<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 1998;
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PREMIER BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 6025 58-1793778
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
INCORPORATION)
---------------
2180 ATLANTA PLAZA
950 EAST PACES FERRY ROAD
ATLANTA, GEORGIA 30326
(404) 814-3090
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DARRELL D. PITTARD
PREMIER BANCSHARES, INC.
2180 ATLANTA PLAZA
950 EAST PACES FERRY ROAD
ATLANTA, GEORGIA 30326
(404) 814-3090
---------------
COPIES TO:
STEVEN S. DUNLEVIE, ESQ.
ELIZABETH O. DERRICK, ESQ.
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
SUITE 700, 1275 PEACHTREE STREET, NE
ATLANTA, GEORGIA 30309
(404) 872-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) FEE(2)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $1.00 par
value................. 6,042,286 $ 4.40 $26,586,058 $ 7,843
- ----------------------------------------------------------------------------------------
Common Stock $1.00 par
value................. 2,170,447 $ 5.07 $11,004,166 $ 3,247
- ----------------------------------------------------------------------------------------
Preferred Stock $60.00
par value............. 40,770 $60.00 $ 2,446,200 $ 722
- ----------------------------------------------------------------------------------------
Total.................. $40,036,424 $11,812
</TABLE>
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- -------------------------------------------------------------------------------
(1) The Registrant will deregister the indicated shares if the Registrant's
shareholders fail to approve the matter described above.
(2) In accordance with Rule 457(f)(2), the total registration fee has been
calculated based on the book value of Button Gwinnett Financial
Corporation common stock and The Bank Holding Company common stock and
preferred stock computed as of the latest practicable date prior to April
20, 1998, the date of filing the Registration Statement.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[PREMIER LETTERHEAD]
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Meeting") of Premier Bancshares, Inc. ("Premier"), to be held at Swissotel
Atlanta, 3391 Peachtree Road, N.E., Atlanta, Georgia 30326, on May 28, 1998,
at 10:00 a.m., local time, notice of which is enclosed.
The following proposals are to be presented at the Meeting: (i) to approve
the Agreement and Plan of Reorganization (the "Button Gwinnett Agreement"),
entered into with Button Gwinnett Financial Corporation ("Button Gwinnett") on
February 5, 1998, pursuant to which Button Gwinnett will merge with and into
Premier (the "Button Gwinnett Merger"); (ii) to elect directors of Premier;
(iii) to ratify the selection of Ernst & Young LLP as Premier's independent
public accountants for the year ending December 31, 1998; (iv) to amend
Premier's Articles of Incorporation to increase the number of authorized
shares of Premier Common Stock from 20,000,000 to 60,000,000 (the "Articles
Amendment"); (v) to amend the Premier Bancshares 1997 Stock Option Plan to
increase the number of shares available for grant thereunder from 1,125,000 to
3,000,000 shares; and (vi) to approve the Premier Bancshares, Inc. Employee
Stock Purchase Plan (collectively, the "Proposals").
Upon consummation of the Button Gwinnett Merger, each share of Button
Gwinnett common stock ("Button Gwinnett Common Stock") issued and outstanding
will be converted into and exchanged for the right to receive 3.885 shares of
Premier common stock ("Premier Common Stock").
I urge you to read the accompanying Joint Proxy Statement/Prospectus, which
includes a description of the proposed Button Gwinnett Merger and the proposed
merger with The Bank Holding Company, and also provides other specific
information concerning the additional proposals to be presented at the
Meeting.
The Proposals listed above have been approved unanimously by your Board of
Directors and are recommended by the Board to you for approval. Each member of
the Board of Directors has agreed to vote all shares of Premier Common Stock
owned by such member in favor of the Proposals.
IT IS IMPORTANT TO UNDERSTAND THAT APPROVAL OF THE BUTTON GWINNETT AGREEMENT
AND THE ARTICLES AMENDMENT REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
SHARES OF PREMIER COMMON STOCK ENTITLED TO VOTE AT THE MEETING. CONSEQUENTLY,
A FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE BUTTON
GWINNETT AGREEMENT AND THE ARTICLES AMENDMENT. THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE PREMIER COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY
WILL BE REQUIRED TO APPROVE THE OTHER PROPOSALS. IF YOU HAVE ANY QUESTIONS
CONCERNING THE DELIVERY OF THE ENCLOSED PROXY CARD, PLEASE CALL ME OR BARBARA
J. BURTT AT (404) 814-3090.
Accordingly, whether or not you plan to attend the Meeting, you are urged to
complete, sign, and promptly return the enclosed proxy card. If you attend the
Meeting, you may vote in person if you wish, even if you have previously
returned your proxy card. The proposed Button Gwinnett Merger is a significant
transaction for Premier, and your vote on this matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE
PROPOSALS TO BE PRESENTED AT THE MEETING BY MARKING THE ENCLOSED PROXY CARD
"FOR" THE PROPOSALS.
Sincerely,
/s/ Darrell D. Pittard
_____________________________________
Darrell D. Pittard
Chairman of the Board and Chief
Executive Officer
Atlanta, Georgia
April , 1998
<PAGE>
[PREMIER LETTERHEAD]
PREMIER BANCSHARES, INC.
2180 ATLANTA PLAZA
950 EAST PACES FERRY ROAD
ATLANTA, GEORGIA 30326
(404) 814-3090
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 1998
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Premier Bancshares, Inc. ("Premier") will be held at Swissotel
Atlanta, 3391 Peachtree Road, N.E., Atlanta, Georgia 30326 on May 28, 1998, at
10:00 a.m., local time, for the following purposes:
1. Merger with Button Gwinnett. To consider and vote on (i) the Agreement
and Plan of Reorganization, dated as of February 5, 1998 (the "Agreement")
by and between Premier and Button Gwinnett Financial Corporation ("Button
Gwinnett") pursuant to which Premier will acquire all of the issued and
outstanding common stock of Button Gwinnett ("Button Gwinnett Common
Stock") through the merger of Button Gwinnett with and into Premier (the
"Merger"), and each share of Button Gwinnett Common Stock will be converted
into 3.885 shares of Premier common stock ("Premier Common Stock"), as
described more fully in the accompanying Joint Proxy Statement/Prospectus;
2. Election of Directors. To elect Directors of Premier to serve until
their successors are duly elected and qualified;
3. Ratification of Auditors. To ratify the selection of Ernst & Young LLP
as independent public accountants for the year ending December 31, 1998;
4. Amendment to Articles of Incorporation. To amend Premier's Articles of
Incorporation to increase the number of authorized shares of Premier Common
Stock from 20,000,000 shares to 60,000,000 shares to allow Premier to
consummate the Button Gwinnett Merger and its proposed merger with The Bank
Holding Company (the "Articles Amendment");
5. Amendment to 1997 Stock Option Plan. To amend the Premier Bancshares,
Inc. 1997 Stock Option Plan to increase the number of shares available for
grant thereunder from 1,125,000 shares to 3,000,000 shares;
6. Adoption of Employee Stock Purchase Plan. To adopt the Premier
Bancshares, Inc. Employee Stock Purchase Plan; and
7. Other Business. To transact such other business as may properly come
before the Meeting, including adjourning the Meeting to permit, if
necessary, further solicitation of proxies.
Approval of the Agreement and the Articles Amendment requires the
affirmative vote of a majority of the shares of Premier Common Stock entitled
to vote at the Meeting. The affirmative vote of a majority of the Premier
Common Stock present in person or represented by proxy will be required to
approve the other proposals listed above. Only shareholders of record at the
close of business on March 26, 1998 are entitled to receive notice of and to
vote at the Meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF PREMIER COMMON
STOCK VOTE "FOR" THE PROPOSALS LISTED ABOVE.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Meeting in person. The proxy may be
revoked by the person executing the proxy by filing with the Secretary of
Premier an instrument of revocation or a duly executed proxy bearing a later
date or by electing to vote in person at the Meeting.
By Order of the Board of Directors
/s/ Barbara J. Burtt
_____________________________________
Barbara J. Burtt
Secretary
Atlanta, Georgia
April , 1998
<PAGE>
[THE BANK HOLDING COMPANY LETTERHEAD]
THE BANK HOLDING COMPANY
201 WEST TAYLOR STREET
GRIFFIN, GEORGIA 30224
(770) 229-2265
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 1998
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders (the
"Meeting") of The Bank Holding Company ("BHC") to be held at the main office
of BHC, 201 West Taylor Street, Griffin, Georgia 30224, on May 28, 1998, at
10:00 a.m., local time, notice of which is enclosed.
At the Meeting, you will be asked to consider and vote on a proposal to
approve the Agreement and Plan of Reorganization entered into with Premier
Bancshares, Inc. ("Premier") on December 3, 1997, as amended by First
Amendment dated December 18, 1997, by Second Amendment dated December 23,
1997, by Third Amendment dated December 31, 1997, by Fourth Amendment dated
January 15, 1998, and by Fifth Amendment dated March 16, 1998 (collectively,
the "Agreement") pursuant to which BHC will merge with and into Premier (the
"Merger"). Upon consummation of the Merger, each share of BHC common stock
("BHC Common Stock") issued and outstanding will be converted into and
exchanged for the right to receive 3.90 shares of Premier common stock
("Premier Common Stock"). Each share of BHC preferred stock ("BHC Preferred
Stock") issued and outstanding will be converted into and exchanged for the
right to receive one share of Premier preferred stock ("Premier Preferred
Stock"). Holders of BHC stock options will also receive options to purchase
Premier Common Stock in exchange for their BHC stock options.
Please read the enclosed Joint Proxy Statement/Prospectus carefully and
consider thoughtfully the information set forth therein. The Agreement and the
Merger have been approved unanimously by your Board of Directors and are
recommended by the Board to you for approval. Each member of the Board of
Directors has agreed to vote all shares of BHC Common Stock owned by such
member in favor of the Agreement and the Merger.
IT IS IMPORTANT TO UNDERSTAND THAT APPROVAL OF THE AGREEMENT REQUIRES THE
AFFIRMATIVE VOTE OF TWO-THIRDS OF THE SHARES OF BHC COMMON STOCK ENTITLED TO
VOTE AT THE MEETING. CONSEQUENTLY, A FAILURE TO VOTE WILL HAVE THE SAME EFFECT
AS A VOTE AGAINST THE AGREEMENT. IF YOU HAVE ANY QUESTIONS CONCERNING THE
DELIVERY OF THE ENCLOSED PROXY CARD, PLEASE CALL ME AT (770) 228-2125.
Accordingly, whether or not you plan to attend the Meeting, you are urged to
complete, sign, and promptly return the enclosed proxy card. If you attend the
Meeting, you may vote in person if you wish, even if you have previously
returned your proxy card. ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO
VOTE FOR APPROVAL OF THE AGREEMENT AND THE MERGER BY MARKING THE ENCLOSED
PROXY CARD "FOR" THE MERGER.
Sincerely,
_____________________________________
Robert H. Smalley, Jr.,
Chairman
Griffin, Georgia
April , 1998
<PAGE>
[THE BANK HOLDING COMPANY LETTERHEAD]
THE BANK HOLDING COMPANY
201 WEST TAYLOR STREET
GRIFFIN, GEORGIA 30224
(770) 229-2265
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 1998
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of The Bank Holding Company ("BHC") will be held at the main office
of BHC, 201 West Taylor Street, Griffin, Georgia 30224, on May 28, 1998, at
10:00 a.m., local time, for the following purpose:
1. Merger. To consider and vote on the Agreement and Plan of
Reorganization dated December 3, 1997, as amended by First Amendment dated
December 18, 1997, by Second Amendment dated December 23, 1997, by Third
Amendment dated December 31, 1997, by Fourth Amendment dated January 15,
1998, and by Fifth Amendment dated March 16, 1998 (collectively, the
"Agreement") by and between Premier Bancshares, Inc. ("Premier") and BHC
pursuant to which (i) Premier will acquire all of the issued and
outstanding common stock of BHC ("BHC Common Stock") and preferred stock of
BHC ("BHC Preferred Stock") through the merger of BHC with and into Premier
(the "Merger"), (ii) each share of BHC Common Stock will be converted into
3.90 shares of Premier Common Stock, and (iii) each share of BHC Preferred
Stock will be converted into one share of Premier Preferred Stock, as
described more fully in the accompanying Joint Proxy Statement/Prospectus.
2. Other Business. To transact such other business as may properly come
before the Meeting, including adjourning the Meeting to permit, if
necessary, further solicitation of proxies.
Approval of the Agreement requires the affirmative vote of two-thirds of the
outstanding shares of BHC Common Stock. Only shareholders of record at the
close of business on March 31, 1998, are entitled to receive notice of and to
vote at the Meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF BHC COMMON
STOCK VOTE "FOR" THE AGREEMENT AND THE MERGER.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Meeting in person. The proxy may be
revoked by the person executing the proxy by filing with the Secretary of BHC
an instrument of revocation or a duly executed proxy bearing a later date or
by electing to vote in person at the Meeting.
By Order of the Board of Directors
_____________________________________
Robert H. Smalley, Jr.,
Chairman
Griffin, Georgia
April , 1998
<PAGE>
[BUTTON GWINNETT LETTERHEAD]
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders (the
"Meeting") of Button Gwinnett Financial Corporation ("Button Gwinnett") to be
held at The Bank of Gwinnett County's main office, 150 South Perry Street,
Lawrenceville, Georgia on May 28, 1998, at 8:00 a.m., local time, notice of
which is enclosed.
At the Meeting, you will be asked to consider and vote on a proposal to
approve the Agreement and Plan of Reorganization entered into with Premier
Bancshares, Inc. ("Premier") on February 5, 1998 (the "Agreement") pursuant to
which Button Gwinnett will merge with and into Premier (the "Merger"). Upon
consummation of the Merger, each share of Button Gwinnett common stock
("Button Gwinnett Common Stock") issued and outstanding will be converted into
and exchanged for the right to receive 3.885 shares of Premier common stock
("Premier Common Stock").
Following the Merger, I will become President of Premier Bank, and will
serve on Premier's Board of Directors. John D. Stephens will also serve on
Premier's Board of Directors following the Merger. Darrell D. Pittard will
remain as Chairman and Chief Executive Officer of Premier and Robert C. Oliver
will remain as President and Chief Operating Officer of Premier.
Please read the enclosed Joint Proxy Statement/Prospectus carefully and
consider thoughtfully the information set forth therein. The Agreement and the
Merger have been approved unanimously by your Board of Directors and are
recommended by the Board to you for approval. Each member of the Board of
Directors has agreed to vote all shares of Button Gwinnett Common Stock owned
by such member in favor of the Agreement and the Merger.
IT IS IMPORTANT TO UNDERSTAND THAT APPROVAL OF THE AGREEMENT REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF BUTTON GWINNETT COMMON STOCK
ENTITLED TO VOTE AT THE MEETING. CONSEQUENTLY, A FAILURE TO VOTE WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE AGREEMENT. IF YOU HAVE ANY QUESTIONS
CONCERNING THE DELIVERY OF THE ENCLOSED PROXY CARD, PLEASE CALL ME OR ANDREW
R. POURCHIER AT (770) 963-6665.
Accordingly, whether or not you plan to attend the Meeting, you are urged to
complete, sign, and promptly return the enclosed proxy card. If you attend the
Meeting, you may vote in person if you wish, even if you have previously
returned your proxy card. ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO
VOTE FOR APPROVAL OF THE AGREEMENT AND THE MERGER BY MARKING THE ENCLOSED
PROXY CARD "FOR" THE MERGER.
Sincerely,
Glenn S. White
President and Chief Executive
Officer
Lawrenceville, Georgia
April , 1998
<PAGE>
[BUTTON GWINNETT LETTERHEAD]
BUTTON GWINNETT FINANCIAL CORPORATION
2230 SCENIC HIGHWAY
SNELLVILLE, GEORGIA 30278
(770) 978-3242
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 1998
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Button Gwinnett Financial Corporation ("Button Gwinnett") will
be held at The Bank of Gwinnett County's main office, 150 South Perry Street,
Lawrenceville, Georgia 30246, on May 28, 1998, at 8:00 a.m., local time, for
the following purposes:
1. Merger. To consider and vote on the Agreement and Plan of
Reorganization dated February 5, 1998 (the "Agreement") by and between
Premier Bancshares, Inc. ("Premier") and Button Gwinnett pursuant to which
(i) Premier will acquire all of the issued and outstanding common stock of
Button Gwinnett ("Button Gwinnett Common Stock") through the merger of
Button Gwinnett with and into Premier (the "Merger"), and (ii) each share
of Button Gwinnett Common Stock will be converted into 3.885 shares of
Premier Common Stock, as described more fully in the accompanying Joint
Proxy Statement/Prospectus.
2. Other Business. To transact such other business as may properly come
before the Meeting, including adjourning the Meeting to permit, if
necessary, further solicitation of proxies.
Approval of the Agreement requires the affirmative vote of a majority of the
shares of Button Gwinnett Common Stock entitled to vote at the Meeting. Only
shareholders of record at the close of business on , 1998, are entitled
to receive notice of and to vote at the Meeting or any adjournment or
postponement thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF BUTTON
GWINNETT COMMON STOCK VOTE "FOR" THE AGREEMENT AND THE MERGER.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Meeting in person. The proxy may be
revoked by the person executing the proxy by filing with the Secretary of
Button Gwinnett an instrument of revocation or a duly executed proxy bearing a
later date or by electing to vote in person at the Meeting.
By Order of the Board of Directors
_____________________________________
Andrew R. Pourchier,
Secretary
Lawrenceville, Georgia
April , 1998
<PAGE>
JOINT PROXY STATEMENT
FOR THE ANNUAL MEETING FOR THE SPECIAL MEETING FOR THE SPECIAL MEETING
OF SHAREHOLDERS TO BE OF SHAREHOLDERS TO BE OF SHAREHOLDERS TO BE
HELD ON MAY 28, 1998 HELD ON MAY 28, 1998 HELD ON MAY 28, 1998
PREMIER BANCSHARES, INC. THE BANK HOLDING COMPANY BUTTON GWINNETT
SWISSOTEL ATLANTA 3391 201 WEST TAYLOR STREET FINANCIAL CORPORATION
PEACHTREE ROAD, N.E. GRIFFIN, GEORGIA 30224 150 SOUTH PERRY STREET
ATLANTA, GEORGIA 30326 (770) 229-2265 LAWRENCEVILLE, GEORGIA
(404) 365-0065 30246 (770) 963-6665
----------------
PROSPECTUS
OF
PREMIER BANCSHARES, INC.
2180 ATLANTA PLAZA
950 EAST PACES FERRY ROAD
ATLANTA, GEORGIA 30326
(404) 814-3090
FOR
8,212,733 SHARES OF COMMON STOCK
40,770 SHARES OF PREFERRED STOCK
This Prospectus of Premier Bancshares, Inc., a bank and thrift holding
company organized and existing under the laws of the State of Georgia
("Premier"), relates to the shares of its common stock, par value $1.00 per
share ("Premier Common Stock"), which are issuable to the shareholders of
Button Gwinnett Financial Corporation ("Button Gwinnett") upon consummation of
the proposed merger (the "Button Gwinnett Merger") described herein, pursuant
to which Button Gwinnett will merge with and into Premier pursuant to the
terms of that certain Agreement and Plan of Reorganization dated as of
February 5, 1998, by and between Premier and Button Gwinnett (the "Button
Gwinnett Agreement"). A copy of the Button Gwinnett Agreement is attached to
this Joint Proxy Statement/Prospectus as Appendix A.
On the effective date of the Button Gwinnett Merger (the "Button Gwinnett
Effective Date"), except as otherwise described herein (i) Button Gwinnett
will merge with and into Premier, and (ii) each outstanding share of the $.01
par value common stock of Button Gwinnett ("Button Gwinnett Common Stock")
will be converted into 3.885 shares of Premier Common Stock. Premier will
survive the Button Gwinnett Merger and the separate existence of Button
Gwinnett will cease. The Bank of Gwinnett County will become a wholly owned
subsidiary
(continued on next page)
This Joint Proxy Statement/Prospectus and the accompanying proxy cards are
first being mailed to shareholders of Premier, Button Gwinnett and BHC on or
about April , 1998.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is April , 1998.
<PAGE>
(continued from previous page)
of Premier but will be merged with and into Premier Bank as soon as
practicable after the Button Gwinnett Effective Date. For a further
description of the terms of the Button Gwinnett Merger, see "The Button
Gwinnett Merger."
This Prospectus also constitutes a Joint Proxy Statement of Premier and
Button Gwinnett and is being furnished to their respective shareholders in
connection with the solicitation of proxies by their respective Boards of
Directors. The proxies solicited by the Button Gwinnett Board of Directors
will be used at the Special Meeting of Shareholders of Button Gwinnett (the
"Button Gwinnett Meeting") to be held on May 28, 1998, including any
adjournment thereof, to consider and vote on the proposed Button Gwinnett
Merger and to transact such other business as may properly come before the
Button Gwinnett Meeting or any adjournments thereof.
The proxies solicited by the Premier Board of Directors will be used at the
Annual Meeting of Shareholders of Premier (the "Premier Meeting") to be held
on May 28, 1998, including any adjournment thereof, to (i) adopt the Button
Gwinnett Agreement and approve the Button Gwinnett Merger; (ii) elect
directors of Premier; (iii) ratify the selection of Ernst & Young LLP as
Premier's independent accounts for the fiscal year ending December 31, 1998;
(iv) approve an amendment to Premier's Articles of Incorporation to increase
the number of authorized shares of Premier Common Stock from 20,000,000 shares
to 60,000,000 shares; (v) approve an amendment to the Premier Bancshares, Inc.
1997 Stock Option Plan (the "1997 Plan") to increase the number of shares
available for grant thereunder from 1,125,000 to 3,000,000 shares; (vi) adopt
the Premier Bancshares, Inc. Employee Stock Purchase Plan; and (vii) transact
such other business as may properly come before the Premier Meeting or any
adjournments thereof.
This Prospectus of Premier also relates to (i) the shares of Premier Common
Stock, and (ii) the shares of Premier preferred stock, par value $60.00 per
share ("Premier Preferred Stock"), which are issuable to the shareholders of
The Bank Holding Company ("BHC") upon consummation of the proposed merger (the
"BHC Merger") described herein, pursuant to which BHC will merge with and into
Premier pursuant to the terms of that certain Agreement and Plan of
Reorganization dated as of December 3, 1997 by and between Premier and BHC, as
amended by First Amendment dated December 18, 1997, by Second Amendment dated
December 23, 1997, by Third Amendment dated December 31, 1997, by Fourth
Amendment dated January 15, 1998 and by Fifth Amendment dated March 16, 1998
(collectively, the "BHC Agreement"). A copy of the BHC Agreement is attached
to this Joint Proxy Statement/Prospectus as Appendix B.
On the effective date of the BHC Merger (the "BHC Effective Date"), except
as otherwise described herein, (i) BHC will merge with and into Premier, (ii)
each outstanding share of the $5.00 par value common stock of BHC ("BHC Common
Stock") will be converted into 3.90 shares of Premier Common Stock, and
(iii) each outstanding share of the $60.00 par value non-voting preferred
stock of BHC ("BHC Preferred Stock") will be converted into one share of
Premier Preferred Stock. Premier will survive the BHC Merger and the separate
existence of BHC will cease. First Community Bank of Henry County ("Henry
County Bank") and The Bank of Spalding County ("Spalding County Bank"), the
banking subsidiaries of BHC, will become wholly owned subsidiaries of Premier
but will be merged with and into Premier Bank as soon as practicable following
the BHC Effective Date. For a further description of the terms of the BHC
Merger, see "The BHC Merger."
This Prospectus also constitutes a Proxy Statement of BHC and is being
furnished to the BHC shareholders in connection with the solicitation of
proxies by the BHC Board of Directors. The proxies solicited by the BHC Board
of Directors will be used at the Special Meeting of Shareholders of BHC (the
"BHC Meeting") to be held on May 28, 1998, including any adjournment thereof,
to consider and vote on the proposed BHC Merger and to transact such other
business as may properly come before the BHC Meeting or any adjournments
thereof.
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TABLE OF CONTENTS
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AVAILABLE INFORMATION...................................................... 1
INCORPORATION BY REFERENCE................................................. 1
SUMMARY.................................................................... 2
The Parties.............................................................. 2
Annual Meeting of Premier Shareholders................................... 3
Special Meeting of Button Gwinnett Shareholders.......................... 3
Special Meeting of BHC Shareholders...................................... 4
Button Gwinnett Merger; Exchange Ratio................................... 4
BHC Merger; Exchange Ratio............................................... 4
Dissenters' Rights....................................................... 5
Reasons for the Button Gwinnett Merger................................... 5
Reasons for the BHC Merger............................................... 6
Fairness Opinions........................................................ 6
Effective Date of Button Gwinnett Merger................................. 6
Effective Date of BHC Merger............................................. 7
Exchange of Stock Certificates........................................... 7
Regulatory Approvals and Other Conditions to the Button Gwinnett Merger
and the BHC Merger...................................................... 7
Waiver, Amendment, and Termination of the Button Gwinnett Agreement...... 8
Waiver, Amendment, and Termination of the BHC Agreement.................. 8
Directors and Executive Officers Following the Button Gwinnett Merger.... 8
Directors and Executive Officers Following the BHC Merger................ 8
Interests of Certain Persons in the Button Gwinnett Merger............... 8
Interests of Certain Persons in the BHC Merger........................... 9
Material Federal Income Tax Consequences of the Button Gwinnett Merger... 9
Material Federal Income Tax Consequences of the BHC Merger............... 9
Accounting Treatment..................................................... 10
Certain Differences in Rights of Shareholders............................ 10
Comparative Market Prices of Common Stock................................ 11
Comparative Per Share Data............................................... 11
Selected Pro Forma Financial Data........................................ 13
Additional Proposals Presented to Premier Shareholders Only.............. 14
Risk Factors............................................................. 14
RISK FACTORS............................................................... 15
Reliance on Residential Mortgage Originations to Produce Fee Income...... 15
Status of Premier as a Bank Holding Company.............................. 15
Growth................................................................... 15
Competition.............................................................. 16
Developments in Technology............................................... 16
Dependence on Senior Management.......................................... 16
Capability of Premier's Data Processing Software to Accommodate the Year
2000.................................................................... 16
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS.. 16
FORWARD-LOOKING STATEMENTS................................................. 17
THE PREMIER MEETING........................................................ 18
General.................................................................. 18
Record Date; Vote Required............................................... 18
THE BUTTON GWINNETT MEETING................................................ 19
General.................................................................. 19
Record Date; Vote Required............................................... 19
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THE BUTTON GWINNETT MERGER................................................. 20
General.................................................................. 20
Possible Adjustment of Button Gwinnett Exchange Ratio.................... 20
Treatment of Button Gwinnett Options..................................... 22
Background of and Reasons for the Button Gwinnett Merger................. 22
Fairness Opinions........................................................ 24
Effective Date of the Button Gwinnett Merger............................. 33
Distribution of Stock Certificates After the Button Gwinnett Merger...... 33
Conditions to Consummation of the Button Gwinnett Merger................. 34
Regulatory Approvals..................................................... 34
Rights of Dissenting Shareholders........................................ 35
Waiver, Amendment, and Termination of the Button Gwinnett Agreement...... 35
Conduct of Business Pending the Button Gwinnett Merger................... 36
Directors and Executive Officers Following the Button Gwinnett Merger.... 37
Employment Agreements.................................................... 37
Interests of Certain Persons in the Merger............................... 39
Material Federal Income Tax Consequences of the Button Gwinnett Merger... 41
Accounting Treatment..................................................... 42
Expenses and Fees........................................................ 42
Resales of Premier Common Stock.......................................... 43
Description of Premier Common Stock...................................... 43
Certain Differences in Rights of Button Gwinnett and Premier
Shareholders............................................................ 43
THE BHC MEETING............................................................ 47
General.................................................................. 47
Record Date; Vote Required............................................... 48
THE BHC MERGER............................................................. 48
General.................................................................. 48
Treatment of BHC Options................................................. 49
Background of and Reasons for the BHC Merger............................. 49
Fairness Opinions........................................................ 51
Effective Date of the BHC Merger......................................... 54
Distribution of Stock Certificates After the BHC Merger.................. 54
Conditions to Consummation of the BHC Merger............................. 55
Regulatory Approvals..................................................... 56
Rights of Dissenting Shareholders........................................ 56
Waiver, Amendment, and Termination of the BHC Agreement.................. 57
Conduct of Business Pending the BHC Merger............................... 58
Directors and Executive Officers Following the BHC Merger................ 58
Interests of Certain Persons in the BHC Merger........................... 58
Material Federal Income Tax Consequences of the BHC Merger............... 60
Accounting Treatment..................................................... 61
Expenses and Fees........................................................ 62
Resales of Premier Common Stock.......................................... 62
Description of Premier Common Stock...................................... 62
Description of Premier Preferred Stock................................... 62
Certain Differences in Rights of BHC and Premier Shareholders............ 63
COMPARATIVE MARKET PRICES AND DIVIDENDS.................................... 67
Premier Market Prices.................................................... 67
Button Gwinnett Market Prices............................................ 68
BHC Market Prices........................................................ 68
Recent Prices............................................................ 68
Dividends................................................................ 68
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Shareholders of Record................................................... 69
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION............... 70
General.................................................................. 70
PRO FORMA CONDENSED COMBINED STATEMENT OF CONDITION........................ 70
Notes to Pro Forma Condensed Combined Financial Statements............... 72
BUSINESS OF PREMIER........................................................ 74
General.................................................................. 74
Recent Developments...................................................... 74
SELECTED HISTORICAL FINANCIAL DATA OF PREMIER.............................. 75
BUSINESS OF BUTTON GWINNETT................................................ 76
General.................................................................. 76
Market Area and Competition.............................................. 76
Deposits................................................................. 76
Lending Activities....................................................... 77
Real Estate Loans........................................................ 77
Commercial Loans......................................................... 77
Consumer Loans........................................................... 78
Investment Activities.................................................... 78
Asset/Liability Management............................................... 78
Employees................................................................ 78
Properties............................................................... 78
Legal Proceedings........................................................ 79
SELECTED HISTORICAL FINANCIAL DATA OF BUTTON GWINNETT...................... 80
BUTTON GWINNETT MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................................. 81
Liquidity and Capital Resources.......................................... 81
Results of Operations.................................................... 81
Year 2000................................................................ 83
BUSINESS OF BHC............................................................ 92
Markets.................................................................. 92
Deposits................................................................. 92
Loans.................................................................... 92
Lending Policy........................................................... 92
Employees................................................................ 93
Competition.............................................................. 93
Properties............................................................... 93
Legal Proceedings........................................................ 93
SELECTED HISTORICAL FINANCIAL DATA OF BHC.................................. 94
BHC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS............................................................. 95
Overview................................................................. 95
Financial Condition at December 31, 1997 and 1996........................ 95
Financial Condition at December 31, 1997 and 1996........................ 95
Liquidity and Capital Resources.......................................... 96
Results of Operations For The Years Ended December 31, 1997 and 1996..... 98
CERTAIN REGULATORY CONSIDERATIONS.......................................... 110
General.................................................................. 110
Payment of Dividends..................................................... 111
Capital Adequacy......................................................... 112
Support of Subsidiary Institutions....................................... 113
Prompt Corrective Action................................................. 114
FDIC Insurance Assessments............................................... 115
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Safety and Soundness Standards......................................... 116
Community Reinvestment Act............................................. 117
Certain Applicable Thrift Regulations.................................. 117
PREMIER ANNUAL MEETING MATTERS........................................... 119
Section 16(a) Beneficial Ownership Reporting Compliance................ 119
Meetings of the Board of Directors and Committees of the Board......... 120
Management of Premier.................................................. 121
Biographies of Directors and Executive Officers of Premier............. 121
Biographies of Additional Directors.................................... 123
Premier Executive Compensation......................................... 124
Employment and Change in Control Agreements............................ 124
Compensation of Directors.............................................. 128
Compensation Committee Interlocks and Insider Participation............ 128
Indemnification of Officers and Directors.............................. 128
Premier Stock Based Plans.............................................. 129
Stock Options Grants and Year End Values............................... 130
Employee Retirement Savings Plan....................................... 130
Certain Relationships and Related Transactions......................... 131
Report of Compensation Committees on Executive Compensation............ 131
Shareholder Return Performance Graph................................... 133
Security Ownership of Certain Beneficial Owners and Management......... 134
Purpose and Operation of the 1997 Plan................................. 137
Proposal to Increase Shares Issuable Under the 1997 Plan............... 138
New Plan Benefits...................................................... 138
Shares Reserved for the Plan........................................... 139
Administration; Amendment and Termination.............................. 139
Eligible Participants.................................................. 139
Material Features of the Plan.......................................... 139
New Plan Benefits...................................................... 139
INDEPENDENT PUBLIC ACCOUNTANTS........................................... 142
PROPOSALS BY PREMIER SHAREHOLDERS FOR 1999 ANNUAL MEETING................ 143
OTHER MATTERS............................................................ 143
REPORT ON FORM 10-K...................................................... 143
OPINIONS................................................................. 143
INDEX TO FINANCIAL STATEMENTS............................................ 143
BUTTON GWINNETT FINANCIAL CORPORATION FINANCIAL STATEMENTS............... F-1
THE BANK HOLDING COMPANY FINANCIAL STATEMENTS............................ F-33
APPENDIX A: AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN PREMIER
BANCSHARES, INC. AND BUTTON GWINNETT FINANCIAL CORPORATION
............................................................ A-1
APPENDIX B: AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN PREMIER
BANCSHARES, INC. AND THE BANK HOLDING COMPANY, AS AMENDED.... B-1
APPENDIX C: OPINION OF BROWN, BURKE CAPITAL PARTNERS, INC. (BUTTON
GWINNETT).................................................... C-1
APPENDIX D:OPINION OF BROWN, BURKE CAPITAL PARTNERS, INC. (BHC).......... D-1
APPENDIX E:OPINION OF THE CARSON MEDLIN COMPANY.......................... E-1
APPENDIX F:ARTICLE 13 OF THE GEORGIA BUSINESS CORPORATION CODE........... F-1
APPENDIX G:AMENDMENT TO PREMIER'S ARTICLES OF INCORPORATION.............. G-1
APPENDIX H: 1998 DECLARATION OF AMENDMENT TO PREMIER BANCSHARES, INC.
1997 STOCK OPTION PLAN....................................... H-1
APPENDIX I:PREMIER BANCSHARES, INC. EMPLOYEE STOCK PURCHASE PLAN......... I-1
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AVAILABLE INFORMATION
Premier is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and, in accordance therewith,
files reports, proxy statements, and other information with the Securities and
Exchange Commission (the "SEC"). Button Gwinnett and BHC are also subject to
such reporting requirements of the Exchange Act. Copies of such reports, proxy
statements, and other information can be obtained, at prescribed rates, from
the SEC by addressing written requests for such copies to the Public Reference
Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. In addition, such reports, proxy statements, and other information
can be inspected at the public reference facilities referred to above and at
the regional offices of the SEC at 7 World Trade Center, 13th Floor, New York,
New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. The SEC maintains a Web site that contains
reports, proxy and information statements and other information regarding
Premier, Button Gwinnett and BHC. The address of such Web site is
http://www.sec.gov.
This Joint Proxy Statement/Prospectus constitutes part of the Registration
Statement on Form S-4 of Premier (including any exhibits and amendments
thereto, the "Registration Statement") filed with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the securities
offered hereby. This Joint Proxy Statement/Prospectus does not include all of
the information in the Registration Statement, certain portions of which have
been omitted pursuant to the rules and regulations of the SEC. For further
information about Premier, Button Gwinnett and BHC and the securities offered
hereby, reference is made to the Registration Statement. The Registration
Statement may be inspected and copied, at prescribed rates, at the SEC's
public reference facilities at the addresses set forth above. Premier Common
Stock is traded on the American Stock Exchange. Reports, proxy statements, and
other information concerning Premier may be inspected at the office of the
American Stock Exchange at 86 Trinity Place, New York, New York 10006-1881.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE INCLUDED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PREMIER,
BUTTON GWINNETT OR BHC. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO OR FROM ANY PERSON TO OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PREMIER, BUTTON GWINNETT OR
BHC SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
All information included in this Joint Proxy Statement/Prospectus with
respect to Premier was supplied by Premier, all information included herein
with respect to Button Gwinnett was supplied by Button Gwinnett, and all
information included herein with respect to BHC was supplied by BHC.
INCORPORATION BY REFERENCE
The documents listed below are hereby incorporated by reference into this
Joint Proxy Statement/Prospectus, and all documents subsequently filed by
Premier pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the date of the Premier Meeting in connection with the Registration
Statement shall be deemed to be incorporated by reference into this Joint
Proxy Statement/Prospectus and to be a part hereof from the date of filing
such documents:
(i) Premier's Annual Report on Form 10-K for the year ended December 31,
1997;
(ii) Premier's Current Reports on Form 8-K dated February 20, 1998 and
Form 8-K/A dated March 5, 1998; and
(iii) The description of Premier's Common Stock contained in Premier's
Proxy Statement/Prospectus dated May 20, 1997, contained in Premier's
Registration Statement on Form S-4 (Registration No. 333-24537) filed on
May 16, 1997.
Premier will provide without charge to each person to whom this Joint Proxy
Statement/Prospectus is delivered, upon oral or written request of such
person, a copy of any and all of the information that has been incorporated by
reference in the Joint Proxy Statement/Prospectus (excluding exhibits), as
well as any other documents required by the SEC to be delivered. Please direct
such requests, as well as any requests for additional information about
Premier to Barbara J. Burtt, Secretary, Premier Bancshares, Inc., 2180 Atlanta
Plaza, 950 East Paces Ferry Road, Atlanta, Georgia 30326, telephone number
(404) 814-3090.
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SUMMARY
The following is a summary of certain information relating to the Button
Gwinnett Meeting, the Premier Meeting, the BHC Meeting, the Button Gwinnett
Merger and the BHC Merger, and the shares of Premier Common Stock to be issued
upon consummation thereof. This summary does not purport to be complete and is
qualified in its entirety by the more detailed information appearing elsewhere
or incorporated by reference in this Joint Proxy Statement/Prospectus.
Shareholders are urged to read carefully the entire Joint Proxy
Statement/Prospectus, including the Appendices. As used in this Joint Proxy
Statement/Prospectus, the terms "Premier," "Button Gwinnett" and "BHC" refer to
those entities, respectively, and, where the context requires, to those
entities and their respective subsidiaries. Unless otherwise indicated, all
information presented has been adjusted to give effect to a three-for-two split
of the Premier Common Stock effective January 23, 1998. Portions of this Joint
Proxy Statement/Prospectus contain certain "forward looking" statements which
involve risks and uncertainties. Premier's actual results may differ
significantly from the results discussed in the forward looking statements.
Factors that might cause such a difference include, but are not limited to,
market acceptance of Premier's products and services, other factors discussed
in this Joint Proxy Statement/Prospectus, including factors discussed in "Risk
Factors," as well as factors discussed in other filings made by Premier with
the SEC. Although Premier believes that the assumptions underlying the forward
looking statements contained herein are reasonable, any of the assumptions
could prove inaccurate, and therefore, there can be no assurance that the
forward looking statements included herein will prove to be accurate.
THE PARTIES
Premier. Premier is a bank and thrift holding company headquartered in
Atlanta, Georgia. Premier has four subsidiaries, Premier Bank ("Premier Bank"),
Premier Lending Corporation ("Premier Lending"), The Central and Southern Bank
of Georgia ("Central and Southern Bank") and The Central and Southern Bank of
North Georgia, FSB ("Central and Southern Bank of North Georgia"). As of
December 31, 1997, Premier had total consolidated assets of approximately $794
million, total consolidated deposits of approximately $653 million and total
consolidated shareholders' equity of approximately $69 million. Through its
subsidiaries, Premier offers a broad range of banking and banking-related
services.
On June 23, 1997, Premier merged with The Central and Southern Holding
Company ("Central and Southern") and Premier issued approximately 5,495,751
shares of its common stock in exchange for all the issued and outstanding
shares of Central and Southern common stock. On December 12, 1997, Premier
merged with Citizens Gwinnett Bankshares, Inc. ("Citizens") and issued
approximately 3,100,251 shares of its common stock in exchange for all the
issued and outstanding shares of Citizens common stock and employee and
director stock options.
On December 16, 1997, Premier entered into an Agreement and Plan of
Reorganization with Lanier Bank & Trust Company ("Lanier"), a Georgia
commercial bank located in Cumming, Georgia. In connection with this agreement,
each issued and outstanding share of Lanier common stock will be exchanged for
the right to receive 1.980 shares of Premier Common Stock and Lanier will be
merged with and into Premier Bank (the "Lanier Merger"). The Lanier Merger is
expected to close in May 1998.
Premier was incorporated in 1988 under the laws of the State of Georgia and
is registered as a bank holding company with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") and the Georgia Department of
Banking and Finance (the "Georgia Department") under the Federal Bank Holding
Company Act of 1956, as amended (the "BHC Act") and the Georgia Bank Holding
Company Act (the "Georgia BHC Act"). Premier is also registered as a thrift
holding company under the regulations of the Office of Thrift Supervision
("OTS"). Premier's principal executive offices are located at 2180 Atlanta
Plaza, 950 East Paces Ferry Road, Atlanta, Georgia 30326, and its telephone
number at such address is (404) 814-3090.
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Button Gwinnett. Button Gwinnett is a bank holding company headquartered in
Snellville, Georgia. Button Gwinnett operates through its subsidiary, The Bank
of Gwinnett County. As of December 31, 1997, Button Gwinnett had total
consolidated assets of approximately $215 million, total consolidated deposits
of approximately $189 million and total consolidated shareholders' equity of
approximately $24 million.
Button Gwinnett was incorporated in 1991 under the laws of the State of
Georgia and is a registered bank holding company under the BHC Act and the
Georgia BHC Act. Button Gwinnett's principal executive offices are located at
2230 Scenic Highway, Snellville, Georgia 30278 and its telephone number at such
address is (770) 978-3242.
BHC. BHC is a bank holding company headquartered in Griffin, Georgia. BHC
operates through its banking subsidiaries, Henry County Bank and Spalding
County Bank. As of December 31, 1997, BHC had total consolidated assets of
approximately $134 million, total consolidated deposits of approximately $117
million and total consolidated common shareholders' equity of approximately $11
million.
BHC was incorporated in 1993 under the laws of the State of Georgia and is a
registered bank holding company under the BHC Act and the Georgia BHC Act.
BHC's principal executive offices are located at 201 West Taylor Street,
Griffin, Georgia 30224, and its telephone number at such address is (770) 229-
2265.
ANNUAL MEETING OF PREMIER SHAREHOLDERS
The Premier Meeting will be held at 10:00 a.m., local time, on May 28, 1998,
at Swissotel Atlanta, 3391 Peachtree Road, N.E., Atlanta, Georgia 30326, for
the following purposes (i) to consider and vote on the Button Gwinnett
Agreement and the Button Gwinnett Merger; (ii) to elect directors of Premier
for 1998 to serve until their successors are duly elected and qualified; (iii)
to ratify the selection of Ernst & Young LLP as Premier's independent public
accountants for the year ending December 31, 1998; (iv) to consider and vote on
an amendment to Premier's Articles of Incorporation to increase its authorized
shares of common stock from 20,000,000 to 60,000,000 (the "Articles
Amendment"); (v) to consider and vote on an amendment to the Premier 1997 Stock
Option Plan (the "1997 Plan") to increase the number of shares available for
grant thereunder from 1,125,000 to 3,000,000; (vi) to consider and vote on the
adoption of the Premier Bancshares, Inc. Employee Stock Purchase Plan; and (vi)
to consider such other business as may properly come before the Premier Meeting
or any adjournments thereof. See "The Premier Meeting."
Only holders of record of Premier Common Stock at the close of business on
March 26, 1998 (the "Premier Record Date") will be entitled to vote at the
Premier Meeting. The affirmative vote of a majority of the Premier Common Stock
outstanding and entitled to vote at the Premier Meeting will be required to
approve the Button Gwinnett Agreement and the Articles Amendment. Approval of
any other matter will require the affirmative vote of a majority of the shares
present in person or represented by proxy and entitled to vote at the Premier
Meeting. As of the Premier Record Date, there were 15,304,673 shares of Premier
Common Stock outstanding and entitled to vote.
The directors and executive officers of Premier beneficially owned, as of the
Premier Record Date, approximately 2,246,995 shares (or approximately 14.7% of
the outstanding shares) of Premier Common Stock. Each member of the Board of
Directors of Premier has agreed to vote those shares owned by such member
(except for shares held in a fiduciary capacity) in favor of the proposals to
be presented at the Premier Meeting.
As of the Premier Record Date, the directors and executive officers of Button
Gwinnett beneficially owned 2,900 shares (or less than 1% of the outstanding
shares) of Premier Common Stock. As of that date, neither Premier nor Button
Gwinnett held any shares of Premier Common Stock in a fiduciary capacity for
others. See "The Premier Meeting."
SPECIAL MEETING OF BUTTON GWINNETT SHAREHOLDERS
The Button Gwinnett Meeting will be held at 8:00 a.m., local time, on May 28,
1998, at The Bank of Gwinnett County's main office, 150 South Perry Street,
Lawrenceville, Georgia 30246, for the purpose of considering and voting on
approval of the Button Gwinnett Agreement and the Button Gwinnett Merger and
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transacting such other business as may properly come before the meeting or any
adjournments thereof. See "The Button Gwinnett Meeting."
Only holders of record of Button Gwinnett Common Stock at the close of
business on , 1998 (the "Button Gwinnett Record Date"), will be entitled
to vote at the Button Gwinnett Meeting. Approval of the Button Gwinnett
Agreement and the Button Gwinnett Merger requires the affirmative vote of a
majority of the shares of Button Gwinnett Common Stock entitled to vote at the
Button Gwinnett Meeting. As of the Button Gwinnett Record Date, there were
shares of Button Gwinnett Common Stock outstanding and entitled to be voted.
The directors and executive officers of Button Gwinnett beneficially owned,
as of the Button Gwinnett Record Date, shares (or approximately % of the
outstanding shares) of Button Gwinnett Common Stock. Each member of the Board
of Directors of Button Gwinnett has agreed to vote those shares owned by such
member (except for shares held in a fiduciary capacity) in favor of the Button
Gwinnett Agreement and the Button Gwinnett Merger.
As of the Button Gwinnett Record Date, the directors and executive officers
of Premier did not beneficially own any shares of Button Gwinnett Common Stock.
As of that date, neither Button Gwinnett nor Premier held any shares of Button
Gwinnett Common Stock in a fiduciary capacity for others. See "The Button
Gwinnett Meeting."
SPECIAL MEETING OF BHC SHAREHOLDERS
The BHC Meeting will be held at 10:00 a.m., local time, on May 28, 1998, at
BHC's main office, 201 West Taylor Street, Griffin, Georgia 30224, for the
purpose of considering and voting on approval of the BHC Agreement and the BHC
Merger and transacting such other business as may properly come before the
meeting or any adjournments thereof. See "The BHC Meeting."
Only holders of record of BHC Common Stock at the close of business on March
31, 1998 (the "BHC Record Date"), will be entitled to vote at the BHC Meeting.
Approval of the BHC Agreement and the BHC Merger require the affirmative vote
of two-thirds of the shares of BHC Common Stock entitled to vote at the BHC
Meeting. As of the BHC Record Date, there were 556,525 shares of BHC Common
Stock outstanding and entitled to be voted.
The directors and executive officers of BHC beneficially owned, as of the BHC
Record Date, 147,357 shares (or approximately 27% of the outstanding shares) of
BHC Common Stock. Each member of the Board of Directors of BHC has agreed to
vote those shares owned by such member in favor of the BHC Agreement and the
BHC Merger.
As of the BHC Record Date, the directors and executive officers of Premier
did not beneficially own any shares of BHC Common Stock. As of that date,
neither BHC nor Premier held any shares of BHC Common Stock in a fiduciary
capacity for others. See "The BHC Meeting."
BUTTON GWINNETT MERGER; EXCHANGE RATIO
The Button Gwinnett Agreement provides for the combination of Button Gwinnett
and Premier pursuant to the merger of Button Gwinnett with and into Premier. On
the Button Gwinnett Effective Date, each share of Button Gwinnett Common Stock
then issued and outstanding will be converted into 3.885 shares of Premier
Common Stock (the "Button Gwinnett Exchange Ratio"). Premier will pay cash in
lieu of any fractional shares (computed to the nearest cent) in an amount equal
to such fraction multiplied by the market value of one share of Premier Common
Stock on the Button Gwinnett Effective Date.
BHC MERGER; EXCHANGE RATIO
The BHC Agreement provides for the combination of BHC and Premier pursuant to
the merger of BHC with and into Premier. On the BHC Effective Date, each share
of BHC Common Stock issued and outstanding will be converted into 3.90 shares
of Premier Common Stock (the "BHC Exchange Ratio"). Each share of BHC
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Preferred Stock issued and outstanding will be converted into one share of
Premier Preferred Stock. Premier will pay cash in lieu of any fractional shares
of BHC Common Stock (computed to the nearest cent) in an amount equal to such
fraction multiplied by the market value of one share of Premier Common Stock on
the BHC Effective Date.
DISSENTERS' RIGHTS
Holders of Button Gwinnett Common Stock and BHC Common Stock who dissent from
the Button Gwinnett Merger and/or the BHC Merger, respectively, are entitled to
the rights and remedies of dissenting shareholders set forth in Article 13 of
the Georgia Business Corporation Code (the "Georgia Code"), subject to
compliance with the procedures set forth therein. A dissenting shareholder is
entitled to receive cash in an amount equal to the "fair value" of such
holder's shares. A copy of Article 13 of the Georgia Code is set forth in
Appendix E to this Joint Proxy Statement/Prospectus and a summary thereof is
included under "The Merger--Rights of Dissenting Shareholders."
To perfect dissenters' rights, a shareholder must comply with Article 13 of
the Georgia Code. In the case of the Button Gwinnett Merger, Article 13
requires, among other things, that a Button Gwinnett shareholder give Button
Gwinnett notice of such holder's intent to dissent from approval of the Button
Gwinnett Agreement prior to the vote of the shareholders at the Button Gwinnett
Meeting and that such shareholder not vote his or her shares in favor of the
Button Gwinnett Agreement. Any Button Gwinnett shareholder who returns a signed
proxy but fails to provide instructions as to the manner in which such holder's
shares are to be voted will be deemed to have voted in favor of the Button
Gwinnett Agreement, and thus will not be entitled to assert dissenters' rights.
To perfect dissenters' rights in the case of the BHC Merger, a BHC
shareholder must give BHC notice of such holder's intent to dissent from
approval of the BHC Agreement prior to the vote of the BHC shareholders at the
BHC Meeting, and must not vote his or her shares in favor of the BHC Agreement.
Any BHC shareholder who returns a signed proxy but fails to provide instruction
as to the manner in which such holder's shares are to be voted, will be deemed
to have voted in favor of the BHC Agreement and will not be entitled to assert
dissenter's rights.
REASONS FOR THE BUTTON GWINNETT MERGER
Button Gwinnett's Board of Directors has unanimously approved the Button
Gwinnett Merger and the Button Gwinnett Agreement and has determined that the
Button Gwinnett Merger is fair to, and in the best interests of, Button
Gwinnett and its shareholders. ACCORDINGLY, BUTTON GWINNETT'S BOARD UNANIMOUSLY
RECOMMENDS THAT BUTTON GWINNETT'S SHAREHOLDERS VOTE FOR APPROVAL OF THE BUTTON
GWINNETT AGREEMENT AND THE BUTTON GWINNETT MERGER. EACH MEMBER OF THE BOARD OF
DIRECTORS OF BUTTON GWINNETT HAS AGREED TO VOTE SUCH MEMBER'S SHARES OF BUTTON
GWINNETT COMMON STOCK IN FAVOR OF THE BUTTON GWINNETT AGREEMENT AND THE BUTTON
GWINNETT MERGER. In approving the Button Gwinnett Merger, Button Gwinnett
directors considered (i) Premier's financial condition; (ii) various
alternatives to the Button Gwinnett Merger, including the merits of other
acquisition proposals; (iii) the consideration to be received by Button
Gwinnett shareholders; (iv) the anticipated synergies and enhanced resources
and lending capabilities that would result from the Button Gwinnett Merger; (v)
the competitive and regulatory environments for financial institutions and
commercial lending businesses generally; (vi) the income tax aspects of the
Button Gwinnett Merger as a tax-free exchange; (vii) the current lack of
marketability of the Button Gwinnett Common Stock, contrasted with the ability
of Button Gwinnett's shareholders to trade the Premier Common Stock to be
received by them as a result of the Button Gwinnett Merger on the American
Stock Exchange; and (viii) the likelihood that the Button Gwinnett Merger would
be approved by applicable regulatory authorities. See "The Button Gwinnett
Merger--Background of and Reasons for the Button Gwinnett Merger."
The Premier Board of Directors has unanimously approved the Button Gwinnett
Agreement and has determined that the Button Gwinnett Merger is in the best
interests of Premier and its shareholders. ACCORDINGLY,
5
<PAGE>
PREMIER'S BOARD UNANIMOUSLY RECOMMENDS THAT PREMIER'S SHAREHOLDERS VOTE FOR
APPROVAL OF THE BUTTON GWINNETT AGREEMENT AND THE BUTTON GWINNETT MERGER. EACH
MEMBER OF THE BOARD OF DIRECTORS OF PREMIER HAS AGREED TO VOTE SUCH MEMBER'S
SHARES OF PREMIER COMMON STOCK IN FAVOR OF THE BUTTON GWINNETT AGREEMENT AND
THE BUTTON GWINNETT MERGER. In approving the Button Gwinnett Merger, Premier's
directors considered (i) Button Gwinnett's financial condition, operations and
market area; (ii) Premier's overall strategic focus; (iii) the financial terms
and income tax consequences of the Button Gwinnett Merger; and (iv) the
management philosophy of Button Gwinnett and its compatibility with that of
Premier. See "The Button Gwinnett Merger--Background of and Reasons for the
Button Gwinnett Merger."
REASONS FOR THE BHC MERGER
BHC's Board of Directors has unanimously approved the BHC Merger and the BHC
Agreement and has determined that the BHC Merger is fair to, and in the best
interests of, BHC and its shareholders. ACCORDINGLY, BHC'S BOARD UNANIMOUSLY
RECOMMENDS THAT BHC'S SHAREHOLDERS VOTE FOR APPROVAL OF THE BHC AGREEMENT AND
THE BHC MERGER. EACH MEMBER OF THE BOARD OF DIRECTORS OF BHC HAS AGREED TO VOTE
SUCH MEMBER'S SHARES OF BHC COMMON STOCK IN FAVOR OF THE BHC AGREEMENT AND THE
BHC MERGER. In approving the BHC Merger, BHC directors considered (i) Premier's
financial condition; (ii) various alternatives to the BHC Merger, including the
merits of other acquisition proposals; (iii) the consideration to be received
by BHC shareholders; (iv) the anticipated synergies and enhanced resources and
lending capabilities that would result from the BHC Merger; (v) the competitive
and regulatory environments for financial institutions and commercial lending
businesses generally; (vi) the income tax aspects of the BHC Merger as a tax-
free exchange; (vii) the current lack of marketability of the BHC Common Stock,
contrasted with the ability of BHC's shareholders to trade the Premier Common
Stock to be received by them as a result of the BHC Merger on the American
Stock Exchange; and (viii) the likelihood that the BHC Merger would be approved
by applicable regulatory authorities. See "The BHC Merger--Background of and
Reasons for the BHC Merger."
FAIRNESS OPINIONS
Premier. Brown, Burke Capital Partners, Inc. ("BBCP") has rendered an opinion
to Premier that, based on and subject to the procedures, matters, and
limitations described in its opinion, and such other matters as it considered
relevant as of the date of its opinion, the terms of the Button Gwinnett Merger
are fair to the shareholders of Premier from a financial perspective. BBCP's
opinion is attached as Appendix C to this Joint Proxy Statement/Prospectus.
Shareholders are urged to read the opinion in its entirety for a description of
the procedures followed, matters considered, and limitations on the reviews
undertaken in connection therewith. See "The Button Gwinnett Merger--Fairness
Opinions."
Button Gwinnett. The Carson Medlin Company ("Carson Medlin") has rendered an
opinion to Button Gwinnett that, based on and subject to the procedures,
matters and limitations described in its opinion and such other matters as it
considered relevant as of the date of its opinion, the terms of the Button
Gwinnett Merger are fair to the shareholders of Button Gwinnett from a
financial perspective. Carson Medlin's opinion is attached as Appendix D to
this Joint Proxy Statement/Prospectus. Shareholders are urged to read the
opinion in its entirety for a description of the procedures followed, matters
considered, and limitations on the reviews undertaken in connection therewith.
See "The Button Gwinnett Merger--Fairness Opinions."
BHC. BHC has not retained a financial advisor to render a fairness opinion.
EFFECTIVE DATE OF BUTTON GWINNETT MERGER
Subject to the conditions to the obligations of the parties to effect the
Button Gwinnett Merger, the Button Gwinnett Effective Date will occur on the
date and at the time specified in a Certificate of Merger (the "Certificate of
Merger") filed by Premier with the Georgia Secretary of State. If no effective
date or time is specified, the Button Gwinnett Merger will become effective
upon the filing of the Certificate of Merger. Unless
6
<PAGE>
otherwise agreed upon by Premier and Button Gwinnett, and subject to the
conditions to the obligations of the parties to effect the Button Gwinnett
Merger, the parties will use their reasonable efforts to cause the Button
Gwinnett Effective Date to occur by the last business day of the month in which
the last of the following events occurs: (i) the effective date (including the
expiration of any applicable waiting period) of the last federal or state
regulatory approval required for the Button Gwinnett Merger; or (ii) the date
on which the Agreement is approved by the requisite vote of Premier and Button
Gwinnett shareholders. The parties expect that all conditions to consummation
of the Button Gwinnett Merger will be satisfied so that the Button Gwinnett
Merger can be consummated during the second quarter of 1998, although there can
be no assurance as to whether or when the Button Gwinnett Merger will occur.
See "The Button Gwinnett Merger--Effective Date of the Button Gwinnett
Merger,--Conditions to Consummation of the Button Gwinnett Merger, and--Waiver,
Amendment, and Termination of the Button Gwinnett Agreement."
EFFECTIVE DATE OF BHC MERGER
Subject to the conditions to the obligations of the parties to effect the BHC
Merger, the BHC Effective Date will occur on the date and at the time specified
in the Certificate of Merger filed by Premier with the Georgia Secretary of
State. If no effective date or time is specified, the BHC Merger will become
effective upon the filing of the Certificate of Merger. Unless otherwise agreed
upon by Premier and BHC, and subject to the conditions to the obligations of
the parties to effect the BHC Merger, the parties will use their reasonable
efforts to cause the BHC Effective Date to occur by the last business day of
the month in which the last of the following events occurs: (i) the effective
date (including the expiration of any applicable waiting period) of the last
federal or state regulatory approval required for the BHC Merger; or (ii) the
date on which the BHC Agreement is approved by the requisite vote of BHC
shareholders. The parties expect that all conditions to consummation of the BHC
Merger will be satisfied so that the BHC Merger can be consummated before
August 31, 1998, although there can be no assurance as to whether or when the
BHC Merger will occur. See "The BHC Merger--Effective Date of the BHC
Merger,"--"Conditions to Consummation of the BHC Merger," and--"Waiver,
Amendment, and Termination of the BHC Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the effective date of each of the Button Gwinnett Merger and
the BHC Merger, Premier will cause SunTrust Bank, Atlanta acting in its
capacity as exchange agent for Premier (the "Exchange Agent"), to mail to the
former shareholders of Button Gwinnett and BHC a letter of transmittal,
together with instructions for the exchange of such shareholders' certificates
representing shares of Button Gwinnett Common Stock and BHC Common Stock and
BHC Preferred Stock for certificates representing shares of Premier Common
Stock and Premier Preferred Stock, as applicable. Former shareholders of Button
Gwinnett and BHC will not be entitled to receive dividends or other
distributions on their shares of Premier Common Stock, until Premier has
received their Button Gwinnett and BHC stock certificates. BUTTON GWINNETT AND
BHC SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE
THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS FROM THE EXCHANGE AGENT.
REGULATORY APPROVALS AND OTHER CONDITIONS TO THE BUTTON GWINNETT MERGER AND THE
BHC MERGER
Both the BHC Merger and the Button Gwinnett Merger are subject to approval by
the Federal Reserve and the Georgia Department. Applications for the requisite
approvals have been filed with these agencies, each of which has yet to issue
its approval of either the Button Gwinnett Merger or the BHC Merger. There can
be no assurance that the approvals of these agencies will be given, or as to
the timing or conditions of such approvals.
Consummation of the Button Gwinnett Merger and the BHC Merger are subject to
various other conditions, including receipt of the required approval of the
Premier and Button Gwinnett shareholders with respect to the Button Gwinnett
Merger and the BHC shareholders with respect to the BHC Merger, receipt of an
opinion of
7
<PAGE>
counsel as to the tax-free nature of certain aspects of the Button Gwinnett
Merger and the BHC Merger, as applicable, and certain other customary
conditions. See "The Button Gwinnett Merger--Conditions to Consummation of the
Button Gwinnett Merger" and "The BHC Merger--Conditions to Consummation of the
BHC Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE BUTTON GWINNETT AGREEMENT
The Button Gwinnett Agreement may be terminated, and the Button Gwinnett
Merger abandoned, at any time prior to the Button Gwinnett Effective Date, by
mutual action of the Boards of Directors of both Button Gwinnett and Premier,
or by action of the Board of Directors of either company under certain
circumstances, including if the Button Gwinnett Merger is not consummated by
September 30, 1998, unless the failure to consummate by such time is due to a
breach of the Button Gwinnett Agreement by the party seeking to terminate. If
for any reason the Button Gwinnett Merger is not consummated, Premier will
continue to operate as a bank holding company and thrift holding company under
its present management, and Button Gwinnett will continue to operate as a bank
holding company under its present management. See "The Button Gwinnett Merger--
Waiver, Amendment, and Termination of the Button Gwinnett Agreement."
WAIVER, AMENDMENT, AND TERMINATION OF THE BHC AGREEMENT
The BHC Agreement may be terminated, and the BHC Merger abandoned, at any
time prior to the BHC Effective Date by mutual action of the Boards of
Directors of both BHC and Premier, or by action of the Board of Directors of
either company under certain circumstances, including if the BHC Merger is not
consummated by August 31, 1998, unless the failure to consummate by such time
is due to a breach of the BHC Agreement by the party seeking to terminate. If
for any reason the BHC Merger is not consummated, Premier will continue to
operate as a bank and thrift holding company under its present management, and
BHC will continue to operate as a bank holding company under its present
management. See "The BHC Merger--Waiver, Amendment, and Termination of the BHC
Agreement."
DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE BUTTON GWINNETT MERGER
The Button Gwinnett Agreement provides that Premier will be the surviving
corporation after the Button Gwinnett Merger and that the directors of the
surviving corporation after the Button Gwinnett Merger will consist of the
current directors of Premier and John D. Stephens and Glenn S. White, the
current Chairman and President respectively of Button Gwinnett.
Following the Button Gwinnett Merger, Mr. White will be President, Chief
Executive Officer and a Director of Premier Bank and Mr. Stephens will serve on
the Board of Directors of Premier Bank.
DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE BHC MERGER
The BHC Agreement provides that Premier will be the surviving corporation
after the BHC Merger and that the directors of the surviving corporation after
the BHC Merger will consist of the current directors of Premier and James E.
Sutherland, a current Director of BHC. The current officers of Premier will not
change as a result of the BHC Merger.
INTERESTS OF CERTAIN PERSONS IN THE BUTTON GWINNETT MERGER
Certain executive officers and directors of Premier and of Button Gwinnett
have interests in the Button Gwinnett Merger in addition to their respective
interests as Premier or Button Gwinnett shareholders generally. Those interests
relate to, among other things, provisions in the Button Gwinnett Agreement
regarding indemnification and eligibility for certain Premier employee
benefits, and treatment of outstanding options to acquire Button Gwinnett
Common Stock. See "The Button Gwinnett Merger--Interests of Certain Persons in
the Button Gwinnett Merger."
8
<PAGE>
On the Effective Date of the Button Gwinnett Merger, Premier, Premier Bank
and Mr. White will enter into an amendment to Mr. White's employment agreement
under which Mr. White will serve as President of Premier Bank following the
Merger. Premier, Premier Bank and The Bank of Gwinnett County will also enter
into an employment agreement with Andrew R. Pourchier under which Mr. Pourchier
will continue as Executive Vice President of The Bank of Gwinnett County and
will become Executive Vice President of Premier Bank. See "The Button Gwinnett
Merger--Employment Agreements."
INTERESTS OF CERTAIN PERSONS IN THE BHC MERGER
Certain executive officers and directors of Premier and of BHC have interests
in the BHC Merger in addition to their respective interests as Premier or BHC
shareholders generally. Those interests relate to, among other things,
provisions in the BHC Agreement regarding indemnification and eligibility for
certain Premier employee benefits, and treatment of outstanding options to
acquire BHC Common Stock. Upon closing of the BHC Merger, Henry County Bank
will enter into an Employment Agreement with Charles B. Blackmon. Currently Mr.
Blackmon does not serve under an employment agreement. See "The BHC Merger--
Interests of Certain Persons in the BHC Merger."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE BUTTON GWINNETT MERGER
Womble Carlyle Sandridge & Rice, PLLC, counsel to Premier, has rendered to
Premier an opinion to the effect of certain tax consequences of the Button
Gwinnett Merger as is generally described as follows so long as the Merger is
consummated according to the Merger Agreement: (i) the Button Gwinnett Merger
will constitute a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); (ii) the
exchange in the Button Gwinnett Merger of Button Gwinnett Common Stock for
Premier Common Stock will not give rise to gain or loss to Button Gwinnett
shareholders except for the recognition of gain as required by Section 302 of
the Code with respect to cash received by Button Gwinnett shareholders in lieu
of fractional shares of Premier Common Stock as a result of the Button Gwinnett
Merger; (iii) neither Premier nor Button Gwinnett will recognize income, gain
or loss as a consequence of the Button Gwinnett Merger; (iv) the aggregate tax
basis of Premier Common Stock received by Button Gwinnett shareholders pursuant
to the Button Gwinnett Merger will be the same as the tax basis of the shares
of Button Gwinnett Common Stock exchanged therefor, decreased by any portion of
such tax basis allocated to fractional shares of Premier Common Stock that are
treated as redeemed by Premier; (v) Button Gwinnett shareholders will have the
same holding period in the shares of Premier Common Stock received pursuant to
the Button Gwinnett Merger as the holding period of the shares of Button
Gwinnett Common Stock exchanged therefor. See "The Button Gwinnett Merger--
Material Federal Income Tax Consequences of the Button Gwinnett Merger."
DUE TO THE INDIVIDUAL NATURE OF THE INCOME TAX CONSEQUENCES OF THE BUTTON
GWINNETT MERGER, SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE SPECIFIC EFFECT OF THE BUTTON GWINNETT MERGER ON THEM UNDER
FEDERAL, STATE, LOCAL, AND FOREIGN TAX LAWS.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE BHC MERGER
Womble Carlyle Sandridge & Rice, PLLC, counsel to Premier, has rendered an
opinion to Premier and BHC to the effect that, among other things: (i) the BHC
Merger will constitute a tax-free reorganization within the meaning of Section
368(a) of the Code; (ii) the exchange in the BHC Merger of BHC Common Stock for
Premier Common Stock will not give rise to gain or loss to holders except for
the recognition of gain as required by Section 302 of the Code with respect to
cash received by BHC shareholders in lieu of fractional shares of Premier
Common Stock as a result of the BHC Merger; (iii) no gain or loss will be
recognized by the shareholders of BHC upon the receipt of Premier Preferred
Stock solely in exchange for their shares of BHC Preferred Stock, assuming the
BHC Preferred Stock is "nonqualified preferred stock", as defined in Section
351(g)(2) of the Code. Section 354(a)(2)(C)(i), which was added by the Taxpayer
Relief Act of 1997, provides that nonqualified preferred stock received for
stock other than nonqualified preferred stock shall be treated as a taxable
transaction. The Premier Preferred Stock is nonqualified preferred stock, as
such term is defined in Section 351(g)(2).
