Joint Proxy Statement/Prospectus contained in Premier's Form S-4 Registration
Statement No.333-24537).
10.21 Agreement for Purchase of Certain Assets and Assumption of Certain Liabilities by
and between The Central and Southern Bank of North Georgia, FSB and The Central and
Southern Bank of Georgia of Georgia dated August 11, 1997.
10.22 Agreement and Plan of Merger by and among Premier Bancshares, Inc., Premier Bank and
The Central and Southern Bank of North Georgia, FSB dated August 11, 1997.
11.1 Statement of Per Share Earnings.
27 Financial Data Schedule.
</TABLE>
- --------------
1 Registrant's plans, management contracts and compensatory
arrangements.
(b) Reports on Form 8-K
On June 26, 1997, the Company filed a Form 8-K reporting that it had closed its
merger with The Central and Southern Holding Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PREMIER BANCSHARES, INC.
Date: August 18, 1997
By: /s/ Darrell D. Pittard
------------------------
Darrell D. Pittard
Chairman and Chief Executive Officer (Principal Executive Officer)
Date August 18, 1997
By: /s/ Michael E. Ricketson
-------------------------
Michael E. Ricketson
Executive Vice President and Chief Financial Officer (Principal Financial
Officer and Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated June 24, 1997, between Premier and
Citizens Gwinnett Bankshares, Inc.
2.2 Amendment to Agreement and Plan of Reorganization dated July 24, 1997, between
Premier and Citizens Gwinnett Bankshares, Inc.
3.1 Articles of Incorporation of the Registrant, as amended, through February 6, 1997.
(Incorporated by reference as Exhibit 3.1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996).
3.2 Articles of Amendment dated February 6, 1997 (Incorporated by reference as Exhibit
3.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
3.3 Bylaws of the Registrant (Incorporated by reference as Exhibit 3.2 from the
Registrant's Form 10-QSB for the quarter ended September 30, 1996).
4.1 Form of Stock Certificate (Incorporated by reference as Exhibit 4.1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.1 Individual Director's Defined Benefit Plan Agreements, dated January 1, 1994,
between First Alliance Bank and each of its directors. (Incorporated by reference
as Exhibit 10.6 to the Registrant's Form 10-KSB for the year ended December 31,
1996).
10.2 Employment Agreement dated as of July 1, 1995 by and among Premier, First Alliance
Bank and J. Edward Mulkey, Jr. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-KSB for the fiscal year ended December 31, 1995)./1/
10.3 First Alliance Bank 1995 Stock Option Plan, dated as of August 8, 1995 and amended
as of March 12, 1996, and related form of employee incentive stock option agreement.
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.4 Guaranty, dated March 25, 1996 by Premier relating to a $2,000,000 loan made by The
Bankers Bank to Interim Alliance Corporation (d/b/a Alliance Finance).
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.5 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and George S. Phelps. (Incorporated by reference as Exhibit 10.4 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.6 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Michael W. Lane. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996)./1/
10.7 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Brian D. Schmitt. (Incorporated by reference as Exhibit 10.6 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996)./1/
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<C> <S>
10.8 Amendment to Employment Agreement dated as of January 1, 1997 by and between First
Alliance/Premier Bancshares, Inc. and Darrell D. Pittard. (Incorporated by
reference as Exhibit 10.7 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996)./1/
10.9 Form of Employment Agreement by and among Premier Bancshares, Inc., Premier Lending
Corporation and Darrell D. Pittard. (Incorporated by reference as Exhibit 10.8 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.10 Amended and Restated Stock Purchase Agreement by and between Premier Bancshares,
Inc. (formerly known as First Alliance/Premier Bancshares, Inc.) and Net.B@nk, Inc.
dated December 19, 1996. (Incorporated by reference as Exhibit 10.9 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.11 First Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@nk, Inc. dated December 19, 1996. (Incorporated
by reference as Exhibit 10.10 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1996.)
10.12 Second Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@ank, Inc. dated May 31, 1997.
10.13 Purchase and Assumption Agreement by and between Premier Bank, FSB and First
Alliance Bank dated December 19, 1996. (Incorporated by reference as Exhibit 10.11
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.14 First Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 13, 1997. (Incorporated by reference as
Exhibit 10.12 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.15 Second Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 25, 1997. (Incorporated by reference as
Exhibit 10.13 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.16 Third Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated May 31, 1997.
10.17 Premier Bancshares, Inc. 1997 Stock Option Plan.1 (Incorporated by reference from
Appendix D to the Joint Proxy Statement/Prospectus contained in Premier's Form S-4
Registration Statement No. 333-24537.)
10.18 Premier Bancshares, Inc. Directors' Stock Option Plan.1 (Incorporated by
reference from Appendix E to the Joint Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement No. 333-24537.)
10.19 Agreement and Plan of Reorganization, dated February 3, 1997, between Premier and
Central and Southern Holding Company (included as Appendix A to the Joint Proxy
Statement/Prospectus contained in Premier's Form S-4 Registration Statement No.
333-24537).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
10.20 Amendment to Agreement and Plan of Reorganization dated March 26, 1997, between
Premier and Central and Southern Holding Company (included as Appendix 'A' to the
Joint Proxy Statement/Prospectus contained in Premier's Form S-4 Registration
Statement No.333-24537).
10.21 Agreement for Purchase of Certain Assets and Assumption of Certain Liabilities by
and between The Central and Southern Bank of North Georgia, FSB and The Central and
Southern Bank of Georgia dated August 11, 1997.
10.22 Agreement and Plan of Merger by and among Premier Bancshares, Inc., Premier Bank and
The Central and Southern Bank of North Georgia, FSB dated August 11, 1997.
11.1 Statement of Per Share Earnings.
27 Financial Data Schedule.
</TABLE>
- --------------
1 Registrant's plans, management contract and compensatory arrangements
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of this 24th day of June, 1997, by and between CITIZENS GWINNETT
BANKSHARES, INC., a Georgia business corporation (hereinafter "Citizens," and
unless the context otherwise requires, the term "Citizens" shall include both
Citizens Gwinnett Bankshares, Inc. and its subsidiary Citizens Bank of Gwinnett
("Citizens Bank")), and PREMIER BANCSHARES, INC., a Georgia business corporation
(hereinafter "Premier," and unless the context otherwise requires, the term
"Premier" shall include Premier Bancshares, Inc. and its subsidiaries, Premier
Bank, Premier Bank FSB, Premier Lending Corporation, Alliance Finance, Inc.,
Central and Southern Bank of Georgia, and Central and Southern Bank of North
Georgia, FSB).
R E C I T A L S :
WHEREAS, the respective boards of directors of Citizens and Premier deem it
advisable and in the best interests of each such entity and their respective
shareholders that Citizens merge with and into Premier (the "Merger"), with
Premier being the surviving corporation and with all of the issued and
outstanding shares of common stock, $10.00 par value per share, of Citizens
("Citizens Stock") (other than shares as to which dissenters' rights have been
perfected) being converted into the right to receive shares of the authorized
common stock, $1.00 par value per share, of Premier ("Premier Stock"), all upon
the terms and conditions hereinafter set forth and as set forth in the Agreement
and Plan of Merger attached hereto as Exhibit "A" and incorporated herein by
----------
reference (the "Merger Agreement"); and
WHEREAS, the boards of directors of the respective entities believe that
the merger of Citizens and Premier and the synergies produced thereby will
greatly enhance and strengthen the franchises and future prospects of both
companies;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
---------
CLOSING
-------
The transactions contemplated herein shall be consummated (the "Closing")
at the offices of Womble Carlyle Sandridge & Rice, PLLC, 1275 Peachtree Street,
N.E., Suite 700, Atlanta, Georgia 30309, on the first business day following
receipt of all approvals from any governmental authorities
<PAGE>
having jurisdiction over the transactions contemplated by this Agreement and the
Merger Agreement, the expiration of any waiting or similar period required by
applicable law, any approval by shareholders of Premier and Citizens of the
Merger, or at such other time and place as may be mutually satisfactory to the
parties hereto (the "Closing Date").
ARTICLE II
----------
MERGER
------
Pursuant to the terms and conditions provided herein, on the Closing Date
Citizens and Premier shall be merged in accordance with and in the manner set
forth in the Merger Agreement. The surviving corporation following the Merger
will be Premier (the "Surviving Corporation") and will operate under the
Articles of Incorporation of Premier and will be the parent holding company of
Citizens Bank of Gwinnett, a Georgia banking corporation, Premier Bank, a
Georgia banking corporation, Central and Southern Bank of Georgia, a Georgia
banking corporation, Premier Bank FSB, a federally chartered savings bank,
Central and Southern Bank of North Georgia, FSB, a federally chartered savings
bank, Premier Lending Corporation, a Georgia business corporation, and Alliance
Finance, Inc., a Georgia business corporation, the latter six of which are
currently wholly-owned subsidiaries of Premier. Upon the terms and conditions
of this Agreement and the Merger Agreement, Premier shall make available on or
before the Effective Date (as defined in the Merger Agreement) for delivery to
the holders of Citizens Stock (i) the number of shares of Premier Stock to be
issued upon conversion of the shares of Citizens Stock and (ii) sufficient funds
to provide for cash payments in lieu of the issuance of fractional shares as
provided in the Merger Agreement, provided, however, that unless and until a
holder of Citizens Stock entitled to receive Premier Stock pursuant to the
Merger shall have surrendered his Citizens Stock certificate(s) or unless
otherwise required by law, the holder of such certificate(s) shall not have any
right to receive payment of any dividends or other distributions on the shares
of Premier Stock or receive any notices sent by Premier to its shareholders or
to vote such shares.
ARTICLE III
-----------
OTHER AGREEMENTS
----------------
3.1 REGISTRATION OF PREMIER STOCK. Premier agrees to file with the
-----------------------------
Securities and Exchange Commission (the "SEC") as soon as reasonably possible a
registration statement (the "Premier Registration Statement") under the
Securities Act of 1933, as amended (the "1933 Act"), on Form S-4 or some other
appropriate form covering the issuance of the shares of Premier Stock to the
shareholders of Citizens pursuant to this Agreement and the Merger Agreement and
to use its best efforts to cause the Premier Registration Statement to become
effective and to remain effective through the Closing Date. Premier agrees to
take any action required to be taken under applicable state securities laws in
connection with the issuance of shares of Premier Stock upon consummation
2
<PAGE>
of the Merger. Citizens agrees to provide Premier reasonable assistance as
necessary in the preparation of the Premier Registration Statement, including,
without limitation, providing Premier with all material facts regarding the
operations, business, assets, liabilities and personnel of Citizens, together
with the audited financial statements of Citizens, all as required by the 1933
Act and the rules, regulations and practices of the SEC, for inclusion in the
Premier Registration Statement. The Premier Registration Statement shall not
cover resales of Premier Stock by any of the shareholders of Citizens, and
Premier shall have no obligation to cause the Premier Registration Statement to
continue to be effective after the Closing or to prepare or file any post-
effective amendments to the Premier Registration Statement after the Closing.
3.2 MEETING OF SHAREHOLDERS OF CITIZENS AND PREMIER. Citizens and Premier
-----------------------------------------------
shall call a special meeting of their respective shareholders (the "Special
Meetings") to be held not more than forty-five (45) days after the Premier
Registration Statement becomes effective under the 1933 Act for the purpose of
submitting the Merger Agreement to such shareholders for their approval. In
connection with the Special Meetings, Premier and Citizens shall prepare and
submit to their respective shareholders a notice of meeting, proxy statement and
proxy (the "Proxy Materials"), which shall include the final prospectus from the
Premier Registration Statement in the form filed with the SEC.
3.3 ACCESS TO PROPERTIES, BOOKS, ETC. Each party hereto shall allow the
---------------------------------
other party and its authorized representatives full access during normal
business hours from and after the date hereof and prior to the Closing Date to
all of the respective properties, books, contracts, commitments and records of
such party and its subsidiaries and shall furnish the other party and its
authorized representatives such information concerning its affairs and the
affairs of its subsidiaries as the other party may reasonably request provided
that such request shall be reasonably related to the transactions contemplated
by this Agreement and shall not interfere unreasonably with normal operations.
Each party shall cause its and its subsidiaries' personnel, employees and other
representatives to assist the other party in making any such investigation.
During such investigation, the investigating party and its authorized
representatives shall have the right to make copies of such records, files, tax
returns and other materials as it may deem advisable and shall advise the other
party of those items of which copies are made. No investigation made heretofore
or hereafter by either party and its authorized representatives shall affect the
representations and warranties of either such party hereunder.
3.4 CONFIDENTIALITY. Prior to consummation of the Merger, the parties to
---------------
this Agreement will provide one another with information which may be deemed by
the party providing the information to be confidential. Each party agrees that
it will hold and will cause its advisors and agents to hold confidential and
protect all information provided to it by the other party to this Agreement or
such party's affiliates, except that the obligations contained in this Section
3.4 shall not in any way restrict the rights of any party or person to use
information that (i) was known to such party prior to the disclosure by the
other party; (ii) is or becomes generally available to the public other than by
breach of this Agreement; (iii) is provided by one party for disclosure
concerning such party in the Premier Registration Statement; or (iv) otherwise
becomes lawfully available to a party
3
<PAGE>
to this Agreement on a nonconfidential basis from a third party who is not under
an obligation of confidence to the other party to this Agreement. If this
Agreement is terminated prior to the Closing, each party hereto agrees to return
all documents, statements and other written materials, whether or not
confidential, and all copies thereof, provided to it by or on behalf of the
other party to this Agreement. The provisions of this Section 3.4 shall survive
termination, for any reason whatsoever, of this Agreement, and, without limiting
the remedies of the parties hereto in the event of any breach of this Section
3.4, the parties hereto will be entitled to seek injunctive relief against the
other party in the event of a breach or threatened breach of this Section 3.4.
3.5 FULL COOPERATION. The parties shall cooperate fully with each other
----------------
in connection with any acts or actions required to be taken as part of their
respective obligations under this Agreement.
3.6 EXPENSES. All of the expenses incurred by Premier in connection with
--------
the authorization, preparation, execution and performance of this Agreement and
the Merger Agreement including, without limitation, all fees and expenses of its
agents, representatives, counsel and accountants and the fees and expenses
related to filing the Premier Registration Statement and all regulatory
applications with state and federal authorities in connection with the
transactions contemplated hereby and thereby, shall be paid by Premier. All
expenses incurred by Citizens in connection with the authorization, preparation,
execution and performance of this Agreement and the Merger Agreement, including,
without limitation, all fees and expenses of its agents, representatives,
counsel and accountants for Citizens and the cost of reproducing and mailing the
Proxy Materials, shall be paid by Citizens.
3.7 PRESERVATION OF GOODWILL. Each party hereto shall use its best efforts
------------------------
to preserve its business organization and the business organization of its
subsidiaries, to keep available the services of its present employees and of the
present employees of its subsidiaries, and to preserve the goodwill of customers
and others having business relations with such party or its subsidiaries.
3.8 APPROVALS AND CONSENTS. Each party hereto represents and warrants to
----------------------
and covenants with the other that it will use its best efforts, and will cause
its officers, directors, employees and agents and its subsidiaries and any
subsidiary's officers, directors, employees and agents to use their best
efforts, to obtain as soon as is reasonably practicable all approvals and
consents of state and federal departments or agencies required or deemed
necessary for consummation of the transactions contemplated by this Agreement
and the Merger Agreement.
3.9 AGREEMENT BY CITIZENS EXECUTIVE OFFICERS AND DIRECTORS.
------------------------------------------------------
Contemporaneously with the execution of this Agreement, each of the directors
and executive officers of Citizens will execute and deliver to Premier an
agreement, the form of which is attached hereto as Exhibit "B," pursuant to
----------
which each of them agrees (1) to recommend to Citizens' shareholders approval of
the Merger, (ii) to vote the capital stock of Citizens owned or controlled by
them in favor of the Merger, (iii) to transfer or assign shares of Premier Stock
received by them in connection with the Merger only in compliance with the 1933
Act, applicable state securities laws and the rules and regulations
4
<PAGE>
promulgated under either and (iv) not to sell, transfer or pledge shares of
Citizens' Common Stock or sell Premier Stock received by them in connection with
the Merger until after Premier's publication of at least thirty (30) days of
post-merger combined operations.
3.10 PRESS RELEASES. Prior to the Effective Date, Citizens and Premier
--------------
shall agree with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
3.10 shall be deemed to prohibit any party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such party's disclosure
obligations imposed by law.
3.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Date,
-------------------------------
Premier or any affiliate of Premier (collectively, the "Premier Group") shall
provide generally to officers, employees and former employees of Citizens who
continue employment with the Premier Group employee benefits on terms and
conditions which, when taken as a whole, are substantially similar to those then
currently provided by the Premier Group to its other similarly situated
officers, employees and former employees. For purposes of eligibility to
participate and any vesting determinations in connection with the provision of
any such employee benefits, service with Citizens prior to the Effective Date
shall be counted. The Premier Group shall also honor in accordance with their
terms all employment, severance, consulting, option and other contracts of a
compensatory nature to the extent disclosed in Section 4.2.3 of the Citizens
Disclosure Memorandum between Citizens and any current or former director,
officer or employee thereof. No other contracts of a compensatory nature to the
extent disclosed in the Citizens Disclosure Memorandum between Citizens and any
current or former director, officer or employee thereof and no other contracts
of the types described that are not so disclosed shall be deemed to be assumed
by the Premier Group by reason of this Section 3.11.
3.12 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK.
----------------------------------------------
(a) All rights with respect to Citizens Common Stock pursuant to stock
options ("Citizens Options") granted under the Citizens Stock Plans, whether or
not exercisable, shall be converted into and become rights with respect to
Premier Common Stock, and the Surviving Corporation shall assume each Citizens
Option, in accordance with the terms of the Citizens Stock Plan and stock option
agreement by which it is evidenced. From and after the Effective Date, (i) each
Citizens Option assumed by the Surviving Corporation may be exercised solely for
shares of Premier Common Stock, (ii) the number of shares of Premier Common
Stock subject to such Citizens Option shall be equal to the number of Citizens
Common Stock multiplied by the Exchange Ratio as defined in the Merger Agreement
attached hereto as Exhibit "A", and (iii) the per share exercise price under
----------
each such Citizens Option shall be adjusted to reflect the Exchange Ratio. It
is intended that the foregoing assumption shall be undertaken in a manner that
will not constitute a "modification" as defined in Section 424 of the Internal
Revenue Code, as to any stock option which is an "incentive stock option."
Citizens and Premier agree to take all necessary steps to effect the provisions
of this Section 3.12.
5
<PAGE>
(b) All restrictions or limitations on transfer with respect to
Citizens Common Stock awarded under the Citizens Stock Plans or any other plan,
program or arrangement of Citizens to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program or arrangement, shall remain in full force and
effect with respect to shares of Surviving Corporation Common Stock into which
such restricted stock is converted pursuant to this Agreement.
(c) Notwithstanding the foregoing provisions of this Section 3.12,
Premier may at its election substitute as of the Effective Date stock options
under the Premier Bancshares, Inc. 1997 Stock Option Plan (the "Premier Stock
Option Plan") for all or a part of the Citizens Options, subject to the
following conditions: (i) the requirements of 3.12(a) and (b) shall be met; (ii)
such substitution shall not constitute a modification, extension or renewal of
any of the Citizens Options which are incentive stock options; (iii) the
substituted options shall continue in effect on substantially the same terms and
conditions as contained in the Citizens Stock Option Plan or other document
granting the Citizens Options; and (iv) each grant of a substitute option to any
individual who shall be deemed subject to Section 16 of the Securities Exchange
Act of 1934 shall have been specifically approved in advance by the full Board
of Directors of Premier or by a committee consisting solely of "non-employee"
directors as defined in Rule 16b-3. As soon as practicable following the
Effective Date, Premier shall deliver to the participants receiving substitute
options under the Premier Stock Option Plan an appropriate notice setting forth
such participant's rights pursuant thereto. Premier has reserved under the
Premier Stock Option Plan adequate shares of Premier Common Stock for delivery
upon exercise of any such substituted options.
3.13 OFFICERS AND DIRECTORS. The officers and directors of the Surviving
----------------------
Corporation from and after the Effective Date shall consist of the officers and
directors of the Surviving Corporation on the date hereof, provided however that
Thomas J. Martin shall be elected to the Board of Directors of Premier after the
Effective Date. Mr. Martin shall also be appointed President of the East Metro
Division of Premier Bank. At the Effective Date, Premier Bank shall enter into
an amendment to the employment agreement with Thomas J. Martin in substantially
the form attached hereto as Exhibit "C."
----------
3.14 MERGER OF PREMIER BANK AND CITIZENS BANK. Contemporaneously with the
----------------------------------------
Closing or as soon as practicable thereafter, Citizens Bank shall be merged with
and into Premier Bank with Premier Bank being the Surviving Bank.
3.15 ACCOUNTING AND TAX TREATMENT. Each of the parties undertakes and
----------------------------
agrees to cause the Merger to qualify, and to take no action which would cause
the Merger not to qualify, for treatment as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended for
federal income tax purposes. Subject to the termination rights of the parties
pursuant to Section 11.6, each of the parties further undertakes and agrees to
cause the Merger to be eligible, and to take no action which would cause the
Merger not to be eligible, to be accounted for as a "pooling of interests."
6
<PAGE>
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF CITIZENS
------------------------------------------
As an inducement to Premier to enter into this Agreement and to consummate
the transactions contemplated hereby, Citizens represents, warrants, covenants
and agrees as follows:
4.1 CITIZENS DISCLOSURE MEMORANDUM. On or before June 27, 1997, Citizens
will deliver to Premier a final disclosure memorandum (the "Citizens Disclosure
Memorandum") containing certain information regarding Citizens as indicated at
various places in this Agreement. All information set forth in the Citizens
Disclosure Memorandum or in documents incorporated by reference in the Citizens
Disclosure Memorandum is true, correct and complete, does not omit to state any
fact necessary in order to make the statements therein not misleading, and shall
be deemed for all purposes of this Agreement to constitute part of the
representations and warranties of Citizens under this Article IV. The
information contained in the Citizens Disclosure Memorandum shall be deemed to
be part of and qualify all representations and warranties contained in this
Article IV and the covenants in Article V to the extent applicable. All
information in each of the documents and other writings furnished to Premier
pursuant to this Agreement or the Citizens Disclosure Memorandum is or will be
true, correct and complete and does not and will not omit to state any fact
necessary in order to make the statements therein not misleading. Citizens
shall promptly provide Premier with written notification of any event,
occurrence or other information necessary to maintain the Citizens Disclosure
Memorandum and all other documents and writings furnished to Premier pursuant to
this Agreement as true, correct and complete in all material respects at all
times prior to and including the Closing.
4.2 CORPORATE AND FINANCIAL.
-----------------------
4.2.1 AUTHORITY. Subject to the approval of various state and
---------
federal regulators and Citizens' shareholders, the execution, delivery and
performance of this Agreement and the other transactions contemplated or
required in connection herewith will not, with or without the giving of notice
or the passage of time, or both, (a) violate any provision of federal or state
law applicable to Citizens, the violation of which could be reasonably expected
to have a material adverse effect on the business, operations, properties,
assets, financial condition or prospects of Citizens; (b) violate any provision
of the Articles of Incorporation or bylaws of Citizens; (c) conflict with or
result in a breach of any provision of, or termination of, or constitute a
default under any instrument, license, agreement, or commitment to which
Citizens is a party, which, singly or in the aggregate, could reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets, financial condition or prospects of Citizens; or (d)
constitute a violation of any order, judgment or decree to which Citizens is a
party, or by which Citizens or any of its assets or properties are bound.
Assuming this Agreement constitutes the valid and binding obligation of Premier,
this Agreement constitutes the valid and binding obligation of Citizens, and is
enforceable in accordance with its terms, except as limited by laws affecting
creditors' rights generally and by the discretion of courts to compel specific
performance.
7
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4.2.2 CORPORATE STATUS. Citizens is a business corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Georgia and has no direct or indirect subsidiaries other than Citizens Bank.
Citizens Bank is a banking corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. Citizens and Citizens
Bank have all of the requisite corporate power and authority and are entitled to
own or lease their respective properties and assets and to carry on their
respective businesses as and in the places where such properties or assets are
now owned, leased or operated and such businesses are now conducted.
4.2.3 CAPITAL STRUCTURE.
-----------------
(a) Citizens has an authorized capital stock consisting of 10,000,000
shares, $10.00 par value of common stock, of which 242,350 shares of common
stock are issued and outstanding as of the date hereof and up to 27,200 shares
are issuable upon the exercise of stock options. Citizens Bank has an
authorized capital stock consisting solely of 1,000,000 shares of Common Stock,
par value $10 ("Citizens Bank Stock"), of which 250,000 shares are issued and
outstanding as of the date hereof. All of the outstanding shares of Citizens
Stock and Citizens Bank Stock are duly and validly issued, fully paid and non-
assessable and were offered, issued and sold in compliance with all applicable
federal and state securities laws. No person has any right of rescission or
claim for damages under federal or state securities laws with respect to the
issuance of any shares of Citizens Stock or Citizens Bank Stock previously
issued. None of the shares of Citizens Stock or Citizens Bank Stock has been
issued in violation of any preemptive or other rights of its shareholders. All
of the issued and outstanding shares of Citizens Bank Stock are owned by
Citizens.
(b) Except as set forth in the Citizens Disclosure Memorandum,
Citizens does not have outstanding any securities which are either by their
terms or by contract convertible or exchangeable into capital stock of Citizens,
or any other securities or debt, of Citizens, or any preemptive or similar
rights to subscribe for or to purchase, or any options or warrants or agreements
or understandings for the purchase or the issuance (contingent or otherwise) of,
or any calls, commitments or claims of any character relating to, its capital
stock or securities convertible into its capital stock. Citizens is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire, or to register, any shares of its capital stock.
(c) There is no agreement, arrangement or understanding to which
Citizens is a party restricting or otherwise relating to the transfer of any
shares of capital stock of Citizens.
(d) All shares of common stock or other capital stock, or any other
securities or debt, of Citizens, which have been purchased or redeemed by
Citizens have been purchased or redeemed in accordance with all applicable
federal, state and local laws, rules, and regulations, including, without
limitation, all federal and state securities laws and rules and regulations of
any securities exchange or system on which such stock, securities or debt are,
or at such time were, traded, and no such purchase or redemption has resulted or
will, with the giving of notice or lapse of time, or both, result in a default
or acceleration of the maturity of, or otherwise modify, any
8
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agreement, note, mortgage, bond, security agreement, loan agreement or other
contract or commitment of Citizens.
4.2.4 CORPORATE RECORDS. The stock records and minute books of
-----------------
Citizens, whether heretofore or hereafter furnished or made available to Premier
by Citizens, (a) fully and accurately reflect all issuances, transfers and
redemptions of the Common Stock, (b) correctly show the record addresses and the
number of shares of such stock issued and outstanding on the date hereof held by
the shareholders of Citizens, (c) correctly show all corporate action taken by
the directors and shareholders of Citizens (including actions taken by consent
without a meeting) and (d) contain true and correct copies or originals of the
respective Articles of Incorporation and all amendments thereto, bylaws as
amended and currently in force, and the minutes of all meetings or consent
actions of its directors and shareholders. No resolutions, regulations or
bylaws have been passed, enacted, consented to or adopted by such directors or
shareholders except those contained in the minute books. All corporate records
have been maintained in accordance with all applicable statutory requirements
and are complete and accurate.