9
<PAGE>
Applying the principles of Section 351(g)(2), the BHC Preferred Stock meets the
definition of nonqualified preferred stock, subject to the fact that it was
created prior to the effective date of the Taxpayer Relief Act of 1997.
Assuming that the IRS takes the position that preferred stock created prior to
the effective date of the Taxpayer Relief Act of 1997 can constitute
nonqualified preferred stock, then the BHC Preferred Stock surrendered for the
Premier Preferred Stock shall constitute a nonqualified preferred stock for
nonqualified preferred stock exchange and therefore should not result in gain
or loss to the BHC Preferred Shareholders. However, if the IRS takes a contrary
position, the holders of BHC Preferred Stock will recognize gain, if any, upon
the receipt of the Premier Preferred Stock solely in exchange for their BHC
Preferred Stock. The gain, if any, shall equal the difference between the fair
value of the Premier Preferred Stock received less the shareholder's adjusted
basis in the BHC Preferred Stock surrendered. The character of the gain as
ordinary or capital will be determined as provided in IRC Section 356(b); (iv)
neither Premier nor BHC will recognize income, gain or loss as a consequence of
the BHC Merger; (v) the aggregate tax basis of Premier Common Stock received by
BHC shareholders pursuant to the BHC Merger will be the same as the tax basis
of the shares of BHC Common Stock exchanged therefor, decreased by any portion
of such tax basis allocated to fractional shares of Premier Common Stock that
are treated as redeemed by Premier; (vi) the BHC shareholders will have the
same holding period in the shares of Premier Common Stock received pursuant to
the BHC Merger as the holding period of the shares of BHC Common Stock
exchanged therefor; (vii) assuming the BHC Preferred Stock is treated as
nonqualified preferred stock, the aggregate tax basis of the shares (including
any fractional share interest) of Premier Preferred Stock received by
Shareholders of BHC who exchange all of their BHC Preferred Stock solely for
shares Premier Preferred Stock in the BHC Merger will be the same as the
aggregate tax basis of the shares (including any fractional share interest) of
BHC Preferred Stock surrendered in exchange therefor; (viii) assuming the BHC
Preferred Stock is treated as nonqualified preferred stock, the holding period
of the shares (including any fractional share interest) of Premier Preferred
Stock received in the BHC Merger will include the period during which the
shares (including any fractional share interest) of BHC Preferred Stock
surrendered in exchange therefore were held, provided such shares (including
any fractional share interest) of BHC Preferred Stock were held as capital
assets at the Effective Time. See "The BHC Merger--Material Federal Income Tax
Consequences of the Merger."
DUE TO THE INDIVIDUAL NATURE OF THE INCOME TAX CONSEQUENCES OF THE BHC
MERGER, SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE
THE SPECIFIC EFFECT OF THE BHC MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND
FOREIGN TAX LAWS.
ACCOUNTING TREATMENT [TO BE DETERMINED]
It is anticipated that both the Button Gwinnett Merger and the BHC Merger
will be accounted for as a pooling of interests. Under the pooling-of-interests
method of accounting, the recorded amounts of the assets and liabilities of
Button Gwinnett and BHC will be carried forward and recorded on the financial
statements of Premier at their previously recorded amounts. In order for the
Button Gwinnett and BHC Mergers to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding Button Gwinnett
and BHC Common Stock must be exchanged for Premier Common Stock. There are
certain other criteria that must be satisfied in order for the BHC and Button
Gwinnett Mergers to qualify as a poolings of interests, some of which criteria
cannot be satisfied until after the Effective Dates of both Mergers.
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
On the Effective Date of each of the Button Gwinnett Merger and the BHC
Merger, the Button Gwinnett shareholders and the BHC shareholders, whose rights
are governed by the Georgia Code and by Button Gwinnett's and BHC's Articles of
Incorporation and Bylaws, respectively, will automatically become Premier
shareholders, and their rights as Premier shareholders will be determined by
the Georgia Code and by Premier's Articles of Incorporation and Bylaws. Upon
consummation of each of the Button Gwinnett Merger and the BHC Merger, the
rights of Premier shareholders will differ from the rights of both Button
Gwinnett and BHC shareholders in certain respects. See "The Button Gwinnett
Merger--Certain Differences in Rights of Shareholders" and "The BHC Merger--
Certain Differences in Rights of Shareholders."
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<PAGE>
COMPARATIVE MARKET PRICES OF COMMON STOCK
Premier Common Stock is currently traded on the American Stock Exchange under
the symbol "PMB." Prior to January 10, 1997, Premier Common Stock was traded on
the NASDAQ SmallCap Market. Neither Button Gwinnett's nor BHC's Common Stock is
traded on an established market. The following table sets forth the last sale
price of Premier Common Stock on December 2, 1997, the date of the last sale
reported by the American Stock Exchange prior to December 3, 1997 (the date of
public announcement of the proposed BHC Merger) and the sale price of BHC
Common Stock on September 22, 1997, the date of the last known sale of BHC
Common Stock prior to December 3, 1997. It also provides the last sale price of
Premier Common Stock on , 1998, the date of the last sale reported by the
American Stock Exchange prior to the mailing of this Joint Proxy
Statement/Prospectus and the sale price of BHC Common Stock on September 22,
1997, the date of the most recent known sale of BHC Common Stock prior to the
mailing of this Joint Proxy Statement/Prospectus.
The following table also sets forth the last sale price of Premier Common
Stock on February 4, 1998, the date of the last sale reported by the American
Stock Exchange prior to February 5, 1998 (the date of public announcement of
the proposed Button Gwinnett Merger) and the last sale price of Button Gwinnett
on July 11, 1997, the last known sale of Button Gwinnett prior to February 5,
1998. It also provides the last sale price of Button Gwinnett stock on ,
1998, the date of the most recent known sale of Button Gwinnett Common Stock
prior to mailing this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
PREMIER COMMON STOCK BUTTON GWINNETT COMMON STOCK BHC COMMON STOCK
- -------------------- ---------------------------- ----------------------------
<S> <C> <C>
$13.50 at December 2,
1997 $21.00 at July 11, 1997 $17.00 at September 22, 1997
(prior to BHC
announcement) (prior to announcement) (prior to announcement)
$20.50 at February 4,
1998
(prior to Button
Gwinnett announcement)
$ at April, 1998 $ at April, 1998 $ at April, 1998
</TABLE>
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data relating to
net income, cash dividends, and book value on (i) an historical basis for
Premier, Button Gwinnett and BHC, (ii) a pro forma combined basis per share of
Premier Common Stock, giving effect to the BHC Merger and the Button Gwinnett
Merger, and (iii) an equivalent pro forma basis per share of Button Gwinnett
and BHC Common Stock, giving effect to the BHC Merger and the Button Gwinnett
Merger. The data also retroactively reflect the effect of Premier's three-for-
two stock split on January 23, 1998. The Premier, Button Gwinnett and BHC pro
forma combined information gives effect to each Merger anticipating the use of
pooling-of-interests accounting and assumes an exchange ratio of 3.90 shares of
Premier Common Stock for each share of BHC Common Stock and assumes an exchange
ratio of 3.885 shares of Premier Common Stock for each share of Button Gwinnett
Common Stock. The unaudited pro forma data is presented for informational
purposes only and is not necessarily indicative of the results of operations or
combined financial position that would have resulted had the Button Gwinnett
Merger and the BHC Merger been consummated at the dates or during the periods
indicated, nor is it necessarily indicative of future results of operations or
combined financial position.
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<PAGE>
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Premier,
Button Gwinnett and BHC including the respective notes thereto, and the pro
forma financial information included herein. See "--Selected Historical
Financial Data of Premier," "--Selected Historical Financial Data of Button
Gwinnett," and "--Selected Historical Financial Data of BHC."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
INCOME PER SHARE
Premier historical...................................... $ 0.75 $ 0.47 $ 0.38
Button Gwinnett historical.............................. 3.54 2.79 2.38
BHC historical.......................................... 1.84 2.24 1.94
Premier and Button Gwinnett pro forma combined(1)(2).... 0.74 0.51 0.42
Button Gwinnett pro forma merger equivalent(3).......... 2.87 1.98 1.63
Premier and BHC pro forma combined(1)(4)................ 0.66 0.46 0.38
BHC pro forma merger equivalent(5)...................... 2.57 1.79 1.48
Premier, Button Gwinnett and BHC pro forma combined(1)..
Button Gwinnett pro forma merger equivalent(3)..........
BHC pro forma merger equivalent(5)...................... 2.81 2.03 1.68
DIVIDENDS DECLARED PER COMMON SHARE
Premier historical...................................... $ 0.17 $ 0.23 $ 0.06
Button Gwinnett historical.............................. 0.60 0.50 0.35
BHC historical.......................................... 0.25 0.25 0.25
Button Gwinnett pro forma merger equivalent(6)..........
BHC pro forma merger equivalent(7)......................
BOOK VALUE PER SHARE (PERIOD END)
Premier historical...................................... $ 4.53 $ 3.79 $ 3.66
Button Gwinnett historical.............................. 17.09 14.52 12.23
BHC historical.......................................... 19.77 17.99 16.04
Premier and Button Gwinnett pro forma combined(1)(2).... 4.44
Button Gwinnett pro forma merger equivalent(3)..........
Premier and BHC pro forma combined(1)(4)................ 4.52
BHC pro forma merger equivalent(5)...................... 17.51
Premier, Button Gwinnett and BHC pro forma combined(1).. 4.50
Button Gwinnett pro forma merger equivalent(3)..........
BHC pro forma merger equivalent(5)...................... 17.43
</TABLE>
- --------
(1) Includes the merger of Lanier Bank & Trust Company with Premier Bank (the
"Lanier Merger") as if the Lanier merger was consummated on January 1, 1995
and was accounted for as a pooling-of-interests.
(2) Represents the combined results of Premier and Button Gwinnett as if the
Merger was consummated on January 1, 1995 and was accounted for as a
pooling-of-interests.
(3) Represents pro forma combined information multiplied by the Button Gwinnett
Exchange Ratio.
(4) Represents the combined results of Premier and BHC as if the Merger were
consummated on January 1, 1995 and was accounted for as a pooling-of-
interests.
(5) Represents pro forma combined information multiplied by the BHC Exchange
Ratio.
(6) Represents historical dividends declared per share by Premier multiplied by
the Button Gwinnett Exchange Ratio.
(7) Represents historical dividends declared per share by Premier multiplied by
the BHC Exchange Ratio.
12
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA
The following unaudited pro forma condensed combined financial statements are
presented assuming the Lanier Merger, Button Gwinnett Merger and the BHC Merger
will be accounted for as poolings of interests [TO BE DETERMINED] and reflect
the combination of the historical consolidated financial statements of Premier,
Lanier, Button Gwinnett and BHC. The pro forma condensed combined balance sheet
has been prepared as if the mergers had been consummated at the beginning of
the period covered. The pro forma condensed combined statements of income have
been prepared as if the mergers had been consummated on January 1, 1995. The
following financial statements do not reflect any anticipated cost savings
which may be realized by Premier after consummation of the Lanier, Button
Gwinnett and BHC Mergers. The pro forma information does not purport to
represent what Premier's, Lanier's, Button Gwinnett's and BHC's combined
results of operations actually would have been if each such merger had occurred
on January 1, 1997.
The pro forma condensed combined financial statements should be read in
conjunction with the historical financial statements of Premier incorporated
herein by reference and the historical financial statements of Button Gwinnett
and BHC appearing elsewhere in this joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31,
1997
---------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET
Total assets................................................... $
Loans and loans held for sale, net.............................
Securities held-to-maturity....................................
Securities available-for-sale..................................
Federal funds sold.............................................
Interest-bearing deposits in banks.............................
Total deposits.................................................
Other borrowings and securities sold under repurchase
agreements....................................................
Stockholders' equity...........................................
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------------
1997 1996 1995
------------ ------------ ------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
OPERATING DATA
Interest income.........................
Interest expense........................
------------ ------------ ------------
Net interest income.....................
Provision for credit losses.............
------------ ------------ ------------
Net interest income after provision for
credit losses..........................
Other income............................
Other expenses..........................
Income taxes............................
------------ ------------ ------------
Net income.............................. $ $ $
============ ============ ============
Net income available to common
stockholders...........................
============ ============ ============
Net income per common share............. $ $ $
============ ============ ============
Net income per common share diluted..... $ $ $
============ ============ ============
</TABLE>
13
<PAGE>
ADDITIONAL PROPOSALS PRESENTED TO PREMIER SHAREHOLDERS ONLY
In addition to the proposal to approve the Button Gwinnett Merger at the
Premier Meeting, the shareholders of Premier will be asked to vote on
additional proposals to (i) elect directors; (ii) ratify the appointment of
Ernst & Young LLP as Premier's independent auditors for 1998; (iii) approve an
amendment to Premier's Articles of Incorporation to increase the authorized
number of shares of common stock from 20,000,000 to 60,000,000; (iv) approve an
amendment to the 1997 Plan to increase the number of shares available for grant
under the Plan from 1,125,000 to 3,000,000; and (v) approve the Premier
Bancshares, Inc. Employee Stock Purchase Plan.
RISK FACTORS
Shareholders of Premier, Button Gwinnett and BHC should carefully consider
the matters set forth under "Risk Factors."
14
<PAGE>
RISK FACTORS
In addition to the other information contained in this Joint Proxy
Statement/Prospectus, the following factors should be considered carefully by
shareholders of Premier, Button Gwinnett and BHC in evaluating both the Button
Gwinnett Merger and the BHC Merger.
RELIANCE ON RESIDENTIAL MORTGAGE ORIGINATIONS TO PRODUCE FEE INCOME
The market for residential mortgages is highly volatile and an increase in
interest rates could have a material adverse effect on both non-interest
income and interest income and in the growth of Premier's residential mortgage
operations. In addition, a substantial portion of Premier's other income has
been derived from gains on the sale of mortgage loans and mortgage production
fees consisting of proceeds from the sale of mortgage servicing rights, loan
origination fees and discount points. Due to the cyclical nature of
residential mortgage originations, there can be no assurance that Premier will
be able to sustain recent levels of gains on the sale of mortgage loans and
mortgage production fees.
STATUS OF PREMIER AS A BANK HOLDING COMPANY
Premier is a legal entity separate and distinct from its subsidiaries,
although the principal source of Premier's cash revenues is dividends from its
subsidiaries. The right of Premier to participate in the assets of any
subsidiary upon the latter's liquidation, reorganization or otherwise will be
subject to the claims of the subsidiaries' creditors, which will take priority
except to the extent that Premier may itself be a creditor with a recognized
claim.
Regulations limit the amount of dividends that may be paid by Premier's
banking subsidiaries without prior regulatory approval. As of December 31,
1997, Premier's banking subsidiaries could declare additional dividends to
Premier, without regulatory approval, of approximately $5.7 million.
Premier's subsidiaries are also subject to restrictions under federal law
which limit the transfer of funds by any of its banking subsidiaries to
Premier and Premier Lending, whether in the form of loans, extensions of
credit, investments, asset purchases or otherwise. Such transfers by any of
the banking subsidiaries to Premier or any affiliate of such banking
subsidiary are limited to 10% of such banking subsidiary's capital and surplus
and, with respect to Premier and all such nonbanking subsidiaries, to an
aggregate of 20% of such banking subsidiary's capital and surplus.
Furthermore, such loans and extensions of credit are required to be secured in
specific amounts.
GROWTH
Premier has grown and may seek to continue to grow by acquiring other
financial institutions and branches. However, the market for acquisitions is
highly competitive. Moreover, any acquisitions will be subject to regulatory
approval and there can be no assurance that Premier will obtain such
approvals. Premier may not be as successful in the future as it has been in
the past in identifying acquisition candidates, integrating acquired
institutions or preventing deposit erosion at acquired institutions or
branches. Furthermore, Premier's ability to grow through acquisitions will
depend on its maintaining sufficient regulatory capital levels and on economic
conditions.
There is no assurance that Premier will not encounter unforeseen expenses,
as well as difficulties and complications in integrating expanded operations
and new employees without disruption to overall operations. In addition, such
rapid growth may adversely affect Premier's operating results because of many
factors, including start-up costs, diversion of management time and resources,
asset quality and required operating adjustments. There can be no assurance
that Premier will successfully integrate or achieve the anticipated benefits
of its growth or expanded operations, and there is no assurance that rapid
growth in its loan portfolio will not result in an increase in Premier's loan
loss experience.
15
<PAGE>
COMPETITION
Premier's subsidiaries face substantial competition for loans and deposits
as well as other sources of funding in the communities they serve. Competing
providers include other national and state banks, thrifts and trust companies,
insurance companies, mortgage banking operations, credit unions, finance
companies, money market funds and other financial and non-financial companies
which may offer products functionally equivalent to those offered by Premier's
subsidiaries. Many competing providers have greater financial resources than
Premier and offer services within and outside the market areas served by
Premier's subsidiaries.
DEVELOPMENTS IN TECHNOLOGY
The market for financial services, including banking services, is
increasingly affected by advances in technology, including developments in
telecommunications, data processing, computers, automation, Internet-based
banking, telebanking, debit cards and so-called "smart" cards. The ability of
Premier to compete successfully in its markets may depend on the extent to
which it is able to exploit such technological changes. However, there can be
no assurance that the development of these or any other new technologies, or
Premier's success or failure in anticipating or responding to such
developments, will materially affect Premier's business, financial condition
and operating results.
DEPENDENCE ON SENIOR MANAGEMENT
The success of Premier has been largely dependent on the skills, experience
and efforts of its senior management. The loss of the services of Mr. Pittard,
or other members of senior management of Premier could have a material adverse
effect on Premier's business and prospects. Premier believes that its future
success will also depend upon its ability to attract, retain and motivate
qualified personnel. There can be no assurance that Premier will be successful
in attracting and retaining such personnel.
CAPABILITY OF PREMIER'S DATA PROCESSING SOFTWARE TO ACCOMMODATE THE YEAR 2000
Like many financial institutions, Premier relies upon computers for the
daily conduct of its business and for data processing generally. There is
concern among industry experts that commencing on January 1, 2000, computers
will be unable to "read" the new year and there may be widespread computer
malfunctions. Management has assessed the electronic systems, programs,
applications and other electronic components used in the operations of
Premier, and believes that Premier's hardware and software has been programmed
to be able to accurately recognize the year 2000, and that significant
additional costs will not be incurred in connection with the Year 2000 issue,
although there can be no assurances in this regard.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth for the respective periods indicated the
ratios of Premier's consolidated earnings to combined fixed charges and
preferred stock dividends.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
PROFORMA
1993 1994 1995 1996 1997 1998
----- ----- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits........ 3.49x 7.18x 4.28x 4.12x 5.40x 5.09x
Including interest on deposits........ 1.05x 1.30x 1.39x 1.36x 1.54x 1.54x
</TABLE>
For purposes of computing the ratio, earnings represent pretax income before
extraordinary items and cumulative effect of changes in accounting principles
plus fixed charges. Fixed charges, excluding interest on deposits, include
interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including interest on deposits, include all interest
expense and the proportion deemed representative of the interest factor of
rent expense, net of income from subleases. For purposes of calculating the
pro forma ratio, preferred stock dividend requirements are included in fixed
charges for both ratios.
16
<PAGE>
FORWARD-LOOKING STATEMENTS
This Joint Proxy Statement/Prospectus contains certain forward-looking
statements including or related to, among other things, Premier's business and
growth strategies.
These and other statements which are not historical facts are based largely
on current expectations and assumptions of management and are subject to a
number of risks and uncertainties which could cause actual results to differ
materially from those contemplated by such forward-looking statements. These
risks and uncertainties include, among others, the risks and uncertainties
described in "Risk Factors" above. Assumptions related to forward-looking
statements include that Premier will continue to price and market its banking
products competitively; that competitive conditions within its market area
will not change materially or adversely; that the demand for Premier's banking
products will remain strong; that Premier will retain key management
personnel; and that there will be no material adverse change in Premier's
operations or business.
Assumptions relating to forward-looking statements involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of
Premier. Although Premier believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the results
contemplated in the forward-looking information will be realized. Management
decisions are subjective in many respects and susceptible to interpretations
and periodic revisions based on actual experience and business developments,
the impact of which may cause Premier to alter its business strategy and
capital expenditure plans which may in turn affect Premier's results of
operations. In light of the significant uncertainties inherent in the forward-
looking information included herein, the inclusion of such information should
not be regarded as a representation by Premier or any other person that the
strategy, objectives or other plans of Premier will be achieved. The forward-
looking statements contained herein speak only as of the date hereof, and
Premier undertakes no obligation to publicly update or revise any of these
forward-looking statements.
17
<PAGE>
THE PREMIER MEETING
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to the holders of
Premier Common Stock in connection with the solicitation by the Premier Board
of Directors of proxies for use at the Premier Meeting, at which Premier
shareholders will be asked to vote upon proposals (i) to approve the Button
Gwinnett Agreement and the Button Gwinnett Merger, (ii) to elect directors;
(iii) to ratify the appointment of Ernst & Young LLP as Premier's independent
public accountants, (iv) to amend Premier's Articles of Incorporation to
increase the number of authorized shares of Premier Common Stock from
20,000,000 to 60,000,000; (v) to approve an amendment to the 1997 Stock Plan
to increase the number of shares available for grant under such plan from
1,125,000 shares to 3,000,000 shares; and (vi) to approve the Premier
Bancshares, Inc. Employee Stock Purchase Plan. The Premier Meeting will be
held at 10:00 a.m., local time, on May 28, 1998, at Swissotel Atlanta, 3391
Peachtree Road, N.E., Atlanta, Georgia 30326.
Premier shareholders are requested to promptly sign, date, and return the
accompanying proxy card to Premier in the enclosed postage-paid envelope. Any
Premier shareholder who has delivered a proxy may revoke it at any time before
it is voted by giving notice of revocation in writing or submitting to Premier
a signed proxy bearing a later date, provided that such notice or proxy is
actually received by Premier prior to the taking of the shareholder vote or by
electing to vote in person at the Premier Meeting. Any notice of revocation
should be sent to Premier Bancshares, Inc., 2180 Atlanta Plaza, 950 East Paces
Ferry Road, Atlanta, Georgia 30326, Attention: Corporate Secretary. The shares
of Premier Common Stock represented by properly executed proxies received at
or prior to the Premier Meeting and not subsequently revoked will be voted as
directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY
PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE BUTTON GWINNETT AGREEMENT
AND FOR APPROVAL OF THE OTHER PROPOSALS. As of the date of this Joint Proxy
Statement/Prospectus, Premier is unaware of any other matter to be presented
at the Premier Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or in person by the directors, officers, and employees of Premier,
who will receive no additional compensation for such solicitation but may be
reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
RECORD DATE; VOTE REQUIRED
Premier's Board of Directors has established the close of business on March
26, 1998, as the Record Date for determining the Premier shareholders entitled
to notice of and to vote at the Premier Meeting. Only Premier shareholders of
record as of the Record Date will be entitled to vote at the meeting. The
affirmative vote of a majority of the Premier Common Stock outstanding and
entitled to vote at the Premier Meeting will be required to approve the Button
Gwinnett Agreement and the Articles Amendment. Abstentions or failures to
return a properly executed proxy will have the same effect as a vote against
the Button Gwinnett Agreement and the Articles Amendment. The affirmative vote
of a majority of the Premier Common Stock present in person or represented by
proxy at the Premier Meeting will be required to (i) elect the Directors for
Premier, (ii) ratify Ernst & Young LLP as Premier's independent public
accountants, (iii) amend the 1997 Plan, and (iv) approve the Premier Employee
Stock Purchase Plan, and any other proposals considered at the Premier
Meeting. Broker non-votes, which occur when a broker submits a proxy card
without exercising discretionary voting authority on a non-routine matter, are
not counted for purposes of determining whether a proposal has been approved.
As a result, broker non-votes will have the effect of votes against the Button
Gwinnett Agreement and the Articles Amendment. As of the Record Date, there
were 1,315 holders of record of 15,304,673 shares of Premier Common Stock
outstanding and entitled to vote at the Premier Meeting, with each share
entitled to one vote.
The presence, in person or by proxy, of a majority of the outstanding shares
of Premier Common Stock entitled to vote at the Premier Meeting is necessary
to constitute a quorum of the shareholders in order to take action at the
meeting. For these purposes, shares of Premier Common Stock that are present,
or represented by
18
<PAGE>
proxy, at the Premier Meeting will be counted for quorum purposes regardless
of whether the holder of the shares or proxy fails to vote on any matter or
whether a broker with discretionary authority fails to exercise its
discretionary voting authority with respect to any matter.
The directors and executive officers of Premier beneficially owned, as of
the Record Date, 2,246,995 shares (or approximately 14.7% of the outstanding
shares) of Premier Common Stock. As of the Record Date, the directors and
executive officers of Button Gwinnett beneficially owned 2,900 shares (or less
than 1% of the outstanding shares) of Premier Common Stock. As of that date,
neither Button Gwinnett, BHC nor Premier held any shares of Premier Common
Stock in a fiduciary capacity for others.
THE BUTTON GWINNETT MEETING
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to the holders of
Button Gwinnett Common Stock in connection with the solicitation by the Button
Gwinnett Board of Directors of proxies for use at the Button Gwinnett Meeting,
at which Button Gwinnett shareholders will be asked to vote upon a proposal to
approve the Button Gwinnett Agreement and the Button Gwinnett Merger. The
Button Gwinnett Meeting will be held at 8:00 a.m., local time, on May 28,
1998, at the main office of The Bank of Gwinnett County, located at 150 South
Perry Street, Lawrenceville, Georgia 30246.
Button Gwinnett shareholders are requested to promptly sign, date, and
return the accompanying proxy card to Button Gwinnett in the enclosed postage-
paid envelope. Any Button Gwinnett shareholder who has delivered a proxy may
revoke it at any time before it is voted by giving notice of revocation in
writing or submitting to Button Gwinnett a signed proxy bearing a later date,
provided that such notice or proxy is actually received by Button Gwinnett
prior to the taking of the shareholder vote or by electing to vote in person
at the Button Gwinnett Meeting. Any notice of revocation should be sent to
Button Gwinnett Financial Corporation, 2230 Scenic Highway, Snellville,
Georgia 30278, Attention: Corporate Secretary. The shares represented by
properly executed proxies received at or prior to the Button Gwinnett Meeting
and not subsequently revoked will be voted as directed in such proxies. IF
INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY PROXIES RECEIVED WILL BE
VOTED FOR APPROVAL OF THE AGREEMENT AND IN THE DISCRETION OF THE PROXY HOLDER
AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME BEFORE THE BUTTON GWINNETT
MEETING. As of the date of this Joint Proxy Statement/Prospectus, Button
Gwinnett is unaware of any other matter to be presented at the Button Gwinnett
Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or in person by the directors, officers, and employees of Button
Gwinnett, who will receive no additional compensation for such solicitation
but may be reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
Button Gwinnett shareholders should not forward any stock certificates with
their proxy cards.
RECORD DATE; VOTE REQUIRED
Button Gwinnett's Board of Directors has established the close of business
on , 1998, as the Record Date for determining the shareholders entitled
to notice of and to vote at the Button Gwinnett Meeting. Only record holders
of Button Gwinnett Common Stock as of the Record Date will be entitled to vote
at the Button Gwinnett Meeting. Approval of the Button Gwinnett Agreement
requires the affirmative vote of a majority of the shares of Button Gwinnett
Common Stock entitled to vote at the Button Gwinnett Meeting. Therefore, an
abstention or failure to return a properly executed proxy card will have the
same effect as a vote against the Button Gwinnett Agreement. As of the Record
Date, there were approximately holders of shares of Button Gwinnett
Common Stock outstanding and entitled to vote at the Button Gwinnett Meeting,
with each share entitled to one vote.
19
<PAGE>
The presence, in person or by proxy, of a majority of the outstanding shares
of Button Gwinnett Common Stock is necessary to constitute a quorum of the
shareholders in order to take action at the Button Gwinnett Meeting. For these
purposes, shares of Button Gwinnett Common Stock that are present, or
represented by proxy, at the Button Gwinnett Meeting will be counted for
quorum purposes regardless of whether the holder of the shares or proxy fails
to vote on the Button Gwinnett Agreement.
The directors and executive officers of Button Gwinnett and their affiliates
beneficially owned, as of the Record Date, shares (or approximately % of
the outstanding shares) of Button Gwinnett Common Stock.
As of the Record Date, the directors and executive officers of Premier and
their affiliates did not beneficially own any shares of Button Gwinnett Common
Stock. As of that date, neither Button Gwinnett nor Premier held any shares of
Button Gwinnett Common Stock in a fiduciary capacity for others.
THE BUTTON GWINNETT MERGER
The following material describes certain aspects of the Button Gwinnett
Merger. This description does not purport to be complete and is qualified in
its entirety by reference to the Appendices hereto, including the Button
Gwinnett Agreement, which is attached as Appendix A to this Joint Proxy
Statement/Prospectus and incorporated herein by reference. All shareholders
are urged to read the Appendices in their entirety.
GENERAL
Upon consummation of the Button Gwinnett Merger, Button Gwinnett will merge
with and into Premier, Premier will survive the Button Gwinnett Merger and the
separate existence of Button Gwinnett will cease. The Bank of Gwinnett County
will become a wholly owned subsidiary of Premier following consummation of the
Button Gwinnett Merger. Upon closing of the Button Gwinnett Merger, or as soon
as practicable thereafter, Premier plans to cause The Bank of Gwinnett County
to merge with and into Premier Bank.
At the Effective Date, each share of Button Gwinnett Common Stock issued and
outstanding will be converted into 3.885 shares of Premier Common Stock
subject to possible adjustment as described below under the caption "--
Possible Adjustment of Button Gwinnett Exchange Ratio." Each share of Premier
Common Stock outstanding immediately prior to the Effective Date will remain
outstanding and unchanged as a result of the Button Gwinnett Merger. No
fractional shares of Premier Common Stock will be issued in connection with
the Button Gwinnett Merger. Premier will pay cash in lieu of any fractional
shares (computed to the nearest cent) in an amount equal to such fraction
multiplied by the market value of one share of Premier Common Stock on the
Button Gwinnett Effective Date.
POSSIBLE ADJUSTMENT OF BUTTON GWINNETT EXCHANGE RATIO
Under certain circumstances, the Button Gwinnett Exchange Ratio will be
adjusted pursuant to certain provisions in the Button Gwinnett Agreement. For
purposes of the description of these provisions and their operation, the
following definitions apply.
"Average Closing Price" means the average of the last sales prices of
Premier Common Stock as reported on the American Stock Exchange (as reported
by The Wall Street Journal, or, if not reported thereby by any other
authoritative source) for the ten consecutive full days in which such shares
are traded on the American Stock Exchange, ending at the close of trading on
the Determination Date. "Determination Date" means the date on which this
Registration Statement is declared effective by the SEC. "Index Group" means
the 17 bank holding companies designated in the Button Gwinnett Agreement the
common stock of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination
Date, any public announcement of a proposal for such company to be acquired or
for such company to acquire
20
<PAGE>
another company or companies in transactions with a value exceeding 25% of the
acquiror's market capitalization. "Index Price" means the weighted average of
the last sales prices of the companies composing the Index Group. "Starting
Date" shall mean the second full trading date after the announcement by
Premier in a press release of the Button Gwinnett Merger. "Premier Ratio"
means the quotient obtained by dividing the Average Closing Price by $19.42.
No Adjustment. There will be no adjustment to the Button Gwinnett Exchange
Ratio if any of two sets of circumstances occur: (i) the Average Closing Price
is equal to or greater than $17.478, or (ii) the Premier Ratio is equal to or
greater than the quotient obtained by dividing the Index Price on the
Determination Date by the Index Price on the Staring Date and subtracting 0.05
from such quotient (the "Index Ratio").
Upward Adjustment of Exchange Ratio. If both (i) the Average Closing Price
is less than $17.478, and (ii) the Premier Ratio is less than the Index Ratio,
then the Button Gwinnett Exchange Ratio shall be increased to equal the lesser
of (i) the quotient obtained by dividing (1) the product of $17.478 and the
Button Gwinnett Exchange Ratio by (2) the Average Closing Price and (ii) the
quotient obtained by dividing (1) the product of the Index Ratio and the
Button Gwinnett Exchange Ratio by (2) the Premier Ratio.
The Button Gwinnett Agreement may be terminated and the Button Gwinnett
Merger abandoned by the Board of Directors of Premier or the Board of
Directors of Button Gwinnett in the event the Premier Ratio is either less
than 0.70 or greater than 1.30. See "--Waiver, Amendments and Termination of
the Button Gwinnett Agreement."
These conditions reflect the parties' agreement that Button Gwinnett's
shareholders will assume the risk of declines in the value of Premier Common
Stock to $17.478 per share. If the value of Premier Common Stock were to
decline to an amount below $17.478 per share but the price of Premier Common
Stock did not decline more than 5% in comparison to the stock prices of the
group of comparable bank holding company stocks (the Index Group referenced
above), then Button Gwinnett's shareholders would continue to assume the risk
of decline in the value of the Premier Common Stock.
The operation of the adjustment mechanism can be illustrated by the
following. (For purposes of the numerical examples, the Button Gwinnett
Exchange Ratio is 3.885 and the Index Price is, as of the Starting Date,
$100.)
(a) The Average Closing Price is not less than $17.478. Under this
scenario, regardless of any comparison between the Premier Ratio and the
Index Ratio, there would be no adjustment to the Button Gwinnett Exchange
Ratio, even though the consideration to be received by Button Gwinnett
shareholders would have fallen from pro forma $75.45 per share as of the
Starting Date, to as little as pro forma $67.90 per share as of the
Determination Date.
(b) The Average Closing Price is less than $17.478, but does not decline
by more than 5% relative to the price of a share of the Index Group. Under
this scenario, there again would be no adjustment to the Button Gwinnett
Exchange Ratio, even though the consideration received by Button Gwinnett
shareholders would have fallen from pro forma $75.45 per share to something
less than pro forma $67.90 per share.
(c) The Average Closing Price is below $17.478 and the Premier Ratio is
below the Index Ratio (Premier's stock price has declined by more than 5%
relative to the price of shares of the Index Group). Under this scenario,
adjustment in the Button Gwinnett Exchange Ratio is designed to ensure that
the Button Gwinnett shareholders receive Premier Common Stock having a
value (based upon the Average Closing Price) that corresponds to not more
than either a decline in the Premier Common Stock price to $17.478 per
share or a 5% decline from the stock performance reflected by the Index
Group.
For example, if the Average Closing Price were $15.00, and the Index Price
on the Determination Date were $95, the Premier Ratio would be 0.772
($15.00 / $19.42) and would be below the Index Ratio of 0.90 (.95 - .05). In
such a case, the Button Gwinnett Exchange Ratio would increase to 4.527, which
represents the lesser of (a) 4.527 [the result of dividing $67.902 (the
product of $17.478 and the 3.885 Button Gwinnett
21
<PAGE>
Exchange Ratio) by the Average Closing Price ($15.00)] and (b) 4.529 [the
result of dividing the Index Ratio (0.90) times 3.885 by the Premier Ratio
(0.772)]. Based upon the assumed $15.00 Average Closing Price, the new Button
Gwinnett Exchange Ratio would represent a value to the Button Gwinnett
shareholders as of the Determination Date of pro forma $67.91 per share.
If the Average Closing Price were $15.00, and the ending Index Price on the
Determination Date were $110, the Premier Ratio would be 0.772 and would be
below the Index Ratio of 1.05 (1.1 - 0.05). In such a case, the Button
Gwinnett Exchange Ratio would increase to 4.527, which represents the lesser
of (a) 4.527 [the result of dividing $67.902 (the product of $17.478 and the
3.885 Button Gwinnett Exchange Ratio) by the Average Closing Price ($15.00)]
and (b) 5.284 [the result of dividing the Index Ratio (1.05) times 3.885 by
the Premier Ratio (0.772)]. Based upon the assumed $15.00 Average Closing
Price, the new Button Gwinnett Exchange Ratio would represent a value to the
Button Gwinnett shareholders of pro forma $67.91 per share.
The foregoing examples are presented for illustration purposes only.
Moreover, Button Gwinnett shareholders should be aware that the actual market
value of a share of Premier Common Stock at the Button Gwinnett Effective Date
and at the time certificates for those shares are delivered following
surrender and exchange of certificates for shares of Button Gwinnett Common
Stock may be more or less than the Average Closing Price. Button Gwinnett
shareholders are urged to obtain information on the trading value of Premier
Common Stock that is more recent than that provided in this Proxy
Statement/Prospectus. See "Comparative Market Prices and Dividends."
TREATMENT OF BUTTON GWINNETT OPTIONS
The Button Gwinnett Agreement provides that all rights with respect to
Button Gwinnett Common Stock pursuant to stock options granted by Button
Gwinnett under its stock option plan which are outstanding at the Button
Gwinnett Effective Date, whether or not then exercisable, will be substituted
for and will become rights with respect to Premier Common Stock, or Premier
will assume each of such options in accordance with the terms of the Button
Gwinnett stock option plan and the agreements evidencing such options. After
the Button Gwinnett Effective Date, those options will become options to
purchase Premier Common Stock, with the exercise price and number of shares of
Premier Common Stock purchasable thereunder being equal to the exercise price
and number of shares of Button Gwinnett Common Stock that could have been
purchased thereunder immediately prior to the consummation of the Button
Gwinnett Merger after giving effect to the Button Gwinnett Exchange Ratio. The
executive officers of Button Gwinnett collectively hold currently exercisable
options to purchase 81,400 shares of Button Gwinnett Common Stock. The Button
Gwinnett directors do not hold any options to purchase Button Gwinnett Common
Stock.
BACKGROUND OF AND REASONS FOR THE BUTTON GWINNETT MERGER
Background of Button Gwinnett Merger. During the fourth quarter of 1997, the
Chairman of the Board and Chief Executive Officer of Button Gwinnett met with
the Chief Executive Officer of Premier to explore the possibility of combining
Premier and Button Gwinnett.
On December 18, 1997, Button Gwinnett engaged Carson Medlin to serve as its
financial advisor in connection with the possible merger of Button Gwinnett
and to render advice to Button Gwinnett concerning the financial aspects of a
potential merger with one of several different banking companies, excluding
Premier together with one other banking company since such companies were
already in exploratory merger discussions with Button Gwinnett.
On December 27, 1997, Premier and Button Gwinnett entered into a
confidentiality agreement, and Button Gwinnett provided Premier with certain
confidential informational memoranda describing Button Gwinnett and its
operations. At about the same time, Carson Medlin contacted other financial
institutions concerning their interest in a merger with Button Gwinnett,
executed confidentiality agreements with such institutions and provided them
with confidential informational memoranda describing Button Gwinnett and its
operations as well as procedures for submitting an offer to acquire Button
Gwinnett.
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On December 30, 1997, Premier's Executive Committee met with BBCP to discuss
financial implications of an acquisition of Button Gwinnett as well as the
expected exchange ratio. On January 16, 1998, Premier submitted to Button
Gwinnett a written expression of interest in a merger with a then-current
total market value of approximately $96.189 million. The Chairman of the Board
and Chief Executive Officer of Button Gwinnett responded to Premier that the
proposed pricing described in Premier's expression of interest would not be
sufficient to gain the support of the Button Gwinnett Board.
On January 22, 1998, at a meeting of the Board of Directors of Premier, BBCP
and Premier's management discussed with the Premier Board the terms of a
possible merger with Button Gwinnett. After a lengthy discussion between
Premier's management and the Premier Board, Premier's Chief Executive Officer
was authorized to present a revised proposal to Button Gwinnett. On January
23, 1998, Premier's Chief Executive Officer submitted to Button Gwinnett a
revised merger proposal in writing with a then current market value of
$115.229 million.
On January 23, 1998, Button Gwinnett's Board met to discuss Premier's
proposal as well as a proposal with a then-current market value of
approximately $86.929 million from another interested banking company. Prior
to the Button Gwinnett Board meeting, Carson Medlin had prepared and reviewed
with Button Gwinnett's Chief Executive Officer an analysis of the two offers
made for Button Gwinnett. At the Button Gwinnett Board meeting, Button
Gwinnett's Chief Executive Officer reviewed this analysis in detail with the
Board. After a lengthy discussion of the two proposals, the Button Gwinnett
Board instructed management to negotiate, together with Button Gwinnett's
legal counsel, the terms of a definitive merger agreement with Premier which
would reflect Premier's offer.
From January 31, 1998 through February 4, 1998, Premier conducted on-site,
in-depth due diligence of Button Gwinnett and Button Gwinnett conducted on-
site, in-depth due diligence of Premier. Additional off-site due diligence,
negotiation of the definitive merger agreement, and discussions with legal
counsel and financial advisors were also undertaken by both companies.
On February 4, 1998, at a special meeting of the Board of Directors of
Premier, BBCP and Premier's management presented to Premier's Board an
analysis of the proposed merger with Button Gwinnett. Following the
presentations and subsequent discussions, the Premier Board authorized its
Chief Executive Officer to execute the proposed Button Gwinnett Agreement
subject to customary conditions and to the condition that the transaction be
accounted for as a pooling-of-interests.
On February 5, 1998, at a special meeting of the Board of Directors of
Button Gwinnett, Button Gwinnett's management reviewed again the analysis
prepared by Carson Medlin with the Button Gwinnett Board, and also reviewed
the results of its due diligence investigation of Premier and the terms of the
proposed Button Gwinnett Agreement. Following the presentations and subsequent
discussions, the Button Gwinnett Board authorized its Chief Executive Officer
to execute the proposed Button Gwinnett Agreement. Later that day, the parties
executed the Button Gwinnett Agreement, and Premier issued a press release
announcing its execution.
Button Gwinnett's Reasons for the Merger. Button Gwinnett's Board of
Directors has unanimously approved the Button Gwinnett Agreement and has
determined that the Button Gwinnett Merger is in the best interests of Button
Gwinnett and its shareholders. The terms of the Button Gwinnett Merger were
the result of arm's-length negotiations between representatives of Button
Gwinnett and representatives of Premier. Without assigning any relative or
specific weights to the factors, the Board of Directors of Button Gwinnett
considered the following material factors:
(a) the information presented to the directors by Button Gwinnett's
management concerning (i) the business, operations, earnings and financial
condition, including capital levels and asset quality, of Premier, and
compliance with regulatory capital requirements on an historical and
prospective basis, and (ii) the results of a due diligence review of
Premier by Button Gwinnett's representatives;
(b) the alternatives to the Button Gwinnett Merger, including the merits
of other acquisition proposals;
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(c) the enhancement of shareholder value as a result of the value of the
consideration to be received by Button Gwinnett's shareholders relative to
Button Gwinnett's book value and earnings per share of common stock;
(d) the anticipated synergies and operating efficiencies, increased
access to capital, increased utilization of capital for lending, and the
increased managerial resources and enhanced service capabilities that would
result from the Button Gwinnett Merger;
(e) the competitive and regulatory environment for financial institutions
and commercial lending businesses generally;
(f) the income tax aspects of the Button Gwinnett Merger as a tax-free
exchange of Button Gwinnett Common Stock for Premier Common Stock;
(g) the likelihood that the Button Gwinnett Merger will be approved by
applicable regulatory authorities; and
(h) the current lack of marketability of the Button Gwinnett Common
Stock, contrasted with the ability of Button Gwinnett's shareholders to
trade the Premier Common Stock to be received by them as a result of the
Button Gwinnett Merger on the American Stock Exchange.
Each member of the Board of Directors of Button Gwinnett has agreed to vote
such member's shares of Button Gwinnett Common Stock in favor of the Button
Gwinnett Merger.
BUTTON GWINNETT'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT BUTTON
GWINNETT SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT.
Premier's Reasons for the Button Gwinnett Merger. The Premier Board of
Directors has unanimously approved the Button Gwinnett Agreement and has
determined that the Button Gwinnett Merger is in the best interests of Premier
and its shareholders. In approving the Button Gwinnett Agreement, the Premier
Board considered a number of factors. Without assigning any relative or
specific weights to the factors, the Premier Board of Directors considered the
following material factors:
(a) Button Gwinnett's business, operations, earnings, and financial
condition, including capital levels and asset quality, on an historical,
prospective, and pro forma basis and in comparison to other financial
institutions serving the Gwinnett County market;
(b) the demographic, economic, and financial characteristics of Gwinnett
County in which Button Gwinnett operates, on an historical and prospective
basis;
(c) a variety of factors affecting and relating to the overall strategic
focus of Premier, including Premier's desire to expand further into
Gwinnett County;
(d) the financial terms and income tax consequences of the proposed
Button Gwinnett Merger;
(e) the commercial lending experience of the management of Button
Gwinnett and its subsidiaries;
(f) the management philosophy of Button Gwinnett and its compatibility
with that of Premier.
Each member of the Board of Directors of Premier has agreed to vote such
member's shares of Premier Common Stock in favor of the Button Gwinnett
Merger.
PREMIER'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PREMIER
STOCKHOLDERS VOTE FOR APPROVAL OF THE BUTTON GWINNETT AGREEMENT.
FAIRNESS OPINIONS
Premier. Premier has retained BBCP to act as its financial advisor in
connection with the Button Gwinnett Merger. On December 30, 1997,
representatives of BBCP participated in a meeting of the Executive Committee
of the Board of Directors of Premier to discuss financial implications of an
acquisition of Button Gwinnett as
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well as the expected exchange ratio Premier might have to propose in order to
acquire Button Gwinnett. Representatives of BBCP also participated in a
meeting of the Premier Board of Directors held on January 22, 1998 when the
prospect for a merger with Button Gwinnett was considered in depth. At the
meeting, the Premier Board approved the merger with Button Gwinnett, subject
to satisfactory completion of a merger agreement. At that meeting BBCP
rendered its oral opinion to the effect that, as of such date, an Exchange
Ratio of 3.885 common shares of Premier for each common share of Button
Gwinnett was fair to the Premier shareholders from a financial point of view.
Subsequently, BBCP updated its oral opinion to Premier's management after
reviewing the Button Gwinnett Agreement which included a provision providing
for an increase in the Button Gwinnett Exchange Ratio under certain events
relating to a decline in the market price of the Premier Common Stock. BBCP
has also subsequently rendered its written opinion to the Premier Board that
on the date of this Prospectus/Proxy Statement, based on the information set
forth therein, the Button Gwinnett Exchange Ratio was fair, from a financial
point of view, to the Premier shareholders.
THE FULL TEXT OF BBCP'S WRITTEN OPINION IS ATTACHED AS APPENDIX C TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX C. PREMIER SHAREHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY BBCP IN CONNECTION THEREWITH.
BBCP's opinion is directed to the Premier Board only and is directed only to
the Button Gwinnett Exchange Ratio and does not constitute a recommendation to
any Premier shareholder regarding how such shareholder should vote at the
Premier Meeting.
In arriving at its opinion, BBCP among other things: (i) analyzed certain
audited and unaudited financial statements and other information of Premier
and Button Gwinnett; (ii) reviewed and discussed with appropriate management
personnel of Premier and Button Gwinnett the past and current business
activities and financial results and the business and financial outlook of
Premier and Button Gwinnett; (iii) reviewed the historical price and trading
activity of the common stock of Premier and other similar banking
institutions; (iv) compared certain financial and stock market data relating
to Premier with similar data of other publicly held banking institutions; (v)
performed an analysis comparing the pro forma consequences of the Button
Gwinnett Merger to both Premier and Button Gwinnett shareholders with respect
to earnings per share and book value and tangible book value per share
represented by the Premier Common Stock that will be held after the Button
Gwinnett Merger to those same measures represented by the common stock
currently held; (vi) considered the relative contributions of Premier and
Button Gwinnett to a combined institution in terms of balance sheet, revenue,
earnings and ownership measures; (vii) reviewed the prices paid in certain
comparable acquisition transactions of community banking institutions and the
multiples of earnings and book value and the level of deposit base premium
received by the selling institutions; (viii) reviewed the Button Gwinnett
Agreement and certain related documents; (ix) considered the potential
synergies and cost savings made available to Premier and Button Gwinnett
through the Button Gwinnett Merger; (x) evaluated the financial and capital
implications to Premier of the Button Gwinnett Merger; (xi) considered stock
trading/liquidity implications to Premier shareholders of the Button Gwinnett
Merger; and (xii) performed such other analyses as BBCP deemed appropriate.
In conducting its analysis and arriving at its opinion, BBCP assumed and
relied upon, without independent verification, the accuracy and completeness
of the information it reviewed for the purposes of the opinion. BBCP also
relied upon the managements of Premier and Button Gwinnett with respect to the
reasonableness and achievability of the financial forecasts (and the
assumptions and bases underlying such forecasts) provided to it. BBCP also
assumed, with Premier's consent, that the aggregate allowances for loan losses
for each of Premier and Button Gwinnett are adequate to cover such losses.
BBCP is not an expert in the evaluation of allowances for loan losses and has
not reviewed any individual credit files. BBCP did not make, nor was it
furnished with, independent valuations or appraisals of the assets or
liabilities of either Premier or Button Gwinnett or any of their subsidiaries.
BBCP did not express any opinion about what the value of Premier Common Stock
actually will be when issued to the holders of Button Gwinnett Common Stock
pursuant to the Button Gwinnett Merger
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or the price at which Premier Common Stock will trade subsequent to the Button
Gwinnett Merger. Premier has informed BBCP, and BBCP has assumed, that the
Button Gwinnett Merger will be recorded utilizing pooling of interests
accounting under generally accepted accounting principles [TO BE DETERMINED].
No limitations were imposed by Premier or the Premier Board on the scope of
BBCP's investigation or the procedures to be followed by BBCP in rendering its
opinion. The opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to BBCP as of,
the date of its analysis.
In addressing the fairness, from a financial point of view, of the
consideration to be issued by Premier to the shareholders of Button Gwinnett,
BBCP employed a variety of generally recognized valuation methodologies and
merger analyses and performed those which it believed were most appropriate
for developing its opinion. The preparation of a fairness opinion involves
various determinations of the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances, and, therefore, such an opinion is not readily susceptible to
summary description. In arriving at its fairness opinion, BBCP did not
attribute any particular weight to any analysis or factor considered by it,
but rather made qualitative judgments about the significance and relevancy of
each analysis and factor. None of the analyses performed by BBCP was assigned
a greater significance by BBCP than any other. Accordingly, BBCP believes that
its analyses must be considered as a whole and that a review of selected
portions of such analyses and the factors considered therein, without
considering all analyses and factors, could create a misleading or incomplete
view of the processes underlying its opinion and any conclusions reached
therein. In its analyses, BBCP made numerous assumptions with respect to
industry performance, general business and economic conditions, and other
matters, many of which are beyond Premier's and Button Gwinnett's control. Any
estimates contained in BBCP's analyses are not necessarily indicative of
actual values or predictive of future results or values that may be
significantly more or less favorable than such estimates. Estimates of values
of companies do not purport to be appraisals or necessarily reflect the prices
at which companies or their securities actually may be sold. In addition, as
described above, BBCP's opinion and presentation to the Premier Board was one
of many factors taken into consideration by the Premier Board in making its
determination to approve the Button Gwinnett Agreement.
The following is a brief summary of analyses performed by BBCP in connection
with its oral opinion delivered to the Premier Board on January 22, 1998:
Summary of Proposal. BBCP reviewed the terms of the proposed transaction as
reflected in the draft Button Gwinnett Agreement, including the calculation of
the market value of the consideration represented by the Button Gwinnett
Exchange Ratio. BBCP stated that based on the price of Premier Common Stock on
January 21, 1998 of $19.328, an exchange ratio of 3.885 shares of Premier
Common Stock for each share of Button Gwinnett Common Stock and options would
provide a per share purchase price of $75.09.
Per Share Premier Merger Consequences Analysis. Based upon a Button Gwinnett
Exchange Ratio of 3.885 shares of Premier Common Stock for each share of
Button Gwinnett Common Stock and using the earnings estimates for 1998 and
1999 for Button Gwinnett prepared by Button Gwinnett management, earnings
estimates for 1998 and 1999 for Premier developed with Premier management and
based on certain cost savings expected to result from the Button Gwinnett
Merger, BBCP compared the estimated 1998 and 1999 earnings per share of
Premier Common Stock on a stand-alone basis to the equivalent pro forma
earnings per share of Premier reflecting consummation of the Button Gwinnett
Merger. BBCP concluded that the Button Gwinnett Merger would result in an
equivalent earnings per share increase of 2.5% in 1998 and 2.8% in 1999 for
Premier shareholders in the combined company.
BBCP also analyzed the impact of the Button Gwinnett Merger on the amount of
fully diluted book value and tangible book value represented by a share of
Premier Common Stock. BBCP assumed consummation of the Button Gwinnett Merger
as of June 30, 1998. BBCP concluded that the Button Gwinnett Merger would
result in a decrease of 3.5% in fully diluted book value and a decrease of
2.4% in fully diluted tangible book value on an equivalent per share basis,
respectively, for Premier shareholders projected as of June 30, 1998.
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Relative Contribution Analysis. BBCP compared various income statement,
balance sheet and market value measures for Premier and Button Gwinnett and
calculated the relative contribution of each institution to the combined, post
merger organization. In this comparison BBCP noted that Button Gwinnett would
have contributed 26.8% of the combined organization's net income (reflecting
adjustments for certain nonrecurring expenses) for the year ended December 31,
1997 and is projected to contribute 24.8% of the combined organization's net
income for the year ending December 31, 1998. BBCP also noted that Button
Gwinnett would have contributed 16.7%, 18.8%, 18.1% and 21.1% of the combined
organization's net loans, total deposits, total assets and fully diluted
shareholders' equity, respectively. BBCP noted that Button Gwinnett
shareholders and option holders would hold 23.0% of the combined
organization's common shares and options based upon an Exchange Ratio of
3.885.
Analysis of Selected Other Bank Mergers Involving Southeastern Community
Banks. BBCP reviewed thirty-three mergers involving Southeastern community
banks and bank holding companies announced between January, 1997 and January,
1998 in which the seller's return on average assets was greater than 1.25%.
BBCP noted in particular the prices paid in these mergers as a multiple of
earnings and book values and the transaction premiums paid in excess of
tangible book value as a percentage of core deposits. BBCP also reviewed other
data in connection with each of these mergers, including the amount of total
assets and the capital level of the acquired institutions and the return on
equity and the return on assets of the acquired institutions. BBCP then
compared this data to that of Button Gwinnett and to the value to be received
by Button Gwinnett shareholders in the Button Gwinnett Merger.
This comparison yielded a range of transaction values as multiples of latest
twelve-months earnings per share of a low of 10.2 times and a high of 74.3
times and a median value of 20.5 times. The Button Gwinnett acquisition
multiple of trailing earnings was 23.8 times. The calculations yielded a range
of transaction values as multiples of book value per share of a low of 1.58
times to a high of 4.34 times and a median value of 2.68 times. The Button
Gwinnett acquisition multiple of book value was 4.73 times. BBCP noted that
Button Gwinnett is one of the most profitable traditional banking franchises
in the United States, generating a return on average equity above 20% for
1997. Its capital position is strong as evidenced by an equity to asset ratio
at December 31, 1997 of 11.37%. Additionally, its franchise is located in
Gwinnett County which has compiled the highest growth rate over the past ten
years of the four counties comprising Metro Atlanta. Finally, the calculations
yielded a range of deposit base premiums paid from a low of 9.9% to a high of
49.1%, with a median value of 22.9%. The equivalent premium on Button Gwinnett
deposits represented by the Exchange Ratio was 54.9%. BBCP finally noted that
market valuations of publicly traded bank stocks have appreciated considerably
over the last two years. As a result, historical merger valuation multiples
may not necessarily reflect current market conditions.
No company or transaction used in the above analyses as a comparison is
identical to Premier, Button Gwinnett, or the Button Gwinnett Merger.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning differences in financial
growth, and operating characteristics of the companies and other factors that
could affect the public trading value of the companies to which they are being
compared. Mathematical analysis (such as determining the average or median) in
and of itself, does not necessarily provide meaningful intercompany
comparisons.
Subsequent to its oral report on January 22, 1998, BBCP reviewed and
considered certain terms in the Button Gwinnett Agreement negotiated between
Premier and Button Gwinnett. These terms provide for an upward adjustment in
the Exchange Ratio under certain events relating to a decline in the market
price of the Premier Common Stock. After such review and consideration, BBCP
reaffirmed its oral opinion to the management of Premier.
In connection with its written opinion dated the date of this Joint Porxy
Statement/Prospectus, BBCP confirmed the appropriateness of the analyses used
to render its January 22, 1998 report and oral opinion by performing
procedures to update certain of such analyses and by reviewing the assumptions
on which such analyses were based and the factors considered in connection
therewith.
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BBCP is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements,
and valuations for estate, tax, corporate and other purposes. A fee of $75,000
will be payable to BBCP upon consummation of the Button Gwinnett Merger. In
addition to the above, BBCP has a continuing financial advisory relationship
with Premier under which BBCP will receive $225,000 during the remainder of
1998. No compensation payable to BBCP is contingent on the conclusions reached
in the opinion of BBCP. Premier has also agreed to reimburse BBCP for
reasonable out-of-pocket expenses and to indemnify BBCP and certain related
persons against certain liabilities relating to or arising out of its
engagement.
Button Gwinnett. Pursuant to an engagement letter dated December 18, 1997,
the Board of Directors of Button Gwinnett retained Carson Medlin to serve as
its financial advisor, with respect to a proposed transaction which would lead
to the merger of Button Gwinnett into or the purchase of substantially all of
the stock or assets of Button Gwinnett by one of certain potential acquiring
financial institutions. As part of its engagement, Carson Medlin agreed to
render its opinion as to the fairness, from a financial point of view, of the
terms of such a transaction to Button Gwinnett's shareholders. Carson Medlin
is a National Association of Securities Dealers, Inc. member investment
banking firm which specializes in the securities of southeastern United States
financial institutions. As part of its investment banking activities, Carson
Medlin is regularly engaged in the valuation of southeastern United States
financial institutions and transactions relating to their securities,
including mergers and acquisitions. Carson Medlin will receive $50,000 for
rendering its opinion.
Carson Medlin delivered its preliminary opinion on February 4, 1998 to
Button Gwinnett's Board that the aggregate consideration is fair to Button
Gwinnett's unaffiliated shareholders from a financial point of view. Carson
Medlin subsequently confirmed such opinion as of the date of this Joint Proxy
Statement/Prospectus. The full text of Carson Medlin's written opinion dated
the date of this Joint Proxy Statement/Prospectus is attached as Appendix E to
this Joint Proxy Statement/Prospectus and should be read in its entirety with
respect to the procedures followed, assumptions made, matters considered and
qualifications of and limitations on the review undertaken by Carson Medlin in
connection therewith. Carson Medlin's opinion is addressed to Button
Gwinnett's Board only, and the opinion does not constitute a recommendation to
any Button Gwinnett shareholder as to how such shareholder should vote at the
Button Gwinnett Meeting or as to any other matter. The summary of the opinion
of Carson Medlin set forth in this Joint Proxy Statement/Prospectus is
qualified in its entirety by reference to the full text of such opinion dated
, 1998, and attached as Appendix E.
Carson Medlin has relied upon, without independent verification, the
accuracy and completeness of the information reviewed by it for the purposes
of rendering its opinion. Carson Medlin did not undertake any independent
evaluation or appraisal of the assets and liabilities of Button Gwinnett or
Premier, nor was it furnished with any such appraisals. Carson Medlin assumed
that the financial forecasts reviewed by it have been reasonably prepared on a
basis reflecting the best currently available judgments and estimates of the
managements of Button Gwinnett and Premier, and that such projected financial
results will be realized in the amounts and at the times contemplated thereby.
Carson Medlin is not an expert in the evaluation of loan portfolios,
underperforming or nonperforming assets, net charge-offs of such assets or the
adequacy of allowances for losses with respect thereto; has not reviewed any
individual credit files; and has assumed that the loan loss allowances for
each of Button Gwinnett and Premier are in the aggregate adequate to cover
such losses. Carson Medlin assumed that the Button Gwinnett Merger will be
recorded as a pooling of interests under generally accepted accounting
principles. Carson Medlin's opinion is necessarily based on economic, market
and other conditions as in effect on the date of its analysis, and on
information made available to it dated as of various earlier dates.
In connection with rendering its opinion, Carson Medlin performed a variety
of financial analyses. The preparation of a financial fairness opinion of this
nature involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances, and, therefore, is not readily susceptible to
partial analysis or summary description. Carson Medlin believes that its
analyses must be considered together as a whole and that selecting portions of
such analyses and the facts considered therein, without considering all other
factors and analyses, could create an
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incomplete view of the analyses and the process underlying Carson Medlin's
opinion. In its analyses, Carson Medlin made numerous assumptions with respect
to industry performance, business and economic conditions, and other matters,
many of which are beyond the control of Button Gwinnett and Premier and which
may not be realized. Any estimates contained in Carson Medlin's analyses are
not necessarily predictive of future results or values, which may be
significantly more or less favorable than such estimates. Estimates of values
of companies do not purport to be appraisals or necessarily reflect the prices
at which such companies or their securities may actually be sold. None of the
analyses performed by Carson Medlin was assigned a greater significance by
Carson Medlin than any other.
In connection with rendering its opinion, Carson Medlin reviewed (i) the
Button Gwinnett Agreement; (ii) the annual reports to shareholders of Button
Gwinnett, including audited financial statements for the five years ended
December 31, 1996; (iii) the audited financial statements of Button Gwinnett
for the year ended December 31, 1997; (iv) the Proxy Statement of Button
Gwinnett dated April 2, 1997 for the annual meeting of shareholders held on
April 21, 1997; (v) the Consolidated Report of Condition and Income of The
Bank of Gwinnett County as of December 31, 1997; (vi) the Uniform Bank
Performance Report for The Bank of Gwinnett County as of September 30, 1997;
(vii) the annual report to shareholders of Premier, including audited
financial statements for the year ended December 31, 1996; (viii) the annual
report on Form 10-K of Premier for the year ended December 31, 1996; (ix) a
draft of the annual report to shareholders of Premier including audited
financial statements for the year ended December 31, 1997; (x) unaudited pro
forma combined financial statements for Premier, Lanier Bank & Trust Company
("Lanier") and BHC as of December 31, 1997 prepared by BBCP; (xi) the
Consolidated Report of Condition and Income of Lanier as of December 31, 1997;
(xii) the Consolidated Report of Condition and Income of Spalding County Bank
as of December 31, 1997; (xiii) the Consolidated Report of Condition and
Income of Henry County Bank as of December 31, 1997; (xiv) a preliminary copy
of the Joint Proxy Statement/Prospectus prepared for the special meetings of
the shareholders of Button Gwinnett and Premier to consider the Button
Gwinnett Merger; and (xv) certain other financial and operating information
with respect to the business, operations and prospects of Button Gwinnett and
Premier.
Carson Medlin also (i) held discussions with members of the senior
management of Button Gwinnett and had discussions with the management of
Premier regarding its historical and current business operations, financial
condition and future prospects; (ii) reviewed the historical market prices and
trading activity for the common stocks of Button Gwinnett, to the extent
available, and Premier and compared them with those of certain publicly traded
companies which it deemed to be relevant; (iii) compared the results of
operations of Button Gwinnett and Premier with those of certain publicly
traded companies which it deemed to be relevant; (iv) compared the proposed
financial terms of the Button Gwinnett Merger with the financial terms, to the
extent publicly available, of certain other recent business combinations of
commercial banking and thrift organizations; (v) analyzed the pro forma
financial impact of the Button Gwinnett Merger on Premier; and (vi) conducted
such other studies, analyses, inquiries and examinations as Carson Medlin
deemed appropriate.
The following is a summary of the principal analyses performed by Carson
Medlin in connection with its opinion.
Summary of Transaction Consideration. Carson Medlin reviewed the terms of
the proposed transaction, including the Button Gwinnett Exchange Ratio and the
aggregate transaction value. Carson Medlin reviewed the implied value of the
consideration offered based upon the closing price of Premier Common Stock on
March 3, 1998, which showed that the implied value of the proposed transaction
was approximately $99.80 per share of Button Gwinnett Common Stock and the
total transaction value was approximately $155.2 million (including
outstanding options to purchase Button Gwinnett Common Stock). Carson Medlin
calculated that the value of the consideration to Button Gwinnett's common
shareholders, based on the closing price of Premier Common Stock on March 3,
1998 represented 584% of Button Gwinnett's stated book value per share at
December 31, 1997, 601% of Button Gwinnett's book value per share adjusted for
the exercise of Button Gwinnett's outstanding options on December 31, 1997,
and 30.1 times Button Gwinnett's diluted earnings per common share for the
year ended December 31, 1997. Carson Medlin calculated that the total
transaction value (including
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options to purchase Button Gwinnett Common Stock) represented a 79.7% premium
on Button Gwinnett's December 31, 1997 core deposits (defined as the aggregate
transaction value minus stated book value, as a percentage of core deposits)
and 72.1% of the total assets of Button Gwinnett at December 31, 1997.
Comparable Transaction Analysis. Carson Medlin reviewed certain information
relating to 21 selected southeastern bank mergers announced between June 1997
and December 1997 in which the acquired institutions had total assets of from
$65 million to $963 million (the "Comparable Transactions"). The Comparable
Transactions are (acquiree/acquiror): Dadeland Bancshares/Colonial BancGroup;
South Florida Banking Company/Colonial BancGroup; 1st United Bancorp/Wachovia
Corporation; GSB Investments/Compass Bancshares; West Coast Bank/FNB
Corporation; United American Bank/Colonial BancGroup; Key Florida
Bancorp/Regions Financial Corporation; Ameribank Bancshares/Wachovia
Corporation; Citizens Gwinnett Bankshares/Premier Bancshares, Inc.; First
State Corporation/Regions Financial Corporation; Lanier Bank & Trust/Premier
Bancshares, Inc.; Guaranty State Bancorp/Triangle Bancorp; Greenville
Financial Corporation/Regions Financial Corporation; First United
Bancorporation/Regions Financial Corporation; Victory Bancshares/Deposit
Guaranty; Tysons Financial/MainStreet BancGroup; George Mason
Bankshares/United Bankshares, Inc.; Regency Financial/MainStreet BancGroup;
Marshall National Bank & Trust/Mercantile Bankshares; Peoples Bank of
Virginia/F&M National Corporation; and Bank of Alexandria/F&M National Corp.
Carson Medlin considered, among other factors, the earnings, capital level,
asset size and quality of assets of the acquired financial institutions.
Carson Medlin compared the transaction prices to the then recently reported
annual earnings, stated book values, total assets and core deposits.
Carson Medlin calculated a range of purchase prices as a percentage of
stated book value for the Comparable Transactions from a low of 185.0% to a
high of 433.8%, with a mean of 306.1%. These transactions indicated a range of
values for each share of Button Gwinnett Common Stock from $31.62 per share to
$74.14 per share, with a mean of $52.31 per share (based on Button Gwinnett's
stated book value of $17.09 per share at December 31, 1997). The value of the
transaction is approximately $99.80 per share of Button Gwinnett Common Stock
(based on the price of Premier's Common Stock on March 3, 1998), which is
above the high end of the range for the Comparable Transactions.
Carson Medlin calculated a range of purchase prices as a multiple of
earnings for the Comparable Transactions from a low of 14.5 times to a high of
40.1 times, with a mean of 24.3 times. These transactions indicated a range of
values for each share of Button Gwinnett Common Stock from $48.14 per share to
$133.13 per share, with a mean of $80.68 per share (based on Button Gwinnett's
diluted earnings per common share for the year ended December 31, 1997 of
$3.32). The value of the transaction is approximately $99.80 per share of
Button Gwinnett Common Stock, which is above the mean for the Comparable
Transactions.