4.2.5 TAX RETURNS; TAXES.
------------------
(a) Citizens has duly filed or will file when due (i) all required
federal and state tax returns and reports, and (ii) all required returns and
reports of other governmental units having jurisdiction with respect to taxes
imposed upon its income, properties, revenues, franchises, operations or other
assets or taxes imposed which might create a lien or encumbrance on any of such
assets or affect adversely its business or operations. Such returns or reports
are, and when filed will be, true, complete and correct, and Citizens has paid,
or will pay with respect to returns or reports not yet filed because not yet
due, to the extent such taxes or other governmental charges have become due, all
taxes and other governmental charges set forth in such returns or reports. All
federal, state and local taxes and other governmental charges paid or payable by
Citizens have been paid, or have been accrued or reserved on its books in
accordance with generally accepted accounting principles ("GAAP") applied on a
basis consistent with prior periods. Adequate reserves for the payment of taxes
have been established on the books of Citizens for all periods through the date
hereof, whether or not due and payable and whether or not disputed. Until the
Closing Date, Citizens shall continue to reserve sufficient funds for the
payment of expected tax liabilities in accordance with GAAP applied on a basis
consistent with prior periods. Citizens has not received any notice of a tax
deficiency or assessment of additional taxes of any kind and, to the knowledge
of the officers of Citizens (collectively, "Citizens Management"), there is no
threatened claim against Citizens, or any basis for any such claim, for payment
of any additional federal, state, local or foreign taxes for any period prior to
the date of this Agreement in excess of the accruals or reserves with respect to
any such claim shown in the 1996 Citizens Financial Statements described in
Section 4.2.6 below or disclosed in the notes with respect thereto. There are
no waivers or agreements by Citizens for the extension of time for the
assessment of any taxes. The federal income tax returns of Citizens have not
been examined by the Internal Revenue Service for any period since January 1,
1993.
9
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(b) Except as set forth in the Citizens Disclosure Memorandum, proper
and accurate amounts have been withheld by Citizens from its employees for all
periods in full and complete compliance with the tax withholding provisions of
applicable federal, state and local tax laws, and proper and accurate federal,
state and local tax returns have been filed by Citizens for all periods for
which returns were due with respect to withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full.
4.2.6 FINANCIAL STATEMENTS. Citizens has delivered to Premier
--------------------
true, correct and complete copies of (i) the audited financial statements of
Citizens for the years ended December 31, 1994, 1995 and 1996, including balance
sheets, statements of income, statements of shareholders' equity, statements of
cash flows and related notes (the audited financial statements for the year
ended December 31, 1996 being referred to as the "1996 Citizens Financial
Statements") and (ii) unaudited financial statements of Citizens for the period
ended March 31, 1997, including a balance sheet, statement of income and related
notes. All of such financial statements have been prepared in accordance with
GAAP consistently applied and present fairly the assets, liabilities and
financial condition of Citizens as of the dates indicated therein and the
results of its operations for the respective periods then ended.
4.2.7 REGULATORY REPORTS. Citizens has made available to Premier
------------------
for review and inspection the year-end Report of Condition and year-end Report
of Income and Dividends as filed by Citizens Bank with the Federal Deposit
Insurance Corporation (the "FDIC") for each of the three years ended December
31, 1996, 1995 and 1994, together with all such other reports filed for the same
three-year period with the FDIC, and the Department of Banking and Finance of
the State of Georgia (the "Department of Banking"), and other applicable
regulatory agencies and the Form F.R. Y-6 filed by Citizens with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") for each of the
three years ended December 31, 1996, 1995 and 1994 (collectively, the "Citizens
Reports"). All of the Citizens Reports, as amended, have been prepared in
accordance with applicable rules and regulations applied on a basis consistent
with prior periods and contain in all material respects all information required
to be presented therein in accordance with such rules and regulations.
4.2.8 ACCOUNTS. Citizens has made available to Premier a list of
--------
each and every bank and other institution in which Citizens maintains an account
or, safety deposit box, the account numbers, and the names of all persons who
are presently authorized to draw thereon, have access thereto or give
instructions regarding distribution of funds or assets therein.
4.2.9 NOTES AND OBLIGATIONS.
---------------------
(a) Except as set forth in the Citizens Disclosure Memorandum or as
provided for in the loss reserve described in subsection (b) below, all notes
receivable or other obligations owned by Citizens or due to it shown in the 1996
Citizens Financial Statements and any such notes receivable and obligations on
the date hereof and on the Closing Date are and will be genuine, legal, valid
and collectible obligations of the respective makers thereof and are not and
will not be subject to any
10
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offset or counterclaim. Except as set forth in subsection (b) below, all such
notes and obligations are evidenced by written agreements, true and correct
copies of which will be made available to Premier for examination prior to the
Closing Date. All such notes and obligations were entered into by Citizens in
the ordinary course of its business and in compliance with all applicable laws
and regulations.
(b) Citizens has established a loss reserve in the 1996 Citizens
Financial Statements and as of the date of this Agreement and will establish a
loan loss reserve as of the Closing Date which is adequate within the meaning of
GAAP and applicable regulatory requirements or guidelines to cover anticipated
losses which might result from such items as the insolvency or default of
borrowers or obligors on such loans or obligations, defects in the notes or
evidences of obligation (including losses of original notes or instruments),
offsets or counterclaims properly chargeable to such reserve, or the
availability of legal or equitable defenses which might preclude or limit the
ability of Citizens to enforce the note or obligation, and the representations
set forth in subsection (a) above are qualified in their entirety by the
aggregate of such loss reserve. Except as described in the Citizens Disclosure
Memorandum, at the Closing Date, the ratio of the loss reserve, established on
such date in good faith by Citizens, to total loans outstanding at such time
shall not exceed the ratio of the loan loss reserve to the total loans
outstanding as reflected in the 1996 Citizens Financial Statements, established
on or before such date in good faith by Citizens, in accordance with GAAP.
4.2.10 LIABILITIES. Citizens has no debt, liability or obligation
-----------
of any kind required to be shown pursuant to GAAP on the consolidated balance
sheet of Citizens, whether accrued, absolute, known or unknown, contingent or
otherwise, including, but not limited to (a) liability or obligation on account
of any federal, state or local taxes or penalty, interest or fines with respect
to such taxes, (b) liability arising from or by virtue of the distribution,
delivery or other transfer or disposition of goods, personal property or
services of any type, kind or variety, (c) unfunded liabilities with respect to
any pension, profit sharing or employee stock ownership plan, whether operated
by Citizens or any other entity covering employees of Citizens, or (d)
environmental liabilities, except (i) those reflected in the 1996 Citizens
Financial Statements, and (ii) as disclosed in the Citizens Disclosure
Memorandum.
4.2.11 ABSENCE OF CHANGES. Except as specifically provided for in
------------------
this Agreement or specifically set forth in the Citizens Disclosure Memorandum,
since December 31, 1996:
(a) there has been no change in the business, assets, liabilities,
results of operations or financial condition of Citizens, or in any of its
relationships with customers, employees, lessors or others, other than changes
in the ordinary course of business, none of which individually or in the
aggregate has had, or which the Citizens Management believes may have, a
material adverse effect on such businesses or properties;
(b) there has been no material damage, destruction or loss to the
assets, properties or business of Citizens, whether or not covered by insurance,
which has had, or which the Citizens Management believes may have, an adverse
effect thereon;
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(c) the business of Citizens has been operated in the ordinary course,
and not otherwise;
(d) the properties and assets of Citizens used in its business have
been maintained in good order, repair and condition, ordinary wear and tear
excepted;
(e) the books, accounts and records of Citizens have been maintained
in the usual, regular and ordinary manner;
(f) there has been no declaration, setting aside or payment of any
dividend or other distribution on or in respect of the capital stock of
Citizens;
(g) there has been no increase in the compensation or in the rate of
compensation or commissions payable or to become payable by Citizens to any
director or executive officer, or to any employee earning $35,000 or more per
annum, or any general increase in the compensation or in the rate of
compensation payable to employees of Citizens earning less than $35,000 per
annum ("general increase" for the purpose hereof meaning any increase generally
applicable to a class or group of employees, but not including increases granted
to individual employees for merit, length of service, change in position or
responsibility or other reasons applicable to specific employees and not
generally to a class or group thereof), or any director, officer, or employee
hired at a salary in excess of $35,000 per annum, or any increase in any payment
of or commitment to pay any bonus, profit sharing or other extraordinary
compensation to any employee;
(h) there has been no change in the articles of incorporation or
bylaws of Citizens;
(i) there has been no labor dispute, unfair labor practice charge or
employment discrimination charge, nor, to the knowledge of Citizens, any
organizational effort by any union, or institution or threatened institution, of
any effort, complaint or other proceeding in connection therewith, involving
Citizens, or affecting its operations;
(j) there has been no issuance, sale, repurchase, acquisition, or
redemption by Citizens of any of its capital stock, bonds, notes, debt or other
securities, and there has been no modification or amendment of the rights of the
holders of any outstanding capital stock, bonds, notes, debt or other securities
thereof,
(k) there has been no mortgage, lien or other encumbrance or security
interest (other than liens for current taxes not yet due or purchase money
security interests arising in the ordinary course of business) created on or in
(including without limitation, any deposit for security consisting of) any asset
or assets of Citizens or assumed by it with respect to any asset or assets;
(l) there has been no indebtedness or other liability or obligation
(whether absolute, accrued, contingent or otherwise) incurred by Citizens which
would be required to be
12
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reflected on a balance sheet of Citizens prepared as of the date hereof in
accordance with GAAP applied on a consistent basis, except as incurred in the
ordinary course of business;
(m) no obligation or liability of Citizens has been discharged or
satisfied, other than in the ordinary course of business;
(n) there have been no sales, transfers or other dispositions of any
asset or assets of Citizens, other than sales in the ordinary course of
business;
(o) there has been no amendment, termination or waiver of any right of
Citizens under any contract or agreement or governmental license, permit or
permission which has had or may have an adverse effect on its business or
properties; and
(p) Citizens has not taken any action or failed to take any action
prior to the date of this Agreement, which action or failure, if taken after the
date of this Agreement, would represent or result in a material breach or
violation of any of the covenants and agreements of Citizens provided in this
Agreement.
4.2.12 LITIGATION AND PROCEEDINGS. Except as set forth on the
--------------------------
Citizens Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of Citizens, threatened against, by or affecting
Citizens, or any officer, director, employee or agent in such person's capacity
as an officer, director, employee or agent of Citizens or relating to the
business or affairs of Citizens, in any court or before any arbitrator or
governmental agency, and no judgment, award, order or decree of any nature has
been rendered against or with respect thereto by any agency, arbitrator, court,
commission or other authority, nor does Citizens have any unasserted contingent
liabilities which might have an adverse effect on its assets or on the operation
of its businesses or which might prevent or impede the consummation of the
transactions contemplated by this Agreement.
4.2.13 PROXY MATERIALS. Neither the Proxy Materials nor other
---------------
materials furnished by Citizens to the Citizens' shareholders in connection with
the transactions contemplated by this Agreement or the Merger Agreement, or in
any amendments thereof or supplements thereto, will, at the times such documents
are distributed to the holders of shares of Citizens Stock and through the
acquisition of shares of Citizens Stock by Premier pursuant to the Merger,
contain with respect to Citizens any untrue statement of a material fact or omit
to state any information required to be stated therein or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they are made with respect to Citizens, not
misleading.
4.3 BUSINESS OPERATIONS.
-------------------
4.3.1 CUSTOMERS. Citizens has no knowledge of any presently
---------
existing facts which could reasonably be expected to result in the loss of any
material borrower or depositor or in Citizens'
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inability to collect amounts due therefrom or to return funds deposited thereby,
except as set forth on the Citizens Disclosure Memorandum.
4.3.2 PERMITS; COMPLIANCE WITH LAW.
----------------------------
(a) Citizens has all permits, licenses, approvals, authorizations and
registrations under all federal, state, local and foreign laws required for
Citizens to own, lease or operate its Assets and to carry on its business as
presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no suspension
or cancellation of any of them is pending or, to the knowledge of Citizens,
threatened.
(b) Citizens has complied with all laws, regulations, and orders
applicable to it or its business, except for any non-compliance which would not
have a material adverse effect on Citizens. The Citizens Disclosure Memorandum
contains a list of any known violations of such laws, regulations, ordinances or
rules by any present officer, director, or employee of Citizens which occurred
since December 31, 1991, and which resulted in any order, proceeding, judgment
or decree which would be required to be disclosed pursuant to Item 401(f) of
Regulation S-K promulgated by the SEC if Citizens had been subject to the
reporting requirements under the 1933 Act or the Securities Exchange Act of
1934, as amended. No past violation of any such law, regulation, ordinance or
rule has occurred which could impair the right or ability of Citizens to conduct
its business.
(c) Except as set forth in the Citizens Disclosure Memorandum, no
notice or warning from any governmental authority with respect to any failure or
alleged failure of Citizens to comply in any respect with any law, regulation or
order has been received, nor is any such notice or warning proposed or, to the
knowledge of Citizens, threatened.
4.3.3 ENVIRONMENTAL.
-------------
(a) Except as set forth in the Citizens Disclosure Memorandum,
Citizens
(i) has not caused or permitted, and has no knowledge of any
claim regarding the environmental condition of the property or the
generation, manufacture, use, or handling or the release or presence
of, any hazardous substances or hazardous wastes, including petroleum,
on, in, under or from any properties or facilities currently owned or
leased by Citizens or adjacent to any properties so owned or leased;
and
(ii) has complied in all material respects with, and has kept all
records and made all filings or reports required by, and is otherwise
in compliance with all applicable federal, state and local laws,
regulations, orders, permits and licenses relating to the generation,
treatment, manufacture, use, handling, release or presence of any
hazardous substances or hazardous wastes, including petroleum and
asbestos, on, in, under or from any properties or facilities currently
owned or leased by Citizens.
14
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(b) Except as set forth in the Citizens Disclosure Memorandum, neither
Citizens nor any of its officers, directors, employees or agents, in the course
of such individual's employment by Citizens, has given advice with respect to,
or participated in any respect in, the management or operation of any entity or
concern whose business relates in any way to the generation, storage, handling,
disposal, transfer, production, use or processing of hazardous substances or
hazardous wastes, including petroleum, nor to Citizens' knowledge has Citizens
foreclosed on any property on which there is a threatened release of any
hazardous substances or hazardous wastes, including petroleum, or on which there
has been such a release and full remediation has not been completed, or any
property on which contained (non-released) hazardous substances or hazardous
wastes, including petroleum, are or were located.
(c) Except as set forth in the Citizens Disclosure Memorandum, neither
Citizens, nor any of its officers, directors, employees, or agents, is aware of,
has been told of, or has observed, the presence of any hazardous substance or
hazardous wastes, including petroleum, on, in, under, or around property on
which Citizens holds a legal or security interest, in violation of, or creating
liability under, federal, state, or local environmental statutes, regulations,
or ordinances.
(d) The term hazardous substances or hazardous waste does not include
those substances which are normally and reasonably used in connection with the
occupancy or operation of office buildings (such as cleaning fluids, and
supplies normally used in the day to day operation of business offices).
4.3.4 INSURANCE. Citizens has made available to Premier a
---------
complete list and description (including the expiration date, premium amount and
coverage thereunder) of all policies of insurance and bonds presently maintained
by, or providing coverage for, Citizens or any of its officers, directors and
employees, all of which are, and will be maintained through the Closing Date, in
full force and effect, together with a complete list of all pending claims under
any of such policies or bonds. All terms, obligations and provisions of each of
such policies and bonds have been complied with, all premiums due thereon have
been paid, and no notice of cancellation with respect thereto has been received.
Except as set forth in the Citizens Disclosure Memorandum, such policies and
bonds provide adequate coverage to insure the properties and businesses of
Citizens and the activities of its officers, directors and employees against
such risks and in such amounts as are prudent and customary. Citizens will not
as of the Closing Date have any liability for premiums or for retrospective
premium adjustments for any period prior to the Closing Date. Citizens has
heretofore made, or will hereafter make, available to Premier a true, correct
and complete copy of each insurance policy and bond in effect since January 1,
1991 with respect to the business and affairs of Citizens.
4.4 PROPERTIES AND ASSETS.
---------------------
4.4.1 CONTRACTS AND COMMITMENTS. The Citizens Disclosure
-------------------------
Memorandum contains a list identifying and briefly describing all written
contracts, purchase orders, agreements, security deeds, guaranties or
commitments to which Citizens is a party or by which it may be bound involving
the payment or receipt, actual or contingent, of more than $25,000 or having a
term or
15
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requiring performance over a period of more than ninety (90) days. Each such
contract, agreement, guaranty and commitment of Citizens is in full force and
effect and is valid and enforceable in accordance with its terms, and
constitutes a legal and binding obligation of the respective parties thereto and
is not the subject of any notice of default, termination, partial termination or
of any ongoing, pending, completed or threatened investigation, inquiry or other
proceeding or action that may give rise to any notice of default, termination or
partial termination. Citizens has complied in all material respects with the
provisions of such contracts, agreements, guaranties and commitments. A true and
complete copy of each such document has been or will be made available to
Premier for examination.
4.4.2 LICENSES; INTELLECTUAL PROPERTY. Citizens has all patents,
-------------------------------
trademarks, trade names, service marks, copyrights, trade secrets and know-how
reasonably necessary to conduct its business as presently conducted and, except
as described in the Citizens Disclosure Memorandum, Citizens is not a party,
either as licensor or licensee, to any agreement for any patent, process,
trademark, service mark, trade name, copyright, trade secret or other
confidential information and there are no rights of third parties with respect
to any trademark, service mark, trade secrets, confidential information, trade
name, patent, patent application, copyright, invention, device or process owned
or used by Citizens or presently expected to be used by either of them in the
future. All patents, copyrights, trademarks, service marks, trade names, and
applications therefor or registrations thereof, owned or used by Citizens, are
listed in the Citizens Disclosure Memorandum. Citizens has complied with all
applicable laws relating to the filing or registration of "fictitious names" or
trade names.
4.4.3 PERSONAL PROPERTY. Citizens has good and marketable title
-----------------
to all of its personalty, tangible and intangible, reflected in the 1996
Citizens Financial Statements (except as since sold or otherwise disposed of by
it in the ordinary course of business), free and clear of all encumbrances,
liens or charges of any kind or character, except (i) those referred to in the
notes to the 1996 Citizens Financial Statements as securing specified
liabilities (with respect to which no default exists or, to the knowledge of
Citizens, is claimed to exist), (ii) those described in the Citizens Disclosure
Memorandum and (iii) liens for taxes not due and payable.
4.4.4 CITIZENS LEASES.
---------------
(a) All leases (the "Citizens Leases") pursuant to which Citizens is
lessor or lessee of any real or personal property (such property, the "Leased
Property") are valid and enforceable in accordance with their terms; there is
not under any of the Citizens Leases any default or, to the knowledge of
Citizens, any claimed default by Citizens, or event of default or event which
with notice or lapse of time, or both, would constitute a default by Citizens
and in respect of which adequate steps have not been taken to prevent a default
on its part from occurring.
(b) The copies of the Citizens Leases heretofore or hereafter
furnished or made available by Citizens to Premier are true, correct and
complete, and the Citizens Leases have not been
16
<PAGE>
modified in any respect other than pursuant to amendments, copies of which have
been concurrently delivered or made available to Premier, and are in full force
and effect in accordance with their terms.
(c) Except as set forth in the Citizens Disclosure Memorandum, there
are no contractual obligations, agreements in principle or present plans for
Citizens to enter into new leases of real property or to renew or amend existing
Citizens Leases prior to the Closing Date.
4.4.5 REAL PROPERTY.
-------------
(a) Citizens does not own any interest in any real property (other
than as lessee) except as set forth in the Citizens Disclosure Memorandum (such
properties being referred to herein as "Citizens Realty"). Except as disclosed
in the Citizens Disclosure Memorandum, Citizens has good title to the Citizens
Realty and the titles to the Citizens Realty are covered by title insurance
policies providing coverage in the amount of the original purchase price, true,
correct and complete copies of which have been or will be furnished to Premier.
Citizens has not encumbered the Citizens Realty since the effective dates of the
respective title insurance policies.
(b) Except as set forth in the Citizens Disclosure Memorandum, the
interests of Citizens in the Citizens Realty and in and under each of the
Citizens Leases are free and clear of any and all liens and encumbrances and are
subject to no present claim, contest, dispute, action or, to the knowledge of
Citizens, threatened action at law or in equity.
(c) The present and past use and operations of, and improvements upon,
the Citizens Realty and all real properties leased by Citizens (the "Citizens
Leased Real Properties") are in compliance in all material respects with all
applicable building, fire, zoning and other applicable laws, ordinances and
regulations and with all deed restrictions of record, no notice of any violation
or alleged violation thereof has been received, and to the knowledge of Citizens
there are no proposed changes therein that would affect the Citizens Realty, the
Citizens Leased Real Properties or their uses.
(d) Except as set forth in the Citizens Disclosure Memorandum, no rent
has been paid in advance and no security deposit has been paid by, nor is any
brokerage commission payable by or to, Citizens with respect to any Lease
pursuant to which it is lessor or lessee.
(e) Citizens is not aware of any proposed or pending change in the
zoning of, or of any proposed or pending condemnation proceeding with respect
to, any of the Citizens Realty or the Citizens Leased Real Properties which may
adversely affect the Citizens Realty or the Citizens Leased Real Properties or
the current or currently contemplated use thereof.
(f) The buildings and structures owned, leased or used by Citizens
are, taken as a whole, in good operating order (except for ordinary wear and
tear), usable in the ordinary course of business, and are sufficient and
adequate to carry on the business and affairs of Citizens.
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4.5 EMPLOYEES AND BENEFITS.
----------------------
4.5.1 DIRECTORS OR OFFICERS OF OTHER CORPORATIONS. Except as set
-------------------------------------------
forth in the Citizens Disclosure Memorandum, no director, officer, or employee
of Citizens serves, or in the past five years has served, as a director or
officer of any other corporation on behalf of or as a designee of Citizens or
any of its subsidiaries.
4.5.2 EMPLOYEE BENEFITS.
-----------------
(a) Except as set forth in the Citizens Disclosure Memorandum,
Citizens does not provide and is not obligated to provide, directly or
indirectly, any benefits for employees, including, without limitation, any
pension, profit sharing, stock option, retirement bonus, hospitalization,
medical, insurance, vacation or other employee benefits under any practice,
agreement or understanding.
(b) The Citizens Disclosure Memorandum lists separately any employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (collectively, "ERISA Plans").
True, correct and complete copies of all ERISA Plans and, to the extent
applicable, all related trust agreements, insurance contracts, summary plan
descriptions, Internal Revenue Service determination letters and filings, the
past three years of actuarial reports and valuations, annual reports and Form
5500 filings (including attachments), and any other related documents requested
by Premier or its counsel have been, or prior to the Closing Date will be, made
available to Premier.
(c) Citizens is not currently and has never been in the past required
to contribute to a multi-employer plan as defined in Section 3(37)(A) of ERISA.
Citizens does not maintain or contribute to, nor within the past six years has
it maintained or contributed to, an employee pension benefit plan as defined in
Section 3(2) of ERISA that is or was subject to Title IV of ERISA.
(d) Each ERISA Plan has been operated and administered in all material
respects in accordance with, and has been amended to comply with (unless such
amendment is not yet required), all applicable laws, rules and regulations,
including, without limitation, ERISA, the Internal Revenue Code of 1986, as
amended ("Code"), and the regulations issued under ERISA and the Code. With
respect to each ERISA Plan, other than routine claims for benefits submitted in
the ordinary course of the benefits process, no litigation or administrative or
other proceeding is pending or, to the knowledge of Citizens, threatened
involving such ERISA Plan or any of its fiduciaries. With respect to each ERISA
Plan, neither Citizens nor any of its directors, officers, employees or agents,
nor to Citizens' knowledge, any "party in interest" or "disqualified person" (as
such terms are defined in Section 3(14) of ERISA and Section 4975 of the Code)
has been engaged in or been a party to any transaction relating to the ERISA
Plan which would constitute a breach of fiduciary duty under ERISA or a
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code), unless such transaction is specifically permitted
under Sections 407 or 408 of ERISA, Section 4975 of the Code or a class or
administrative exemption issued by the Department
18
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of Labor. Each ERISA Plan that is a group health plan within the meaning of
Section 607(l) of ERISA and Section 4980B of the Code is in compliance with the
continuation coverage requirements of Section 501 of ERISA and Section 4980B of
the Code.
(e) Of the ERISA Plans, the "employee pension benefit plans" within
the meaning of Section 3(2) of ERISA (collectively, the "Employee Pension
Benefit Plans") are separately identified on the Citizens Disclosure Memorandum.
With respect to each Employee Pension Benefit Plan, except as set forth on the
Citizens Disclosure Memorandum: (i) such Employee Pension Benefit Plan
constitutes a qualified plan within the meaning of Section 401(a) of the Code
and the trust is exempt from federal income tax under Section 501(a) of the
Code; (ii) all contributions required by such plan have been made; and (iii) no
termination, partial termination or discontinuance of contributions has occurred
without a determination by the IRS that such action does not affect the tax-
qualified status of such plan.
(f) As of the Closing Date, with respect to each ERISA Plan, Citizens
will have provided adequate reserves, or insurance or qualified trust funds, to
provide for all payments and contributions required, or reasonably expected to
be required, to be made under the provisions of such ERISA Plan or required to
be made under applicable laws, rules and regulations, with respect to any period
prior to the Closing Date to the extent reserves are required under GAAP, based
on an actuarial valuation satisfactory to the actuaries of Citizens representing
a projection of claims expected to be incurred under such ERISA Plan.
(g) Except as set forth in the Citizens Disclosure Memorandum,
Citizens does not provide and has no obligation to provide benefits, including,
without limitation, death, health or medical benefits (whether or not insured)
with respect to current or former employees of Citizens beyond their retirement
or other termination of service with Citizens other than (i) coverage mandated
by applicable law, (ii) benefits under the Employee Pension Benefit Plans, or
(iii) benefits the full cost of which is borne by the current or former employee
or his beneficiary.
(h) Except as set forth in the Citizens Disclosure Memorandum, neither
this Agreement nor any transaction contemplated hereby will (i) entitle any
current or former employee, officer or director of Citizens to severance pay,
unemployment compensation or any similar or other payment, or (ii) accelerate
the time of payment or vesting of, or increase the amount of compensation or
benefits due any such employee, officer or director.
4.5.3 LABOR-RELATED MATTERS. Except as described in the Citizens
---------------------
Disclosure Memorandum, Citizens is not, and has not been, a party to any
collective bargaining agreement or agreement of any kind with any union or labor
organization or to any agreement with any of its employees which is not
terminable at will or upon ninety (90) days notice at the election of, and
without cost or penalty to, Citizens. Citizens has not received at any time in
the past five (5) years, any demand for recognition from any union, and no
attempt has been made, or will have been made as of the Closing Date, to
organize any of its employees. Citizens has complied in all material respects
with all obligations under the National Labor Relations Act, as amended, the Age
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Discrimination in Employment Act, as amended, and all other federal, state and
local labor laws and regulations applicable to employees. There are no unfair
labor practice charges pending or threatened against Citizens, and there are,
and in the past three (3) years there have been, no charges, complaints, claims
or proceedings, no slowdowns or strikes pending or threatened against, or
involving, as the case may be, Citizens with respect to any alleged violation of
any legal duty (including but not limited to any wage and hour claims,
employment discrimination claims or claims arising out of any employment
relationship) by Citizens as to any of its employees or as to any person seeking
employment therefrom, and no such violations exist.
4.5.4 RELATED PARTY TRANSACTIONS. Except for (a) loans and
--------------------------
extensions of credit made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by Citizens with other persons who are not affiliated with
Citizens, and which do not involve more than the normal risk of repayment or
present other unfavorable features, (b) deposits, all of which are on terms and
conditions identical to those made available to all customers of Citizens at the
time such deposits were entered into, and (c) transactions specifically
described in the Citizens Disclosure Memorandum, there are no contracts with or
commitments to present or former five percent (5%) or greater shareholders,
directors, officers, or employees involving the expenditure after December 31,
1991 of more than $60,000 as to any one individual, including with respect to
any business directly or indirectly controlled by any such person, or $100,000
for all such contracts or commitments in the aggregate for all such individuals
(other than contracts or commitments relating to services to be performed by any
officer, director or employee as a currently-employed employee of Citizens).
4.6 OTHER MATTERS.
-------------
4.6.1 REGULATORY REPORTS. Citizens will make available to Premier
------------------
for review and inspection all applications, reports or other documents filed by
it for each of its past three full fiscal years with any regulatory or
governmental agencies. All of such applications, reports and other documents
have been prepared in accordance with applicable rules and regulations of the
regulatory agencies with which they were filed.
4.6.2 APPROVALS, CONSENTS AND FILINGS. Except for the approval of
-------------------------------
the Federal Reserve and the Department of Banking, or as set forth in the
Citizens Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
thereby will (a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, or (b)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Citizens, or any of Citizens' assets.
4.6.3 DEFAULT.
-------
(a) Except for those consents described in or set forth pursuant to
Section 4.6.2 above, neither the execution of this Agreement nor the
consummation of the transactions contemplated herein (i) constitutes a breach of
or default under any contract or commitment to which
20
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Citizens is a party or by which Citizens or its properties or assets are bound,
(ii) does or will result in the creation or imposition of any security interest,
lien, encumbrance, charge, equity or restriction of any nature whatsoever in
favor of any third party upon any assets of Citizens, or (iii) constitutes an
event permitting termination of any agreement or the acceleration of any
indebtedness of Citizens.
(b) Citizens is not in default under its articles of incorporation or
bylaws or under any term or provision of any security deed, mortgage, indenture
or security agreement or of any other contract or instrument to which Citizens
is a party or by which it or any of its property is bound.
4.6.4 Representations and Warranties. No representation or
------------------------------
warranty contained in this Article IV or in any written statement delivered by
or at the direction of Citizens pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of
all documents that have been or will be furnished to Premier in connection with
this Agreement or pursuant hereto are or shall be true, correct and complete.
ARTICLE V
---------
CONDUCT OF BUSINESS OF CITIZENS PENDING CLOSING
-----------------------------------------------
Except as expressly otherwise provided herein, Citizens covenants and
agrees .that, without the prior written consent of Premier, between the date
hereof and the Closing Date:
5.1 CONDUCT OF BUSINESS. Citizens will conduct its business only in the
-------------------
ordinary course, without the creation of any indebtedness for borrowed money
(other than deposit and similar accounts and customary credit arrangements
between banks in the ordinary course of business).
5.2 MAINTENANCE OF PROPERTIES. Citizens will maintain its properties and
-------------------------
assets in good operating condition, ordinary wear and tear excepted.
5.3 INSURANCE. Citizens will maintain and keep in full force and effect
---------
all of the insurance referred to in Section 4.3.4 hereof or other insurance
equivalent thereto in all material respects.
5.4 CAPITAL STRUCTURE. No change will be made in the authorized or issued
-----------------
capital stock or other securities of Citizens, and Citizens will not issue or
grant any right or option to purchase or otherwise acquire any of the capital
stock or other securities of Citizens.
5.5 DIVIDENDS. Except for a dividend in the amount of $.20 per share to
---------
be paid in the third quarter of 1997 and $.20 per share for any quarter
thereafter until the Closing Date, no other dividend, distribution or payment
will be declared or made in respect to the Citizens Stock, and Citizens will
not, directly or indirectly, redeem, purchase or otherwise acquire any of its
capital stock.
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5.6 AMENDMENT OF ARTICLES; CORPORATE EXISTENCE. Citizens will not amend
------------------------------------------
its Articles of Incorporation or bylaws, and Citizens will maintain its
corporate existence and powers.
5.7 NO ACQUISITIONS. Citizens shall not acquire by merging or
---------------
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other entity or division thereof or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to it.
5.8 NO DISPOSITIONS. Citizens will not sell, mortgage, lease, buy or
---------------
otherwise acquire, transfer or dispose of any real property or interest therein
(except for sales in the ordinary course of business) and Citizens will not,
except in the ordinary course of business, sell or transfer, mortgage, pledge,
or subject to any lien, charge or other encumbrance any other tangible or
intangible asset.
5.9 CONTRACTS. Except for renewals of existing contracts in effect as of
---------
the date hereof, or entering into a contract for the purpose of substituting a
vendor under any such existing contract, Citizens will not enter into any
contract of the kind described in Section 4.4.1 hereof
5.10 BOOKS AND RECORDS. The books and records of Citizens will be
-----------------
maintained in the usual, regular and ordinary course.
5.11 ADVICE OF CHANGES. Citizens shall promptly advise Premier orally and
-----------------
in writing of any change or event having, or which the Citizens Management
believes could have, a material adverse effect on the assets, liabilities,
business, operations or financial condition of Citizens.
5.12 INCUR ADDITIONAL DEBT. Citizens shall not incur any debt obligations
---------------------
or other obligations for borrowed money in excess of an aggregate of $100,000
(for Citizens on a consolidated basis) except in the ordinary course of business
of Citizens and Citizens Bank consistent with past practices (which included for
Citizens Bank creation of deposit liabilities, purchase of federal funds,
advances from the Federal Reserve Bank or Federal Home Loan Bank and entry into
and repurchase of agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition on any asset of Citizens or
Citizens Bank of any lien or permit any such lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances, Federal
Home Loan Bank advances, "treasury tax and loan" accounts established in the
ordinary course of business, the satisfaction of legal requirements in the
exercise of trust powers, and Liens in effect as of the date hereof that are
disclosed in the Citizens Disclosure Memorandum).
5.13 ADOPT NEW BENEFIT PLAN. Neither Citizens nor Citizens Bank shall
----------------------
adopt any new employee benefit plan or make any material change in or to any
existing employee benefit plan other than any such change that is required by
law or that, in the opinion of counsel, is necessary or advisable to maintain
the tax qualified status of any such plan.
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5.14 CHANGE IN TAX OR ACCOUNTING METHOD. Neither Citizens nor
----------------------------------
Citizens Bank shall make any significant change in any tax or accounting methods
or systems of internal accounting controls, except as may be appropriate to
conform to changes in tax laws, regulatory accounting requirements or GAAP.
5.15 LITIGATION. Neither Citizens nor Citizens Bank shall commence any
----------
litigation other than in accordance with past practice, settle any litigation
involving any liability of Citizens or Citizens Bank for money damages in excess
of $50,000 or which imposes material restrictions upon the operations of
Citizens or Citizens Bank.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF PREMIER
-----------------------------------------
As an inducement to Citizens to enter into this Agreement and to consummate
the transactions contemplated hereby, Premier represents, warrants, covenants
and agrees as follows:
6.1 PREMIER DISCLOSURE MEMORANDUM. On or before June 27, 1997, Premier
-----------------------------
will deliver to Citizens a final disclosure memorandum (the "Premier Disclosure
Memorandum") containing certain information regarding Premier as indicated at
various places in this Agreement. All information set forth in the Premier
Disclosure Memorandum or in documents incorporated by reference in the Premier
Disclosure Memorandum is true, correct and complete, does not omit to state any
fact necessary in order to make the statements therein not misleading, and shall
be deemed for all purposes of this Agreement to constitute part of the
representations and warranties of Premier under this Article VI. The
information contained in the Premier Disclosure Memorandum shall be deemed to be
part of and qualify all representations and warranties contained in this Article
VI and the covenants in Article VII to the extent applicable. All information
in each of the documents and other writings furnished to Citizens pursuant to
this Agreement or the Premier Disclosure Memorandum is or will be true, correct
and complete and does not and will not omit to state any fact necessary in order
to make the statements therein not misleading. Premier shall promptly provide
Citizens with written notification of any event, occurrence or other information
necessary to maintain the Premier Disclosure Memorandum and all other documents
and writings furnished to Citizens pursuant to this Agreement as true, correct
and complete in all material respects at all times prior to and including the
Closing.
6.2 CORPORATE AND FINANCIAL.
-----------------------
6.2.1 AUTHORITY. Subject to the approval of various state and
---------
federal regulators, the execution, delivery and performance of this Agreement
and the other transactions contemplated or required in connection herewith will
not, with or without the giving of notice or the passage of time, or both, (a)
violate any provision of federal or state law applicable to Premier, the
violation of which could be reasonably expected to have a material adverse
effect on the business, operations,
23
<PAGE>
properties, assets, financial condition or prospects of Premier; (b) violate any
provision of the articles of incorporation or bylaws of Premier; (c) conflict
with or result in a breach of any provision of, or termination of, or constitute
a default under any instrument, license, agreement, or commitment to which
Premier is a party, which, singly or in the aggregate, could reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets, financial condition or prospects of Premier; or (d)
constitute a violation of any order, judgment or decree to which Premier is a
party, or by which Premier or any of its assets or properties are bound.
Assuming this Agreement constitutes the valid and binding obligation of
Citizens, this Agreement constitutes the valid and binding obligation of
Premier, and is enforceable in accordance with its terms, except as limited by
laws affecting creditors' rights generally and by the discretion of courts to
compel specific performance.
6.2.2 CORPORATE STATUS. Premier is a business corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Georgia and has no direct or indirect subsidiaries, which are material to
Premier, other than Premier Bank, a Georgia banking corporation, Central and
Southern Bank of Georgia, a Georgia banking corporation, Premier Bank FSB, a
federally chartered savings bank, Central and Southern Bank of North Georgia,
FSB, a federally chartered savings bank, Premier Lending Corporation, a Georgia
business corporation, and Alliance Finance, Inc., a Georgia business corporation
(collectively, the "Premier Subsidiaries"). Premier Bank and Central and
Southern Bank of Georgia are banking corporations duly organized, validly
existing and in good standing under the laws of the State of Georgia. Premier
Bank FSB and Central and Southern Bank of North Georgia, FSB are savings banks,
duly organized, validly existing and in good standing under the laws of the
United States. Premier Lending Corporation and Alliance Finance, Inc. are
business corporations duly organized, validly existing and in good standing
under the laws of the United States. Premier and the Premier Subsidiaries have
all requisite corporate power and authority and are entitled to own or lease
their respective properties and to carry on their respective businesses in the
places where such properties are now owned, leased or operated and such
businesses are now conducted.
6.2.3 CAPITAL STRUCTURE.
-----------------
(a) Premier has an authorized capital stock consisting solely of
20,000,000 shares of common stock, par value $1.00 per share, of which
7,913,235 shares are issued and outstanding as of the date hereof. All of the
issued and outstanding shares of Premier Stock and the Premier Subsidiaries
capital stock (the "Premier Subsidiaries Stock") are duly and validly issued,
fully paid and nonassessable and were offered, issued and sold in compliance
with all applicable federal or state securities laws. No person has any right
of rescission or claim for damages under federal or state securities laws with
respect to the issuance of shares of Premier Stock or any of the shares of
Premier Subsidiaries Stock previously issued. None of the shares of Premier
Subsidiaries Stock has been issued in violation of the preemptive or other
rights of any shareholder of Premier. None of the shares of the Premier
Subsidiaries Stock was issued in violation of the preemptive or other rights of
any shareholder of the Premier Subsidiaries. All of the issued and outstanding
shares of the Premier
24
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Subsidiaries Stock, other than twenty percent (20%) of the issued and
outstanding shares of Alliance Finance, Inc., are owned by Premier.
(b) Except for the shares issuable upon the exercise of stock options
(the "Stock Options") and as set forth in the Premier Disclosure Memorandum,
Premier does not have outstanding any securities which are either by their terms
or by contract convertible or exchangeable into Premier Stock, or any other
securities or debt, of Premier, or any preemptive or similar rights to subscribe
for or to purchase, or any options or warrants or agreements or understandings
for the purchase or the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock or
securities convertible into its capital stock. Premier is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(c) There is no agreement, arrangement or understanding to which
Premier is a party restricting or otherwise relating to the transfer of any
shares of Premier Stock.
(d) All shares of common stock or other capital stock, or any other
securities or debt, of Premier, which have been purchased or redeemed by Premier
have been purchased or redeemed in accordance with all applicable federal, state
and local laws, rules, and regulations, including, without limitation, all
federal and state securities laws and rules and regulations of any securities
exchange or system on which such stock, securities or debt are, or at such time
were, traded, and no such purchase or redemption has resulted or will, with the
giving of notice or lapse of time, or both, result in a default or acceleration
of the maturity of, or otherwise modify, any agreement, note, mortgage, bond,
security agreement, loan agreement or other contract or commitment of Premier.
6.2.4 CORPORATE RECORDS. The stock records and minute books of
-----------------
Premier, whether heretofore or hereafter furnished or made available to Citizens
by Premier, (a) fully and accurately reflect all issuances, transfers and
redemptions of the Common Stock, (b) correctly show the record addresses and the
number of shares of such stock issued and outstanding on the date hereof held by
the shareholders of Premier, (c) correctly show all corporate action taken by
the directors and shareholders of Premier (including actions taken by consent
without a meeting) and (d) contain true and correct copies or originals of the
respective Articles of Incorporation and all amendments thereto, bylaws as
amended and currently in force, and the minutes of all meetings or consent
actions of its directors and shareholders. No resolutions, regulations or
bylaws have been passed, enacted, consented to or adopted by such directors or
shareholders except those contained in the minute books. All corporate records
have been maintained in accordance with all applicable statutory requirements
and are complete and accurate.
6.2.5 TAX RETURNS; TAXES.
------------------
(a) Premier has duly filed or will file when due (i) all required
federal and state tax returns and reports, and (ii) all required returns and
reports of other governmental units having
25
<PAGE>
jurisdiction with respect to taxes imposed upon its income, properties,
revenues, franchises, operations or other assets or taxes imposed which might
create a lien or encumbrance on any of such assets or affect adversely its
business or operations. Such returns or reports are, and when filed will be,
true, complete and correct, and Premier has paid, or will pay with respect to
returns or reports not yet filed because not yet due, to the extent such taxes
or other governmental charges have become due, all taxes and other governmental
charges set forth in such returns or reports. All federal, state and local
taxes and other governmental charges paid or payable by Premier have been paid,
or have been accrued or reserved on its books in accordance with GAAP applied on
a basis consistent with prior periods. Adequate reserves for the payment of
taxes have been established on the books of Premier for all periods through the
date hereof, whether or not due and payable and whether or not disputed. Until
the Closing Date, Premier shall continue to reserve sufficient funds for the
payment of expected tax liabilities in accordance with GAAP applied on a basis
consistent with prior periods. Premier has not received any notice of a tax
deficiency or assessment of additional taxes of any kind and, to the knowledge
of the officers of Premier (collectively, "Premier Management"), there is no
threatened claim against Premier, or any basis for any such claim, for payment
of any additional federal, state, local or foreign taxes for any period prior to
the date of this Agreement in excess of the accruals or reserves with respect to
any such claim shown in the 1996 Premier Financial Statements described in
Section 6.2.6 below or disclosed in the notes with respect thereto. There are
no waivers or agreements by Premier for the extension of time for the assessment
of any taxes. The federal income tax returns of Premier have not been examined
by the Internal Revenue Service for any period since January 1, 1993.
(b) Except as set forth in the Premier Disclosure Memorandum, proper
and accurate amounts have been withheld by Premier from its employees for all
periods in full and complete compliance with the tax withholding provisions of
applicable federal, state and local tax laws, and proper and accurate federal,
state and local tax returns have been filed by Premier for all periods for which
returns were due with respect to withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full.
6.2.6 FINANCIAL STATEMENTS AND PRO FORMA INFORMATION. Premier has
----------------------------------------------
delivered to Citizens true, correct and complete copies of (i) the audited
financial statements of Premier for the years ended December 31, 1994, 1995 and
1996, including balance sheets, statements of income, statements of
shareholders' equity, statements of cash flows and related notes (the audited
financial statements for the year ended December 31, 1996 being referred to as
the "1996 Premier Financial Statements"); (ii) unaudited financial statements of
Premier for the period ended March 31, 1997, including a balance sheet,
statement of income and related notes; and (iii) unaudited proforma financial
statements dated March 31, 1997, reflecting the merger with the Central and
Southern Holding Company ("Central") in connection with Premier's shareholder
meeting on June 16, 1997 (the "Pro Forma Financial Statements"). All of such
financial statements have been prepared in accordance with GAAP consistently
applied and present fairly the assets, liabilities and financial condition of
Premier as of the dates indicated therein and the results of its operations for
the respective periods then ended.
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6.2.7 REGULATORY REPORTS. Premier has made available to Citizens
------------------
for review and inspection the year-end Report of Condition and year-end Report
of Income and Dividends as filed by the Premier banking and thrift subsidiaries
with the FDIC and the Office of Thrift Supervision, as applicable, for each of
the three years ended December 31, 1996, 1995 and 1994, together with all such
other reports filed for the same three-year period with the FDIC, and the
Department of Banking, and other applicable regulatory agencies and the Form
F.R. Y-6 filed by Premier with the Federal Reserve for each of the three years
ended December 31, 1996, 1995 and 1994 (collectively, the "Premier Reports").
All of the Premier Reports, as amended, have been prepared in accordance with
applicable rules and regulations applied on a basis consistent with prior
periods and contain in all material respects all information required to be
presented therein in accordance with such rules and regulations.
6.2.8 ACCOUNTS. Premier has made available to Citizens a list of
--------
each and every bank and other institution in which Premier maintains an account
or safety deposit box, the account numbers, and the names of all persons who are
presently authorized to draw thereon, have access thereto or give instructions
regarding distribution of funds or assets therein.
6.2.9 NOTES AND OBLIGATIONS.
---------------------
(a) Except as set forth in the Premier Disclosure Memorandum or as
provided for in the loss reserve described in subsection (b) below, all notes
receivable or other obligations owned by Premier or due to it shown in the 1996
Premier Financial Statements and any such notes receivable and obligations on
the date hereof and on the Closing Date are and will be genuine, legal, valid
and collectible obligations of the respective makers thereof and are not and
will not be subject to any offset or counterclaim. Except as set forth in
subsection (b) below, all such notes and obligations are evidenced by written
agreements, true and correct copies of which will be made available to Citizens
for examination prior to the Closing Date. All such notes and obligations were
entered into by Premier in the ordinary course of its business and in compliance
with all applicable laws and regulations.
(b) Premier has established a loss reserve in the 1996 Premier
Financial Statements and as of the date of this Agreement and will establish a
loan loss reserve as of the Closing Date which is adequate within the meaning of
GAAP and applicable regulatory requirements or guidelines to cover anticipated
losses which might result from such items as the insolvency or default of
borrowers or obligors on such loans or obligations, defects in the notes or
evidences of obligation (including losses of original notes or instruments),
offsets or counterclaims properly chargeable to such reserve, or the
availability of legal or equitable defenses which might preclude or limit the
ability of Premier to enforce the note or obligation, and the representations
set forth in subsection (a) above are qualified in their entirety by the
aggregate of such loss reserve. Except as described in the Premier Disclosure
Memorandum, at the Closing Date, the ratio of the loss reserve, established on
such date in good faith by Premier, to total loans outstanding at such time
shall not exceed the ratio of the loan loss reserve to the total loans
outstanding as reflected in the 1996 Premier Financial Statements, established
on or before such date in good faith by Premier, in accordance with GAAP.
27
<PAGE>
6.2.10 LIABILITIES. Premier has no debt, liability or obligation
-----------
of any kind required to be shown pursuant to GAAP on the consolidated balance
sheet of Premier, whether accrued, absolute, known or unknown, contingent or
otherwise, including, but not limited to (a) liability or obligation on account
of any federal, state or local taxes or penalty, interest or fines with respect
to such taxes, (b) liability arising from or by virtue of the distribution,
delivery or other transfer or disposition of goods, personal property or
services of any type, kind or variety, (c) unfunded liabilities with respect to
any pension, profit sharing or employee stock ownership plan, whether operated
by Premier or any other entity covering employees of Premier, or (d)
environmental liabilities, except (i) those reflected in the 1996 Premier
Financial Statements, and (ii) as disclosed in the Premier Disclosure
Memorandum.
6.2.11 ABSENCE OF CHANGES. Except as specifically provided for in
------------------
this Agreement or specifically set forth in the Premier Disclosure Memorandum,
since December 31, 1996:
(a) there has been no change in the business, assets, liabilities,
results of operations or financial condition of Premier, or in any of its
relationships with customers, employees, lessors or others, other than changes
in the ordinary course of business, none of which individually or in the
aggregate has had, or which the Premier Management believes may have, a material
adverse effect on such businesses or properties;
(b) there has been no material damage, destruction or loss to the
assets, properties or business of Premier, whether or not covered by insurance,
which has had, or which the Premier Management believes may have, an adverse
effect thereon;
(c) the business of Premier has been operated in the ordinary course,
and not otherwise;
(d) the properties and assets of Premier used in its business have
been maintained in good order, repair and condition, ordinary wear and tear
excepted;
(e) the books, accounts and records of Premier have been maintained in
the usual regular and ordinary manner;
(f) there has been no declaration, setting aside or payment of any
dividend or other distribution on or in respect of the capital stock of Premier;
(g) there has been no increase in the compensation or in the rate of
compensation or commissions payable or to become payable by Premier to any
director or executive officer, or to any employee earning $35,000 or more per
annum, or any general increase in the compensation or in the rate of
compensation payable or to become payable to employees of Premier earning less
than $35,000 per annum ("general increase" for the purpose hereof meaning any
increase generally applicable to a class or group of employees, but not
including increases granted to individual
28
<PAGE>
employees for merit, length of service, change in position or responsibility or
other reasons applicable to specific employees and not generally to a class or
group thereof), or any director, officer, or employee hired at a salary in
excess of $35,000 per annum, or any increase in any payment of or commitment to
pay any bonus, profit sharing or other extraordinary compensation to any
employee;
(h) there has been no change in the articles of incorporation or
bylaws of Premier;
(i) there has been no labor dispute, unfair labor practice charge or
employment discrimination charge, nor, to the knowledge of Premier, any
organizational effort by any union, or institution or threatened institution of
any effort, complaint or other proceeding in connection therewith, involving
Premier or affecting its operations;
(j) there has been no issuance, sale, repurchase, acquisition, or
redemption by Premier of any of its capital stock, bonds, notes, debt or other
securities, and there has been no modification or amendment of the rights of the
holders of any outstanding capital stock, bonds, notes, debt or other securities
thereof;
(k) there has been no mortgage, lien or other encumbrance or security
interest (other than liens for current taxes not yet due or purchase money
security interests arising in the ordinary course of business) created on or in
(including without limitation, any deposit for security consisting of) any asset
or assets of Premier or assumed by it with respect to any asset or assets;
(l) there has been no indebtedness or other liability or obligation
(whether absolute, accrued, contingent or otherwise) incurred by Premier which
would be required to be reflected on a balance sheet of Premier prepared as of
the date hereof in accordance with GAAP applied on a consistent basis, except as
incurred in the ordinary course of business;
(m) no obligation or liability of Premier has been discharged or
satisfied, other than in the ordinary course of business;
(n) there have been no sales, transfers or other dispositions of any
asset or assets of Premier, other than sales in the ordinary course of business;
(o) there has been no amendment, termination or waiver of any right of
Premier under any contract or agreement or governmental license, permit or
permission which has had or may have an adverse effect on its business or
properties; and
(p) Premier has not taken any action or failed to take any action
prior to the date of this Agreement which would represent or result in a
material breach or violation of any of the covenants and agreements of Premier
provided in this Agreement.
6.2.12 LITIGATION AND PROCEEDINGS. Except as set forth on the
--------------------------
Premier Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or
29
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governmental actions or investigations, pending or, to the knowledge of Premier,
threatened against, by or affecting Premier, or any officer, director, employee
or agent in such person's capacity as an officer, director, employee or agent of
Premier or relating to the business or affairs of Premier, in any court or
before any arbitrator or governmental agency, and no judgment, award, order or
decree of any nature has been rendered against or with respect thereto by any
agency, arbitrator, court, commission or other authority, nor does Premier have
any unasserted contingent liabilities which might have an adverse effect on its
assets or on the operation of its businesses or which might prevent or impede
the consummation of the transactions contemplated by this Agreement.
6.2.13 PROXY MATERIALS. Neither the Proxy Materials nor other
---------------
materials furnished by Premier to the Premier's shareholders in connection with
the transactions contemplated by this Agreement or the Merger Agreement, or in
any amendments thereof or supplements thereto, will, at the times such documents
are distributed to the holders of shares of Premier Stock and through the
acquisition of shares of Premier Stock by Citizens pursuant to the Merger,
contain with respect to Premier any untrue statement of a material fact or omit
to state any information required to be stated therein or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they are made with respect to Premier, not misleading.
6.3 BUSINESS OPERATIONS.
-------------------
6.3.1 CUSTOMERS. Premier has no knowledge of any presently
---------
existing facts which could reasonably be expected to result in the loss of any
material borrower or depositor or in Premier's inability to collect amounts due
therefrom or to return funds deposited thereby, except as set forth on the
Premier Disclosure Memorandum.
6.3.2 PERMITS; COMPLIANCE WITH LAW.
----------------------------
(a) Premier has all permits, licenses, approvals, authorizations and
registrations under all federal, state, local and foreign laws required for
Premier to own, lease or operate its Assets and to carry on its business as
presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no suspension
or cancellation of any of them is pending or, to the knowledge of Premier,
threatened.