Carson Medlin calculated the core deposit premiums for the Comparable
Transactions and found a range of values from a low of 10.1% to a high of
37.9%, with a mean of 24.6%. The premium on Button Gwinnett's core deposits
implied by the terms of the Button Gwinnett Agreement is 79.7%, which is above
the high end of the range for the Comparable Transactions.
Finally, Carson Medlin calculated a range of purchase prices as a percentage
of total assets for the Comparable Transactions from a low of 19.0% to a high
of 40.3%, with a mean of 27.9%. The aggregate consideration as a percentage of
total assets implied by the terms of the Button Gwinnett Merger is
approximately 72.1%, which is above the high end of the range for the
Comparable Transactions.
Industry Comparative Analysis. In connection with rendering its opinion,
Carson Medlin compared selected operating results of Button Gwinnett to
Premier and those of 47 publicly-traded community commercial banks in Alabama,
Florida, Georgia, North Carolina, South Carolina, Virginia and West Virginia
(the "SIBR Banks") as contained in the Southeastern Independent Bank
Review(TM), a proprietary research publication prepared by Carson Medlin
quarterly since 1991. The SIBR Banks range in asset size from approximately
$124 million to $2.4 billion and in shareholders' equity from approximately
$13 million to $237 million. Carson Medlin considers this group of financial
institutions more comparable to Button Gwinnett and Premier than
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larger, more widely traded regional financial institutions. Carson Medlin
compared, among other factors, the profitability, capitalization, and asset
quality of Button Gwinnett and Premier to those of the SIBR Banks. Carson
Medlin noted that for the nine months ended September 30, 1997: (i) Button
Gwinnett had a return on average assets (ROA) of 2.44% compared to 1.60% for
Premier and 1.26% on average for the SIBR Banks; (ii) Button Gwinnett had a
return on average equity (ROE) of 22.6% compared to 18.1% for Premier and
12.9% on average for the SIBR Banks; (iii) Button Gwinnett had common equity
to total assets of 10.84% compared to 8.95% for Premier and 9.71% on average
for the SIBR Banks; and (iv) Button Gwinnett's non-performing assets ratio
(defined as loans 90 days past due, nonaccrual loans and other real estate to
total loans and other real estate) was 0.08% compared to 0.40% for Premier and
0.96% on average for the SIBR Banks. This comparison indicated that Button
Gwinnett's financial performance was superior to the performance of Premier
and the SIBR banks and that Premier's financial performance was generally
superior to that of the average SIBR Bank.
No company or transaction used in the preceding Industry Comparative or
Comparable Transaction Analyses is identical to Button Gwinnett, Premier or
the Button Gwinnett Merger. Accordingly, evaluating the results of these
analyses necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of Button Gwinnett,
Premier and other factors that could affect the value of the companies to
which they are being compared. Mathematical analysis (such as determining the
average or median) is not, in itself, a meaningful method of using comparable
industry or transaction data.
Contribution Analysis. Carson Medlin reviewed the relative contributions in
terms of various balance sheet items, net income and market capitalization to
be made by Button Gwinnett and Premier on a pro forma basis as adjusted for
the pending mergers other than Button Gwinnett as of March 3, 1998 to the
combined institution based on (i) balance sheet data at December 31, 1997, and
(ii) income statement data for the year ended December 31, 1997. The income
statement and balance sheet components analyzed included total assets, loans
(net of the unearned income and the allowance for loan and lease losses),
total deposits, shareholders' equity, tangible equity, core income (defined as
income before taxes and nonrecurring gains and expenses), and net income. This
analysis showed that, while Button Gwinnett's shareholders and optionholders
would own approximately 23.0% of the aggregate outstanding shares and options
of the combined institution based on the Button Gwinnett Exchange Ratio,
Button Gwinnett is contributing 17.7% of total assets, 16.6% of total loans
(net of unearned income and the allowance for loan and lease losses), 18.6% of
total deposits, 21.1% of shareholders' equity, 22.0% of tangible equity, 26.9%
of core income, and 26.8% of net income. For some of the financial components,
Button Gwinnett is contributing a higher proportion than the percentage of
ownership that Button Gwinnett shareholders and optionholders are receiving in
the Button Gwinnett Merger; for other components, Button Gwinnett is
contributing less than its shareholders and optionholders are receiving.
Present Value Analysis. Carson Medlin calculated the present value of the
Button Gwinnett Common Stock assuming that Button Gwinnett remains an
independent bank. For purposes of this analysis, Carson Medlin utilized
certain projections of Button Gwinnett's future earnings through the year
2002. The analysis assumes that Button Gwinnett would continue to pay a
dividend and that in 1998 and each year thereafter the dividend would be equal
to 18% of projected net income and that Button Gwinnett would be acquired at
the end of 2002 at a purchase price of 300% of projected book value (adjusted
for the exercise in the fifth year of all currently outstanding options). The
present value of the annual dividends plus the merger consideration at the end
of 2002 was then calculated using discount rates of 13% through 15% per annum.
These rates were selected to reflect the rates that investors in securities
such as Button Gwinnett Common Stock might be expected to require in order to
be competitive with alternative investments with similar characteristics. On
the basis of these assumptions, Carson Medlin calculated that the present
value to the shareholders of Button Gwinnett Common Stock ranged from $56.35
to $61.52 per share. The consideration implied by the terms of the Button
Gwinnett Agreement is approximately $99.80 per share, which is above the high
end of the range of the calculated present values were Button Gwinnett to
remain independent through 2002. Carson Medlin considered the present value
analysis because it is a widely used valuation methodology, but noted that the
results of such methodology are highly dependent upon the numerous assumptions
that must be made, including earnings growth rates, dividend payout rates,
terminal values and discount rates.
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Stock Trading History. Carson Medlin reviewed and analyzed the historical
trading prices and volumes for Premier's Common Stock from March 1996 to March
1998. Carson Medlin also compared the performance of Premier Common Stock over
this period to the Dow Jones Southeastern U.S. Banks Index and the Dow Jones
Equity Market Index.
This analysis showed that for the two-year period ended March 4, 1998, the
annual return for Premier's Common Stock (all cash distributions and dividends
reinvested on the ex-dividend date) was 107% compared to 42% for the Dow Jones
Southeastern U.S. Banks Index and 29% for the Dow Jones Equity Market Index.
At the end of the four quarters ended September 30, 1997, the ratio of stock
price to trailing 12 months earnings per share for the SIBR Banks was: a low
of 15.2 times, a high of 17.0 times, and a mean of 15.9 times. For the same
periods, Premier's price to earnings ratio ranged from a low of 23.6 times to
a high of 25.6 times with a mean of 24.9 times. Premier Common Stock has
traded on average at a higher price to earnings ratio than the SIBR Banks.
At the end of the four quarters ended September 30, 1997, the stock price as
a percentage of book value for the SIBR Banks was: a low of 193%, a high of
249%, and a mean of 221%. For the same periods, Premier's price to book ratio
ranged from a low of 244% to a high of 406% with a mean of 321%. Premier
Common Stock has traded on average at a higher price to book value basis
compared to the SIBR Banks.
Carson Medlin also examined the recent trading volume in Premier Common
Stock, which began trading on the American Stock Exchange on January 10, 1997.
Before that time it traded on the NASDAQ Small Cap Market. Carson Medlin
considers the Premier Common Stock to be liquid and marketable.
Carson Medlin also examined recent trading prices and volumes of Button
Gwinnett Common Stock, to the extent available. Button Gwinnett's Common Stock
is not listed on an exchange, trades infrequently and actual trade prices and
trading volume could not be confirmed. Carson Medlin did not consider the
market price of Button Gwinnett Common Stock in its analysis.
Shareholder Claims Analysis. Carson Medlin compared the ownership of one
share of the Button Gwinnett Common Stock to the ownership of 3.885 shares of
Premier Common Stock (as per the Button Gwinnett Exchange Ratio) from the
perspective of claims on various balance sheet and income statement variables.
For the purpose of this analysis Premier's results were adjusted for the
proposed mergers of Lanier and BHC as of year end 1997. Carson Medlin found
that Button Gwinnett shareholders would have had a claim to $2.79 of pro forma
1997 diluted earnings per share after consummation of the Button Gwinnett
Merger versus $3.32 without the Button Gwinnett Merger and $3.50 of estimated
pro forma 1998 diluted earnings per share versus $3.64 without. Button
Gwinnett's shareholders and optionholders would have had a claim to $278.8
million in December 31, 1997 total assets compared to $215.2 million without
the Button Gwinnett Merger. Button Gwinnett's shareholders would have had a
claim to $17.38 in December 31, 1997 pro forma book value per share, adjusted
for the exercise of all options, compared to $16.62 before the Button Gwinnett
Merger. Furthermore, Button Gwinnett's shareholders would be expected,
assuming continuation of Premier's recent dividend rate, to receive cash
dividends at the annual rate of $1.24 per Button Gwinnett share after the
Button Gwinnett Merger versus $0.60 per share prior to the Button Gwinnett
Merger.
Other Analyses. Carson Medlin also reviewed selected investment research
reports on and earnings estimates for Premier. In addition, Carson Medlin
performed a dilution analysis and such other analyses and comparisons that it
deemed appropriate.
The opinion expressed by Carson Medlin was based upon market, economic and
other relevant considerations as they existed and were evaluated as of the
date of the opinion. Events occurring after the date of issuance of the
opinion, including but not limited to, changes affecting the securities
markets, the results of
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operations or material changes in the assets or liabilities of Button Gwinnett
or Premier could materially affect the assumptions used in preparing the
opinion.
EFFECTIVE DATE OF THE BUTTON GWINNETT MERGER
Subject to the conditions to the obligations of the parties to effect the
Button Gwinnett Merger, the Button Gwinnett Effective Date will occur on the
date and at the time specified in the Certificate of Merger filed by Premier
with the Georgia Secretary of State. If no effective date or time is
specified, the Button Gwinnett Merger will become effective upon the filing of
the Certificate of Merger. Unless otherwise agreed upon by Premier and Button
Gwinnett, and subject to the conditions to the obligations of the parties to
effect the Button Gwinnett Merger, the parties will use their reasonable
efforts to cause the Button Gwinnett Effective Date to occur by the last
business day of the month in which the last of the following events occurs:
(i) the effective date (including the expiration of any applicable waiting
period) of the last federal or state regulatory approval required for the
Button Gwinnett Merger or (ii) the date on which the Button Gwinnett Agreement
is approved by the requisite vote of Button Gwinnett and Premier shareholders.
No assurance can be provided that the necessary shareholder and regulatory
approvals can be obtained or that other conditions precedent to the Button
Gwinnett Merger can or will be satisfied. Premier and Button Gwinnett
anticipate that all conditions to consummation of the Button Gwinnett Merger
will be satisfied so that the Button Gwinnett Merger can be consummated in the
second quarter of 1998. However, delays in the consummation of the Button
Gwinnett Merger could occur.
The Board of Directors of either Premier or Button Gwinnett generally may
terminate the Button Gwinnett Agreement if the Button Gwinnett Merger is not
consummated by September 30, 1998, unless the failure to consummate by that
date is the result of a breach of the Button Gwinnett Agreement by the party
seeking termination. See "--Conditions to Consummation of the Button Gwinnett
Merger" and "--Waiver, Amendment, and Termination of the Button Gwinnett
Agreement."
DISTRIBUTION OF STOCK CERTIFICATES AFTER THE BUTTON GWINNETT MERGER
Promptly after the Effective Date, Premier will cause SunTrust Bank,
Atlanta, acting in the capacity of Exchange Agent, to mail to the former
shareholders of Button Gwinnett a letter of transmittal, together with
instructions for the exchange of such shareholders' certificates representing
shares of Button Gwinnett Common Stock for certificates representing shares of
Premier Common Stock.
BUTTON GWINNETT SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon
surrender to the Exchange Agent of certificates for Button Gwinnett Common
Stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of Button Gwinnett Common Stock a certificate
or certificates representing the number of shares of Premier Common Stock to
which such holder is entitled as a result of the Button Gwinnett Merger. After
the Button Gwinnett Effective Date, holders of record of Button Gwinnett
Common Stock as of the Button Gwinnett Effective Date will be entitled to vote
at any meeting of Premier shareholders the number of shares of Premier Common
Stock into which their Button Gwinnett Common Stock has been converted,
regardless of whether such shareholders have surrendered their Button Gwinnett
stock certificates. NO DIVIDEND OR OTHER DISTRIBUTION PAYABLE AFTER THE BUTTON
GWINNETT EFFECTIVE DATE WITH RESPECT TO PREMIER COMMON STOCK, HOWEVER, WILL BE
PAID TO THE HOLDER OF ANY UNSURRENDERED BUTTON GWINNETT STOCK CERTIFICATE
UNTIL THE HOLDER DULY SURRENDERS SUCH CERTIFICATE. Upon such surrender, all
undelivered dividends and other distributions will be delivered to such
shareholder, in each case without interest.
After the Button Gwinnett Effective Date, there will be no transfers of
shares of Button Gwinnett Common Stock on Button Gwinnett's stock transfer
books. If certificates representing shares of Button Gwinnett Common Stock are
presented for transfer after the Button Gwinnett Effective Date, they will be
canceled and exchanged for the shares of Premier Common Stock deliverable in
respect thereof.
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CONDITIONS TO CONSUMMATION OF THE BUTTON GWINNETT MERGER
Consummation of the Button Gwinnett Merger is subject to a number of
conditions, including, but not limited to:
(i) approval of the Button Gwinnett Merger from the Federal Reserve and
the Georgia Department without any conditions or restrictions that would,
in the reasonable judgment of either party, so materially adversely impact
the economic benefits of the transactions contemplated by the Button
Gwinnett Agreement as to render inadvisable the consummation of the Button
Gwinnett Merger, and the expiration of applicable waiting periods under the
BHC Act;
(ii) approval of the Button Gwinnett Agreement and the transactions
contemplated thereby by the holders of a majority of the shares of Button
Gwinnett Common Stock entitled to vote on the Button Gwinnett Merger;
(iii) approval of the Button Gwinnett Agreement and the transactions
contemplated thereby by the holders of a majority of the shares of Premier
Common Stock entitled to vote on the Button Gwinnett Merger;
(iv) approval of an increase in the number of authorized shares of
Premier Common Stock to 60,000,000 by the holders of a majority of the
shares of Premier Common Stock entitled to vote thereon and by the American
Stock Exchange, Inc., and the receipt of any other approval for such
increase that may be required by law;
(v) the receipt of all consents by both parties required for consummation
of the Button Gwinnett Merger or for the preventing of any default under
any contract or permit of such party, as applicable, which if not obtained
or made, is reasonably likely to have, individually or in the aggregate, a
material adverse effect on such party;
(vi) the receipt by both parties of an opinion from Womble Carlyle
Sandridge & Rice, PLLC, counsel for Premier, to the effect that, among
other things: (i) the Button Gwinnett Merger will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"); (ii) the exchange in the
Button Gwinnett Merger of Button Gwinnett Common Stock for Premier Common
Stock will not give rise to gain or loss to the shareholders of Button
Gwinnett with respect to such exchange, except to the extent of any cash
received for fractional shares or upon the exercise by a shareholder of his
or her dissenters' rights; and (iii) neither Premier nor Button Gwinnett
will recognize gain or loss as a consequence of the Button Gwinnett Merger;
(vii) approval for listing on the American Stock Exchange of the shares
of Premier Common Stock to be issued in the Button Gwinnett Merger; and
(viii) receipt of letters from Mauldin & Jenkins, LLC and Ernst & Young
LLP dated as of the Button Gwinnett Effective Date, confirming that the
Button Gwinnett Merger will qualify for pooling-of-interests accounting
treatment.
Consummation of the Button Gwinnett Merger also is subject to the
satisfaction or waiver of various other conditions specified in the Button
Gwinnett Agreement, including, among others: (i) the delivery by Premier and
Button Gwinnett of opinions of their respective counsel and certificates
executed by their respective Chief Executive Officers and Chief Financial
Officers as to compliance with the Button Gwinnett Agreement; and (ii) as of
the Button Gwinnett Effective Date, the accuracy of certain representations
and warranties and the compliance in all material respects with the agreements
and covenants of each party.
REGULATORY APPROVALS
The Button Gwinnett Merger may not proceed in the absence of receipt of the
requisite regulatory approvals. There can be no assurance that such regulatory
approvals will be obtained or as to the timing of such approvals. There also
can be no assurance that such approvals will not be accompanied by conditions
which cause such approvals to fail to satisfy the conditions set forth in the
Button Gwinnett Agreement. Applications for the approvals described below have
been submitted to the appropriate regulatory agencies.
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Premier and Button Gwinnett are not aware of any material governmental
approvals or actions that are required for consummation of the Button Gwinnett
Merger, except as described below. Should any other approval or action be
required, it presently is contemplated that such approval or action would be
sought.
The Button Gwinnett Merger requires the prior approval of the Federal
Reserve, pursuant to Section 3 of the BHC Act. In granting its approval under
Section 3 of the BHC Act, the Federal Reserve must take into consideration,
among other factors, the financial and managerial resources and future
prospects of the institutions and whether the acquisition can reasonably be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased competition,
conflicts of interest, or unsound banking practices. Under the BHC Act, the
Button Gwinnett Merger may not be consummated until the 15th day following the
date of Federal Reserve approval, during which time the United States
Department of Justice may challenge the transaction on antitrust grounds. The
commencement of any antitrust action would stay the effectiveness of the
Federal Reserve's approval, unless a court specifically orders otherwise.
The Button Gwinnett Merger also is subject to the approval of the Georgia
Department. In its evaluations, the Georgia Department will take into account
considerations similar to those applied by the Federal Reserve.
RIGHTS OF DISSENTING SHAREHOLDERS
Any shareholder of record of Button Gwinnett who objects to the Button
Gwinnett Merger and who fully complies with Section 14-2-1301 et seq. of the
Georgia Code will be entitled to demand and receive payment in cash of an
amount equal to the fair value of all, but not less than all, of his or her
shares of Button Gwinnett Common Stock if the Button Gwinnett Merger is
consummated. A shareholder of record may assert dissenters' rights as to fewer
than the shares registered in such shareholder's name only if he or she
dissents with respect to all shares beneficially owned by any one beneficial
owner and notifies Button Gwinnett in writing of the name and address of each
person on whose behalf the shareholder of record asserts dissenters' rights.
For the purpose of determining the amount to be received in connection with
the exercise of statutory dissenters' rights under the Georgia Code, the fair
value of a dissenting shareholder's Button Gwinnett Common Stock equals the
value of the shares immediately before the Button Gwinnett Effective Date of
the Button Gwinnett Merger, excluding any appreciation or depreciation in
anticipation of the Button Gwinnett Merger.
Any Button Gwinnett shareholder desiring to receive payment of the fair
value of his or her Button Gwinnett Common Stock in accordance with the
requirements of the Georgia Code: (i) must deliver to Button Gwinnett prior to
the time the shareholder vote on the Button Gwinnett Agreement is taken, a
written notice of his or her intent to demand payment for his or her shares if
such Button Gwinnett Merger is consummated; (ii) must not vote his or her
shares in favor of the Button Gwinnett Agreement; and (iii) must demand
payment and deposit stock certificates representing Button Gwinnett Common
Stock in accordance with the terms of a notice which will be sent to the
shareholder by Premier (as the surviving corporation in the Button Gwinnett
Merger) no later than 10 days after such Button Gwinnett Merger is
consummated. A filing of the written notice of intent to dissent with respect
to the Button Gwinnett Agreement should be sent to: Button Gwinnett, 150 South
Perry Street, Lawrenceville, Georgia 30246, Attention: President. A VOTE
AGAINST THE BUTTON GWINNETT AGREEMENT ALONE WILL NOT SATISFY THE REQUIREMENTS
FOR THE SEPARATE WRITTEN NOTICE OF INTENT TO DISSENT TO THE BUTTON GWINNETT
MERGER, THE SEPARATE WRITTEN DEMAND FOR PAYMENT OF THE FAIR VALUE OF SHARES OF
BUTTON GWINNETT COMMON STOCK AND THE DEPOSIT OF THE STOCK CERTIFICATES, WHICH
ARE REFERRED TO IN CONDITIONS (I) AND (III) ABOVE. RATHER, A DISSENTING
SHAREHOLDER MUST SEPARATELY COMPLY WITH ALL OF THOSE CONDITIONS.
WAIVER, AMENDMENT, AND TERMINATION OF THE BUTTON GWINNETT AGREEMENT
Prior to the Button Gwinnett Effective Date, and to the extent permitted by
law, any provision of the Button Gwinnett Agreement generally may be (i)
waived by the party benefitted by the provision or (ii) amended by a written
agreement between Premier and Button Gwinnett approved by their respective
Boards of Directors; provided, however, that after approval by the Premier and
Button Gwinnett shareholders, no amendment that
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would require further approval by such shareholders under the Georgia Code may
be made without the approval of such shareholders.
The Button Gwinnett Agreement may be terminated, and the Button Gwinnett
Merger abandoned, at any time prior to the Button Gwinnett Effective Date,
either before or after approval by the Premier and the Button Gwinnett
shareholders, upon written notice to the other party as follows:
(i) by either party, if the shareholders of either Premier or Button
Gwinnett have not approved the Button Gwinnett Agreement in accordance with
the provisions of the Georgia Code, or any consent of any regulatory
authority required for consummation of the Button Gwinnett Merger has been
denied by final nonappealable action of such authority;
(ii) by either party (provided that the terminating party is not then in
breach of any representation, warranty, covenant or agreement under the
applicable standard set forth in the Button Gwinnett Agreement) in the
event of any material breach by the other party of any covenant or
agreement, or in the event of any material inaccuracy in any representation
or warranty of the other party, which breach or inaccuracy cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party;
(iii) by mutual consent of the Board of Directors of both parties;
(iv) by either party if the Button Gwinnett Merger shall not have been
consummated by September 30, 1998;
(v) by the Board of Directors of either party in the event that the
Premier Ratio is either less than 0.70 or greater than 1.30. See "--
Possible Adjustment of Button Gwinnett Exchange Ratio."
If the Button Gwinnett Agreement is terminated, the parties will have no
further obligations, except with respect to certain provisions, including
those providing for payment of expenses and restricting disclosure of
confidential information. See "--Expenses and Fees" for additional information
concerning the payment of expenses.
CONDUCT OF BUSINESS PENDING THE BUTTON GWINNETT MERGER
Each of Button Gwinnett and Premier generally has agreed, unless the prior
consent of the other party is obtained, and except as otherwise contemplated
by the Button Gwinnett Agreement, to operate its business only in the ordinary
course, to preserve intact its business organization and assets and to
maintain its rights and franchises. In addition, the Button Gwinnett Agreement
contains certain other restrictions applicable to the conduct of the business
of either Button Gwinnett or Premier prior to consummation of the Button
Gwinnett Merger, as described below.
Each party has agreed not to take certain actions relating to the operation
of its business pending consummation of the Button Gwinnett Merger without the
prior approval of the other party. Those actions generally include, without
limitation: (i) amending its Articles of Incorporation or Bylaws; (ii)
becoming responsible for any obligation for borrowed money in excess of an
aggregate of $100,000 (except in the ordinary course of business consistent
with past practices); (iii) adjusting, splitting, combining or reclassifying
any of its capital stock; (iv) selling or encumbering any shares of its
capital stock or any asset having a book value in excess of $50,000 (except in
the ordinary course of business for reasonable and adequate consideration);
(v) purchasing any securities (generally other than U.S. Treasury or U.S.
government securities) or making any material investment or otherwise
acquiring direct or indirect control over any entity; (vi) granting any
increase in compensation or benefits to any employee whose annual salary
exceeds $35,000, paying any severance or termination pay or any bonus other
than pursuant to written policies, or granting any general increase in
compensation to all employees; (vii) making any significant change in any tax
or accounting methods or systems of internal accounting controls; (viii)
commencing any litigation (except in accordance with past practice) or
settling any litigation involving liability of the holding company or any
subsidiary for damages in excess of $50,000 which imposes material
restrictions upon its operations; or (ix) entering into, modifying or
terminating any material contract except in the ordinary course of business.
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In addition, Button Gwinnett has agreed to refrain from certain actions
relating to the operation of its business pending consummation of the Button
Gwinnett Merger, which actions generally include, without limitation: (i)
issuing or selling any additional shares of Button Gwinnett Common Stock or
any other capital stock of Button Gwinnett; (ii) entering into or amending any
employment agreement that Button Gwinnett does not have the unconditional
right to terminate; or (iii) adopting any new employee benefit plan or making
any material change in or to any existing employee benefit plans.
DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE BUTTON GWINNETT MERGER
Management. The officers and directors of Premier shall remain the same
following the Button Gwinnett Merger except that Glenn S. White and John D.
Stephens shall be elected to the Board of Directors of Premier. Mr. White
shall also serve as President of Premier Bank following the Button Gwinnett
Merger.
Mr. White, age 46, has been a Director of Button Gwinnett since 1993 and a
Director and the President of The Bank of Gwinnett County since 1987.
John D. Stephens, age 57, has served as Chairman of the Board of Directors
of Button Gwinnett and The Bank of Gwinnett County since 1993. In addition,
Mr. Stephens is Chief Executive Officer and owner of John D. Stephens, Inc. in
Stone Mountain, Georgia which has engaged in pipeline construction since 1966.
EMPLOYMENT AGREEMENTS
Glenn S. White. At the Effective Date of the Button Gwinnett Merger,
Premier, Premier Bank, and The Bank of Gwinnett County, will enter into an
employment agreement with Glenn S. White. Under the terms of the employment
agreement, Mr. White will continue as President and Chief Executive Officer of
The Bank of Gwinnett County, become President and Chief Operating Officer of
Premier Bank, and become Executive Vice President of Premier. In addition, Mr.
White will be elected to the Board of Directors of Premier Bank and shall be
entitled to serve thereon as long as he is employed by Premier Bank. The term
of the Employment Agreement is 36 months from the Button Gwinnett Effective
Date, subject to automatic 12-month extensions unless the parties do not agree
to the extension. Mr. White's annual base salary will be $185,000 and he is
entitled to receive such additional incentive compensation as may be awarded
in the discretion of the Boards of Directors of Premier, Premier Bank and/or
The Bank of Gwinnett County, or any committee designated by them. Mr. White is
to receive total annual compensation, inclusive of base salary and incentive
compensation of not less than $240,000 during the first 36 months of the
employment agreement. Mr. White's base salary and any incentive pay is to be
reviewed at least annually by the Boards of Directors of Premier, Premier Bank
and/or The Bank of Gwinnett County and his base salary may be increased in
their discretion to reflect performance. Mr. White is generally eligible for
participation in the employee benefits programs, including but not limited to
life and health insurance, and is to receive title to an automobile, and a
monthly car allowance, is to be generally reimbursed for expenses and is to be
reimbursed for country club and business association dues. In the event of a
disability, Mr. White is entitled to receive 100% of his then-current base
salary for 12 months; provided, however, that he may be terminated if he is
disabled for a continuous period exceeding 12 months. In the event of a
termination for "cause" (as defined in the agreement), Mr. White will receive
no right to compensation or other benefits. If Mr. White terminates his
employment because the status, character, capacity or circumstances of his
employment have been materially altered (whether by reduction in salary or
otherwise), Mr. White shall be entitled to receive a lump sum severance
payment equal to three times his then-current annual base salary and incentive
compensation. If Mr. White voluntarily terminates his employment due to
reasons unrelated to a "change in control," then he is entitled to receive no
right to compensation or other benefits. If Mr. White's employment is
terminated by the Boards of Directors for any reason other than for "cause" or
disability, then he is entitled to receive a lump sum severance payment equal
to three times his then-current annual base salary and incentive compensation.
In the event of a "change in control" (any transaction in which 50% or more of
the voting stock of Premier becomes controlled by another, there is a sale,
transfer, consolidation or merger of
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Premier, or Premier Bank or The Bank of Gwinnett County are sold to or merged
with a corporation that is not a majority owned subsidiary of Premier or
Premier's shareholders), any termination (voluntary or involuntary) of Mr.
White's employment (other than for "cause") occurring either six months prior
to or 12 months after the "change of control," shall entitle him to receive a
lump sum severance payment equal to three times his then-current annual base
salary and incentive compensation. Finally, the employment agreement prohibits
Mr. White from disclosing any confidential information during his employment
and for a period of one year after termination.
Andrew R. Pourchier. At the Effective Date of the Button Gwinnett Merger,
Premier Bank and The Bank of Gwinnett County will enter into an employment
agreement with Andrew R. Pourchier. Under the terms of the employment
agreement, Mr. Pourchier will continue as Executive Vice President of The Bank
of Gwinnett County and become Executive Vice President of Premier Bank. In
addition, Mr. Pourchier will be elected to the Board of Directors of Premier
Lending and shall be entitled to serve thereon as long as he is employed by
Premier Bank. The term of the employment agreement is 24 months from the
Button Gwinnett Effective Date, subject to automatic 12-month extensions
unless the parties do not agree to the extension. Mr. Pourchier's annual base
salary will be $137,000 and he is entitled to receive such additional
incentive compensation as may be awarded in the discretion of the Boards of
Directors of Premier Bank and/or The Bank of Gwinnett County, or any committee
designated by them. Mr. Pourchier is to receive total compensation, inclusive
of base salary and incentive compensation of not less than $178,000 during the
first 24 months of the employment agreement. Mr. Pourchier's base salary and
any incentive pay is to be reviewed at least annually by the Boards of
Directors of Premier, Premier Bank and/or The Bank of Gwinnett County and his
base salary may be increased in their discretion to reflect performance. Mr.
Pourchier is generally eligible for participation in the employee benefits
programs, including but not limited to life and health insurance, and is to
receive title to an automobile and a monthly car allowance, and is to be
generally reimbursed for expenses and is to be reimbursed for country club and
business association dues. In the event of a disability, Mr. Pourchier is
entitled to receive 100% of his then-current base salary for 12 months;
provided, however, that he may be terminated if he is disabled for a
continuous period exceeding 12 months. In the event of a termination for
"cause" (as defined in the employment agreement), Mr. Pourchier will receive
no right to compensation or other benefits. If Mr. Pourchier terminates his
employment because the status, character, capacity or circumstances of his
employment have been materially altered (whether by reduction in salary or
otherwise), Mr. Pourchier shall be entitled to receive a lump sum severance
payment equal to his then-current annual base salary and incentive
compensation. If Mr. Pourchier voluntarily terminates his employment due to
reasons unrelated to a "change in control," then he is entitled to receive no
right to compensation or other benefits. If Mr. Pourchier's employment is
terminated by the Boards of Directors for any reason other than "cause" or
disability, then he is entitled to receive a lump sum severance payment equal
to his then-current annual base salary and incentive compensation. In the
event of a "change in control" (any transaction in which 50% or more of the
voting stock of Premier becomes controlled by another, there is a sale,
transfer, consolidation or merger of Premier, or Premier Bank or The Bank of
Gwinnett County are sold to or merged with a corporation that is not a
majority owned subsidiary of Premier or Premier's shareholders), any
termination (voluntary or involuntary) of Mr. Pourchier's employment (other
than for "cause") occurring either six months prior to or 12 months after the
"change of control," shall entitle him to receive a lump sum severance payment
equal to his then-current annual base salary and incentive compensation.
Finally, the agreement prohibits Mr. Pourchier from disclosing any
confidential information during his employment and for a period of one year
after termination.
Linda S. George. Following the Effective Date of the Button Gwinnett Merger,
Linda S. George will continue as Vice President of Construction Lending for
The Bank of Gwinnett County and become Vice President of Construction Lending
for Premier Bank. Effective as of the Button Gwinnett Effective Date, Premier
Bank and The Bank of Gwinnett County will enter into a severance pay agreement
with Ms. George. In the event of any termination (voluntary or involuntary)
for any reason other than in connection with a "change of control," Ms. George
will receive no right to compensation or other benefits. In the event of a
"change in control" (any transaction in which 50% or more of the voting stock
of Premier becomes controlled by another, there is a sale, transfer,
consolidation or merger of Premier, or Premier Bank or The Bank of Gwinnett
County are sold to or
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merged with a corporation that is not a majority owned subsidiary of Premier
or Premier's shareholders), any termination of Ms. George's employment by her
employers (other than for "cause") occurring either three months prior to or
six months after the "change of control," shall entitle her to receive a
severance payment equal to one-half of her then-current annual base salary and
incentive compensation. Finally, the severance pay agreement prohibits Ms.
George from disclosing any confidential information during her employment and
for a period of one year after termination.
John C. Pentecost. John C. Pentecost will continue as Senior Vice President
of Commercial Lending for The Bank of Gwinnett County and will become Senior
Vice President of Commercial Lending for Premier Bank following the Button
Gwinnett Merger. Premier Bank and The Bank of Gwinnett County will enter into
a severance pay agreement with Mr. Pentecost, effective as of the Button
Gwinnett Effective Date. In the event of any termination (voluntary or
involuntary) for any reason other than in connection with a "change of
control," Mr. Pentecost will receive no right to compensation or other
benefits. In the event of a "change in control" (any transaction in which 50%
or more of the voting stock of Premier becomes controlled by another, there is
a sale, transfer, consolidation or merger of Premier, or Premier Bank or The
Bank of Gwinnett County are sold to or merged with a corporation that is not a
majority owned subsidiary of Premier or Premier's shareholders), any
termination of Mr. Pentecost's employment (other than for "cause") occurring
either three months prior to or six months after the "change of control,"
shall entitle him to receive a severance payment equal to his then-current
annual base salary and incentive compensation. Finally, the agreement
prohibits Mr. Pentecost from disclosing any confidential information during
his employment and for a period of one year after termination.
William P. Shaver. William P. Shaver will continue as Vice President of
Commercial Lending for The Bank of Gwinnett County and become Vice President
of Commercial Lending for Premier Bank following the Button Gwinnett Merger.
Premier Bank and The Bank of Gwinnett County will enter into a severance pay
agreement with Mr. Shaver effective as of the Button Gwinnett Effective Date.
In the event of termination (voluntary or involuntary) for any reason other
than in connection with a "change of control," Mr. Shaver will receive no
right to compensation or other benefits. In the event of a "change in control"
(any transaction in which 50% or more of the voting stock of Premier becomes
controlled by another, there is a sale, transfer, consolidation or merger of
Premier, or Premier Bank or The Bank of Gwinnett County are sold to or merged
with a corporation that is not a majority owned subsidiary of Premier or
Premier's shareholders), any termination of Mr. Shaver's employment by his
employers (other than for "cause") occurring either three months prior to or
six months after the "change of control," shall entitle him to receive a
severance payment equal to one-half of his then-current annual base salary and
incentive compensation. Finally, the severance pay agreement prohibits Mr.
Shaver from disclosing any confidential information during his employment and
for a period of one year after termination.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Button Gwinnett Agreement also provides that, after the Effective Date,
Premier will provide generally to officers and employees of Button Gwinnett
and its subsidiaries who become officers or employees of Premier or its
subsidiaries, employee benefits under employee benefit plans on terms and
conditions that, taken as a whole, are substantially similar to those
currently provided by Premier and its subsidiaries to their similarly situated
officers and employees. For purposes of participation and vesting under such
employee benefit plans, service with Button Gwinnett or its subsidiaries prior
to the Effective Date will be treated as service with Premier or its
subsidiaries. The Button Gwinnett Agreement further provides that Premier will
honor all employment, severance, consulting, and other compensation contracts
previously disclosed to Premier between Button Gwinnett or its subsidiaries
and any current or former director, officer, or employee, and all provisions
for vested amounts earned or accrued through the Effective Date under Button
Gwinnett's benefit plans.
Certain terms of Mr. White's employment agreement with Premier Bank are more
favorable to Mr. White than the terms of his current employment agreement with
Button Gwinnett. Such more favorable terms include a three-year initial term
with one-year extensions compared to renewable one-year terms under his
current employment agreement. Additionally, Mr. White's employment agreement
with Premier Bank provides for a
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minimum total annual compensation, inclusive of base salary and incentive
compensation, of $240,000, and his employment agreement with Button Gwinnett
does not provide any minimum compensation other than the base salary. Mr.
White's existing employment agreement with Button Gwinnett is silent as to the
possible disability of Mr. White, while the employment agreement with Premier
Bank provides for payment of 100% of Mr. White's base salary for 12 months in
the event of a disability. Under the employment agreement with Button
Gwinnett, Mr. White is not entitled to any additional severance compensation
in the event of termination without "cause" of his current employment
agreement, or any termination related to a change of control of Button
Gwinnett, other than that provided in the Indexed Executive Salary
Continuation Plan Agreement as discussed below. Mr. White's employment
agreement with Premier Bank, however, provides for a one time severance
payment equal to three times his then-current annual base salary and incentive
compensation as discussed above. Finally, Mr. White's employment agreement
with Button Gwinnett contains non-competition provisions while his employment
agreement with Premier Bank is silent with respect to non-competition.
Certain terms of Mr. Pourchier's employment agreement with Premier Bank are
more favorable to Mr. Pourchier than the terms of his current employment
agreement with Button Gwinnett. Such more favorable terms include a two-year
initial term with one-year extensions compared to renewable one-year terms
under his current employment agreement. Additionally, Mr. Pourchier's
employment agreement with Premier Bank provides for a minimum total annual
compensation, inclusive of base salary and incentive compensation, of
$178,000, and his employment agreement with Button Gwinnett does not provide
any minimum compensation other than the base salary. Mr. Pourchier's
employment agreement with Button Gwinnett is silent as to the possible
disability of Mr. Pourchier, while the employment agreement with Premier Bank
provides for payment of 100% of Mr. Pourchier's base salary for 12 months in
the event of a disability. Under the employment agreement with Button
Gwinnett, Mr. Pourchier is not entitled to any additional severance
compensation in the event of termination without "cause" of his current
employment agreement, or any termination related to a change of control of
Button Gwinnett, other than that provided in the Indexed Executive Salary
Continuation Plan Agreement as discussed below. Mr. Pourchier's employment
agreement with Premier Bank, however, provides for a one time severance
payment equal to his then-current annual base salary and incentive
compensation as discussed above. Finally, Mr. Pourchier's employment agreement
with Button Gwinnett contains non-competition provisions while his employment
agreement with Premier Bank is silent with respect to non-competition.
Certain terms of Ms. George's severance pay agreement with Premier Bank and
The Bank of Gwinnett County are more favorable to Ms. George than the terms of
her current employment agreement with Button Gwinnett. The employment
agreement with Button Gwinnett does not provide any severance payments in the
event of termination related to a change of control. As discussed above, the
severance pay agreements effective at the Button Gwinnett Effective Date
provide, in the event of a termination occurring three months before or within
six months after a "change of control," a one time severance payment to Ms.
George equal to one-half of Ms. George's then-current annual base salary.
The terms of Mr. Pentecost's severance pay agreement are generally as
favorable as the terms of his current employment agreement with Button
Gwinnett. Following the Button Gwinnett Merger, however, Premier has committed
to grant Mr. Pentecost an option to purchase 10,000 shares of Premier Common
Stock at an exercise price equal to the market price of such stock at the date
of grant, provided that Mr. Pentecost's severance pay agreement with Premier
is in effect and his employment agreement with Button Gwinnett has been
superseded by the severance pay agreement.
Mr. Shaver does not currently have an employment agreement with Button
Gwinnett, and the terms of his severance agreement with Premier Bank and
Gwinnett County Bank are therefore more favorable to him.
In addition, as a result of the Button Gwinnett Merger, certain rights of
Mr. White, Mr. Pourchier and Ms. George will become vested under certain
Indexed Executive Salary Continuation Plan Agreements previously executed by
The Bank of Gwinnett County and each of Mr. White, Mr. Pourchier and Ms.
George. The terms of the Indexed Executive Salary Continuation Plan Agreements
are indexed to certain universal life insurance policy illustrations. The
Indexed Executive Salary Continuation Plan Agreements require the creation
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and maintenance of a "Pre-Retirement Account" for each covered employee, which
"Pre-Retirement Account" is measured by the excess of the annual after-tax
earnings from the named policy over the cost of funds expense associated with
the named policy illustration. The balance in the "Pre-Retirement Account" is
payable to the covered employee in ten annual installments after the employee
reaches the age of 65 (even if the employee is no longer employed). In
addition, upon reaching the age of 65, the employee also receives an annual
retirement benefit equal to the excess of the annual after-tax earnings from
the named policy over the cost of funds expense associated with the named
policy illustrations for each year after age 65 until the employee's death. As
a result of the closing of the Button Gwinnett Merger, the covered employees'
rights to receive the benefits are vested and the employees will receive the
described benefits under the Indexed Executive Salary Continuation Plan
Agreements commencing at the age of 65, regardless of whether the covered
employee is still employed at that time. The Indexed Executive Salary
Continuation Plan Agreement for Mr. White is indexed to a $550,000 universal
life policy illustration and The Bank of Gwinnett County currently owns a
policy based on that illustration. The Indexed Executive Salary Continuation
Plan Agreement for Mr. Pourchier is indexed to a $275,000 universal life
policy illustration and The Bank of Gwinnett County currently owns a policy
based on that illustration. The Indexed Executive Salary Continuation Plan
Agreement for Ms. George is indexed to a $175,000 universal life policy
illustration and The Bank of Gwinnett County currently owns a policy based on
that illustration.
As of the Record Date, the directors and executive officers of Button
Gwinnett beneficially owned 2,900 shares (or less than 1% of the outstanding
shares) of Premier Common Stock.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE BUTTON GWINNETT MERGER
THE FOLLOWING IS A SUMMARY OF MATERIAL ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE BUTTON GWINNETT MERGER. THIS SUMMARY IS BASED ON THE
FEDERAL INCOME TAX LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES
NOT TAKE INTO ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS,
INCLUDING AMENDMENTS TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN
JUDICIAL OR ADMINISTRATIVE RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT.
THIS SUMMARY DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL
INCOME TAX CONSEQUENCES OF THE BUTTON GWINNETT MERGER AND IS NOT INTENDED AS
TAX ADVICE TO ANY PERSON. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING,
THIS SUMMARY DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE
BUTTON GWINNETT MERGER TO SHAREHOLDERS IN LIGHT OF THEIR PARTICULAR
CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT ENTITIES,
DEALERS IN SECURITIES, INSURANCE COMPANIES, OR CORPORATIONS, AMONG OTHERS).
NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE BUTTON GWINNETT MERGER
UNDER ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. SHAREHOLDERS, THEREFORE,
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE BUTTON GWINNETT MERGER, INCLUDING TAX RETURN
REPORTING REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, FOREIGN, STATE,
LOCAL, AND OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE
TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Womble Carlyle Sandridge
& Rice, PLLC, counsel to Premier, has rendered an opinion to Premier and
Button Gwinnett concerning certain federal income tax consequences of the
proposed Button Gwinnett Merger under federal income tax law and this
discussion is entirely qualified by such opinion. It is such firm's opinion
that:
(i) The Button Gwinnett Merger will be a tax-free reorganization within
the meaning of Section 368(a) of the Code.
(ii) The shareholders of Button Gwinnett will recognize no gain or loss
upon the exchange of their Button Gwinnett Common Stock solely for shares
of Premier Common Stock except for the recognition of gain as required by
Section 302 of the Code with respect to the receipt by the shareholders (or
option holders) of Button Gwinnett Common Stock of cash in lieu of
fractional shares.
(iii) Button Gwinnett shareholders who dissent from the Button Gwinnett
Merger will be treated as having received such payment as a distribution in
redemption of their shares of stock as required by Section 356(a) of the
Code. Button Gwinnett shareholders electing to exercise dissenters' rights
should consult their own tax advisors as to the tax treatment in their
particular circumstances.
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(iv) No income, gain or loss will be recognized by Premier or Button
Gwinnett as a consequence of the Button Gwinnett Merger.
(v) The aggregate tax basis of Premier Common Stock received by Button
Gwinnett shareholders pursuant to the Button Gwinnett Merger will be the
same tax basis of the shares of Button Gwinnett Common Stock exchanged
therefor decreased by any portion of such tax basis allocated to fractional
shares of Premier Common Stock that are treated as redeemed by Premier.
(vi) The holding period of the shares of Premier Common Stock received by
the Button Gwinnett shareholders will include the holding period of the
shares of Button Gwinnett Common Stock exchanged therefor, provided that
the stock of Button Gwinnett is held as a capital asset on the date of the
consummation of the Button Gwinnett Merger.
Among other things, the opinion of Womble Carlyle Sandridge & Rice, PLLC is
based on Button Gwinnett shareholders' maintaining sufficient equity ownership
interest in Premier after the Button Gwinnett Merger. The Internal Revenue
Service has recently issued regulations which provide that shareholders of an
acquired corporation (i.e., Button Gwinnett) must maintain a continuing equity
ownership interest in the acquiring corporation (i.e., Premier). The IRS may
interpret these regulations as requiring that no redemptions occur after the
Effective Date. Management of Premier has represented that it has no plan or
intention to cause Premier to redeem or otherwise reacquire the shares of
Premier Common Stock issued in the Button Gwinnett Merger. In addition,
Management of Button Gwinnett has represented that its shareholders do not
plan on having their shares redeemed after the Button Gwinnett Effective Date.
In addition to the foregoing requirements, certain additional matters must be
true with respect to the Button Gwinnett Merger. Premier believes that the
factual matters will be satisfied.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX CONSEQUENCES
OF THE BUTTON GWINNETT MERGER. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT [TO BE DETERMINED]
It is anticipated that the Button Gwinnett Merger will be accounted for as a
pooling of interests. Under the pooling-of-interests method of accounting, the
recorded amounts of the assets and liabilities of Button Gwinnett will be
carried forward and recorded on the financial statements of Premier at their
previously recorded amounts. In order for the Button Gwinnett Merger to
qualify for pooling-of-interests accounting treatment, substantially all (90%
or more) of the outstanding Button Gwinnett Common Stock must be exchanged for
Premier Common Stock. There are certain other criteria that must be satisfied
in order for the Button Gwinnett Merger to qualify as a pooling of interests,
some of which criteria cannot be satisfied until after the Button Gwinnett
Effective Date.
For information concerning certain conditions to be imposed on the exchange
of Button Gwinnett Common Stock for Premier Common Stock in the Button
Gwinnett Merger by affiliates of Button Gwinnett and certain restrictions to
be imposed on the transferability of the Premier Common Stock received by
those affiliates in the Button Gwinnett Merger in order, among other things,
to ensure the availability of pooling-of-interests accounting treatment, see
"--Resales of Premier Common Stock."
EXPENSES AND FEES
The Button Gwinnett Agreement provides, in general, that each of the parties
will bear and pay its own expenses in connection with the transactions
contemplated by the Button Gwinnett Agreement, including fees and expenses of
its own financial or other consultants, investment bankers, accountants, and
counsel.
The Button Gwinnett Agreement also provides that if it is terminated because
one of the parties breaches its representations and warranties or one of its
covenants, then the breaching party agrees to pay the non-breaching party (i)
an amount equal to the reasonable and documented fees and expenses incurred by
the non-breaching
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party in connection with the Button Gwinnett Merger and (ii) either (x)
$150,000 if the breach was not willful or (y) $1,000,000 if the breach was
willful or if the Button Gwinnett Agreement was terminated in contemplation of
a competing proposal to acquire, or be acquired by, the breaching party.
RESALES OF PREMIER COMMON STOCK
The shares of Premier Common Stock to be issued to Button Gwinnett
shareholders in the Button Gwinnett Merger have been registered under the
Securities Act, but that registration does not cover resales of those shares
by persons who control, are controlled by, or are under common control with,
Button Gwinnett (such persons are referred to hereinafter as "affiliates" and
generally include executive officers, directors, and 10% or more shareholders)
at the time of the Button Gwinnett Meeting. Affiliates may not sell shares of
Premier Common Stock acquired in connection with the Button Gwinnett Merger,
except pursuant to an effective registration statement under the Securities
Act or in compliance with SEC Rule 145 or another applicable exemption from
the Securities Act registration requirements and until such time as financial
results covering at least 30 days of combined operations of Premier and Button
Gwinnett after the consummation of the Button Gwinnett Merger have been
published.
Each person who Button Gwinnett reasonably believes to be an affiliate of
Button Gwinnett has delivered to Premier a written agreement providing that
such person generally will not sell, pledge, transfer, or otherwise dispose of
any Premier Common Stock to be received by such person upon consummation of
the Button Gwinnett Merger, except in compliance with the Securities Act, the
rules and regulations of the SEC promulgated thereunder and applicable
restrictions regarding pooling-of-interests accounting treatment.
DESCRIPTION OF PREMIER COMMON STOCK
Premier is currently authorized to issue 20,000,000 shares of Premier Common
Stock, of which 15,304,673 shares were issued and outstanding at March 26,
1998. Holders of Premier Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. The ability of Premier to pay dividends is affected by the ability
of its subsidiaries to pay dividends, which is limited by applicable
regulatory requirements and capital guidelines. At December 31, 1997, under
such requirements and guidelines, Premier's combined subsidiaries had $5.7
million of undivided profits legally available for the payment of dividends
without regulatory approval. See "Certain Regulatory Considerations--Payment
of Dividends."
CERTAIN DIFFERENCES IN RIGHTS OF BUTTON GWINNETT AND PREMIER SHAREHOLDERS
General. As a result of the Button Gwinnett Merger, on the Button Gwinnett
Effective Date, Button Gwinnett shareholders will exchange their shares of
capital stock in Button Gwinnett for shares of capital stock in Premier and
will become shareholders of Premier. Thereafter, the rights as shareholders of
Button Gwinnett will be determined by Premier's Articles of Incorporation and
Bylaws. The following is a summary of the material differences in the rights
of shareholders of Premier and Button Gwinnett. Both Premier and Button
Gwinnett are Georgia corporations governed by the Georgia Code. Accordingly,
there are no material differences between the rights of a Premier shareholder
and the rights of a Button Gwinnett shareholder solely under the Georgia Code.
This summary does not purport to be a complete discussion of, and is qualified
in its entirety by reference to, the Georgia Code and the Articles of
Incorporation and Bylaws of each corporation.
Authorized Capital Stock. Premier is currently authorized to issue
20,000,000 shares of common stock, $1.00 par value, of which 15,304,673 shares
were outstanding as of March 26, 1998. No other class of common stock is
currently authorized. As a part of the Premier Meeting, its shareholders are
being asked to increase the number of authorized shares of Premier Common
Stock from 20,000,000 to 60,000,000 shares. The Board of Directors of Premier
may issue additional shares of Premier Common Stock up to the maximum amount
permitted by the Articles of Incorporation, without further action by the
shareholders of Premier, unless such action is otherwise required by
applicable law. Premier's Articles of Incorporation provide that no
shareholders
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of Premier shall have any preemptive right to subscribe for or to purchase any
shares or other securities issued by Premier.
Premier's Articles of Incorporation provide for the issuance of up to
2,000,000 shares of preferred stock by the Board of Directors without further
shareholder action in one or more series, with such rights, preferences,
privileges and restrictions, including dividend rates, conversion rights,
voting rights, terms of redemption, redemption prices, amounts payable upon
liquidation and the number of shares constituting any series or the
designation of such series, as may be determined by the Board of Directors.
There are currently no shares of Premier preferred stock issued and
outstanding. Premier anticipates issuing 40,770 shares of its Preferred Stock
to BHC preferred shareholders upon consummation of the BHC Merger.
Button Gwinnett is authorized to issue 5,000,000 shares of Button Gwinnett
Common Stock, $0.01 par value, of which 1,432,477 shares of Button Gwinnett
Common Stock were issued and outstanding as of the Record Date. Button
Gwinnett is also authorized to issue 1,000,000 shares of preferred stock and
the Board of Directors is authorized to fix the voting and other powers and
preferences, together with the relative, participating, optional and other
special rights of such stock. The payment of cash dividends is subject to
authorization by the Board of Directors.
Amendment of Articles of Incorporation and Bylaws. Any amendment to
Premier's Articles of Incorporation must comply with the applicable provisions
of the Georgia Code. The Georgia Code provides that an amendment to a
corporation's articles of incorporation requires: (i) recommendation of the
corporation's board of directors to the shareholders (unless the board of
directors elects, because of a conflict of interest or other special
circumstances, to make no recommendation) and (ii) approval of the proposed
amendment by a majority of the votes entitled to be cast on the amendment,
unless a greater vote is required by other provisions of the Georgia Code or
the Articles of Incorporation. Certain "housekeeping" amendments to a
corporation's articles of incorporation may be adopted by the board of
directors without shareholder action. Such amendments include to extend the
duration of the corporation, to change or eliminate the par value of each
issued and unissued share of an outstanding class if the corporation has only
shares of that class outstanding, and to change the corporate name.
Premier's Bylaws provide that they may be altered or amended and new bylaws
may be adopted by the shareholders at any annual or special meeting of the
shareholders or by the Board of Directors at any regular or special meeting of
the Board of Directors; provided, however, that if such action is to be taken
at a meeting of the shareholders, notice of the general nature of the proposed
change in the Bylaws shall be given in the notice of meeting.
Any amendment to Button Gwinnett's Articles of Incorporation must comply
with the applicable provisions of the Georgia Code. The Georgia Code provides
that an amendment to a corporation's articles of incorporation requires: (i)
recommendation of the corporation's board of directors to the shareholders
(unless the board of directors elects, because of a conflict of interest or
other special circumstances, to make no recommendation) and (ii) approval of
the proposed amendment by a majority of the votes entitled to be cast on the
amendment, unless a greater vote is required by other provisions of the
Georgia Code or the Articles of Incorporation. Certain "housekeeping"
amendments to a corporation's articles of incorporation may be adopted by the
board of directors without shareholder action. Such amendments include to
extend the duration of the corporation, to change or eliminate the par value
of each issued and unissued share of an outstanding class if the corporation
has only shares of that class outstanding, and to change the corporate name.
Button Gwinnett's Bylaws provide that the board of directors of Button
Gwinnett shall have the power to alter, amend or repeal the bylaws or adopt
new bylaws but any bylaws adopted by the board of directors may be altered,
amended or repealed by new bylaws adopted by the shareholders. The
shareholders of Button Gwinnett may prescribe that any bylaw or bylaws adopted
by them shall not be altered, amended or repealed, by the board of directors.
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Removal of Directors. Premier's Bylaws provide that any director may be
removed at a meeting with respect to which notice of such purpose is given:
(i) without cause, only upon the affirmative vote of the holders of at least
two-thirds of the issued and outstanding shares of Premier Common Stock; and
(ii) for cause only upon the affirmative vote of the holders of a majority of
the issued and outstanding shares of Premier Common Stock.
Under Button Gwinnett's Bylaws, any or all directors may be removed at a
meeting with respect to which notice of such purpose is given by the
affirmative vote of the holders of a majority of the shares entitled to vote
at an election of the directors, with or without cause.
Limitation on Director Liability. Premier's Articles of Incorporation
provide that no director of Premier shall be personally liable to Premier or
its shareholders for monetary damages for a breach of the duty of care or
other duty as a director, provided that this elimination of liability shall
not eliminate or limit the liability of a director (i) for an appropriation,
in violation of the director's duties, of any business opportunity of Premier;
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) for the types of liability set
forth in Section 14-2-832 of the Georgia Code or (iv) for any transaction from
which the director derived an improper personal benefit. Section 14-2-832 of
the Georgia Code provides that a director who votes for or assents to a
distribution made in violation of Section 14-2-640 of the Georgia Code or the
Articles of Incorporation is personally liable to the corporation for the
amount of the distribution that exceeds what could have been distributed
without violating Section 14-2-640 of the Georgia Code or the Articles of
Incorporation if it is established that the director did not perform his or
her duties in a manner the director believed in good faith to be in the best
interests of the corporation and with the care an ordinarily prudent person in
a like position would exercise under similar circumstances. Section 14-2-640
of the Georgia Code provides that no distribution may be made if, after giving
it effect: (i) the corporation would not be able to pay its debts as they
become due in the usual course of business; or (ii) the corporation's total
assets would be less than the sum of its total liabilities plus the amount
that would be needed if the corporation were to be dissolved at the time of
the distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution.
Button Gwinnett's Articles of Incorporation provide that no director of
Button Gwinnett shall be personally liable to Button Gwinnett or its
shareholders for monetary damages for a breach of the duty of care or other
duty as a director, provided that this elimination of liability shall not
eliminate or limit the liability of a director (i) for an appropriation in
violation of the director's duties, of any business opportunity of Button
Gwinnett; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for the types of
liability set forth in Section 14-2-832 of the Georgia Code or (iv) for any
transaction from which the director derived an improper personal benefit.
Section 14-2-832 of the Georgia Code provides that a director who votes for or
assents to a distribution made in violation of Section 14-2-640 of the Georgia
Code or the Articles of Incorporation is personally liable to the corporation
for the amount of the distribution that exceeds what could have been
distributed without violating Section 14-2-640 of the Georgia Code or the
Articles of Incorporation if it is established that the director did not
perform his or her duties in a manner the director believed in good faith to
be in the best interests of the corporation and with the care an ordinarily
prudent person in a like position would exercise under similar circumstances.
Section 14-2-640 of the Georgia Code provides that no distribution may be made
if, after giving it effect: (i) the corporation would not be able to pay its
debts as they become due in the usual course of business; or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus the amount that would be needed if the corporation were to be dissolved
at the time of the distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
Indemnification. Premier's Bylaws provide that Premier may indemnify or
obligate itself to indemnify an individual made a party to a proceeding
because he or she is or was a director, officer, employee or agent of Premier
for reasonable expenses, judgments, fines, penalties and amounts paid in
settlement incurred in
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connection with the proceeding if the individual acted in a manner he or she
believed in good faith to be in or reasonable cause to believe his or her
conduct was unlawful. To the extent that a director, officer, employee or
agent of Premier has been successful, on the merits or otherwise, in the
defense of any proceeding to which he or she was a party, or in defense of any
claim, issue or matter therein, because he or she is or was a director,
officer, employee or agent of Premier, Premier shall indemnify the director,
employee or agent against reasonable expenses incurred by him or her in
connection therewith.
Button Gwinnett's Bylaws provide that Button Gwinnett may indemnify or
obligate itself to indemnify an individual who was, is, or threatened to be
made a party to a proceeding because he or she is or was a director, officer,
employee or agent of Button Gwinnett if the individual acted in a manner he or
she believed in good faith to be in or not opposed to the best interests of
Button Gwinnett and, in the case of any criminal proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful. Button Gwinnett
may also indemnify or obligate itself to indemnify an individual who was, is,
or threatened to be made a party to a proceeding because he or she is or was a
director, officer, employee or agent in any subsidiary of Button Gwinnett or
serving in that capacity in another corporation at the request of Button
Gwinnett if the individual acted in a manner he or she believed in good faith
to be in or not opposed to the best interests of Button Gwinnett and, in the
case of any criminal proceeding, he or she had no reasonable cause to believe
his or her conduct was unlawful. The foregoing indemnification may extend to
reasonable expenses (including attorneys' fees), judgments, fines, penalties
and amounts paid in settlement incurred in connection with the proceeding. To
the extent that a director, officer, employee or agent of Button Gwinnett has
been successful, on the merits or otherwise, in the defense of any proceeding
to which he or she was a party, or in defense of any claim, issue or matter
therein, Button Gwinnett is required to indemnify such person. Button Gwinnett
may also pay expenses incurred in defending any action, suit or proceeding
referred to above in advance of the final disposition of such matter if the
party provides Button Gwinnett with a written affirmation that he or she has
met the standard of conduct set forth above and further agrees to repay such
amounts unless it is proven that he or she is ultimately entitled to
indemnification.
Vote Required for Shareholder Approval. Premier's Bylaws provide that, if a
quorum is present, the affirmative vote of a majority of the shares of Premier
Common Stock represented at the meeting and entitled to vote on the subject
matter will represent the act of the shareholders, except as otherwise
provided by law or Premier's Articles of Incorporation or Bylaws.
Button Gwinnett's Bylaws provide that when a quorum is present at any
meeting, the affirmative vote of the holders of a majority of the shares of
stock of Button Gwinnett entitled to vote and present in person or by proxy,
voting together as a single class, shall decide any questions brought before
such meeting, except as otherwise required by statute or the Articles of
Incorporation. A quorum is present if a majority of the shareholders are
present in person or by proxy; provided that, if a quorum is not present, then
those shareholders who are present may adjourn the meeting to such time and
place as they determine and, at the later meeting, the presence in person or
by proxy of 40% of the shareholders shall constitute a quorum.
Mergers, Consolidations, and Sales of Assets. Neither Premier's Articles of
Incorporation nor its Bylaws provide for specific approval requirements for
mergers, consolidations, and sales of assets. As a result, the provisions of
the Georgia Code will govern the approval of such transactions. The Georgia
Code generally provides that approval of such transactions will require a
recommendation by the board of directors to the shareholders and approval by
the shareholders by a majority of all the votes entitled to be cast by all
shares entitled to vote on the transaction.
Neither Button Gwinnett's Articles of Incorporation nor its Bylaws provide
for specific approval requirements for mergers, consolidations, and sales of
assets. As a result, the provisions of the Georgia Code will govern the
approval of such transactions. The Georgia Code generally provides that
approval of such transactions will require a recommendation by the board of
directors to the shareholders and approval by the shareholders by a majority
of all the votes entitled to be cast by all shares entitled to vote on the
transaction.
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Actions by Shareholders Without a Meeting. Premier's Bylaws provide that
action required or permitted to be taken at a shareholders' meeting may be
taken without a meeting by consent in writing setting forth the action to be
taken and signed by those persons who would be entitled to vote at a meeting
those shares having the voting power to cast not less than the minimum number
(or numbers, in the case of voting by class) of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote were present and voted.
Neither Button Gwinnett's Articles of Incorporation nor its Bylaws make any
provision for shareholder actions without a special or annual meeting.
Special Meeting of Shareholders. Premier's Bylaws provide that special
meetings of the shareholders may be called at any time by the Board of
Directors or President of Premier or upon the written request of any one or
more shareholders owning an aggregate of not less than 25% of the outstanding
capital stock. Notice must be given in writing not less than 10 or more than
50 days before the date of the meeting and must state the purpose for which
the meeting is called.
Button Gwinnett's Bylaws provide that special meetings of shareholders may
be called at any time by the Chairman of the Board, a majority of the
directors then in office, or by the written request of the holders of at least
51% of the issued and outstanding shares of capital stock entitled to vote.
Written notice of the meeting must be given not less than 10 nor more than 60
days before the date of the meeting and must state the purpose for which the
meeting is called.
Number of Directors. Premier's Bylaws state that the Board of Directors
shall consist of not less than four nor more than 19 directors. The number of
directors may be fixed or changed from time to time within this range by the
shareholders or the Board of Directors. The Premier Board of Directors is
presently fixed at 19 members. There are currently three vacancies on the
board of directors.
Button Gwinnett's Articles of Incorporation state that the Board of
Directors shall consist of not less than three nor more than 25 directors. The
number of directors shall be determined from time to time by resolution of the
Board of Directors. Button Gwinnett's Board of Directors presently consists of
13 members.
Dividends. Premier's Articles of Incorporation provide that subject to the
provisions of Section 14-2-640 of the Georgia Code, the board of directors
shall have the power to distribute a portion of the assets of Premier, in cash
or in property, to holders of shares of Premier out of the capital surplus of
Premier. As explained above, Section 14-2-640 of the Georgia Code establishes
certain situations where a corporation may not make distributions to its
shareholders.
The Bylaws of Button Gwinnett provide that dividends upon the outstanding
shares of Button Gwinnett Common Stock may be declared by the board of
directors of Button Gwinnett at any regular or special meeting and paid in
cash or property only out of the retained earnings of Button Gwinnett, only
when Button Gwinnett meets applicable legal requirements for paid-in capital
and/or appropriated net earnings.
THE BHC MEETING
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to the holders of
BHC Common Stock in connection with the solicitation by the BHC Board of
Directors of proxies for use at the BHC Meeting, at which BHC shareholders
will be asked to vote upon a proposal to approve the BHC Agreement and the BHC
Merger. The BHC Meeting will be held at 10:00 a.m., local time, on May 28,
1998, at the main office of BHC, located at 201 West Taylor Street, Griffin,
Georgia 30224.
BHC shareholders of BHC Common Stock are requested to promptly sign, date,
and return the accompanying proxy card to BHC in the enclosed postage-paid
envelope.
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Any BHC shareholder who has delivered a proxy may revoke it at any time
before it is voted by giving notice of revocation in writing or submitting to
BHC a signed proxy bearing a later date, provided that such notice or proxy is
actually received by BHC prior to the taking of the shareholder vote, or by
electing to vote in person at the BHC Meeting. Any notice of revocation should
be sent to The Bank Holding Company, 201 West Taylor Street, Griffin, Georgia
30224, Attention: Corporate Secretary. The shares represented by properly
executed proxies received at or prior to the BHC Meeting and not subsequently
revoked will be voted as directed in such proxies. IF INSTRUCTIONS ARE NOT
GIVEN, SHARES REPRESENTED BY PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF
THE BHC AGREEMENT AND IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER
MATTERS THAT PROPERLY MAY COME BEFORE THE BHC MEETING. As of the date of this
Joint Proxy Statement/Prospectus, BHC is unaware of any other matter to be
presented at the BHC Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or in person by the directors, officers, and employees of BHC, who
will receive no additional compensation for such solicitation but may be
reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
BHC shareholders should not forward any stock certificates with their proxy
cards.
RECORD DATE; VOTE REQUIRED
BHC's Board of Directors has established the close of business on March 31,
1998, as the BHC Record Date for determining the shareholders entitled to
notice of and to vote at the BHC Meeting. Only record holders of BHC Common
Stock as of the BHC Record Date will be entitled to vote at the BHC Meeting.
Approval of the BHC Agreement requires the affirmative vote of two-thirds of
the shares of the BHC Common Stock entitled to vote at the BHC Meeting.
Therefore, an abstention or failure to return a properly executed proxy card
will have the same effect as a vote against the BHC Agreement. As of the BHC
Record Date, there were approximately 435 holders of 556,525 shares of BHC
Common Stock outstanding and entitled to vote at the BHC Meeting, with each
share entitled to one vote.
The presence, in person or by proxy, of a majority of the outstanding shares
of BHC Common Stock is necessary to constitute a quorum of the shareholders in
order to take action at the BHC Meeting. However, the affirmative vote of the
holders of two-thirds of the BHC Common Stock is required to approve the BHC
Agreement and the BHC Merger. For these purposes, shares of BHC Common Stock
that are present, or represented by proxy, at the BHC Meeting will be counted
for quorum purposes regardless of whether the holder of the shares or proxy
fails to vote on the BHC Agreement.
The directors and executive officers of BHC and their affiliates
beneficially owned, as of the BHC Record Date, 147,357 shares (or
approximately 27% of the outstanding shares) of BHC Common Stock.
As of the BHC Record Date, the directors and executive officers of Premier
and their affiliates did not beneficially own any shares of BHC Common Stock.
As of the BHC Record Date, neither BHC nor Premier held any shares of BHC
Common Stock in a fiduciary capacity for others.
THE BHC MERGER
The following material describes certain aspects of the BHC Merger. This
description does not purport to be complete and is qualified in its entirety
by reference to the Appendices hereto, including the BHC Agreement, which is
attached as Appendix B to this Joint Proxy Statement/Prospectus and
incorporated herein by reference. All shareholders are urged to read the
Appendices in their entirety.
GENERAL
Upon consummation of the BHC Merger, BHC will merge with and into Premier,
Premier will survive the BHC Merger and the separate existence of BHC will
cease. Henry County Bank and Spalding County Bank will
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become wholly owned subsidiaries of Premier following consummation of the BHC
Merger. As soon as practicable after the BHC Effective Date, Premier plans to
cause Henry County Bank and Spalding County Bank to merge with and into
Premier Bank.
At the BHC Effective Date, each share of the BHC Common Stock issued and
outstanding will be converted into 3.90 shares of Premier Common Stock. Each
share of BHC Preferred Stock issued and outstanding will be converted into one
share of Premier Preferred Stock. Each share of Premier Common Stock
outstanding immediately prior to the BHC Effective Date will remain
outstanding and unchanged as a result of the BHC Merger. No fractional shares
of Premier Common Stock will be issued in connection with the BHC Merger.
Premier will pay cash in lieu of any fractional shares (computed to the
nearest cent) in an amount equal to such fraction multiplied by the market
value of one share of Premier Common Stock on the BHC Effective Date.
TREATMENT OF BHC OPTIONS
The BHC Agreement, as amended, provides that all rights with respect to BHC
Common Stock pursuant to stock options granted by BHC under its stock option
plan which are outstanding at the BHC Effective Date, whether or not then
exercisable, will be converted into and will become rights with respect to
Premier Common Stock and Premier will assume each of such options in
accordance with the terms of the stock option agreements by which each such
option is evidenced. After the BHC Effective Date, those options will become
options to purchase Premier Common Stock, with the exercise price and number
of shares of Premier Common Stock purchasable thereunder being equal to the
exercise price and number of shares of BHC Common Stock that could have been
purchased thereunder immediately prior to the consummation of the BHC Merger
after giving effect to the BHC Exchange Ratio. Premier may at its election
substitute as of the BHC Effective Date stock options under the Premier
Bancshares, Inc. 1997 Stock Option Plan (the "Premier Stock Option Plan") for
all or part of the BHC options, subject to certain conditions. As soon as
practicable following the BHC Effective Date, Premier shall deliver to the
participants receiving substitute options under the Premier Stock Option Plan
an appropriate notice setting forth such participants' 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
substitute options.
BACKGROUND OF AND REASONS FOR THE BHC MERGER
During the fourth quarter of 1997, the Chief Executive Officers of Premier
and BHC began to explore the possibility of combining Premier and BHC. On
October 20, 1997, after consultation with Premier's Executive Committee and
BBCP, Premier's Chief Executive Officer informed BHC's Chief Executive Officer
in writing of Premier's interest in a merger with BHC, together with the
general terms of a preliminary offer. Contemporaneously, BHC was also
contacted by another financial institution with the same intent. On November
5, 1997, Premier's Chief Executive Officer informed the Chairman of the Board
of Directors of BHC in writing that Premier would enhance its prior offer in
several material respects, including an increase from $50.00 to $51.50 for
each share of BHC Common Stock based on the trading value of Premier Common
Stock during the specified period and 2.5122 of Premier's shares for each
share of BHC Common Stock. On November 10, 1997, BHC's Board of Directors met,
considered Premier's enhanced offer, and voted to reject the same; and
thereafter, on November 14, 1997, BHC's Executive Committee met with Premier's
Chief Executive Officer and Chief Operating Officer. On November 17, 1997,
Premier's Chief Executive Officer informed the Chairman of the Board of
Directors of BHC in writing that Premier would again enhance its offer in
several material respects, including an increase in the exchange ratio to 2.67
shares of Premier Common Stock for each share of BHC Common Stock; and on
November 19, 1997, BHC's Board of Directors met, considered Premier's latest
enhanced offer, and voted to accept the same. After further consultation by
and among Premier's Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Executive Committee, and legal counsel and BBCP, Premier's
management, on December 3, 1997, entered into a definitive merger agreement
with BHC; and the certain Agreement and Plan of Reorganization dated December
3, 1997 by and between Premier and BHC, whereby BHC would be merged with and
into Premier, was approved, adopted, and ratified by Premier's Board of
Directors on December 10, 1997.
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From December 3, 1997, to January 15, 1998, Premier conducted on-site, in-
depth due diligence of BHC. Additional off-site due diligence and discussions
with legal counsel and financial advisors were undertaken by both Premier and
BHC. On December 18, 1997, December 23, 1997, and December 31, 1997,
respectively, three separate amendments to the definitive merger agreement
between the parties were entered into to extend the due diligence period. As a
result of the due diligence conducted by Premier, and after further
consultation with Premier's Executive Committee and legal counsel and BBCP,
Premier's Chief Executive Officer informed the Chairman of the Board of
Directors of BHC of the following revised offer: 2.52 shares of Premier Common
Stock for each share of BHC Common Stock. On January 12, 1998, Premier's Chief
Executive Officer and Chief Operating Officer attended a special meeting of
the Board of Directors of BHC to discuss Premier's suggested revision to the
exchange ratio. With full authority given by the respective Boards of
Directors, the management of Premier and BHC, on January 15, 1998, entered
into a fourth amendment to the definitive merger agreement, whereby each share
of BHC Common Stock would be converted into and exchanged for the right to
receive 2.60 shares of Premier Common Stock upon the consummation of the
merger of BHC with and into Premier. On March 16, 1998, Premier and BHC
entered into a fifth amendment to the definitive merger agreement substituting
a new form of employment agreement for Charles B. Blackmon to be effective at
the time of the BHC Merger.
BHC's Reasons for the BHC Merger. The BHC Board of Directors has unanimously
approved the BHC Agreement and has determined that the BHC Merger is in the
best interests of BHC and its shareholders. The terms of the BHC Merger were
the result of arm's-length negotiations between representatives of BHC and
representatives of Premier. Without assigning any relative or specific weights
to the factors, the Board of Directors of BHC considered the following
material factors:
(a) the information presented to the directors by BHC's management
concerning (i) the business, operations, earnings and financial condition,
including capital levels and asset quality, of Premier, and compliance with
regulatory capital requirements on an historical and prospective basis, and
(ii) the results of a due diligence review of Premier by BHC
representatives;
(b) the alternatives to the BHC Merger, including the merits of other
acquisition proposals;
(c) the enhancement of shareholder value as a result of the value of the
consideration to be received by BHC's shareholders relative to BHC's book
value and earnings per share of common stock;
(d) the anticipated synergies and operating efficiencies, increased
access to capital, increased utilization of capital for lending, and the
increased managerial resources and enhanced service capabilities that would
result from the BHC Merger;
(e) the competitive and regulatory environment for financial institutions
and commercial lending businesses generally;
(f) the income tax aspects of the BHC Merger as a tax-free exchange of
BHC Common Stock and BHC Preferred Stock for Premier Common Stock and
Premier Preferred Stock;
(g) the likelihood that the BHC Merger will be approved by applicable
regulatory authorities; and
(h) the current lack of marketability of the BHC Common Stock, contrasted
with the ability of BHC's shareholders to exchange their BHC Common Stock
for Premier Common Stock in connection with the BHC Merger and thereafter
have the ability to trade such securities on the American Stock Exchange.
Each member of the Board of Directors of BHC has agreed to vote such
member's shares of BHC Common Stock in favor of the BHC Merger.
BHC'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE BHC SHAREHOLDERS VOTE
FOR APPROVAL OF THE BHC AGREEMENT.
Premier's Reasons for the BHC Merger. The Premier Board of Directors has
unanimously approved the BHC Agreement and has determined that the BHC Merger
is in the best interests of Premier and its shareholders. In approving the BHC
Agreement, the Premier Board considered a number of factors. Without assigning
any
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relative or specific weights to the factors, the Premier Board of Directors
considered the following material factors:
(a) BHC's business, operations, earnings, and financial condition,
including capital levels and asset quality, on an historical, prospective,
and pro forma basis and in comparison to other financial institutions
serving Henry and Spalding Counties;
(b) the demographic, economic, and financial characteristics of Henry and
Spalding Counties in which BHC operates, on an historical and prospective
basis;
(c) a variety of factors affecting and relating to the overall strategic
focus of Premier, including a desire to expand Premier Bank into Henry and
Spalding Counties;
(d) the financial terms and income tax consequences of the proposed BHC
Merger;
(e) the management philosophy of BHC and its compatibility with that of
Premier.
Each member of the Board of Directors of Premier has agreed to vote such
member's shares of Premier Common Stock in favor of the BHC Merger.
PREMIER'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PREMIER
SHAREHOLDERS VOTE FOR APPROVAL OF THE BHC AGREEMENT.
FAIRNESS OPINIONS
Premier. Premier has retained BBCP to act as its financial advisor in
connection with the BHC Merger. Representatives of BBCP met with the Chairman
of the Board of Directors of Premier on November 20, 1997 when the prospect
for a merger with BHC was considered in depth. At that meeting BBCP rendered
its preliminary opinion that, as of such date, an exchange ratio of 4.0050
common shares of Premier for each common share of BHC was fair to the Premier
shareholders from a financial point of view. On January 15, 1998, the exchange
ratio was adjusted to reflect specific nonrecurring items identified during
the due diligence process. The Boards of Directors for both Premier and BHC
approved the adjusted exchange ratio (previously defined as the "BHC Exchange
Ratio") of 3.900 shares of Premier Common Stock for each share of BHC Common
Stock. At that time BBCP rendered an updated oral opinion that the BHC
Exchange Ratio was fair to the Premier shareholders from a financial point of
view. BBCP has also subsequently rendered its written opinion to the Premier
Board that on the date of this Joint Proxy Statement/Prospectus, based on the
information set forth therein, the BHC Exchange Ratio was fair, from a
financial point of view, to the Premier shareholders.
THE FULL TEXT OF BBCP'S WRITTEN OPINION IS ATTACHED AS APPENDIX D TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX D. PREMIER SHAREHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY BBCP IN CONNECTION THEREWITH.
BBCP's opinion is directed to the Premier Board only and is directed only to
the BHC Exchange Ratio and does not constitute a recommendation to any BHC
shareholder regarding how such BHC shareholder should vote at the BHC Meeting.
In arriving at its opinion, BBCP among other things: (i) analyzed certain
audited and unaudited financial statements and other information of Premier
and BHC; (ii) reviewed and discussed with appropriate management personnel of
Premier and BHC the past and current business activities and financial results
and the business and financial outlook of Premier and BHC; (iii) reviewed the
historical price and trading activity of the Premier Common Stock and other
similar banking institutions; (iv) compared certain financial and stock market
data relating to Premier with similar data of other publicly held banking
institutions; (v) performed an analysis comparing the pro forma consequences
of the BHC Merger to both Premier and BHC shareholders with respect to
earnings per share and tangible book value per share represented by the
Premier Common Stock that will be
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held after the BHC Merger to those same measures represented by the common
stock currently held; (vi) considered the relative contributions of Premier
and BHC to a combined institution in terms of balance sheet, revenue, earnings
and ownership measures; (vii) reviewed the prices paid in certain comparable
acquisition transactions of community banking institutions and the multiples
of earnings and book value and the level of deposit base premium received by
the selling institutions; (viii) reviewed the BHC Agreement and certain
related documents; (ix) considered the potential synergies and cost savings
made available to Premier and BHC through the BHC Merger; (x) evaluated the
financial and capital implications to Premier of the BHC Merger; (xi)
considered stock trading/liquidity implications to Premier shareholders of the
BHC Merger; and (xii) performed such other analyses as BBCP deemed
appropriate.
In conducting its analysis and arriving at its opinion, BBCP assumed and
relied upon, without independent verification, the accuracy and completeness
of the information it reviewed for the purposes of the opinion. BBCP also
relied upon the management of Premier and BHC with respect to the
reasonableness and achievability of the financial forecasts (and the
assumptions and bases underlying such forecasts) provided to it. BBCP also
assumed, with Premier's consent, that the aggregate allowances for loan losses
for each of Premier and BHC are adequate to cover such losses. BBCP is not an
expert in the evaluation of allowances for loan losses and has not reviewed
any individual credit files. BBCP did not make, nor was it furnished with,
independent valuations or appraisals of the assets or liabilities of either
Premier or BHC or any of their subsidiaries. BBCP did not express any opinion
about what the value of Premier Common Stock actually will be when issued to
the holders of BHC Common Stock pursuant to the BHC Merger or the price at
which Premier Common Stock will trade subsequent to the BHC Merger. Premier
has informed BBCP, and BBCP has assumed, that the BHC Merger will be recorded
utilizing pooling of interests accounting treatment under generally accepted
accounting principles.
No limitations were imposed by Premier or the Premier Board on the scope of
BBCP's investigation or the procedures to be followed by BBCP in rendering its
opinion. The opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to BBCP as of,
the date of its analysis.
In addressing the fairness, from a financial point of view, of the
consideration to be issued by Premier to the shareholders of BHC, BBCP
employed a variety of generally recognized valuation methodologies and merger
analyses and performed those which it believed were most appropriate for
developing its opinion. The preparation of a fairness opinion involves various
determinations of the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances,
and, therefore, such an opinion is not readily susceptible to summary
description. In arriving at its fairness opinion, BBCP did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments about the significance and relevancy of each analysis
and factor. None of the analyses performed by BBCP was assigned a greater
significance by BBCP than any other. Accordingly, BBCP believes that its
analyses must be considered as a whole and that a review of selected portions
of such analyses and the factors considered therein, without considering all
analyses and factors, could create a misleading or incomplete view of the
processes underlying its opinion and any conclusions reached therein. In its
analyses, BBCP made numerous assumptions with respect to industry performance,
general business and economic conditions, and other matters, many of which are
beyond Premier's and BHC's control. Any estimates contained in BBCP's analyses
are not necessarily indicative of actual values or predictive of future
results or values that may be significantly more or less favorable than such
estimates. Estimates of values of companies do not purport to be appraisals or
necessarily reflect the prices at which companies or their securities actually
may be sold. In addition, as described above, BBCP's opinion and presentation
to the Premier Board was one of many factors taken into consideration by the
Premier Board in making its determination to approve the BHC Agreement.
The following is a brief summary of analyses performed by BBCP in connection
with its oral opinion delivered to the Premier Board:
Summary of Proposal. BBCP reviewed the terms of the proposed transaction as
reflected in the BHC Agreement, including the calculation of the market value
of the consideration represented by the BHC Exchange
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Ratio. BBCP stated that based on the price of Premier Common Stock on January
14, 1998 (the day prior to the Fourth Amendment to Agreement and Plan of
Reorganization) of $19.17, an exchange ratio of 3.900 shares of Premier Common
Stock for each share of BHC Common Stock and options would provide a per share
purchase price of $74.77.
Per Share Merger Consequences Analysis. Based upon a BHC Exchange Ratio of
3.900 shares of Premier Common Stock for each share of BHC Common Stock and
using the earnings estimates for 1998 and 1999 for BHC prepared by BHC
management, earnings estimates for 1998 and 1999 for Premier developed with
Premier management and based on certain cost savings expected to result from
the BHC Merger, BBCP compared the estimated 1998 and 1999 earnings per share
of Premier Common Stock on a stand-alone basis to the equivalent pro forma
earnings per share of Premier reflecting consummation of the BHC Merger. BBCP
concluded that the BHC Merger would result in an equivalent earnings per share
decrease of 0.5% in 1998 and an increase of 1.0% in 1999 for Premier
shareholders in the combined company.
BBCP also analyzed the impact of the BHC Merger on the amount of fully
diluted book value and tangible book value represented by a share of Premier
Common Stock. BBCP assumed consummation of the BHC Merger as of June 30, 1998.
BBCP concluded that the BHC Merger would result in an increase of 2.4% in
fully diluted book value and a decrease of 0.2% in fully diluted tangible book
value on an equivalent per share basis, respectively, for Premier shareholders
projected as of June 30, 1998.
Relative Contribution Analysis. BBCP compared various income statement,
balance sheet and market value measures for Premier and BHC and calculated the
relative contribution of each institution to the combined, post merger
organization. In this comparison BBCP noted that BHC would have contributed
13.0% of the combined organization's net income (reflecting adjustments for
certain nonrecurring expenses) for the quarter ended September 30, 1997 and is
projected to contribute 11.6% of the combined organization's net income
projected for fiscal 1998. BBCP also noted that BHC would have contributed
13.7%, 15.0%, 14.6% and 15.1% of the combined organization's net loans, total
deposits, total assets and fully diluted shareholder's equity, respectively.
BBCP referenced that BHC shareholders and option holders would hold 12.5% of
the combined organization's common shares and options.
Analysis of Selected Other Bank Mergers Involving Southeastern Community
Banks. BBCP reviewed twenty-five mergers involving Georgia community banks and
bank holding companies announced between January, 1996 and December, 1997.
BBCP noted in particular the prices paid in these mergers as a multiple of
earnings and book values and the transaction premiums paid in excess of
tangible book value as a percentage of core deposits. BBCP also reviewed other
data in connection with each of these mergers, including the amount of total
assets and the capital level of the acquired institutions and the return on
equity and the return on assets of the acquired institutions. BBCP then
compared this data to that of BHC and to the value to be received by BHC
shareholders in the BHC Merger.
This comparison yielded a range of transaction values as multiples of latest
twelve-months earnings per share of a low of 9.9 times and a high of 32.9
times and a median value of 16.2 times. The BHC acquisition multiple of
trailing earnings attributable to common shareholders was 20.9 times. The
calculations yielded a range of transaction values as multiples of book value
per share of a low of 1.14 times to a high of 3.10 times and a median value of
1.94 times. The BHC acquisition multiple of book value was 2.53 times.
Finally, the calculations yielded a range of deposit base premiums paid from a
low of 2.6% to a high of 37.9%, with a median value of 12.8%. The equivalent
premium on BHC deposits represented by the BHC Exchange Ratio was 20.5%. BBCP
noted that market valuations of publicly traded bank stocks have appreciated
considerably over the last eighteen months. As a result, historical merger
valuation multiples may not necessarily reflect current market conditions.
No company or transaction used in the above analyses as a comparison is
identical to Premier, BHC, or the BHC Merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial growth, and operating
characteristics of the
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companies and other factors that could affect the public trading value of the
companies to which they are being compared. Mathematical analysis (such as
determining the average or median) in and of itself, does not necessarily
provide meaningful intercompany comparisons.
In connection with its written opinion dated the date of this Joint Proxy
Statement/Prospectus, BBCP confirmed the appropriateness of the analyses used
to render its adjusted report oral opinion by performing procedures to update
certain of such analyses and by reviewing the assumptions on which such
analyses were based and the factors considered in connection therewith.
BBCP is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements,
and valuations for estate, tax, corporate and other purposes. A fee of $75,000
will be payable to BBCP upon consummation of the BHC Merger. In addition to
the above, BBCP has a continuing financial advisory relationship with Premier
under which BBCP will receive $225,000 during the remainder of 1998. No
compensation payable to BBCP is contingent on the conclusions reached in the
opinion of BBCP. Premier has also agreed to reimburse BBCP for reasonable out
of pocket-expenses and to indemnify BBCP and certain related persons against
certain liabilities relating to or arising out of its engagement.
BHC. BHC has not retained a financial advisor to render a fairness opinion
with respect to the BHC Merger.
EFFECTIVE DATE OF THE BHC MERGER
Subject to the conditions to the obligations of the parties to effect the
BHC Merger, the BHC Effective Date will occur on the date and at the time
specified in the Certificate of Merger filed by Premier with the Georgia
Secretary of State. If no effective date or time is specified, the BHC Merger
will become effective upon the filing of the Certificate of Merger. Unless
otherwise agreed upon by Premier and BHC, and subject to the conditions to the
obligations of the parties to effect the BHC Merger, the parties will use
their reasonable efforts to cause the BHC Effective Date to occur by the last
business day of the month in which the last of the following events occurs:
(i) the effective date (including the expiration of any applicable waiting
period) of the last federal or state regulatory approval required for the BHC
Merger or (ii) the date on which the BHC Agreement is approved by the
requisite vote of the holders of BHC Common Stock.
No assurance can be provided that the necessary shareholder and regulatory
approvals can be obtained or that other conditions precedent to the BHC Merger
can or will be satisfied. Premier and BHC anticipate that all conditions to
consummation of the BHC Merger will be satisfied so that the BHC Merger can be
consummated in the second quarter of 1998. However, delays in the consummation
of the BHC Merger could occur.
The Board of Directors of either Premier or BHC generally may terminate the
BHC Agreement if the BHC Merger is not consummated by August 31, 1998, unless
the failure to consummate by that date is the result of a breach of the BHC
Agreement by the party seeking termination. See "--Conditions to Consummation
of the BHC Merger" and "--Waiver, Amendment, and Termination of the BHC
Agreement."
DISTRIBUTION OF STOCK CERTIFICATES AFTER THE BHC MERGER
Promptly after the BHC Effective Date, Premier will cause SunTrust Bank,
Atlanta, acting in the capacity of Exchange Agent, to mail to the former
shareholders of BHC a letter of transmittal, together with instructions for
the exchange of such shareholders' certificates representing shares of BHC
Common Stock and BHC Preferred Stock for certificates representing shares of
Premier Common Stock and Premier Preferred Stock.
BHC SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS FROM THE EXCHANGE
AGENT. Upon surrender to the Exchange Agent of certificates for BHC Common
Stock and BHC Preferred Stock, together with a properly completed letter of
transmittal, there will be issued and mailed to each holder of BHC Common
Stock and BHC Preferred Stock a certificate or
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certificates representing the number of shares of Premier Common Stock and
Premier Preferred Stock to which such holder is entitled as a result of the
BHC Merger. After the BHC Effective Date, holders of record of BHC Common
Stock as of the BHC Effective Date will be entitled to vote at any meeting of
Premier shareholders the number of shares of Premier Common Stock into which
their BHC Common Stock has been converted, regardless of whether such
shareholders have surrendered their certificates of BHC Common Stock. NO
DIVIDEND OR OTHER DISTRIBUTION PAYABLE AFTER THE BHC EFFECTIVE DATE WITH
RESPECT TO PREMIER COMMON STOCK WILL BE PAID, HOWEVER, TO THE HOLDER OF ANY
UNSURRENDERED BHC CAPITAL STOCK CERTIFICATE UNTIL THE HOLDER DULY SURRENDERS
SUCH CERTIFICATE. Upon such surrender, all undelivered dividends and other
distributions will be delivered to such shareholder, in each case without
interest.
After the BHC Effective Date, there will be no transfers of shares of BHC
Common Stock or BHC Preferred Stock on BHC's stock transfer books. If
certificates representing shares of BHC Common Stock or BHC Preferred Stock
are presented for transfer after the BHC Effective Date, they will be canceled
and exchanged for the shares of Premier Common Stock or Premier Preferred
Stock, as applicable, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE BHC MERGER
Consummation of the BHC Merger is subject to a number of conditions,
including, but not limited to:
(i) approval from the Federal Reserve and the Georgia Department without
any conditions or restrictions that would, in the reasonable judgment of
either party, so materially adversely impact the economic benefits of the
transactions contemplated by the BHC Agreement as to render inadvisable the
consummation of the BHC Merger, and the expiration of applicable waiting
periods under the Bank Holding Company Act;
(ii) approval by the Premier shareholders of an increase in the number of
authorized shares of Premier Common Stock sufficient for Premier to issue
the shares of Premier Common Stock pursuant to the BHC Agreement.
(iii) approval by the holders of two-third of the shares of BHC Common
Stock entitled to vote on the BHC Merger;
(iv) the absence of any action by any court or governmental authority
restraining or prohibiting the BHC Merger;
(v) the receipt of all consents by Premier and BHC required for the
consummation of the BHC Merger;
(vi) the receipt of an opinion of counsel to the effect that, among other
things: (i) the BHC Merger will constitute a tax-free reorganization within
the meaning of Section 368(a)(1)(A) of the Code; (ii) the exchange in the
BHC Merger of BHC Common Stock for Premier Common Stock will not give rise
to gain or loss to holders of BHC Common Stock, except to the extent of any
cash received for fractional shares or upon the exercise by a shareholder
of his or her dissenters' rights; (iii) the exchange in the BHC Merger of
BHC Preferred Stock for Premier Preferred Stock will not give rise to gain
or loss to holders of BHC Preferred Stock; and (iv) neither Premier nor BHC
will recognize gain or loss as a consequence of the BHC Merger;
(vii) approval for listing on the American Stock Exchange of the shares
of Premier Common Stock to be issued in the BHC Merger; and
(viii) receipt of a letter from Premier's independent auditors dated as
of the BHC Effective Date, confirming that the BHC Merger will qualify for
pooling-of-interests accounting treatment.
Consummation of the BHC Merger also is subject to the satisfaction or waiver
of various other conditions specified in the BHC Agreement, including, among
others: (i) the delivery by Premier and BHC of opinions of their respective
counsel and certificates executed by their respective Chief Executive Officers
and Chief Financial Officers as to compliance with the BHC Agreement; and (ii)
as of the BHC Effective Date, the accuracy of certain representations and
warranties and the compliance in all material respects with the agreements and
covenants of each party.
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REGULATORY APPROVALS
The BHC Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. There also can be no
assurance that such approvals will not be accompanied by conditions which
cause such approvals to fail to satisfy the conditions set forth in the BHC
Agreement. Applications for the approvals described below have been submitted
to the appropriate regulatory agencies.
Premier and BHC are not aware of any material governmental approvals or
actions that are required for consummation of the BHC Merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
The BHC Merger requires the prior approval of the Federal Reserve, pursuant
to Section 3 of the Bank Holding Company Act. In granting its approval under
Section 3 of the Bank Holding Company Act, the Federal Reserve must take into
consideration, among other factors, the financial and managerial resources and
future prospects of the institutions and whether the acquisition can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased
competition, conflicts of interest, or unsound banking practices. Under the
Bank Holding Company Act, the BHC Merger may not be consummated until the 15th
day following the date of Federal Reserve approval, during which time the
United States Department of Justice may challenge the transaction on antitrust
grounds. The commencement of any antitrust action would stay the effectiveness
of the Federal Reserve's approval, unless a court specifically orders
otherwise.
The BHC Merger also is subject to the approval of the Georgia Department. In
its evaluations, the Georgia Department will take into account considerations
similar to those applied by the Federal Reserve.
RIGHTS OF DISSENTING SHAREHOLDERS
Any shareholder of record of BHC who objects to the BHC Merger and who fully
complies with Section 14-2-1301 et seq. of the Georgia Code will be entitled
to demand and receive payment in cash of an amount equal to the fair value of
all, but not less than all, of his or her shares of BHC Common Stock if the
BHC Merger is consummated. A shareholder of record may assert dissenters'
rights as to fewer than the shares registered in such shareholder's name only
if he or she dissents with respect to all shares beneficially owned by any one
beneficial owner and notifies BHC in writing of the name and address of each
person on whose behalf he asserts dissenters' rights. For the purpose of
determining the amount to be received in connection with the exercise of
statutory dissenters' rights under the Georgia Code, the fair value of a
dissenting shareholder's BHC Common Stock equals the value of the shares
immediately before the BHC Effective Date of the BHC Merger, excluding any
appreciation or depreciation in anticipation of the BHC Merger.
Any BHC shareholder desiring to receive payment of the fair value of his or
her BHC Common Stock in accordance with the requirements of the Georgia Code:
(i) must deliver to BHC prior to the time the shareholder vote on the BHC
Agreement is taken, a written notice of his or her intent to demand payment
for his shares if such BHC Merger is consummated; (ii) must not vote his or
her shares in favor of the BHC Agreement; and(ii) must demand payment and
deposit stock certificates representing BHC Common Stock in accordance with
the terms of a notice which will be sent to the shareholder by Premier (as the
Surviving Corporation in the BHC Merger) no later than 10 days after such BHC
Agreement is consummated. A filing of the written notice of intent to dissent
with respect to the BHC Agreement should be sent to: The Bank Holding Company,
201 West Taylor Street, Griffin, Georgia 30224, Attention: President. A VOTE
AGAINST THE BHC AGREEMENT ALONE WILL NOT SATISFY THE REQUIREMENTS FOR THE
SEPARATE WRITTEN NOTICE OF INTENT TO DISSENT TO THE BHC MERGER, THE SEPARATE
WRITTEN DEMAND FOR PAYMENT OF THE FAIR VALUE OF SHARES OF BHC COMMON STOCK AND
THE DEPOSIT OF THE STOCK CERTIFICATES, WHICH ARE REFERRED TO IN CONDITIONS (A)
AND (C) ABOVE. RATHER, A DISSENTING SHAREHOLDER MUST SEPARATELY COMPLY WITH
ALL OF THOSE CONDITIONS.
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Within 10 days of the later of the BHC Effective Date or the receipt of a
payment demand by a shareholder who deposits his or her stock certificates in
accordance with the BHC's dissenters' notice sent to those shareholders who
notified BHC of their intent to dissent, described in (iii) above, Premier (as
the Surviving Corporation in the BHC Merger) must offer to pay to each
dissenting shareholder the amount Premier estimates to be the fair value of
the dissenting shareholder's shares, plus accrued interest. Such notice and
offer must be accompanied by: (i) BHC's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of making an offer,
an income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial statements,
if any; (ii) an explanation of how the interest was calculated; (iii) a
statement of the dissenting shareholder's right to demand payment of a
different amount under Section 14-2-1327 of the Georgia Code; and (iv) a copy
of the dissenters' rights provisions of the Georgia Code.
If the dissenting shareholder accepts Premier's offer, by written notice to
such entity, within 30 days after Premier's offer or is deemed to have
accepted the offer by reason of failing to respond to such offer, Premier must
make payment for his or her shares within 60 days after the making of the
offer or the BHC Effective Date, whichever is later. Upon payment of the
agreed value, the dissenting shareholder will cease to have any interest in
his or her shares of BHC Common Stock.
If within 30 days after Premier offers payment for the shares of a
dissenting shareholder, the dissenting shareholder does not accept the
estimate of fair value of his or her shares and interest due thereon and
demands payment of his or her own estimate of the fair value of the shares and
interest due thereon, then Premier, within 60 days after receiving the payment
demand of a different amount from a dissenting shareholder, must file an
action in a court of competent jurisdiction in Spalding County, Georgia,
requesting that the fair value of such shares be found and determined. Premier
must make all dissenting shareholders whose demands remain unsettled parties
to the proceeding. If Premier does not commence the proceeding within such 60-
day period, it shall be required to pay each dissenting shareholder whose
demand remains unsettled the amount demanded by the dissenting shareholder.
The foregoing does not purport to be a complete statement of the provisions
of the Georgia Code relating to statutory dissenters' rights and is qualified
in its entirety by reference to the dissenters' rights provisions of the
Georgia Code, which are reproduced in full in Appendix F to this Proxy
Statement/Prospectus and which are incorporated herein by reference.
WAIVER, AMENDMENT, AND TERMINATION OF THE BHC AGREEMENT
Prior to the Closing Date, and to the extent permitted by law, any provision
of the BHC Agreement generally may be (i) waived by the party benefitted by
the provision or (ii) amended by a written agreement between Premier and BHC
approved by their respective Boards of Directors; provided, however, that
after approval by the holders of BHC Common Stock, no amendment that would
require further approval by such shareholders under the Georgia Code may be
made without the approval of such shareholders.
The BHC Agreement may be terminated, and the BHC Merger abandoned, at any
time prior to the BHC Effective Date, either before or after approval by the
BHC shareholders, upon written notice to the other party as follows:
(i) by the board of Directors of either party in the event any consent of
any regulatory authority required for consummation of the BHC Merger shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for
appeal;
(ii) by the Board of Directors of either party, if the holders of the
requisite number of shares of BHC Common Stock shall not have approved the
BHC Agreement in accordance with the provisions of the Georgia Code;
(iii) by the Board of Directors of either party, in the event of a
material breach by the other party of any representation or warranty
contained in the BHC Agreement which cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching party
of such breach and which breach would provide the non-breaching party the
ability to refuse to consummate the BHC Merger;
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(iv) by the Board of Directors of either party, in the event of a
material breach by the other party of any covenant or agreement contained
in the BHC Agreement which cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching party of such
breach;
(v) by the Board of Directors of either party, in the event that any of
the conditions precedent to the obligations of such party to consummate the
BHC Merger cannot be satisfied or fulfilled on or before August 31, 1998;
(vi) by mutual consent of the Board of Directors of Premier and BHC; or
(vii) by either party if the BHC Merger shall not have been consummated
by August 31, 1998, but only if the failure to consummate the transactions
contemplated by the BHC Agreement on or before such date is not caused by
any breach of the BHC Agreement by the party electing to terminate.
(viii) by the Board of Directors of Premier, in the event it determines
in its sole discretion that the BHC Merger cannot be accounted for as a
"pooling of interests."
If the BHC Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. See "--Expenses and Fees" for additional information concerning
the payment of expenses.
CONDUCT OF BUSINESS PENDING THE BHC MERGER
Each of BHC and Premier generally has agreed to (i) operate its business in
the usual, regular and ordinary course; (ii) preserve intact its business
organization and assets and maintain its rights and franchises; (iii) use its
reasonable efforts to cause its representations and warranties to be correct
at all times; and (iv) take no action which would adversely affect the ability
of any party to obtain any consents required for the transactions contemplated
by the BHC Agreement or adversely affect in any material respect the ability
of either party to perform its covenants and agreements under the BHC
Agreement.
BHC has agreed not to take certain actions relating to the operation of its
business or the business of BHC subsidiaries pending consummation of the BHC
Merger without the prior written approval of Premier. Those actions generally
include, without limitation: (i) amending the Articles of Incorporation or
Bylaws; (ii) becoming responsible for any obligation for borrowed money in
excess of an aggregate of $100,000 (except in the ordinary course of business
consistent with past practices), or impose, or suffer the imposition, on any
asset of BHC (or any of its subsidiaries) of any lien or permit any such lien
to exist; (iii) changing its authorized or issued capital stock or paying any
dividend or other distribution in respect of its capital stock, except that
BHC is permitted to declare and pay dividends legally and contractually
required to be paid with respect to BHC Preferred Stock; (iv) disposing of any
asset other than in the ordinary course of business; (v) adopting any new
employee benefit plan or program, or materially changing any existing plan or
program except for any change required by law or advisable to maintain the tax
qualified status of any such plan; (vi) commencing any litigation (except in
accordance with past practice), settling any litigation involving liability of
the holding company or any subsidiary for damages in excess of $50,000 or
material restrictions upon its operations; or (vii) entering into, modifying
or terminating any material contract except in the ordinary course of
business.
DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE BHC MERGER
The officers and directors of Premier shall remain the same following the
BHC Merger, provided however that James E. Sutherland, a current director of
BHC, shall be selected by the Board of Directors of Premier, in its sole
discretion, to serve on the Board of Directors of Premier from and after the
BHC Effective Date in accordance with the Articles of Incorporation and Bylaws
of Premier.
INTERESTS OF CERTAIN PERSONS IN THE BHC MERGER
The BHC Agreement also provides that, after the BHC Effective Date, Premier
will provide generally to officers and employees of BHC and its subsidiaries
who become officers or employees of Premier or its subsidiaries, employee
benefits under employee benefit plans on terms and conditions that, taken as a
whole, are
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substantially similar to those currently provided by Premier and its
subsidiaries to their similarly situated officers and employees. For purposes
of participation and vesting under such employee benefit plans, service with
BHC or its subsidiaries prior to the BHC Effective Date will be treated as
service with Premier or its subsidiaries. The BHC Agreement further provides
that Premier will honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Premier between BHC or its
subsidiaries and any current or former director, officer, or employee, and all
provisions for vested amounts earned or accrued through the BHC Effective Date
under BHC's benefit plans.
Upon the closing of the BHC Merger, Henry County Bank will enter into an
Employment Agreement with Charles B. Blackmon. Premier will be joining as a
party to the Employment Agreement for the purpose of providing certain stock
options, as described below. Under the terms of the Employment Agreement, Mr.
Blackmon will continue as President of the Henry County Bank and as President
of the Henry County division of Premier Bank upon the merger of the Henry
County Bank with and into Premier Bank. The term of the Employment Agreement
is two years from the closing of the BHC Merger. Mr. Blackmon's total annual
compensation (including base salary and incentive bonus) will not be less than
$215,000. In addition, as an incentive to remain employed by the Henry County
Bank or by Premier Bank upon its merger with the Henry County Bank, Premier
has agreed to grant Mr. Blackmon: (i) an option to purchase 10,000 shares of
the common stock of Premier, which options will vest and may be exercised six
months from the closing of the BHC Merger, at an exercise price of $15.00 per
share; (ii) upon the closing of the BHC Merger, an option to purchase 3,000
shares of the common stock of Premier at an exercise price equal to the
average closing price of the common stock of Premier during the ten
consecutive trading days immediately prior to the closing of the BHC Merger,
as reported by the American Stock Exchange; (iii) in January 1999, an option
to purchase 3,000 shares of the common stock of Premier at an exercise price
equal to the average closing price of the common stock of Premier during the
ten consecutive trading days immediately prior to the closing of the BHC
Merger, as reported by the American Stock Exchange; (iv) on the first
anniversary of the closing of the BHC Merger, an option to purchase 10,000
shares of the common stock of Premier at an exercise price equal to 65% of the
average closing price of the common stock of Premier during the ten
consecutive trading days immediately prior to the first anniversary of the
closing of the BHC Merger, as reported by the American Stock Exchange; and (v)
on the second anniversary of the closing of the BHC Merger, an option to
purchase 10,000 shares of the common stock of Premier at an exercise price
equal to 85% of the average closing price of the common stock of Premier
during the ten consecutive trading days immediately prior to the second
anniversary of the closing of the BHC Merger, as reported by the American
Stock Exchange. Finally, Mr. Blackmon will be eligible to receive a lump sum
bonus of $25,000, if the BHC Merger is closed on or before April 30, 1998;
$20,000, if the BHC Merger is closed after April 30, 1998, and before June 1,
1998; or $15,000, if the BHC Merger is closed after May 31, 1998, and before
July 1, 1998. Mr. Blackmon is also to receive an automobile allowance of $800
per month and title to two automobiles, to-wit: a 1990 Buick, and a 1996 Buick
for and in consideration of his payment to the Henry County Bank in an amount
equal to the fair market value of said vehicle. In the event of a "Termination
for Cause" (as defined in the Employment Agreement) or voluntary termination
by Mr. Blackmon, Mr. Blackmon will receive no right to compensation or other
benefits. If Mr. Blackmon's employment is terminated for any reason other than
a "Termination for Cause," then he is entitled to receive a lump sum severance
payment equal to the remaining portion of his base salary prorated from the
date of his termination to the end of the term of the Employment Agreement.
The Employment Agreement prohibits Mr. Blackmon from: (i) disclosing any
confidential information during his employment and for a period of one year
after termination; (ii) competing with the Henry County Bank in Henry and
Spalding Counties during the term of his employment and for a period of six
months following the termination of such employment, for whatever reason; and
(iii) soliciting any customers or employees of the Henry County Bank, for
himself or any other party, during the term of his employment.
As of the BHC Record Date, the directors and executive officers of BHC
beneficially owned no shares of Premier Common Stock.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE BHC MERGER
THE FOLLOWING IS A SUMMARY OF MATERIAL ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE BHC MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME
TAX LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO
ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS
TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE BHC MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN
PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS
THE FEDERAL INCOME TAX CONSEQUENCES OF THE BHC MERGER TO SHAREHOLDERS IN LIGHT
OF THEIR PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS,
TAX-EXEMPT ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, OR
CORPORATIONS, AMONG OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF
THE BHC MERGER UNDER ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS.
SHAREHOLDERS, THEREFORE, ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE BHC MERGER, INCLUDING TAX RETURN
REPORTING REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, FOREIGN, STATE,
LOCAL, AND OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE
TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Womble Carlyle Sandridge
& Rice, PLLC, counsel to Premier, has rendered an opinion to Premier
concerning certain federal income tax consequences of the proposed BHC Merger
under federal income tax law and this discussion is entirely qualified by such
opinion. It is such firm's opinion that:
(i) The BHC Merger will be a tax-free reorganization within the meaning
of Section 368(a) of the Code.
(ii) The shareholders of BHC will recognize no gain or loss upon the
exchange of their BHC Common Stock solely for shares of Premier Common
Stock, except for the recognition of gain as required by Section 302 of the
Code with respect to the receipt by the shareholders (or option holders) of
BHC Common Stock of cash in lieu of fractional shares.
(iii) Holders of BHC Common Stock who dissent from the BHC Merger will be
treated as having received such payment as a distribution in redemption of
their shares of stock as required by Section 356(a) of the Code. Holders of
BHC Common Stock electing to exercise dissenters' rights should consult
their own tax advisors as to the tax treatment in their particular
circumstances.
(iv) No income, gain or loss will be recognized by Premier or BHC as a
consequence of the BHC Merger.
(v) The aggregate tax basis of Premier Common Stock received by holders
of BHC Common Stock pursuant to the BHC Merger will be the same tax basis
of the shares of BHC Common Stock exchanged therefor decreased by any
portion of such tax basis allocated to fractional shares of Premier Common
Stock that are treated as redeemed by Premier.
(vi) The holding period of the shares of Premier Common Stock received by
the BHC shareholders will include the holding period of the shares of BHC
Common Stock and BHC Preferred Stock exchanged therefor, provided that the
BHC Common Stock are held as capital assets on the date of the consummation
of the BHC Merger.
(vii) No gain or loss will be recognized by the shareholders of BHC upon
the receipt of Premier Preferred Stock solely in exchange for their shares
of BHC Preferred Stock, assuming the BHC Preferred Stock is "nonqualified
preferred stock", as defined in Section 351(g)(2) of the Internal Revenue
Code of 1986, as amended. Section 354(a)(2)(C)(i), which was added by the
Taxpayer Relief Act of 1997, provides that nonqualified preferred stock
received for stock other than nonqualified preferred stock shall be treated
as a taxable transaction. The Premier Preferred Stock is nonqualified
preferred stock, as such term is defined in Section 351(g)(2). Applying the
principles of Section 351(g)(2), the BHC Preferred Stock meets the
definition of nonqualified preferred stock, subject to the fact that it was
created prior to the effective date of the Taxpayer Relief Act of 1997.
Assuming that the IRS takes the position that preferred stock created prior
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to effective date of the 1997 Tax Act can constitute nonqualified preferred
stock, then the BHC Preferred Stock surrendered for the Premier Preferred
Stock shall constitute a nonqualified preferred stock for nonqualified
preferred stock exchange and therefore should not result in gain or loss to
the BHC Preferred Shareholders. However, if the IRS takes a contrary
position, the BHC Preferred Shareholders will recognize gain, if any, upon
the receipt of the Premier Preferred Stock solely in exchange for their BHC
Preferred Stock. The gain, if any, shall equal the difference between the
fair value of the Premier Preferred Stock received less the shareholder's
adjusted basis in the BHC Preferred Stock surrendered. The character of the
gain as ordinary or capital will be determined as provided in IRC Section
356(b).
(viii) Assuming the BHC Preferred Stock is treated as nonqualified
preferred stock, the aggregate tax basis of the shares (including any
fractional share interest) of Premier Preferred Stock received by
Shareholders of BHC who exchange all of their BHC Preferred Stock solely
for shares Premier Preferred Stock in the reorganization will be the same
as the aggregate tax basis of the shares (including any fractional share
interest) of BHC Preferred Stock surrendered in exchange therefor.
(ix) Assuming the BHC Preferred Stock is treated as nonqualified
preferred stock, the holding period of the shares (including any fractional
share interest) of Premier Preferred Stock received in the reorganization
will include the period during which the shares (including any fractional
share interest) of BHC Preferred Stock surrendered in exchange therefore
were held, provided such shares (including any fractional share interest)
of BHC Preferred Stock were held as capital assets at the Effective Time.
Among other things, the opinion of Womble Carlyle Sandridge & Rice, PLLC is
based on BHC shareholders' maintaining sufficient equity ownership interest in
Premier after the BHC Merger. The Internal Revenue Service takes the position
for purposes of issuing an advance ruling on reorganizations, that the
shareholders of an acquired corporation (i.e., BHC) must maintain a continuing
equity ownership interest in the acquiring corporation (i.e., Premier) equal,
in terms of value, to at least 50% of their interest in the acquired
corporation. Moreover, shares of BHC Common Stock and Premier Common Stock
held by BHC shareholders and otherwise sold, redeemed or disposed of prior to
or shortly after the BHC Effective Date are taken into account. Management of
Premier has represented that it has no plan or intention to cause Premier to
redeem or otherwise reacquire the shares of Premier Common Stock issued in the
BHC Merger. In addition to the foregoing requirements, certain additional
matters must be true with respect to the BHC Merger. Premier believes that the
factual matters will be satisfied.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX CONSEQUENCES
OF THE BHC MERGER. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO THEM
INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT
It is anticipated that the BHC Merger will be accounted for as a pooling of
interests. Under the pooling-of-interests method of accounting, the recorded
amounts of the assets and liabilities of BHC will be carried forward and
recorded on the financial statements of Premier at their previously recorded
amounts. In order for the BHC Merger to qualify for pooling-of-interests
accounting treatment, substantially all (90% or more) of the outstanding BHC
Common Stock and BHC Preferred Stock must be exchanged for Premier Common
Stock and Premier Preferred Stock, as applicable. There are certain other
criteria that must be satisfied in order for the BHC Merger to qualify as a
pooling of interests, some of which criteria cannot be satisfied until after
the BHC Effective Date.
For information concerning certain conditions to be imposed on the exchange
of BHC Common Stock and BHC Preferred Stock for Premier Common Stock and
Premier Preferred Stock in the BHC Merger by affiliates of BHC and certain
restrictions to be imposed on the transferability of the Premier Common Stock
and Premier Preferred Stock received by those affiliates in the BHC Merger in
order, among other things, to ensure the availability of pooling-of-interests
accounting treatment, see "--Resales of Premier Common Stock."
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EXPENSES AND FEES
The BHC Agreement provides, in general, that each of the parties will bear
and pay its own expenses in connection with the transactions contemplated by
the BHC Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel.
The BHC Agreement also provides that if it is terminated because one of the
parties breaches its representations and warranties or one of its covenants,
and the breach cannot be or has not been cured within 30 days after written
notice of the breach is given to the breaching party, then the breaching party
agrees to pay the non-breaching party (i) an amount equal to the reasonable
and documented fees and expenses incurred by the non-breaching party in
connection with the BHC Merger and (ii) (x) $50,000 if the breach was not
willful or (y) $500,000 if the breach was willful or if the BHC Agreement was
terminated in contemplation of a competing proposal to acquire BHC.
RESALES OF PREMIER COMMON STOCK
The shares of Premier Common Stock and Premier Preferred Stock to be issued
to BHC shareholders in the BHC Merger have been registered under the
Securities Act, but that registration does not cover resales of those shares
by persons who control, are controlled by, or are under common control with,
BHC (such persons are referred to hereinafter as "affiliates" and generally
include executive officers, directors, and 10% shareholders) at the time of
the BHC Meeting. Affiliates may not sell shares of Premier Common Stock and
Premier Preferred Stock acquired in connection with the BHC Merger, except
pursuant to an effective registration statement under the Securities Act or in
compliance with SEC Rule 145 or another applicable exemption from the
Securities Act registration requirements and until such time as financial
results covering at least 30 days of combined operations of Premier and BHC
after the consummation of the BHC Merger have been published.
Each person who BHC reasonably believes to be an affiliate of BHC has
delivered to Premier a written agreement providing that such person generally
will not sell, pledge, transfer, or otherwise dispose of any Premier Common
Stock or Premier Preferred Stock to be received by such person upon
consummation of the BHC Merger, except in compliance with the Securities Act,
the rules and regulations of the SEC promulgated thereunder and applicable
restrictions regarding pooling-of-interests accounting treatment.
DESCRIPTION OF PREMIER COMMON STOCK
Premier is currently authorized to issue 20,000,000 shares of Premier Common
Stock, of which 15,304,673 shares were issued and outstanding at March 26,
1998. As part of Premier's annual meeting, its shareholders are being asked to
increase the number of authorized shares of Premier Common Stock from
20,000,000 to 60,000,000. Holders of Premier Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors out of
funds legally available therefor. The ability of Premier to pay dividends is
affected by the ability of its subsidiaries to pay dividends, which is limited
by applicable regulatory requirements and capital guidelines. At December 31,
1997, under such requirements and guidelines, Premier's combined subsidiaries
had $5.7 million of undivided profits legally available for the payment of
dividends without regulatory approval. See "Certain Regulatory
Considerations--Payment of Dividends."
DESCRIPTION OF PREMIER PREFERRED STOCK
Premier is authorized to issue up to 2,000,000 shares of preferred stock.
Premier has designated a series of non-voting preferred stock, $60.00 par
value per share (the "Premier Preferred Stock"). Premier plans to issue 40,770
shares of its preferred stock to BHC Preferred Stock shareholders in
connection with the BHC Merger. The Premier Preferred Stock will pay a
dividend of 8% of its par value each year from current earnings or undivided
profits, which dividend shall be cumulative but subordinate to the rights of
trade creditors. If at any time Premier is in default in the payment of the 8%
dividends and until such time as the default is cured, the holders of Premier
Preferred Stock will be entitled to one vote for each share of Premier
Preferred Stock along with the holders of Premier Common Stock on all matters
coming before the shareholders at all regular and
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called Premier shareholder meetings. Beginning on January 1, 2000, Premier has
the right to redeem up to 20% of the originally issued Premier Preferred Stock
each year at a redemption price of $60.00 per share plus all accrued and
unpaid dividends. The holder of any Premier Preferred Stock that remains
issued and outstanding after May 20, 2004 may require Premier to redeem such
Premier Preferred Stock at a redemption price of $60.00 per share plus all
accrued and unpaid dividends.
CERTAIN DIFFERENCES IN RIGHTS OF BHC AND PREMIER SHAREHOLDERS
General. As a result of the BHC Merger, on the BHC Effective Date, BHC
shareholders will exchange their shares of capital stock in BHC for shares of
capital stock in Premier and will become shareholders of Premier. Thereafter,
the rights as shareholders of the BHC shareholders will be determined by
Premier's Articles of Incorporation and Bylaws. The following is a summary of
the material differences in the rights of shareholders of Premier and BHC.
Both Premier and BHC are Georgia corporations governed by the Georgia Code.
Accordingly, there are no material differences between the rights of a Premier
shareholder and the rights of a BHC shareholder solely under the Georgia Code.
This summary does not purport to be a complete discussion of, and is qualified
in its entirety by reference to, the Georgia Code and the Articles of
Incorporation and Bylaws of each corporation.
Authorized Capital Stock. Premier is currently authorized to issue
20,000,000 shares of common stock, $1.00 par value, of which 15,304,673 shares
were outstanding as of March 26, 1998. No other class of common stock is
currently authorized. As a part of Premier's annual meeting, its shareholders
are being asked to increase the number of authorized shares of Premier Common
Stock from 20,000,000 to 60,000,000 shares. The Board of Directors of Premier
may issue additional shares of Premier Common Stock up to the maximum amount
permitted by the Articles of Incorporation, without further action by the
shareholders of Premier, unless such action is otherwise required by
applicable law. Premier's Articles of Incorporation provide that no
shareholders of Premier shall have any preemptive right to subscribe for or to
purchase any shares or other securities issued by Premier.
Premier's Articles of Incorporation provide for the issuance of up to
2,000,000 shares of preferred stock by the Board of Directors without further
shareholder action in one or more series, with such rights, preferences,
privileges and restrictions, including dividend rates, conversion rights,
voting rights, terms of redemption, redemption prices, amounts payable upon
liquidation and the number of shares constituting any series or the
designation of such series, as may be determined by the Board of Directors.
There are currently no shares of Premier preferred stock issued and
outstanding. Premier anticipates issuing 40,770 shares of its Preferred Stock
to BHC preferred shareholders upon consummation of the BHC Merger.
BHC is authorized to issue 10,000,000 shares of BHC Common Stock, $5.00 par
value, of which 556,525 shares of BHC Common Stock were issued and outstanding
as of the BHC Record Date. BHC is also authorized to issue 50,000 shares of
non-voting preferred stock, $60.00 par value, of which 40,770 were issued and
outstanding as of the BHC Record Date.
Amendment of Articles of Incorporation and Bylaws. Any amendment to
Premier's Articles of Incorporation must comply with the applicable provisions
of the Georgia Code. The Georgia Code provides that an amendment to a
corporation's articles of incorporation requires: (i) recommendation of the
corporation's board of directors to the shareholders (unless the board of
directors elects, because of a conflict of interest or other special
circumstances, to make no recommendation) and (ii) approval of the proposed
amendment by a majority of the votes entitled to be cast on the amendment,
unless a greater vote is required by other provisions of the Georgia Code or
the articles of incorporation. Certain "housekeeping" amendments to a
corporation's articles of incorporation may be adopted by the board of
directors without shareholder action. Such amendments include to extend the
duration of the corporation, to change or eliminate the par value of each
issued and unissued share of an outstanding class if the corporation has only
shares of that class outstanding, and to change the corporate name.
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Premier's Bylaws provide that they may be altered or amended and new bylaws
may be adopted by the shareholders at any annual or special meeting of the
shareholders or by the Board of Directors at any regular or special meeting of
the Board of Directors; provided, however, that if such action is to be taken
at a meeting of the shareholders, notice of the general nature of the proposed
change in the bylaws shall be given in the notice of meeting.
Any amendment to BHC's Articles of Incorporation must comply with the
applicable provisions of the Georgia Code. The Georgia Code provides that an
amendment to a corporation's articles of incorporation requires: (i)
recommendation of the corporation's board of directors to the shareholders
(unless the board of directors elects, because of a conflict of interest or
other special circumstances, to make no recommendation) and (ii) approval of
the proposed amendment by a majority of the votes entitled to be cast on the
amendment, unless a greater vote is required by other provisions of the
Georgia Code or the articles of incorporation. Certain "housekeeping"
amendments to a corporation's articles of incorporation may be adopted by the
board of directors without shareholder action. Such amendments include to
extend the duration of the corporation, to change or eliminate the par value
of each issued and unissued share of an outstanding class if the corporation
has only shares of that class outstanding, and to change the corporate name.
BHC's Bylaws provide that the board of directors of BHC shall have the power
to alter, amend or repeal the bylaws or adopt new bylaws, unless such power is
reserved exclusively to the shareholders by the articles of incorporation or
in bylaws previously adopted by the shareholders. Any bylaws adopted by the
board of directors may be altered, amended or repealed by new bylaws adopted,
by the shareholders. The shareholders of BHC may prescribe that any bylaw or
bylaws adopted by them shall not be altered, amended or repealed, by the board
of directors.
Removal of Directors. Premier's Bylaws provide that any director may be
removed at a meeting with respect to which notice of such purpose is given:
(i) without cause, only upon the affirmative vote of the holders of at least
two-thirds of the issued and outstanding shares of Premier Common Stock; and
(ii) for cause only upon the affirmative vote of the holders of a majority of
the issued and outstanding shares of Premier Common Stock.
Under BHC's Bylaws, any or all directors may be removed at a meeting with
respect to which notice of such purpose is given by the affirmative vote of
the holders of a majority of the shares entitled to vote at an election of the
directors, with or without cause.
Limitation on Director Liability. Premier's Articles of Incorporation
provide that no director of Premier shall be personally liable to Premier or
its shareholders for monetary damages for a breach of the duty of care or
other duty as a director, provided that this elimination of liability shall
not eliminate or limit the liability of a director (i) for an appropriation in
violation of his duties, of any business opportunity of Premier; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for the types of liability set forth in
Section 14-2-832 of the Georgia Code, or (iv) for any transaction from which
the director derived an improper personal benefit. Section 14-2-832 of the
Georgia Code provides that a director who votes for or assents to a
distribution made in violation of Section 14-2-640 of the Georgia Code or the
articles of incorporation is personally liable to the corporation for the
amount of the distribution that exceeds what could have been distributed
without violating Section 14-2-640 of the Georgia Code or the articles of
incorporation if it is established that he did not perform his duties in a
manner he believed in good faith to be in the best interests of the
corporation and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances. Section 14-2-640 of the Georgia
Code provides that no distribution may be made if, after giving it effect: (i)
the corporation would not be able to pay its debts as they become due in the
usual course of business; or (ii) the corporation's total assets would be less
than the sum of its total liabilities plus the amount that would be needed if
the corporation were to be dissolved at the time of the distribution, to
satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those receiving the distribution.
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BHC's articles of incorporation provide that no director of BHC shall be
personally liable to BHC or its shareholders for monetary damages for a breach
of the duty of care or other duty as a director, provided that this
elimination of liability shall not eliminate or limit the liability of a
director (i) for an appropriation in violation of his duties, of any business
opportunity of BHC; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) for the
types of liability set forth in Section 14-2-832 of the Georgia Code or (iv)
for any transaction from which the director derived an improper personal
benefit. Section 14-2-832 of the Georgia Code provides that a director who
votes for or assents to a distribution made in violation of Section 14-2-640
of the Georgia Code or the articles of incorporation is personally liable to
the corporation for the amount of the distribution that exceeds what could
have been distributed without violating Section 14-2-640 of the Georgia Code
or the articles of incorporation if it is established that he did not perform
his duties in a manner he believed in good faith to be in the best interests
of the corporation and with the care an ordinarily prudent person in a like
position would exercise under similar circumstances. Section 14-2-640 of the
Georgia Code provides that no distribution may be made if, after giving it
effect: (i) the corporation would not be able to pay its debts as they become
due in the usual course of business; or (ii) the corporation's total assets
would be less than the sum of its total liabilities plus the amount that would
be needed if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution.
Indemnification. Premier's Bylaws provide that Premier may indemnify or
obligate itself to indemnify an individual made a party to a proceeding
because he or she is or was a director, officer, employee or agent of Premier
for reasonable expenses, judgments, fines, penalties and amounts paid in
settlement incurred in connection with the proceeding if the individual acted
in a manner he or she believed in good faith to be in or not opposed to the
best interests of Premier and, in the case of any criminal proceeding, he or
she had no reasonable cause to believe his or her conduct was unlawful. To the
extent that a director, officer, employee or agent of Premier has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she was a party, or in defense of any claim, issue or matter
therein, because he or she is or was a director, officer, employee or agent of
Premier, Premier shall indemnify the director, employee or agent against
reasonable expenses incurred by him or her in connection therewith.
BHC's Bylaws provide that BHC may indemnify or obligate itself to indemnify
an individual made a party to a proceeding because he or she is or was a
director, officer, employee or agent if the individual acted in a manner he or
she believed in good faith to be in or not opposed to the best interests of
BHC and, in the case of any criminal proceeding, he or she had no reasonable
cause to believe his or her conduct was unlawful. BHC may also indemnify or
obligate itself to indemnify an individual who was, is, or threatened to be
made a party to a proceeding because he or she is or was a director, officer,
employee or agent in any subsidiary of BHC or serving in that capacity in
another corporation at the request of BHC if the individual acted in a manner
he or she believed in good faith to be in or not opposed to the best interests
of BHC and, in the case of any criminal proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful. The foregoing
indemnification may extend to reasonable expenses (including attorneys' fees),
judgments, fines, penalties and amounts paid in settlement incurred in
connection with the proceeding. To the extent that a director, officer,
employee or agent of BHC has been successful, on the merits or otherwise, in
the defense of any proceeding to which he or she was a party, or in defense of
any claim, issue or matter therein, BHC is required to indemnify such person.
BHC may also pay expenses incurred in defending any action, suit or proceeding
referred to above in advance of the final disposition of such matter if the
party provides BHC with a written affirmation that he or she has met the
standard of conduct set forth above and further agrees to repay such amounts
unless it is proven that he or she is ultimately entitled to indemnification.
Vote Required for Shareholder Approval. Premier's Bylaws provide that, if a
quorum is present, the affirmative vote of a majority of the shares of Premier
Common Stock represented at the meeting and entitled to vote on the subject
matter will represent the act of the shareholders, except as otherwise
provided by law or Premier's Articles of Incorporation or Bylaws.
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BHC's Bylaws provide that when a quorum is present at any meeting, the
affirmative vote of the holders of a majority of the shares of stock of BHC
entitled to vote and present in person or by proxy, voting together as a
single class, shall decide any questions brought before such meeting, except
as otherwise required by statute, or the articles of incorporation or the
bylaws. A quorum is present if a majority of the shareholders are present in
person or by proxy; provided that, if a quorum is not present, then those
shareholders who are present may adjourn the meeting to such time and place as
they determine.
Mergers, Consolidations, and Sales of Assets. Neither Premier's Articles of
Incorporation or Bylaws provide for specific approval requirements for
mergers, consolidations, and sales of assets. As a result, the provisions of
the Georgia Code will govern the approval of such transactions. The Georgia
Code generally provides that approval of such transactions will require a
recommendation by the board of directors to the shareholders and approval by
the shareholders by a majority of all the votes entitled to be cast by all
shares entitled to vote on the transaction.
The Articles of Incorporation of BHC provide that no share exchange, merger,
consolidation or sale, lease, transfer, exchange or other disposition (one
transaction or in a series of related transactions) of all or substantially
all of the assets of BHC or any of its affiliates to another corporation,
person or entity shall occur unless it is approved at a shareholders meeting
called for that purpose by the affirmative vote of the holders of two-thirds
of all classes of stock entitled to vote in the election of directors.
Actions by Shareholders Without a Meeting. Premier's Bylaws provide that
action required or permitted to be taken at a shareholders' meeting may be
taken without a meeting by consent in writing setting forth the action to be
taken and signed by those persons who would be entitled to vote at a meeting
those shares having the voting power to cast not less than the minimum number
(or numbers, in the case of voting by class) of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote were present and voted.
BHC's Bylaws provide that any action required by the Financial Institutions
Code of Georgia to be taken in a meeting of the shareholders, or any action
which may be taken at a meeting of the shareholders, may be taken without a
meeting if a written consent, setting forth the action so taken, shall be
signed by each of the shareholders entitled to vote with respect to the
subject matter thereof.
Special Meeting of Shareholders. Premier's Bylaws provide that special
meetings of the shareholders may be called at any time by the Board of
Directors or President of Premier or upon the written request of any one or
more shareholders owning an aggregate of not less than 25% of the outstanding
capital stock. Notice must be given in writing not less than 10 or more than
50 days before the date of the meeting and must state the purpose for which
the meeting is called.
BHC's Bylaws provide that special meeting for the shareholders or a special
meeting in lieu of the annual meeting of shareholders shall be called by BHC
upon the written request of the holders of at least 25% of all the shares of
capital stock of BHC entitled to vote in the election of directors; special
meetings of the shareholders or a special meeting in lieu of the annual
meeting of shareholders may be called at any time by the President, Chairman
of the Board, or the Board of Directors of BHC.
Number of Directors. Premier's Bylaws state that the board of directors
shall consist of not less than four nor more than 19 directors. The number of
directors may be fixed or changed from time to time within this range by the
shareholders or the board of directors. The Premier Board of Directors is
presently fixed at 19 members. There are currently three vacancies on the
board of directors.
BHC's Bylaws state that the board of directors shall consist of not less
than five nor more than 25 directors. The number of directors shall be
determined from time to time by resolution of the board of directors or by
66
<PAGE>
resolution of the shareholders. The board of directors may increase or
decrease the number of directors by not more than two in any one year, so long
as such increase or decrease does not place the number of directors at less
than five nor more than 25. The number of directors shall be determined from
time to time by resolution of the board of directors. BHC's Board of Directors
presently consists of 13 members.
Dividends. Premier's Articles of Incorporation provide that subject to the
provisions of Section 14-2-640 of the Georgia Code, the board of directors
shall have the power to distribute a portion of the assets of Premier, in cash
or in property, to holders of shares of Premier out of the capital surplus of
Premier. As explained above, Section 14-2-640 of the Georgia Code establishes
certain situations where a corporation may not make distributions to its
shareholders.
The Bylaws of BHC provide that dividends upon the outstanding shares of BHC
may be declared by the board of directors of BHC at any regular or special
meeting and paid in cash or property only out of the retained earnings of BHC,
only when BHC meets the paid-in capital and appropriated net earnings
requirements of the Financial Institutions Code of Georgia, and only in
compliance with the regulations Georgia Department regarding payment of
dividends.
COMPARATIVE MARKET PRICES AND DIVIDENDS
PREMIER MARKET PRICES
The Premier Common Stock has been listed on the American Stock Exchange
under the symbol "PMB" since January 10, 1997. Prior to that date and since
January 25, 1995, the Premier Common Stock was on the NASDAQ Small Cap Market
under the symbol "FABC." The following table sets forth, for the indicated
periods, the high and low closing sales prices for Premier Common Stock as
reported by the American Stock Exchange and on NASDAQ Small Cap Market for
prior periods since January 25, 1995 and the high and low sales prices for the
Premier Common Stock for each of the quarters in which trading occurred in
1995.
<TABLE>
<CAPTION>
SALES PRICE
-------------
CALENDAR PERIOD HIGH LOW
- --------------- ------ ------
<S> <C> <C>
1995
First Quarter.................................................... $ 5.09 $ 4.58
Second Quarter................................................... 5.53 4.66
Third Quarter.................................................... 5.81 5.17
Fourth Quarter................................................... 6.19 5.81
1996
First Quarter.................................................... $ 6.55 $ 5.91
Second Quarter................................................... 7.20 6.19
Third Quarter.................................................... 7.75 6.92
Fourth Quarter................................................... 7.84 6.92
1997
First Quarter.................................................... $ 9.47 $ 7.84
Second Quarter................................................... 11.67 9.25
Third Quarter.................................................... 14.00 10.08
Fourth Quarter................................................... 17.92 13.08
1998
First Quarter.................................................... 29.38 17.08
Second Quarter (through April 13, 1998).......................... 26.75 25.00
</TABLE>
67
<PAGE>
BUTTON GWINNETT MARKET PRICES
Button Gwinnett Common Stock is not listed for quotation on the American
Stock Exchange or any other stock exchange. The price of the Button Gwinnett
Common Stock in the last known transaction, which occurred on February 27,
1998, was $20.00 per share. The price of Button Gwinnett Common Stock in the
last known transaction prior to February 5, 1998 (the date the Button Gwinnett
Merger was publicly announced) was $21.00 per share and occurred on July 11,
1997. Based on transactions of which Button Gwinnett management is aware,
sales of Button Gwinnett Common Stock from January 1, 1995 to January 1, 1996
were in a price range of $11.25 to $15.00 per share. Sales of Button Gwinnett
Common Stock from January 1, 1996 to January 1, 1997 were in a price range of
$14.50 to $20.00 per share. Sales of Button Gwinnett Common Stock from January
1, 1997 to January 1, 1998 were in a price range of $21.00 to $25.00 per
share. From January 1, 1998 until February 4, 1998 all sales of Button
Gwinnett Common Stock were for a price of $20.00 per share. No assurance can
be given that the stated price range represents the actual market value of
Button Gwinnett Common Stock.
BHC MARKET PRICES
BHC Common Stock is not listed for quotation on the American Stock Exchange
or on any other stock exchange. The price of the BHC Common Stock in the last
known transaction, which occurred on September 22, 1997, was $17.00 per share.
The price of BHC Common Stock in the last known transaction prior to December
3, 1997 (the date the BHC Merger was publicly announced) was $17.00 per share
and occurred on September 22, 1997. Based on transactions of which BHC's
management is aware, sales of BHC Common Stock from January 1, 1995 to January
1, 1996 were in a price range of $14.75 to $19.00 per share. Sales of BHC
Common Stock from January 1, 1996 to January 1, 1997 were in a price range of
$14.75 to $19.00 per share. From January 1, 1997 until December 31, 1997 all
sales of BHC Common Stock were for a price of $17.00 per share. No assurance
can be given that the stated price range represents the actual market value of
BHC Common Stock.
RECENT PRICES
On April , 1998, the last day on which Premier Common Stock was traded
prior to the mailing of this Joint Proxy Statement/Prospectus, the last
reported sales price of Premier Common Stock as reported on the American Stock
Exchange was $ per share. At the close of trading on December 2, 1997, the
date of the last sale reported by the American Stock Exchange prior to
December 3, 1997 (the date the BHC Merger was publicly announced), the last
reported sales price of Premier Common Stock was $13.50 per share. The last
known sales price of BHC Common Stock was $17.00 per share.
At the close of trading on February 4, 1998, the date of the last sale
reported by the American Stock Exchange prior to February 5, 1998 (the date
the Button Gwinnett Merger was publicly announced), the last reported sales
price of Premier Common Stock was $20.50 per share. The last known sales price
of Button Gwinnett Common Stock was $20.00 per share.