(b) Premier has complied with all laws, regulations, and orders
applicable to it or its business, except for any non-compliance which would not
have a material adverse effect on Premier. The Premier Disclosure Memorandum
contains a list of any known violations of such laws, regulations, ordinances or
rules by any present officer, director, or employee of Premier which occurred
since December 31, 1991, and which resulted in any order, proceeding, judgment
or decree which would be required to be disclosed pursuant to Item 401(f) of
Regulation S-K promulgated by the SEC if Premier had been subject to the
reporting requirements under the 1933 Act or the Securities Exchange Act of
1934. No past violation of any such law, regulation, ordinance or rule has
occurred which could impair the right or ability of Premier to conduct its
business.
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(c) Except as set forth in the Premier Disclosure Memorandum, no
notice or warning from any governmental authority with respect to any failure or
alleged failure of Premier to comply in any respect with any law, regulation or
order has been received, nor is any such notice or warning proposed or, to the
knowledge of Premier, threatened.
6.3.3 ENVIRONMENTAL.
-------------
(a) Except as set forth in the Premier Disclosure Memorandum, Premier
(i) has not caused or permitted, and has no knowledge of any
claim regarding the environmental condition of the property or the
generation, manufacture, use, or handling or the release or presence of,
any hazardous substances or hazardous wastes, including petroleum, on, in,
under or from any properties or facilities currently owned or leased by
Premier or adjacent to any properties so owned or leased; and
(ii) has complied in all material respects with, and has kept all
records and made all filings or reports required by, and is otherwise in
compliance with all applicable federal, state and local laws, regulations,
orders, permits and licenses relating to the generation, treatment,
manufacture, use, handling, release or presence of any hazardous substances
or hazardous wastes, including petroleum and asbestos, on, in, under or
from any properties or facilities currently owned or leased by Premier.
(b) Except as set forth in the Premier Disclosure Memorandum, neither
Premier nor any of its officers, directors, employees or agents, in the course
of such individual's employment by Premier, has given advice with respect to, or
participated in any respect in, the management or operation of any entity or
concern whose business relates in any way to the generation, storage, handling,
disposal, transfer, production, use or processing of hazardous substances or
hazardous wastes, including petroleum, nor to Premier's knowledge has Premier
foreclosed on any property on which there is a threatened release of any
hazardous substances or hazardous wastes, including petroleum, or on which there
has been such a release and full remediation has not been completed, or any
property on which contained (non-released) hazardous substances or hazardous
wastes, including petroleum, are or were located.
(c) Except as set forth in the Premier Disclosure Memorandum, neither
Premier, nor any of its officers, directors, employees, or agents, is aware of,
has been told of, or has observed, the presence of any hazardous substance or
hazardous wastes, including petroleum, on, in, under, or around property on
which Premier holds a legal or security interest, in violation of, or creating
liability under, federal, state, or local environmental statutes, regulations,
or ordinances.
(d) The term hazardous substances or hazardous waste does not include
those substances which are normally and reasonably used in connection with the
occupancy or operation of office buildings (such as cleaning fluids, and
supplies normally used in the day to day operation of business offices).
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6.3.4 INSURANCE. Premier has made available to Citizens a
---------
complete list and description (including the expiration date, premium amount and
coverage thereunder) of all policies of insurance and bonds presently maintained
by, or providing coverage for, Premier or any of its officers, directors and
employees, all of which are, and will be maintained through the Closing Date, in
full force and effect, together with a complete list of all pending claims under
any of such policies or bonds. All terms, obligations and provisions of each of
such policies and bonds have been complied with, all premiums due thereon have
been paid, and no notice of cancellation with respect thereto has been received.
Except as set forth in the Premier Disclosure Memorandum, such policies and
bonds provide adequate coverage to insure the properties and businesses of
Premier and the activities of its officers, directors and employees against such
risks and in such amounts as are prudent and customary. Premier will not as of
the Closing Date have any liability for premiums or for retrospective premium
adjustments for any period prior to the Closing Date. Premier has heretofore
made, or will hereafter make, available to Citizens a true, correct and complete
copy of each insurance policy and bond in effect since January 1, 1991 with
respect to the business and affairs of Premier.
6.4 PROPERTIES AND ASSETS.
---------------------
6.4.1 Contracts and Commitments. The Premier Disclosure
-------------------------
Memorandum contains a list identifying and briefly describing all written
contracts, purchase orders, agreements, security deeds, guaranties or
commitments to which Premier is a party or by which it may be bound involving
the payment or receipt, actual or contingent, of more than $25,000 or having a
term or requiring performance over a period of more than ninety (90) days. Each
such contract, agreement, guaranty and commitment of Premier is in full force
and effect and is valid and enforceable in accordance with its terms, and
constitutes a legal and binding obligation of the respective parties thereto and
is not the subject of any notice of default, termination, partial termination or
of any ongoing, pending, completed or threatened investigation, inquiry or other
proceeding or action that may give rise to any notice of default, termination or
partial termination. Premier has complied in all material respects with the
provisions of such contracts, agreements, guaranties and commitments. A true
and complete copy of each such document has been or will be made available to
Citizens for examination.
6.4.2 LICENSES; INTELLECTUAL PROPERTY. Premier has all patents,
-------------------------------
trademarks, trade names, service marks, copyrights, trade secrets and know-how
reasonably necessary to conduct its business as presently conducted and, except
as described in the Premier Disclosure Memorandum, Premier is not a party,
either as licensor or licensee, to any agreement for any patent, process,
trademark, service mark, trade name, copyright, trade secret or other
confidential information and there are no rights of third parties with respect
to any trademark, service mark, trade secrets, confidential information, trade
name, patent, patent application, copyright, invention, device or process owned
or used by Premier or presently expected to be used by either of them in the
future. All patents, copyrights, trademarks, service marks, trade names, and
applications therefor or registrations thereof, owned or used by Premier, are
listed in the Premier Disclosure Memorandum.
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Premier has complied with all applicable laws relating to the filing or
registration of "fictitious names" or trade names.
6.4.3 PERSONAL PROPERTY. Premier has good and marketable title to
-----------------
all of its personalty, tangible and intangible, reflected in the 1996 Premier
Financial Statements (except as since sold or otherwise disposed of by it in the
ordinary course of business), free and clear of all encumbrances, liens or
charges of any kind or character, except (i) those referred to in the notes to
the 1996 Premier Financial Statements as securing specified liabilities (with
respect to which no default exists or, to the knowledge of Premier, is claimed
to exist), (ii) those described in the Premier Disclosure Memorandum and (iii)
liens for taxes not due and payable.
6.4.4 PREMIER LEASES.
--------------
(a) All leases (the "Premier Leases") pursuant to which Premier is
lessor or lessee of any real or personal property (such property, the "Premier
Leased Property") are valid and enforceable in accordance with their terms;
there is not under any Premier Leases any default or, to the knowledge of
Premier, any claimed default by Premier, or event of default or event which with
notice or lapse of time, or both, would constitute a default by Premier and in
respect of which adequate steps have not been taken to prevent a default on its
part from occurring.
(b) The copies of the Premier Leases heretofore or hereafter furnished
or made available by Premier to Citizens are true, correct and complete, and the
Premier Leases have not been modified in any respect other than pursuant to
amendments, copies of which have been concurrently delivered or made available
to Citizens, and are in full force and effect in accordance with their terms.
(c) Except as set forth in the Premier Disclosure Memorandum, there
are no contractual obligations, agreements in principle or present plans for
Premier to enter into new leases of real property or to renew or amend existing
Premier Leases prior to the Closing Date.
6.4.5 REAL PROPERTY.
-------------
(a) Premier does not own any interest in any real property (other than
as lessee) except as set forth in the Premier Disclosure Memorandum (such
properties being referred to herein as "Premier Realty"). Except as disclosed
in the Premier Disclosure Memorandum, Premier has good title to the Premier
Realty and the titles to the Premier Realty are covered by title insurance
policies providing coverage in the amount of the original purchase price, true,
correct and complete copies of which have been or will be furnished to Citizens
with the Premier Disclosure Memorandum. Premier has not encumbered the Premier
Realty since the effective dates of the respective title insurance policies.
(b) Except as set forth in the Premier Disclosure Memorandum, the
interests of Premier in the Premier Realty and in and under each of the Premier
Leases are free and clear of any
33
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and all liens and encumbrances and are subject to no present claim, contest,
dispute, action or, to the knowledge of Premier, threatened action at law or in
equity.
(c) The present and past use and operations of, and improvements upon,
the Premier Realty and all real properties leased by Premier (the "Premier
Leased Real Properties") are in compliance in all material respects with all
applicable building, fire, zoning and other applicable laws, ordinances and
regulations and with all deed restrictions of record, no notice of any violation
or alleged violation thereof has been received, and to the knowledge of Premier
there are no proposed changes therein that would affect the Premier Realty, the
Premier Leased Real Properties or their uses.
(d) Except as set forth in the Premier Disclosure Memorandum, no rent
has been paid in advance and no security deposit has been paid by, nor is any
brokerage commission payable by or to, Premier with respect to any Premier Lease
pursuant to which it is lessor or lessee.
(e) Premier is not aware of any proposed or pending change in the
zoning of, or of any proposed or pending condemnation proceeding with respect
to, any of the Premier Realty or the Premier Leased Real Properties which may
adversely affect the Premier Realty or the Premier Leased Real Properties or the
current or currently contemplated use thereof.
(f) The buildings and structures owned, leased or used by Premier are,
taken as a whole, in good operating order (except for ordinary wear and tear),
usable in the ordinary course of business, and are sufficient and adequate to
carry on the business and affairs of Premier.
6.5 EMPLOYEES AND BENEFITS.
----------------------
6.5.1 DIRECTORS OR OFFICERS OF OTHER CORPORATIONS. Except as set
-------------------------------------------
forth in the Premier Disclosure Memorandum, no director, officer, or employee of
Premier serves, or in the past five years has served, as a director or officer
of any other corporation on behalf of or as a designee of Premier or any of its
subsidiaries.
6.5.2 EMPLOYEE BENEFITS.
-----------------
(a) Except as set forth in the Premier Disclosure Memorandum, Premier
does not provide and is not obligated to provide, directly or indirectly, any
benefits for employees, including, without limitation, any pension, profit
sharing, stock option, retirement bonus, hospitalization, medical, insurance,
vacation or other employee benefits under any practice, agreement or
understanding.
(b) The Premier Disclosure Memorandum lists separately any employee
benefit plan within the meaning of Section 3(3) of ERISA (collectively, "ERISA
Plans"). True, correct and complete copies of all ERISA Plans and, to the
extent applicable, all related trust agreements, insurance contracts, summary
plan descriptions, Internal Revenue Service determination letters and
34
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filings, the past three years of actuarial reports and valuations, annual
reports and Form 5500 filings (including attachments), and any other related
documents requested by Citizens or its counsel have been, or prior to the
Closing Date will be, made available to Citizens.
(c) Premier is not currently and has never been in the past required
to contribute to a multi-employer plan as defined in Section 3(37)(A) of ERISA.
Premier does not maintain or contribute to, nor within the past six years has it
maintained or contributed to, an employee pension benefit plan as defined in
Section 3(2) of ERISA that is or was subject to Title IV of ERISA.
(d) Each ERISA Plan has been operated and administered in all material
respects in accordance with, and has been amended to comply with (unless such
amendment is not yet required), all applicable laws, rules and regulations,
including, without limitation, ERISA, the Code and the regulations issued under
ERISA and the Code. With respect to each ERISA Plan, other than routine claims
for benefits submitted in the ordinary course of the benefits process, no
litigation or administrative or other proceeding is pending or, to the knowledge
of Premier, threatened involving such ERISA Plan or any of its fiduciaries.
With respect to each ERISA Plan, neither Premier nor any of its directors,
officers, employees or agents, nor to Premier's knowledge, any "party in
interest" or "disqualified person" (as such terms are defined in Section 3(14)
of ERISA and Section 4975 of the Code) has been engaged in or been a party to
any transaction relating to the ERISA Plan which would constitute a breach of
fiduciary duty under ERISA or a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code), unless such
transaction is specifically permitted under Sections 407 or 408 of ERISA,
Section 4975 of the Code or a class or administrative exemption issued by the
Department of Labor. Each ERISA Plan that is a group health plan within the
meaning of Section 607(l) of ERISA and Section 4980B of the Code is in
compliance with the continuation coverage requirements of Section 501 of ERISA
and Section 4980B of the Code.
(e) Of the ERISA Plans, the "employee pension benefit plans" within
the meaning of Section 3(2) of ERISA (collectively, the "Employee Pension
Benefit Plans") are separately identified on the Premier Disclosure Memorandum.
With respect to each Employee Pension Benefit Plan, except as set forth on the
Premier Disclosure Memorandum: (i) such Employee Pension Benefit Plan
constitutes a qualified plan within the meaning of Section 401(a) of the Code
and the trust is exempt from federal income tax under Section 501(a) of the
Code; (ii) all contributions required by such plan have been made; and (iii) no
termination, partial termination or discontinuance of contributions has occurred
without a determination by the IRS that such action does not affect the tax-
qualified status of such plan.
(f) As of the Closing Date, with respect to each ERISA Plan, Premier
will have provided adequate reserves, or insurance or qualified trust funds, to
provide for all payments and contributions required, or reasonably expected to
be required, to be made under the provisions of such ERISA Plan or required to
be made under applicable laws, rules and regulations, with respect to any period
prior to the Closing Date to the extent reserves are required under GAAP, based
on an actuarial valuation satisfactory to the actuaries of Premier representing
a projection of claims expected to be incurred under such ERISA Plan.
35
<PAGE>
(g) Except as disclosed on the Premier Disclosure Memorandum, Premier
does not provide and has no obligation to provide benefits, including, without
limitation, death, health or medical benefits (whether or not insured) with
respect to current or former employees of Premier beyond their retirement or
other termination of service with Premier other than (i) coverage mandated by
applicable law, (ii) benefits under the Employee Pension Benefit Plans, or (iii)
benefits the full cost of which is borne by the current or former employee or
his beneficiary.
(h) Neither this Agreement nor any transaction contemplated hereby
will (i) entitle any current or former employee, officer or director of Premier
to severance pay, unemployment compensation or any similar or other payment, or
(ii) accelerate the time of payment or vesting of, or increase the amount of
compensation or benefits due any such employee, officer or director.
6.5.3 LABOR-RELATED MATTERS. Except as described in the Premier
---------------------
Disclosure Memorandum, Premier is not, and has not been, a party to any
collective bargaining agreement or agreement of any kind with any union or labor
organization or to any agreement with any of its employees which is not
terminable at will or upon ninety (90) days notice at the election of, and
without cost or penalty to, Premier. Premier has not received at any time in
the past five (5) years, any demand for recognition from any union, and no
attempt has been made, or will have been made as of the Closing Date, to
organize any of its employees. Premier has complied in all material respects
with all obligations under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other federal, state and
local labor laws and regulations applicable to employees. There are no unfair
labor practice charges pending or threatened against Premier, and there are, and
in the past three (3) years there have been, no charges, complaints, claims or
proceedings, no slowdowns or strikes pending or threatened against, or
involving, as the case may be, Premier with respect to any alleged violation of
any legal duty (including but not limited to any wage and hour claims,
employment discrimination claims or claims arising out of any employment
relationship) by Premier as to any of its employees or as to any person seeking
employment therefrom, and no such violations exist.
6.5.4 RELATED PARTY TRANSACTIONS. Except for (a) loans and
--------------------------
extensions of credit made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by Premier with other persons who are not affiliated with Premier,
and which do not involve more than the normal risk of repayment or present other
unfavorable features, (b) deposits, all of which are on terms and conditions
identical to those made available to all customers of Premier at the time such
deposits were entered into, and (c) transactions specifically described in the
Premier Disclosure Memorandum, there are no contracts with or commitments to
present or former five percent (5%) or greater shareholders, directors,
officers, or employees involving the expenditure after December 31, 1991 of more
than $60,000 as to any one individual, including with respect to any business
directly or indirectly controlled by any such person, or $100,000 for all such
contracts or commitments in the aggregate for all such individuals (other than
contracts or commitments relating to services to be performed by any officer,
director or employee as a currently-employed employee of Premier).
36
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6.6 OTHER MATTERS.
-------------
6.6.1 REGULATORY REPORTS. Premier will make available to Citizens
------------------
for review and inspection all applications, reports or other documents filed by
it for each of its past three full fiscal years with any regulatory or
governmental agencies. All of such applications, reports and other documents
have been prepared in accordance with applicable rules and regulations of the
regulatory agencies with which they were filed.
6.6.2 APPROVALS, CONSENTS AND FILINGS. Except for the approval of
-------------------------------
the Federal Reserve and the Department of Banking, or as set forth in the
Premier Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
thereby will (a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, or (b)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Premier, or any of Premier's assets.
6.6.3 DEFAULT.
-------
(a) Except for those consents described in or set forth pursuant to
Section 6.6.2 above, neither the execution of this Agreement nor consummation of
the transactions contemplated herein (i) constitutes a breach of or default
under any contract or commitment to which Premier is a party or by which Premier
or its properties or assets are bound, (ii) does or will result in the creation
or imposition of any security interest, lien, encumbrance, charge, equity or
restriction of any nature whatsoever in favor of any third party upon any assets
of Premier, or (iii) constitutes an event permitting termination of any
agreement or the acceleration of any indebtedness of Premier.
(b) Premier is not in default under its articles of incorporation or
bylaws or under any term or provision of any security deed, mortgage, indenture
or security agreement or of any other contract or instrument to which Premier is
a party or by which it or any of its property is bound.
6.6.4 REPRESENTATIONS AND WARRANTIES. No representation or
------------------------------
warranty contained in this Article VI or in any written statement delivered by
or at the direction of Premier pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of
all documents that have been or will be furnished to Citizens in connection with
this Agreement or pursuant hereto are or shall be true, correct and complete.
6.6.5 PREMIER STOCK. The shares of Premier Stock to be issued and
-------------
delivered to Citizens' shareholders pursuant to the terms of the Merger
Agreement, when so issued and delivered, will be validly authorized and issued,
fully paid and non-assessable, and no shareholder of Premier will have any
preemptive rights with respect thereto.
37
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ARTICLE VII
-----------
CONDUCT OF BUSINESS OF PREMIER PENDING CLOSING
----------------------------------------------
Except as expressly otherwise provided herein, Premier covenants and agrees
that, without the prior written consent of Citizens, between the date hereof and
the Closing Date:
7.1 CONDUCT OF BUSINESS. Premier will conduct its business only in the
-------------------
ordinary course, without the creation of any indebtedness for borrowed money
(other than deposit and similar accounts and customary credit arrangements
between banks in the ordinary course of business).
7.2 MAINTENANCE OF PROPERTIES. Premier will maintain its properties and
-------------------------
assets in good operating condition, ordinary wear and tear excepted
7.3 INSURANCE. Premier will maintain and keep in full force and effect
---------
all of the insurance referred to in Section 6.3.4 hereof or other insurance
equivalent thereto in all material respects.
7.4 CAPITAL STRUCTURE. No change will be made in the authorized or issued
-----------------
capital stock or other securities of Premier, and Premier will not issue or
grant any right or option to purchase or otherwise acquire any of the capital
stock or other securities of Premier.
7.5 DIVIDENDS. Except for quarterly dividends in the amount not to exceed
---------
$.10 per share, no other dividend, distribution or payment will be declared or
made in respect to the Premier Stock.
7.6 AMENDMENT OF ARTICLES; CORPORATE EXISTENCE. Premier will not amend
------------------------------------------
its articles of incorporation or bylaws, and Premier will maintain its corporate
existence and powers.
7.7 NO ACQUISITIONS. Premier shall not acquire by merging or
---------------
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other entity or division thereof or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to it.
7.8 NO DISPOSITIONS. Premier will not sell, mortgage, lease, buy or
---------------
otherwise acquire, transfer or dispose of any real property or interest therein
(except for sales in the ordinary course of business) and Premier will not,
except in the ordinary course of business, sell or transfer, mortgage, pledge or
subject to any lien, charge or other encumbrance any other tangible or
intangible asset.
7.9 BOOKS AND RECORDS. The books and records of Premier will be
-----------------
maintained in the usual, regular and ordinary course.
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7.10 ADVICE OF CHANGES. Premier shall promptly advise Citizens orally
-----------------
and in writing of any change or event having, or which the Premier Management
believes could have, a material adverse effect on the assets, liabilities,
business, operations or financial condition of Premier.
7.11 INCUR ADDITIONAL DEBT. Premier shall not incur any debt obligations
---------------------
or other obligations for borrowed money in excess of an aggregate of $100,000
(for Premier on a consolidated basis) except in the ordinary course of business
of Premier consistent with past practices (which included for Premier
Subsidiaries, creation of deposit liabilities, purchase of federal funds,
advances from the Federal Reserve Bank or Federal Home Loan Bank and entry into
and repurchase of agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition on any asset of Premier of any
lien or permit any such lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, Federal Home Loan Bank advances,
"treasury tax and loan" accounts established in the ordinary course of business,
the satisfaction of legal requirements in the exercise of trust powers, and
liens in effect as of the date hereof that are disclosed in the Premier
Disclosure Memorandum).
7.12 ADOPT NEW BENEFIT PLAN. Premier shall not adopt any new employee
----------------------
benefit plan or make any material change in or to any existing employee benefit
plan other than any such change that is required by law or that, in the opinion
of counsel, is necessary or advisable to maintain the tax qualified status of
any such plan.
7.13 CHANGE IN TAX OR ACCOUNTING METHOD. Premier shall not make any
----------------------------------
significant change in any tax or accounting methods or systems of internal
accounting controls, except as may be appropriate to conform to changes in tax
laws or regulatory accounting requirements or GAAP.
7.14 LITIGATION. Premier shall not commence any litigation other than in
----------
accordance with past practice, settle any litigation involving any liability of
Premier for money damages in excess of $50,000 or which imposes material
restrictions upon the operations of Premier.
ARTICLE VIII
------------
CONDITIONS TO OBLIGATIONS OF PREMIER
------------------------------------
All of the obligations of Premier under this Agreement are subject to the
fulfillment prior to or at the Closing Date of each of the following conditions,
any one or more of which may be waived by Premier:
8.1 VERACITY OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties of Citizens contained herein or in any certificate, schedule or other
document delivered pursuant to the provisions hereof, or in connection herewith,
shall be true in all material respects as of the date when made and shall be
deemed to be made again at and as of the Closing Date and shall be true in
39
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all material respects at and as of such time, except as a result of changes or
events expressly permitted or contemplated herein.
8.2 PERFORMANCE OF AGREEMENTS. Citizens shall have performed and complied
-------------------------
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
8.3 CERTIFICATES, RESOLUTIONS, OPINION. Citizens shall have delivered to
----------------------------------
Premier:
(a) a certificate executed by the President and Secretary of Citizens,
dated as of the Closing Date, and certifying in such detail as Premier may
reasonably request to the fulfillment of the conditions specified in Sections
8.1 and 8.2 hereof;
(b) duly adopted resolutions of the Board of Directors and
shareholders of Citizens certified by the Secretary thereof, dated the Closing
Date, (i) authorizing and approving the execution of this Agreement (with
respect to the directors of Citizens) and the Merger Agreement (with respect to
the directors and shareholders of Citizens) and the consummation of the
transactions contemplated herein and therein in accordance with their respective
terms and (ii) authorizing all other necessary and proper corporate action to
enable Citizens to comply with the terms hereof and thereof;
(c) certificates of the valid existence of Citizens and the Citizens
Bank under the laws of the State of Georgia, executed by the Secretary of State
and the Department of Banking, respectively, and dated not more than five (5)
business days prior to the Closing Date;
(d) certificates from the appropriate public officials of the State of
Georgia, dated not more than five (5) business days prior to the Closing Date,
certifying that Citizens has filed all corporate tax returns required by the
laws of such state and has paid all taxes shown thereon to be due;
(e) an opinion of Porter Keadle Moore LLP, certified public
accountants, to the effect that the Merger will be accounted for as a "pooling
of interests," which opinion will be subject only to such qualifications,
exceptions and factual assumptions as are satisfactory to Premier;
(f) an opinion of Kilpatrick Stockton LLP, counsel for Citizens, dated
the Closing Date, in the form attached hereto as Exhibit "E;" and
----------
(g) letters from each of the directors and officers of Citizens in
substantially the form of Exhibit "D."
----------
8.4 SHAREHOLDER APPROVAL. The Merger Agreement shall have been approved
--------------------
by the vote of the holders of at least a majority of Citizens Stock and Premier
Stock. The aggregate number of shares of Citizens Common Stock dissenting to
the Merger shall not exceed 24,235 shares.
40
<PAGE>
8.5 REGULATORY APPROVALS. Premier shall have received from any and all
--------------------
governmental authorities, bodies or agencies having jurisdiction over the
transactions contemplated by this Agreement and the Merger Agreement, including,
but not limited to the Federal Reserve and the Department of Banking, such
consents, authorizations and approvals as are necessary for the consummation
thereof and all applicable waiting or similar periods required by law shall have
expired.
8.6 EFFECTIVE REGISTRATION STATEMENT. The Premier Registration Statement
--------------------------------
shall have been declared effective by the SEC and no stop order shall have been
entered with respect thereto.
8.7 CERTIFICATE OF MERGER. The Secretary of State of the State of Georgia
---------------------
shall have issued a Certificate of Merger with regard to the Merger in
accordance with the provisions of the Georgia Business Corporation Code.
8.8 PREMIER FAIRNESS OPINION. Premier shall have received from Brown,
------------------------
Burke Capital Partners, Inc. a letter, dated not more than five (5) business
days prior to the date of the Proxy Statement, to the effect that, in the
opinion of such firm, the consideration to be paid to Citizens' shareholders in
connection with the Merger is fair, from a financial point of view, to the
shareholders of Premier.
ARTICLE IX
----------
CONDITIONS TO OBLIGATIONS OF CITIZENS
-------------------------------------
All of the obligations of Citizens under this Agreement are subject to the
fulfillment prior to or at the Closing Date of each of the following conditions,
any one or more of which may be waived by it:
9.1 VERACITY OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties of Premier contained herein or in any certificate, schedule or other
document delivered pursuant to the provisions hereof, or in connection herewith,
shall be true in all material respects as of the date when made and shall be
deemed to be made again at and as of the Closing Date and shall be true in all
material respects at and as of such time, except as a result of changes or
events expressly permitted or contemplated herein.
9.2 PERFORMANCE OF AGREEMENTS. Premier shall have performed and complied
-------------------------
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing Date.