DIVIDENDS
The holders of Premier Common Stock are entitled to receive cash dividends
when and if declared by the Board of Directors out of funds legally available
therefor. Premier paid a $.04 per share cash dividend on January 27, 1997 to
its shareholders. The decision to declare this dividend was based on Premier's
performance in 1996. Premier paid a $.05 dividend in May, 1997, based on
Premier's performance in the first quarter of 1997, paid a $.06 dividend in
August, 1997 based on Premier's performance in the second quarter of 1997,
paid a $.07 dividend in November, 1997, based on Premier's performance in the
third quarter of 1997, and paid an $.08 dividend in February, 1998, based on
Premier's performance in the fourth quarter of 1997. The future declaration
and payment of dividends will depend upon the earnings of its subsidiaries,
business conditions, operating results, capital and reserve requirements, and
the Board of Directors' consideration of other relevant factors.
68
<PAGE>
The payment of cash dividends to the holders of Button Gwinnett Common Stock
is subject to authorization by the Board of Directors of Button Gwinnett. On
February 18, 1998, Button Gwinnett paid a $1.00 per share cash dividend.
The payment of cash dividends to the holders of BHC Common Stock is subject
to authorization by the Board of Directors of BHC. During each of the fiscal
years of 1996 and 1997, the Board of Directors of BHC declare a $0.25 per
share dividend in November that was payable at the beginning of January of the
following year. The primary source of funds available to BHC is the receipt of
dividends from Henry County Bank and Spalding County Bank.
BHC pays dividends on its Preferred Stock on December 31st of each year.
Premier, Button Gwinnett and BHC are legal entities separate and distinct
from their respective subsidiaries and their revenues depend in significant
part on the payment of dividends from their subsidiaries, which subsidiaries
are subject to certain legal restrictions on the amount of dividends they are
permitted to pay. See "Certain Regulatory Considerations--Payment of
Dividends."
SHAREHOLDERS OF RECORD
As of the Record Date, there were approximately 1,315 holders of record of
Premier Common Stock, holders of record of Button Gwinnett Common Stock,
and 435 holders of record of BHC Common Stock.
69
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
GENERAL
The following unaudited pro forma condensed combined financial statements
are presented assuming the Lanier Merger, Button Gwinnett Merger and the BHC
Merger will be accounted for as poolings of interests and reflect the
combination of the historical consolidated financial statements of Premier,
Lanier, Button Gwinnett and BHC. The pro forma condensed combined balance
sheet has been prepared as if the mergers had been consummated at the
beginning of the period covered. The pro forma condensed combined statements
of income have been prepared as if the mergers had been consummated on January
1, 1995. The following financial statements do not reflect any anticipated
cost savings which may be realized by Premier after consummation of the
Lanier, Button Gwinnett and BHC Mergers. The pro forma information does not
purport to represent what Premier's, Lanier's and Button Gwinnett's and BHC's
combined results of operations actually would have been if each such merger
had occurred on January 1, 1997.
The pro forma condensed combined financial statements should be read in
conjunction with the historical financial statements of Premier incorporated
herein by reference and the historical financial statements of Button Gwinnett
and BHC appearing elsewhere in this joint Proxy Statement/Prospectus.
PRO FORMA CONDENSED COMBINED STATEMENT OF CONDITION
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA BUTTON PRO FORMA PRO FORMA
PREMIER LANIER ADJUSTMENTS PREMIER/LANIER BHC GWINNETT ADJUSTMENTS COMBINED
-------- ------- ----------- -------------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from
banks.................. $ 28,028 $ 3,943 $ 31,971 $ 4,269 $
Interest-bearing
deposits in banks...... 6,477 -- 6,477 --
Federal funds sold...... 17,847 24,505 42,352 5,350
Securities held-to-
maturity............... -- 462 462 --
Securities available-
for-sale............... 115,801 7,845 123,646 23,214
Loans held for sale..... 59,363 -- 59,363 3,375
Loans................... 539,028 31,983 571,011 90,658
Less allowance for
credit losses.......... (8,847) (508) (9,355) (1,424)
-------- ------- ------ -------- -------- ------- --- ---------
Loans, net........... 530,181 31,475 -- 561,656 89,234
Premises and equipment.. 20,649 1,921 22,570 3,613
Goodwill and other
intangibles............ 2,817 -- 2,817 2,185
Other assets............ 13,034 1,173 14,207 2,382
-------- ------- ------ -------- -------- ------- --- ---------
Total assets......... $794,197 $71,324 -- $865,521 $133,622
======== ======= ====== ======== ======== ======= === =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Non-interest bearing... $ 89,355 $12,097 $101,452 $ 15,113
Interest bearing....... 563,622 44,915 608,537 101,857
-------- ------- ------ -------- -------- ------- --- ---------
Total deposits....... 652,977 57,012 709,989 116,970 189,220 -- 1,016,179
Federal funds sold and
securities sold under
repurchase agreements.. 21,423 4,500 25,923 1,245
Other borrowings........ 43,760 -- 43,760 62
Other liabilities....... 7,112 291 7,403 1,898
-------- ------- ------ -------- -------- ------- --- ---------
Total liabilities.... 725,272 61,803 -- 787,075 120,175
Redeemable preferred
stock.................. -- -- -- 2,446
-------- ------- ------ -------- -------- ------- --- ---------
Common stock............ 15,217 4,022 (1,633)(b) 17,606 2,783
Capital surplus......... 28,841 3,858 1,633 (b) 34,332 4,493
Retained earnings....... 24,127 1,631 25,758 3,807
Unrealized gains on
securities available-
for-sale, net of tax... 740 10 750 (82)
Treasury stock.......... -- -- -- -- --
Total stockholders'
equity................. 68,925 9,521 -- 78,446 11,001
-------- ------- ------ -------- -------- ------- --- ---------
Total liabilities and
stockholders' equity... $794,197 $71,324 $ -- $865,521 $133,622
======== ======= ====== ======== ======== ======= === =========
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements.
70
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (A)
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA BUTTON PRO FORMA PRO FORMA
PREMIER LANIER ADJUSTMENTS PREMIER/LANIER BHC GWINNETT ADJUSTMENTS COMBINED
------- ------ ----------- -------------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income......... $63,031 $4,889 $67,920 $11,270
Interest expense........ 30,038 1,935 31,973 5,124
------- ------ ----- ------- ------- --- --- ---
Net interest income.... 32,993 2,954 -- 35,947 6,146
Provision for credit
losses................. 644 (120) 524 915
------- ------ ----- ------- ------- --- --- ---
Net interest income
after provision for
credit losses.......... 32,349 3,074 -- 35,423 5,231
Other income............ 21,193 517 21,710 1,185
Other expenses.......... 36,930 2,363 39,293 4,407
------- ------ ----- ------- ------- --- --- ---
Income before income
taxes.................. 16,612 1,228 -- 17,840 2,009
Income tax expense...... 5,418 428 5,846 790
------- ------ ----- ------- ------- --- --- ---
Net income.............. $11,194 $ 800 $ -- $11,994 $ 1,219
======= ====== ===== ======= ======= === === ===
Net income attributable
to common stockholders. $11,194 $ 800 $ -- $11,994 $ 1,023
======= ====== ===== ======= ======= === === ===
Net income per share of
common stock........... $ 0.75 $ 0.98 -- $ 0.69 $ 1.84
======= ====== ===== ======= ======= === === ===
Net income per share of
common stock--diluted.. $ 0.73 $ 0.98 $ -- $ 0.67 $ 1.84
======= ====== ===== ======= ======= === === ===
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements.
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (A)
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA BUTTON PRO FORMA PRO FORMA
PREMIER LANIER ADJUSTMENTS PREMIER/LANIER BHC GWINNETT ADJUSTMENTS COMBINED
------- ------ ----------- -------------- ------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income......... $51,271 $4,494 $55,765 $9,979
Interest expense........ 25,343 1,755 27,098 4,490
------- ------ ----- ------- ------ --- --- ---
Net interest income.... 25,928 2,739 -- 28,667 5,489
Provision for credit
losses................. (115) (50) (165) 144
------- ------ ----- ------- ------ --- --- ---
Net interest income
after provision for
credit losses.......... 26,043 2,789 -- 28,832 5,345
Other income............ 13,956 512 14,468 1,297
Other expenses.......... 30,800 2,180 32,980 4,221
------- ------ ----- ------- ------ --- --- ---
Income before income
taxes.................. 9,199 1,121 -- 10,320 2,421
Income tax expense...... 2,194 332 2,526 979
------- ------ ----- ------- ------ --- --- ---
Net income.............. $ 7,005 $ 789 $ $ 7,794 $1,442
======= ====== ===== ======= ====== === === ===
Net income attributable
to common stockholders. $ 7,005 $ 789 $ -- $ 7,794 $1,246
======= ====== ===== ======= ====== === === ===
Net income per share of
common stock........... $ 0.47 $ 0.97 $ -- $ 0.45 $ 2.24
======= ====== ===== ======= ====== === === ===
Net income per share of
common stock--diluted.. $ 0.46 $ 0.97 $ -- $ 0.44 $ 2.24
======= ====== ===== ======= ====== === === ===
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements.
71
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (A)
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA BUTTON PRO FORMA PRO FORMA
PREMIER LANIER ADJUSTMENTS PREMIER/LANIER BHC GWINNETT ADJUSTMENTS COMBINED
------- ------ ----------- -------------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income......... $41,006 $4,438 $45,444 $ 9,563 $ $
Interest expense........ 19,874 1,656 21,530 4,486
------- ------ ----- ------- ------- ---- --- ----
Net interest income.... 21,132 2,782 -- 23,914 5,077
Provision for credit
losses................. (582) -- (582) 89
------- ------ ----- ------- ------- ---- --- ----
Net interest income
after provision for
credit losses.......... 21,714 2,782 -- 24,496 4,988
Other income............ 9,650 429 10,079 1,339
Other expenses.......... 23,623 2,151 25,774 4,317
------- ------ ----- ------- ------- ---- --- ----
Income before income
taxes.................. 7,741 1,060 -- 8,801 2,010
Income tax expense...... 2,188 358 2,546 735
------- ------ ----- ------- ------- ---- --- ----
Net income.............. $ 5,553 $ 702 $ -- $ 6,255 $ 1,275
======= ====== ===== ======= ======= ==== === ====
Net income attributable
to common stockholders. $ 5,553 $ 702 $ -- $ 6,255 $ 1,079
======= ====== ===== ======= ======= ==== === ====
Net income per share of
common stock........... $ 0.38 $ 0.87 $ -- $ 0.36 $ 1.94
======= ====== ===== ======= ======= ==== === ====
Net income per share of
common stock--diluted.. $ 0.37 $0 .87 $ -- $ 0.36 $ 1.94
======= ====== ===== ======= ======= ==== === ====
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) The unaudited pro forma condensed combined statement of condition as of
December 31, 1997 and condensed combined statements of income for the
years ended December 31, 1997, 1996 and 1995 have been prepared based upon
the historical consolidated statements of condition and statements of
income, which give effect to the Button Gwinnett and BHC Mergers accounted
for as poolings-of-interests [TO BE DETERMINED], based on each Exchange
Ratio. The pro forma financial statements include all adjustments
necessary to reflect the acquisitions on a pooling-of-interests basis. The
pro forma condensed combined financial statements should be read in
conjunction with the accompanying historical consolidated financial
statements of Premier incorporated herein by reference and the historical
consolidated financial statements of Button Gwinnett and BHC and the
related notes thereto included elsewhere in this Joint Proxy
Statement/Prospectus.
(b) Provided below is the pro forma adjustment necessary to reflect the
business combination of Premier and Lanier accounted for as a pooling-of-
interests. Each outstanding share of Lanier Common Stock will be exchanged
for 1.98 shares of Premier Common Stock.
<TABLE>
<S> <C>
Issuance of Premier shares (2,389,008 at $1.00 par value).. $ 2,389,000
Retirement of Lanier shares (804,380 at $5.00 par value) 4,022,000
-----------
Net effect on common stock................................. $(1,633,000)
===========
</TABLE>
(c) Provided below is the pro forma adjustment necessary to reflect the
business combinations of Premier, Button Gwinnett and BHC accounted for as
poolings-of-interests [TO BE DETERMINED]. Each outstanding share of Button
Gwinnett Common Stock will be exchanged for 3.885 shares of Premier Common
Stock and each outstanding share of BHC Common Stock will be exchanged for
3.90 shares of Premier Common Stock.
72
<PAGE>
<TABLE>
<S> <C>
Issuance of Premier shares (7,735,621 at $1.00 par value)... $ 7,736,000
Retirement of Button Gwinnett shares (1,432,477 at $0.01 par
value)..................................................... (15,000)
Retirement of BHC shares (556,525 at $5.00 par value) (2,783,000)
-----------
Net effect on common stock.................................. 4,938,000
===========
</TABLE>
The issuance of shares shown above is based on the current number of shares
outstanding.
(d) Reflects the retirement of all Button Gwinnett treasury stock.
(e) The pro forma condensed combined statements of income do not include the
estimated direct costs associated with the acquisitions. The estimated
merger expenses of Premier for the Button Gwinnett and BHC Mergers are
$550,000. As of December 31, 1997, approximately $520,000 of the estimated
expenses remained to be paid.
(f) Net income per share of common stock and per share of common stock-diluted
is computed by dividing net income by the weighted average number of
shares of common stock and common stock equivalents outstanding during
each period on an equivalent share basis, restated for the Premier stock
splits and to reflect the merger of Premier and The Central and Southern
Holding Company in June 1997 and Premier and Citizens in December 1997.
Common stock equivalents include stock options.
73
<PAGE>
BUSINESS OF PREMIER
GENERAL
Premier is a bank and thrift holding company organized and existing under
the laws of the State of Georgia and headquartered in Atlanta, Georgia.
Premier has five subsidiaries: Premier Bank ("Premier Bank"), Premier Lending
Corporation ("Premier Lending"), The Central and Southern Bank of Georgia
("Central and Southern Bank"), The Central and Southern Bank of North Georgia
F.S.B. ("Central and Southern Bank of North Georgia") and Citizens Bank of
Gwinnett ("Citizens Bank") that offer a broad range of banking and bank-
related services. Premier was incorporated in 1988 under the laws of the State
of Georgia. As of December 31, 1997, Premier had total consolidated assets of
approximately $794 million, total consolidated deposits of approximately $653
million and total consolidated shareholders' equity of approximately $69
million.
On June 23, 1997, Premier merged with the Central and Southern Holding
Company ("Central and Southern") and issued 3,663,834 shares of its common
stock in exchange for all the issued and outstanding shares of Central and
Southern. On December 12, 1997, Premier merged with Citizens Gwinnett
Bancshares, Inc. ("Citizens") and issued 2,066,834 shares of its common stock
in exchange for all the issued and outstanding shares of Citizens.
Premier's principal executive offices are located at 2180 Atlanta Plaza, 950
East Paces Ferry Road, Atlanta, Georgia 30326, and its telephone number at
such address is (404) 814-3090.
RECENT DEVELOPMENTS
Reorganization. Premier is in the process of reorganizing certain of its
banking subsidiaries, the result of which will be the current main office of
Central and Southern Bank of North Georgia located in Greensboro, Georgia
becoming a branch of Central and Southern Bank. Central and Southern Bank and
Central and Southern Bank of North Georgia have entered into a Purchase and
Assumption Agreement dated August 11, 1997, whereby Central and Southern Bank
will purchase and assume all of the assets and liabilities, respectively, of
the Greensboro branch of Central and Southern Bank of North Georgia.
Immediately following consummation of the purchase and assumption transaction,
Central and Southern Bank of North Georgia will merge with and into Premier
Bank pursuant to an Agreement and Plan of Merger by and between Premier,
Premier Bank and Central and Southern Bank of North Georgia dated August 11,
1997. Premier Bank will be the resulting institution following the merger.
Immediately following consummation of the merger, Central and Southern Bank of
North Georgia's federal stock association charter shall be deemed to be
canceled and will be surrendered to the OTS. In addition to this
reorganization, Premier also plans to merge Citizens Bank with and into
Premier Bank pursuant to an Agreement and Plan of Merger by and between
Premier, Premier Bank and Citizens Bank dated September 22, 1997. Premier Bank
will be the resulting institution following the merger. Management anticipates
that all of the above-referenced transactions should be consummated during the
end of the second quarter 1998.
Lanier Merger. On December 16, 1997, Premier entered into an Agreement and
Plan of Reorganization with Lanier. In connection with this agreement, each
issued and outstanding share of Lanier common stock will be exchanged for the
right to receive 1.980 shares of Premier Common Stock and Lanier Bank & Trust
Company will be merged with and into Premier Bank. On February 4, 1998,
Premier filed a Form S-4 Registration Statement registering the 1,702,748
shares of Premier Common Stock to be issued to Lanier shareholders in
connection with the Lanier Merger. The Lanier Merger has been approved by the
Lanier shareholders but closing is subject to other customary conditions and
approval by applicable regulatory authorities. The Lanier Merger is expected
to close in May of 1998.
74
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF PREMIER
The following table presents consolidated selected financial data for
Premier for each of the five years in the period ended December 31, 1997. The
consolidated selected financial data for Premier has been restated for all
periods presented to reflect the business combinations of First Alliance
Bancorp, Inc. and Premier Bancshares, Inc. on August 31, 1996, of Central and
Southern and Premier on June 23, 1997 and of Citizens Gwinnett Bankshares,
Inc. and Premier on December 12, 1997, all of which were accounted for as
poolings of interests. In addition, the consolidated selected financial data
includes the results of operations of Traditional Mortgage Corporation,
Allatoona Federal Savings Bank and Interim Alliance Corporation, which were
accounted for as purchase business combinations, from the respective dates of
acquisition. Net income per share has been restated for all periods presented
to reflect stock splits payable to shareholders of record on January 23, 1998
and March 6, 1997 as well as to conform to the requirements of Financial
Accounting Standards Board ("FASB") Statement No. 128, "Earnings Per Share".
This financial data is derived in part from, and should be read in conjunction
with the Consolidated Financial Statements and the related notes thereto
contained in the Company's Annual Report on -Form 10K.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Interest income............ 63,031 51,271 41,006 33,517 36,685
Interest expense........... 30,038 25,343 19,873 15,087 17,371
Net interest income........ 32,993 25,928 21,133 18,340 19,314
Provision for credit
losses.................... 644 (115) (582) 365 3,902
Other income............... 21,193 13,956 9,649 5,171 4,742
Other expense.............. 36,930 30,800 23,623 18,763 19,267
Net income................. 11,194 7,005 5,553 2,913 599
PER SHARE DATA:
Net income................. 0.75 0.47 0.38 0.21 0.05
Net income assuming
dilution.................. 0.73 0.46 0.37 0.21 0.05
Cash dividends declared.... 0.17 0.23 0.06 0.04 0.01
Book value................. 4.53 3.79 3.66 3.04 3.47
Average total equity....... 61,691 55,853 51,912 45,204 42,605
Average total assets....... 731,500 607,344 498,998 450,466 470,727
Total assets............... 794,197 677,273 553,584 430,375 461,211
Securities available for
sale...................... 15,801 151,055 146,608 123,776 140,673
Loans held for sale........ 59,363 24,408 25,912 26,047 4,446
Loans, net................. 530,181 393,030 304,087 232,351 246,549
Total deposits............. 652,977 577,212 456,012 360,604 408,671
Total borrowings........... 65,183 35,472 35,466 21,599 4,990
Total stockholders'
equity.................... 68,925 57,484 55,158 44,921 44,805
</TABLE>
75
<PAGE>
BUSINESS OF BUTTON GWINNETT
GENERAL
Button Gwinnett Financial Corporation ("Button Gwinnett") is the surviving
corporation resulting from the merger (the "1993 Merger") of Button Gwinnett
Bancorp, Inc., a Georgia corporation, and The Gwinnett Financial Corporation,
a Georgia corporation, on January 25, 1993. Following the 1993 Merger, Button
Gwinnett held all of the common stock of two subsidiary banks, The Bank of
Gwinnett County, a banking corporation chartered by the State of Georgia, and
Button Gwinnett National Bank ("BGNB"), a national banking association. On
September 25, 1993, The Bank of Gwinnett County acquired the assets and
liabilities of one of the two offices of BGNB which was located at 2230 Scenic
Highway, Snellville, Georgia, and Button Gwinnett sold BGNB (then consisting
of the assets and liabilities associated with the other office of BGNB which
was located at 4640 Jimmy Carter Boulevard, Norcross, Georgia) to Mountain
National Bank.
At December 31, 1997, Button Gwinnett had total consolidated assets of
approximately $215 million, total consolidated deposits of approximately $189
million and total consolidated shareholders' equity of approximately $24
million. Button Gwinnett's principal executive offices are located at 2230
Scenic Highway, Snellville, Georgia 30278, and its telephone number at that
address is (770) 978-3242. The Bank of Gwinnett County's principal executive
offices are located at 150 South Perry Street, Lawrenceville, Georgia 30246,
and its telephone number at that address is (770) 963-6665.
The Bank of Gwinnett County is a full-service commercial bank, offering
personal and business checking accounts, interest-bearing checking accounts,
and various types of certificates of deposit. The Bank of Gwinnett County also
provides financing for commercial transactions, makes secured and unsecured
loans and provides other financial services to its customers.
MARKET AREA AND COMPETITION
Gwinnett County, The Bank of Gwinnett County's primary service area, is
located 25 miles northeast of downtown Atlanta, Georgia. Gwinnett County was
chartered by the Georgia legislature in 1818 and was named for Button
Gwinnett, a signer of the Declaration of Independence. Gwinnett County has 13
municipalities, including Lawrenceville, Snellville, Buford, Lilburn, Duluth
and Norcross. The County Seat is Lawrenceville.
The banking industry in Georgia is highly competitive. In recent years,
intense market demands, economic pressures, changing interest rates and
increased customer awareness of product and service differences among
financial institutions have forced banks to diversify their services and
become more cost effective. The Bank of Gwinnett County faces strong
competition in attracting deposits and making loans. Its most direct
competition for deposits comes from savings institutions, commercial banks,
credit unions and issuers of securities such as shares in money market funds.
Interest rates, convenience of office locations and marketing are all
significant factors in The Bank of Gwinnett County's competition for deposits.
Competition for loans comes from savings institutions, commercial banks,
insurance companies, consumer finance companies, credit unions and other
institutional lenders. The Bank of Gwinnett County competes for loan
originations through the interest rates and loan fees it charges and the
efficiency and quality of services it provides. Competition is affected by the
general availability of lendable funds, general and local economic conditions,
current interest rate levels and other factors that are not readily
predictable.
DEPOSITS
The Bank of Gwinnett County offers a wide range of commercial and consumer
deposit accounts, including noninterest bearing checking accounts, money
market checking accounts (consumer and commercial), negotiable order of
withdrawal ("NOW") accounts, individual retirement accounts, time certificates
of deposit, and regular savings accounts. The sources of deposits typically
are residents and businesses and their employees within The Bank of Gwinnett
County's market area, and are obtained through personal solicitation by The
Bank of Gwinnett
76
<PAGE>
County's officers and directors, direct mail solicitation, and advertisements
published in the local media. The Bank of Gwinnett County pays competitive
interest rates on time and savings deposits and has implemented a service
charge fee schedule competitive with other financial institutions in its
market area, covering such matters as maintenance fees on checking accounts,
per item processing fees on checking accounts, returned check charges, and the
like.
LENDING ACTIVITIES
The Bank of Gwinnett County makes primarily real estate-construction loans,
commercial loans, and to a lesser extent consumer loans. As of December 31,
1997 such loans constituted 24.0%, 64.9% and 11.1%, respectively, of total
loans.
REAL ESTATE LOANS
The Bank of Gwinnett County makes single-family residential construction
loans for one-to four-unit structures. The Bank of Gwinnett County requires a
first lien position on the land associated with the construction projects and
offers these loans only to qualified residential building contractors. Loan
disbursements require on-site inspections to assure the project is on budget
and that the loan proceeds are being used in accordance with the plans,
specifications and survey for the construction project and not being diverted
to another project. The loan-to-value ratio for such loans is predominately
75% of the appraised value based on plans and specifications, and is a maximum
of 80% if the loan is amortized. Loans for construction can present a high
degree of risk to the lender, depending on, among other things, whether the
builder can sell the home to a buyer, whether the buyer can obtain permanent
financing, whether the transaction produces income in the interim, and the
nature of changing economic conditions.
The Bank of Gwinnett County also makes acquisition and development loans to
Bank-approved developers for the purpose of developing acreage into single-
family lots on which houses will be built. Loan disbursements require on-site
inspections to assure the project is on budget and that the loan proceeds are
being used for the development project and not being diverted to another
project. The loan-to-value ratio for such loans does not exceed 75% of the
discounted value, as defined in the appraisal report. Loans for acquisition
and development can present a high degree of risk to the lender, depending
upon, among other things, whether the developer can find builders to buy the
lots, whether the builder can obtain financing, whether the transaction
produces income in the interim and the nature of changing economic conditions.
COMMERCIAL LOANS
Commercial lending is directed principally towards businesses whose demand
for funds falls within The Bank of Gwinnett County's legal lending limits and
are existing or potential deposit customers of The Bank of Gwinnett County.
This category includes loans made to individual, partnership or corporate
borrowers obtained for a variety of purposes. Risks associated with these
loans can be significant. Risks include, but are not limited to, fraud,
bankruptcy, economic downturn, deteriorated or non-existing collateral and
changes in interest rates.
Additionally, The Bank of Gwinnett County offers first mortgage loans on
commercial real estate for owner occupied or investment real estate. Almost
all conventional first mortgage loans originated by The Bank of Gwinnett
County have a loan-to-value that does not exceed 80% with a maximum term of 20
years and call provisions every three to five years. Such loans carry fixed or
adjustable interest rates. Risks involved with commercial mortgage lending
include, but are not limited to, title defects, fraud, general real estate
market deterioration, inaccurate appraisals, violation of banking protection
laws, interest rate fluctuations and financial deterioration of the borrower.
The Bank of Gwinnett County also makes commercial loans to small businesses
with respect to which the U.S. Small Business Administration ("SBA")
guarantees repayment on varying percentages of the loan amount, subject to
certain other limitations. The Bank of Gwinnett County may sell the guaranteed
portion of these loans
77
<PAGE>
to institutional investors in the secondary markets. The Bank of Gwinnett
County also participates in other SBA loan programs. Risks associated with
these loans include, but are not limited to, credit risk, e.g., fraud,
bankruptcy, economic downturn, deteriorated or non-existing collateral and
changes in interest rates, and operational risk, e.g., failure of The Bank of
Gwinnett County to adhere to SBA funding and servicing requirements in order
to secure and maintain the SBA guarantees and servicing rights.
CONSUMER LOANS
The Bank of Gwinnett County makes consumer loans, consisting primarily of
installment loans to individuals for personal, family and household purposes,
including loans for automobiles and investments, first mortgage residential
loans and home equity lines of credit. Risks associated with these loans
include, but are not limited to, fraud, bankruptcy, deteriorated or non-
existing collateral, general economic downturn, interest rate fluctuations and
customer financial problems.
INVESTMENT ACTIVITIES
After establishing necessary cash reserves and funding loans, The Bank of
Gwinnett County invests its remaining liquid assets in investments allowed
under banking laws and regulations. The Bank of Gwinnett County invests
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States, and other taxable securities and
in certain obligations of states and municipalities. The Bank of Gwinnett
County also engages in Federal Funds transactions with its principal
correspondent banks and primarily acts as a net seller of such funds. The sale
of Federal Funds amounts to a short-term loan from The Bank of Gwinnett County
to another bank. Risks associated with these investments include, but are not
limited to, mismanagement in terms of interest rate, maturity and
concentration.
ASSET/LIABILITY MANAGEMENT
It is the objective of The Bank of Gwinnett County to manage its assets and
liabilities to provide a satisfactory, consistent level of profitability
within the framework of established cash, loan, investment, borrowing and
capital policies. Certain officers of The Bank of Gwinnett County are charged
with the responsibility for developing and monitoring policies and procedures
that are designed to insure acceptable composition of the asset/liability mix.
It is the overall philosophy of management to support asset growth primarily
through growth of core deposits, which include deposits of all categories made
by individuals, partnerships and corporations. Management of The Bank of
Gwinnett County seeks to invest the largest portion of The Bank of Gwinnett
County's assets in small- to medium-sized business loans and real estate
related loans. The Bank of Gwinnett County's asset/liability mix is monitored
on a timely basis with a report reflecting interest-sensitive assets and
interest-sensitive liabilities being prepared and presented to its
Asset/Liability Committee on a monthly basis. The objective of this policy is
to manage interest-sensitive assets and liabilities so as to minimize the
impact of substantial movements and interest rates on the Bank's earnings. See
"Button Gwinnett Selected Statistical Information--Asset/Liability
Management."
EMPLOYEES
As of March 1, 1998, The Bank of Gwinnett County had 51 full-time employees
and 7 part-time employees. The Bank of Gwinnett County is not a party to any
collective bargaining agreement, and, in the opinion of management, enjoys
excellent relations with its employees. Button Gwinnett does not have any
employees who are not also employees of The Bank Gwinnett County.
PROPERTIES
Button Gwinnett's principal executive offices are located at 2230 Scenic
Highway, Snellville, Georgia 30278, and its telephone number at that address
is (770) 978-3242. The Bank of Gwinnett County's principal executive offices
are located at 150 South Perry Street, Lawrenceville, Georgia, and its
telephone number at that address is (770) 963-6665. The Bank of Gwinnett
County has three other offices located in Gwinnett County.
78
<PAGE>
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Button Gwinnett is
a party or of which any of its properties are subject; nor are there material
proceedings known to Button Gwinnett to be contemplated by any governmental
authority; nor are there material proceedings known to Button Gwinnett,
pending or contemplated, in which any director, officer or affiliate or any
principal security holder of Button Gwinnett, or any associate of any of the
foregoing, is a party or has an interest adverse to Button Gwinnett.
79
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF BUTTON GWINNETT
The following selected financial data is derived from the financial
statements of Button Gwinnett. The financial data for the years ended December
31, 1997, 1996, 1995, 1994, 1993 is derived from the consolidated financial
statements of Button Gwinnett. The following data should be read in
conjunction with Button Gwinnett' consolidated financial statements and the
related notes contained elsewhere in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET:
Total assets................. $ 215,191 $ 186,568 $ 159,200 $ 126,802 $ 113,802
Loans, net................... 142,273 117,569 100,699 85,764 73,290
Securities................... 45,541 32,004 25,912 23,662 14,973
Federal funds sold........... 6,765 21,515 19,625 2,945 12,850
Deposits..................... 189,220 165,237 140,804 111,051 99,882
Shareholders' equity......... 24,476 20,013 16,915 14,925 13,196
OPERATING DATA:
Interest income.............. $ 16,667 $ 14,706 $ 13,536 $ 9,719 $ 8,939
Interest expense............. 5,686 5,225 4,807 2,981 3,068
Net interest income.......... 10,981 9,481 8,729 6,738 5,871
Provision for losses on
loans....................... 260 445 600 255 290
Net interest income after
provision for losses on
loans....................... 10,721 9,036 8,129 6,483 5,581
Other income................. 1,101 1,037 1,279 894 1,426
Other expenses............... 4,225 4,115 4,313 3,851 4,331
Income tax expense........... 2,733 2,113 1,798 1,229 748
Net income................... 4,864 3,845 3,297 2,297 1,928
Net income per share......... 3.32 2.62 2.30 1.58 1.31
Cash dividends declared per
share....................... 0.60 0.50 0.35 0.30 0.30
</TABLE>
80
<PAGE>
BUTTON GWINNETT MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 Button Gwinnett to meet those needs. Button Gwinnett
seeks to meet liquidity requirements primarily through management of short-
term investments (principally Federal Funds Sold) and monthly amortizing
loans. Another source of liquidity is the repayment of maturing single payment
loans. Also, Button Gwinnett maintains relationships with correspondent banks
which could provide funds to it on a short notice, if needed.
The liquidity and capital resources of Button Gwinnett are monitored on a
periodic basis by Federal and State regulatory authorities. As determined
under guidelines established by those regulatory authorities, Button
Gwinnett's liquidity ratios at December 31, 1997 were considered satisfactory.
At that date, Button Gwinnett's short-term investments were adequate to cover
any reasonably anticipated immediate need for funds, and Button Gwinnett was
not aware of any events or trends likely to result in a material change in its
liquidity.
At December 31, 1997, Button Gwinnett's capital-to-asset ratio was
considered adequate based on guidelines established by the regulatory
authorities. During 1997, Button Gwinnett increased its capital by $4,462,567,
which is net income for the year, less treasury stock, dividends paid and
adjustments to capital due to the exercise of stock options. At December 31,
1997, total capital of Button Gwinnett amounted to $24,475,511.
Management is not aware of any current recommendations by the regulatory
authorities which, if they were to be implemented, would have a material
effect on Button Gwinnett's liquidity, capital resources or operations.
The impact of inflation on banks differs from its impact on non-financial
institutions. Banks, as financial intermediaries, have assets which are
primarily monetary in nature and which tend to fluctuate in concert with
inflation. A bank can reduce the impact of inflation if it can manage its rate
sensitivity gap. This gap represents the difference between rate sensitive
assets and rate sensitive liabilities. Button Gwinnett attempts to structure
its assets and liabilities and to manage the rate sensitivity gap, thereby
seeking to minimize the potential effects of inflation.
RESULTS OF OPERATIONS
Button Gwinnett's results of operations are determined by its ability to
effectively manage interest income and expense, to minimize loan and
investment losses, to generate noninterest income and to control noninterest
expense. Since interest rates are determined by market forces and economic
conditions beyond the control of Button Gwinnett, the ability to generate net
interest income depends upon Button Gwinnett's ability to generate an adequate
spread between the rate earned on earning assets and the rate paid on
interest-bearing liabilities. Thus, the key performance measure for net
interest income is the interest margin or net yield, divided by average
earning assets.
Net interest income was $10,980,881 in 1997 as compared to $9,481,517 in
1996, representing an increase of 15.81%. This increase is attributable to a
higher volume of average earning assets offset by a lower net interest margin.
Average earning assets increased by $22,123,000 or 13.99% to $180,227,000 in
1997 from $158,104,000 in 1996. This increase is attributable to an increase
in average loans of $19,731,000, an increase in average investments of
$5,981,000 and an increase in average certificates of deposits in other banks
of $372,000. Average deposits increased $20,387,000 or 13.58% to $170,538,000
in 1997 from $150,151,000 in 1996. Approximately 26% of the average deposits
were noninterest-bearing deposits in 1997.
81
<PAGE>
The net interest margin increased to 6.09% in 1997 as compared to 6.00% in
1996. This increase is attributable to the decrease in the yield on average
earning assets being less than the decrease in the rate paid on average
interest-bearing liabilities. The yield on average earning assets decreased by
0.5% from 9.30% in 1996 to 9.25% in 1997, while the rate of interest paid on
average interest bearing liabilities decreased by 2.15%, from 4.64% in 1996 to
4.54% in 1997.
The allowance for loan losses is maintained at a level that management
believes to be adequate to absorb potential losses in the loan portfolio.
Management's determination of the adequacy of the allowance is based on an
evaluation of the portfolio, past loan loss experience, current economic
conditions, volume, growth, composition of the loan portfolio, and other risks
inherent in the portfolio. In addition, regulatory agencies, as an integral
part of their examination process, periodically review Button Gwinnett's
allowance for loan losses, and may require Button Gwinnett to record additions
to the allowance based on their judgment about information available to them
at the time of their examinations.
The provision for loan losses is a charge to earnings in the current period
to replenish the allowance and maintain it at a level management has
determined to be adequate. The provision for loan losses charged to earnings
totaled $260,000 in 1997 and $445,000 in 1996. The decreased provision in 1997
resulted from management's evaluation of the loan portfolios and minimal
losses during the year. Net loan charge-offs decreased by $53,768 in 1997 as
compared to 1996. Net loan charge-offs as a percentage of the provision for
loan losses amounted to 5% in 1997 and 15% in 1996. The allowance for loan
losses as a percentage of total loans outstanding at December 31, 1997 and
1996 amounted to 1.78% and 1.94%, respectively. Management considers the year
end allowance adequate to cover potential losses in the loan portfolio.
The following is a comparison of noninterest income for 1997 and 1996.
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Service charges on deposit accounts................... $ 780,220 $ 757,084
Other................................................. 320,918 279,438
---------- ----------
$1,101,138 $1,036,522
========== ==========
</TABLE>
Noninterest income increased approximately $65,000 in 1997 as compared to
1996. The increase in service charges on deposit accounts is attributable to
commercial service charges, in addition to an increase in insufficient funds
charges. The increase in other income of approximately $41,000 is primarily
due to an increase in Invest Income, which are commissions earned on the sale
of mutual funds, annuities, etc. by a third party.
The following is an analysis of noninterest expense for 1997 and 1996.
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Salaries and employee benefits........................ $2,690,385 $2,346,532
Equipment............................................. 207,388 315,932
Occupancy expense..................................... 220,940 195,894
Other................................................. 1,107,112 1,256,931
---------- ----------
$4,225,825 $4,115,289
========== ==========
</TABLE>
Noninterest expense increased approximately $110,000 in 1997. There was an
increase of $344,000 in salaries and employee benefits as a result of
additional personnel and an increase in employee incentives and an increase of
$25,000 in occupancy expense for building repairs made during 1997. These
increases were partially offset by a decrease of $108,000 in equipment expense
related to reductions in depreciation expense for the year and a decrease in
other expenses of approximately $150,000 from $1,256,931 during 1996 to
$1,107,112 in 1997. The primary decreases in other expenses are attributable
to the following: $50,000 reduction in legal and professional expense; $58,000
decrease in FDIC insurance premiums; $25,000 reduction in Other Real Estate
82
<PAGE>
expense and approximately $33,000 decrease in postage expense, partially
offset by an increase of $15,000 in appraisal/inspection expense.
YEAR 2000
Like many financial institutions, Button Gwinnett relies on computers for
the daily conduct of its business and for data processing in particular. There
is concern among industry experts that commencing on January 1, 2000,
computers will be unable to "read" the new year and that there may be wide-
spread computer malfunction. Management of Button Gwinnett has assessed the
electronic systems, programs, applications, and other electronic components
used in its operations and is currently in the process of determining the cost
that will be incurred with the year 2000 issue.
83
<PAGE>
BUTTON GWINNETT SELECTED STATISTICAL INFORMATION
The following statistical information is provided for Button Gwinnett for
the years ended December 31, 1997 and 1996. The data is presented using daily
average balances. This data should be read in conjunction with the financial
statements presented elsewhere in this Joint Proxy Statement/Prospectus.
AVERAGE BALANCES AND NET INCOME ANALYSIS
The following tables set forth the amount of Button Gwinnett's interest
income or interest expense for each category of interest-earning assets and
interest-bearing liabilities and the average interest rate for total interest-
earning assets and total interest-bearing liabilities, net interest spread and
net yield on average interest-earning assets.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1997 1996
------------------------- -------------------------
AVG. AVG.
INTEREST YIELD/ INTEREST YIELD/
AVERAGE INCOME/ RATE AVERAGE INCOME/ RATE
BALANCE EXPENSE PAID BALANCE EXPENSE PAID
-------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans, net of unearned
income.................. $128,921 $13,719 10.64% $109,190 $12,020 11.01%
Federal Funds Sold....... 13,844 750 5.42% 17,805 939 5.77%
Taxable investments...... 33,808 2,014 5.96% 27,021 1,558 5.77%
Tax-exempt investments... 3,167 154 4.86% 3,973 181 4.56%
Interest-bearing deposits
in banks................ 487 30 6.16% 115 8 6.96%
-------- ------- -------- -------
Total interest-earning
assets................ $180,227 $16,667 9.25% $158,104 $14,706 9.30%
Non-Interest-earning
assets:
Cash..................... $ 9,691 $ 8,312
Allowance for loan
losses.................. (2,463) (2,077)
Other Assets............. 6,252 5,895
-------- --------
Total noninterest-
earning assets........ $ 13,480 $ 12,130
-------- --------
TOTAL ASSETS......... $193,707 $16,667 $170,234 $14,706
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
liabilities:
Interest-bearing demand
deposits................ $ 62,348 $ 2,394 3.84% $ 47,549 $ 1,789 3.76%
Savings and time
deposits................ 62,971 3,292 5.23% 65,061 3,436 5.28%
-------- ------- -------- -------
Total interest-bearing
liabilities........... $125,319 $ 5,686 4.54% $112,610 $ 5,225 4.64%
Noninterest-bearing
liabilities and
stockholders' equity:
Demand deposits.......... $ 45,219 $ 37,541
Other liabilities........ 1,747 1,803
Stockholders' equity..... 21,422 18,280
-------- --------
Total noninterest-
bearing liabilities
and stockholders'
equity................ $ 68,388 $ 57,624
TOTAL LIABILITIES AND
STOCKHOLDERS'
EQUITY.............. $193,707 $ 5,686 $170,234 $ 5,225
Interest rate spread....... 4.71% 4.66%
Net interest income........ $10,981 $ 9,481
Net interest margin........ 6.09% 6.00%
</TABLE>
- --------
(1) Interest income on loans includes $1,261,354 and $1,353,976 of loan fee
income for the years ended December 31, 1997 and 1996, respectively.
Interest income on loans also includes $7,216 and $6,061 of interest
income recognized on non accrual and renegotiated loans for the years
ended December 31, 1997 and 1996, respectively.
84
<PAGE>
RATE AND VOLUME ANALYSIS
The following table reflects the changes in net interest income resulting
from changes in interest rates and from asset and liability volume. The change
in interest attributable to rate has been determined by applying the change in
rate between the two years indicated to average balances outstanding in the
later year. The change in interest due to volume has been determined by
applying the rate from the earlier year to the change in average balances
outstanding between years. Thus, changes that are not solely due to volume have
been consistently attributed to rate.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------------------------
1997 1996
------------------------- -------------------------
INCREASE CHANGE DUE TO INCREASE CHANGE DUE TO
(DECREASE) RATE VOLUME (DECREASE) RATE VOLUME
---------- ------ ------ ---------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in:
Income from earning
assets:
Int. and fees on
loans................ $1,699 $(473) $2,172 $ 623 $(432) $1,055
Int. on taxable
investments.......... 456 65 391 475 (1) 476
Int. on tax-exempt
investments........... (27) 10 (37) (30) (11) (19)
Int. on Fed Funds Sold. (189) 20 (209) 108 (91) 199
Int. on deposits in
banks................. 22 (4) 26 (6) 2 (8)
------ ----- ------ ------ ----- ------
Total Interest
Income............. $1,961 $(382) $2,343 $1,170 $(533) $1,703
Expense from interest-
bearing liabilities:
Int. on interest-
bearing demand........ $ 605 $ 48 $ 557 $ 672 $ 196 $ 476
Int. on time and savings
deposits............... (144) (53) (91) (254) (134) (120)
------ ----- ------ ------ ----- ------
Total interest
expense............ $ 461 (5) $ 466 $ 418 $ 62 $ 356
Net interest income. $1,500 $(377) $1,877 $ 752 $(595) $1,347
</TABLE>
85
<PAGE>
ASSET/LIABILITY MANAGEMENT
The following table sets forth the distribution of the repricing of Button
Gwinnett's earning assets and interest-bearing liabilities as of December 31,
1997, the cumulative interest rate sensitivity gap (i.e., interest rate
sensitive assets less interest rate sensitive liabilities) and the cumulative
interest rate sensitivity gap ratio (i.e., interest rate sensitive assets
divided by interest rate sensitive liabilities). The table also sets forth the
time periods in which earning assets and liabilities will mature or may
reprice in accordance with their contractual terms. However, the table does
not necessarily indicate the impact of general interest rate movements on the
net interest margin since the repricing of various categories of assets and
liabilities is subject to competitive pressures and the needs of Button
Gwinnett's customers. In addition, various assets and liabilities indicated as
repricing within the same period may in fact reprice at different times within
such period and at different rates.
Button Gwinnett uses this table as a tool to manage interest rate
sensitivity and risk on certain products. What is not taken into consideration
is Button Gwinnett's strong capital position of 11% and the aggressive
marketing and officer calling program that maintains 29% of the total deposits
in non-interest bearing accounts, thus maintaining some of the highest returns
on average assets for its peer group, as well as some of the highest net
interest margins.
<TABLE>
<CAPTION>
WITHIN WITHIN WITHIN AFTER
SIX ONE FIVE FIVE
MONTHS YEAR YEARS YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans, net of unearned income........ $ 77,080 $ 84,170 $139,728 $144,851
Federal Funds sold................... 6,765 6,765 6,765 6,765
Taxable investments.................... 7,644 18,338 41,474 42,467
Tax-exempt investments................. 400 400 2,341 3,073
Interest-bearing deposits in banks..... 500 500 500 500
-------- -------- -------- --------
$ 92,389 $110,173 $190,808 $197,656
Interest Bearing Demand Deposits:
Interest-bearing deposits............ $ 66,759 $ 66,759 $ 66,759 $ 66,759
Savings................................ 4,473 4,473 4,473 4,473
Time Deposits.......................... 48,188 56,513 63,688 63,688
-------- -------- -------- --------
$119,420 $127,745 $134,920 $134,920
Cumulative Interest Rate Sensitivity
Gap................................... $(27,031) $(17,572) $ 5,588 $ 62,736
-------- -------- -------- --------
Cumulative Interest Rate Sensitivity
Gap Ratio............................. 78% 87% 142% 147%
</TABLE>
Button Gwinnett activity manages the mix of asset and liability maturities
to control the effects of changes in the general level of interest rates on
net interest income. Except for its effect on the general level of interest
rates, inflation does not have a material impact on Button Gwinnett due to the
rate variability and short-term maturities of its earning assets. In
particular, approximately 58% of the loan portfolio is comprised of loans
which have variable rate terms or are short-term obligations. Mortgage loans,
primarily with five to 15 year maturities, are also made on a variable rate
basis with rates being adjusted every one to five years. Additionally, 49% of
average other earning assets mature within one year.
86
<PAGE>
BUTTON GWINNETT INVESTMENT PORTFOLIO
TYPES OF INVESTMENTS
The carrying value and estimated market value of investment securities are
as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Securities Held for Investment:
December 31, 1997
U.S. Government and agency
securities.................... $32,777,796 $ 89,531 $(29,352) $32,837,975
State and municipal securities. 5,223,492 57,461 (630) 5,280,323
Mortgage-backed securities..... 7,539,332 16,759 (7,587) 7,548,504
----------- -------- -------- -----------
$45,540,620 $163,751 $(37,569) $45,666,802
=========== ======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Securities Held for Investment:
December 31, 1996
U.S. Government and agency
securities.................... $28,300,312 $ 66,788 $(74,851) $28,292,249
State and municipal securities. 3,703,971 55,716 (4,003) 3,755,684
----------- -------- -------- -----------
$32,004,283 $122,504 $(78,854) $32,047,933
=========== ======== ======== ===========
</TABLE>
MATURITIES
The amount of investment securities in each category as of December 31, 1997
and 1996 are shown in the following table according to maturity
classifications (i) one year or less, (ii) after one year through five years,
(iii) after five years through ten years, and (iv) after ten years.
<TABLE>
<CAPTION>
U.S. TREASURY AND OTHER U.S. GOVERNMENT
AGENCIES AND CORPORATION
---------------------------------------------
YEAR ENDED DECEMBER 31
---------------------------------------------
1997 1996
--------------------- ---------------------
AMOUNT(1) YIELD AMOUNT(1) YIELD
----------- -------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Maturity:
One year or less............... $ 9,642 5.68% $ 7,716 5.53%
After one year through five
years......................... 23,136 6.25% 20,084 5.95%
After five years through ten
years......................... -0- -- 500 6.50%
After ten years................ 9,689 6.17% -0- --
----------- -----------
$ 42,467 $ 28,300
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
STATE AND POLITICAL SUBDIVISIONS
----------------------------------
AMOUNT YIELD(1) AMOUNT YIELD(1)(2)
------ -------- ------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Maturity:
One year or less........................... $ 400 4.14 $ 655 4.69%
After one year through five years.......... 1,941 4.76 1,839 4.67%
After five years through ten years......... 732 5.70 1,210 5.26%
After ten years............................ -- -- -- --
------ ------
$3,073 $3,704
====== ======
</TABLE>
- --------
(1) Yields are 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 is computed using the acquisition price of each security in that
range.
(2) Yields on municipal securities are not stated on a tax equivalent basis.
87
<PAGE>
BUTTON GWINNETT LOAN PORTFOLIO
TYPES OF LOANS
The amount of loans outstanding at the indicated dates is shown in the
following table according to type of loans and concentration of loans which
exceed 10% of total loans.
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1997 1996
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commercial and business............................... $32,179 $28,102
Business loans secured by real estate................. 62,035 42,297
Real estate--construction............................. 34,857 37,199
Real estate--mortgage................................. 9,134 7,997
Consumer and other installment loans.................. 6,995 4,651
----------- -----------
$145,200 $120,246
Deferred fees......................................... (350) (347)
Reserve for loan losses............................... (2,577) (2,331)
----------- -----------
Loans, net.......................................... $142,273 $117,568
=========== ===========
</TABLE>
MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
Total loans as of December 31, 1997 and 1996 are shown in the following
tables according to maturity classifications (i) one year or less, (ii) after
one year through five years, and (iii) after five years.
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1997 1996
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Maturity:
One year or less..................................... $ 72,426 $ 72,764
After one year through five years.................... 66,427 42,749
After five years..................................... 6,347 4,733
----------- -----------
$145,200 $120,246
=========== ===========
</TABLE>
The following table summarizes loans at December 31, 1997 with due dates
after one year which (i) have predetermined interest rates and (ii) have
floating or adjustable interest rates.
<TABLE>
<CAPTION>
1-5 OVER 5
YEARS YEARS TOTAL
------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Predetermined interest rates............................ $55,609 $5,126 $60,735
Floating or adjustable rates............................ 10,818 1,221 12,039
------- ------ -------
$66,427 $6,347 $72,774
======= ====== =======
</TABLE>
88
<PAGE>
NONPERFORMING LOANS
The following table presents, at December 31, 1997 and 1996, the aggregate
of nonperforming loans for the categories indicated.
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1997 1996
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Loans accounted for on a nonaccrual basis.............. $ 25 $ 38
Installment loans and term loans contractually past due
90 days or more as to interest or principal payments
and still accruing.................................... -- --
Loans, the terms of which have been renegotiated to
provide a reduction or deferral of interest or
principal because of deterioration in the financial
position of the borrower.............................. 63 84
Loans now current about which there are serious doubts
as to the ability of the borrower to comply with
present loan repayment terms.......................... -- --
Interest income that would have been recorded on
nonaccrual and restructured loans under original
terms................................................. 10 10
Interest income that was recorded on a nonaccrual and
restructured loans.................................... 7 6
</TABLE>
The accrual of interest income on loans is discontinued when the loans
become over 90 days past due. Interest previously accrued but not collected is
charged against current period interest income when such loans are placed on
nonaccrual status. Interest accruals are recorded on such loans only when they
are brought fully current with respect to interest and principal and when, in
the judgment of management, the loans are estimated to be fully collectible as
to both principal and interest.
In the opinion of management, any loans classified by regulatory authorities
as doubtful, substandard or special mention that have not been disclosed above
do not (i) represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating results, liquidity
or capital resources, or (ii) represent material credits about which
management is aware of any information which causes management to have serious
doubts as to the ability of such borrowers to comply with the loan repayment
terms. Any loans classified by regulatory authorities as loss have been
charged off.
Effective January 1, 1996, Button Gwinnett adopted Statement of Financial
Accounting Standards No. 114 and, as amended, No. 118, "Accounting by
Creditors for Impairment of a Loan." The statement prescribes that impaired
loans be measured on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a practical expedient,
at the loan's observable market price or the fair value of the collateral if
the loan is collateral dependent. The statement had no material effect on the
financial statements of Button Gwinnett as of December 31, 1997.
COMMITMENTS AND LINES OF CREDIT
In the ordinary course of business, Button Gwinnett has granted commitments
to extend credit to approved customers. Button Gwinnett has also granted
commitments to approved customers for standby letters of credit. These
commitments are recorded in the financial statements when funds are disbursed
or the financial instruments become payable. Button Gwinnett uses the same
credit and collateral policies for these off balance sheet commitments as it
does for financial instruments that are recorded in the consolidated financial
statements. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitment amounts expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements.
89
<PAGE>
The following is a summary of the commitments outstanding at December 31,
1997 and 1996.
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1997 1996
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commitments to extend credit...................... $47,304 $46,186
Standby letters of credit......................... 2,449 2,201
----------- -----------
$49,753 $48,387
=========== ===========
</TABLE>
SUMMARY OF BUTTON GWINNETT LOAN LOSS EXPERIENCE
The provision for possible loan losses is created by direct charges to
operations. Losses on loans are charged against the allowance in the period in
which such loans, in management's opinion, become uncollectible. Recoveries
during the period are credited to this allowance. The factors that influence
management's judgment in determining the amount charged to operating expense
are past loan experience, composition of the loan portfolio, evaluation of
possible future losses, current economic conditions and other relevant
factors. Button Gwinnett's allowance for loan losses was approximately
$2,577,044 at December 31, 1997, representing 1.78% of year end total loans
outstanding, compared with $2,330,733 at December 31, 1996, which represented
1.94% of year end total loans outstanding. The allowance for loan losses is
reviewed continuously based on management's evaluation of current risk
characteristics of the loan portfolio, as well as the impact of prevailing and
expected economic business conditions. Management considers the allowance for
loan losses adequate to cover possible loan losses on the loans outstanding.
Management has not allocated Button Gwinnett's allowance for loan losses to
specific categories of loans. Based on management's best estimate,
approximately 40% of the allowance should be allocated to real estate loans,
45% to commercial, financial and agricultural loans and 15% to
consumer/installment loans as of December 31, 1997.
The following table presents an analysis of Button Gwinnett's loan loss
experience for the year ended December 31, 1997.
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Average amount of loans outstanding.................. $ 128,921 $ 109,190
Balance of reserve for possible loan losses at
beginning of period................................. $ 2,331 $ 1,953
----------- -----------
Charge-offs:
Commercial, financial and agricultural............. $ (17) $ (49)
Real estate........................................ 0 (20)
Consumer........................................... (8) (16)
Recoveries:
Commercial, financial and agricultural............. 10 7
Real estate........................................ 0 4
Consumer........................................... 1 7
----------- -----------
Net charge-offs.................................. $ (14) $ (67)
=========== ===========
Additions to reserve charged to operating expenses... $ 260 $ 445
=========== ===========
Balance of reserve for possible loan losses...... $ 2,577 $ 2,331
=========== ===========
Ratio of net loan charge-offs to average loans....... 0.01% 0.06%
=========== ===========
</TABLE>
90
<PAGE>
BUTTON GWINNETT DEPOSITS
The average amount of deposits and average rate paid thereon, classified as
to noninterest-bearing demand deposits, interest-bearing demand deposits,
savings deposits and time deposits, for the years ended December 31, 1997 and
1996 are presented below.
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1997 1996
------------- -------------
AMOUNT RATE AMOUNT RATE
-------- ---- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits............... $ 45,219 -- $ 37,541 --
Interest-bearing demand deposits.................. 62,348 3.84% 47,549 3.76%
Savings........................................... 5,173 2.41% 5,991 2.40%
Time deposits..................................... 57,798 5.48% 59,070 5.57%
-------- --------
Total deposits.................................. $170,538 $150,151
======== ========
</TABLE>
The amounts of time certificates of deposit issued in amounts of $100,000 or
more as of December 31, 1997 and 1996, are shown below by category, which is
based on time remaining until maturity of (i) three months or less, (ii) over
three through six months (iii) over six through 12 months and (iv) over 12
months.
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1997 1996
AMOUNT AMOUNT
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Three months or less................................... $12,069 $ 7,181
Over three through six months.......................... 6,502 3,754
Over six through 12 months............................. 2,031 3,716
Over 12 months......................................... 4,658 3,796
----------- -----------
Total................................................ $25,260 $18,447
=========== ===========
</TABLE>
BUTTON GWINNETT RETURN ON ASSETS AND SHAREHOLDERS' EQUITY
The following rate of return information for the years ended December 31,
1997 and 1996 is presented below.
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1997 1996
------ ------
<S> <C> <C>
Return on assets(1)............................................... 2.51% 2.26%
Return on equity(2)............................................... 22.70% 21.03%
Dividend payout ratio(3).......................................... 18.07% 19.08%
Equity to assets ratio(4)......................................... 11.07% 10.74%
</TABLE>
- --------
(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Dividends declared per share divided by fully diluted earnings per common
share.
(4) Average equity divided by average total assets.
91
<PAGE>
BUSINESS OF BHC
BHC was organized under the laws of the State of Georgia in May 1993, and is
a registered bank holding company. All of BHC's activities are conducted by
its wholly-owned subsidiaries, Henry County Bank and Spalding County Bank,
which were organized as Georgia banking corporations in August, 1984 and
December, 1986, respectively.
Henry County Bank and Spalding County Bank are community-oriented commercial
banks that serve Henry and Spalding Counties, with particular emphasis on
retail banking, and offer such customary banking services as consumer and
commercial checking accounts, NOW accounts, savings accounts, certificates of
deposit, lines of credit and money transfers. Henry County Bank and Spalding
County Bank finance commercial and consumer transactions, make secured and
unsecured loans, and provide a variety of other banking services.
At December 31, 1997, BHC had total consolidated assets of approximately
$134 million, total consolidated deposits of approximately $117 million and
total consolidated shareholders' equity of approximately $11 million. BHC's
principal executive offices are located at 201 West Taylor Street, Griffin,
Georgia 30224, and its telephone number at that address is (770) 229-2675.
MARKETS
BHC conducts general banking activities through the Henry County Bank and
Spalding County Bank primarily in Henry and Spalding Counties, Georgia.
Customers of the Henry County Bank and Spalding County Bank are primarily
consumers and small businesses.
DEPOSITS
Henry County Bank and Spalding County Bank offer a full range of depository
accounts and services to both consumers and businesses. At December 31, 1997,
Henry County Bank's deposits, totaling an aggregate of approximately $63
million, consisted of approximately $8 million in non-interest-bearing demand
deposits (13% of total deposits); approximately $9 million in interest-bearing
demand deposits (14% of total deposits); approximately $2 million in savings
deposits (3% of total deposits); approximately $31 million in time deposits in
amounts less than $100,000 (50% of total deposits); and approximately $13
million in time deposits of $100,000 or more 20% of total deposits). At
December 31, 1997, Spalding County Bank's deposits, totaling an aggregate of
approximately $54 million, consisted of approximately $7 million in non-
interest-bearing demand deposits (13% of total deposits); approximately $8
million in interest-bearing demand deposits (15% total deposits);
approximately $3 million in savings deposits (5% of total deposits);
approximately $29 million in time deposits in amounts less than $100,000 (54%
of total deposits); and approximately $7 million in time deposits of $100,000
or more (13% of total deposits).
LOANS
Henry County Bank and Spalding County Bank make both secured and unsecured
loans to individuals, firms and corporations, and both consumer and commercial
lending operations include various types of credit for its customers. Secured
loans include first and second real estate mortgage loans. Henry County Bank
and Spalding County Bank also makes direct installment loans to consumers on
both a secured and unsecured basis.
LENDING POLICY
The current lending strategies of Henry County Bank and Spalding County Bank
are to make loans only to local customers or to national or international
firms doing business locally. Unsecured loans normally will not be made to
persons who do not reside or work in Henry and Spalding Counties Bank's
primary trade areas. Secured loans can be made to customers outside Henry
County Bank's and Spalding County Bank's trade areas who are well established
and have net worth and collateral to support the loan. Real estate loans
usually are made only
92
<PAGE>
when such loans are secured by real property located in Henry and Spalding
Counties, and to a lesser extent by real property located in Clayton, Lamar
and Pike Counties.
Henry County Bank and Spalding County Bank provide each lending officer with
written guidelines for lending activities. Lending authority is delegated by
the Board of Directors of Henry County Bank and Spalding County Bank to loan
officers, each of whom is limited in the amount of secured and unsecured loans
which he or she can make to a borrower.
EMPLOYEES
As of December 31, 1997, Henry County Bank had 23 full-time employees and
one part-time employee. Spalding County Bank had 30 full-time employees and
three part-time employees. Two full-time employees are employed by both Henry
County Bank and Spalding County Bank. BHC has no salaried employees. Neither
Henry County Bank nor Spalding County Bank is a party to any collective
bargaining agreement, and management believes that the employer relations of
Henry County Bank and Spalding County Bank are good.
COMPETITION
The banking business is highly competitive. Henry County Bank and Spalding
County Bank compete with other banks, many of which are substantially larger
and have greater financial resources. In particular, Henry County Bank
competes with 10 other banks in Henry County. Spalding County Bank competes
with five other banks in Spalding County and other financial service
organizations, including savings and loan associations and finance companies,
insurance companies, credit unions and certain governmental agencies. To the
extent that Henry County Bank and Spalding County Bank must maintain non-
interest-earning reserves against deposits, they may be at a competitive
disadvantage when compared with other financial institutions and the
organizations that are not required to maintain reserves against substantially
similar sources of funds. Further, the deregulation of banks, savings and loan
associations and other financial institutions and the increased competition
from investment bankers and brokers and other financial service organizations
has had a significant impact on the competitive environment in which Henry
County Bank and Spalding County Bank operate.
PROPERTIES
The executive offices of BHC is located in the 8,750 square-foot facility of
Spalding County Bank at 201 West Taylor Street, Griffin, Georgia 30224. Henry
County Bank has two offices located in McDonough, Georgia and Stockbridge,
Georgia.
LEGAL PROCEEDINGS
There are no material pending proceedings to which BHC is a party or of
which any of its properties are subject; nor are there material proceedings
known to BHC to be contemplated by any governmental authority; nor are there
material proceedings known to BHC, pending or contemplated, in which any
director, officer or affiliate or any principal security holder of BHC, or any
associate of any of the foregoing, is a party or has an interest adverse to
BHC.
93
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF BHC
The following selected financial data is derived from the financial
statements of BHC. The financial data for the years ended December 31, 1997,
1996, 1995, 1994 and 1993 is derived from the consolidated financial
statements. The following data should be read in conjunction with BHC's
consolidated financial statements and the related notes contained elsewhere in
this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET:
Total assets.................. $ 133,621 $ 118,568 $ 108,528 $ 108,563 $ 54,587
Loans, net.................... 92,609 82,368 75,086 76,856 38,433
Securities.................... 23,214 21,395 19,629 17,259 9,027
Federal funds sold............ 5,350 3,220 2,390 1,055 3,346
Deposits...................... 116,970 104,442 95,142 91,690 48,544
Borrowings.................... 1,307 77 592 4,618 --
Common Stockholders' equity... 11,000 10,014 8,929 7,639 5,270
Preferred Stock............... 2,446 2,446 2,446 2,446 --
OPERATING DATA:
Interest income............... $ 11,269 $ 9,979 $ 9,564 $ 5,499 $ 3,923
Interest expense.............. 5,123 4,489 4,486 2,402 1,492
Net interest income........... 6,146 5,490 5,078 3,097 2,431
Provisions for losses on
loans........................ 915 145 90 171 139
Net interest income after
provision for losses on
loans........................ 5,231 5,345 4,988 2,926 2,292
Other income.................. 1,185 1,298 1,340 425 375
Other expenses................ 4,407 4,222 4,318 2,411 1,827
Income tax expense............ 790 979 735 348 290
Net income.................... 1,219 1,442 1,275 592 550
Net income per share.......... 1.84 2.24 1.94 1.22 1.33
Cash dividends declared per
common share................. 0.25 0.25 0.25 0.25 0.25
</TABLE>
94
<PAGE>
BHC MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition of BHC and its two
bank subsidiaries, Spalding County Bank and Henry County Bank at December 31,
1997 and 1996 and the results of operations for the years ended December 31,
1997 and 1996. The purpose of this discussion is to focus on information about
BHC's financial condition and results of operations which are not otherwise
apparent from the audited consolidated financial statements. Reference should
be made to those statements and the selected financial data presented
elsewhere in this report for an understanding of the following discussion and
analysis.
OVERVIEW
BHC's 1997 results were characterized by strong growth and decreased
earnings due primarily to increased loan loss provisions in the last quarter.
See "Provision for Loan Losses". BHC's total assets increased by 12.70% to
$133.6 million and net income decreased 15.46% to $1.2 million as of and for
the year ended December 31, 1997.
On December 3, 1997, the Company entered into the BHC Agreement. Under the
BHC Agreement, BHC will merge with and into Premier. Upon consummation of the
BHC Merger, each share of BHC Common Stock will be converted into and
exchanged for the right to receive 3.90 shares of Premier Common Stock,
subject to possible adjustment as defined in the agreement. Consummation is
subject to certain conditions, including regulatory and shareholder approval.
FINANCIAL CONDITION AT DECEMBER 31, 1997 AND 1996
Following is a summary of BHC's balance sheets for the periods indicated:
<TABLE>
<CAPTION>
DECEMBER 31, INCREASE (DECREASE)
----------------------- ----------------------
1997 1996 AMOUNT PERCENT
----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and due from banks......... $ 4,269 $ 3,499 $ 770 22.01
Federal funds sold.............. 5,350 3,220 2,130 66.15
Securities...................... 23,214 21,395 1,819 8.50
Loans........................... 92,609 82,368 10,241 12.43
Premises and equipment.......... 3,612 3,921 (309) (7.88)
Goodwill........................ 2,185 2,369 (184) (7.77)
Other assets.................... 2,382 1,796 586 32.63
----------- ----------- ---------- ---------
$ 133,621 $ 118,568 $ 15,053 12.70
=========== =========== ========== =========
Total deposits.................. $ 116,970 $ 104,442 $ 12,528 12.00
Federal funds purchased......... 1,245 -- 1,245 N/A
Other borrowings................ 62 77 (15) (19.48)
Other liabilities............... 1,898 1,589 309 19.45
Preferred stock................. 2,446 2,446 -- --
Common stockholders' equity..... 11,000 10,014 986 9.85
----------- ----------- ---------- ---------
$ 133,621 $ 118,568 $ 15,053 12.70%
=========== =========== ========== =========
</TABLE>
FINANCIAL CONDITION AT DECEMBER 31, 1997 AND 1996
As indicated in the above table, BHC's total assets increased by 12.70%,
primarily as a result of management's marketing efforts and the significant
growth in Henry County. Adequate capital and liquidity levels at both the
holding company and bank level have been maintained. Total interest-earning
assets were $121,173 at December 31, 1997 or 90.68% of total assets as
compared to 90.23% at December 31, 1996. BHC's
95
<PAGE>
primary interest-earning assets at December 31, 1997 were loans which made up
76.43% of total interest-earning assets as compared to 76.99% at December 31,
1996. BHC's loan to deposit ratio at December 31, 1997 was 79.17% as compared
to 78.86% at December 31, 1996. The 1997 and 1996 ratios are within BHC's
target ratio of 75% to 85%. Total deposits grew at a rate of 12%. This deposit
growth was used primarily to fund new loan growth. In 1997, the Banks paid
dividends totaling $625,000 to BHC. This allowed BHC to reduce total debt by
$15,000, to meet the dividend requirements of BHC's preferred stock and to pay
a dividend to BHC's common shareholders.
The Banks' investment portfolios increased by $1,819,000 as a result of
deposit growth not used to fund loan growth. Unrealized losses on securities
decreased by $163,000 to $132,000 at December 31, 1997. Management has not
specifically identified any securities for sale in future periods which, if so
designated, would require a charge to operations if the market value would not
be reasonably expected to recover prior to the time of sale.