41
<PAGE>
9.3 CERTIFICATES, RESOLUTIONS, OPINION. Premier shall have delivered to
----------------------------------
Citizens:
(a) a certificate executed by the President and Secretary of Premier,
dated the Closing Date, certifying in such detail as Citizens may reasonably
request to the fulfillment of the conditions specified in Sections 9.1 and 9.2
hereof;
(b) duly adopted resolutions of the Board of Directors of Premier,
certified by the Secretary thereof, dated the Closing Date, (i) authorizing and
approving the execution of this Agreement and the Merger Agreement on behalf of
Premier, and the consummation of the transactions contemplated herein and
therein in accordance with their respective terms, and (ii) authorizing all
other necessary and proper corporate actions to enable Premier to comply with
the terms hereof and thereof;
(c) a certificate of the valid existence of Premier, under the laws of
the State of Georgia executed by the Secretary of State of the State of Georgia,
dated not more than five (5) business days prior to the Closing Date;
(d) certificates from the appropriate public officials of the State of
Georgia, dated not more than five (5) business days prior to the Closing Date,
certifying that Premier has filed all corporate tax returns required by the laws
of such state and has paid all taxes shown thereon to be due;
(e) an opinion of Mauldin & Jenkins LLC, certified public accountants,
to the effect that the Merger will be accounted for as a "pooling of interests,"
which opinion will be subject only to such qualifications, exceptions and
factual assumptions as are satisfactory to Citizens; and
(f) an opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel for
Premier, dated the Closing Date, in the form attached hereto as Exhibit "F."
----------
9.4 SHAREHOLDER APPROVAL. The Merger Agreement shall have been approved
--------------------
by the vote of the holders of at least a majority of Citizens Stock and Premier
Stock. The aggregate number of shares of Citizens Common Stock dissenting to
the Merger shall not exceed 24,235 shares.
9.5 REGULATORY APPROVALS. Any and all governmental authorities, bodies or
--------------------
agencies having jurisdiction over the transactions contemplated by this
Agreement and the Merger Agreement, including, but not limited to the Federal
Reserve and the Department of Banking, shall have granted such consents,
authorizations and approvals as are necessary for the consummation hereof and
thereof, and all applicable waiting or similar periods required by law shall
have expired.
9.6 EFFECTIVE REGISTRATION STATEMENT. The Premier Registration Statement
--------------------------------
shall have been declared effective by the SEC and no stop order shall have been
entered with respect thereto.
42
<PAGE>
9.7 TAX OPINION. Citizens shall have received from Kilpatrick Stockton
-----------
LLP its opinion, in form and substance reasonably satisfactory to Citizens, to
the effect that:
(1) The Merger and the issuance of shares of Premier Stock in
connection therewith, as described herein and in the Merger Agreement, will
constitute a tax-free reorganization under Section 368(a)(1)(A) of the
Code;
(2) Except for the recognition of gain as required by Section 302 of
the Code with respect to the receipt by the holders of Citizens Stock of
cash in lieu of fractional shares of Premier Stock and the recognition of
gain as required by Section 356(a) of the Code upon exercise by a
shareholder of his, her or its dissenters rights, no gain or loss will be
recognized by holders of Citizens Stock upon the exchange of such stock
solely for Premier Stock as a result of the Merger;
(3) No gain or loss will be recognized by Citizens as a result of the
Merger;
(4) The aggregate tax basis of Premier Stock received by shareholders
of Citizens pursuant to the Merger will be the same as the tax basis of the
shares of Citizens Stock exchanged therefor decreased by any portion of
such tax basis allocated to fractional shares of Premier Stock that are
treated as redeemed by Premier; and
(5) The holding period of the shares of Premier Stock received by the
shareholders of Citizens will include the holding period of the shares of
Citizens Stock exchanged therefor, provided that the stock of Citizens is
held as a capital asset on the date of the consummation of the Merger.
9.8 CERTIFICATE OF MERGER. The Secretary of State of the State of Georgia
---------------------
shall have issued a Certificate of Merger with regard to the Merger in
accordance with the provisions of the Georgia Business Corporation Code.
9.9 CITIZENS FAIRNESS OPINION. Citizens shall have received from The
---------------------------
Carson Medlin Company a letter, dated not more than five (5) business days prior
to the date of the Proxy Statement, to the effect that, in the opinion of such
firm, the consideration to be paid to Citizens' shareholders in connection with
the Merger is fair, from a financial point of view, to the shareholders of
Citizens.
ARTICLE X
---------
WARRANTIES, NOTICES, ETC.
-------------------------
10.1 WARRANTIES. All statements contained in any certificate or other
----------
instrument delivered by or on behalf of Citizens or Premier pursuant hereto or
in connection with the transactions contemplated hereby shall be deemed
representations and warranties hereunder by them. Unless the
43
<PAGE>
context otherwise requires, the representations and warranties required of
Citizens shall be required to be made, and shall be considered made, on behalf
of both Citizens and its subsidiary Citizens Bank, and the representations and
warranties required of Premier, shall be required to be made, and shall be
considered made, on behalf of Premier and the Premier Subsidiaries.
10.2 SURVIVAL OF REPRESENTATIONS. All representations, warranties,
---------------------------
covenants, and agreements made by either party hereto in or pursuant to this
Agreement or in any instrument, exhibit, or certificate delivered pursuant
hereto shall be deemed to have been material and to have been relied upon by the
party to which made, but, except as set forth hereafter or specifically stated
in this Agreement, such representations, warranties, covenants, and agreements
shall expire and be of no further force and effect upon the consummation of the
Merger; provided, however, that the following shall survive consummation of the
Merger and the transactions contemplated hereby:
(a) the opinions of counsel referred to in Sections 8.3(f) and 9.3(e)
of this Agreement;
(b) any intentional misrepresentation of any material fact made by
either party hereto in or pursuant to this Agreement or in any instrument,
document or certificate delivered pursuant hereto; and
(c) the provisions of this Section 10 and the provisions contained in
Sections 3.4, 3.6, 3.12, 3.13 and 11.13.
10.3 NOTICES. All notices or other communications required or permitted to
-------
be given or made hereunder shall be in writing and delivered personally or sent
by pre-paid, first class certified or registered mail, return receipt requested,
or by facsimile transmission, to the intended recipient thereof at its address
or facsimile number set out below. Any such notice or communication shall be
deemed to have been duly given immediately (if given or made in person or by
facsimile confirmed by mailing a copy thereof to the recipient in accordance
with this Paragraph 10.3 on the date of such facsimile), or five days after
mailing (if given or made by mail), and in proving same it shall be sufficient
to show that the envelope containing the same was delivered to the delivery
service and duly addressed, or that receipt of a facsimile was confirmed by the
recipient as provided above. Either party may change the address to which
notices or other communications to such party shall be delivered or mailed by
giving notice thereof to the other party hereto in the manner provided herein.
(1) To Citizens: Citizens Gwinnett Bankshares, Inc.
3209 US Hwy. 23
Duluth, Georgia 30136-3546
Attention: Thomas J. Martin President
Facsimile: (770) 476-3209
44
<PAGE>
With copies to: Kilpatrick Stockton LLP
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30309
Attention: Richard R. Cheatham, Esq.
Facsimile: (404) 815-6555
(2) To Premier: Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Attention: Darrell D. Pittard Chairman and CEO
Facsimile: (404) 814-3672
With copies to: Womble Carlyle Sandridge & Rice, PLLC
Suite 700
1275 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Steven S. Dunlevie, Esq.
Facsimile: (404) 888-7490
10.4 ENTIRE AGREEMENT. This Agreement and the Merger Agreement supersede
----------------
all prior discussions and agreements between Citizens and Premier with respect
to the Merger and the other matters contained herein and therein, and this
Agreement and the Merger Agreement contain the sole and entire agreement between
Citizens and Premier with respect to the transactions contemplated herein and
therein.
10.5 WAIVER; AMENDMENT. Prior to or on the Closing Date, Premier shall
-----------------
have the right to waive any default in the performance of any term of this
Agreement by Citizens, to waive or extend the time for the fulfillment by
Citizens of any or all of Citizens' obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations of Premier under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any law or applicable governmental regulation. Prior to or on
the Closing Date, Citizens shall have the right to waive any default in the
performance of any term of this Agreement by Premier, to waive or extend the
time for the fulfillment by Premier of any or all of Premier's obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Citizens under this Agreement, except any condition which, if not
satisfied, would result in the violation of any law or applicable governmental
regulation. This Agreement may be amended by a subsequent writing signed by the
parties hereto, provided, however, that the provisions of Sections 8.5 and 9.5
requiring regulatory approval shall not be amended by the parties hereto without
regulatory approval.
45
<PAGE>
ARTICLE XI
----------
TERMINATION
-----------
This Agreement may be terminated at any time prior to or on the
Closing Date upon written notice to the other party as follows, and, upon any
such termination of this Agreement, neither party hereto shall have any
liability to the other, except that the provisions of Section 3.4 and 11.13
hereof shall survive the termination of this Agreement for any reason.
11.1 MATERIAL ADVERSE CHANGE. (a) By Premier, if, after the date
-----------------------
hereof, a material adverse change in the financial condition or business of
Citizens shall have occurred which change would reasonably be expected to have a
material adverse effect on the market price of Citizens Stock, or if Citizens
shall have suffered a material loss or damage to any of its properties or
assets, which change, loss or damage materially affects or impairs its ability
to conduct its business. (b) By Citizens, if, after the date hereof, a material
adverse change in the financial condition or business of Premier shall have
occurred which change would reasonably be expected to have a material adverse
effect on the market price of Premier Stock, or if Premier shall have suffered a
material loss or damage to any of its properties or assets, which change, loss
or damage materially affects or impairs its ability to conduct its business.
11.2 NONCOMPLIANCE. (a) By Premier, if the terms, covenants or
-------------
conditions of this Agreement to be complied with or performed by Citizens before
the Closing shall not have been substantially complied with or substantially
performed at or before the Closing Date and such noncompliance or nonperformance
shall not have been waived by Premier. (b) By Citizens, if the terms, covenants
or conditions of this Agreement to be complied with or performed by Premier
before the Closing shall not have been substantially complied with or
substantially performed at or before the Closing Date and such noncompliance or
nonperformance shall not have been waived by Citizens.
11.3 FAILURE TO DISCLOSE. (a) By Premier, if it learns of any fact
-------------------
or condition not disclosed in this Agreement, the Citizens Disclosure
Memorandum, or the 1996 Citizens Financial Statements, which was required to be
disclosed by Citizens pursuant to the provisions of this Agreement at or prior
to the date of execution hereof with respect to the business, properties, assets
or earnings of Citizens which materially and adversely affects such business,
properties, assets or earnings or the ownership, value or continuance thereof,
(b) By Citizens, if it learns of any fact or condition not disclosed in this
Agreement, the Premier Disclosure Memorandum, or the 1996 Premier Financial
Statements, which was required to be disclosed by Premier pursuant to the
provisions of this Agreement at or prior to the date of execution hereof with
respect to the business, properties, assets or earnings of Premier which
materially and adversely affect such business, properties, assets or earnings or
the ownership, value or continuance thereof.
11.4 ADVERSE PROCEEDINGS. By either party, if any action, suit or
-------------------
proceeding shall have been instituted or threatened against either party to this
Agreement to restrain or prohibit, or to obtain substantial damages in respect
of, this Agreement or the consummation of the transactions
46
<PAGE>
contemplated herein, which, in the good faith opinion of Citizens or Premier
makes consummation of the transactions herein contemplated inadvisable.
11.5 DISCLOSURE MEMORANDUM. By either party on or before June 30,
---------------------
1997, in the event that the review of the disclosures contained in the other
party's Disclosure Memorandum causes its Board of Directors to determine, in its
reasonable good faith judgment, that fact or circumstance exists or is likely to
exist or result which materially and adversely impacts one or more of the
economic benefits to it of the transactions contemplated by this Agreement so as
to render inadvisable the consummation of the Merger.
11.6 ACCOUNTING TREATMENT. By either party on or before July 24,
--------------------
1997, if the board of directors of a party determines that the Merger may not be
structured in a manner satisfactory to both boards of directors in their sole
discretion to qualify for "pooling of interests" accounting treatment.
11.7 TERMINATION DATE. By either party, if
----------------
the Closing Date shall not have occurred on or before November 30, 1997.
11.8 SHAREHOLDERS VOTE. By either party, if the Merger Agreement is
-----------------
not approved by the vote of the holders of either Citizens Stock or Premier
Stock as required by applicable law.
11.9 ENVIRONMENTAL LIABILITY OF CITIZENS. By Premier, if it learns
-----------------------------------
of any potential liability of Citizens arising from noncompliance with any
federal, state or local environmental law by Citizens, or any potential
liability of Citizens arising from any environmental condition of the properties
or assets of Citizens, including any properties or assets in which Citizens
holds a security interest.
11.10 ENVIRONMENTAL LIABILITY OF PREMIER. By Citizens, if it learns
----------------------------------
of any potential liability of Premier arising from noncompliance with any
federal, state or local environmental law by Premier, or any potential liability
of Premier arising from any environmental condition of the properties or assets
of Premier, including any properties or assets in which Premier holds a security
interest.
11.11 MUTUAL CONSENT. By the mutual consent of the Board of
--------------
Directors of both Citizens and Premier.
11.12 PREMIER STOCK PRICE. By Citizens or Premier within 3 days of
-------------------
the filing date of Premier's Registration Statement with the SEC, if the Market
Value of Premier Stock is less than $15.69 or greater than $19.19. For purposes
of this provision, the "Market Value of Premier Stock" shall be determined on
the basis of the ten (10) trading day average of the closing price of Premier
Stock during the ten (10) trading days preceding the filing date of Premier's
Registration Statement with the SEC.
11.13 EXPENSES UPON TERMINATION. If for any reason this Agreement is
-------------------------
terminated pursuant to Section 11.3 or in contemplation of an acquisition
proposal, the terminating party shall agree to pay the non-terminating party (i)
an amount equal to the reasonable and documented fees
47
<PAGE>
and expenses incurred by the non-terminating party in connection with the
examination and investigation of the non-terminating party, the preparation and
negotiation of this Agreement and related agreements, regulatory filings and
other documents related to the transactions contemplated hereunder, including,
without limitation, fees and expenses of investment bankers, consultants,
accountants, attorneys and other agents, and (ii) (x) $50,000 if this Agreement
is terminated pursuant to Section 11.3 and the nondisclosure is not willful or
(y) $150,000 if this Agreement is terminated pursuant to Section 11.3 and the
nondisclosure is willful or if this Agreement is terminated in contemplation of
an acquisition proposal, which sums represent compensation for the non-
terminating party's loss as a result of the transaction contemplated by this
Agreement not being consummated. Final settlement with respect to such fees and
expenses shall be made within thirty (30) days after the termination of this
Agreement. For purposes of this Section 11.13, an "acquisition proposal" shall
mean any tender offer or exchange offer, any proposal for merger, acquisition of
all the stock or assets of, or other business combination involving such
terminating party or the acquisition of a substantially equity interest in, or a
substantial portion of the assets of such terminating party or any of its
subsidiaries, a definitive agreement with respect to which is entered into
within one year of the date of this Agreement. Notwithstanding anything
contained herein to the contrary, no expenses shall be payable upon termination
pursuant to this Section 11.13 in the event of termination pursuant to Section
11.6 herein.
ARTICLE XII
-----------
COUNTERPARTS, READINGS, ETC.
----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The headings herein set out are for
convenience of reference only and shall not be deemed a part of this Agreement.
A pronoun in one gender includes and applies to the other genders as well.
ARTICLE XIII
------------
BINDING EFFECT
--------------
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement may not be assigned by either party without the
prior written consent of the other.
ARTICLE XIV
-----------
GOVERNING LAW
-------------
The validity and effect of this Agreement and the Merger Agreement and
the rights and obligations of the parties hereto and thereto shall be governed
by and construed and enforced in accordance with the laws of the State of
Georgia.
48
<PAGE>
IN WITNESS WHEREOF, Citizens and Premier have caused this Agreement to
be executed by their respective duly authorized corporate officers and their
respective corporate seals to be affixed hereto as of the day and year first
above written.
CITIZENS GWINNETT BANKSHARES, INC.
(CORPORATE SEAL) By: /s/ Thomas J. Martin
----------------------
Thomas J. Martin
President
Attest:
/s/ Darrell W. Moore
- ---------------------------
Darrell W. Moore, Secretary
PREMIER BANCSHARES, INC.
(CORPORATE SEAL) By: /s/ Darrell D. Pittard
------------------------
Darrell D. Pittard
Chairman and Chief Executive Officer
Attest:
/s/ Frank H. Roach
- --------------------
Frank H. Roach, Executive Vice President
and Treasurer
49
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this _____ day of June, 1997, by and between PREMIER BANCSHARES, INC.
("Premier") and CITIZENS GWINNETT BANKSHARES, INC. ("Citizens"), both Georgia
corporations (said corporations are hereinafter collectively referred to as the
"Constituent Corporations").
R E C I T A L S :
WHEREAS, the authorized capital stock of Premier consists of 20,000,000
shares of Common Stock, $1.00 par value per share (the "Premier Stock"), of
which 7,913,235 shares are issued and outstanding;
WHEREAS, the authorized capital stock of Citizens consists of 10,000,000
shares of Common Stock, $10.00 par value per share, of which 242,350 shares are
issued and outstanding and up to 27,200 shares are issuable upon the exercise of
stock options on the Effective Date (as defined herein) ("Citizens Stock");
WHEREAS, the respective Boards of Directors of the Constituent Corporations
deem it advisable and in the best interests of each such corporation and its
shareholders that Citizens merge with Premier, with Premier being the surviving
corporation;
WHEREAS, the respective Boards of Directors of the Constituent
Corporations, by resolutions duly adopted, have unanimously approved and adopted
this Agreement, and the Board of Directors of Citizens, by resolution duly
adopted, has directed that this Agreement be submitted to the shareholders of
Citizens for their approval; and
WHEREAS, Premier has agreed to issue shares of Premier Stock which
shareholders of Citizens will be entitled to receive, according to the terms and
conditions contained herein, on or after the Effective Date (as defined herein)
of the merger provided for herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and adequacy of which as legally sufficient consideration are hereby
acknowledged, the parties hereto have agreed and do hereby agree, as follows:
<PAGE>
1. MERGER.
------
Pursuant to and with the effects provided in the applicable provisions
of Article 11 of the Georgia Business Corporation Code, as amended (Chapter 2 of
Title 14 of the Official Code of Georgia), Citizens (hereinafter sometimes
referred to as the "Merged Corporation") shall be merged with and into Premier
(the "Merger"). Premier shall be the surviving corporation (the "Surviving
Corporation") and shall continue under the name "Premier Bancshares, Inc.". On
the Effective Date (as defined herein) of the Merger, the individual existence
of the Merged Corporation shall cease and terminate.
2. ACTIONS TO BE TAKEN.
-------------------
The acts and things required to be done by the Georgia Business
Corporation Code in order to make this Agreement effective, including the
submission of this Agreement to the shareholders of the Merged Corporation, the
shareholders of the Surviving Corporation and the filing of the Certificate of
Merger relating hereto in the manner provided in said Code, shall be attended to
and done by the proper officers of the Constituent Corporations with the
assistance of counsel as soon as practicable.
3. EFFECTIVE DATE.
--------------
The Merger shall be effective upon the approval of this Agreement by
the shareholders of the Merged Corporation, the shareholders of the Surviving
Corporation, and the filing of the Certificate of Merger relating hereto in the
manner provided in the Georgia Business Corporation Code (the "Effective Date").
4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION.
----------------------------------------------------- -----------
(a) The Articles of Incorporation of Premier, as heretofore amended,
shall on the Effective Date be the Articles of Incorporation of the Surviving
Corporation.
(b) Until altered, amended or repealed, as therein provided, the
Bylaws of Premier as in effect on the Effective Date shall be the Bylaws of the
Surviving Corporation.
5. MANNER AND BASIS OF CONVERTING SHARES OF CAPITAL STOCK; CAPITAL
------------------------------------------------------- -------
STRUCTURE OF THE SURVIVING CORPORATION.
- --------------------------------------
The manner and basis of converting the shares of capital stock of each
of the Constituent Corporations into shares of the Surviving Corporation shall
be as follows:
2
<PAGE>
(a) Based on $17.44 ("Premier Target Price"), upon the Effective Date
each share of Citizens' stock outstanding shall be converted into fully-paid and
nonassessable shares of Premier Stock at the following ratios ("Exchange Ratio")
based upon the following assumptions:
(i) If Premier Market Value is greater than 94% of the Premier
Target Price and less than 106% of the Premier Target Price, the Exchange Ratio
---
shall equal: [8.0876 x Premier Target Price/Premier Market Value].
(ii) If Premier Market Value is greater than 106% of the Premier
Target Price, the Exchange Ratio shall equal: [8.0876/1.06].
(iii) If Premier Market Value is
less than 94% of the Premier Target Price, the Exchange Ratio shall equal
[8.0876/0.94].
The "Premier Market Value" shall be determined on the basis of the ten
trading day average of the daily closing price of Premier Stock on the American
Stock Exchange during the ten trading days preceding the filing date of the
Registration Statement with the Securities and Exchange Commission.
(b) Any holder of shares of Citizens Common Stock who perfects such
holder's dissenter's rights of appraisal in accordance with and as contemplated
by Section 14-2-1106 of the Georgia Business Corporation Code (the "GBCC") shall
be entitled to receive the value of such shares in cash as determined pursuant
to such provision of the GBCC; provided, that no such payment shall be made to
any dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the GBCC and surrendered to Citizens
the certificate or certificates representing shares for which payment is being
made. In the event that after the Effective Date a dissenting shareholder of
Citizens fails to perfect, or effectively withdraws or loses, such holder's
right to appraisal and of payment for such holder's shares, the Surviving
Corporation shall issue and deliver the consideration to which such holder of
shares of Citizens Common Stock is entitled under this Section 5 (without
interest) upon surrender by such holder of the certificate or certificates
representing shares of Citizens Common Stock held by such holder.
(c) If either party should change the number of its outstanding shares
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such shares prior to the Effective Date then the shares of Premier
Stock to be issued hereunder to holders of Citizens Stock shall be
proportionately adjusted.
(d) No scrip or fractional share certificates of Premier Stock shall
be issued in connection with the Merger and an outstanding fractional share
interest will not entitle the owner thereof to vote, to receive dividends or to
have any of the rights of a shareholder with respect to such fractional
interest. In lieu of any fractional interest, there shall be paid in cash an
amount (computed to the nearest cent) equal to such fraction multiplied by the
Premier Market Value.
3
<PAGE>
(e) As soon as practicable after the Effective Date, each holder as of
the Effective Date of any of the shares of Citizens Stock, upon presentation and
surrender of the certificates representing such shares to Premier, shall be
entitled to receive in exchange therefor a certificate representing the number
of shares of Premier Stock to which such shareholder shall be entitled according
to the terms of this Agreement. Until such surrender, each such outstanding
certificate which prior to the Effective Date represented Citizens Stock shall
be deemed for all corporate purposes to evidence ownership of the number of
shares of Premier Stock into which the same shall have been converted and the
right to receive payment for fractional shares.
(f) Upon the Effective Date, each share of Premier Stock issued and
outstanding immediately prior to the Effective Date shall continue unchanged and
shall continue to evidence a share of common stock of the Surviving Corporation.
6. TERMINATION OF SEPARATE EXISTENCE.
---------------------------------
Upon the Effective Date, the separate existence of the Merged
Corporation shall cease and the Surviving Corporation shall possess all of the
rights, privileges, immunities, powers and franchises, as well of a public
nature as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account, and
all other choses in action, and all and every other interest of or belonging to
or due to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed, and the title to any real estate or any interest therein, vested in either
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger. The Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities, obligations and penalties of
each of the Constituent Corporations; and any claim existing or action or
proceeding, civil or criminal, pending by or against either of said Constituent
Corporations may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place, and any judgment rendered
against either of the Constituent Corporations may thenceforth be enforced
against the Surviving Corporation; and neither the rights of creditors nor any
liens upon the property of either of the Constituent Corporations shall be
impaired by the Merger.
7. FURTHER ASSIGNMENTS.
-------------------
If at any time the Surviving Corporation shall consider or be advised
that any further assignments or assurances in law or any other things are
necessary or desirable to vest in said corporation, according to the terms
hereof, the title to any property or rights of the Merged Corporation, the
proper officers and directors of the Merged Corporation shall and will execute
and make all such proper assignments and assurances and do all things necessary
and proper to vest title in such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes of this Agreement.
4
<PAGE>
8. CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.
--------------------------------------------------
This Agreement is subject to, and consummation of the Merger is
conditioned upon, the fulfillment as of the Effective Date of each of the
following conditions:
(a) Approval of this Agreement by the affirmative vote of the holders
of a majority of the outstanding voting shares of Citizens Stock;
(b) Approval of this Agreement by the affirmative vote of the holders
of a majority of the outstanding voting shares of Premier Stock; and
(c) All the terms, covenants, agreements, obligations and conditions
of the Agreement and Plan of Reorganization (the "Acquisition Agreement") of
even date herewith by and between Citizens and Premier to be complied with,
satisfied and performed on or prior to the Closing Date (as defined therein),
shall have been complied with, satisfied and performed in all material respects
unless accomplishment of such covenants, agreements, obligations and conditions
has been waived by the party benefited thereby.
9. TERMINATION.
-----------
This Agreement may be terminated and the Merger abandoned in
accordance with the terms of the Acquisition Agreement, at any time before or
after adoption of this Agreement by the directors of either of the Constituent
Corporations, notwithstanding favorable action on the Merger by the shareholders
of the Merged Corporation, but not later than the issuance of the certificate of
merger by the Secretary of State of Georgia with respect to the Merger in
accordance with the provisions of the Georgia Business Corporation Code.
10. COUNTERPARTS; TITLE; HEADINGS.
-----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Agreement and the
headings herein set out are for the convenience of reference only and shall not
be deemed a part of this Agreement.
11. AMENDMENTS; ADDITIONAL AGREEMENTS.
---------------------------------
At any time before or after approval and adoption by the shareholders
of Citizens, this Agreement may be modified, amended or supplemented by
additional agreements, articles or certificates as may be determined in the
judgment of the respective Boards of Directors of the Constituent Corporations
to be necessary, desirable or expedient to further the purposes of this
Agreement, to clarify the intention of the parties, to add to or modify the
covenants, terms or conditions contained herein or to effectuate or facilitate
any governmental approval of the Merger or this Agreement, or otherwise to
effectuate or facilitate the consummation of the transactions
5
<PAGE>
contemplated hereby; provided, however, that no such modification, amendment or
supplement shall reduce to any extent the consideration into which shares of
Citizens Stock shall be converted in the Merger pursuant to Section 5 hereof.
IN WITNESS WHEREOF, the Constituent Corporations have each caused this
Agreement to be executed on their respective behalfs and their respective
corporate seals to be affixed hereto as of the day and year first above written.
PREMIER BANCSHARES, INC.
(CORPORATE SEAL) By: /s/ Darrell D. Pittard
------------------------
Darrell D. Pittard
Chairman and Chief Executive Officer
Attest:
/s/ Barbara J. Burtt
- --------------------
Secretary
CITIZENS GWINNETT BANKSHARES, INC.
(CORPORATE SEAL) By: /s/ Thomas J. Martin
----------------------
Thomas J. Martin
President
Attest:
/s/ Darrell W. Moore
- --------------------
Secretary
6
<PAGE>
EXHIBIT 2.2
FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This First Amendment (the "Amendment") to Agreement and Plan of
Reorganization (the "Agreement") dated June 24, 1997, between Premier
Bancshares, Inc. ("Premier") and Citizens Gwinnett Bankshares, Inc. ("Citizens")
is made and entered into as of the 24th day of July 1997. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
ascribed to them in the Agreement.
WHEREAS, the parties desire to amend the Agreement to extend the
termination period in connection with a determination whether the Merger may be
accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and for the purpose of amending the Agreement,
Premier and Citizens agree as follows:
1. That Section 11.6 of the Agreement be deleted in its entirety and the
following Section 11.6 shall be inserted in lieu thereof:
"11.6. ACCOUNTING TREATMENT. By either party on or before August
8, 1997, if the board of directors of a party determines that the Merger
may not be structured in a manner satisfactory to both boards of directors
in their sole discretion to qualify for "pooling of interests" accounting
treatment."
Except as specifically amended herein the Agreement shall remain in
full force and effect. In witness whereof, the parties have caused this
Amendment to be signed by their duly authorized officers as of the date first
shown above.
Attest: PREMIER BANCSHARES, INC.
/s/ Barbara J. Burtt /s/ Darrell D. Pittard
- -------------------- ----------------------
Barbara J. Burtt, Secretary Darrell D. Pittard, Chairman
[CORPORATE SEAL]
Attest: CITIZENS GWINNETT BANKSHARES, INC.
/s/ Darrell W. Moore /s/ Thomas J. Martin
- -------------------- --------------------
Secretary Thomas J. Martin, President
[CORPORATE SEAL]
<PAGE>
EXHIBIT 10.12
SECOND AMENDMENT
TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This SECOND AMENDMENT (the "Second Amendment") to the Amended and Restated
Stock Purchase Agreement (the "Agreement") dated as of December 19, 1996, as
amended on February 25, 1997, by and between NET.B@NK, INC. (the "Company") and
PREMIER BANCSHARES, INC. (formerly known as First Alliance/Premier Bancsharse,
Inc., "Bancshares"), is entered into and made effective as of May 31, 1997.
Capitalized terms used herein and not otherwise defined shall have the meaning
ascribed to them in the Agreement.
WHEREAS, the parties hereto desire to further amend the Agreement for the
purpose of extending the termination date thereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Bancshares agree to further amend the
Agreement as follows:
1. Section 3.2 of the Agreement is hereby amended to extend the expiration
of the permissible Effective Date to August 31, 1997.
2. Section 10.1(b) of the Agreement is hereby amended to extend the
termiantion date of the Agreement to August 31, 1997.
3. In consideration of the above extensions, the Company shall, at
Closing, reimburse Bancshares for its documented out-of-pocket third-party
expenses incurred as a result of such extensions; provided, however that the
aggregate reimbursement shall not exceed $50,000 for June, 1997 and $25,000 for
July and August.
4. In further consideration of the above extensions and concurrent with
the execution of this Second Amendment, the Company shall pay to Bancshares
$25,000, which shall be deducted from expenses incurred by Bancshares for the
month of June 1997.
5. Except as hereinabove amended, the Agreement, as amended on February
25, 1997, shall remain otherwise in full force and effect.
6. This Second Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shal
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Second Amendment to
be execute don its behalf and its corporate seal to be hereunto affixed and
attested to by officers hereunto duly authorized, all as of the day and year
first above written.
NET.B@NK, INC.
Attest:
By: /s/ D. R. Grimes
---------------------------
/s/ Mary Johnson D. R. Grimes
- ------------------ Chief Executive Officer
Secretary
[CORPORATE SEAL]
PREMIER BANCSHARES, INC.
Attest:
By: /s/ Darrell D. Pittard
--------------------------
/s/ Barbara J. Burtt Darrell D. Pittard
- ---------------------- Chairman of the Board and
Secretary Chief Executive Officer
[CORPORATE SEAL]
<PAGE>
EXHIBIT 10.16
THIRD AMENDMENT TO
PURCHASE AND ASSUMPTION AGREEMENT
THIS THIRD AMENDMENT (the "Amendment") to the Purchase and Assumption
Agreement (the "Agreement"), dated as of December 19, 1996, by and between
PREMIER BANK, FSB, a federal savings bank organized under the laws of the United
States ("Seller"), and PREMIER BANK, formerly known as First Alliance Bank, a
commercial bank organized under the laws of the State of Georgia ("Purchaser"),
is made and entered into this 31st day of May, 1997. Capitalized terms used
herein and not otherwise defined shall have the meaning ascribed to them in the
Agreement.
WHEREAS, the parties hereto desire to amend the Agreement for the purpose
of extending the termination date thereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and Purchaser agree to amend the Agreement as
follows:
1. Section 13.1 of the Agreement is hereby amended to extend the
expiration of the permissible date of Closing to August 31, 1997.
2. Section 14.3 of the Agreement is hereby amended to extend the automatic
termination date of the Agreement to August 31, 1997.
3. Except as hereinabove amended, the Agreement shall remain otherwise in
full force and effect.
4. This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers hereunto duly authorized all as of the day and year first
above written.
PREMIER BANK, FSB
Attest:
By: /s/ J. Edward Mulkey, Jr.
--------------------------------------
J. Edward Mulkey, Jr., President
/s/ Barbara J. Burtt
- ----------------------
Assistant Secretary
[BANK SEAL]
<PAGE>
PREMIER BANK
Attest:
By: /s/ J. Edward Mulkey, Jr.
--------------------------------------
J. Edward Mulkey, Jr., President
/s/ Frank H. Roach
- --------------------
Assistant Secretary
[BANK SEAL]
2
<PAGE>
EXHIBIT 10.21
AGREEMENT FOR
PURCHASE OF CERTAIN ASSETS AND
ASSUMPTION OF CERTAIN LIABILITIES
BETWEEN
THE CENTRAL AND SOUTHERN BANK
OF NORTH GEORGIA, FSB
AND
THE CENTRAL AND SOUTHERN BANK OF GEORGIA
DATED
AUGUST 11, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF DEPOSIT LIABILITIES
<TABLE>
<C> <S> <C>
1.01 Sale of Assets.............................................................1
1.02 Assignment and Assumption of Deposit Liabilities...........................2
1.03 Purchase Price for Real Property, Personal Property and Purchased Loans....3
1.04 Payment for Assumption of Deposit Liabilities..............................4
1.05 Assignment of Contracts....................................................4
1.06 Prorations and Transfer Taxes..............................................4
1.07 Closing Date and Place of Closing..........................................5
1.08 Time for Delivery..........................................................5
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES OF SELLER
2.01 Organization...............................................................5
2.02 List of Deposit Liabilities, Loans and Contracts...........................5
2.03 Leases.....................................................................6
2.04 Real Property..............................................................6
2.05 Personal Property..........................................................6
2.06 Premises...................................................................6
2.07 Contracts, Consents and Other Agreements...................................7
2.08 Access to Information......................................................7
2.09 Preservation of Business, etc..............................................7
2.10 Accuracy of Exhibits.......................................................8
2.11 Untrue Statements..........................................................8
2.12 Litigation.................................................................8
2.13 Compliance With Laws.......................................................9
2.14 Conflicts..................................................................9
2.15 Corporate Approval.........................................................9
2.16 Regulatory Approval........................................................9
2.17 Other Agreements...........................................................9
2.18 Purchased Loans............................................................9
2.19 Seller's Indemnities and Assumptions......................................11
2.20 Warranties and Guaranties.................................................12
2.21 Retirement Accounts.......................................................12
ARTICLE III
COVENANTS, REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 Organization .............................................................13
3.02 Corporate Approval........................................................13
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
3.03 Conflicts.................................................................13
3.04 Regulatory Approval.......................................................13
3.05 Assumption of Contracts...................................................13
3.06 Litigation................................................................13
3.07 Purchaser's Indemnities and Assumptions...................................13
ARTICLE IV
DOCUMENTS AND TRANSFERS ON THE CLOSING DATE
AND THE ADJUSTMENT PAYMENT DATE
4.01 Closing Date - Seller.....................................................15
4.02 Closing Date - Purchaser..................................................16
4.03 Adjustment Payment Date - Seller..........................................17
4.04 Adjustment Payment Date - Purchaser.......................................17
ARTICLE V
CONDITIONS TO OBLIGATIONS OF SELLER
5.01 Compliance With Conditions...............................................17
5.02 Truth of Warranties......................................................17
5.03 Regulatory Approval......................................................18
5.04 Officers' Certificates...................................................18
5.05 Cooperation After Closing................................................18
5.06 Validity of Assumption...................................................18
5.07 Absence of Litigation....................................................18
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
6.01 Compliance With Terms of Agreement.......................................18
6.02 Truth of Warranties......................................................18
6.03 Regulatory Approval......................................................19
6.04 Officers' Certificate....................................................19
6.05 No Material Change.......................................................19
6.06 Cooperation After Closing................................................19
6.07 Validity of Assumption...................................................19
6.08 Absence of Litigation....................................................19
ARTICLE VII
TERMINATION
7.01 Termination...............................................................19
7.02 Risk of Loss..............................................................20
</TABLE>
ii
<PAGE>
ARTICLE VIII
MISCELLANEOUS
<TABLE>
<C> <S> <C>
8.01 Expenses.................................................................21
8.02 Press Releases...........................................................21
8.03 Nature and Survival of Representations and Warranties....................21
8.04 Brokers..................................................................21
8.05 Extensions and Waivers...................................................21
8.06 Removal of Signs.........................................................21
8.07 Amendments...............................................................21
8.08 Further Assurances.......................................................22
8.09 Binding Effect...........................................................22
8.10 Notices..................................................................22
8.11 Headings.................................................................23
8.12 Severability.............................................................23
8.13 Enforcement Costs........................................................23
8.14 Remedies Cumulative......................................................23
8.15 Entire Agreement.........................................................23
8.16 Governing Law............................................................23
</TABLE>
iii
<PAGE>
EXHIBIT 10.21
AGREEMENT
FOR
PURCHASE OF CERTAIN ASSETS AND
ASSUMPTION OF CERTAIN LIABILITIES
THIS AGREEMENT FOR PURCHASE OF CERTAIN ASSETS AND ASSUMPTION OF CERTAIN
LIABILITIES (the "Agreement") is made and entered into as of August 11, 1997
between The Central and Southern Bank of North Georgia, FSB, a federally-
chartered savings bank ("Seller"), and The Central and Southern Bank of Georgia,
a commercial bank organized under the laws of the State of Georgia
("Purchaser").
WHEREAS, Seller operates a branch savings bank office in a free-standing
premises located at:
201 South Main Street
Greensboro, Georgia 30642
(the "Branch Office"); and
WHEREAS, Purchaser desires to establish a bank branch to be located at
and operated from the Branch Office; and
WHEREAS, Seller desires to sell and transfer and Purchaser desires to
acquire certain assets and assume certain liabilities in connection with the
operation of the Branch Office including: (a) title to certain real and personal
property used in the operation of the Branch Office; (b) certain time, savings
and checking deposit accounts which are maintained at the Branch Office; and (c)
certain Purchased Loans (as defined below).
NOW, THEREFORE, in consideration of the above premises and the mutual
agreements, covenants and provisions herein contained, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF DEPOSIT LIABILITIES
1.01 SALE OF ASSETS. Upon the terms and conditions set forth in
--------------
this Agreement, Seller shall sell and convey to Purchaser, and Purchaser shall
purchase from Seller, certain of the assets used in connection with the
operation of the Branch Office including:
A. REAL PROPERTY. Good and marketable fee simple title to the
-------------
real property and improvements located thereon at the Branch Office, together
with all easements and appurtenances belonging thereto, and all intangible
rights, licenses and permits pertaining thereto or to the use
<PAGE>
thereof (the "Real Property"). A more detailed description of the Real Property
is attached hereto as Exhibit "A" and incorporated herein by this reference.
-----------
B. PERSONAL PROPERTY. The personal property owned by Seller and
-----------------
specifically set forth on Exhibit B attached hereto and incorporated herein by
---------
this reference, generally including, without limitation, fixtures, furniture,
equipment, materials, machine and equipment operations manuals, supplies, safe
deposit box keys, vault and drawer cash, security deposits, telephone and fax
numbers used by Seller in connection with the Branch Office, checks deposited to
Deposit Liabilities (as defined below) and returned for insufficient funds or as
doubtful of collection, subject nevertheless to collection, and savings and
checking deposit records and customer records related thereto (collectively, the
"Personal Property"), but excluding proprietary signage inserts of Seller.
C. PURCHASED LOANS. Those loans set forth on Exhibit C
--------------- ---------
(attached hereto and incorporated herein by this reference) plus those
additional loans which may be selected by Purchaser and Seller prior to the
Closing Date (the "Purchased Loans ").
D. CONTRACTS. Those contracts relating to the operation of the
---------
Branch Office as specifically selected by Purchaser pursuant to Section 3.05
hereof including, without limitation, safe deposit box rental agreements (the
"Selected Contracts").
1.02 ASSIGNMENT AND ASSUMPTION OF DEPOSIT LIABILITIES. Upon the
------------------------------------------------
terms and conditions set forth in this Agreement, Seller shall assign to
Purchaser and Purchaser shall assume all liabilities for payment of the
withdrawal value of all outstanding savings, checking, money-market and
certificate of deposit accounts, including individual retirement and Keogh
accounts, at the Branch Office existing as of the close of business on the
Closing Date (the "Deposit Liabilities"). Deposit Liabilities shall include
interest accrued thereon but not credited to the withdrawal value of the
appropriate account as of the close of business on the Closing Date.
On the Closing Date, Seller shall provide a final customer list of the
Deposit Liabilities. Within thirty (30) days after the date of this Agreement,
Seller shall notify the holders of the accounts comprising the Deposit
Liabilities to be assumed that, subject to closing requirements, Purchaser will
be assuming the liability of the accounts and shall set out the details of the
administration of the assumed accounts. Such notice shall be subject to the
prior approval by Purchaser, and Purchaser agrees to assist Seller in preparing
such notice. Holders of accounts opened subsequent to the date of the
notification contemplated above and prior to the Closing Date will be given a
copy of the Seller's notification letter by Seller at the time the account is
opened.
With respect to the Deposit Liabilities, the parties agree as follows:
A. DIRECT DEPOSIT ACCOUNTS. Seller will provide to Purchaser, no
-----------------------
less than ten (10) nor more than thirty (30) days prior to the Closing Date, a
list of its Automated Clearing House ("ACH") entries for electronic transfer
accounts domiciled at the Branch Office. At the Closing (as defined below),
Purchaser will provide ACH originators with account number conversion tapes or
2
<PAGE>
other documentary information. Seller will continue to accept and forward to
Purchaser ACH entries and corresponding funds related to the Deposit Liabilities
for one hundred twenty (120) days following the Closing Date. Seller will
notify Purchaser of receipt of any such funds within twenty-four (24) hours of
receipt. Following the expiration of the 120-day period, Seller may discontinue
accepting and forwarding ACH entries and funds and return them to the
originators marked "Account Closed," and Seller shall not be liable for any
account overdrafts which may be thereby created.
B. CHECKING ACCOUNTS. Within thirty (30) days after the Closing
-----------------
Date, Purchaser will provide holders of checking accounts, new checks bearing
appropriate Magnetic Ink Character Recognition ("MICR") encoding with
Purchaser's routing and transit numbers and the Purchaser's identification
number. Seller will forward to Purchaser checks received by it drawn on
accounts which are part of the Deposit Liabilities for a period of forty-five
(45) days following the Closing Date. After the 45 day period, Seller will
return these items marked "Account Closed" or "Refer to Maker" and Purchaser
will have no responsibility for the returned items. Purchaser accepts full
responsibility to either pay the items or return them in accordance with the
customer agreement and applicable law. During such 45-day period, Seller will
give Purchaser a daily accounting of debits to its clearing account. Purchaser
shall promptly reimburse Seller for such debits.
C. INTEREST REPORTING. Seller shall report from January 1, 1997
------------------
through the Closing Date and Purchaser shall report from the day after the
Closing Date and thereafter all interest credited to, interest withheld from and
early withdrawal penalties charged to the Deposit Liabilities. Said reports
shall be made to the holders of these accounts and to the applicable federal and
state regulatory agencies.
1.03 PURCHASE PRICE FOR REAL PROPERTY, PERSONAL PROPERTY AND PURCHASED
-----------------------------------------------------------------
LOANS. The purchase price for the Real Property, the Personal Property and the
- -----
Purchased Loans shall be equal to the sum of the Real Property Purchase Price
(as defined below), the Personal Property Purchase Price (as defined below) and
the Loans Purchase Price (as defined below), as set forth in this Section 1.03.
A. REAL PROPERTY. The purchase price for the Real Property shall be
-------------
equal to the book value of the Real Property (the "Real Property Purchase
Price"). Book value of the Real Property shall mean the value at which the Real
Property is carried for financial reporting purposes on the Seller's books at
the close of business on the last day of the calendar month immediately
preceding the month of the Closing.
B. PERSONAL PROPERTY. The purchase price for the Personal Property
-----------------
shall be equal to the net book value of the Personal Property reduced by the
book value of any such property which is not in working order (the "Personal
Property Purchase Price"). Net book value of the Personal Property shall mean
the sum of values at which the items of Personal Property are carried for
financial reporting purposes on the Seller's books at the close of business on
the last day of the calendar month immediately preceding the month of the
Closing.
3
<PAGE>
C. PURCHASED LOANS. The purchase price for the Purchased Loans shall
---------------
be equal to the outstanding principal balance of said loans, less any discount
or plus any premium specified by Seller with respect to each, and accrued
interest thereon as of the close of business on the Closing Date (the "Loans
Purchase Price"). Such aggregate principal balance of the Purchased Loans, as
adjusted for premiums or discounts, shall be hereinafter referred to as the
"Purchased Loans Base."
D. METHOD OF PAYMENT. The Real Property Purchase Price, the
-----------------
Personal Property Purchase Price and the Estimated Loans Purchase Price (as
defined below) shall be paid at the time of the Closing as a credit against
Seller's payment of the Estimated Liabilities Price (as defined below).
1.04 PAYMENT FOR ASSUMPTION OF DEPOSIT LIABILITIES. In connection
---------------------------------------------
with Purchaser's assumption of the Deposit Liabilities, Seller shall pay
Purchaser the Liabilities Price (as defined below).
A. LIABILITIES PRICE. The "Liabilities Price" shall be equal to one
-----------------
hundred percent (100%) of the total amount of the Deposit Liabilities.
B. CALCULATION OF PAYMENT ON THE CLOSING DATE. At the time of
------------------------------------------
Closing, Seller shall pay to Purchaser the estimated amount of the Liabilities
Price based on Deposit Liabilities as of a date (the "Calculation Date")
mutually agreed by Seller and Purchaser no more than five (5) business days
prior to the Closing Date (the "Estimated Liabilities Price"). The Seller shall
pay the Estimated Liabilities Price, adjusted for the Real Property Purchase
Price, the Personal Property Purchase Price and the estimated amount of the
Loans Purchase Price based on the Purchased Loans Base as of the close of
business on the Closing Date (the "Estimated Loans Purchase Price"), to
Purchaser in cash by federal funds wire on the Closing Date.
C. CALCULATION OF ADJUSTMENT PAYMENT DATE. Within fifteen (15) days
--------------------------------------
after the Closing Date, an adjustment payment (the "Adjustment Payment") shall
be made by the appropriate party so that the total amount paid by Seller equals
the Liabilities Price adjusted for the credits of the Real Property Purchase
Price, the Personal Property Purchase Price and the Loans Purchase Price. The
Adjustment Payment shall be paid by the appropriate party in cash by federal
funds wire.
1.05 ASSIGNMENT OF CONTRACTS. Seller shall assign the Selected
-----------------------
Contracts to Purchaser, who shall assume all rights and obligations of Seller
under the Selected Contracts from and after the close of business on the Closing
Date.
1.06 PRORATIONS AND TRANSFER TAXES. Amounts due and payable or
-----------------------------
prepaid relating to the Selected Contracts, property, intangible and tangible
taxes, safe deposit box rents, Savings Association Insurance Fund ("SAIF")
insurance premiums, or other prepaid items of a similar nature which are
assigned to Purchaser, shall be adjusted ratably to the Closing Date. Seller
shall pay the amount of all documentary stamp taxes and other transfer taxes
imposed by the State of Georgia and
4
<PAGE>
the county in which the Branch Office is located, and all applicable municipal
transfer taxes, as a result of the transaction contemplated by this Agreement.
Purchaser shall pay the amount of all sales taxes imposed by the State of
Georgia or any other governmental authority as a result of the transaction
contemplated by this Agreement. Utilities, including but not limited to phone,
water, sewer, garbage, electricity and gas, if applicable, shall be pro-rated as
of the Closing Date. Seller and Purchaser agree to cooperate with each other
subsequent to the Closing Date regarding the determination and payment of
accurate prorations for utilities.
1.07 CLOSING DATE AND PLACE OF CLOSING. Subject to satisfaction or
---------------------------------
waiver of all the conditions set forth in Articles V and VI of this Agreement,
the Closing shall be on a date mutually agreed between Purchaser and Seller, but
in no event later than October 31, 1997 (the "Closing Date"). The Closing shall
be held on the Closing Date at 10:00 A.M. at the offices of Womble Carlyle
Sandridge & Rice, PLLC, 1275 Peachtree Street, N.E., Suite 700, Atlanta, Georgia
30309 or such other location as may be mutually agreed between Purchaser and
Seller. The day of the Closing shall belong to the Purchaser for purposes of
prorating income and expenses.
1.08 TIME FOR DELIVERY. Except as otherwise provided, any delivery,
-----------------
conveyance, assignment or transfer that is to be made on the Closing Date or the
date of the Adjustment Payment, shall be made by and as of the close of business
on such date in the manner and at the place reasonably requested in writing by
the party that is to receive such delivery, conveyance, assignment or transfer.
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES OF SELLER
Seller covenants, represents and warrants to Purchaser as follows:
2.01 ORGANIZATION. Seller is a federally-chartered stock savings
------------
bank, validly existing and in good standing under the corporate laws of the
United States of America. Seller has all corporate power required to carry on
its business. Seller has and maintains all regulatory authorizations, licenses,
permits and certificates required to carry on its current business at the Branch
Office.
2.02 LIST OF DEPOSIT LIABILITIES, LOANS AND CONTRACTS. As soon as is
------------------------------------------------
reasonably possible, but in any event not more than thirty (30) days after the
execution of this Agreement, Seller at its sole cost and expense shall deliver
the following items, current (except as otherwise specified herein) as of a date
not more than five (5) days prior to the date of delivery to Purchaser:
A. DEPOSIT LIABILITIES. A schedule of all savings, checking, money-
-------------------
market and certificate of deposit accounts, including Deposit Liabilities
maintained at the Branch Office as of the close of business on June 30, 1997,
and such other historical account records as are in possession of Seller,
certified by the Chief Financial Officer or Treasurer of Seller to be true and
accurate. Such schedule shall include the account number and type of account
for each deposit account, interest rate
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paid for each applicable interest period, the maturity date, if any, the
principal balance of and interest paid for each applicable interest period and
such other information as may be necessary and desirable for the proper
administration of such accounts and claims made with respect thereto.
B. LOANS. A list of all loans of Seller which Seller desires to make
-----
available for purchase by Purchaser to the extent expected to remain outstanding
on the Closing Date (the "Branch Office Loans"), certified by the Chief
Financial Officer or Treasurer of Seller to be true and accurate.
C. CONTRACTS. A list of all oral and written contracts to which
---------
Seller is a party that are necessary for or in any way relate to the operation
of the Branch Office or Seller's business therein and, if written, a copy of
each such contract.
D. OPERATING EXPENSES. A schedule of operating expenses, excluding
------------------
employee salary and benefits, of the Branch Office for the twelve (12) months
preceding the date of this Agreement, if available, or if such schedule is not
available, the best available information regarding such operating expenses.
2.03 LEASES. Except as set forth in the list provided pursuant to
------
Section 2.02C, no real or personal property used in conjunction with the
operation of the Branch Office or the Seller's business therein is leased by
Seller.
2.04 REAL PROPERTY. Seller warrants that it has good and marketable
-------------
fee simple title to the Real Property. The Seller shall cause all deeds to
secure debt and other liens encumbering title to the Real Property to be paid in
full and canceled of record at or before the Closing.
2.05 PERSONAL PROPERTY. To the best of Seller's knowledge, the
-----------------
Personal Property is in good condition, reasonable wear and tear excepted, and
is suitable for the business conducted at the Branch Office. Seller warrants
that it is the owner of and has good and marketable title to the Personal
Property free and clear of all debts, liens, security interests and encumbrances
except as may be otherwise set forth in this Agreement, none of which will
materially affect the value or use of such Personal Property.
2.06 PREMISES. Exhibit D (attached hereto and incorporated herein by
-------- ---------
this reference) consists of true and correct copies of all documents and
agreements relating to the Branch Office in the possession of Seller. All
buildings, structures and appurtenances located at the Branch Office, including
drive-through facilities, are in good operating condition and in a state of good
repair, and are adequate and suitable for the purposes for which they are being
used. None of such buildings, structures, including drive-through facilities,
or appurtenances (or any equipment therein), nor the operation or maintenance
thereof, nor the operation of the Branch Office therein, violates any documents
or restrictive covenants or any provision of any federal, state or local law,
ordinance, rule or regulation, or encroaches on any property owned by others.
There are no special assessments affecting or relating to the Real Property. No
work has been done upon, or materials delivered to, the Branch Office, or any
portion thereof, during Seller's occupancy pursuant to Seller's instructions
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which is not fully paid for, nor does any person, firm or corporation now have
any lien rights with respect to the Branch Office or any part or parcel thereof
by reason of such work or material. No condemnation proceeding is pending or,
to the knowledge of the Seller, threatened which would preclude or impair the
use of the Real Property by the Seller for the purposes for which it is
currently used. To the best of Seller's knowledge, during the Seller's
occupancy of the Premises, no hazardous or toxic materials have been disposed of
on the Premises or discharged to the surrounding or underlying ground or waters.
To the best of the Seller's knowledge, and without independent investigation, no
hazardous or toxic materials were disposed of on the Premises or discharged to
the surrounding or underlying ground or water prior to the Seller's occupancy of
the Premises.
2.07 CONTRACTS, CONSENTS AND OTHER AGREEMENTS. Seller shall use its
----------------------------------------
best efforts to effect the lawful and valid assignment of the Selected Contracts
designated by Purchaser to Purchaser on the Closing Date, including without
limitation, the obtaining of all required consents to each such assignment from
other parties to the Selected Contracts. Seller agrees that, at any time and
from time to time after the Closing Date, Seller will, upon the request of
Purchaser, do, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney or assurances as may be required for
the valid assignment of the Selected Contracts to Purchaser.