BHC has a significant portion (79%) of its loan portfolio collateralized by
real estate located in BHC's primary market area of Spalding, Henry, and
surrounding counties. BHC's real estate mortgage and construction portfolio
consists of loans collateralized by one to four-family residential properties
(26%), construction loans to build one to four-family residential properties
(25%), nonresidential properties consisting primarily of small business
commercial properties (47%), and multi-family residential and other properties
(2%). BHC requires that loans collateralized by real estate not exceed the
collateral value by the following percentages for each type of real estate
loan as follows:
<TABLE>
<S> <C>
One to four-family residential properties...................... 89%
Construction loans on one to four-family residential
properties.................................................... 85%
Nonresidential property........................................ 85%
Multi-family residential properties and other.................. 75 to 80%
</TABLE>
The Bank's remaining 21% of its loan portfolio consists of commercial,
consumer, and other loans. BHC requires collateral commensurate with the
repayment ability and creditworthiness of the borrower.
The specific economic and credit risks associated with BHC's loan portfolio,
especially the real estate portfolio, include, but are not limited to, a
general downturn in the economy which could affect unemployment rates in BHC's
market area, general real estate market deterioration, interest rate
fluctuations, deteriorated or non-existing collateral, title defects,
inaccurate appraisals, financial deterioration of borrowers, fraud, and any
violation of banking protection laws. Construction lending can also present
other specific risks to the lender such as whether developers can find
builders to buy lots for home construction, whether the builders can obtain
financing for the construction, whether the builders can sell the home to a
buyer, and whether the buyer can obtain permanent financing. Currently, real
estate values and employment trends in BHC's market area are stable with no
indications of a significant downturn in the general economy.
BHC attempts to reduce these economic and credit risks not only by adherence
to loan to value guidelines, but also by investigating the creditworthiness of
the borrower and monitoring the borrower's financial position. Also, BHC
establishes and periodically reviews its lending policies and procedures as
well as having independent loan review. State banking regulations limit
exposure by prohibiting secured loan relationships that exceed 25% of Henry
County Bank's and Spalding County Bank's statutory capital and unsecured loan
relationships that exceed 15% of Henry County Bank's and Spalding County
Bank's statutory capital.
LIQUIDITY AND CAPITAL RESOURCES
The purpose of liquidity management is to ensure that there are sufficient
cash flows to satisfy demands for credit, deposit withdrawals, and other needs
of BHC. Traditional sources of liquidity include asset maturities and growth
in core deposits. A company may achieve its desired liquidity objectives from
the management of assets and liabilities and through funds provided by
operations. Funds invested in short-term marketable instruments
96
<PAGE>
and the continuous maturing of other earning assets are sources of liquidity
from the asset perspective. The liability base provides sources of liquidity
through deposit growth, the maturity structure of liabilities, and
accessibility to market sources of funds.
Scheduled loan payments are a relatively stable source of funds, but loan
payoffs and deposit flows fluctuate significantly, being influenced by
interest rates and general economic conditions and competition. BHC attempts
to price its deposits to meet its asset/liability objectives consistent with
local market conditions.
The liquidity and capital resources of Henry County Bank and Spalding County
Bank (collectively, the "Banks") are monitored on a periodic basis by State
and Federal regulatory authorities. As determined under guidelines established
by those regulatory authorities and internal policy, the Banks' liquidity was
considered satisfactory.
At December 31, 1997, BHC had loan commitments and letters of credit
outstanding of $23,589,000. Because these commitments generally have fixed
expiration dates and many will expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. If
needed, the Banks have the ability on a short-term basis to borrow and
purchase Federal funds from other financial institutions. At December 31,
1997, the Banks have arrangements with four commercial banks for additional
short-term advances of approximately $3,000,000.
At December 31, 1997, BHC's and the Banks' capital ratios were considered
adequate based on regulatory minimum capital requirements. BHC's common
shareholders' equity increased due to the retention of earnings, net of
dividends paid, of $884,000. BHC's common shareholders' equity also increased
due to the increase in the fair value of securities available for sale, net of
taxes, in the amount of $101,000. For regulatory purposes, the net unrealized
losses on securities available for sale, net of taxes, and the $2,185,000 of
goodwill acquired in the acquisition of Henry County Bank, are excluded in the
computation of the capital ratios.
The primary source of funds available to BHC is the payment of dividends by
the Banks. Banking regulations limit the amount of the dividends that may be
paid without prior approval of the Banks' regulatory agency. Approximately
$639,000 was available to be paid as dividends by the Banks at December 31,
1997. During 1997, the Banks paid a total of $625,000 in dividends to BHC
which allowed BHC to repay $15,000 on the debt that was incurred in the
acquisition of Henry County Bank and to pay normal dividends.
The minimum capital requirements to be considered well capitalized under
prompt corrective action provisions and the actual capital ratios for BHC and
the Banks as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
ACTUAL
------------------------------------------------
THE BANK THE BANK FIRST COMMUNITY
HOLDING OF SPALDING BANK OF HENRY REGULATORY
COMPANY COUNTY COUNTY REQUIREMENT
-------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Leverage capital ratio........ 6.84% 8.80% 8.43% 5.00%
Risk-based capital ratios:
Core capital................ 9.13 12.76 10.53 6.00
Total capital............... 10.38 14.01 11.51 10.00
</TABLE>
At December 31, 1997, BHC had no material commitments for capital
expenditures.
Management believes that its liquidity and capital resources are adequate
and will meet its foreseeable short and long-term needs. Management
anticipates that it will have sufficient funds available to meet current loan
commitments and to fund or refinance, on a timely basis, its other material
commitments and liabilities.
Management is not aware of any other known trends, events or uncertainties
that will have or that are reasonably likely to have a material effect on its
liquidity, capital resources or operations. Management is also not aware of
any current recommendations by the regulatory authorities which, if they were
implemented, would have such an effect.
97
<PAGE>
Effects of Inflation
The impact of inflation on banks differs from its impact on non-financial
institutions. Banks, as financial intermediaries, have assets which are
primarily monetary in nature and which tend to fluctuate in concert with
inflation. A bank can reduce the impact of inflation if it can manage its rate
sensitivity gap. This gap represents the difference between rate sensitive
assets and rate sensitive liabilities. BHC, through its asset-liability
committee, attempts to structure the assets and liabilities and manage the
rate sensitivity gap, thereby seeking to minimize the potential effects of
inflation. See "Asset/Liability Management" section.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Following is a summary of BHC's operations for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 INCREASE (DECREASE)
--------------------------------------------
1997 1996 AMOUNT PERCENT
----------- -------------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest income................... $ 11,269 $ 9,979 $ 1,290 12.93%
Interest expense.................. 5,123 4,489 634 14.12
Net interest income............... 6,146 5,490 656 11.95
Provision for loan losses......... 915 145 770 531.03
Other income...................... 1,185 1,298 (113) (8.71)
Other expenses.................... 4,407 4,222 185 4.38
Pretax income..................... 2,009 2,421 (412) (17.02)
Income taxes...................... 790 979 (189) (19.31)
Net income........................ 1,219 1,442 (223) (15.46)
</TABLE>
Net Interest Income
BHC's results of operations are determined by its ability to effectively
manage interest income and expense, to minimize loan and investment losses, to
generate non-interest income, and to control operating expenses. Since
interest rates are determined by market forces and economic conditions beyond
the control of BHC, BHC's ability to generate net interest income is dependent
upon its ability to obtain an adequate net interest spread between the rate
paid on interest-bearing liabilities and the rate earned on interest-earning
assets.
The net yield on average interest-earning assets increased in 1997 to 5.39%
from 5.38% in 1996. Average loans increased by $9.0 million which accounted
for the majority of a $12.0 million increase in total average interest-earning
assets. Average interest-bearing liabilities increased by $11.0 million with
average interest-bearing time deposits accounting for the vast majority of
this increase. The rate earned on average interest-earning assets increased to
9.88% in 1997 from 9.78% in 1996. The rate paid on average interest-bearing
liabilities was 5.40% in 1997 and 5.35% in 1996.
Provision for Loan Losses
The provision for loan losses increased to $915,000 in 1997 from $145,000 in
1996. This increase was due to increased net loan charge-offs of $373,000 in
1997 as compared to $131,000 in 1996, the net increase in the loan portfolio,
and increased classified loans. Loans are classified based upon regulatory
classifications of loss, doubtful, substandard, and special mention. The
majority of the loans that caused the increase in classified loans were
identified in the fourth quarter of 1997. Classified loans increased to
$6,995,000 at December 31, 1997 as compared to $2,651,000 at December 31,
1996. Of the total classified loans at December 31, 1997, 53% are classified
as substandard and 45% as special mention. Impaired loans, consisting solely
of nonaccrual loans, were $559,000 at December 31, 1997, and other
nonperforming assets, consisting of other real estate owned (OREO) was
$325,000, which is carried at the lower of cost or fair value. Selected ratios
concerning nonperforming loans and assets are as follows:
98
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1997 1996
------ ------
<S> <C> <C>
Net charge-offs to average loans............................. 0.43% 0.17%
Reserve for loan losses to total loans....................... 1.51% 1.06%
Reserve for loan losses to total loans and OREO.............. 1.51% 1.05%
Nonperforming assets to total loans and OREO................. 0.94% 0.45%
Reserve for loan losses to nonperforming loans............... 2.55:1 5.84:1
Reserve for loan losses to nonperforming assets.............. 1.61:1 2.35:1
</TABLE>
Based upon management's evaluation of the loan portfolio, management
believes the reserve for loan losses to be adequate to absorb possible losses
on existing loans that may become uncollectible. This evaluation considers
past loan loss experience, past due and classified loans, underlying
collateral values and current economic conditions which may affect the
borrower's ability to repay.
Other Income
Other operating income consists of service charges on deposit accounts,
gains on sale of mortgage loans, and other miscellaneous revenues and fees.
Other operating income decreased to $1,185,000 in 1997 from $1,298,000 in
1996. This decrease is due primarily to the decreased gains on sale of
mortgage loans of $73,000 and decreased other miscellaneous revenues and fees
of $42,000.
Non-interest Expense
The relatively small increase in non-interest expenses is due primarily to
controlled costs associated with continued operational efficiencies achieved
in 1997 and 1996. Salaries and employee benefits and other operating expenses
are the primary components of non-interest expense. Salaries and employee
benefits decreased to $1,985,000 in 1997 from $2,084,000 in 1996. Other
operating expenses increased to $1,558,000 in 1997 from $1,355,000 in 1996.
Income Tax
Income taxes, as a percentage of pre-tax income, decreased in 1997 to 39.32%
from 40.44% in 1996. The income tax rates are higher than the statutory
Federal income tax rate of 34% due primarily to state income taxes and the
non-deductibility of goodwill amortization.
Asset/Liability Management
It is BHC's objective to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash, loan, investment, borrowing, and capital policies. Certain
officers are charged with the responsibility for monitoring policies and
procedures that are designed to ensure acceptable composition of the
asset/liability mix. It is the overall philosophy of management to support
asset growth primarily through growth of core deposits of all categories made
by local individuals, partnerships, and corporations.
BHC's asset/liability mix is monitored on a regular basis with a report
reflecting the interest rate-sensitive assets and interest rate-sensitive
liabilities being prepared and presented to the Board of Directors of the
Banks on a monthly basis. The objective of this policy is to monitor interest
rate-sensitive assets and liabilities so as to minimize the impact of
substantial movements in interest rates on earnings. An asset or liability is
considered to be interest rate-sensitive if it will reprice or mature within
the time period analyzed, usually one year or less. The interest rate-
sensitivity gap is the difference between the interest-earning assets and
interest-bearing liabilities scheduled to mature or reprice within such time
period. A gap is considered positive when the amount of interest rate-
sensitive assets exceeds the amount of interest rate-sensitive liabilities. A
gap is considered negative when the amount of interest rate-sensitive
liabilities exceeds the interest rate-sensitive assets. During a period of
rising interest rates, a negative gap would tend to adversely affect net
interest income, while a positive
99
<PAGE>
gap would tend to result in an increase in net interest income. Conversely,
during a period of falling interest rates, a negative gap would tend to result
in an increase in net interest income, while a positive gap would tend to
adversely affect net interest income. If BHC's assets and liabilities were
equally flexible and moved concurrently, the impact of any increase or
decrease in interest rates on net interest income would be minimal.
A simple interest rate "gap" analysis by itself may not be an accurate
indicator of how net interest income will be affected by changes in interest
rates. Accordingly, BHC also evaluates how the repayment of particular assets
and liabilities is impacted by changes in interest rates. Income associated
with interest-earning assets and costs associated with interest-bearing
liabilities may not be affected uniformly by changes in interest rates. In
addition, the magnitude and duration of changes in interest rates may have a
significant impact on net interest income. For example, although certain
assets and liabilities may have similar maturities or periods of repricing,
they may react in different degrees to changes in market interest rates.
Interest rates on certain types of assets and liabilities fluctuate in advance
of changes in general market rates, while interest rates on other types may
lag behind changes in general market rates. In addition, certain assets, such
as adjustable rate mortgage loans, have features (generally referred to as
"interest rate caps and floors") which limit changes in interest rates.
Prepayment and early withdrawal levels also could deviate significantly from
those assumed in calculating the interest rate gap. The ability of many
borrowers to service their debts also may decrease during periods of rising
interest rates.
Changes in interest rates also affect BHC's liquidity position. BHC
currently prices deposits in response to market rates and it is management's
intention to continue this policy. If deposits are not priced in response to
market rates, a loss of deposits could occur which would negatively affect
BHC's liquidity position.
At December 31, 1997, BHC's cumulative one year interest rate-sensitivity
gap ratio was 95%. BHC's targeted ratio is 80% to 120% in this time horizon.
This indicates that BHC's interest-earning assets will reprice during this
period at a rate slightly slower than BHC's interest-bearing liabilities. BHC
is within its targeted parameters and net interest income should not be
significantly affected by changes in interest rates. It is also noted that
over 83% of BHC's certificates of deposit greater than $100,000 mature within
the one year time horizon. The majority of these deposits are from established
customers. It is management's belief that as long as BHC pays the prevailing
market rate on these type deposits, BHC's liquidity, while not assured, will
not be negatively affected.
The following table sets forth the distribution of the repricing of BHC's
interest-earning assets and interest- bearing liabilities as of December 31,
1997, the interest rate-sensitivity gap, the cumulative interest rate-
sensitivity gap, the interest rate-sensitivity gap ratio and the cumulative
interest rate-sensitivity gap ratio. The table also sets forth the time
periods in which earning assets and liabilities will mature or may reprice in
accordance with their contractual terms. However, the table does not
necessarily indicate the impact of general interest rate movements on the net
interest margin since the repricing of various categories of assets and
liabilities is subject to competitive pressures and the needs of BHC's
customers. In addition, various assets and liabilities indicated as repricing
within the same period may in fact, reprice at different times within such
period and at different rates.
100
<PAGE>
<TABLE>
<CAPTION>
AFTER THREE AFTER ONE
WITHIN MONTHS YEAR BUT
THREE BUT WITHIN WITHIN AFTER FIVE
MONTHS ONE YEAR FIVE YEARS YEARS TOTAL
------- ----------- ---------- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Federal funds sold......... $ 5,350 $ -- $ -- $ -- $ 5,350
Securities................. 3,467 5,297 7,967 6,483 23,214
Loans...................... 43,430 19,512 30,429 662 94,033
------- -------- ------- ------- -------
52,247 24,809 38,396 7,145 122,597
------- -------- ------- ------- -------
Interest-bearing liabilities:
Interest-bearing demand
deposits.................. 16,237 -- -- -- --
Savings...................... 4,826 -- -- -- 4,826
Certificates, less than
$100,000.................... 9,668 32,860 18,314 -- 60,842
Certificates $100,00 and
over........................ 5,331 11,232 3,389 -- 19,952
Federal funds purchased...... 1,245 -- -- -- 1,245
Debentures payable........... -- 15 47 -- 62
------- -------- ------- ------- -------
37,307 44,107 21,750 -- 103,164
------- -------- ------- ------- -------
Interest rate sensitivity
gap......................... $14,940 $(19,298) $16,646 $ 7,415 $19,433
======= ======== ======= ======= =======
Cumulative interest rate
sensitivity gap............. $14,940 $ (4,358) $12,288 $19,433 $19,433
======= ======== ======= ======= =======
Interest rate sensitivity gap
ratio....................... 1.40 0.56 1.77 --
======= ======== ======= =======
Cumulative interest rate
sensitivity gap ratio....... 1.40 0.95 1.12 1.19
======= ======== ======= =======
</TABLE>
Capability of BHC's Data Processing Software to Accommodate the Year 2000
Like many financial institutions, BHC and its subsidiaries rely upon
computers for the daily conduct of their business and for data processing
generally. There is concern among industry experts that commencing on January
1, 2000, computers will be unable to "read" the new year and that there may be
widespread computer malfunctions. Management of BHC has assessed the
electronic systems, programs, applications, and other electronic components
used in the operations of BHC and believes that BHC's hardware and software
has been programmed to be able to accurately recognize the Year 2000, and that
significant additional costs will not be incurred in connection with the Year
2000 issue, although there can be no assurances in this regard.
101
<PAGE>
SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA
The tables and schedules on the following pages set forth certain
significant financial information and data with respect to: the distribution
of assets, liabilities and common stockholders' equity of BHC, the interest
rates and interest differentials experienced by BHC; the investment portfolio
of BHC; the loan portfolio of BHC, including types of loans, maturities, and
sensitivities of loans to changes in interest rates and information on
nonperforming loans; summary of the loan loss experience and reserves for loan
losses of BHC; types of deposits of BHC and the return on equity and assets
for BHC.
DISTRIBUTION OF ASSETS, LIABILITIES, AND
COMMON STOCKHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIALS
AVERAGE BALANCES
The condensed average balance sheets for the periods indicated are presented
below. (1)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1997 1996
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 3,030 $ 3,086
Taxable securities.......................................... 21,975 19,929
Nontaxable securities....................................... 611 326
Securities valuation account................................ (291) (371)
Federal funds sold.......................................... 4,310 3,610
Loans (2)................................................... 87,173 78,145
Reserve for loan losses..................................... (874) (868)
Other assets................................................ 9,338 7,808
-------- --------
$125,272 $111,665
======== ========
Total interest-earning assets............................... $114,069 $102,010
======== ========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand................................. $ 15,166 $ 14,084
Interest-bearing demand.................................... 16,529 16,193
Savings.................................................... 5,016 5,126
Time....................................................... 72,772 61,982
-------- --------
Total deposits........................................... 109,483 97,385
Federal funds purchased.................................... 500 202
Note payable............................................... -- 250
Debentures payable......................................... 77 92
Other liabilities.......................................... 2,123 1,827
-------- --------
Total liabilities........................................ 112,183 99,756
-------- --------
Preferred stock............................................ 2,446 2,446
-------- --------
Common stockholders' equity................................ 10,643 9,463
-------- --------
$125,272 $111,665
======== ========
Total interest-bearing liabilities......................... $ 94,894 $ 83,845
======== ========
</TABLE>
- --------
(1) Average balances were determined using the daily average balances during
the year for each category.
(2) Average loans include nonaccrual loans and are stated net of unearned
income.
102
<PAGE>
INTEREST INCOME AND INTEREST EXPENSE
The following tables set forth the amount of BHC's interest income and
interest expense for each category of interest-earning assets and interest-
bearing liabilities and the average interest rate for total interest-earning
assets and total interest-bearing liabilities, net interest spread and net
yield on average interest-earning assets.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1996
---------------- ----------------
AVERAGE AVERAGE
INTEREST RATE INTEREST RATE
-------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans (1).............. $ 9,693 11.12% $8,622 11.03%
Interest on taxable securities.............. 1,304 5.93 1,139 5.71
Interest on nontaxable securities (2)....... 34 5.48 22 6.86
Interest on Federal funds sold.............. 238 5.53 196 5.42
------- ------
Total interest income....................... 11,269 9.88 9,979 9.78
------- ------
INTEREST EXPENSE:
Interest on interest-bearing demand depos-
its........................................ 538 3.25 542 3.35
Interest on savings deposits................ 155 3.08 162 3.15
Interest on time deposits................... 4,404 6.05 3,741 6.04
Interest on Federal funds purchased......... 20 4.11 13 6.54
Interest on note payable.................... -- -- 24 9.76
Interest on debentures...................... 6 8.00 7 8.27
------- ------
Total interest expense...................... 5,123 5.40 4,489 5.35
------- ------
NET INTEREST INCOME.......................... $ 6,146 $5,490
======= ======
Net interest spread......................... 4.48% 4.43%
===== =====
Net yield on average interest-earning as-
sets....................................... 5.39% 5.38%
===== =====
</TABLE>
- --------
(1) Interest and fees on loans includes $922,000 and $897,000 of loan fee
income for the years ended December 31, 1997 and 1996, respectively. There
was $4,000 of interest income recognized on nonaccrual loans during 1997
and none in 1996.
(2) Yields on nontaxable securities have not been computed on a tax equivalent
basis.
103
<PAGE>
RATE AND VOLUME ANALYSIS
The following table describes the extent to which changes in interest rates
and changes in volume of interest-earning assets and interest-bearing
liabilities have affected BHC's interest income and expense during the year
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (1) change in
volume (change in volume multiplied by old rate); (2) change in rate (change
in rate multiplied by old volume); and (3) a combination of change in rate and
change in volume. The changes in interest income and interest expense
attributable to both volume and rate have been allocated proportionately on a
consistent basis to the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997 VS. 1996
CHANGES DUE TO:
------------------------
INCREASE
RATE VOLUME (DECREASE)
---- ------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Increase (decrease) in:
Income from interest-earning assets:
Interest and fees on loans............................ $ 70 $1,001 $1,071
Interest on taxable securities........................ 45 120 165
Interest on nontaxable securities..................... (5) 17 12
Interest on Federal funds sold........................ 4 38 42
---- ------ ------
Total interest income............................... 114 1,176 1,290
---- ------ ------
Expense from interest-bearing liabilities:
Interest on interest-bearing demand deposits.......... (15) 11 (4)
Interest on savings deposits.......................... (4) (3) (7)
Interest on time deposits............................. 10 653 663
Interest on Federal funds purchased................... (6) 13 7
Interest on note payable.............................. -- (24) (24)
Interest on debentures................................ -- (1) (1)
---- ------ ------
Total interest expense.............................. (15) 649 634
---- ------ ------
Net interest income................................. $129 $ 527 $ 656
==== ====== ======
</TABLE>
104
<PAGE>
INVESTMENT PORTFOLIO
TYPES OF INVESTMENTS
The carrying amounts of securities at the dates indicated, which are all
classified as available-for-sale, are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1996
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
U.S. Treasury and other U.S. Government agencies and corpora-
tions......................................................... $18,917 $16,551
Municipal securities........................................... 807 643
Mortgage-backed securities..................................... 2,842 3,576
Equity securities.............................................. 648 625
------- -------
$23,214 $21,395
======= =======
</TABLE>
MATURITIES
The amounts of securities in each category as of December 31, 1997 are shown
in the following table according to contractual maturity classifications (1)
one year or less, (2) after one year through five years, (3) after five years
through ten years and (4) after ten years. Equity securities are not included
in the table because they have no contractual maturity.
<TABLE>
<CAPTION>
AFTER ONE YEAR AFTER FIVE
THROUGH FIVE YEARS THROUGH
ONE YEAR OR LESS YEARS TEN YEARS AFTER TEN YEARS TOTAL
---------------- --------------- --------------- --------------- ----------------
AMOUNT YIELD(1) AMOUNT YIELD(1) AMOUNT YIELD(1) AMOUNT YIELD(1) AMOUNT YIELD(1)
------- -------- ------ -------- ------ -------- ------ -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and other
U.S. Government
agencies and
corporations........... $ 4,215 4.79% $8,550 5.74% $6,152 6.62% $ -- -- % $18,917 5.81%
Municipal securities
(2).................... 72 6.78 418 5.34 22 7.75 295 4.83 807 5.35
Mortgage-backed
securities............. -- -- -- -- -- -- 2,842 5.04 2,842 5.04
------- ---- ------ ---- ------ ----- ------ ---- ------- ----
$ 4,287 4.82 $8,968 5.72 $6,174 6.62 $3,137 5.02 $22,566 5.70
======= ==== ====== ==== ====== ===== ====== ==== ======= ====
</TABLE>
- --------
(1) Yields were computed using coupon interest, adding discount accretion or
subtracting premium amortization, as appropriate, on a ratable basis over
the life of each security. The weighted average yield for each maturity
range was computed using the carrying value of each security in that
range.
(2)Yields on municipal securities have not been computed on a tax equivalent
basis.
LOAN PORTFOLIO
TYPES OF LOANS
The amount of loans outstanding at the indicated dates are shown in the
following table according to the type of loan.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1996
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Commercial and financial...................................... $ 9,050 $ 5,269
Real estate-construction...................................... 18,928 19,441
Real estate-mortgage.......................................... 55,732 49,834
Consumer installment loans and other.......................... 10,323 8,706
------- -------
94,033 83,250
Less allowance for loan losses................................ (1,424) (882)
------- -------
Net loans.................................................... $92,609 $82,368
======= =======
</TABLE>
105
<PAGE>
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
Total loans as of December 31, 1997 are shown in the following table
according to contractual maturity classifications (1) one year or less, (2)
after one year through five years, and (3) after five years. The disclosure
of loans by the required categories, commercial and financial and real
estate--construction, is not available and would involve undue burden and
expense to BHC. In making this determination, BHC has considered the estimated
cost to compile the required information and its current electronic data
processing capability.
<TABLE>
<CAPTION>
(DOLLARS
IN
THOUSANDS)
<S> <C>
Maturity:
One year or less................................................. $55,524
After one year through five years................................ 37,550
After five years................................................. 959
-------
$94,033
=======
</TABLE>
The following table summarizes loans at December 31, 1997 with the due dates
after one year which have predetermined and floating or adjustable interest
rates.
<TABLE>
<CAPTION>
(DOLLARS
IN
THOUSANDS)
<S> <C>
Predetermined interest rates...................................... $36,568
Floating or adjustable interest rates............................. 1,941
-------
$38,509
=======
</TABLE>
RISK ELEMENTS
Information with respect to nonaccrual, past due, and restructured loans at
December 31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans....................................... $ 559 $ 51
Loans contractually past due ninety days or more as to
interest or principal payments and still accruing..... 76 126
Restructured loans..................................... -- --
Loans, now current about which there are serious doubts
as to the ability of the borrower to comply with loan
repayment terms....................................... -- --
Interest income that would have been recorded on
nonaccrual and restructured loans under original
terms................................................. 15 4
Interest income that was recorded on nonaccrual and
restructured loans.................................... 4 --
</TABLE>
It is the policy of the Banks to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a
significant deterioration in the financial condition of the borrower and full
repayment of principal and interest is not expected and (2) the principal or
interest is more than ninety days past due, unless the loan is both well-
secured and in the process of collection.
The interest income information on nonaccrual and restructured loans in the
above table is not comparable with the interest income information on impaired
loans as disclosed in Note 3 of the financial statements. The above table
includes interest income information only on nonaccrual and restructured loans
that were outstanding at the end of the year. The financial statements include
interest income information on impaired loans that were outstanding throughout
the year. Also, the interest income information in the above table represents
the interest that could have been earned during the entire year. The interest
income information on impaired loans in the financial statements represents
the interest that was recognized only during the period of impairment.
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Loans classified for regulatory purposes as loss, 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 material credits about
which management is aware of any information which causes management to have
serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes average loan balances for each year
determined using the daily average balances during the year; changes in the
allowance for loan losses arising from loans charged off and recoveries on
loans previously charged off; additions to the allowance which have been
charged to operating expense; and the ratio of net charge-offs during the
period to average loans.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1997 1996
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Average amount of loans outstanding.............. $ 87,173 $ 78,145
============ ============
Balance of allowance for loan losses
at beginning of period.......................... $ 882 $ 868
------------ ------------
Loans charged off
Commercial and financial....................... 88 --
Real estate mortgage........................... 112 104
Installment.................................... 206 73
------------ ------------
406 177
------------ ------------
Loans recovered
Commercial and financial....................... -- --
Real estate mortgage........................... -- 29
Installment.................................... 33 17
------------ ------------
33 46
------------ ------------
Net charge-offs.................................. 373 131
------------ ------------
Additions to allowance charged to operating
expense during period........................... 915 145
------------ ------------
Balance of allowance for loan losses
at end of period................................ $ 1,424 $ 882
============ ============
Ratio of net loans charged off during the
period to average loans outstanding............. 0.43% 0.17%
============ ============
</TABLE>
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and inherent risks in
the loan portfolio. Management's evaluation of the loan portfolio includes a
periodic review of loan loss experience, current economic conditions which may
affect the borrower's ability to pay and the underlying collateral value of
the loans.
107
<PAGE>
As of December 31, 1997 and 1996, management had made no allocations of its
allowance for loan losses to specific categories of loans. Based on
mangement's best estimate, the allocation of the allowance for loan losses to
types of loans, as of the indicated dates, is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
PERCENT OF LOANS PERCENT OF LOANS
IN EACH CATEGORY IN EACH CATEGORY
AMOUNT TO TOTAL LOANS AMOUNT TO TOTAL LOANS
------ ----------------- ------ -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial and financial...... $ 142 10% $ 89 6%
Real estate--construction..... 214 20 132 23
Real estate--mortgage......... 641 59 397 60
Consumer installment
loans and other.............. 427 11 264 11
------ --- ---- ---
$1,424 100% $882 100%
====== === ==== ===
</TABLE>
DEPOSITS
Average amount of deposits and average rates paid thereon, classified as to
noninterest-bearing demand deposits, interest-bearing demand deposits, savings
deposits, and time deposits, for the years indicated are presented below. (1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996
---------------- ---------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits............ $ 15,166 --% $14,084 --%
Interest-bearing demand deposits............... 16,529 3.25 16,193 3.35
Savings deposits............................... 5,016 3.08 5,126 3.15
Time deposits.................................. 72,772 6.05 61,982 6.04
-------- -------
Total deposits............................... $109,483 $97,385
======== =======
</TABLE>
- --------
(1) Average balances were determined using the daily average balances during
the year for each category.
The amounts of time certificates of deposit issued in amounts of $100,000 or
more as of December 31, 1997 are shown below by category, which is based on
time remaining until maturity of (1) three months or less, (2) over three
through six months, (3) over six through twelve months, and (4) over twelve
months.
<TABLE>
<S> <C>
(DOLLARS IN
THOUSANDS)
Three months or less............................................. $ 5,331
Over three months through six months............................. 5,114
Over six through twelve months................................... 6,118
Over twelve months............................................... 3,389
-----------
Total.......................................................... $ 19,952
===========
</TABLE>
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<PAGE>
RETURN ON ASSETS AND COMMON STOCKHOLDERS' EQUITY
The following rate of return information for the years indicated is presented
below.
<TABLE>
<S> <C> <C>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996
----------- -----------
Return on assets (1)............................... 0.97% 1.29%
Return on equity (2)............................... 11.45 15.24
Dividend payout ratio (3).......................... 13.59 11.16
Equity to assets ratio (4)......................... 8.50 8.47
</TABLE>
- --------
(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Dividends declared per share of common stock divided by net income per
share.
(4) Average common equity divided by average total assets.
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<PAGE>
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth the material elements of the regulatory
framework applicable to banks, thrifts, and bank and thrift holding companies
and provides certain specific information related to Premier, Button Gwinnett
and BHC.
GENERAL
Premier is a bank holding company registered with the Federal Reserve and
the Georgia Department under the Bank Holding Company Act and the Georgia Bank
Holding Company Act, respectively. As such, Premier is subject to the
supervision, examination and reporting requirements of the Bank Holding
Company Act and the Georgia Bank Holding Company Act and the regulations of
the Federal Reserve, and the Georgia Department promulgated under such Acts.
Premier is also a thrift holding company registered with the Office of Thrift
Supervision (the "OTS") under the Federal Home Owners' Loan Act and the
Georgia Bank Holding Company Act. As a thrift holding company, Premier is
subject to the regulation, supervision, examination and reporting requirements
of the OTS and the Georgia Department. Button Gwinnett and BHC are also bank
holding companies registered with the Federal Reserve and the Georgia
Department under the Bank Holding Company Act and the Georgia Bank Holding
Company Act, respectively. As such, Button Gwinnett and BHC are subject to the
supervision, examination and reporting requirements of the Bank Holding
Company Act and the Georgia Bank Holding Company Act, the regulations of the
Federal Reserve, and the Georgia Department promulgated under such Acts.
The Bank Holding Company Act requires every bank holding company to obtain
the prior approval of the Federal Reserve before: (i) it may acquire direct or
indirect ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or
control more than 5% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company. Similar federal statutes require thrift holding companies and
other companies to obtain prior approval of the OTS before acquiring direct or
indirect ownership or control of a savings bank or savings association.
The Bank Holding Company Act further provides that the Federal Reserve may
not approve any transaction that would result in a monopoly or would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any section of the United States, or the
effect of which may be substantially to lessen competition or to tend to
create a monopoly in any section of the country, or that in any other manner
would be in restraint of trade, unless the anticompetitive effects of the
proposed transaction are clearly outweighed by the public interest in meeting
the convenience and needs of the communities to be served. The Federal Reserve
is also required to consider the financial and managerial resources and future
prospects of the bank holding companies and banks involved and the convenience
and needs of the communities to be served. Consideration of financial
resources generally focuses on capital adequacy, and consideration of
convenience and needs issues focuses, in part, on the parties' performance
under the Community Reinvestment Act of 1977 ("CRA"), both of which are
discussed in more detail below.
The Bank Holding Company Act, as amended by the interstate banking
provisions of the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Interstate Banking Act"), which became effective on September
29, 1995, repealed the prior statutory restrictions on interstate acquisitions
of banks by bank holding companies, such that Premier, Button Gwinnett, BHC
and any other bank holding company located in Georgia may now acquire a bank
located in any other state, and any bank holding company located outside of
Georgia may lawfully acquire any Georgia-based bank, regardless of state law
to the contrary, in either case subject to certain deposit-percentage, aging
requirements, and other restrictions. The Interstate Banking Act also
generally provides that, as of June 1, 1997, national and state-chartered
banks may now branch interstate through acquisitions of banks in other states.
110
<PAGE>
In response to the Interstate Banking Act, the Georgia General Assembly
adopted the Georgia Interstate Banking Act which was effective on July 1,
1995. The Georgia Interstate Banking Act provides that (i) interstate
acquisitions by institutions located in Georgia will be permitted in states
which also allow national interstate acquisitions, and (ii) interstate
acquisitions of institutions located in Georgia will be permitted by
institutions located in states which allow national interstate acquisitions.
Additionally, on January 26, 1996, the Georgia General Assembly adopted the
Georgia Interstate Branching Act which permits Georgia-based banks and bank
holding companies owning or acquiring banks outside of Georgia and all non-
Georgia banks and bank holding companies owning or acquiring banks in Georgia
the right to merge any lawfully acquired bank into an interstate branch
network. The Georgia Interstate Branching Act also allows banks to establish
de novo branches on a limited basis beginning July 1, 1996. Beginning July 1,
1998, the number of de novo branches which may be established will no longer
be limited.
The Bank Holding Company Act generally prohibits a bank holding company from
engaging in activities other than banking or managing or controlling banks or
other permissible subsidiaries and from acquiring or retaining direct or
indirect control of any company engaged in any activities other than those
activities determined by the Federal Reserve to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
In determining whether a particular activity is permissible, the Federal
Reserve must consider whether the performance of such an activity reasonably
can be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased
or unfair competition, conflicts of interest, or unsound banking practices.
For example, factoring accounts receivable, acquiring or servicing loans,
leasing personal property, conducting discount securities brokerage
activities, performing certain data processing services, acting as agent or
broker in selling credit life insurance and certain other types of insurance
in connection with credit transactions, and performing certain insurance
underwriting activities all have been determined by the Federal Reserve to be
permissible activities of bank holding companies. The Bank Holding Company Act
does not place territorial limitations on permissible non-banking activities
of bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a bank holding company or its subsidiaries to terminate any
activity or to terminate its ownership or control of any subsidiary when it
has reasonable cause to believe that continuation of such activity or such
ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiary of that bank holding company.
Each bank and thrift subsidiary of Premier is a member of the Federal
Deposit Insurance Corporation (the "FDIC"), and as such, its deposits are
insured by the FDIC to the maximum extent provided by law. Similarly, each
bank subsidiary of Button Gwinnett and BHC is a member of the FDIC, and its
deposits are insured by the FDIC to the maximum extent provided by law.
Premier Bank, Central and Southern Bank, Citizens Bank, The Bank of Gwinnett
County, Henry County Bank and Spalding County Bank are subject to regulation,
supervision, and examination by the FDIC and the Georgia Department. Central
and Southern Bank of North Georgia is subject to regulation, supervision, and
examination by the OTS and the FDIC. The FDIC and the Georgia Department
regularly examine the operations of Premier Bank, Central and Southern Bank,
Citizens Bank, The Bank of Gwinnett County, Henry County Bank, and Spalding
County Bank and are given the authority to approve or disapprove mergers,
consolidations, the establishment of branches, and similar corporate actions.
The FDIC and the Georgia Department also have the power to prevent the
continuance or development of unsafe or unsound banking practices or other
violations of law. Central and Southern Bank of North Georgia is similarly
examined by the FDIC and the OTS, and is subject to the prior approval
requirements of the FDIC and the OTS with respect to mergers, consolidations,
the establishment of branches, and similar corporate actions.
PAYMENT OF DIVIDENDS
Premier, Button Gwinnett and BHC are legal entities separate and distinct
from their banking and other subsidiaries. The principal sources of cash flow
of Premier, including cash flow to pay dividends to its
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<PAGE>
shareholders, are dividends from Premier Bank, Premier Lending, Central and
Southern Bank, Central and Southern Bank of North Georgia and Citizens Bank.
The principal source of cash flow of Button Gwinnett, including cash flow to
pay dividends to its shareholders, is dividends from The Bank of Gwinnett
County. The principal sources of cash flow of BHC, including cash flow to pay
dividends to its shareholders, are dividends from Henry County Bank and
Spalding County Bank. There are statutory and regulatory limitations on the
payment of dividends by Premier Bank, Central and Southern Bank, Central and
Southern Bank of North Georgia and Citizens Bank to Premier; The Bank of
Gwinnett County to Button Gwinnett; and Henry County Bank and Spalding County
Bank to BHC; as well as by Premier, Button Gwinnett and BHC to their
respective shareholders.
If, in the opinion of the federal banking regulators, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such
authority may require, after notice and hearing, that such institution cease
and desist from such practice. The federal banking agencies have indicated
that paying dividends that deplete a depository institution's capital base to
an inadequate level would be an unsafe and unsound banking practice. Under the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a
depository institution may not pay any dividend if payment would cause it to
become undercapitalized or if it already is undercapitalized. See "--Prompt
Corrective Action." Moreover, the federal agencies have issued policy
statements that provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
At December 31, 1997, under dividend restrictions imposed under federal and
state laws, Premier Bank, Central and Southern Bank, Central and Southern Bank
of North Georgia and Citizens Bank, without obtaining governmental approvals,
could declare aggregate dividends to Premier of approximately $5.7 million. At
December 31, 1997, retained earnings available from The Bank of Gwinnett
County to pay dividends to Button Gwinnett totaled approximately $2.4 million.
At December 31, 1997, retained earnings available from Henry County Bank and
Spalding County Bank to pay dividends to BHC totaled approximately $639,000.
The payment of dividends by Premier, Button Gwinnett and BHC and their
respective subsidiaries may also be affected or limited by other factors, such
as the requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Premier, Button Gwinnett and BHC and their respective bank and thrift
subsidiaries are required to comply with the capital adequacy standards
established by the Federal Reserve in the case of Premier, Button Gwinnett and
BHC, and the appropriate federal banking regulator in the case of each bank
and thrift subsidiary. There are two basic measures of capital adequacy for
bank holding companies that have been promulgated by the Federal Reserve: a
risk-based measure and a leverage measure. All applicable capital standards
must be satisfied for a bank holding company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and
bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items are assigned to broad risk categories, each with appropriate weights.
The resulting capital ratios represent capital as a percentage of total risk-
weighted assets and off-balance-sheet items.
The minimum guideline for the ratio (the "Total Risk-Based Capital Ratio")
of total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8%. At least
half of Total Capital must be comprised of common stock, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries and
noncumulative perpetual preferred stock, less goodwill and certain other
intangible assets ("Tier 1 Capital"). The remainder may consist of
subordinated debt, other preferred stock, and a limited amount of loan loss
reserves ("Tier 2 Capital"). At December 31, 1997, Premier's consolidated
Total Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e.,
the ratio of Tier 1
112
<PAGE>
Capital to risk-weighted assets) were 16.29% and 14.07%, respectively. At
December 31, 1997, Button Gwinnett's consolidated Total Risk-Based Capital
Ratio and its Tier 1 Risk-Based Capital Ratio were 16.4% and 15.1%,
respectively. At December 31, 1997, BHC's consolidated Total Risk-Based
Capital Ratio and its Tier 1 Risk-Based Capital Ratio were 10.38% and 9.13%,
respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less
goodwill and certain other intangible assets, of 3% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3%, plus an additional cushion of 100 to 200 basis
points. Premier's Leverage Ratio at December 31, 1997 was 11.37%. Button
Gwinnett's Leverage Ratio at December 31, 1997 was 11.65%. BHC's Leverage
Ratio at December 31, 1997 was 6.84%. The guidelines also provide that bank
holding companies experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Each of the depository institution subsidiaries of Premier, Button Gwinnett
and BHC is subject to risk-based and leverage capital requirements adopted by
their respective federal banking regulators, which are substantially similar
to those adopted by the Federal Reserve for bank holding companies. Each of
these subsidiary depository institutions was in compliance with applicable
minimum capital requirements as of December 31, 1997. Neither Premier, Button
Gwinnett, BHC nor any of their respective subsidiary depository institutions
has been advised by any federal banking agency of any specific minimum capital
ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift to a
variety of enforcement remedies, including issuance of a capital directive,
the termination of deposit insurance by the FDIC, a prohibition on the taking
of brokered deposits, and certain other restrictions on its business. As
described below, substantial additional restrictions can be imposed upon FDIC-
insured depository institutions that fail to meet applicable capital
requirements. See "--Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve and the FDIC have, pursuant to
FDICIA, recently adopted final regulations, requiring regulators to consider
interest rate risk (when the interest rate sensitivity of an institution's
assets does not match the sensitivity of its liabilities or its off-balance
sheet position) in the evaluation of a bank's capital adequacy. The bank
regulatory agencies have concurrently proposed a methodology for evaluating
interest rate risk which would require banks with excessive interest rate risk
exposure to hold additional amounts of capital against such exposures. The OTS
has already included an interest-rate risk component in its risk-based capital
guidelines for savings associations that it regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Premier, Button Gwinnett and BHC are expected
to act as a source of financial strength for, and to commit resources to
support, each of their depository institution subsidiaries. This support may
be required at times when, absent such Federal Reserve policy, Premier, Button
Gwinnett and BHC may not be inclined to provide it. In addition, any capital
loans by a bank holding company to any of its depository institution
subsidiaries are subordinate in right of payment to deposits and to certain
other indebtedness of such depository institutions. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a depository
institution subsidiary will be assumed by the bankruptcy trustee and entitled
to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in
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<PAGE>
connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to any
commonly controlled FDIC-insured depository institution "in danger of
default." "Default" is defined generally as the appointment of a conservator
or receiver, and "in danger of default" is defined generally as the existence
of certain conditions indicating that a default is likely to occur in the
absence of regulatory assistance. The FDIC's claim for damages is superior to
claims of shareholders of the insured depository institution or its holding
company, but is subordinate to claims of depositors, secured creditors, and
holders of subordinated debt (other than affiliates) of the commonly
controlled insured depository institution. As a result, any loss suffered by
the FDIC in respect of any of the subsidiaries of Premier would likely result
in assertion of the cross-guarantee provisions, the assessment of such
estimated losses against the depository institution's banking or thrift
affiliates, and a potential loss of Premier's investment in such other
subsidiary depository institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions
in the three undercapitalized categories, the severity of which will depend
upon the capital category in which the institution is placed. Generally,
subject to a narrow exception, FDICIA requires the banking regulator to
appoint a receiver or conservator for an institution that is critically
undercapitalized. The federal banking agencies have specified by regulation
the relevant capital level for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Risk-Based Capital Ratio of
10% or greater, a Tier 1 Risk-Based Capital Ratio of 6.0% or greater, and a
Leverage Ratio of 5.0% or greater and (ii) is not subject to any written
agreement, order, capital directive, or prompt corrective action directive
issued by the appropriate federal banking agency is deemed to be well
capitalized. An institution with a Total Risk-Based Capital Ratio of 8.0% or
greater, a Tier 1 Risk-Based Capital Ratio of 4.0% or greater, and a Leverage
Ratio of 4.0% or greater is considered to be adequately capitalized. A
depository institution that has a Total Risk-Based Capital Ratio of less than
8.0%, a Tier 1 Risk-Based Capital Ratio of less than 4.0%, or a Leverage Ratio
of less than 4.0% is considered to be undercapitalized. A depository
institution that has a Total Risk-Based Capital Ratio of less than 6.0%, a
Tier 1 Risk-Based Capital Ratio of less than 3.0%, or a Leverage Ratio of less
than 3.0% is considered to be significantly undercapitalized, and an
institution that has a tangible equity capital to assets ratio equal to or
less than 2.0% is deemed to be critically undercapitalized. For purposes of
the regulation, the term "tangible equity" includes core capital elements
counted as Tier 1 Capital for purposes of the risk-based capital standards,
plus the amount of outstanding cumulative perpetual preferred stock (including
related surplus), minus intangible assets with certain exceptions. A
depository institution may be deemed to be in a capitalization category that
is lower than is indicated by its actual capital position if it receives an
unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary
depository institution meets its capital restoration plan, subject to certain
limitations. The obligation of a controlling holding company under FDICIA to
fund a capital restoration plan is limited to the lesser of 5% of an
undercapitalized subsidiary's assets or the amount required to meet regulatory
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches, or engaging in any new line of business, except in
accordance with an accepted capital restoration plan or with the approval of
the FDIC. In addition, the appropriate federal banking regulator is given
authority with respect to any undercapitalized depository institution to take
any of the actions it is required to or may take with respect to a
significantly undercapitalized institution as described below if it determines
"that those actions are necessary to carry out the purpose" of FDICIA.
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<PAGE>
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the
appropriate federal banking agency must require the institution to take one or
more of the following actions: (i) sell enough shares, including voting
shares, to become adequately capitalized; (ii) merge with (or be sold to)
another institution (or holding company), but only if grounds exist for
appointing a conservator or receiver; (iii) restrict certain transactions with
banking affiliates as if the "sister bank" exception to the requirements of
Section 23A of the Federal Reserve Act did not exist; (iv) otherwise restrict
transactions with bank or non-bank affiliates; (v) restrict interest rates
that the institution pays on deposits to "prevailing rates" in the
institution's "region;" (vi) restrict asset growth or reduce total assets;
(vii) alter, reduce, or terminate activities; (viii) hold a new election of
directors; (ix) dismiss any director or senior executive officer who held
office for more than 180 days immediately before the institution became
undercapitalized, provided that in requiring dismissal of a director or senior
executive officer, the regulator must comply with certain procedural
requirements, including the opportunity for an appeal in which the director or
officer will have the burden of proving his or her value to the institution;
(x) employ "qualified" senior executive officers; (xi) cease accepting
deposits from correspondent depository institutions; (xii) divest certain
nondepository affiliates which pose a danger to the institution; or (xiii) be
divested by a parent holding company. In addition, without the prior approval
of the appropriate federal banking regulator, a significantly undercapitalized
institution may not pay any bonus to any senior executive officer or increase
the rate of compensation for such an officer.
At December 31, 1997, Premier Bank, Central and Southern Bank, Central and
Southern Bank of North Georgia, Citizens Bank, The Bank of Gwinnett County,
Henry County Bank and Spalding County Bank had the requisite capital levels to
qualify as "well capitalized."
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994, assigns an institution to
one of three capital categories: (i) well capitalized; (ii) adequately
capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based
on a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to
which it is assigned. Under the final risk-based assessment system, as well as
the prior transitional system, there are nine assessment risk classifications
(i.e., combinations of capital groups and supervisory subgroups) to which
different assessment rates are applied. Assessment rates for members of both
the Bank Insurance Fund ("BIF") and the Savings Association Insurance Fund
("SAIF") for the first half of 1995, as they had during 1994, ranged from 23
basis points (0.23% of deposits) for an institution in the highest category
(i.e., "well capitalized" and "healthy") to 31 basis points (0.31% of
deposits) for an institution in the lowest category (i.e., "undercapitalized"
and "substantial supervisory concern"). These rates were established for both
funds to achieve a designated ratio of reserves to insured deposits (i.e.,
1.25%) within a specified period of time.
Once the designated ratio for the BIF was reached in May 1995, the FDIC
reduced the assessment rate applicable to BIF deposits in two stages, so that,
beginning in 1996, the deposit insurance premiums for 92% of all BIF members
in the highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size. The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable
future given the undercapitalized nature of that insurance fund.
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Recognizing that the disparity between the SAIF and BIF premium rates have
adverse consequences for the SAIF insured institutions and other banks with
SAIF assessed deposits, including reduced earnings and an impaired ability to
raise funds in capital markets and to attract deposits, in July 1995, the
FDIC, the Treasury Department, and the OTS released statements outlining a
proposed plan to recapitalize the SAIF, the principal feature of which was a
special one-time assessment on depository institutions holding SAIF-insured
deposits, which was intended to recapitalize the SAIF at a reserve ratio of
1.25%. This proposal contemplated elimination of the disparity between the
assessment rates on BIF and SAIF deposits following recapitalization of the
SAIF.
A variation of this proposal designated the Deposit Insurance Funds Act of
1996 ("DIFA") was enacted by Congress as part of the omnibus budget
legislation and signed into law on September 30, 1996. As directed by DIFA,
the FDIC implemented a special one-time assessment of approximately 65.7 basis
points (0.657%) on a depository institution's SAIF-insured deposits held as of
March 31, 1995 (or approximately 52.6 basis points on SAIF deposits acquired
by banks in certain qualifying transactions). In addition, the FDIC has
implemented a revision in the SAIF assessment rate schedule which effected, as
of October 1, 1996 (i) a widening in the assessment rate spread among
institutions in the different capital and risk assessment categories, (ii) an
overall reduction of the assessment rate range assessable on SAIF deposits of
from 0 to 27 points, and (iii) a special interim assessment rate range for the
last quarter of 1996 of from 18 to 27 basis points on institutions subject to
Financing Corporation ("FICO") assessments. Effective January 1, 1997,
assessments to help pay off the $780 million in annual interest payments on
the $8 billion FICO bonds issued in the late 1980's as part of the government
rescue of the thrift industry are imposed on both BIF- and SAIF-insured
deposits in annual amounts presently estimated at 1.29 basis points and 6.44
basis points, respectively. Beginning in January, 2000, BIF- and SAIF-insured
institutions will share the FICO interest costs at equal rates currently
estimated at 2.43 basis points.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is
in an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
SAFETY AND SOUNDNESS STANDARDS
The FDIA, as amended by the FDICIA and the Riegle Community Development and
Regulatory Improvement Act of 1994, requires the federal bank regulatory
agencies to prescribe standards, by regulations or guidelines, relating to
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate risk exposure, asset growth,
asset quality, earnings, stock valuation and compensation, fees and benefits,
and such other operational and managerial standards as the agencies deem
appropriate. The federal bank regulatory agencies have adopted, effective
August 9, 1995, a set of guidelines prescribing safety and soundness standards
pursuant to FDICIA, as amended. The guidelines establish general standards
relating to internal controls and information systems, internal audit systems,
loan documentation, credit underwriting, interest rate exposure, asset growth
and compensation and fees and benefits. In general, the guidelines require,
among other things, appropriate systems and practices to identify and manage
the risks and exposures specified in the guidelines. The guidelines prohibit
excessive compensation as an unsafe and unsound practice and describe
compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee,
director, or principal shareholder. In addition, the agencies adopted
regulations that authorize, but do not require, an agency to order an
institution that has been given notice by an agency that it is not satisfying
any of such safety and soundness standards to submit a compliance plan. If,
after being so notified, an institution fails to submit an acceptable
compliance plan or fails in any material respect to implement an acceptable
compliance plan, the agency must issue an order directing action to correct
the deficiency and may issue an order directing other actions of the types to
which an undercapitalized institution is subject under the "prompt corrective
action" provisions of FDICIA. See "--Prompt Corrective Action." If an
institution fails to comply with such an order, the agency may seek to enforce
such order in judicial proceedings and to impose civil money penalties. The
federal regulatory agencies also proposed guidelines for asset quality and
earnings standards.
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COMMUNITY REINVESTMENT ACT
The Community Reinvestment Act of 1977 ("CRA") requires the federal bank
regulatory agencies to encourage financial institutions to meet the credit
needs of low- and moderate-income borrowers in their local communities. In May
1995, the federal bank regulatory agencies published final amended regulations
promulgated pursuant to the CRA. The final regulations eliminate the 12
assessment factors under the former regulation and replace them with
performance tests. Institutions are no longer required to prepare CRA
Statements or extensively document director participation, marketing efforts
or the ascertainment of community credit needs. Under the final rule, an
institution's size and business strategy determines the type of examination
that it will receive. Large, retail-oriented institutions will be examined
using a performance-based lending, investment and service test. Small
institutions will be examined using a streamlined approach. All institutions
have the option of being evaluated under a strategic plan formulated with
community input and pre-approved by the bank regulatory agency.
CRA regulations provide for certain disclosure obligations. In accordance
with the CRA, each institution must post a CRA notice advising the public of
the right to comment to the institution and its regulator on the institution's
CRA performance and to review the institution's CRA public file. Each lending
institution must maintain for public inspection a public file that includes a
listing of branch locations and services, a summary of lending activity, a map
of its communities, and any written comments from the public on its
performance in meeting community credit needs. Public disclosure of written
CRA evaluations of financial institutions made by regulatory agencies is
required by the CRA. This promotes enforcement of CRA requirements by
providing the public with the status of a particular institution's community
reinvestment record.
CERTAIN APPLICABLE THRIFT REGULATIONS
Central and Southern Bank of North Georgia, as a thrift institution, is
subject to extensive regulation by the OTS. The lending activities and other
investments of thrift institutions must comply with various regulatory
requirements.
Qualified Thrift Lender Test. One such set of requirements relates to an
institution's status as a "Qualified Thrift Lender." Unless an institution so
qualifies, its borrowing privileges from a Federal Home Loan Bank may be
restricted, and it may be subject to other operating limitations. To meet the
Qualified Thrift Lender Test ("QTL Test"), an institution must maintain at
least 65% of its assets in "Qualified Thrift Investments," which under the
regulations consist of (i) loans made to purchase, refinance, construct,
improve or repair domestic residential or manufactured housing, (ii) home
equity loans, (iii) securities backed by or representing an interest in
mortgages on domestic, residential, or manufactured housing, and (iv)
obligations issued by federal deposit insurance agencies. Subject to a 15%-of-
assets limitation, "Qualified Thrift Investments" may also include consumer
loans, investments in certain subsidiaries, loans for construction of schools,
churches, nursing homes and hospitals, and 200% of investments in loans for
low-to-moderate-income housing and certain other community oriented
investments.
In September, 1996, the Economic Growth and Regulatory Paperwork Reduction
Act of 1996 (the "Economic Growth Act of 1996") was signed into law and
contained provisions which significantly affected the QTL Test. The Economic
Growth Act of 1996 liberalized the QTL Test for savings associations by
permitting them to satisfy a similar, but different, 60% asset test under the
Internal Revenue Code. Alternatively, savings associations may meet the QTL
Test by satisfying a more liberal 65% asset test that allows an institution to
include small business, credit card and education loans as qualified
investments for purposes of the test. Furthermore, consumer loans now count as
qualified thrift investments up to 20% of portfolio assets. On November 27,
1996, the OTS issued an Interim Final Rule that implements provisions of the
Economic Growth Act of 1996, including the amended QTL Test. At December 31,
1997, approximately 90.50% of Central and Southern Bank of North Georgia's
assets were invested in Qualified Thrift Investments as currently defined.
Liquidity Requirements. Thrift institutions, including Central and Southern
Bank of North Georgia, are required to maintain average daily balances of
liquid assets sufficient to meet the institution's foreseeable cash
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needs. Specifically, the Central and Southern Bank of North Georgia must
maintain liquid assets (consisting of cash, certain time deposits, bankers
acceptance, highly rated corporate debt and commercial paper, securities of
certain mutual funds, and specific U.S. government, state or federal agency
obligations) of not less than 5% of the total amount of the institution's net
withdrawable savings deposits plus short-term borrowings, and to maintain
average daily balances of short-term liquid assets of not less than 1% of such
total amount. The liquidity ratio of the Central and Southern Bank of North
Georgia at December 31, 1997, was 11.05%.
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PREMIER ANNUAL MEETING MATTERS
ELECTION OF DIRECTORS--PROPOSAL 2
The Board of Directors of Premier currently consists of 16 directors.
Premier's Bylaws provide that the Board of Directors shall consist of not less
than four, nor more than 19 members, the precise number to be determined from
time to time by the Board of Directors. The number of directors has been set
at 19 by the Board. The Board of Directors recommends the election of the 16
nominees listed below. Fewer nominees are named than the number fixed because
it is anticipated that following the BHC Merger, James E. Sutherland will be
appointed to the Board to fill one vacancy as provided by the BHC Agreement
and following the Button Gwinnett Merger, John D. Stephens and Glenn S. White
will be appointed to the Premier Board to fill two vacancies as provided in
the Button Gwinnett Agreement.
Each of the nominees has consented to being named in this Proxy
Statement/Prospectus and to serve as a director of Premier if elected. In the
event that any nominee withdraws or for any reason is not able to serve as a
director, the proxy will be voted for such other person as may be designated
by the Board of Directors, but in no event will the proxy be voted for more
than 16 nominees. The affirmative vote of a majority of all votes cast at the
meetings by the holders of Premier Common Stock is required for the election
of the 16 nominees standing for election. Management of Premier has no reason
to believe that any nominee will not serve if elected.
The Bylaws provide that directors shall be elected for one year terms. Each
of the following persons are current directors of Premier and have been
nominated by management for re-election to the Board of Directors of Premier:
<TABLE>
<CAPTION>
SERVED AS A DIRECTOR
NAME AGE POSITION(S) WITH PREMIER OF PREMIER SINCE
---- --- ------------------------ --------------------
<S> <C> <C> <C>
John E. Aderhold.............. 72 Director 1998
N. Michael Anderson........... 50 Director 1993
George S. Carpenter, Jr. ..... 67 Director 1997
James L. Coxwell, Sr. ........ 56 Director 1988
Donald N. Ellis............... 53 Director 1997
William M. Evans, Jr. ........ 46 Director 1993
John H. Ferguson, D.D.S. ..... 54 Director 1997
Robert E. Flournoy III........ 45 Director 1997
James E. Freeman.............. 61 Director 1988
A. F. Gandy................... 64 Director 1997
Robin R. Howell............... 33 Director 1992
Billy H. Martin............... 56 Director 1996
C. Steve McQuaig, M.D. ....... 48 Director 1997
Robert C. Oliver.............. 49 Director, President and 1997
Chief Operating Officer
Thomas E. Owen, Jr. .......... 67 Director 1997
Darrell D. Pittard............ 49 Chairman and 1993
Chief Executive Officer
</TABLE>
There are no family relationships between any director or executive officer
(or any nominee for such positions) and any other director, executive officer
or nominee.
As described above, if the directors nominated by the Board of Directors are
elected as directors of Premier and the Button Gwinnett Merger is approved and
closed, the Board of Directors will fill two vacancies on the Premier Board of
Directors resulting from the increased number of directors to 19 so that the
directors of Premier will consist of the nominees named above and Glenn S.
White and John D. Stephens. If the BHC Merger is approved and closed, the
Board of Directors will fill one vacancy on the Premier Board of Directors to
appoint James E. Sutherland to serve on the Board of Premier following the
Merger (Messrs. White, Stephens and
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Sutherland, collectively, the "Additional Directors"). Each of the Additional
Directors has consented to being named in this Joint Proxy
Statement/Prospectus and to serve as a director of Premier if each respective
merger is consummated.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Premier's directors, executive
officers and persons who own more than 10% of the outstanding Common Stock of
Premier, to file with the SEC reports of changes in ownership of the Common
Stock of Premier held by such persons. Officers, directors and greater than
10% shareholders are also required to furnish Premier with copies of all forms
they file under this Section. To Premier's knowledge, based solely on a review
of the copies of such reports furnished to Premier's and representations that
no other reports were required, during 1997, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
shareholders were complied with, except as follows: Messrs. Carpenter, Ellis,
Ferguson, Owen, Gandy, McQuaig, Oliver failed to file on a timely basis his
initial report of beneficial ownership; Messrs. Gandy, McQuaig, Anderson
failed to file on a timely basis his annual statement of changes in beneficial
ownership; Messrs. Oliver and Ricketson failed to file on a timely basis his
statement of changes in beneficial ownership; Mr. Pittard failed to file on a
timely basis one report relating to one transaction.
Although it is not Premier's obligation to make filings pursuant to Section
16 of the Exchange Act, Premier has adopted a policy requiring all Section 16
reporting persons to report monthly to the Chief Financial Officer of Premier
as to whether any transactions in Premier's Common Stock occurred during the
pervious month.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of Premier held 10 meetings during 1997. Each
director attended at least 75% or more of the aggregate number of meetings
held by the Board of Directors and the committees on which he or she served.
Premier's Board of Directors has three standing committees--the Audit
Committee, the Compensation Committee and the Executive Committee. The Board
of Directors does not have a standing nominating committee, such function
being reserved to the full Board of Directors.
The Executive Committee presently consists of Darrell D. Pittard, James E.
Freeman (Chairman), William M. Evans, Jr., Don N. Ellis, A. F. Gandy, and
Robert C. Oliver. The Executive Committee held five meetings during 1997.
The Audit Committee presently consists of John H. Ferguson (Chairman),
George S. Carpenter, Jr., Don N. Ellis, James L. Coxwell, Sr., William M.
Evans, Jr. and Billy H. Martin. The Audit Committee has been assigned the
principal functions of: (i) recommending the independent auditors; (ii)
reviewing and approving the annual report of the independent auditors; (iii)
approving the annual financing statements; and (iv) reviewing and approving
summary reports of the auditor's findings and recommendations. The Audit
Committee held five meetings during 1997.
The Compensation Committee presently consists of N. Michael Anderson
(Chairman), George S. Carpenter, Jr., John H. Ferguson, Robin R. Howell, C.
Steve McQuaig and Billy H. Martin. The Compensation Committee has been
assigned the functions of approving and monitoring the remuneration
arrangements for senior management and stock option grants under Premier's
stock based plans. The Compensation Committee held four meetings during 1997.
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate one or more additional committees, each committee to
consist of one or more of the Directors of Premier, which shall have such name
or names and shall have and may exercise such powers of the Board of
Directors, except the powers denied to the Executive Committee, as may be
determined from time to time by the Board of Directors. Such committees shall
provide for their own rules of procedure, subject to the same restrictions
thereon as for the Executive Committee.
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MANAGEMENT OF PREMIER
The members of the Board of Directors of Premier Bank, Premier Lending,
Central and Southern Bank, Central and Southern Bank of North Georgia and
Citizens Bank are elected annually by Premier, acting as the sole shareholder
of each subsidiary.
The table below set forth for each executive officer of Premier (i) the
person's name, (ii) his or her age at March 23, 1998, (iii) the year he or she
was first elected as an officer of Premier, and (iv) his or her positions with
Premier.
<TABLE>
<CAPTION>
NAME AGE ELECTED POSITIONS WITH PREMIER
---- --- ------- ----------------------
<S> <C> <C> <C>
Jo S. Hill.............. 49 1997 Chief Administrative Officer and Executive Vice President
Michael W. Lane......... 47 1996 Executive Vice President
Robert C. Oliver........ 49 1997 President and Chief Operating Officer
George S. Phelps........ 45 1997 Executive Vice President
Darrell D. Pittard...... 49 1993 Chairman of the Board and Chief Executive Officer of Premier
Michael E. Ricketson.... 48 1997 Executive Vice President and Chief Financial Officer
</TABLE>
BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS OF PREMIER
John E. Aderhold has served on the Board of Directors of Premier since May
, 1998. Mr. Aderhold has served as Chairman of the Board of Directors of
Lanier since 1986. Mr. Aderhold also serves on the Board of Directors of
Frederica Bank & Trust.
N. Michael Anderson has served on the Board of Directors of Premier since
1993. Mr. Anderson has served as President of Michael Anderson, Inc., a
secondary marketing whole loan brokerage company since 1985.
George S. Carpenter, Jr. has been a Director of Premier since Premier's
merger with Central and Southern on June 23, 1997. Prior to Premier's merger
with Central and Southern, Mr. Carpenter served as a Director of Central and
Southern since 1980. Mr. Carpenter is an attorney.
James L. Coxwell, Sr. has been a Director of Premier since 1984. Mr. Coxwell
is the owner of Coxwell Development and Construction and also co-owner of
Crown Development Group, Inc., both located in Kennesaw, Georgia. He is also
the owner of Jim Coxwell GMC, Inc., which is a holding company, and
owner/landlord of several commercial real estate properties.
Donald N. Ellis has been a Director of Premier since Premier's merger with
Central and Southern on June 23, 1997. Prior to Premier's merger with Central
and Southern, Mr. Ellis had served as a director of Central and Southern since
1993. From 1970 until his retirement in 1996, Mr. Ellis was a plant manager
for Universal Rundle Corporation.
William M. Evans, Jr. has been a member of the Board of Directors of Premier
since 1993. Mr. Evans has served as President of William Evans and Associates,
Inc., a real estate developer, since 1978.
John H. Ferguson, D.D.S. has been a Director of Premier since Premier's
merger with Central and Southern on June 23, 1997. Prior to Premier's merger
with Central and Southern, Dr. Ferguson had served as a director of Central
and Southern since 1980. Dr. Ferguson is an orthodontist.
Robert E. Flournoy III has been a member of the Board of Directors of
Premier since 1988. Mr. Flournoy has been a partner in the Marietta, Georgia
law firm of Robert E. Flournoy III & Associates since 1981. Mr. Flournoy also
serves as Chairman of the Downtown Marietta Development Authority.
James E. Freeman has served on the Board of Directors of Premier since 1988.
Mr. Freeman has been President of Kenworth of Atlanta, a truck dealership,
since 1992.
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A. F. Gandy has been a Director of Premier since Premier's merger with
Central and Southern on June 23, 1997. Prior to Premier's merger with Central
and Southern, Mr. Gandy had served as Chairman of the Board of Central and
Southern since January 1993 and a Director of the Central and Southern since
1980. From 1984 until his retirement in September 1993, Mr. Gandy served as
General Manager of the Meadows Division of William Barnet & Son, Inc., a
manufacturer of carpet yarns, and from 1993 through 1995, he was a consultant
to William Barnet & Son, Inc.
Jo S. Hill has served as Executive Vice President and Chief Administrative
Officer of Premier since October 1997. From 1993 to 1997, she owned an
Atlanta-based human resources consulting business and served as an outside
director of Premier Lending and Premier Bank. Ms. Hill served as Senior Vice
President of Prime Bank from April 1991 to February 1994, and Vice President
of Prime Bank from September 1989 to April 1991. Prior to 1991, she was
employed with BankSouth as a Vice President.
Robin R. Howell has been a member of the Board of Directors of Premier since
1992. Ms. Howell has served as Vice President of Delta Life Insurance Company
since 1993.
Michael W. Lane has served as Executive Vice President of Premier since June
1996. From 1993 to February 1994, Mr. Lane served as Manager, Vice President--
Financing Health Care Claims of Millennium Healthcare Funding, Inc. From 1992
to March 1993, he was employed by Prime Bank, FSB as Manager, Vice President,
Commercial Banking Group--Commercial Lending, Asset-Based Lending and Private
Banking. Mr. Lane was employed from May 1983 to March 1992 by First American
Bank in various positions, his last being Manager, Group Vice President of
Asset-Based Lending.
Billy H. Martin has served on the Board of Directors of Premier since
December 1996. Mr. Martin has served on the board of the subsidiary banks of
Premier since 1993. Since 1987, Mr. Martin has been engaged in the real estate
investment and development business both individually and through limited
partnerships.
Thomas J. Martin has been a Director of Premier and President of the East
Metro Division of Premier Bank since Premier's acquisition of Citizens on
December 12, 1997. Prior to the acquisition, Mr. Martin served as President
and Chief Executive Officer of Citizens and as Chairman and Chief Executive of
Citizens Bank from 1995 to December 1997. Mr. Martin organized Citizens Bank
in 1984 and served as President of Citizens Bank from 1984 to 1995.
C. Steve McQuaig, M.D. has been a Director of Premier since Premier's merger
with Central and Southern on June 23, 1997. Prior to the merger with Central
and Southern, Mr. McQuaig served as Director of Central and Southern since
1984. Dr. McQuaig is a physician and President of Milledgeville Ophthalmology
Associates, P.C.
Robert C. Oliver has served as President and Chief Operating Officer of
Premier since June 23, 1997. Mr. Oliver was President and Chief Executive
Officer of Central and Southern Holding Company since January 1993. From
October 1992 to January 1993, Mr. Oliver served as President of the Central
and Southern Bank of Georgia. Prior to September 1992, Mr. Oliver was Senior
Vice President and Regional Executive of Wachovia Bank of Georgia.
Thomas E. Owen, Jr. has been a Director of Premier since Premier's merger
with Central and Southern on June 23, 1997. Prior to Premier's merger with
Central and Southern, Mr. Owen had served as a Director of Central and
Southern since 1986. Mr. Owen is President and Chief Operating Officer of
Protective Laundry and Cleaners, Inc.
George S. Phelps has served as Executive Vice President of Premier since
June 1997. Mr. Phelps has served as President of Premier Lending since April
1995. Mr. Phelps was Senior Vice President at Allatoona Federal Savings Bank
and was responsible for mortgage lending from 1991 to April 1995.
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Darrell D. Pittard serves as the Chairman and Chief Executive Officer of
Premier. Mr. Pittard founded Premier Lending Corporation in March of 1993
before Premier Bancshares, Inc. was merged with and into First Alliance
Bancorp., Inc. (Premier's predecessor) in August 1996. In August 1996, Mr.
Pittard was elected Chairman of the Board and Chief Executive Officer of
Premier. From August 1988 to February 1993, Mr. Pittard was employed by Prime
Bank, FSB and its holding company, Prime Bancshares, Inc., as President and
Chief Executive Officer (March 1990 to February 1993) and as Chief Operating
Officer (August 1988 to March 1990). Prime Bancshares, Inc. was acquired in
February 1993 by SouthTrust Corporation.
Michael E. Ricketson has served as Executive Vice President and Chief
Financial Officer of Premier since June 1997. Mr. Ricketson served as
Executive Vice President and a Director of Central and Southern since 1996 and
Chief Financial Officer of Central and Southern Bank since October 1993. Mr.
Ricketson served as First Vice President and Financial Officer of First
National Bancorp from 1990 through April 1992. Prior to 1990, he was
controller of the First National Bank of Gainesville.
BIOGRAPHIES OF ADDITIONAL DIRECTORS
John D. Stephens, 58, has served as Chairman of the Board of Directors of
Button Gwinnett and The Bank of Gwinnett County since 1993. Mr. Stephens is
Chief Executive Officer and owner of John D. Stephens, Inc. in Stone Mountain,
Georgia, which has engaged in pipeline construction since 1966.
Glenn S. White, 47, has served as a Director of Button Gwinnett since 1993
and as a Director and the President of Button Gwinnett and The Bank of
Gwinnett County since 1987.
James E. Sutherland, 62, has served as a Director of BHC since 1993. Mr.
Sutherland is the President and Chief Executive Officer of Sutherland Food
Service, Inc., Rich & Morgan, Inc., Sonny East Produce, Inc., Lumber City Egg
Marketers, Inc. and National Poultry & Foods, Inc.
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PREMIER EXECUTIVE COMPENSATION
The following table provides certain summary information for 1997, 1996 and
1995, concerning compensation paid or accrued by Premier to or on behalf of
Premier's Chief Executive Officer and the other four most highly compensated
executive officers of Premier during 1997 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------- ------------
AWARDS
------------
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) GRANTED (#) COMPENSATION
- --------------------------- ---- ---------- --------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Darrell D. Pittard....... 1997 $211,459 $90,000 $21,025(1) 63,125 $ 7,101
Chairman and Chief 1996 175,000 51,640 14,400(1) 0
Executive Officer 1995 138,000 84,488 4,100(1) 27,083
Robert C. Oliver......... 1997 67,642(7) 43,875 15,000(2) 15,000 3,674
President and Chief 1996 -- -- -- -- --
Operating Officer 1995 -- -- -- -- --
Michael W. Lane.......... 1997 115,520 39,000 4,300(2)(3) 22,395 4,796
Executive 1996 110,000 20,524 2,600(2)(3) 0
Vice President 1995 95,000 32,808 600(2)(3) 14,896
George S. Phelps......... 1997 100,800 46,000 4,300(2)(4) 22,395 4,143
Executive 1996 96,000 27,372 1,600(2)(4) 0
Vice President 1995 54,560 30,744 1,000(2)(4) 9,479
Michael E. Ricketson..... 1997 31,572(7) 20,150 1,300(5)(6) 7,500 16,653
Executive Vice President 1996 -- -- -- -- --
and Chief Financial
Officer 1995 -- -- -- -- --
</TABLE>
- --------
(1) Consists of directors' fees. Does not reflect compensation in the form of
perquisites and personal benefits such as car allowance ($9,600 for 1997),
and country club dues ($1,500), the value of which did not exceed the
lesser of $50,000 or 10% of salary and bonus for any fiscal year to which
such benefits pertain.
(2) Consists of directors' fees, and in the case of Mr. Phelps, $1,200 of
which was deferred and in the case of Mr. Oliver, $6,450 of which was
deferred. In the case of Mr. Oliver, does not reflect compensation in the
form of perquisites and personal benefits such as the use of a car
($3,858) and moving expenses ($5,693).
(3) Does not reflect compensation in the form of a car allowance ($6,900 for
1997, $5,800 for 1996 and $3,600 for 1995) the value for which did not
exceed the lesser of $50,000 or 10% of salary and bonus for any fiscal
year to which such benefits pertain.
(4) Does not reflect compensation in the form of perquisites such as a car
allowance ($6,000 for 1997 and 1996 and $3,500 for 1995) and vacation pay
($2,852 for 1995) the value of which did not exceed the lesser of $50,000
or 10% of salary and bonus for any fiscal year to which such benefits
pertain.
(5) Consists of directors' fees.
(6) Does not reflect compensation in the form of perquisites such as a car
allowance ($3,428) the value for which did not exceed the lesser of 50,000
or 10% of salary and bonus for fiscal 1997.
(7) Consists of compensation from June 23, 1997 through December 31, 1997.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
Jo S. Hill. On October 1, 1997, Premier Lending entered into an employment
agreement with Jo S. Hill. The term of the agreement is one year, subject to a
recurring 12-month extension, provided the Board of Directors of Premier
Lending determines that Ms. Hill's performance has met the Board's
requirements and standards. The agreement provides for an initial annual base
salary of $90,000. The base salary was increased to $115,000 by the Premier
Board of Directors in January 1998. Ms. Hill is entitled to receive such
additional incentive compensation as may be awarded in the discretion of the
Board of Directors of Premier Lending, or any committee designated by them.
The Board may, by its discretion, increase Ms. Hill's base salary to reflect
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her performance. In the event of a disability, Ms. Hill is entitled to receive
100% of her then current base salary for six months, provided, however, that
she may be terminated if she is disabled for a continuous period exceeding six
months. In the event of a "termination for cause" (as defined in the
agreement), Ms. Hill shall have no right to compensation or other benefits. If
Ms. Hill's employment is terminated by Premier for any reason other than
"termination for cause" or disability, she is entitled to receive a severance
payment equal to her then current base salary and incentive compensation. In
the event of a "change of control" (any transaction in which 50% or more of
the voting stock of Premier becomes controlled by another; or there is a sale,
transfer, consolidation or merger of Premier; or Premier is sold to or merged
with a corporation that is not a majority owned subsidiary of Premier), any
termination of Ms. Hills' employment (other than for "cause") occurring either
six months prior to or 12 months after the "change of control" shall entitle
her to receive a severance payment equal to her current base salary and
incentive compensation. If Ms. Hill voluntarily terminates her employment due
to reasons unrelated to a "change in control," she is not entitled to receive
any compensation or other benefits. Finally, the agreement prohibits Ms. Hill
from disclosing any confidential information during her employment and for a
period of one year after termination.
Michael W. Lane. On June 23, 1997, Premier Lending entered into an
employment agreement with Mr. Michael W. Lane whereby he continued as
Executive Vice President of Commercial Finance of Premier Lending. The term of
the agreement is one year, subject to a 12-month extension if the parties
agree to the extension. Mr. Lane's annual base salary was $115,500, and he is
entitled to receive such additional incentive compensation as may be awarded
in the discretion of the Board of Directors of Premier Lending, or any
committee designated by them. Mr. Lane's base salary and any incentive pay is
to be reviewed at least annually by the Board of Directors of Premier Lending,
and his base salary may be increased in their discretion to reflect
performance. Mr. Lane's current base salary is $137,500. In the event of a
disability, Mr. Lane is entitled to receive 100% of his then current base
salary for six months; provided, however, that he may be terminated if he is
disabled for a continuous period exceeding six months. In the event a
termination for "cause" (as defined in the agreement), Mr. Lane will receive
no right to compensation or other benefits. If Mr. Lane voluntarily terminates
his employment due to reasons unrelated to a "change in control," then he is
entitled to receive no right to compensation or other benefits. If Mr. Lane's
employment is terminated by the Board of Directors for any reason other than
"cause" or disability, then he is entitled to receive a severance payment
equal to his current base salary and incentive compensation. In the event of a
"change in control" (any transaction in which 50% or more of the voting stock
of Premier becomes controlled by another, there is a sale, transfer,
consolidation or merger of Premier or Premier Lending is sold to or merged
with a corporation that is not a majority owned subsidiary of Premier), any
termination of Mr. Lane's employment (other than for "cause") occurring either
six months prior to or 12 months after the "change of control," shall entitle
him to receive a severance payment equal to his current base salary and
incentive compensation. Finally, the agreement prohibits Mr. Lane from
disclosing any confidential information during his employment and for a period
of one year after termination.
Thomas J. Martin. On the effective date of the Citizens Merger, Premier Bank
entered into an amendment to Mr. Martin's employment agreement with Citizens
(originally entered into on December 11, 1990 and first amended on March 11,
1997) which provides that Mr. Martin shall serve on the Board of Directors of
Premier and as President of Premier Bank's East Metro division. The term of
the employment agreement, as amended, will be six months following Premier's
acquisition of Citizens. Under the employment agreement, as amended, Mr.
Martin's base salary is $136,500.
The amendment provides for a growth bonus whereby Premier Bank will agree to
pay Mr. Martin a lump sum bonus of $25,000 if certain profit targets are met
by Premier and a lump sum bonus equal to 5% of the amount by which Premier
Bank's profits exceed $2.3 million for calendar year 1997. The amendment also
provides for perquisites such as an automobile, country club dues and
healthcare benefits. If, within six months after the Citizens acquisition, Mr.
Martin is terminated or if he does not agree to enter into a new employment
agreement, Mr. Martin will be entitled to a lump sum payment of $409,500,
which lump sum payment is the same amount made payable to Mr. Martin under the
March 11, 1997 amendment to his employment agreement
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in the event of a "change of control" such as the Merger. The amendment also
contains a six month non-compete for Gwinnett County, Georgia, a one year
client and employee nonsolicitation covenant and a one-year confidentiality
covenant.
Robert C. Oliver. Upon the closing of Premier's merger with Central and
Southern Holding Company, Central and Southern Bank entered into an employment
agreement with Robert C. Oliver under which he continued to serve as President
and Chief Executive Officer of Central and Southern Bank and became President
and Chief Operating Officer of Premier. The employment agreement terminates on
June 23, 2000, but is subject to a 12-month extension if the parties agree to
the extension. Mr. Oliver's initial annual base salary was $143,500 and he is
entitled to receive such additional incentive compensation as may be awarded
in the discretion of the Boards of Directors of Premier and Central and
Southern Bank, or any committee designated by them. Mr. Oliver's base salary
and any incentive pay is to he reviewed at least annually by the Boards of
Directors of Premier and Central and Southern Bank and his base salary may be
increased in their discretion to reflect performance. His current base salary
is $242,000. Mr. Oliver has been granted the use of an automobile and is
reimbursed for country club and business association dues. To the extent
approved by the Boards of Directors, Mr. Oliver may receive a loan for up to
twenty percent (20%) of his base salary for the purposes of paying any
required initiation fees to country clubs, which loan will be forgiven if he
remains employed for three years, is not terminated for cause and does not
voluntarily terminate his agreement without a "change of control." In the
event of a disability, Mr. Oliver is entitled to receive 100% of his then
current base salary for 12 months; provided, however, that he may be
terminated if he is disabled for a continuous period exceeding 12 months. In
the event of a termination for "cause" (as defined in the agreement), Mr.
Oliver will receive no right to compensation or other benefits. If Mr. Oliver
voluntarily terminates his employment due to reasons unrelated to a "change in
control," then he is entitled to receive no right to compensation or other
benefits. If Mr. Oliver's employment is terminated by the Boards of Directors
for any reason other than "cause" or disability, then he is entitled to
receive a severance payment equal to three times his current annual base
salary and incentive compensation. In the event of a "change in control" (any
transaction in which 50% or more of the voting stock of Premier becomes
controlled by another, there is a sale, transfer, consolidation or merger of
Premier or Central and Southern Bank is sold to or merged with a corporation
that is not a majority owned subsidiary of Premier), any termination of Mr.
Oliver's employment (other than for "cause") occurring either six months prior
to or 12 months after the "change of control," shall entitle him to receive a
severance payment equal to three times his current annual base salary and
incentive compensation. Finally, the agreement prohibits Mr. Oliver from
disclosing any confidential information during his employment and for a period
of one year after termination.
George S. Phelps. On June 23, 1997, Premier Lending entered into a new
employment agreement with George S. Phelps whereby he continued as President
of Premier Lending. The term of the agreement is one year, subject to a 12-
month extension if the parties agree to the extension. Mr. Phelps' annual base
salary is $100,800, and he is entitled to receive such additional incentive
compensation as may be awarded in the discretion of the Board of Directors or
any committee designated by them. Mr. Phelps' base salary and any incentive
pay is to be reviewed at least annually by the Board of Directors of Premier
Lending and his base salary may be increased in their discretion to reflect
performance. Mr. Phelps' current base salary is $143,000. In the event of a
disability, Mr. Phelps is entitled to receive 100% of his then current base
salary for six months; provided, however, that he may be terminated if he is
disabled for a continuous period exceeding six months. In the event of a
termination for "cause" (as defined in the agreement), Mr. Phelps will receive
no right to compensation or other benefits. If Mr. Phelps voluntarily
terminates his employment due to reasons unrelated to a "change in control,"
then he is entitled to receive no right to compensation or other benefits. If
Mr. Phelps' employment is terminated by the Board of Directors for any reason
other than "cause" or disability, then he is entitled to receive a severance
payment equal to his current base salary and incentive compensation. In the
event of a "change in control" (any transaction in which 50% or more of the
voting stock of Premier becomes controlled by another; there is a sale,
transfer, consolidation or merger of Premier; or Premier Lending is sold to or
merged with a corporation that is not a majority owned subsidiary of Premier),
any termination of Mr. Phelps' employment (other than for "cause") occurring
either six months prior to or 12 months after the "change of control" shall
entitle him to receive a severance payment equal to his current base salary
and incentive compensation. Finally, the agreement
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prohibits Mr. Phelps from disclosing any confidential information during his
employment and for a period of one year after termination.
Darrell D. Pittard. Darrell D. Pittard is currently employed pursuant to an
employment agreement dated effective as of June 23, 1997 which provides for an
annual base salary of $200,000 and expires on June 23, 2000. Mr. Pittard's
current annual base salary is $330,000 and is subject to a 12-month extension
if the boards of directors for Premier and Premier Lending determine that it
should be extended. Mr. Pittard is entitled to receive such additional
incentive compensation as may be awarded in the discretion of the Boards of
Directors of Premier and Premier Lending, or any committee designated by them.
Mr. Pittard's base salary and any incentive pay is to be reviewed at least
annually by the Boards of Directors of Premier and Premier Lending and his
base salary may be increased in their discretion to reflect performance. Mr.
Pittard is granted the use of an automobile and is reimbursed for country club
and business association dues. To the extent approved by the Boards of
Directors of Premier and Premier Lending, Mr. Pittard may receive a loan for
up to twenty percent (20%) of his base salary for the purposes of paying any
required initiation fees to country clubs, which loan will be forgiven if he
remains employed for three years, is not terminated for cause and does not
voluntarily terminate his agreement without a "change of control." In the
event of a disability, Mr. Pittard is entitled to receive 100% of his then
current base salary for 12 months; provided, however, that he may be
terminated if he is disabled for a continuous period exceeding 12 months. In
the event of a termination for "cause" (as defined in the agreement), Mr.
Pittard will receive no right to compensation or other benefits. If Mr.
Pittard voluntarily terminates his employment due to reasons unrelated to a
"change in control," then he is entitled to receive no right to compensation
or other benefits. If Mr. Pittard's employment is terminated by the Boards of
Directors of Premier and Premier Lending for any reason other than "cause" or
disability, then he is entitled to receive a severance payment equal to three
times his current base salary and incentive compensation. In the event of a
"change in control" (any transaction, consolidation or merger of Premier, or
Premier Lending is sold to or merged with a corporation that is not a majority
owned subsidiary of Premier), any termination of Mr. Pittard's employment
(other than for "cause") occurring either six months prior to or 12 months
after the "change in control" shall entitle him to receive a severance payment
equal to three times his current base salary and incentive compensation.
Finally, the agreement prohibits Mr. Pittard from disclosing any confidential
information during his employment and for a period of one year after
termination.
Michael E. Ricketson. Upon the closing of Premier's merger with Central and
Southern Holding Company, Premier and Central and Southern Bank entered into
an employment agreement with Michael E. Ricketson in which he continued as
Chief Financial Officer of Central and Southern Bank and an Executive Vice
President of Premier. The agreement terminates on June 23, 2000, but is
subject to a 12-month extension if the parties agree to the extension. Mr.
Ricketson's initial annual base salary was $85,000 per year and he is entitled
to receive such additional incentive compensation as may be awarded in the
discretion of the Boards of Directors of Premier and Central and Southern
Bank, or any committee designated by them. Mr. Ricketson's base salary and any
incentive pay is to be reviewed at least annually by the Boards of Directors
and his base salary may be increased in their discretion to reflect
performance. Mr. Ricketson's current annual base salary is $137,500. In the
event of a disability, Mr. Ricketson is entitled to receive 100% of his then
current base salary for six months; provided, however, that he may be
terminated if he is disabled for a continuous period exceeding six months. In
the event of a termination for "cause" (as defined in the agreement), Mr.
Ricketson will receive no right to compensation or other benefits. If Mr.
Ricketson, voluntarily terminates his employment due to reasons unrelated to a
"change in control," then he is entitled to receive no right to compensation
or other benefits. If Mr. Ricketson's employment is terminated by the Board of
Directors for any reason other than "cause" or disability, then he is entitled
to receive a severance payment equal to his current annual base salary and
incentive compensation. In the event of a "change in control" (a transaction
in which 50% or more of the voting stock of Premier becomes controlled by
another; there is a sale, transfer, consolidation or merger of Premier; or
Central and Southern Bank is sold to or merged with a corporate that is not a
majority owned subsidiary of Premier), any termination of Mr. Ricketson's
employment (other than for "cause") occurring either six months prior to or 12
months after the "change of control," shall entitle him to receive a severance
payment equal to his current annual base salary and incentive compensation.
Finally, the agreement prohibits Mr. Ricketson from disclosing any
confidential information during employment and for a period of one year after
termination.
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COMPENSATION OF DIRECTORS
All of the members of the Board of Directors of Premier currently receive
$2,500 per meeting as a retainer for their service as directors. The Board
holds regularly scheduled quarterly meetings and calls additional meetings
from time to time. Directors who serve on committees of the board also receive
$500 per committee meeting. Directors are also eligible to participate in the
Premier Bancshares, Inc. Directors Deferred Stock Unit Plan (the "Directors
Plan"). The Directors Plan was adopted by the shareholders on December 12,
1997.
The Directors Plan permits each Director of Premier and its subsidiaries to
elect in advance to defer some or all of his directors' fees and to apply such
amounts toward the grant of deferred stock units. Upon settlement at the time
of the director's termination of service, the deferred stock units are payable
in cash or shares of Premier Common Stock, as elected by the Director. The
plan provides that each Director who makes a deferral election will receive,
in lieu of directors' fees, a deferred stock unit award that equals the number
of shares of Premier Common Stock as may be purchased with the amount of the
deferred directors' fees at that time based on a price equal to 85% of the
fair market value of the shares on the grant date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Other than George S. Carpenter, Jr. who serves on the Compensation Committee
of the Central and Southern Bank, no member of the Compensation Committee
serves as a member of the compensation committee of any entity that has one or
more executive officers serving as a member of Premier's Board or Compensation
Committee. None of the members of the Compensation Committee are officers or
employees of Premier or any of its subsidiaries. No executive officer of
Premier served as a member of the Compensation Committee (or other board
committee performing equivalent functions or, in the absence of such
committee, the entire board of directors) or another entity, one of whose
executive officers served on the compensation committee of Premier.
Furthermore, no executive officer of Premier served (i) as a director of
another entity, one of whose executive officer served on Premier's
Compensation Committee, or (ii) as a member of the compensation committee (or
other board committee performing equivalent functions) of another entity, one
of whose executive officers served as a director of Premier. Except as set
forth under "--Certain Relationships and Related Transactions," there were no
material transactions between Premier and any of the members of the
Compensation Committee during 1997.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The provisions of the Georgia Code and Premier's Bylaws set forth the extent
to which Premier's directors and officers may be indemnified against
liabilities they may incur while serving in such capacities. Under Premier's
Bylaws, Premier is required to indemnify its officers and directors against
reasonable expenses (including attorneys' fees) incurred by them in the
defense of any action, suit or proceeding to which they were made a party, or
in defense of any claim, issue or matter therein, by reason of the fact that
they are or were officers, directors, employees or agents of Premier, to the
extent that they have been successful, on the merits or otherwise, in such
defense. Premier's Bylaws also permit indemnification of its directors and
officers against any liability incurred in connection with any threatened,
pending or completed action, suit or proceeding by reason of the fact that
they are or were directors or officers of Premier or who, while directors or
officers of Premier, are or were serving at Premier's request as directors,
officers, partners, trustees, employees or agents of another entity, if they
acted in a manner they believed in good faith to be in, or not opposed to, the
best interests of Premier, or, with respect to any criminal proceeding, had no
reasonable cause to believe their conduct was unlawful, if a determination has
been made that they have met these standards of conduct. Such indemnification
in connection with a proceeding by or in the right of Premier, however, is
limited to reasonable expenses, including attorneys' fees, incurred in
connection with the proceeding. Premier must also provide advancement of
expenses incurred by any director or officer in defending any such action,
suit or proceeding upon receipt of any undertaking by or on behalf of such
officer or director to repay such advances unless it is ultimately determined
that he or she is not entitled to indemnification by Premier.
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Premier may not indemnify a director or officer in connection with a
proceeding by or in the right of Premier in which the director or officer was
adjudged liable to Premier for appropriation of a business opportunity or
payment of unlawful dividends, in connection with a proceeding in which he or
she was adjudged liable on the basis that he or she improperly received a
personal benefit or for intentional misconduct or a knowing violation of law.
The indemnification provisions of the Georgia Code are essentially identical
to those set forth above, except that the Georgia Code permits, but does not
require, a corporation to advance expenses under the circumstances for such
payments described above. Premier maintains an insurance policy insuring
Premier and its directors and officers against certain liabilities, including
liabilities under the Securities Act.
Premier's Articles of Incorporation provide that no director of Premier
shall be personally liable to Premier or its shareholders for monetary damages
for a breach of the duty of care or of any other duty as a director, except in
the case of: (i) wrongful appropriation of any business opportunity of
Premier; (ii) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law; (iii) liability for unlawful
distributions; or (iv) any transaction from which the director derived an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Premier
pursuant to the foregoing provisions, Premier has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
PREMIER STOCK BASED PLANS
Premier has adopted or assumed obligations under the following this stock
option or stock incentive plans: the Premier Bancshares, Inc. 1995 Stock
Option Plan (the "Premier Plan"); the Premier Lending Corporation 1993
Employee Stock Option Plan (the "Premier Employee Plan"); the Premier Lending
Corporation Directors Stock Option Plan (the "Premier Directors Plan"); the
1997 Plan, and the Premier Bancshares, Inc. Directors Deferred Stock Unit
Plan. The Premier stock-based plans (the "Premier Plans") are all administered
by the Compensation Committee. All stock options available under the Premier
Plan and the Premier Employee Plan have been granted.
The shareholders of Premier approved the adoption or assumption of three
additional stock-based plans in 1997. The shareholders adopted the 1997 Plan
in June 1997 at Premier's annual meeting. The 1997 Plan provides for the grant
of options for shares of Premier Common Stock to eligible employees,
independent contractors, consultants and advisors of Premier and its related
corporations. Options may be granted under the 1997 Plan until June 14, 2007.
A maximum of 1,125,000 shares of Premier Common Stock may be issued pursuant
to options granted under the 1997 Plan. The number of shares available for
issuance under the 1997 Plan is proposed to be increased to 2,000,000. See
"Amendment of 1997 Plan--Proposal 5." The Compensation Committee has granted
options to purchase 955,419 shares under the 1997 Plan and options to purchase
887,969 shares under the 1997 Plan remain unexercised. Options under the 1997
Plan may be incentive stock options or nonqualified stock options. The 1997
Plan also authorizes the Committee to grant options to non-employees and non-
key employees in connection with mergers, reorganizations or other business
combinations involving Premier or a related corporation.
On December 12, 1997, the shareholders of Premier adopted the Directors
Plan. The Directors Plan amends and restates the Premier Bancshares, Inc.
Directors Stock Option Plan previously adopted by the shareholders of Premier
at the 1997 annual meeting. The Directors Plan permits each Director to elect
in advance to defer some or all of his or her directors' fees and to apply
such amounts toward the grant of deferred stock units. Upon settlement, the
deferred stock units are payable in cash or shares of Premier Common Stock, as
elected by the Director. Under the terms of the Directors Plan, each Director
who makes a deferral election would receive, in lieu of directors' fees, an
award of deferred stock units on the grant date that would equal such number
of shares of Premier Common Stock as could be purchased for the amount of
deferred directors' fees on that date, based on a price equal to 85% of the
fair market value of the shares as of such grant date.
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STOCK OPTIONS GRANTS AND YEAR END VALUES
The following table provides certain information concerning individual
grants of stock options made during 1997 to the Named Executive Officers:
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM(1)
OPTIONS IN FISCAL PRICE EXPIRATION -------------------------
NAME GRANTED YEAR ($ PER SHARE) DATE 5% 10%
---- ---------- ---------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Darrel D. Pittard....... 40,626(2) 10% $ 8.35 1/23/07 $ 16,961 33,923
22,600(3) 6% $10.58 7/23/07 11,955 23,911
Robert C. Oliver........ 15,000(3) 4% $10.58 7/23/07 7,935 15,870
Michael W. Lane......... 14,595(2) 4% $ 8.35 1/23/07 6,093 12,187
7,500(3) 2% $10.58 7/23/07 3,968 7,935
George S. Phelps........ 14,895(2) 4% $ 8.35 1/23/07 6,219 12,437
7,500(3) 2% $10.58 7/23/07 3,968 7,935
Michael E. Ricketson.... 7,500(3) 2% $10.58 7/23/07 3,968 7,935
</TABLE>
- --------
(1) The dollar amounts under these columns represent the potential realizable
value of each grant of option assuming that the market price of Premier's
Common Stock appreciates in value from the date of grant at the 5% and 10%
annual rates prescribed by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the price of Premier's
Common Stock.
(2) These options will vest in two years from date of grant with 50% vesting
on January 23, 1998 and the remainder vesting on January 23, 1999.
(3) These options will vest in two years from date of grant with 50% vesting
on July 23, 1998 and remainder vesting on July 23, 1999.
The following table provides certain information concerning the value of
unexercised options held by the Named Executive Officers as of December 31,
1997. No options were exercised by the named Executive Officers in 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Darrell D. Pittard......... 47,396 42,812 $580,260 $165,375
Robert C. Oliver........... 23,100 15,000 403,935 55,125
Michael W. Lane............ 44,791 14,947 283,461 126,467
George S. Phelps........... 16,927 14,947 206,323 126,467
Michael E. Ricketson....... 13,698 7,500 177,115 55,125
</TABLE>
- --------
(1) Dollar values were calculated by determining the difference between the
fair market value of the underlying securities at December 31, 1997
($17.93 per share) and the exercise price of the options.
EMPLOYEE RETIREMENT SAVINGS PLAN
Premier has established a savings and profit-sharing plan that qualifies as
a tax-deferred savings plan under Section 401(k) of the Internal Revenue Code
(the "401(k) Plan") for its salaried employees who are at least 21 years old
and who have completed three months of service with Premier. Eligible
employees may contribute up to 20% of their gross salary to the 401(k) Plan to
a maximum of $9,500 for 1997 and may contribute up to 18%
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of their gross salary to the 401(k) Plan to a maximum of $10,000 for 1998.
Each participating employee is fully vested in contributions made by such
employees. Premier presently matches 75% of the amount contributed by an
employee up to 4% of the employee's salary, but Premier's policy regarding
matching contributions may be changed annually in the discretion of the Board
of Directors. All amounts contributed under the 401(k) Plan are invested in
one or more investment accounts administered by an independent plan
administrator.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Premier's directors and executive officers, their immediate family members
and certain companies and other entities associated with them, have been
customers of and have had banking transactions with Premier Bank, Premier
Lending, Central and Southern Bank, Central and Southern Bank of North Georgia
and Citizens Bank and are expected to continue such relationships in the
future. As of December 31, 1997, the aggregate outstanding balance of all such
loans was $6,214,000, or approximately 9% of shareholders' equity. In the
opinion of Premier's management, the extensions of credit made by Premier
Bank, Premier Lending, Central and Southern Bank, Central and Southern Bank of
North Georgia and Citizens Bank to such individuals, companies and entities
since January 1, 1995 (i) were made in the ordinary course of business, (ii)
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and (iii) did not involve more than a normal risk of
collectibility or present other unfavorable features.
REPORT OF COMPENSATION COMMITTEES ON EXECUTIVE COMPENSATION
During 1997, the Compensation Committee of the Board of Directors was
comprised of all non-employee members of the Board. The Compensation Committee
is responsible for: (i) setting Premier's compensation philosophy and
policies; (ii) review and approval of pay recommendations for the executive
officers of Premier; (iii) initiation of all compensation actions for the
Chief Executive Officer of Premier; and (iv) administering and awarding
options and other awards under the Premier Plans.
Premier's compensation policies have been designed to align the financial
interests of Premier's management with those of its shareholders, and to take
into account Premier's operating environment and expectations for continued
growth and enhanced profitability. Compensation for each of Premier's
executive officers consists of a base salary, an annual discretionary bonus
and stock options. Premier does not currently provide executive officers with
other long-term incentive compensation other than the ability to contribute
their earnings to Premier's 401(k) Plan.
The Compensation Committee's philosophy is that the predominate portion of
an executive's compensation should be based directly upon the value of long-
term incentive compensation in the form of stock option awards. The
Compensation Committee believes that providing executives with the
opportunities to acquire significant stakes in the growth and prosperity of
Premier (through grants of stock options), while maintaining other elements of
Premier's compensation program at conservative levels, will enable Premier to
attract and retain executives with the outstanding management abilities and
entrepreneurial spirit which are essential to Premier's ongoing success.
Furthermore, the Compensation Committee believes that this approach to
compensation motivates executives to perform to their full potential.
At least annually, the Compensation Committee reviews salary recommendations
for Premier's executives and then approves such recommendations, with any
modifications it has deemed appropriate. The annual salary recommendations for
such persons are made under the ultimate direction of the Chief Executive
Officer, based on peer group and national industry surveys of total
compensation packages, as well as evaluations of the individual executive's
past and expected future performance. Similarly, the Compensation Committee
fixes the base salary of the Chief Executive Officer based on a review of
competitive compensation data, the Chief Executive Officer's overall
compensation package, and the Compensation Committee's assessment of his past
performance and its expectation as to his future performance in leading
Premier.
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The Compensation Committee also determines, based upon the recommendation of
the Chief Executive Officer, the annual bonus, if any, to be paid to executive
officers (other than the Chief Executive Officer). The amount of each
individual bonus is determined based upon an evaluation of such factors as
individual performance, increases in Premier's revenue, net income, net income
per share and market penetration, as well as the executive's contribution to
Premier's performance. The Compensation Committee applies similar criteria in
setting the amount of annual bonus, if any, earned by the Chief Executive
Officer.
Stock options represent a substantial portion of compensation for Premier's
executive officers, including the Chief Executive Officer. Stock options
typically are granted at the prevailing market price on the date of grant, and
will only have value if Premier's stock price increases. Generally, grants
vest in equal amounts over a period of five years (although certain special
types of grants may vest either immediately or over a shorter period) and
executives must be employed by Premier at the time of vesting in order to
exercise the options. In special circumstances, however, the Compensation
Committee has authority to accelerate vesting or modify other restrictions on
exercise. Grants of stock options generally are based upon the level of the
executive's position with Premier and an evaluation of the executive's past
and expected future performance. The Compensation Committee believes that
dependence on stock options for a significant portion of executives'
compensation more closely aligns such executives' interests with those of
Premier's shareholders, since the ultimate value of such compensation is
linked directly to stock price.
The Chief Executive Officer's employment agreement provides for an annual
base salary of $200,000. The base salary paid to the Chief Executive Officer
is reviewed annually by the Compensation Committee and may be adjusted based
on competitive compensation data, the Chief Executive Officer's overall
compensation package and the Compensation Committee's assessment of his past
experience and its expectation as to his future contributions in leading
Premier and its businesses. In July, 1997, the Compensation Committee reviewed
the compensation of Premier's executive officers and increased the annual base
salary of the Chief Executive Officer from $200,000 to $225,000. Effective
January 1, 1998 the Chief Executive Officer's annual base salary was increased
to $330,000. On January 22, 1998, Mr. Pittard was granted an incentive stock
option to purchase 67,500 shares at a price of $19.33 per share. The increase
in the Chief Executive Officer's base salary was based primarily on his
success in closing two key acquisitions of bank holding companies in 1997 and
the substantial increase in the price of Premier's Common Stock during 1997.
The Compensation Committee also increased the salary of two other executive
officers of Premier.
On January 23, 1997 the Compensation Committee granted the Chief Executive
Officer options to purchase 40,625 shares of Premier's Common Stock at a price
of $8.35 per share. On July 23, 1997, the Compensation Committee granted the
Chief Executive Officer options to purchase 22,600 shares of Premier's Common
Stock at a price of $10.58 per share. These stock option awards were based
upon an evaluation of his performance criteria and are consistent with the
philosophy of providing incentives based on Premier's future performance.
The Compensation Committee continually evaluates Premier's compensation
policies and procedures with respect to executives. Although the Compensation
Committee believes that current compensation policies have been successful in
aligning the financial interests of executive officers with those of Premier's
shareholders and with Premier's performance, it continues to examine what
modifications, if any, should be implemented to further link executive
compensation with both individual and Premier's performance.
COMPENSATION COMMITTEE
N. Michael Anderson
George S. Carpenter, Jr.
Robin R. Howell
Billy H. Martin
John H. Ferguson, D.D.S.
C. Steve McQuaig, M.D.
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<PAGE>
Notwithstanding anything to the contrary set forth in any of Premier's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement/Prospectus, in whole or in part, the
foregoing Report of Compensation Committee on Executive Compensation and the
Stockholder Return Performance Graph shall not be incorporated by reference
into any such filings.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on Premier's Common Stock against the
cumulative total return of the American Stock Exchange Bank Index for the
period commencing on January 26, 1995, and ending December 31, 1997. The graph
assumes that the value of the investment in Premier's Common Stock and each
index was $100 on January 26, 1995. The yearly change in cumulative total
return is measured by dividing (1) the sum of (i) the cumulative amount of
dividends for each fiscal year, assuming dividend reinvestment, and (ii) the
change in share price between the beginning and end of the Measuring Period,
by (2) the share price at the beginning of the Measuring Period.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG PREMIER BANCSHARES, INC., SNL
AMERICAN STOCK EXCHANGE INDEX
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PERIOD ENDING
----------------------------------------------------------
INDEX 1/26/95 6/30/95 12/31/95 6/20/96 12/31/96 6/30/97 12/31/97
- ----- ------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Premier Bancshares,
Inc.................... 100.00 108.59 115.83 143.64 155.77 238.03 376.07
S&P 500................. 100.00 117.75 134.77 148.36 165.57 199.69 220.83
SNL Southeast Banks..... 100.00 116.18 143.66 156.04 197.20 243.91 298.94
SNL Banks (under
$250M)................. 100.00 111.92 137.62 152.20 173.87 210.20 283.73
SNL Banks ($250M to
$500M)................. 100.00 111.45 131.84 146.00 171.20 214.15 296.09
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 26, 1995 IN PREMIER
BANCSHARES, INC. COMMON STOCK, AMERICAN
STOCK EXCHANGE BANK INDEX
133
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Premier
Common Stock owned, as of the Record Date and on a pro forma basis giving
effect to the Lanier Merger and the Button Gwinnett Merger and the BHC Merger,
(i) by each person who beneficially owned more than 5% of the shares of
Premier Common Stock outstanding, (ii) by each Premier director and nominee
(iii) by the executive officers of Premier and (iv) by all Premier directors
and executive officers as a group.
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCK
FOLLOWING THE
PERCENT OF BHC AND
COMMON STOCK BUTTON
NUMBER OF PERCENT OF FOLLOWING THE GWINNETT
NAME OF BENEFICIAL OWNER SHARES(1) COMMON STOCK LANIER MERGER MERGERS
------------------------ --------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
John E. Aderhold........... 100 * 1.09% *
N. Michael Anderson (2).... 115,432 * * *
George S. Carpenter, Jr.
(3)....................... 33,256 * * *
James L. Coxwell, Sr....... 145,467 * * *
Donald N. Ellis............ 10,512 * * *
William M. Evans, Jr. (4).. 56,289 * * *
John H. Ferguson, D.D.S.
(5)....................... 146,349 * * *
Robert Flournoy (6)........ 55,617 * * *
James E. Freeman (7)....... 420,456 2.75% 2.48% 1.67%
A. F. Gandy (8)............ 109,951 * * *
Jo S. Hill (9)............. 40,387 * * *
Robin R. Howell (10)....... 138,016 * * *
Michael W. Lane (11)....... 50,029 * * *
Billy H. Martin (12)....... 65,922 * * *
Thomas J. Martin (13)...... 111,895 * * *
C. Steve McQuaig, M.D.
(14)...................... 53,339 * * *
Robert C. Oliver (15)...... 116,975 * * *
Thomas E. Owen, Jr. (16)... 55,386 * * *
George S. Phelps (17)...... 47,040 * * *
Darrell D. Pittard (18).... 380,611 2.49% 2.24% 1.51%
Michael E. Ricketson (19).. 90,520 * * *
All directors, nominees and
executive officers as a
group (21 persons)........ 2,246,995 14.70% 13.23% 8.94%
</TABLE>
- --------
* Represents less than one percent of the shares outstanding.
(1) On a fully-diluted basis, except as otherwise indicated, the persons named
in the table have sole voting and investment power with respect to all
shares shown as beneficially owned by them. The information shown above is
based upon information furnished by the named persons and based upon
"beneficial ownership" concepts set forth in rules promulgated under the
Exchange Act. Under such rules, a person is deemed to be a "beneficial
owner" of a security if that person has or shares "voting power," which
includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose or to direct the
disposition of such security. A person is also deemed to be a beneficial
owner of any security of which that person has the right to acquire
beneficial ownership within 60 days. More than one person may be deemed to
be a beneficial owner of the same securities.
(2) Includes 10,831 shares subject to currently exercisable stock options,
60,810 held in a self-directed individual retirement account ("IRA") and
41,541 shares owned jointly with Mr. Anderson's mother.
(3) Includes 9,093 shares held in an IRA and 2,530 owned by Mr. Carpenter's
wife.
(4) Includes 10,833 shares subject to currently exercisable options, 2,536
shares held in a profit sharing plan and 27,082 shares owned by a company
that Mr. Evans controls.
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<PAGE>
(5) Includes 93,704 shares held in pension and profit sharing plans and 4,308
shares owned by Mr. Ferguson's wife.
(6) Includes 22,591 shares held in an IRA, 300 shares owned by Mr. Flournoy's
spouse and 1,799 shares owned by Mr. Flournoy's children.
(7) Includes 38,445 shares owned by Mr. Freeman's wife.
(8) Includes 4,500 shares owned by Mr. Gandy's wife.
(9) Includes 10,834 shares subject to currently exercisable options, 1,692
shares held in an IRA and 105 shares owned by Ms. Hill's husband.
(10) Includes 138,016 shares held in trust for the benefit of Robin Robinson
Howell, as to which beneficial ownership is shared.
(11) Includes 14,895 shares subject to currently exercisable stock options,
8,463 shares held in an IRA and 26,671 owned jointly with Mr. Lane's
wife.
(12) Includes 2,924 shares held in an IRA and 6,126 shares owned by Mr.
Martin's wife.
(13) Includes 7,692 shares held in an IRA, 2,400 shares held in Premier's
401(k) Plan, 29,976 held in Premier's Employee Stock Ownership Plan,
9,408 shares owned by Mr. Martin's wife and 1,500 shares owned by Mr.
Martin's son.
(14) Includes 8,101 shares held in an IRA, 14,020 shares owned by companies
that Mr. McQuaig controls and 16,860 owned by Mr. McQuaig's spouse.
(15) Includes 23,100 shares subject to currently exercisable stock options,
33,370 shares held in an IRA, 3,328 shares held in Premier's 401(k) Plan,
5,750 shares owned by Mr. Oliver's wife, 3,339 shares as custodian for
minor children and 225 shares owned by Mr. Oliver's son.
(16) Includes 9,170 shares held in an IRA.
(17) Includes 24,373 shares subject to currently exercisable stock options,
1,436 shares held in an IRA and 3,053 shares held in Premier's 401(k)
Plan.
(18) Includes 45,206 shares subject to currently exercisable stock options,
6,000 shares held in an IRA, and 1,544 shares held in Premier's 401(k)
Plan.
(19) Includes 36,390 shares held in an IRA, 2,507 shares held in Premier's
401(k) Plan and 11,491 shares as custodian for minor children.
RATIFICATION OF ERNST & YOUNG LLP--PROPOSAL 3
On December 29, 1997, Premier dismissed Mauldin & Jenkins, LLC as its
independent public accountant and retained Ernst & Young LLP to audit its
financial statements for 1997. The selection of Premier's independent public
accountants is not required to be submitted to the vote of the shareholders,
but the Board believes the shareholders should have the opportunity to ratify
the Board's selection of Ernst & Young LLP. A representative of Ernst & Young
LLP will be present at the Premier Meeting and will have the opportunity to
make a statement if he so desires and is expected to be available to respond
to appropriate questions. See "Independent Public Accountants."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF ERNST & YOUNG LLP AS PREMIER'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 1998
FISCAL YEAR.
AMENDMENT TO ARTICLES OF INCORPORATION -- PROPOSAL 4
A condition precedent to the consummation of the Button Gwinnett and BHC
Mergers is an amendment to Premier's Articles of Incorporation to increase the
number of authorized shares of Common Stock of Premier to provide for the
issuance of shares of Premier's Common Stock (or options covering such shares,
as applicable) to the shareholders and option holders of Button Gwinnett and
BHC as contemplated in the Button Gwinnett and BHC Agreements (the "Articles
Amendment"). The Articles Amendment amends Article 5.a. of Premier's Articles
of Incorporation to increase the number of authorized shares of Common Stock
from 20,000,000 shares to 60,000,000 shares. A copy of the Articles Amendment
is attached as Appendix F to this Joint Proxy Statement/Prospectus.
135
<PAGE>
Because Premier may not have sufficient uncommitted authorized but unissued
shares of Common Stock to consummate the Button Gwinnett and BHC Mergers
without approval of the proposed increase in the number of authorized shares
of Common Stock, such proposed increase is a condition precedent to
consummation of the Button Gwinnett and BHC Mergers, which the Premier Board
believes is in the best interests of Premier shareholders. In addition,
Premier's Board of Directors believes that the proposed increase in the number
of authorized shares of Premier Common Stock will provide flexibility needed
to meet corporate objectives and to implement Premier's strategic plan and is
in the best interests of Premier and its shareholders.
The Board of Directors recommends that shareholders approve the Articles
Amendment because it considers the proposal to be in the best long-term and
short-term interests of Premier, its shareholders and its other
constituencies. The proposed increase in the number of shares of authorized
Common Stock will ensure that sufficient shares of Common Stock are available
subsequent to the issuance of shares of Common Stock pursuant to the terms of
the Button Gwinnett and BHC Agreements and will ensure that additional shares
of Common Stock will be available, if needed, for issuance in connection with
any possible business developments, including, among others, stock splits,
stock dividends, acquisitions, finances, stock-incentive plans and other
corporate purposes. In addition, the proposed increase in the number of
authorized shares of Common Stock will ensure that sufficient shares are
available for grant pursuant to Premier's 1997 Plan. See "--Amendment to 1997
Stock Option Plan--Proposal 5."
The Board of Directors believes that the availability of the additional
shares of Common Stock for such purposes without delay or the necessity for a
special shareholders' meeting (except as may be required by applicable law or
regulatory authorities or by the rules of the American Stock Exchange or of
any stock exchange on which Premier's securities may then be listed) will be
beneficial to Premier by providing it with the flexibility required to
consider and respond to future business opportunities and needs as they arise.
The availability of additional authorized shares of Common Stock will also
enable Premier to act promptly when the Board of Directors determines that the
issuance of additional shares of Common Stock is advisable. It is possible
that shares of Common Stock may be issued at a time and under circumstances
that may increase or decrease earnings per share and increase or decrease the
book value per share of shares presently held.
Although Premier may require additional capital or other financing to fund
its operations and continued growth, other than the shares of Common Stock to
be issued in connection with the Lanier Merger, Button Gwinnett Merger, BHC
Merger and the 1997 Plan, Premier does not have any immediate agreements,
arrangements, commitments or understandings with respect to the issuance of
any of the additional shares of Common Stock which would be authorized by the
proposal to increase the number of authorized shares.
On March 26, 1998, 15,304,673 shares of Premier Common Stock were issued and
outstanding. Upon consummation of the Lanier Merger, an additional 1,702,748
shares of Common Stock will be issued and outstanding.
Although the proposed amendment is not intended to be an anti-takeover
measure, shareholders should note that, under certain circumstances, the
additional shares of Common Stock could be used alone or in combination with
Premier's other anti-takeover measures, such as its blank check preferred
stock, to make any attempt to gain control of Premier or the Board of
Directors more difficult or time-consuming.
Any of the additional shares of Common Stock could be privately placed with
purchasers who might side with the Premier Board in opposing a hostile
takeover bid. It is possible that such shares could be sold with or without an
option, on the part of Premier, to repurchase such shares, or on the part of
the purchaser, to put such shares to Premier.
The amendment to increase the authorized Common Stock might be considered to
have the effect of discouraging an attempt by another person or entity,
through the acquisition of a substantial number of shares of the Premier
Common Stock, to acquire control of Premier, since the issuance of the
additional shares of Common Stock could be used to dilute the stock ownership
of a person or entity seeking to obtain control and to increase
136
<PAGE>
the cost to a person or entity seeking to acquire a majority of the voting
power of Premier. If so used, the effect of the additional authorized shares
of Common Stock might be (i) to deprive shareholders of an opportunity to sell
their stock at a temporarily higher price as a result of a tender offer or the
purchase of shares by a person seeking to obtain control of Premier or (ii) to
assist incumbent management in retaining its present position.
The approval of the holders of a majority of the issued and outstanding
shares of Common Stock of Premier is required for the adoption of the Articles
Amendment. THE BOARD OF DIRECTORS RECOMMENDS THAT PREMIER'S SHAREHOLDERS VOTE
FOR APPROVAL OF THE ARTICLES AMENDMENT.
AMENDMENT OF 1997 PLAN--PROPOSAL 5
PURPOSE AND OPERATION OF THE 1997 PLAN
On March 26, 1997, the Premier Board adopted the 1997 Plan. The 1997 Plan
was approved by the Premier shareholders on June 16, 1997. As discussed below,
the 1997 Plan is proposed to be amended to increase the number of shares
authorized for issuance under the plan from 1,125,000 shares to 3,000,000
shares.
The purpose of the 1997 Plan is to encourage and enable selected key
employees, independent contractors, consultants and advisors of Premier and
its related corporations to acquire or increase their holdings of Premier
Common Stock in order to promote a closer identification of their interests
with those of Premier and its shareholders, thereby further stimulating their
efforts to enhance the efficiency, soundness, profitability, growth and
shareholder value of Premier.
This purpose is carried out by granting options to purchase shares of
Premier Common Stock to selected participants. Options may be incentive stock
options intended to qualify under Section 422 of the Code or nonqualified
stock options. For purposes of the plan, a "key employee" means an employee of
Premier or a related corporation whom the Committee determines qualifies as a
key employee based on the nature and extent of the individual's duties,
responsibilities, personal capabilities, performance and potential, or any
combination of these factors. Approximately persons qualify as key employees
at this time. The 1997 Plan also provides for the grant of options to
independent contractors, consultants and advisors (collectively, "independent
contractors"). There are no persons who qualify as independent contractors at
this time. The number of persons who may be eligible to participate in the
plan is subject to change from time to time.
The 1997 Plan also authorizes the grant of options to non-employees and non-
key employees who provide services to Premier or an affiliate in connection
with mergers, reorganizations or other business combinations involving Premier
or a related corporation. Premier substituted options to purchase shares to
eligible participants in connection with its merger with The Central and
Southern Holding Company in June, 1997.
In addition, in connection with the Lanier Merger, Premier plans to grant
substitute options to option holders under the Lanier Directors Stock Option
Plan and the Lanier 1989 Key Employee Incentive Stock Option Plan. In
connection with the Button Gwinnett Merger, Premier plans to grant substitute
options to option holders under the Button Gwinnett Bancorp, Inc. Option Plan
(or to elect to assume such options), and any substitute options will be
granted under the 1997 Plan. Approximately persons are eligible to receive
such substitute options. Further, in connection with the BHC Merger, Premier
plans to grant substitute options to one option holder. The number of
individuals who may be eligible for options in connection with a business
combination also is subject to change from time to time.
The 1997 Plan is administered by the Compensation Committee of the Premier
Board. The effective date of the 1997 Plan was June 15, 1997, and the 1997
Plan is intended to have a 10-year term unless earlier terminated by the
Premier Board. The 1997 Plan may be amended or terminated by the Premier Board
at any time; however, any amendment that would materially increase the number
of shares issuable under the 1997 Plan or materially change the requirements
for eligibility will require shareholder approval. In addition, no outstanding
option may
137
<PAGE>
be amended or terminated without an optionee's consent if the amendment or
termination would adversely affect the optionee's rights.
As of April , 1998, the closing sales price of the Premier Common Stock was
$ .
PROPOSAL TO INCREASE SHARES ISSUABLE UNDER THE 1997 PLAN
As adopted in 1997, the 1997 Plan provided for the issuance and sale of up
to 750,000 shares of Premier Common Stock. As a result of the three-for-two
stock split effective January 23, 1998, a maximum of 1,125,000 shares of
Premier Common Stock may be issued pursuant to options granted under the 1997
Plan. The number of shares subject to issuance under the 1997 Plan may be
further adjusted in the event of a change in the outstanding shares of Premier
Common Stock as a result of a merger, reorganization, stock dividend, stock
split distributable in shares or other similar change in the capital
structure. No optionee may be granted options in any calendar year for more
than 112,500 shares of Premier Common Stock (subject to adjustment as provided
herein).
Effective March 11, 1998, the Premier Board adopted an amendment to the 1997
Plan which would increase the number of shares of Premier Common Stock
issuable under the plan from 1,125,000 shares to 3,000,000 shares. As of March
23, 1998, 169,581 shares remained available for grant under the 1997 Plan. In
addition, as discussed above, since the 1997 Plan was adopted by the
shareholders at the 1997 annual meeting, Premier has completed or proposed to
complete certain transactions which would further deplete the number of shares
available for issuance under the 1997 Plan.
In order for the 1997 Plan to continue to provide an incentive for highly
qualified individuals to serve or continue service with Premier, to more
closely align the interests of such individuals with Premier's shareholders,
and to provide stock-based compensation comparable to that offered by other
financial institutions, the Premier Board believes that the number of shares
of Common Stock authorized for issuance should be increased as described
herein (subject to the adjustment provisions discussed above for stock splits
and other capital changes).
Except as proposed to be amended to increase the number of shares issuable
under the plan, the 1997 Plan would continue in effect in its current form.
The Premier Board believes that the amendment to increase the number of shares
available for issuance under the 1997 Plan is necessary in order for the plan
to continue to serve as a strong stock-based incentive for employees and other
eligible individuals in service to Premier in the future.
NEW PLAN BENEFITS
The amount of compensation that will be paid pursuant to the grant of awards
under the 1997 Plan in the current year to the following persons is not yet
determinable due to vesting and other requirements. However, the following
table sets forth the number of options that have been granted in 1997 under
the 1997 Plan, each at an exercise price of $10.38 per share, to each of the
following:
<TABLE>
<CAPTION>
PREMIER BANCSHARES, INC. 1997 PLAN
NAME DOLLAR VALUE ($) NUMBER OF SHARES
---- ------------------------ ----------------
<S> <C> <C>
Darrell D. Pittard................ [ ] 22,500
Robert C. Oliver.................. [ ] 15,000
Michael W. Lane................... [ ] 7,500
George S. Phelps.................. [ ] 7,500
Michael E. Ricketson.............. [ ] 7,500
</TABLE>
The dollar value is based on a per share price of $ (the closing sales
price of Common Stock on the American Stock Exchange on April , 1998.
Certain Federal Income Tax Consequences. The following summary generally
describes the principal federal (and not state and local) income tax
consequences of awards granted under the 1997 Plan. The summary
138
<PAGE>
is general in nature and is not intended to cover all tax consequences that
may apply to a particular participant or to Premier. The provisions of the
Code and the regulations thereunder relating to these matters are complicated
and their impact in any one case may depend upon the particular circumstances.
Incentive Stock Options. Incentive stock options granted under the 1997 Plan
are intended to qualify as incentive stock options under Section 422 of the
Code. Pursuant to Section 422, the grant and exercise of an incentive stock
option will generally not result in taxable income to the optionee (with the
possible exception of alternative minimum tax liability) if the optionee does
not dispose of shares received upon exercise of such option less than one year
after the date of exercise and two years after the date of grant, and if the
optionee has continuously been an employee of Premier or a related corporation
from the date of grant to three months before the date of exercise (or twelve
months in the event of death or disability). Premier will not be entitled to a
deduction for income tax purposes in connection with the exercise of an
incentive stock option. Upon the disposition of shares acquired pursuant to
exercise of an incentive stock option, the optionee will be taxed on the
amount by which the amount realized upon such disposition exceeds the option
price, and such amount will be treated as long-term capital gain or loss. If
the holding period requirements for incentive stock option treatment described
above are not met, the option will be treated as a nonqualified stock option.
Pursuant to the Code and the terms of the 1997 Plan, in no event can there
first become exercisable by an optionee in any one calendar year incentive
stock options granted by Premier or any related corporation with respect to
shares having an aggregate fair market value (determined at the time an option
is granted) greater than $100,000. To the extent an incentive stock option
exceeds the foregoing limitation, it will be treated for all purposes under
the plan as a nonqualified stock option. In addition, no incentive stock
option may be granted to an individual who owns, immediately before the time
that the option is granted, stock possessing more than 10% of the total
combined voting power of all classes of stock of Premier or a related
corporation (unless certain requirements are met, including an option price
greater than or equal to 110% of the fair market value of the shares and an
option period of five years or less).
Nonqualified Stock Options. If an optionee receives a nonqualified stock
option, the difference between the market value of the stock on the date of
exercise and the option price will constitute taxable ordinary income to the
optionee on the date of exercise. Premier will be entitled to a deduction in
the same year in an amount equal to the income taxable to the optionee. The
optionee's basis in shares of Premier Common Stock acquired upon exercise of
an option will equal the option price plus the amount of income taxable at the
time of exercise. Any subsequent disposition of the stock by the optionee will
be taxed as a capital gain or loss to the optionee, and will be long-term
capital gain or loss if the optionee has held the stock for more than one year
at the time of sale.
Pursuant to the terms of the 1997 Plan, Premier will require any recipient
of shares of Premier Common Stock pursuant to exercise of a nonqualified stock
option to pay the corporation in cash the amount of any tax or other amount
required by any governmental authority to be withheld and paid over by the
corporation to such authority for the account of such recipient.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSED AMENDMENT. The affirmative vote of a majority of the shares of
Premier Common Stock represented in person or by proxy at the Premier Meeting
is necessary for the approval of the amendment to the 1997 Plan. Any shares
not voted (whether by abstention, broker non-vote or otherwise) have the
effect of a negative vote.
ADOPTION OF EMPLOYEE STOCK PURCHASE PLAN--PROPOSAL 5
Effective March 11, 1998, the Premier Board adopted the Premier Bancshares,
Inc. Employee Stock Purchase Plan (the "Plan"), subject to shareholder
approval at the Premier Meeting. If approved by shareholders, the Plan will
enable eligible employees to be granted options to purchase Premier Common
Stock at a discount through payroll deductions or other means established
under the Plan.
139
<PAGE>
The Plan is intended to permit eligible employees to provide for their
future security and to encourage them to remain employees of Premier (or its
subsidiaries), and thus to promote the best interests of Premier and its
shareholders and enhance the long-term performance of Premier. The Plan is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Code, and thus to permit participants to receive favorable tax treatment,
as described below.
The following summary describes the material terms of the Plan and is
qualified in all respects by reference to the terms of the Plan, which is
attached as Appendix I to this Joint Proxy Statement/Prospectus. Shareholders
should refer to the Plan for more complete and detailed information.
SHARES RESERVED FOR THE PLAN
The aggregate number of shares of Common Stock which may be purchased under
the Plan shall not exceed 2,000,000, subject to adjustment in the event of
mergers, consolidations, stock dividends, stock splits or other changes in the
outstanding Premier Common Stock in accordance with Plan terms. Shares issued
under the Plan may be authorized and unissued shares, treasury shares or
shares purchased on the open market.
ADMINISTRATION; AMENDMENT AND TERMINATION
The Plan will be administered by the Board, or, upon its delegation, by the
Compensation Committee (the "Committee") of the Board. (References to the
Committee include the Board if it elects to administer the Plan.) The
Committee may adopt rules and procedures consistent with the Plan for its
administration and may delegate certain administrative functions as it
considers appropriate. The Committee's interpretation and construction of the
Plan is final and conclusive.
The Board may at any time, and from time to time, modify, amend, suspend or
terminate the Plan or any option, except that, (i) shareholder approval is
required of any amendment to the extent required under Section 423 of the Code
or other applicable law or rule; and (ii) no amendment may materially and
adversely affect any outstanding option without the participant's consent. If
adopted by the shareholders, the effective date of the Plan will be May 15,
1998 and the Plan is anticipated to continue in effect through May 15, 2008
unless terminated earlier by the Board.
ELIGIBLE PARTICIPANTS
Generally, employees of Premier (or a subsidiary designated by Premier) are
eligible to participate in the Plan once they have been employed 90 days or
more if they customarily work more than 20 hours per week and for more than
five months per year. Approximately 505 employees would have been eligible to
participate as of December 31, 1997.
MATERIAL FEATURES OF THE PLAN
If the Plan is approved by the shareholders, beginning July 1, 1998, Premier
will grant options on January 1 and July 1 of each year that the Plan is in
effect (or on such other date as Premier may designate). Each option period
will last for six months ending on the June 30 or December 31 immediately
following the grant of options (or on such date(s) as the Committee
determines).
Each eligible employee who has elected to participate in the Plan will be
entitled on the date of exercise (the last day of the purchase period) to
purchase shares of Premier Common Stock at an option price equal to the lesser
of 90% of the fair market value (as defined in the Plan) on the date of grant
(the first day of the purchase period) or on the date of exercise.
Payment for shares of Premier Common Stock purchased under the Plan will be
made by authorized payroll deductions from a participant's compensation or by
other methods authorized by the Committee. Compensation generally means a
participant's base salary or regular rate of compensation (including
commissions, bonuses and
140
<PAGE>
incentive compensation, but excluding employee benefits and other similar non-
cash compensation elements), as determined as of the date of each payroll
deduction.
An eligible employee who elects to participate in the Plan will designate a
stated whole percentage between 1% and 10% of compensation to be credited to
the participant's account under the Plan. On the offer date for each purchase
period, a participant will be granted an option to purchase such number of
shares as is determined by dividing the amount of the participant's payroll
deductions which had accumulated on the purchase date by the applicable option
price. Unless a participant withdraws or terminates employment before the
purchase date in accordance with Plan terms, the option will be exercised
automatically for the purchase of the full number of shares subject to the
option.
Premier will maintain an account for each participant to reflect the shares
of Premier Common Stock purchased under the Plan by each participant. No
participant in the Plan is permitted to purchase Premier Common Stock under
the Plan at a rate that exceeds $25,000 in fair market value of Premier Common
Stock, determined at the time options are granted, for each calendar year, and
additional restrictions may apply to the purchase of shares based on the terms
of the Plan and Section 423 of the Code.
Funds received by Premier from the sale of Premier Common Stock under the
Plan may be used for any corporate purpose.
NEW PLAN BENEFITS
It is not possible to determine how many eligible employees will participate
in the Plan in the future. Therefore, it is not possible to determine the
dollar value or number of shares of Common Stock that will be distributed
under the Plan. Premier anticipates, however, that on the average
approximately 350,000 shares of Premier Common Stock will be distributed
annually during the term of the Plan. Based on a per share price of $ (the
closing sales price of the Common Stock on the American Stock Exchange on
April , 1998), the benefits of the Plan during 1997 would have been as
follows:
PREMIER BANCSHARES, INC. EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
NAME DOLLAR VALUE ($) NUMBER OF SHARES
---- ---------------- ----------------
<S> <C> <C>
Darrell D. Pittard......................... 25,000 [ ]
Robert C. Oliver........................... 24,200 [ ]
Michael W. Lane............................ 13,750 [ ]
George S. Phelps........................... 14,300 [ ]
Michael E. Ricketson....................... 13,700 [ ]
Executive Group............................ 100,000 [ ]
Non-Executive Officer Employee Group....... 250,000 [ ]
</TABLE>
FEDERAL TAX CONSEQUENCES
As noted above, the Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Code. Under the Code,
an employee who elects to participate in the Plan will not realize income (and
Premier will not receive a deduction) at the time an option is granted or when
the shares purchased under the Plan are transferred to him, although
participants will receive the benefit of the discounted price at the time of
purchase.
Participants will, however, recognize income when they sell or dispose of
the shares. If an employee disposes of such shares after two years from the
date of grant of the option and after one year from the date of the purchase
of such shares, the employee will recognize ordinary income for the year in
which such disposition occurs in an amount equal to the lesser of (i) the
excess of the fair market value of such shares at the time of disposition over
the purchase price, or (ii) the excess of the fair market value of the stock
at the time of the grant
141
<PAGE>
of the option over the option price (that is, the option price discount). The
employee's basis in the shares disposed of will be increased by an amount
equal to the amount so includable in his income as compensation. Any
additional gain or loss will be a capital gain or loss, either short-term or
long-term, depending on the holding period for such shares.
If any employee disposes of the shares purchased under the Plan within such
two-year or one-year period, the employee will recognize ordinary income for
the year in which such disposition occurs in an amount equal to the excess of
the fair market value of such shares on the date of purchase over the purchase
price. The employee's basis in such shares disposed of will be increased by an
amount equal to the amount includable in his income as compensation, and any
gain or loss computed with reference to such adjusted basis which is
recognized at the time of disposition will be a capital gain or loss, either
short-term or long-term, depending on the holding period for such shares. In
the event of a disposition within such two-year or one-year period, the
participant's employer will be entitled to a tax deduction equal to the amount
the employee is required to include in income as a result of such disposition.
The discussion above is only a summary of federal income consequences to
Premier and participating employees, and does not cover the tax consequences
that might arise in every individual circumstance.
Adoption of this proposal requires an affirmative vote by the holders of a
majority of the outstanding Common Stock. Any shares not voted (whether by
abstention, broker non-vote or otherwise) have the effect of a negative vote.
THE PREMIER BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PREMIER BANCSHARES, INC. EMPLOYEE STOCK PURCHASE PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
On December 29, 1997, Premier dismissed its independent auditors, Mauldin &
Jenkins, LLC, and on the same date engaged the firm of Ernst & Young LLP as
its independent public accountants for the year ended December 31, 1997. Each
of these actions was recommended by the Audit Committee and approved by the
Board of Directors of Premier.
The reports of Mauldin & Jenkins, LLC on the financial statements of Premier
for the past two fiscal years did not contain an adverse opinion or a
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles. In connection with the audits of
Premier's financial statements for each of the two fiscal years ended December
31, 1996 and 1997, there were no disagreements with Mauldin & Jenkins, LLC on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of Mauldin & Jenkins, LLC, would have caused it
to make reference to the subject matter of the disagreement in its report.
Ernst & Young LLP has served as independent auditors of Premier for the year
ended December 31, 1997, and has been selected the Board of Directors to serve
as independent auditors of Premier for the year ending December 31, 1998.
Representatives of Ernst & Young LLP are expected to be present at the Premier
Annual Meeting and will have the opportunity to make a statement if they
desire to do so and to respond to appropriate questions.
PROPOSALS BY PREMIER SHAREHOLDERS FOR 1999 ANNUAL MEETING
Any proposal to be presented at Premier's Annual Meeting of Shareholders
must be received at the principal executive offices of Premier not later than
December 15, 1998, directed to the attention of Barbara J. Burtt, Secretary,
for consideration for inclusion in Premier's proxy statement and form of proxy
relating to that meeting. Any such proposals must comply in all respects with
the rules and regulations of the SEC.
142
<PAGE>
At the time of the preparation of this Proxy Statement, the Board of
Directors of Premier had not been informed of any matters which should be
presented for action at the Premier Meeting other than the proposals
specifically set forth in the accompanying Notice of Annual Meeting of
Shareholders and referred to herein. If other matters are properly presented
for action at the Premier Meeting, it is intended that the persons named in
the accompanying form of proxy will vote or refrain from voting in accordance
with their best judgment on such matters.