2.08 ACCESS TO INFORMATION. From and after the date of this
---------------------
Agreement, Seller shall, during normal business hours, afford the officers,
attorneys, accountants and other authorized representatives of Purchaser
reasonable access to the Branch Office and the books, records and properties of
Seller pertaining to the Branch Office (including the Branch Office Loans) in
order that Purchaser may have full opportunity to make such investigations as
Purchaser shall reasonably desire to make of the Branch Office and such books,
records and properties, and Purchaser shall be permitted to make extracts from,
or copies of, such books and records. Seller shall furnish to Purchaser such
financial and operating data and other information regarding the Branch Office
as Purchaser shall reasonably request, which information shall be kept
confidential by Purchaser. Information not specifically relating to the Branch
Office subsequently or heretofore obtained, other than information available to
Purchaser through independent sources or in the public domain, shall be kept
confidential by Purchaser and shall not be used by Purchaser otherwise than in
connection with this Agreement and operation of the Branch Office after the
Closing Date. In the event of termination of this Agreement, each party shall
keep confidential all information received by the other party. In the event of
any such termination, Purchaser shall return to Seller all documents received
from Seller, and all copies thereof, that include or evidence such information.
2.09 PRESERVATION OF BUSINESS, ETC. Between the date of execution of
-----------------------------
this Agreement and the Closing Date, Seller: (a) shall preserve the Branch
Office as a going concern and operate such business only in the ordinary course
in accordance with its past practices; (b) without the prior written consent of
Purchaser, shall not offer for savings and checking account deposits at the
Branch Office any special promotion or premium for new savings and checking
accounts or additional deposits to existing savings and checking accounts; (c)
shall keep its books and records in accordance with generally accepted
accounting principles consistent with the principles applied in the preceding
fiscal
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year, except to the extent that generally accepted accounting principles have
been modified by federal law or regulation; (d) shall not enter into any
agreements relating to the Branch Office other than such as are incidental to
normal current operations; (e) shall not effectuate or consent to any
modification or cancellation of any Selected Contract; (f) shall not dispose of
any part of the Branch Office without the consent of Purchaser; (g) shall make
no changes in the personnel employed at the Branch Office other than
terminations for cause or replacement of personnel; (h) shall not change any of
its savings account practices at the Branch Office, except as required by
changes in applicable law or industry-wide practice; (i) shall not take any
action which would materially affect Purchaser's rights hereunder or the assets
to be acquired or liabilities to be assumed hereunder; and (j) shall not
increase the interests rates payable on any of the types of accounts at the
Branch Office unless any such increases are offered by the Seller at all of its
other branches. Seller will use its best efforts to maintain the Branch Office
and Personal Property in customary repair, and preserve the present
relationships with all customers of the Branch Office and with entities having
business dealings with it through the Branch Office. Seller agrees to provide
to Purchaser, at the time Seller provides such notice to its branch offices, but
in no event less than one business day prior to such change, written notice of
each change in interest rates to be paid on such types of accounts throughout
its branch offices generally, through the Closing Date.
2.10 ACCURACY OF EXHIBITS. True, complete and correct copies of
--------------------
contracts, agreements, leases and other instruments listed on any exhibit hereto
and noted on the exhibit as having been furnished to Purchaser have been and
will continue to be made available to Purchaser by Seller. To the best of
Seller's knowledge, all exhibits, schedules or lists to be provided by Seller to
Purchaser are or will be when delivered, complete and accurate in all material
respects. Seller shall update on the Closing Date to the close of business on
the Closing Date the information contained in any such exhibit, schedule or list
provided as of a date prior to the Closing Date pursuant to this Agreement.
2.11 UNTRUE STATEMENTS. No representation or warranty by Seller in
-----------------
this Agreement or any exhibit hereto, and/or any statement, schedule, list, or
officer's certificate furnished or to be furnished to Purchaser pursuant hereto
or in connection with the transactions contemplated hereby contains or will
contain, as of the date of delivery thereof or as amended or supplemented at the
Closing Date and at the Adjustment Payment Date, respectively, any untrue
statement of material fact, or omits or will omit to state any material fact,
necessary to make the statements contained herein or therein not misleading.
2.12 LITIGATION. There is no litigation, proceeding, examination or
----------
investigation pending or, to the knowledge of Seller, threatened against or
relating to the Branch Office or business of Seller conducted on or from the
Branch Office or in connection therewith which would have a materially adverse
effect (a) on Seller's business at the Branch Office, (b) on the prospects of
such business, or (c) on the Branch Office, or which questions the validity of
any action taken or to be taken by Seller pursuant to or in connection with the
provisions of this Agreement; and Seller does not know nor has any reasonable
grounds to know of any basis for any such action, or any governmental
investigation, examination or proceeding relative to the Branch Office or the
Seller's business conducted thereat.
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2.13 COMPLIANCE WITH LAWS. With respect to the Branch Office and the
--------------------
business of Seller carried on at the Branch Office, Seller is, and at all times
has been: (a) in material compliance with the provisions of any applicable
federal, state and local statutes, regulations and ordinances (including,
without limitation, those relating to solid waste and hazardous waste treatment
and their storage, on or off-site disposal, generation and transfers, those
relating to water, air or noise pollution, ground water contamination, the
handling, storage or release into the environment of hazardous materials or
hazardous substances or the transfer of hazardous materials), the violation of
which would impede Purchaser's ability to operate the Branch Office, including
without limitation all such regulations of governmental agencies having
jurisdiction over such business; and (b) in compliance with all material
agreements, contracts and commitments to which Seller is a party. To the best
of Seller's knowledge, Seller is not in violation of any such statute,
regulation or ordinance, or in default under any such material agreement,
contract or commitment other than as provided in Schedule 2.13 attached hereto.
2.14 CONFLICTS. The execution, delivery and performance of this
---------
Agreement and compliance with the provisions hereof by Seller will not conflict
with, or result in any material breach of any of the terms, conditions or
provisions of, or constitute a material default under, or, except for such
rights that may be created in favor of Purchaser by this Agreement, result in
the creation of any lien, charge or encumbrance upon the Branch Office pursuant
to, any corporate charter, bylaw, mortgage, lease, agreement, order, decree,
ruling or other instrument to which Seller is a party or by which Seller is
bound.
2.15 CORPORATE APPROVAL. The execution, delivery and performance of
------------------
this Agreement have been duly authorized by the Board of Directors of Seller
and, subject to receipt of required regulatory approvals, no other corporate
action or other approval, acquiescence or consent is required in order to
authorize the execution, delivery and performance of this Agreement by Seller.
2.16 REGULATORY APPROVAL. Seller shall use its best efforts to
-------------------
secure and to assist in securing any regulatory approval or consent required to
be obtained as a condition to the lawful consummation of the transactions
contemplated by this Agreement.
2.17 OTHER AGREEMENTS. Except for this Agreement, there is no other
----------------
outstanding agreement for the sale or transfer of any portion or all of the
Branch Office, the Real Property, the Personal Property, the Deposit Liabilities
or the Purchased Loans.
2.18 PURCHASED LOANS.
---------------
A. The Seller is the sole owner of each Purchased Loan and has the
authority to sell, transfer, and assign such loans on the terms herein set
forth; and there has been no assignment, sale, or hypothecation thereof by
Seller, except the usual hypothecation of the Purchased Loan documents in
connection with Seller's normal banking transactions in the conduct of its
business. As to each Purchased Loan, all applicable federal and state laws,
rules and regulations, as from time to time amended, have been complied with;
and all conditions within the control of Seller as to the
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<PAGE>
validity of the applicable insurance or guaranty as required by the National
Housing Act of 1934, as amended, and the rules and regulations thereunder, or as
required by the Servicemen's Readjustment Act of 1944, and the rules and
regulations thereunder, or by the mortgage insurance companies or other
insurers, have been properly satisfied and said insurance or guaranty is valid
and enforceable. Seller agrees to do all acts necessary to perfect title to the
Purchased Loans in Purchaser at Closing, and to be responsible at no expense to
Purchaser for seeing to it that at all times while this Agreement is in force,
policies of fidelity, fire, and extended coverage, theft, forgery and errors and
omissions insurance are maintained on the collateral property securing the
Purchased Loans, and shall furnish proof of such insurance coverage upon demand
by Purchaser.
B. Seller represents and warrants as to each Purchased Loan that:
(i) The applicable loan documents have been duly executed by the loan
debtor, acknowledged, and recorded; and the loan is valid and complies with all
applicable lending laws and regulations;
(ii) The loan debtor has duly executed appropriate evidence indicating
that the loan debtor has received the disclosure materials as required by
applicable laws and regulations;
(iii) The full original principal amount of the loan has been
advanced to the loan debtor, either by direct payment, or by payment made on the
loan debtor's request or approval; the unpaid principal balance is as stated on
Exhibit C; all costs, fees, and expenses incurred in making, closing, and
- ----------
recording the loan have been paid; no part of the security property has been
released from the lien of the loan; the terms of the loan have in no way been
changed or modified, except for loan adjustments made in compliance with the
loan contract and applicable regulatory requirements or as set forth in
appropriate amendments executed by the loan debtor and Seller; and the loan is
current and not in default;
(iv) Each loan which Seller represents to be insured by a private
mortgage insurance company, or to be insured or guaranteed by a governmental or
quasi-governmental agency, is so insured or guaranteed;
(v) There is in force a paid-up title insurance policy on the loan or
other documentary evidence in an amount at least equal to the outstanding
principal balance of the loan affirming the quality and validity of Seller's
lien securing the loan;
(vi) The assignment, if any, of the loan from the Seller to Purchaser
will be valid and sufficient;
(vii) All documents submitted are genuine, and all other
representations as to each loan sold are true and correct;
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<PAGE>
(viii) There is in force such flood insurance policy as is
required (if any) under the Flood Disaster Protection Act of 1973, as amended,
and implementing and other regulations; and
(ix) The improvements on the premises securing each loan are kept
insured by hazard insurance policies in an amount at least equal to the
outstanding principal of the loan, or the full insurable value of the
improvements, whichever is less.
2.19 SELLER'S INDEMNITIES AND ASSUMPTIONS.
------------------------------------
A. INDEMNITIES. Seller agrees to indemnify, hold harmless and
-----------
defend Purchaser at all times from and after the Closing Date against and from
any and all losses, claims, damages, costs, expenses or liabilities to which
Purchaser may become subject insofar as such losses, claims, damages, costs,
expenses and liabilities (including such attorneys' fees incurred in connection
with such actions even if incident to arbitration or appellate, bankruptcy and
post-judgment proceedings) arise out of or are based upon the following:
(i) The activities and operations of Seller, its officers, directors
and employees at or relating to the Branch Office for all periods prior to and
including the Closing Date, including but not limited to obligations and
liabilities relating to Selected Contracts, Deposit Liabilities, Real Property,
Personal Property, taxes and penalties and interest thereon and other
governmental laws and regulations, safe deposit boxes leased at any time prior
to Closing from the Branch Office and the payment of accrued interest;
(ii) The existence of any facts, circumstances, situations or
conditions or the happening of any event constituting a breach or violation of
any of the representations, warranties, covenants or agreements of Seller
contained in this Agreement, or the untruth or inaccuracy thereof, including but
not limited to all statements or figures contained in the exhibits to or
statements, certificates or lists and schedules provided pursuant to this
Agreement; provided, however, that Seller's obligations hereunder with respect
to any breach of representation or warranty shall not survive beyond three (3)
years after the Closing Date;
(iii) Any default or failure to perform, on the part of
Seller, occurring prior to or on the Closing Date, under any of the Selected
Contracts or Deposit Liabilities; and
(iv) The existence of any defect in the assignment of any Purchased
Loan, including Seller's lack of power or authority to make such assignment, or
of a defense asserted by a borrower under a Purchased Loan, which defect or
defense impedes or prevents, upon default of such borrower, the ability of
Purchaser to collect such Purchased Loan or to otherwise realize upon the
collateral securing such Purchased Loan.
The defense and indemnification will include, but not be limited to, losses or
potential losses under the Uniform Commercial Code relating to negotiable
instruments, assignments or pledges; claims
11
<PAGE>
relating to disclosures, representations, fraud or concealment; claims founded
on employee defalcation or negligence; and any other activity or failure to act
relating to the obtaining and handling of said accounts prior to or on the
Closing Date or in connection with the performance by Seller of any of its post-
Closing Date obligations under this Agreement, including without limitation
improper crediting or debiting of receipts or disbursements of the accounts;
provided, however, that Seller's obligations under Sections 2.19(A)(ii) and (iv)
with respect to Purchased Loans shall arise only if Seller fails to transfer to
and exchange with Purchaser a new loan (a "Substitute Loan") in substitution for
the Purchased Loan(s) giving rise to Seller's obligations under Sections
2.19(A)(ii) and (iv) within forty-five (45) days after Purchaser's notice to
Seller provided under this Section 2.19. Purchaser shall have the right in its
reasonable discretion to accept or reject a loan as a Substitute Loan and, once
accepted, a Substitute Loan shall be deemed a Purchased Loan for all purposes of
this Agreement. Transfers and conveyances of Purchased Loans by Purchaser to
Seller and of Substitute Loans by Seller to Purchaser shall take place in the
manner, and accompanied by the ancillary documentation, as specified in this
Agreement for the transfer and conveyance of Purchased Loans by Seller to
Purchaser on the Closing Date. Accruals for interest, hazard insurance, real
estate taxes, etc. shall be prorated as of the date of transfer and conveyance,
and differences in principal balances between Substitute Loans and the Purchased
Loans for which they were substituted shall be reconciled and paid by the
appropriate party on such date.
B. SELLER'S PARTICIPATION. Purchaser will supply Seller with notice
----------------------
of any loss, damage or claim which, if true, could result in loss or damage and
an indemnification obligation of Seller as set forth above. Seller shall have
the right to pay, settle or compromise any such claim. If Seller litigates any
action arising from such claim, Seller shall pay all costs imposed in litigating
the claim and any awards or judgments related to the claim which resulted from
actions or inactions prior to or on the Closing Date. If Seller fails to defend
Purchaser or fails to settle or compromise the claim within a reasonable period
of time after notice, then Purchaser shall be entitled to settle, compromise or
pay any award or judgment (after giving Seller notice of its intention to do so)
and Purchaser shall be entitled to immediately receive reimbursement therefore
from Seller upon written demand, whether the matter was litigated, settled or
compromised, equal to the amount of any award or judgment, and/or equal to the
amount of any settlement or costs of any compromise paid by or incurred by
Purchaser plus an amount equal to attorneys' fees incident to arbitration or
appellate, bankruptcy and post-judgment proceedings and paraprofessional fees.
2.20 WARRANTIES AND GUARANTIES. With respect to the Personal
-------------------------
Property, Seller shall assign and deliver to Purchaser, on or prior to the
Closing Date, all warranties and guaranties, manufacturers' or otherwise, which
are in force and effect as of the Closing Date and which are not expressly made
non-assignable by their own terms.
2.21 RETIREMENT ACCOUNTS. Seller shall resign as trustee under
-------------------
individual retirement and Keogh accounts included in the Deposit Liabilities,
effective on the Closing Date and appoint Purchaser as its successor trustee in
accordance with the terms of such account documents. Seller shall promptly send
appropriate notices to such account holders.
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<PAGE>
ARTICLE III
COVENANTS, REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser covenants, represents and warrants to Seller as follows:
3.01 ORGANIZATION. Purchaser is a Georgia chartered commercial bank
------------
validly existing and in good standing under the laws of the State of Georgia.
Purchaser has all corporate power, subject to required regulatory approvals, to
carry on the business of a commercial bank at the Branch Office.
3.02 CORPORATE APPROVAL. The execution, delivery and performance of
------------------
this Agreement have been duly authorized by the Board of Directors of Purchaser
and, subject to receipt of required regulatory approvals, no other corporate
action or other approval or consent is required in order to authorize the
execution, delivery and performance of this Agreement by Purchaser.
3.03 CONFLICTS. The execution, delivery and performance of this
---------
Agreement and compliance with the provisions hereof by Purchaser will not
conflict with, or result in any material breach of any of the terms, conditions
or provisions of, or constitute a material default under, any corporate charter,
bylaw, mortgage, lease, agreement, order, decree, ruling or other instrument to
which Purchaser is a party or by which Purchaser is bound.
3.04 REGULATORY APPROVAL. Purchaser shall use its best efforts to
-------------------
secure and to assist in securing any regulatory approval or consent required to
be obtained as a condition to the lawful consummation of the transactions
contemplated by this Agreement.
3.05 ASSUMPTION OF CONTRACTS. Within fifteen (15) days after receipt
-----------------------
of contracts to be provided to Purchaser by Seller pursuant to Section 2.02C,
Purchaser shall inform Seller, in writing, of those contracts, Purchaser wants
to assume, which contracts shall comprise the "Selected Contracts."
3.06 LITIGATION. There is no litigation, proceeding, examination or
----------
investigation pending or, to the knowledge of Purchaser, threatened against or
relating to the business of Purchaser to be conducted on or from the Branch
Office or in connection therewith which questions the validity of any action
taken or to be taken by Purchaser pursuant to or in connection with the
provisions of this Agreement; and, Purchaser does not know and has no reasonable
grounds to know of any basis for any such action, or any governmental
investigation, examination or proceeding relative to the Branch Office or the
Purchaser's proposed business thereat.
3.07 PURCHASER'S INDEMNITIES AND ASSUMPTIONS.
---------------------------------------
A. INDEMNITIES. Purchaser agrees to indemnify, hold harmless and
-----------
defend Seller at all times after the Closing Date against and from any and all
losses, claims, damages, costs, expenses or liabilities to which Seller may
become subject insofar as such losses, claims, damages, costs, expenses and
liabilities (including such attorneys' fees, incurred in connection with such
action
13
<PAGE>
even if incident to arbitration or appellate, bankruptcy and post-judgment
proceedings) arise out of or are based upon the following:
(i) The activities and operations of Purchaser at the Branch Office
for all periods after the Closing Date, including, but not limited to,
obligations to depositors and borrowers on deposits and loans acquired by
Purchaser, obligations and liabilities relating to taxes and penalties and
interest thereon and other governmental laws and regulations;
(ii) The existence of any facts, circumstances, situations or
conditions or the happening of any event constituting a breach or violation of
any of the representations, warranties, covenants or agreements of Purchaser
contained in this Agreement, or the untruth or inaccuracy thereof; provided,
however, that Purchaser's obligations hereunder with respect to any breach of
representation or warranty shall not survive beyond three (3) years after the
Closing Date;
(iii) Any default or failure to perform, on the part of Purchaser,
occurring after the Closing Date, under any of the Selected Contracts and
Deposit Liabilities; and
(iv) All damages to persons or property which occur after the Closing
Date in or relating to the operation of the Branch Office unless such damages
result from a breach by Seller of its obligations under this Agreement.
The defense and indemnification will include, but not be limited to, losses or
potential losses under the Uniform Commercial Code relating to negotiable
instruments, assignments or pledges; claims relating to disclosures,
representations, fraud or concealment; claims founded on employee defalcation or
negligence; and other activity or failure to act relating to the obtaining and
handling of said accounts after the Closing Date, including improper crediting
or debiting of receipts or disbursements of the accounts.
B. PURCHASER'S PARTICIPATION. Seller will supply Purchaser with
-------------------------
notice of any loss or damage or claim which, if true, could result in loss or
damage and an indemnification obligation of Purchaser as set forth above.
Purchaser shall have the right to pay, settle or compromise any such claim. If
Purchaser litigates any action arising from such claim, Purchaser shall pay all
costs imposed in litigating the claim and any awards or judgments related to the
claim which resulted from actions or inactions subsequent to the Closing Date.
If Purchaser fails to defend Seller or fails to settle or compromise the claim
within a reasonable period of time after notice, then Seller shall be entitled
to settle, compromise or pay any award or judgment (after giving Purchaser
notice of its intention to do so) and Seller shall be entitled to receive
reimbursement therefore from Purchaser upon written demand, whether the matter
was litigated, settled or compromised, equal to the amount of any award or
judgment, and/or equal to the amount of any settlement or cost of any compromise
paid by or incurred by Seller plus an amount equal to attorneys' fees even if
incident to arbitration or appellate, bankruptcy and post-judgment proceedings
and paraprofessional fees.
14
<PAGE>
C. NO ASSUMPTIONS. There shall be no general assumption by Purchaser
--------------
of Seller's liabilities, whether accrued or unaccrued, contingent, or otherwise;
except, (i) liabilities relating to the Selected Contracts assumed by Purchaser;
and (ii) the Deposit Liabilities.
ARTICLE IV
DOCUMENTS AND TRANSFERS ON THE CLOSING DATE
AND THE ADJUSTMENT PAYMENT DATE
4.01 CLOSING DATE - SELLER. On or before the Closing Date, Seller
---------------------
shall deliver the following documents and make the following transfers to
Purchaser:
A. A statement listing each Deposit Liability as of the Calculation
Date upon which the Estimated Liabilities Price was calculated, setting forth
the name, address and social security number, if known, of the depositor
thereof, account number and type of account, the principal balance, accrued
interest, maturity date, if any, interest rate, and other information requested
by Purchaser, certified in writing by the Chief Financial Officer or Treasurer
of Seller as being true and correct as of the close of business of such date;
B. A statement setting forth the name and address of the borrower,
the outstanding principal amount, the maturity date, the interest rate and the
amount of accrued but unpaid interest owing as of the Calculation Date, for each
Purchased Loan, certified by the Chief Financial Officer or Treasurer of Seller
as being true and correct as of the close of business as of such date. Seller
shall furnish the borrower with an Internal Revenue Service Form 1098 interest
statement and an explanatory letter regarding the interest paid for the calendar
year-to-date as of the Closing Date. Purchaser shall furnish the borrower with
an internal Revenue Service Form 1098 interest statement for interest paid from
the Closing Date through the end of the calendar year;
C. A Closing Statement detailing the amounts to be transferred by
Seller to Purchaser pursuant to Section 1.04B setting forth, in reasonable
detail, the Estimated Liabilities Price, the Real Property Purchase Price, the
Personal Property Purchase Price and the Estimated Loans Purchase Price, as well
as the prorations required by Section 1.06 hereof;
D. An Officer's Certificate as provided in Section 6.04 of this
Agreement;
E. The transfer of the Estimated Liabilities Price, as adjusted,
pursuant to Section 1.04B of this Agreement, and the payment of the other
amounts payable by Seller pursuant to Section 1.06 hereof;
F. The following records:
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(i) All records maintained at the Branch Office relating to the
Deposit Liabilities, including signature cards, applications, truth-in-savings
and other disclosures, copies of passbooks and certificates;
(ii) All records maintained at the Branch Office relating to the
operation of the Branch Office;
(iii) All original forms of the Selected Contracts duly
assigned to Purchaser with all necessary consents obtained and attached;
(iv) Security deposits, if any, held by Seller under the Selected
Contracts; and
(v) All original notes, mortgages, security agreements, loan files and
other documents relating to the Purchased Loans duly endorsed or assigned to
Purchaser including, without limitation, appraisals, surveys, title insurance
policies, applications, hazard insurance policies and disclosure statements;
G. A bill of sale containing warranties of title and freedom from
encumbrances transferring the Personal Property and the Purchased Loans;
H. Possession of the Branch Office, Real Property and Personal
Property;
I. All warranties and guaranties as to Personal Property as provided
in Section 2.19 of this Agreement; and
J. All of Seller's right, title and interest in and to the safe
deposit box business located at the Branch Office including removable safe
deposit boxes and safe deposit box stacks in the vaults, together with all
rights and benefits accruing to the lessor from and after the Closing Date under
rental agreements with persons to whom any such boxes are rented under
agreements with Seller (which rent shall be prorated in accordance with Section
1.06), and all of the keys, combinations, signature cards, agreements and
records pertaining to the operation of such safe deposit boxes by Seller.
4.02 CLOSING DATE - PURCHASER. On or before the Closing Date,
------------------------
Purchaser shall deliver to Seller the following:
A. An Officer's Certificate as provided in Section 5.04 of this
Agreement;
B. An assumption of Seller's obligations under the Selected
Contracts and Deposit Liabilities; and
16
<PAGE>
C. The amount of the sales taxes to be paid by Purchaser as provided
in Section 1.06 of this Agreement.
4.03 ADJUSTMENT PAYMENT DATE - SELLER. On the Adjustment Payment
--------------------------------
Date, Seller shall deliver the following documents and make the following
transfers to Purchaser:
A. An amended statement listing each change from the statement
delivered pursuant to Section 4.01A in the Deposit Liabilities to be transferred
to and assumed by Purchaser, setting forth the name, address and social security
number, if known, of the depositor thereof, account number and type of account,
the principal balance, accrued interest, maturity date, if any, interest rate,
and other information required by Purchaser, as of the close of business on the
Closing Date, certified by the Chief Financial Officer or Treasurer of Seller as
being true and correct;
B. An amended statement setting forth any change from the statement
delivered pursuant to Section 4.01B setting forth the name and address of the
borrower, the outstanding principal amount, the maturity date, the interest rate
and the amount of accrued but unpaid interest owing for each Purchased Loan as
of the close of business on the Closing Date, certified by the Chief Financial
Officer or Treasurer of Seller as being true and correct; and
C. Any Adjustment Payment due to Purchaser, as provided in Section
1.04C of this Agreement.
4.04 ADJUSTMENT PAYMENT DATE - PURCHASER. On the Adjustment Payment
-----------------------------------
Date, Purchaser shall prepare, with the assistance of Seller, a Closing
Statement for execution by the parties and pay to Seller any Adjustment Payment
due to Seller pursuant to Section 1.04C of this Agreement.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated under
this Agreement are subject to the satisfaction of the following conditions on or
prior to the Closing Date unless otherwise waived in writing by Seller:
5.01 COMPLIANCE WITH CONDITIONS. All of the terms, covenants and
--------------------------
conditions of this Agreement to be complied with and performed by Purchaser on
or before the Closing Date shall have been duly complied with and performed in
all material respects.
5.02 TRUTH OF WARRANTIES. The representations and warranties made by
-------------------
Purchaser herein or in any certificate or document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
shall be true and correct in all material respects, on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
17
<PAGE>
5.03 REGULATORY APPROVAL. All required regulatory approvals shall
-------------------
have been obtained from the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation, and the Georgia Department of Banking and Finance or such
other applicable regulatory authority in a manner and form reasonably
satisfactory to Seller and shall be in full force and effect.
5.04 OFFICERS' CERTIFICATES. Seller shall have received certificates
----------------------
of Purchaser's President or Executive Vice President, dated as of the Closing
Date, certifying that: (a) Purchaser has performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by Purchaser prior to or at the Closing Date; and (b) all representations
and warranties made by Purchaser in this Agreement, or in any certificate or
document delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, are true and correct at and as of the Closing
Date.
5.05 COOPERATION AFTER CLOSING. Seller and Purchaser shall have
-------------------------
agreed on procedures for handling ACH transactions, direct deposits, in-clearing
items, ATM transactions and like transactions relating to the Deposit
Liabilities after the Closing Date.
5.06 VALIDITY OF ASSUMPTION. The validity of the form, substance and
----------------------
legal enforceability of all instruments of transfer and other documentation
hereunder shall be subject to the reasonable approval of Seller and its counsel.
5.07 ABSENCE OF LITIGATION. No action or proceeding shall have been
---------------------
instituted or threatened on or before the Closing Date or pertaining to the
acquisition contemplated hereby or otherwise, the result of which could be
materially adverse to the assumption, service and operation by Purchaser of the
assets purchased and liabilities assumed hereunder.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions contemplated
under this Agreement are subject to the satisfaction of the following conditions
on or prior to the Closing Date unless otherwise waived in writing by Purchaser:
6.01 COMPLIANCE WITH TERMS OF AGREEMENT. All of the terms, covenants,
----------------------------------
and conditions of this Agreement to be complied with and performed by Seller on
or before the Closing Date shall have been duly complied with and performed in
all material respects.
6.02 TRUTH OF WARRANTIES. The representations and warranties made by
-------------------
Seller herein or in any certificate or document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on the Closing Date.
18
<PAGE>
6.03 REGULATORY APPROVAL. All required regulatory approvals shall
-------------------
have been obtained from the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation, and the Georgia Department of Banking and Finance or such
other applicable regulatory authority in a manner and form reasonably
satisfactory to Purchaser and shall be in full force and effect.
6.04 OFFICERS' CERTIFICATE. Purchaser shall have received
---------------------
certificates of Seller's President or Executive Vice President dated as of the
Closing Date, certifying that: (a) Seller has performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by Seller prior to or at the Closing Date; (b) all representations and
warranties made by Seller in this Agreement, or in any certificate or document
delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, are true at and as of the Closing Date; and
(c) no default exists under any Purchased Loans as of the Closing Date.
6.05 NO MATERIAL CHANGE. On the Closing Date, there shall have been
------------------
no material adverse change in the business or prospects of the Branch Office.
6.06 COOPERATION AFTER CLOSING. Seller and Purchaser shall have
-------------------------
agreed on procedures for handling ACH transactions, direct deposits, in-clearing
items, ATM transactions and like transactions related to the Deposit Liabilities
after the Closing Date.
6.07 VALIDITY OF ASSUMPTION. The validity of the form, substance and
----------------------
legal enforceability of all instruments of transfer and other documentation
hereunder including, without limitation, that required to be delivered pursuant
to Section 4.01 hereof, shall be subject to the reasonable approval of Purchaser
and its counsel.
6.08 ABSENCE OF LITIGATION. No action or proceeding shall have been
---------------------
instituted or threatened on or before the Closing Date or pertaining to the
acquisition contemplated hereby or otherwise, the result of which could be
materially adverse to the assumption, service and operation of Purchaser of the
assets purchased and liabilities assumed hereunder.
ARTICLE VII
TERMINATION
7.01 TERMINATION. This Agreement shall terminate and be of no
-----------
further force or effect between the parties hereto, and the parties shall be
released from all further obligations hereunder (except with respect to any
liability for breach of any duty or obligation arising prior to the date of
termination), upon the earlier occurrence of any of the following:
A. Purchaser's election, in its sole and absolute discretion, not to
proceed with this Agreement and the transactions contemplated herein at the end
of a period of thirty (30) days following the date hereof (the "Due Diligence
Period"). Such election shall be in writing and delivered to Seller within five
(5) business days following the end of the Due Diligence Period. If
19
<PAGE>
Purchaser shall elect to terminate this Agreement under this Section 7.01A, such
termination shall be without any liability to either of the parties hereto.
B. Termination pursuant to Section 7.02.
C. Upon the expiration of fifteen (15) days after the Office of
Thrift Supervision (or its successor), the Federal Deposit Insurance
Corporation, the Georgia Department of Banking and Finance and/or any other
appropriate regulatory authority issues a decision denying or refusing to grant
the approval or consent required to be obtained pursuant to this Agreement,
unless within said period Seller and Purchaser agree in writing to submit or
resubmit an application to or appeal the decision of the regulatory authority
which has denied or refused to grant said approval.
D. Immediately upon the expiration of thirty (30) days from the date
that either party hereto has given notice to the other party hereto of such
other party's breach or misrepresentation of any condition, warranty,
representation or covenant herein; provided, such breach or misrepresentation
results in a condition which materially and adversely affects the value of one
party's performance being tendered by the other, and further provided that no
such termination shall take effect if within said 30-day period the party so
notified shall have substantially corrected the ground for termination as
specified in the aforementioned notice.
E. Upon failure to consummate the transactions contemplated herein
by October 31, 1997.
Anything in the foregoing to the contrary notwithstanding, neither party
hereto shall have the right to terminate this Agreement due to its default or
immaterial default by the other party hereto, and no termination hereunder shall
relieve any party from any liability for its own breach of this Agreement.
7.02 RISK OF LOSS. If the Branch Office, the Real Property or the
------------
Personal Property are damaged by fire or other casualty prior to the Closing
Date and the estimated cost of restoration does not exceed three percent (3%) of
the assessed valuation of the property so damaged, the cost of restoration shall
be an obligation of Seller and the Closing shall proceed pursuant to the terms
of this Agreement with estimated restoration costs paid by Seller and escrowed
at Closing. If the estimated cost of restoration exceeds three percent (3%) of
the assessed valuation of the property so damaged, Purchaser shall have the
option of either: (a) taking the Branch Office, the Real Property and the
Personal Property as is together with either the three percent (3%) limit on
restoration costs or any insurance proceeds payable by virtue of such loss or
damage; or (b) terminating this Agreement without liability to Purchaser.
20
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.01 EXPENSES. Except as otherwise specifically provided in this
--------
Agreement, Seller and Purchaser each shall pay its own expenses in connection
with this Agreement and the transactions contemplated hereby, including counsel
fees and expenses.
8.02 PRESS RELEASES. Seller and Purchaser shall consult with each
--------------
other as to the form and substance of any press release or other public
disclosure of matters relating to this Agreement prior to the distribution or
publication of any such release; provided, however, that nothing herein shall be
deemed to prohibit any party, after such consultation, from making any
disclosure which it or its counsel deems necessary in order to fulfill such
party's disclosure obligations imposed by law.
8.03 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
-----------------------------------------------------
representations and warranties made by Seller and Purchaser in this Agreement or
pursuant hereto shall survive the Closing Date.
8.04 BROKERS. Each of the parties represents and warrants that such
-------
party has dealt with no broker or finder in connection with any of the
transactions contemplated by this Agreement, and, insofar as such party knows,
no broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions. The parties each agree to indemnify
and hold harmless one another against any loss, liability, damage, cost, claim
or expense incurred by reason of any brokerage commission or finder's fee
alleged to be payable because of any act, omission or statement of the
indemnifying party.
8.05 EXTENSIONS AND WAIVERS. The parties, by written agreement, may:
----------------------
(a) extend the time for the performance of any of the obligations or other acts
of the parties hereto; (b) waive any inaccuracies in the representations
contained in this Agreement or in any document delivered pursuant to this
Agreement; and, (c) waive compliance with or modify any of the covenants
contained in this Agreement and waive or modify the performance of any of the
obligations of the parties hereto. Any agreement on the part of any party for
any such extension, modification or waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if authorized by the Board of
Directors or the President or any Senior Vice President of such party.
8.06 REMOVAL OF SIGNS. Purchaser and Seller shall coordinate the
----------------
removal of signs from the Branch Office bearing Seller's name and the
replacement of such signs with those bearing Purchaser's name. The parties
shall use their best efforts to cause this to occur immediately after the
Closing Date and prior to the next business day. Seller shall pay for the labor
involved in the removal of the signs, as well as any repairs necessary to be
made to the Branch Office as a result of the removal, and Purchaser shall pay
for the new sign bearing Purchaser's name. In the event Seller has not
cooperated in the removal of said signs or repaired the building within seven
(7) days after the Closing Date as provided herein, then Purchaser may remove
said signs or repair the building, which removal or repair shall be at Seller's
expense.
21
<PAGE>
8.07 AMENDMENTS. Except as otherwise provided herein, the provisions
----------
of this Agreement may not be amended, supplemented or waived orally, but only by
a writing signed by the party as to whom enforcement of any such amendment,
supplement or waiver is sought and making specific reference to this Agreement.
8.08 FURTHER ASSURANCES. The parties hereby agree from time to time
------------------
to execute and deliver such further and other transfers, assignments and
documents and do all matters and things which may be convenient or necessary to
more effectively and completely carry out the intentions of this Agreement.
8.09 BINDING EFFECT. All of the terms and provisions of this
--------------
Agreement, whether so expressed or not, shall be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective legal
representatives, successors and permitted assigns.
8.10 NOTICES. All notices, requests, consents and other
-------
communications required or permitted under this Agreement shall be in writing
(including telex, telefaxed and telegraphic communication) and shall be (as
elected by the person giving such notice) hand delivered by messenger or courier
service, telecommunicated, or mailed by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
PURCHASER: With a copy to:
The Central and Southern Bank Womble Carlyle Sandridge & Rice, PLLC
of Georgia Suite 700
150 West Greene Street 1275 Peachtree Street, N.E.
Milledgeville, Georgia 31061 Atlanta, Georgia 30309
Attention: Robert C. Oliver,
President Attention: Steven S. Dunlevie, Esq.
SELLER: With a copy to:
The Central and Southern Bank Womble Carlyle Sandridge & Rice, PLLC
of North Georgia, FSB Suite 700
201 South Main Street 1275 Peachtree Street, N.E.
Greensboro, Georgia 30642 Atlanta, Georgia 30309
Attention: Tren B. Watson,
President Attention: Steven S. Dunlevie, Esq.
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
22
<PAGE>
8.11 HEADINGS. The headings, table of contents and list of exhibits
--------
contained in this Agreement are for convenience of reference only, are not to be
considered a part hereof and shall not limit or otherwise affect in any way the
meaning or interpretation of this Agreement.
8.12 SEVERABILITY. If any provision of this Agreement or any other
------------
Agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
8.13 ENFORCEMENT COSTS. If any legal action or other proceeding is
-----------------
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, court costs and all expenses (including, without limitation,
all such fees, costs and expenses incident to arbitration, appellate, bankruptcy
and post-judgment proceedings), incurred in that action or proceeding, in
addition to any other relief to which such party or parties may be entitled.
Attorneys' fees shall include, without limitation, paralegal fees, investigative
fees, expert witness fees, administrative costs, and all other charges billed by
the attorney to the prevailing party.
8.14 REMEDIES CUMULATIVE. Except as otherwise expressly provided
-------------------
herein, no remedy herein conferred upon any party is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise. No single or partial
exercise by any party of any right, power or remedy hereunder shall preclude any
other or further exercise thereof.
8.15 ENTIRE AGREEMENT. This Agreement represents the entire
----------------
understanding and agreement among the parties with respect to the subject matter
hereof, and supersedes all other negotiations, understandings and
representations (if any) made by and among such parties.
8.16 GOVERNING LAW. Except to the extent governed by federal law,
-------------
this Agreement shall be construed in accordance with the laws of the State of
Georgia applicable to agreements made and to be performed in Georgia.
[The remainder of this page intentionally left blank]
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the 11th day of August, 1997.
PURCHASER:
[CORPORATE SEAL] THE CENTRAL AND SOUTHERN BANK OF GEORGIA
Attest: /s/ By: /s/ Robert C. Oliver
------------------- ---------------------
Secretary Robert C. Oliver
Chairman
SELLER:
[CORPORATE SEAL] THE CENTRAL AND SOUTHERN BANK OF NORTH GEORGIA,
FSB
Attest: /s/ By: /s/ Tren B. Watson
------------------ --------------------
Secretary Tren B. Watson
President
24
<PAGE>
EXHIBIT 10.22
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PREMIER BANK,
CENTRAL AND SOUTHERN BANK OF NORTH GEORGIA, FSB
AND
PREMIER BANCSHARES, INC.
<PAGE>
EXHIBIT 10.22
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of the 11th day of August, 1997, by and among Premier Bank, a commercial
bank organized under the laws of the state of Georgia ("Premier Bank"), Central
and Southern Bank of North Georgia, FSB, a federal savings association organized
under the laws of the United States ("Central and Southern Bank"), and Premier
Bancshares, Inc., a corporation organized under the laws of the state of Georgia
("Premier").
WITNESSETH:
WHEREAS, Premier, in its capacity as the sole shareholder of both Premier
Bank and Central and Southern Bank, desires to consolidate the operations of
Premier Bank and Central and Southern Bank;
WHEREAS, the respective Boards of Directors of Premier Bank, Central and
Southern Bank, and Premier have approved and deem it advisable and in the best
interests of Premier Bank, Central and Southern Bank, and Premier to merge
Central and Southern Bank with and into Premier Bank pursuant to this Agreement
(the "Merger");
WHEREAS, the parties to this Agreement contemplate that the transactions
set forth herein will qualify pursuant to Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and that this Agreement constitutes a
plan of reorganization pursuant to Section 368 of the Code.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Consummation of Merger; Closing Date.
------------------------------------
(a) Subject to the provisions hereof, Central and Southern Bank shall merge
with and into Premier Bank under the charter of Premier Bank, and the name of
the resulting institution shall be "Premier Bank" (the "Resulting Institution")
and the business of the Resulting Institution shall be to operate a Georgia
chartered commercial bank. Subject to the terms and conditions hereof, unless
otherwise agreed upon by Premier Bank and Central and Southern Bank, the Merger
shall become effective on the 10th calendar day following the effective date
(including expiration of any applicable waiting period) of the last required
Consent (as defined below) of any Regulatory Authority (as defined below)
legally required to consummate the transactions contemplated under the
<PAGE>
this Agreement (such time is hereinafter referred to as the "Effective Time").
As used in this Agreement, "Consent" shall mean a consent, approval or
authorization, waiver, clearance, exemption or similar affirmation by any person
pursuant to any contract, permit, law, regulation or order, and "Regulatory
Authorities" shall mean, collectively, the Federal Trade Commission (the "FTC"),
the United States Department of Justice (the "Justice Department"), the Board of
Governors of the Federal Reserve System (the "FRB "), the Office of Thrift
Supervision (the "OTS"), the Office of the Comptroller of the Currency (the
"OCC"), the Federal Deposit Insurance Corporation (the "FDIC"), and the Georgia
Department of Banking and Finance (the "Georgia Department").
(b) The closing of the Merger (the "Closing") shall take place at the
principal office of Premier at 10:00 a.m. local time on the Effective Time of
the Merger, or such other date and time and place as the parties hereto may
agree (the "Closing Date").
Section 1.2 Effect of Merger. At the Effective Time of the Merger,
----------------
Central and Southern Bank shall be merged with and into Premier Bank and the
corporate existence of Central and Southern Bank shall cease, and Premier Bank
shall be the Resulting Institution. The articles of incorporation and bylaws of
Premier Bank, as in effect on the date hereof and as otherwise amended prior to
the Effective Time of the Merger, shall be the articles of incorporation and the
bylaws of the Resulting Institution until further amended as provided therein
and in accordance with applicable law. The Resulting Institution shall have all
the rights, franchises, privileges, immunities and powers and shall be subject
to all the duties and liabilities of a commercial bank organized under the laws
of the state of Georgia and shall thereupon and thereafter possess all other
rights, privileges, immunities and franchises of a private, as well as of a
public nature, of each of the constituent institutions. All property (real,
personal and mixed) and all debts on whatever account, including subscriptions
to shares, and all choses in action, all and every other interest, of or
belonging to or due to each of the constituent institutions so merged shall be
taken and deemed to be transferred to and vested in the Resulting Institution
without further act or deed. The title to any real estate, or any interest
therein, vested in any of the constituent institutions shall not revert or be in
any way impaired by reason of the Merger. The Resulting Institution shall
thenceforth be responsible and liable for all the liabilities and obligations of
each of the constituent institutions so merged and any claim existing or action
or proceeding pending by or against either of the constituent institutions may
be prosecuted as if the Merger had not taken place or the Resulting Institution
may be substituted in its place. Neither the rights of creditors nor any liens
upon the property of any constituent institution shall be impaired by the
Merger.
Section 1.3 Further Assurances. From and after the Effective Time of the
------------------
Merger, as and when requested by the Resulting Institution, the officers and
directors of Premier Bank or Central and Southern Bank last in office shall
execute and deliver or cause to be executed and delivered in the name of Premier
Bank or Central and Southern Bank, as the case may be, such deeds and other
instruments and take or cause to be taken such further or other actions as shall
be necessary in order to vest or perfect in or confirm of record or otherwise to
the Resulting Institution title to and possession of all of the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of Central and Southern Bank.
2
<PAGE>
Section 1.4 Directors and Officers. From and after the Effective Time of
----------------------
the Merger, the officers and directors of the Resulting Institution shall be
those persons who shall be designated in writing by Premier at or prior to the
Effective Time of the Merger. The current officers and directors of Premier
Bank and Central and Southern Bank who are not designated by Premier to serve as
officers and directors of the Resulting Institution shall deliver their
resignations as officers and directors of Premier Bank and/or Central and
Southern Bank to Premier as of the Effective Time of the Merger.
Section 1.5 Savings Accounts. From and after the Effective Time of the
----------------
Merger, savings accounts of the Resulting Institution shall be issued in a
manner consistent with the issuance of savings accounts by Premier Bank prior to
the Effective Time of the Merger.
Section 1.6 Manner of Conversion. At the Effective Time of the Merger,
--------------------
each share of common stock, par value $10.00 per share, of Central and Southern
Bank issued and outstanding immediately prior to the Effective Time of the
Merger shall be converted into one fully paid and nonassessable share of common
stock, par value $5.00 per share, of the Resulting Institution, which shares
shall be held by Premier.
Section 1.7 Location of Offices. The locations of the main office and
-------------------
branch offices of the Resulting Institution are listed on Exhibit "A" attached
hereto and incorporated herein by this reference.
Section 1.8 Deposit Insurance Funds. Pursuant to Section 5(d)(3) of the
-----------------------
Federal Deposit Insurance Act and 12 C.F.R. (S) 303.3, the Merger will not
result in the transfer of any insured depository institution's federal deposit
insurance from one federal deposit insurance fund to the other federal deposit
insurance fund.
Section 1.9 Savings Association Charter. The federal stock association
---------------------------
charter of Central and Southern Bank shall be deemed to be canceled as of the
Effective Time, and the Resulting Institution shall surrender such charter to
the OTS as soon as practicable after the Effective Time.
ARTICLE II
COVENANTS AND AGREEMENTS
Section 2.1 Best Efforts, Cooperation. Subject to the terms and
-------------------------
conditions herein provided, each of the parties hereto agrees to use its best
efforts promptly to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations, or otherwise, including attempting to obtain all necessary
Consents, to consummate and make effective, as soon as practicable, the
transactions contemplated by this Agreement.
3
<PAGE>
Section 2.2 Regulatory Matters.
------------------
(a) Following the execution and delivery of this Agreement, Premier,
Premier Bank, and Central and Southern Bank shall cause to be prepared and filed
all required applications and filings with the Regulatory Authorities which are
necessary or contemplated for the obtaining of the Consents of the Regulatory
Authorities for consummation of the Merger. Such applications and filings shall
be in such form as may be prescribed by the respective government agencies and
shall contain such information as they may require. The parties hereto will
cooperate with each other and use their best efforts to prepare and execute all
necessary documentation, to effect all necessary or contemplated filings and to
obtain all necessary or contemplated permits, consents, approvals, rulings and
authorizations of government agencies and third parties which are necessary or
contemplated to consummate the transactions contemplated by this Agreement,
including, without limitation, those required or contemplated from the
Regulatory Authorities. Each of the parties shall have the right to review and
approve in advance, which approval shall not be unreasonably withheld, any
filing made with, or written material submitted to, any government agencies in
connection with the transactions contemplated by this Agreement.
(b) Each party hereto will furnish the other party with all information
concerning itself, its subsidiaries, directors, officers, shareholders and
depositors, as applicable, and such other matters as may be necessary or
advisable in connection with any statement or application made by or on behalf
of any such party to any governmental body in connection with the transactions,
applications or filings contemplated by this Agreement. Upon request, the
parties hereto will promptly furnish each other with copies of written
communications received by them or their respective subsidiaries from, or
delivered by any of the foregoing to, any governmental body in respect of the
transactions contemplated hereby.
ARTICLE III
CONDITIONS TO CLOSING
The obligations of Premier Bank and Central and Southern Bank to consummate
the transactions provided for herein shall be subject to the satisfaction of the
following conditions, unless waived as hereinafter provided for:
Section 3.1 Regulatory Approvals. All necessary Consents of the
--------------------
Regulatory Authorities shall have been obtained and all notice and waiting
periods required by law to pass after receipt of such Consents shall have
passed, and all conditions to consummation of the Merger set forth in such
Consents shall have been satisfied.
Section 3.2 Litigation. No preliminary or permanent injunction or other
----------
order by any federal or state court which prevents the consummation of the
Merger shall have been issued and shall remain in effect; nor shall there be any
third party proceeding pending to prevent the consummation of the Merger.
4
<PAGE>
ARTICLE IV
TERMINATION AND AMENDMENT
Section 4.1 Termination. This Agreement may be terminated and the Merger
-----------
abandoned at any time prior to the Effective Time by Premier. In the event of
the termination and abandonment of this Agreement by Premier pursuant to this
Section 4.1, this Agreement shall terminate and become void and shall have no
effect, without liability on behalf of any party.
Section 4.2 Amendments. To the extent permitted by law, this Agreement
----------
may be amended by a subsequent writing signed by each of Premier, Central and
Southern Bank and Premier Bank.
ARTICLE V
MISCELLANEOUS
Section 5.1 Entire Agreement. This Agreement and the documents referred
----------------
to herein contain the entire agreement among Premier, Central and Southern Bank
and Premier Bank with respect to the transactions contemplated hereunder, and
this Agreement supersedes all prior arrangements or understandings with respect
thereto, whether written or oral. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors. Nothing in this Agreement, expressed or implied, is
intended to confer upon any person, firm, corporation or entity, other than the
parties hereto and their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section 5.2 Notices. All notices or other communications which are
-------
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by first class or registered or certified mail, postage
prepaid, telegram or telex or other facsimile transmission addressed as follows:
If to Premier Bank:
Premier Bank
950 East Paces Ferry Road
Atlanta, Georgia 30326
Attention: Robert C. Oliver, President
Fax: (404) 816-4314
5
<PAGE>
If to Premier:
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 E. Paces Ferry Road
Atlanta, Georgia 30326
Attention: Darrell D. Pittard, Chairman
Fax: (404) 816-4314
If to Central and Southern Bank:
Central and Southern Bank of North Georgia, FSB
P.O. Box 2816
Gainesville, Georgia 30503
Attention: Tren B. Watson, President
Fax: (706) 453-4458
All such notices or other communications shall be deemed to have been
delivered (i) upon receipt when delivery is made by hand, (ii) on the third
(3rd) business day after deposit in the United States mail when delivery is made
by first class, registered or certified mail, and (iii) upon transmission when
made by telegram, telex or other facsimile transmission if evidenced by a sender
transmission completed confirmation.
Section 5.3 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document with the same force and
effect as though all parties had executed the same document.
Section 5.4 Persons Bound; No Assignment. This Agreement shall be
----------------------------
binding. upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns, but notwithstanding the foregoing, this
Agreement may not be assigned by any party hereto unless the prior written
consent of the other parties is first obtained, except that Premier may transfer
the capital stock of Central and Southern Bank to another affiliate of Premier
without the necessity of obtaining any prior written consent.
Section 5.5 Waiver. The waiver by any party of the performance of any
------
agreement, covenant, condition or warranty contained herein shall not invalidate
this Agreement, nor shall it be considered a waiver of any other agreement,
covenant, condition or warranty contained in this Agreement. A waiver by any
party of the time for performing any act shall not be deemed a waiver of the
time for performing any other act or an act required to be performed at a later
time. The exercise of any remedy provided by law, equity or otherwise and the
provisions in this Agreement for any remedy shall not exclude any other remedy
unless it is expressly excluded. The waiver of any
6
<PAGE>
provision of this Agreement must be signed by the party or parties against whom
enforcement of the waiver is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered, and their respective seals hereunto affixed, by their
officers thereunto duly authorized, and have caused this Agreement to be dated
as of the date and year first above written.
PREMIER BANK
ATTEST
By: /s/ Robert C. Oliver
-----------------------------
/s/ Robert C. Oliver, President
- ----------------------
Secretary
[Bank Seal]
PREMIER BANCSHARES, INC.
ATTEST
By: /s/ Darrell D. Pittard
-----------------------------
Darrell D. Pittard, Chairman
/s/ Barbara J. Burtt
- ----------------------------
Barbara J. Burtt, Secretary
[Corporate Seal]
CENTRAL AND SOUTHERN BANK OF NORTH GEORGIA, FSB
ATTEST
By:/s/ Tren B. Watson
------------------
Tren B. Watson, President
/s/
- ---------------------------
Secretary
[Bank Seal]
7
<PAGE>
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended June 30, ------------------------------------
1997 1996 1995 1994
-------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Primary
- -------
Weighted average Premier common shares outstanding during
the period 7,910,903 7,971,439 7,906,511 7,000,025
Common shares issuable in connection with assumed
exercise of options under the treasury stock method 151,356 119,930 76,149 41,638
---------- ---------- ---------- ----------
Total 8,062,259 8,091,369 7,982,660 7,041,663
========== ========== ========== ==========
Net income less preferred dividends $4,088,000 $5,493,739 $4,547,944 $1,790,999
---------- ---------- ---------- ----------
Per share earnings 0.51 0.68 0.57 0.25
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996<F1>
<CASH> 21,806 0
<INT-BEARING-DEPOSITS> 8,870 0
<FED-FUNDS-SOLD> 20,138 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 99,706 0
<INVESTMENTS-CARRYING> 0 0
<INVESTMENTS-MARKET> 0 0
<LOANS> 418,675 0
<ALLOWANCE> 6,973 0
<TOTAL-ASSETS> 587,424 0
<DEPOSITS> 472,356 0
<SHORT-TERM> 53,108 0
<LIABILITIES-OTHER> 5,625 0
<LONG-TERM> 5,980 0
0 0
0 0
<COMMON> 7,917 0
<OTHER-SE> 42,438 0
<TOTAL-LIABILITIES-AND-EQUITY> 587,424 0
<INTEREST-LOAN> 18,735 15,627
<INTEREST-INVEST> 3,352 3,305
<INTEREST-OTHER> 958 972
<INTEREST-TOTAL> 23,045 19,904
<INTEREST-DEPOSIT> 10,092 8,367
<INTEREST-EXPENSE> 1,287 1,399
<INTEREST-INCOME-NET> 11,666 10,138
<LOAN-LOSSES> (130) (229)
<SECURITIES-GAINS> (41) 135
<EXPENSE-OTHER> 14,649 12,277
<INCOME-PRETAX> 5,667 3,974
<INCOME-PRE-EXTRAORDINARY> 4,088 2,959
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,088 2,959
<EPS-PRIMARY> .51 .37
<EPS-DILUTED> .51 .37
<YIELD-ACTUAL> 4.71 0
<LOANS-NON> 786 0
<LOANS-PAST> 227 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 6,568 0
<CHARGE-OFFS> 166 0
<RECOVERIES> 775 0
<ALLOWANCE-CLOSE> 6,973 0
<ALLOWANCE-DOMESTIC> 6,973 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 6,973 0
<FN>
<F1>The June 30, 1996 financial information has been restated for the pooling of
interest accounting of the business combination.
</FN>
</TABLE>