OTHER MATTERS
The Boards of Directors of Premier, Button Gwinnett and BHC are not aware of
any matter to be presented for action at the Premier Meeting, the Button
Gwinnett Meeting or the BHC Meeting other than the approval and adoption of
the Button Gwinnett Merger and BHC Merger and, with respect to Premier, the
Premier Annual Meeting Proposals. If any other matter comes before the Premier
Meeting, the Button Gwinnett Meeting or the BHC Meeting, it is the intention
of the persons named in the accompanying proxy to vote on such matter in
accordance with their best judgment unless authority therefor is withheld on
the enclosed proxy card. Such discretionary matters may include motions to
adjourn the meeting for the purpose of further soliciting proxies in favor of
the Button Gwinnett Merger and the BHC Merger and, with respect to Premier,
the Premier Annual Meeting Proposals.
REPORT ON FORM 10-K
Premier's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, as filed with the SEC, is available to shareholders who make written
request therefor to Premier at 2180 Atlanta Plaza, 950 East Paces Ferry Road,
Atlanta, Georgia 30326. Copies of exhibits and basic documents filed with that
report or referenced therein will be furnished to shareholders of record upon
request. All documents subsequently filed by Premier pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the date of the Premier
Meeting will be deemed to be incorporated by reference.
EXPERTS
The consolidated financial statements of Premier Bancshares, Inc and
Subsidiaries at December 31, 1997, and for the year then ended, appearing in
the Premier Bancshares, Inc and Subsidiaries, Annual Report (Form 10-K) for
the year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Premier Bancshares, Inc and
Subsidiaries at December 31, 1996, and for each of the two years in the period
ended December 31, 1996, appearing in the Premier Bancshares, Inc and
Subsidiaries' Annual Report on Form 10-K for the year ended December 31, 1997,
have been audited by Mauldin & Jenkins, LLC, independent auditors, as set
forth therein and included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
OPINIONS
The legality of the shares of the Premier Common Stock to be issued in the
Button Gwinnett Merger and the BHC Merger, and certain tax consequences will
be passed upon by Womble Carlyle Sandridge & Rice, PLLC, Atlanta, Georgia.
143
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
THE BANK HOLDING COMPANY, INC.
<S> <C>
Independent Auditor's Report............................................. FA-1
Consolidated Balance Sheets.............................................. FA-2
Consolidated Statements of Income........................................ FA-3
Consolidated Statements of Stockholders' Equity.......................... FA-4
Consolidated Statements of Cash Flows.................................... FA-5
Notes to Consolidated Financial Statements............................... FA-7
BUTTON GWINNETT FINANCIAL CORPORATION
Independent Auditor's Report............................................. FB-1
Consolidated Balance Sheets.............................................. FB-2
Consolidated Statements of Earnings...................................... FB-3
Consolidated Statements of Changes in Stockholders' Equity............... FB-4
Consolidated Statements of Cash Flows.................................... FB-5
Notes to Consolidated Financial Statements............................... FB-7
</TABLE>
144
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
The Bank Holding Company and Subsidiaries
Griffin, Georgia
We have audited the accompanying consolidated balance sheets of The Bank
Holding Company and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income, common stockholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Bank
Holding Company and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 29, 1998
FA-1
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
ASSETS ------------ ------------
<S> <C> <C>
Cash and due from banks.............................. $ 4,268,855 $ 3,499,104
Federal funds sold................................... 5,350,000 3,220,000
Securities available-for-sale........................ 23,213,836 21,394,698
Loans held for sale.................................. 3,375,039 2,141,508
Loans................................................ 90,657,653 81,107,868
Less allowance for loan losses....................... 1,423,667 881,669
------------ ------------
Loans, net......................................... 89,233,986 80,226,199
Premises and equipment............................... 3,612,654 3,921,140
Goodwill............................................. 2,184,766 2,369,395
Other assets......................................... 2,382,116 1,795,896
------------ ------------
Total assets....................................... $133,621,252 $118,567,940
============ ============
<CAPTION>
LIABILITIES, REDEEMABLE PREFERRED STOCK AND COMMON
STOCKHOLDERS' EQUITY
<S> <C> <C>
Deposits
Noninterest-bearing demand......................... $ 15,113,355 $ 14,786,177
Interest-bearing demand............................ 16,236,915 17,187,466
Savings............................................ 4,826,295 4,945,149
Time, $100,000 and over............................ 19,951,974 14,569,755
Other time......................................... 60,841,520 52,953,510
------------ ------------
Total deposits................................... 116,970,059 104,442,057
Federal funds purchased and securities sold under
repurchase agreements............................... 1,244,950 --
Debentures payable................................... 61,539 76,924
Other liabilities.................................... 1,898,622 1,588,375
------------ ------------
Total liabilities................................ 120,175,170 106,107,356
------------ ------------
Commitments and contingent liabilities
Redeemable 8% preferred stock, par value $60; 50,000
shares authorized; 40,770 issued and outstanding.... 2,446,200 2,446,200
------------ ------------
Common stockholders' equity
Common stock, par value $5; 10,000,000 shares
authorized; 556,525 issued and outstanding........ 2,782,625 2,782,625
Capital surplus.................................... 4,491,861 4,491,861
Retained earnings.................................. 3,807,146 2,922,890
Unrealized losses on securities available-for-sale,
net of tax........................................ (81,750) (182,992)
------------ ------------
Total common stockholders' equity................ 10,999,882 10,014,384
------------ ------------
Total liabilities, redeemable preferred stock and
common stockholders' equity..................... $133,621,252 $118,567,940
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
FA-2
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Interest income
Loans................................................. $ 9,693,454 $8,622,293
Taxable securities.................................... 1,304,373 1,138,865
Nontaxable securities................................. 33,459 22,351
Federal funds sold.................................... 238,394 195,785
----------- ----------
Total interest income............................... 11,269,680 9,979,294
----------- ----------
Interest expense
Deposits.............................................. 5,096,494 4,444,300
Federal funds purchased and securities sold under
repurchase agreements................................ 20,560 13,235
Notes payable......................................... -- 24,407
Debentures payable.................................... 6,154 7,573
----------- ----------
Total interest expense.............................. 5,123,208 4,489,515
----------- ----------
Net interest income................................. 6,146,472 5,489,779
Provision for loan losses............................... 915,000 145,000
----------- ----------
Net interest income after provision for loan losses. 5,231,472 5,344,779
----------- ----------
Other income
Service charges on deposit accounts................... 548,513 541,106
Gain on sale of mortgage loans........................ 471,596 544,854
Net realized gains on sale of securities available-
for-sale............................................. 11,627 16,592
Other operating income................................ 153,384 195,228
----------- ----------
Total other income.................................. 1,185,120 1,297,780
----------- ----------
Other expenses
Salaries and employee benefits........................ 1,984,966 2,084,304
Equipment and occupancy expenses...................... 680,539 597,917
Goodwill amortization................................. 184,628 184,628
Other operating expenses.............................. 1,557,529 1,354,625
----------- ----------
Total other expenses................................ 4,407,662 4,221,474
----------- ----------
Income before income taxes.......................... 2,008,930 2,421,085
Income tax expense...................................... 789,847 979,063
----------- ----------
Net income.......................................... $ 1,219,083 $1,442,022
=========== ==========
Basic earnings per common share......................... $ 1.84 $ 2.24
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
FA-3
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
UNREALIZED
LOSSES ON
SECURITIES TOTAL
COMMON STOCK AVAILABLE COMMON
------------------ CAPITAL RETAINED FOR SALE, STOCKHOLDERS'
SHARES PAR VALUE SURPLUS EARNINGS NET OF TAX EQUITY
------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1995 556,525 $2,782,625 $4,491,861 $1,815,695 $(161,126) $ 8,929,055
Net income............ -- -- -- 1,442,022 -- 1,442,022
Cash dividends
declared, $.25 per
share................ -- -- -- (139,131) -- (139,131)
Cash dividends on
preferred stock...... -- -- -- (195,696) -- (195,696)
Net change in
unrealized losses on
securities available-
for-sale, net of tax. -- -- -- -- (21,866) (21,866)
------- ---------- ---------- ---------- --------- -----------
Balance, December 31,
1996................... 556,525 2,782,625 4,491,861 2,922,890 (182,992) 10,014,384
Net income............ -- -- -- 1,219,083 -- 1,219,083
Cash dividends
declared, $.25 per
share................ -- -- -- (139,131) -- (139,131)
Cash dividends on
preferred stock...... -- -- -- (195,696) -- (195,696)
Net change in
unrealized losses on
securities available-
for-sale, net of tax. -- -- -- -- 101,242 101,242
------- ---------- ---------- ---------- --------- -----------
Balance, December 31,
1997................... 556,525 $2,782,625 $4,491,861 $3,807,146 $ (81,750) $10,999,882
======= ========== ========== ========== ========= ===========
</TABLE>
See Notes to Consolidated Financial Statements.
FA-4
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Operating Activities
Net income......................................... $ 1,219,083 $ 1,442,022
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation..................................... 298,511 267,412
Amortization of intangible assets................ 184,628 188,796
Provision for loan losses........................ 915,000 145,000
Provision for bond losses........................ 25,000 --
Deferred income taxes............................ (176,566) 3,988
Net increase in loans held for sale.............. (1,233,531) (749,032)
Net realized gains on sale of securities avail-
able-for-sale................................... (11,627) (16,592)
(Gain) loss on sales of other real estate........ 64,438 (2,322)
Gain on sale of premises and equipment........... (9,338) --
Increase in interest receivable.................. (426,320) (133,245)
Increase in interest payable..................... 319,572 142,921
Other operating activities....................... (275,479) (11,591)
----------- -----------
Net cash provided by operating activities...... 893,381 1,277,357
----------- -----------
Investing Activities
Purchases of securities available-for-sale......... (14,242,295) (8,740,975)
Proceeds from sales of securities available-for-
sale.............................................. 515,625 2,199,813
Proceeds from maturities of securities available-
for-sale.......................................... 12,057,452 4,752,949
Net increase in Federal funds sold................. (2,130,000) (830,000)
Net increase in loans.............................. (10,299,216) (7,225,647)
Purchase of premises and equipment................. (115,198) (852,338)
Proceeds from sale of premises and equipment....... 134,511 --
Proceeds from sales of other real estate........... 532,751 502,167
----------- -----------
Net cash used in investing activities............ (13,546,370) (10,194,031)
----------- -----------
Financing Activities
Net increase in deposits........................... 12,528,002 9,300,396
Net increase in Federal funds purchased and
securities sold under repurchase agreements....... 1,244,950 --
Repayment of note and debentures payable........... (15,385) (514,616)
Dividends paid..................................... (334,827) (334,827)
----------- -----------
Net cash provided by financing activities........ 13,422,740 8,450,953
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
FA-5
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Net increase (decrease) in cash and due from banks..... $ 769,751 $ (465,721)
Cash and due from banks at beginning of year........... 3,499,104 3,964,825
---------- ----------
Cash and due from banks at end of year................. $4,268,855 $3,499,104
========== ==========
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest........................................... $4,803,636 $4,346,594
Income taxes....................................... $1,056,533 $ 918,394
NONCASH TRANSACTIONS
Unrealized (gains) losses on securities available-
for-sale............................................ $ (163,293) $ 39,392
Principal balances of loans transferred to other real
estate.............................................. $ 376,429 $ 547,794
</TABLE>
See Notes to Consolidated Financial Statements.
FA-6
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
The Bank Holding Company (the Company) is a multi-bank holding company whose
business is conducted by its wholly-owned subsidiaries, The Bank of Spalding
County and First Community Bank of Henry County (the Banks). The Banks are
commercial banks located in Griffin, Spalding County, Georgia and McDonough,
Henry County, Georgia, respectively. The Banks provide a full range of banking
services in its primary market areas of Spalding and Henry counties and
surrounding counties.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Significant intercompany transactions and accounts are
eliminated in consolidation.
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and general practices within the financial
services industry. In preparing the financial statements, management is
required to make estimates and assumptions that affect the reported amounts
and disclosures of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could differ from
those estimates.
CASH AND DUE FROM BANKS
Cash on hand, cash items in process of collection, and amounts due from
banks are included in cash and due from banks.
The Company maintains amounts due from banks which, at times, may exceed
Federally insured limits. The Company has not experienced any losses in such
accounts.
SECURITIES
Securities are classified based on management's intention on the date of
purchase. Securities which management has the intent and ability to hold to
maturity are classified as held-to-maturity and reported at amortized cost.
All other debt securities are classified as available-for-sale and carried at
fair value with net unrealized gains and losses included in stockholders'
equity, net of tax. Equity securities without a readily determinable fair
value are carried at cost.
Interest and dividends on securities, including amortization of premiums and
accretion of discounts, are included in interest income. Realized gains and
losses from the sales of securities are determined using the specific
identification method.
LOANS HELD FOR SALE
Loans held for sale consist of mortgage loans and are carried at the lower
of aggregate cost or fair value. These loans are sold to investors who
purchase the loans with "locked in" interest rates agreed to by the investors
and the Company prior to closing, thereby reducing the Company's exposure to
interest rate risk. These loans are sold without recourse, and no servicing
rights are retained. The gain or loss on the sale of these loans are
recognized at the time the loans are funded by the investor.
FA-7
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
LOANS
Loans are carried at their principal amounts outstanding less the allowance
for loan losses. Interest income on loans is credited to income based on the
principal amount outstanding.
Loan origination fees and certain direct costs of loans are recognized at
the time the loan is recorded. Because net origination loan fees and costs are
not material, the results of operations are not materially different than the
results which would be obtained by accounting for loan fees and costs in
accordance with generally accepted accounting principles.
The allowance for loan losses is maintained at a level that management
believes to be adequate to absorb potential losses in the loan portfolio.
Management's determination of the adequacy of the allowance is based on an
evaluation of the portfolio, past loan loss experience, current economic
conditions, volume, growth, composition of the loan portfolio, and other risks
inherent in the portfolio. In addition, regulatory agencies, as an integral
part of their examination process, periodically review the Company's allowance
for loan losses, and may require the Company to record additions to the
allowance based on their judgment about information available to them at the
time of their examinations.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. Interest income is subsequently recognized only to the extent cash
payments are received.
A loan is impaired when it is probable the Company will be unable to collect
all principal and interest payments due in accordance with the terms of the
loan agreement. Individually identified impaired loans are measured based on
the present value of payments expected to be received, using the contractual
loan rate as the discount rate. Alternatively, measurement may be based on
observable market prices or, for loans that are solely dependent on the
collateral for repayment, measurement may be based on the fair value of the
collateral. If the recorded investment in the impaired loan exceeds the
measure of fair value, a valuation allowance is established as a component of
the allowance for loan losses. Changes to the valuation allowance are recorded
as a component of the provision for loan losses.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets.
GOODWILL
Goodwill represents the excess of the acquisition cost of First Community
Bank of Henry County over the fair value of the net assets acquired less
accumulated amortization. Goodwill is being amortized on the straight-line
method over a period of fifteen years.
OTHER REAL ESTATE OWNED
Other real estate owned represents properties acquired through foreclosure.
Other real estate owned is held for sale and is carried at the lower of the
recorded amount of the loan or fair value of the properties less estimated
selling costs. Any write-down to fair value at the time of transfer to other
real estate owned is charged to the allowance for loan losses. Subsequent
gains or losses on sale and any subsequent adjustment to the value are
recorded as other expenses.
FA-8
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
INCOME TAXES
Income tax expense consists of current and deferred taxes. Current income
tax provisions approximate taxes to be paid or refunded for the applicable
year. Deferred tax assets and liabilities are recognized for the temporary
differences between the bases of assets and liabilities as measured by tax
laws and their bases as reported in the financial statements. Deferred tax
expense or benefit is then recognized for the change in deferred tax assets or
liabilities between periods.
Recognition of deferred tax balance sheet amounts is based on management's
belief that it is more likely than not that the tax benefit associated with
certain temporary differences, tax operating loss carryforwards and tax
credits will be realized. A valuation allowance would be recorded for those
deferred tax items for which it is more likely than not that realization would
not occur.
The Company and the Banks file a consolidated income tax return. Each entity
provides for income taxes based on its contribution to income taxes (benefits)
of the consolidated group.
EARNINGS PER COMMON SHARE
Basic earnings per common share are computed by dividing net income
available to common stockholders by the weighted-average number of shares of
common stock outstanding. Diluted earnings per share are computed by dividing
net income available to common stockholders by the sum of the weighted-average
number of shares of common stock outstanding and potential common shares.
Potential common shares consist of stock options.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has issued, and the Company
has adopted, Statement of Financial Accounting Standards (SFAS) No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". SFAS No. 125 was amended by SFAS No. 127,
which defers the effective date of certain provisions of SFAS No. 125 until
January 1, 1998. This statement provides accounting and reporting standards
for transfers and servicing of financial assets and extinguishments of
liabilities based on consistent application of a financial-components approach
that focuses on control. It distinguishes transfers of financial assets that
are sales from transfers that are secured borrowings. The adoption of this
statement did not have a material effect on the Company's financial
statements.
The FASB has issued, and the Company has adopted, SFAS No. 128, "Earnings
Per Share". SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15
"Earnings Per Share" and specifies the computation, presentation, and
disclosure requirements for earnings per share (EPS) for entities with
publicly held common stock or potential issuable common stock. SFAS No. 128
replaces the presentation of primary EPS with a presentation of basic EPS and
fully diluted EPS with diluted EPS. It also requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the numerator
and denominator for the basic EPS computation to the numerator and denominator
of the diluted EPS computation. SFAS No. 128 is effective for financial
statements for both interim and annual periods ending after December 15, 1997.
The adoption of this statement did not have a material effect on the Company's
financial statements.
The FASB has issued SFAS No. 130, "Reporting Comprehensive Income". This
statement establishes standards for reporting and display of comprehensive
income and its components in the financial statements.
FA-9
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
SFAS No. 130 requires all items that are required to be recognized under
accounting standards as components of comprehensive income to be reported in a
financial statement that is displayed in equal prominence with the other
financial statements. The term "comprehensive income" is used in the SFAS to
describe the total of all components of comprehensive income including net
income. "Other comprehensive income" refers to revenues, expenses, gains and
losses that are included in comprehensive income but excluded from earnings
under current accounting standards. Currently, "other comprehensive income"
for the Company consists of items previously recorded directly in equity under
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". SFAS No. 130 is effective for periods beginning after December
15, 1997.
NOTE 2. SECURITIES
The amortized cost and fair value of securities are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Securities Available-for-Sale
December 31, 1997:
U. S. Government and agency
securities.................. $18,989,098 $40,937 $(113,478) $18,916,557
State and municipal securi-
ties........................ 805,870 3,418 (2,397) 806,891
Mortgage-backed securities... 2,902,252 13,539 (73,873) 2,841,918
Equity securities............ 648,470 -- -- 648,470
----------- ------- --------- -----------
$23,345,690 $57,894 $(189,748) $23,213,836
=========== ======= ========= ===========
December 31, 1996:
U. S. Government and agency
securities.................. $16,743,610 $13,299 $(205,697) $16,551,212
State and municipal securi-
ties........................ 642,033 6,162 (5,644) 642,551
Mortgage-backed securities... 3,679,233 17,222 (120,490) 3,575,965
Equity securities............ 624,970 -- -- 624,970
----------- ------- --------- -----------
$21,689,846 $36,683 $(331,831) $21,394,698
=========== ======= ========= ===========
</TABLE>
The amortized cost and fair value of securities as of December 31, 1997 by
contractual maturity are shown below. Maturities may differ from contractual
maturities in mortgage-backed securities because the mortgages underlying the
securities may be called or prepaid with or without penalty. Therefore, these
securities and equity securities are not included in the maturity categories
in the following summary.
<TABLE>
<CAPTION>
SECURITIES AVAILABLE-
FOR-SALE
-----------------------
AMORTIZED FAIR
COST VALUE
----------- -----------
Due in one year or less................................ $ 4,314,821 $ 4,286,891
<S> <C> <C>
Due from one year to five years........................ 9,016,849 8,967,754
Due from five to ten years............................. 6,167,303 6,173,799
Due in over ten years.................................. 295,995 295,004
Mortgage-backed securities............................. 2,902,252 2,841,918
Equity securities...................................... 648,470 648,470
----------- -----------
$23,345,690 $23,213,836
=========== ===========
</TABLE>
Securities with a carrying value of $11,521,000 and $8,128,000 at December
31, 1997 and 1996, respectively, were pledged to secure public deposits and
for other purposes.
FA-10
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2. SECURITIES--(CONTINUED)
Gains and losses on sales of securities available-for-sale consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1996
------- --------
<S> <C> <C>
Gross gains................................................... $11,627 $ 36,663
Gross losses.................................................. -- (20,071)
------- --------
Net realized gains............................................ $11,627 $ 16,592
======= ========
</TABLE>
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Commercial, financial, and agricultural............... $ 9,050,000 $ 5,269,000
Real estate--construction............................. 18,928,000 19,441,000
Real estate--mortgage................................. 52,356,961 47,692,000
Consumer installment and other........................ 10,322,692 8,705,868
----------- -----------
90,657,653 81,107,868
Allowance for loan losses............................. (1,423,667) (881,669)
----------- -----------
Loans, net............................................ $89,233,986 $80,226,199
=========== ===========
Changes in the allowance for loan losses are as follows:
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Balance, beginning of year............................ $ 881,669 $ 868,197
Provision for loan losses............................ 915,000 145,000
Loans charged off.................................... (405,787) (177,188)
Recoveries of loans previously charged off........... 32,785 45,660
----------- -----------
Balance, end of year.................................. $ 1,423,667 $ 881,669
=========== ===========
</TABLE>
The total recorded investment in impaired loans was $559,000 and $51,000 at
December 31, 1997 and 1996, respectively. There were no impaired loans that
had related allowances determined in accordance with Statement of Financial
Accounting Standard No. 114, ("Accounting by Creditors for Impairment of a
Loan") at December 31, 1997 and 1996. The average recorded investment in
impaired loans for 1997 and 1996 was $306,000 and $54,000, respectively.
Interest income on impaired loans recognized for cash payments received was
not material for the years ended December 31, 1997 and 1996.
The Company has granted loans to certain directors, executive officers, and
their related entities. The interest rates on these loans were substantially
the same as rates prevailing at the time of the transaction and repayment
terms are customary for the type of loan involved. Changes in related party
loans for the year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Balance, beginning of year.......................................... $ 8,869,441
<S> <C>
Advances........................................................... 6,780,204
Repayments......................................................... (6,481,475)
-----------
Balance, end of year................................................ $ 9,168,170
===========
</TABLE>
FA-11
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Land.................................................. $ 755,045 $ 881,354
Buildings and leasehold improvements.................. 3,101,331 3,107,681
Equipment............................................. 2,235,098 2,176,598
----------- -----------
6,091,474 6,165,633
Accumulated depreciation.............................. (2,478,820) (2,244,493)
----------- -----------
$ 3,612,654 $ 3,921,140
=========== ===========
</TABLE>
NOTE 5. LEASE COMMITMENTS
The Bank of Spalding County's premises and equipment are located on land
leased under a sixty year lease agreement. Rental expense incurred under this
lease was $37,409 for the years ended December 31, 1997 and 1996. The lease is
adjusted every five years based upon the change in the Consumer Price Index.
The agreement requires the Bank to pay all property taxes and normal
maintenance on the property.
The total minimum rental commitment at December 31, 1997 under this lease is
$1,795,632 which is due as follows:
<TABLE>
<CAPTION>
During the next five years.......................................... $ 187,045
<S> <C>
During the remaining term of the lease.............................. 1,608,587
----------
$1,795,632
==========
</TABLE>
NOTE 6. DEBENTURES PAYABLE
Debentures payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1996
------- -------
<S> <C> <C>
Debentures payable, due in annual installments of $15,385,
interest payable semi-annually at prime (8.50% at December 31,
1997), unsecured.............................................. $61,539 $76,924
======= =======
</TABLE>
NOTE 7. EMPLOYEE BENEFIT PLANS
The Company has a 401(k) retirement plan covering substantially all
employees. Contributions to the plan charged to expense during 1997 and 1996
amounted to $19,850 and $15,387, respectively.
The Company has granted stock options in 1997 to an executive officer of the
Company under an employment agreement. The agreement provides for the purchase
of 15,000 shares of common stock. The exercise price is based on the book
value of the Company's common stock at the date of exercise. The weighted-
average exercise price of $19.77 in the following table is based on the book
value of the Company's common stock at December 31, 1997. The options are
exercisable in 1,000 share annual increments.
FA-12
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7. EMPLOYEE BENEFIT PLANS--(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
WEIGHTED-
AVERAGE
EXERCISE
NUMBER PRICE
------- ---------
<S> <C> <C>
Under option, beginning of year.............................. -- $ --
Granted...................................................... 15,000 19.77
-------
Under option, end of year.................................... 15,000 19.77
=======
Exercisable, end of year..................................... 1,000 19.77
=======
Weighted-average fair value of options granted during the
year........................................................ $ 6.46
=======
Weighted-average remaining contractual life in years (under
option and exercisable)..................................... 10
=======
</TABLE>
As permitted by SFAS No. 123 ("Accounting for Stock-Based Compensation"),
the Company recognizes compensation cost for stock-based employee compensation
awards in accordance with APB Opinion No. 25, ("Accounting for Stock Issued to
Employees"). The Company recognized no compensation cost for stock-based
employee compensation awards for the years ended December 31, 1997 and 1996.
If the Company had recognized compensation cost in accordance with SFAS No.
123, net income and earnings per share would have been reduced as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------
NET INCOME
AVAILABLE TO BASIC
COMMON EARNINGS
STOCKHOLDERS PER SHARE
------------ ---------
<S> <C> <C>
As reported.............................................. $1,023,387 $ 1.84
Stock-based compensation, net of related tax effect...... (4,020) (0.01)
---------- ------
As adjusted.............................................. $1,019,367 $ 1.83
========== ======
</TABLE>
The fair value of the options granted during the year was based upon the
discounted value of future cash flows of the options using the following
assumptions:
<TABLE>
<CAPTION>
Risk-free rate......................................................... 5.97%
<S> <C>
Expected life of the options........................................... 10 Years
Expected dividends (as a percent of the fair value of the stock)....... 1.26%
Volatility............................................................. 5.60%
</TABLE>
NOTE 8: INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1996
--------- --------
<S> <C> <C>
Current..................................................... $ 966,413 $975,075
Deferred.................................................... (176,566) 3,988
--------- --------
Income tax expense.......................................... $ 789,847 $979,063
========= ========
</TABLE>
FA-13
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8: INCOME TAXES--(CONTINUED)
The Company's income tax expense differs from the amounts computed by
applying the Federal income tax statutory rates to income before income taxes.
A reconciliation of the differences is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1997 1996
----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Income taxes at statutory rate.............. $683,036 34% $823,169 34%
Tax-exempt interest......................... (9,656) -- (7,543) --
State income taxes.......................... 36,393 2 53,216 2
Goodwill amortization....................... 62,774 3 62,774 2
Other items, net............................ 17,300 -- 47,447 2
-------- --- -------- ---
Income tax expense.......................... $789,847 39% $979,063 40%
======== === ======== ===
</TABLE>
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Loan loss reserves......................................... $449,509 $266,545
Securities available-for-sale.............................. 50,105 112,156
Other...................................................... 10,067 15,613
-------- --------
509,681 394,314
-------- --------
Deferred tax liabilities, depreciation....................... 275,295 274,443
-------- --------
Net deferred tax assets...................................... $234,386 $119,871
======== ========
</TABLE>
NOTE 9: EARNINGS PER COMMON SHARE
The following is a reconciliation of net income (the numerator) and weighted-
average shares outstanding (the denominator) used in determining basic earnings
per common share (EPS):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------------------------------
WEIGHTED-
AVERAGE
NET INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Net income................................. $1,219,083
Less: preferred stock dividends............ (195,696)
----------
Basic EPS.................................. $1,023,387 556,525 $ 1.84
========== ======= ======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
------------------------------------
WEIGHTED-
AVERAGE
NET INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Net income................................. $1,442,022
Less: preferred stock dividends............ (195,696)
----------
Basic EPS.................................. $1,246,326 556,525 $2.24
========== ======= =====
</TABLE>
FA-14
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. COMMITMENTS AND CONTINGENT LIABILITIES
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 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:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996
----------- -----------
<S> <C> <C>
Commitments to extend credit........................... $21,789,000 $14,699,087
Standby letters of credit.............................. 1,800,378 1,247,629
----------- -----------
$23,589,378 $15,946,716
=========== ===========
</TABLE>
Commitments to extend credit generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
credit risk involved in issuing these financial instruments is essentially the
same as that involved in extending loans to customers. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation of the customer. Collateral
held varies but may include real estate and improvements, marketable
securities, accounts receivable, inventory, equipment, and personal property.
Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held
varies as specified above and is required in instances which the Company deems
necessary.
In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management of the Company, any liability
resulting from such proceedings would not have a material effect on the
Company's financial statements.
NOTE 11. CONCENTRATIONS OF CREDIT
The Company originates primarily commercial, residential, and consumer loans
to customers in Spalding and Henry counties and surrounding counties. The
ability of the majority of the Company's customers to honor their contractual
loan obligations is dependent on the economy in these areas.
Seventy-nine percent of the Company's loan portfolio is concentrated in
loans secured by real estate, of which a substantial portion is secured by
real estate in the Company's primary market area. In addition, a substantial
portion of the other real estate owned is located in those same markets.
Accordingly, the ultimate collectibility of the loan portfolio and the
recovery of the carrying amount of other real estate owned are susceptible to
changes in market conditions in the Company's primary market area. The other
significant concentrations of credit by type of loan are set forth in Note 3.
FA-15
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11. CONCENTRATIONS OF CREDIT--(CONTINUED)
The Banks, as a matter of policy, do not generally extend credit to any
single borrower or group of related borrowers in excess of 25% of the Banks'
statutory capital, which amounted to $1,069,000 for The Bank of Spalding
County and $1,241,000 for First Community Bank of Henry County.
NOTE 12. REGULATORY MATTERS
The Banks are subject to certain restrictions on the amount of dividends
that may be declared without prior regulatory approval. At December 31, 1997,
approximately $639,000 of retained earnings were available for dividend
declaration without regulatory approval.
The Company and the Banks are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory--and possibly
additional discretionary--actions by regulators that, if undertaken, could
have a direct material effect on the financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and Banks must meet specific capital guidelines that involve
quantitative measures of the assets, liabilities, and certain off-balance-
sheet items as calculated under regulatory accounting practices. The Company
and Banks' capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Banks to maintain minimum amounts and ratios of
total and Tier I capital to risk-weighted assets and of Tier I capital to
average assets. Management believes, as of December 31, 1997, the Company and
the Banks meet all capital adequacy requirements to which they are subject.
As of December 31, 1997, notification from the FDIC categorized the Banks as
well capitalized under the regulatory framework for prompt corrective action.
To be categorized as well capitalized, the Banks must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the
following table. There are no conditions or events since that notification
that management believes have changed the Banks' category.
The Company and Banks' actual capital amounts and ratios are presented in
the following table.
<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------- ------------ -------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------ ----- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital (to Risk
Weighted Assets):
Consolidated................ $10,116 10.38% $7,800 8% $9,750 10%
Spalding.................... $ 5,821 14.01% $3,325 8% $4,156 10%
Henry....................... $ 6,412 11.51% $4,456 8% $5,570 10%
Tier I Capital (to Risk
Weighted Assets):
Consolidated................ $ 8,897 9.13% $3,900 4% $5,850 6%
Spalding ................... $ 5,302 12.76% $1,663 4% $2,494 6%
Henry....................... $ 5,867 10.53% $2,228 4% $3,342 6%
Tier I Capital (to Average As-
sets):
Consolidated................ $ 8,897 6.84% $5,204 4% $6,505 5%
Spalding ................... $ 5,302 8.80% $2,410 4% $3,012 5%
Henry ...................... $ 5,867 8.43% $2,785 4% $3,481 5%
</TABLE>
FA-16
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12. REGULATORY MATTERS--(CONTINUED)
<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------ ------------ -------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital (to Risk Weighted
Assets):
Consolidated................. $8,708 10.06% $6,925 8% $ 8,656 10%
Spalding..................... $5,643 12.51% $3,609 8% $ 4,511 10%
Henry........................ $5,566 13.42% $3,318 8% $ 4,148 10%
Tier I Capital (to Risk
Weighted Assets):
Consolidated................. $7,828 9.04% $3,464 4% $ 5,196 6%
Spalding..................... $5,113 11.33% $1,805 4% $ 2,708 6%
Henry........................ $5,216 12.58% $1,659 4% $ 2,488 6%
Tier I Capital (to Average As-
sets):
Consolidated................. $7,828 6.90% $4,538 4% $ 5,672 5%
Spalding..................... $5,113 8.39% $2,438 4% $ 3,047 5%
Henry........................ $5,216 9.94% $2,099 4% $ 2,624 5%
</TABLE>
NOTE 13. PREFERRED STOCK
The Company issued 40,770 shares of nonvoting, nonconvertible $60 par value
preferred stock totaling $2,446,200 in connection with the acquisition of
First Community Bank of Henry County. The preferred stock pays an 8% annual
dividend which is cumulative but subordinate to the rights of trade creditors.
Holders of the preferred shares will be entitled to redeem the shares on or
after October 3, 2004. The Company has the right to redeem up to 20% of the
preferred shares each year beginning on October 3, 1999.
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments. In cases where quoted
market prices are not available, fair values are based on estimates using
discounted cash flow methods. Those methods are significantly affected by the
assumptions used, including the discount rates and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the instrument. The use of
different methodologies may have a material effect on the estimated fair value
amounts. Also, the fair value estimates presented herein are based on
pertinent information available to management as of December 31, 1997 and
1996. Such amounts have not been revalued for purposes of these financial
statements since those dates and, therefore, current estimates of fair value
may differ significantly from the amounts presented herein.
Cash, Due From Banks, and Federal Funds Purchased and Sold:
The carrying amounts of cash, due from banks, and Federal funds purchased
and sold approximate their fair value.
Securities:
Fair values for securities are based on quoted market prices. The
carrying values of equity securities with no readily determinable fair
value approximate fair values.
FA-17
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)
Loans:
For variable-rate loans that reprice frequently and have no significant
change in credit risk, fair values are based on carrying values. For other
loans, the fair values are estimated using discounted cash flow methods,
using interest rates currently being offered for loans with similar terms
to borrowers of similar credit quality. Fair values for impaired loans are
estimated using discounted cash flow methods or underlying collateral
values.
Deposits:
The carrying amounts of demand deposits, savings deposits, and variable-
rate certificates of deposit approximate their fair values. Fair values for
fixed-rate certificates of deposit are estimated using discounted cash flow
methods, using interest rates currently being offered on certificates.
Debentures Payable:
The carrying amount of debentures payable approximates its fair value.
Accrued Interest:
The carrying amount of accrued interest approximate their fair values.
Preferred Stock:
The carrying amount of preferred stock approximates its fair value.
Off-Balance-Sheet Instruments:
Fair values of the Company's off-balance-sheet financial instruments are
based on fees charged to enter into similar agreements. However,
commitments to extend credit and standby letters of credit do not represent
a significant value to the Company until such commitments are funded. The
Company has determined that these instruments do not have a distinguishable
fair value and no fair value has been assigned.
The estimated fair values of the Company's financial instruments were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------- -------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Financial assets:
Cash, due from banks, and
Federal funds sold...... $ 9,618,855 $ 9,618,855 $ 6,719,104 $ 6,719,104
Securities available-for-
sale.................... 23,213,836 23,213,836 21,394,698 21,394,698
Loans held for sale...... 3,375,039 3,375,039 2,141,508 2,141,508
Loans.................... 89,233,986 92,239,931 80,226,199 81,532,000
Accrued interest
receivable.............. 1,583,582 1,583,582 1,157,262 1,157,262
Financial liabilities:
Deposits................. 116,970,059 117,364,004 104,442,057 105,050,792
Federal funds purchased
and securities sold
under repurchase
agreements.............. 1,244,950 1,244,950 -- --
Debentures payable....... 61,539 61,539 76,924 76,924
Accrued interest payable. 1,853,673 1,853,673 1,534,301 1,534,301
Preferred stock.......... 2,446,200 2,446,200 2,446,200 2,446,200
</TABLE>
FA-18
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15. SUPPLEMENTAL FINANCIAL DATA
Components of other operating expenses in excess of 1% of income are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
<S> <C> <C>
Data processing............................................... $202,482 $191,850
Directors fees................................................ 158,550 161,275
Advertising................................................... 141,431 117,491
</TABLE>
NOTE 16. PARENT COMPANY FINANCIAL INFORMATION
The following information presents the condensed balance sheets, statements
of income, and cash flows of The Bank Holding Company as of and for the years
ended December 31, 1997 and 1996:
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Assets
Cash................................................. $ -- $ 2,352
Investment in subsidiaries........................... 13,270,945 12,515,901
Other assets......................................... 236,676 19,255
----------- -----------
Total assets....................................... $13,507,621 $12,537,508
=========== ===========
</TABLE>
<TABLE>
<S> <C> <C>
Liabilities
Liabilities, debentures payable...................... $ 61,539 $ 76,924
----------- -----------
Preferred stock...................................... 2,446,200 2,446,200
----------- -----------
Common stockholders' equity.......................... 10,999,882 10,014,384
----------- -----------
$13,507,621 $12,537,508
=========== ===========
</TABLE>
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Income, dividends from subsidiaries.................... $ 625,000 $ 780,000
---------- ----------
Expense
Interest............................................. 6,154 31,979
Other expenses....................................... 89,735 60,881
---------- ----------
Total expenses..................................... 95,889 92,860
---------- ----------
Income before income tax benefits and equity in
undistributed income of subsidiaries.................. 529,111 687,140
Income tax benefits.................................... (36,170) (35,440)
---------- ----------
Income before equity in undistributed income of
subsidiaries........................................ 565,281 722,580
Equity in undistributed income of subsidiaries......... 653,802 719,442
---------- ----------
Net income........................................... $1,219,083 $1,442,022
========== ==========
</TABLE>
FA-19
<PAGE>
THE BANK HOLDING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15. SUPPLEMENTAL FINANCIAL DATA--(CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................ $1,219,083 $1,442,022
Adjustments to reconcile net income to net cash
provided by operating activities:
Undistributed income of subsidiaries................ (653,802) (719,442)
Other operating activities.......................... (217,421) 12,395
---------- ----------
Net cash provided by operating activities........... 347,860 734,975
---------- ----------
FINANCING ACTIVITIES
Repayment of note and debentures payable.............. (15,385) (514,616)
Dividends paid........................................ (334,827) (334,827)
---------- ----------
Net cash used in financing activities............... (350,212) (849,443)
---------- ----------
Net decrease in cash................................ (2,352) (114,468)
Cash at beginning of year............................. 2,352 116,820
---------- ----------
Cash at end of year................................... $ -- $ 2,352
========== ==========
</TABLE>
NOTE 17. BUSINESS COMBINATION
On December 3, 1997, the Company entered into an Agreement and Plan of
Reorganization with Premier Bancshares, Inc. ("Premier") of Atlanta, Georgia.
Under this agreement, the Company will merge with and into Premier. Upon
consummation of the merger, each share of Company stock will be converted into
and exchanged for the right to receive 3.90 shares of Premier common stock,
subject to possible adjustment as defined in the agreement. Consummation is
subject to certain conditions, including regulatory and stockholder approval.
FA-20
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Button Gwinnett Financial Corporation and Subsidiary
Lawrenceville, Georgia
We have audited the accompanying consolidated balance sheets of Button
Gwinnett Financial Corporation and subsidiary as of December 31, 1997 and
1996, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Button
Gwinnett Financial Corporation and subsidiary as of December 31, 1997 and
1996, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 14, 1998, except for Note 14 as to
which the date is February 5, 1998
FB-1
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
ASSETS ------------ ------------
<S> <C> <C>
Cash and due from banks........................ $ 13,808,676 $ 9,823,064
Interest-bearing deposits in banks............. 500,000 --
Federal funds sold............................. 6,765,000 21,515,000
Securities held-to-maturity (fair value of
$45,666,802 and $32,047,933).................. 45,540,620 32,004,283
Loans.......................................... 144,850,291 119,899,273
Less allowance for loan losses................. 2,577,044 2,330,733
------------ ------------
Loans, net................................... 142,273,247 117,568,540
Premises and equipment......................... 3,873,124 3,620,119
Other assets................................... 2,430,217 2,037,288
------------ ------------
Total assets................................. $215,190,884 $186,568,294
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Deposits
Noninterest-bearing demand................... $ 54,298,531 $ 43,877,754
Interest-bearing demand...................... 66,759,403 59,655,148
Savings...................................... 4,473,462 5,531,514
Time, $100,000 and over...................... 25,259,652 18,447,251
Other time................................... 38,428,591 37,725,123
------------ ------------
Total deposits............................. 189,219,639 165,236,790
Other liabilities............................ 1,495,734 1,318,560
------------ ------------
Total liabilities.......................... 190,715,373 166,555,350
------------ ------------
Commitments and contingent liabilities
Stockholders' equity
Preferred stock, par value $.01; 1,000,000
shares authorized; none issued.............. -- --
Common stock, par value $.01; 5,000,000
shares authorized; 1,527,639 shares issued;
1,432,477 and 1,378,746 shares outstanding.. 15,276 15,276
Capital surplus.............................. 13,334,986 13,354,771
Retained earnings............................ 12,311,438 8,264,430
Treasury stock, 95,162 and 148,893 shares.... (1,186,189) (1,621,533)
------------ ------------
Total stockholders' equity................. 24,475,511 20,012,944
------------ ------------
Total liabilities and stockholders' equity. $215,190,884 $186,568,294
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
FB-2
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Interest income
Loans.................................... $13,718,655 $12,020,294 $11,396,642
Taxable securities....................... 2,014,838 1,558,034 1,082,895
Nontaxable securities.................... 153,496 181,592 211,158
Deposits in banks........................ 29,822 7,705 14,646
Federal funds sold....................... 750,395 938,688 830,876
----------- ----------- -----------
Total interest income.................. 16,667,206 14,706,313 13,536,217
Interest expense on deposits............... 5,686,325 5,224,796 4,807,424
----------- ----------- -----------
Net interest income.................... 10,980,881 9,481,517 8,728,793
Provision for loan losses.................. 260,000 445,000 600,000
----------- ----------- -----------
Net interest income after provision for
loan losses........................... 10,720,881 9,036,517 8,128,793
----------- ----------- -----------
Other income
Service charges on deposit accounts...... 780,220 757,084 702,150
Other operating income................... 320,918 279,438 260,847
Gain on sale of land..................... -- -- 316,036
----------- ----------- -----------
Total other income..................... 1,101,138 1,036,522 1,279,033
----------- ----------- -----------
Other expenses
Salaries and employee benefits........... 2,690,385 2,346,532 2,169,080
Equipment expenses....................... 207,388 315,932 280,299
Occupancy expenses....................... 220,940 195,894 226,839
Other operating expenses................. 1,107,112 1,256,931 1,636,198
----------- ----------- -----------
Total other expenses................... 4,225,825 4,115,289 4,312,416
----------- ----------- -----------
Income before income taxes............. 7,596,194 5,957,750 5,095,410
Income tax expense......................... 2,732,668 2,112,946 1,798,089
----------- ----------- -----------
Net income................................. $ 4,863,526 $ 3,844,804 $ 3,297,321
=========== =========== ===========
Basic earnings per common share............ $ 3.54 $ 2.79 $ 2.38
=========== =========== ===========
Diluted earnings per common share.......... $ 3.32 $ 2.62 $ 2.30
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
FB-3
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK TOTAL
------------------- CAPITAL RETAINED -------------------- STOCKHOLDERS'
SHARES PAR VALUE SURPLUS EARNINGS SHARES COST EQUITY
--------- --------- ----------- ----------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1994................... 1,527,539 $15,275 $13,353,647 $ 2,297,206 82,828 $ (741,378) $14,924,750
Net income............. -- -- -- 3,297,321 -- -- 3,297,321
Cash dividends
declared, $.35 per
share................. -- -- -- (484,658) -- -- (484,658)
Exercise of stock
options............... 100 1 1,124 -- -- -- 1,125
Purchase of treasury
stock................. -- -- -- -- 62,174 (823,735) (823,735)
--------- ------- ----------- ----------- ------- ----------- -----------
Balance, December 31,
1995................... 1,527,639 15,276 13,354,771 5,109,869 145,002 (1,565,113) 16,914,803
Net income............. -- -- -- 3,844,804 -- -- 3,844,804
Cash dividends
declared, $.50 per
share................. -- -- -- (690,243) -- -- (690,243)
Purchase of treasury
stock................. -- -- -- -- 3,891 (56,420) (56,420)
--------- ------- ----------- ----------- ------- ----------- -----------
Balance, December 31,
1996................... 1,527,639 15,276 13,354,771 8,264,430 148,893 (1,621,533) 20,012,944
Net income............. -- -- -- 4,863,526 -- -- 4,863,526
Cash dividends
declared, $.60 per
share................. -- -- -- (816,518) -- -- (816,518)
Exercise of stock
options............... -- -- (217,013) -- (98,950) 1,384,943 1,167,930
Purchase of treasury
stock................. -- -- -- -- 45,219 (949,599) (949,599)
Tax benefit of stock-
based compensation
deducted for income
tax reporting purposes
in excess of stock-
based compensation
recognized for
financial reporting
purposes.............. -- -- 197,228 -- -- -- 197,228
--------- ------- ----------- ----------- ------- ----------- -----------
Balance, December 31,
1997................... 1,527,639 $15,276 $13,334,986 $12,311,438 95,162 $(1,186,189) $24,475,511
========= ======= =========== =========== ======= =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
FB-4
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1966 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Operating Activities
Net income......................... $ 4,863,526 $ 3,844,804 $ 3,297,321
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation..................... 200,619 281,987 271,187
Increase (decrease) in OAKAR
deposit assessment expense
accrual......................... -- (260,000) 260,000
Provision for loan losses........ 260,000 445,000 600,000
Deferred income taxes............ (81,450) (229,337) (55,625)
Gain on sale of land............. -- -- (316,036)
Gain on sale of other real es-
tate............................ -- (40,347) --
Increase in interest receivable.. (276,869) (112,697) (147,804)
Increase in interest payable..... 62,889 77,402 490,372
Other operating activities....... 276,903 (92,283) 78,954
------------ ------------ ------------
Net cash provided by operating
activities.................... 5,305,618 3,914,529 4,478,369
------------ ------------ ------------
Investing Activities
Purchases of securities held-to-
maturity.......................... (23,184,053) (16,500,000) (9,165,000)
Proceeds from maturities of
securities held-to-maturity....... 9,647,716 10,407,277 6,915,054
Net (increase) decrease in Federal
funds sold........................ 14,750,000 (1,890,000) (16,680,000)
Net (increase) decrease in
interest-bearing deposits in
banks............................. (500,000) 200,000 100,000
Net increase in loans.............. (24,964,707) (17,605,807) (15,534,563)
Proceeds from sale of land......... -- 721,452 --
Proceeds from sale of other real
estate............................ -- 361,188 --
Proceeds of premises and equipment. (453,624) (53,911) (63,048)
------------ ------------ ------------
Net cash used in investing
activities...................... (24,704,668) (24,359,801) (34,427,557)
------------ ------------ ------------
Financing Activities
Net increase in deposits........... 23,982,849 24,432,671 29,752,674
Purchase of treasury stock......... (949,599) (56,420) (823,735)
Proceeds from exercise of stock
options........................... 1,167,930 -- 1,125
Dividends paid..................... (816,518) (690,243) (484,658)
------------ ------------ ------------
Net cash provided by financing
activities...................... 23,384,662 23,686,008 28,445,406
------------ ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
FB-5
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- -----------
<S> <C> <C> <C>
Net increase (decrease) in cash and due
from banks................................ $ 3,985,612 $3,240,736 $(1,503,782)
Cash and due from banks at beginning of
year...................................... 9,823,064 6,582,328 8,086,110
----------- ---------- -----------
Cash and due from banks at end of year..... $13,808,676 $9,823,064 $ 6,582,328
=========== ========== ===========
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest............................... $ 5,623,436 $5,147,394 $ 4,317,052
Income taxes........................... $ 2,504,677 $2,291,000 $ 1,935,643
NONCASH TRANSACTIONS
Principal balances of loans transferred
to other real estate.................... $ -- $ 290,841 $ 30,000
</TABLE>
See Notes to Consolidated Financial Statements.
FB-6
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Button Gwinnett Financial Corporation (the Company) is a bank holding
company whose business is conducted by its wholly-owned subsidiary, The Bank
of Gwinnett County, (the Bank). The Bank is a commercial bank located in
Lawrenceville, Gwinnett County, Georgia with branches located in Snellville
and Lilburn, Georgia. The Bank provides a full range of banking services in
its primary market area of Gwinnett County and the surrounding counties.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company
and its subsidiary. Significant intercompany transactions and accounts are
eliminated in consolidation.
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and general practices within the financial
services industry. In preparing the financial statements, management is
required to make estimates and assumptions that affect the reported amounts
and disclosures of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could differ from
those estimates.
CASH AND DUE FROM BANKS
Cash on hand, cash items in process of collection and amounts due from banks
are included in cash and due from banks.
The Company maintains amounts due from banks which, at times, may exceed
Federally insured limits. The Company has not experienced any losses in such
accounts.
SECURITIES
Securities are classified based on management's intention on the date of
purchase. Securities which management has the intent and ability to hold to
maturity are classified as held-to-maturity and reported at amortized cost.
All other securities would be classified as available-for-sale and carried at
fair value with net unrealized gains and losses included in stockholders'
equity net of tax.
Interest and dividends on securities, including amortization of premiums and
accretion of discounts, are included in interest income. Realized gains and
losses from the sales of securities are determined using the specific
identification method.
LOANS
Loans are carried at their principal amounts outstanding less unearned
income and the allowance for loan losses. Interest income on loans is credited
to income based on the principal amount outstanding.
Nonrefundable loan fees and certain direct loan origination costs are
deferred with the net amount recognized into income over the life of the loans
as a yield adjustment.
The allowance for loan losses is maintained at a level that management
believes to be adequate to absorb potential losses in the loan portfolio.
Management's determination of the adequacy of the allowance is based on an
evaluation of the portfolio, past loan loss experience, current economic
conditions, volume, growth, composition of the loan portfolio, and other risks
inherent in the portfolio. In addition, regulatory agencies, as an integral
part of their examination process, periodically review the Company's allowance
for loan losses, and may
FB-7
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
require the Company to record additions to the allowance based on their
judgment about information available to them at the time of their
examinations.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. Interest income is subsequently recognized only to the extent cash
payments are received.
A loan is impaired when it is probable the Company will be unable to collect
all principal and interest payments due in accordance with the terms of the
loan agreement. Individually identified impaired loans are measured based on
the present value of payments expected to be received, using the contractual
loan rate as the discount rate. Alternatively, measurement may be based on
observable market prices or, for loans that are solely dependent on the
collateral for repayment, measurement may be based on the fair value of the
collateral. If the recorded investment in the impaired loan exceeds the
measure of fair value, a valuation allowance is established as a component of
the allowance for loan losses. Changes to the valuation allowance are recorded
as a component of the provision for loan losses.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets.
INCOME TAXES
Income tax expense consists of current and deferred taxes. Current income
tax provisions approximate taxes to be paid or refunded for the applicable
year. Deferred tax assets and liabilities are recognized for the temporary
differences between the bases of assets and liabilities as measured by tax
laws and their bases as reported in the financial statements. Deferred tax
expense or benefit is then recognized for the change in deferred tax assets or
liabilities between periods.
Recognition of deferred tax balance sheet amounts is based on management's
belief that it is more likely than not that the tax benefit associated with
certain temporary differences, tax operating loss carryforwards, and tax
credits will be realized. A valuation allowance would be recorded for those
deferred tax items for which it is more likely than not that realization would
not occur.
The Company and the Bank file a consolidated income tax return. Each entity
provides for income taxes based on its contribution to income taxes (benefits)
of the consolidated group.
EARNINGS PER COMMON SHARE
Basic earnings per common share are computed by dividing net income by the
weighted-average number of shares of common stock outstanding. Diluted
earnings per share are computed by dividing net income by the sum of the
weighted-average number of shares of common stock outstanding and potential
common shares. Potential common shares consist of stock options.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has issued, and the Company
has adopted, Statement of Financial Accounting Standards (SFAS) No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". SFAS No. 125 was amended by SFAS No. 127,
which defers the effective date of certain provisions of SFAS No. 125 until
January 1, 1998. This statement provides accounting and reporting standards
for transfers and servicing of financial assets and extinguishments of
liabilities based on
FB-8
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
consistent application of a financial-components approach that focuses on
control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings. The adoption of this statement did not
have a material effect on the Company's financial statements.
The FASB has issued, and the Company has adopted, SFAS No. 128, "Earnings
Per Share". SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15
"Earnings Per Share" and specifies the computation, presentation, and
disclosure requirements for earnings per share (EPS) for entities with
publicly held common stock or potential issuable common stock. SFAS No. 128
replaces the presentation of primary EPS with a presentation of basic EPS and
fully diluted EPS with diluted EPS. It also requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the numerator
and denominator for the basic EPS computation to the numerator and denominator
of the diluted EPS computation. SFAS No. 128 is effective for financial
statements for both interim and annual periods ending after December 15, 1997.
The adoption of this statement did not have a material effect on the Company's
financial statements.
The FASB has issued SFAS No. 130, "Reporting Comprehensive Income". This
statement establishes standards for reporting and display of comprehensive
income and its components in the financial statements. SFAS No. 130 requires
all items that are required to be recognized under accounting standards as
components of comprehensive income to be reported in a financial statement
that is displayed in equal prominence with the other financial statements. The
term "comprehensive income" is used in the SFAS to describe the total of all
components of comprehensive income including net income. "Other comprehensive
income" refers to revenues, expenses, gains and losses that are included in
comprehensive income but excluded from earnings under current accounting
standards. Currently, "other comprehensive income" for the Company consists of
items previously recorded directly in equity under SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". SFAS No. 130 is
effective for periods beginning after December 15, 1997.
NOTE 2. SECURITIES
The amortized cost and fair value of securities are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Securities Held-to-Maturity
December 31, 1997:
U. S. Government and agency se-
curities...................... $32,777,796 $ 89,531 $(29,352) $32,837,975
State and municipal securities. 5,223,492 57,461 (630) 5,280,323
Mortgage-backed securities..... 7,539,332 16,759 (7,587) 7,548,504
----------- -------- -------- -----------
$45,540,620 $163,751 $(37,569) $45,666,802
=========== ======== ======== ===========
Securities Held-to-Maturity
December 31, 1996:
U. S. Government and agency se-
curities...................... $28,300,312 $ 66,788 $(74,851) $28,292,249
State and municipal securities. 3,703,971 55,716 (4,003) 3,755,684
----------- -------- -------- -----------
$32,004,283 $122,504 $(78,854) $32,047,933
=========== ======== ======== ===========
</TABLE>
FB-9
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2. SECURITIES--(CONTINUED)
The amortized cost and fair value of securities as of December 31, 1997 by
contractual maturity are shown below. Maturities may differ from contractual
maturities of mortgage-backed securities because the mortgages underlying the
securities may be called or prepaid with or without penalty. Therefore, these
securities are not included in the maturity categories in the following
maturity summary.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less................................ $10,041,850 $10,041,185
Due from one year to five years........................ 25,615,663 25,725,068
Due from five to ten years............................. 193,775 202,045
Due in over ten years.................................. 2,150,000 2,150,000
Mortgage-backed securities............................. 7,539,332 7,548,504
----------- -----------
$45,540,620 $45,666,802
=========== ===========
</TABLE>
Securities with a carrying value of $650,000 and $1,650,000 at December 31,
1997 and 1996, respectively, were pledged to secure public deposits and for
other purposes.
There were no sales of securities in 1997, 1996 or 1995.
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
Commercial and financial............................ $ 32,179,000 $ 28,102,000
Business loans secured by real estate............... 62,035,000 42,297,000
Real estate--construction........................... 34,857,000 37,199,000
Real estate--mortgage............................... 9,134,000 7,997,000
Consumer instalment and other....................... 6,995,787 4,651,036
------------ ------------
145,200,787 120,246,036
Deferred fees....................................... (350,496) (346,763)
Allowance for loan losses........................... (2,577,044) (2,330,733)
------------ ------------
Loans, net.......................................... $142,273,247 $117,568,540
============ ============
</TABLE>
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Balance, beginning of year................. $2,330,733 $1,953,189 $1,464,057
Provision for loan losses................. 260,000 445,000 600,000
Loans charged off......................... (24,507) (85,160) (121,424)
Recoveries of loans previously charged
off...................................... 10,818 17,704 10,556
---------- ---------- ----------
Balance, end of year....................... $2,577,044 $2,330,733 $1,953,189
========== ========== ==========
</TABLE>
FB-10
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES--(CONTINUED)
The total recorded investment in impaired loans was $88,302 and $121,760 at
December 31, 1997 and 1996, respectively. There were no impaired loans that
had related allowances for loan losses determined in accordance with SFAS No.
114 ("Accounting by Creditors for Impairment of a Loan") at December 31, 1997
and 1996. The average recorded investment in impaired loans for 1997 and 1996
was $104,299 and $64,881, respectively. Interest income recognized on impaired
loans for cash payments received was not material for the years ended December
31, 1997, 1996 and 1995.
The Company has granted loans to certain directors, executive officers, and
their related entities. The interest rates on these loans were substantially
the same as rates prevailing at the time of the transaction and repayment
terms are customary for the type of loan involved. Changes in related party
loans for the year ended December 31, 1997 are as follows:
<TABLE>
<S> <C>
Balance, beginning of year.......................................... $5,110,576
Advances........................................................... 676,824
Repayments......................................................... (1,841,215)
Transactions due to changes in directors........................... (1,353,909)
----------
Balance, end of year................................................ $2,592,276
==========
</TABLE>
NOTE 4. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Land.................................................. $ 1,719,914 $ 1,241,377
Buildings............................................. 2,662,122 2,715,658
Equipment............................................. 1,352,856 1,359,371
----------- -----------
5,734,892 5,316,406
Accumulated depreciation.............................. (1,861,768) (1,696,287)
----------- -----------
$ 3,873,124 $ 3,620,119
=========== ===========
</TABLE>
NOTE 5. EMPLOYEE BENEFIT PLANS
The Company has a contributory 401(K) retirement plan covering substantially
all employees. Contributions to the plan charged to expense for the years
ended December 31, 1997, 1996 and 1995 amounted to $46,827, $41,164, and
$33,712, respectively.
The Company has deferred compensation agreements with three of its key
employees which provide benefits payable at age sixty-five or if the employee
becomes totally disabled. There was no liability associated with these
agreements at December 31, 1997 and 1996, respectively.
The Company purchased and is the beneficiary of life insurance policies on
these three key employees. The policies will be used to fund the deferred
compensation agreements referred to above. The carrying value of these
policies at December 31, 1997 and 1996 was $171,026 and $118,968,
respectively. Income (expense) recognized on these policies for the years
ended December 31, 1997, 1996, and 1995 was $4,558, $(2,795), and $(8,691),
respectively.
FB-11
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. EMPLOYEE STOCK OPTION PLAN
The Company has an Employee Stock Option Plan with 17,400 remaining common
stock options available to grant to key employees. Option prices are
determined by the Company's Stock Option Plan Committee, but cannot be less
than 100% of the fair value of the Company's common stock on the date of the
grant. The options expire in ten years from date of grant. Other pertinent
information related to the options is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1997 1996 1995
------------------- ------------------ -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE NUMBER PRICE
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Under option, beginning
of year................ 186,331 $10.47 184,331 $10.35 155,225 $ 9.48
Granted................ 1,000 23.00 2,000 21.00 29,206 15.00
Exercised.............. (64,122) 9.36 -- -- (100) 11.25
Terminated............. (400) 14.25 -- -- -- --
-------- -------- --------
Under option end of
year................... 122,809 11.14 186,331 10.47 184,331 10.35
======== ======== ========
Exercisable, end of
year................... 105,437 12.45 149,587 9.65 121,381 8.99
======== ======== ========
Weighted-average fair
value of options
granted during the
year................... $ 4.49 $ 4.74 $ 2.61
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
UNDER OPTION, END OF YEAR
------------------------------------------------------------------------------------
WEIGHTED-
WEIGHTED- AVERAGE
AVERAGE REMAINING
RANGE OF EXERCISE CONTRACTUAL
NUMBER PRICES PRICE LIFE IN YEARS
------- ------------ --------- -------------
<S> <C> <C> <C>
50,153 $ 6.93-8.65 $ 8.05 3
69,656 11.25-15.00 12.90 7
3,000 21.00-23.00 21.67 9
-------
122,809 11.14 5
=======
</TABLE>
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE, END OF YEAR
-------------------------------------------------------------------------------------
WEIGHTED-
WEIGHTED- AVERAGE
AVERAGE REMAINING
RANGE OF EXERCISE CONTRACTUAL
NUMBER PRICES PRICE LIFE IN YEARS
------- ------------- --------- -------------
<S> <C> <C> <C>
50,153 $ 6.93-8.65 $ 8.05 3
54,484 11.25-15.00 12.90 7
800 21.00 21.67 9
-------
105,437 12.45 5
=======
</TABLE>
The Company also had outstanding options to purchase 34,828 shares of stock
to one key officer. These options were granted in connection with the
formation of the Bank. These options were exercised in 1997 at book value as
reported on the most recent quarterly report of condition of the Company
before the exercise date or $16.31.
FB-12
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. EMPLOYEE STOCK OPTION PLAN--(CONTINUED)
As permitted by SFAS No. 123 ("Accounting for Stock-Based Compensation"),
the Company recognizes compensation cost for stock-based employee compensation
awards in accordance with APB Opinion No. 25, ("Accounting for Stock Issued to
Employees"). The Company recognized no compensation cost for stock-based
employee compensation awards for the years ended December 31, 1997, 1996 and
1995. If the Company had recognized compensation cost in accordance with SFAS
No. 123, net income and earnings per share would have been reduced as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------
BASIC DILUTED
EARNINGS EARNINGS
NET INCOME PER SHARE PER SHARE
---------- --------- ---------
<S> <C> <C> <C>
As reported................................. $4,863,526 $ 3.54 $ 3.32
Stock-based compensation, net of related tax
effect..................................... (16,848) (0.01) (0.01)
---------- ------ ------
As adjusted................................. $4,846,678 $ 3.53 $ 3.31
========== ====== ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------
BASIC DILUTED
EARNINGS EARNINGS
NET INCOME PER SHARE PER SHARE
---------- --------- ---------
<S> <C> <C> <C>
As reported................................. $3,844,804 $ 2.79 $ 2.62
Stock-based compensation, net of related tax
effect..................................... (21,989) (0.02) (0.01)
---------- ------ ------
As adjusted................................. $3,822,815 $ 2.77 $ 2.61
========== ====== ======
<CAPTION>
DECEMBER 31, 1995
-------------------------------
BASIC DILUTED
EARNINGS EARNINGS
NET INCOME PER SHARE PER SHARE
---------- --------- ---------
<S> <C> <C> <C>
As reported................................. $3,297,321 $ 2.38 $ 2.30
Stock-based compensation, net of related tax
effect..................................... (12,232) -- --
---------- ------ ------
As adjusted................................. $3,285,089 $ 2.38 $ 2.30
========== ====== ======
</TABLE>
The fair value of the options granted during the year was based upon the
discounted value of future cash flows of the options using the following
assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Risk-free interest rate.......................... 6.13% 6.50% 6.50%
Expected life of the options..................... 7 years 7 years 7 years
Expected dividends (as a percent of the fair
value of the stock)............................. 2.61% 2.38% 7.14%
</TABLE>
NOTE 7. INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Current.................................. $2,814,118 $2,342,283 $1,853,714
Deferred................................. (81,450) (229,337) (55,625)
---------- ---------- ----------
Income tax expense...................... $2,732,668 $2,112,946 $1,798,089
========== ========== ==========
</TABLE>
FB-13
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. EMPLOYEE STOCK OPTION PLAN--(CONTINUED)
The Company's income tax expense differs from the amounts computed by
applying the Federal income tax statutory rates to income before income taxes.
A reconciliation of the differences is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995
------------------- ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUONT PERCENT
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Income taxes at statu-
tory rate.............. $2,582,706 34% $2,025,635 34% $1,732,439 34%
Tax-exempt interest..... (52,447) (1) (61,741) (1) (69,100) (1)
State income taxes...... 173,453 2 122,296 2 115,035 2
Other items, net........ 28,956 1 26,756 -- 19,715 --
---------- --- ---------- --- ---------- ---
Provision for income
taxes.................. $2,732,668 36% $2,112,946 35% $1,798,089 35%
========== === ========== === ========== ===
</TABLE>
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
<S> <C> <C>
Deferred tax assets, loan loss reserves................... $816,131 $723,173
-------- --------
Deferred tax liabilities:
Depreciation............................................ 95,950 84,347
Other................................................... 13,243 13,338
-------- --------
109,193 97,685
-------- --------
Net deferred tax assets................................... $706,938 $625,488
======== ========
</TABLE>
NOTE 8. EARNINGS PER COMMON SHARE
The following is a reconciliation of net income (the numerator) and weighted-
average shares outstanding (the denominator) used in determining basic and
diluted earnings per common share (EPS):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------
WEIGHTED-
NET AVERAGE
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS............................... $4,863,526 1,373,199 $3.54
=====
Effect of Dilutive Securities Stock op-
tions.................................. -- 91,170
---------- ---------
Diluted EPS............................. $4,863,526 1,464,369 $3.32
========== ========= =====
</TABLE>
FB-14
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. EARNINGS PER COMMON SHARE--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------
WEIGHTED-
NET AVERAGE
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS............................... $3,844,804 1,379,739 $ 2.79
======
Effect of Dilutive Securities Stock op-
tions.................................. -- 87,084
---------- ---------
Diluted EPS............................. $3,844,804 1,466,823 $ 2.62
========== ========= ======
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------
WEIGHTED-
NET AVERAGE
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS............................... $3,297,321 1,384,913 $ 2.38
======
Effect of Dilutive Securities Stock op-
tions.................................. -- 50,344
---------- ---------
Diluted EPS............................. $3,297,321 1,435,257 $ 2.30
========== ========= ======
</TABLE>
NOTE 9. COMMITMENTS AND CONTINGENT LIABILITIES
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 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:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
------------ -----------
<S> <C> <C>
Commitments to extend credit....................... $ 47,304,868 $46,186,625
Standby letters of credit.......................... 2,448,945 2,200,720
------------ -----------
$ 49,753,813 $48,387,345
============ ===========
</TABLE>
Commitments to extend credit generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
credit risk involved in issuing these financial instruments is essentially the
same as that involved in extending loans to customers. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation of the customer. Collateral
held varies but may include real estate and improvements, marketable
securities, accounts receivable, inventory, equipment and personal property.
Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing
FB-15
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. COMMITMENTS AND CONTINGENT LIABILITIES--(CONTINUED)
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans to customers.
Collateral held varies as specified above and is required in instances which
the Company deems necessary.
In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management of the Company, any liability
resulting from such proceedings would not have a material effect on the
Company's financial statements.
The Company originates primarily commercial, residential and consumer loans
to customers in Gwinnett County and surrounding counties. The ability of the
majority of the Company's customers to honor their contractual loan
obligations is dependent on the economy in these areas.
Seventy-three percent (73%) of the Company's loan portfolio is concentrated
in loans secured by real estate, of which a substantial portion is secured by
real estate in the Company's primary market area. Accordingly, the ultimate
collectibility of the loan portfolio is susceptible to changes in market
conditions in the Company's primary market area.
The Company, as a matter of policy, does not generally extend credit to any
single borrower or group of related borrowers in excess of 25% of statutory
capital, or approximately $3,250,000.
NOTE 10. REGULATORY MATTERS
The Bank is subject to certain restrictions on the amount of dividends that
may be declared without prior regulatory approval. At December 31, 1997,
approximately $2,413,000 of retained earnings were available for dividend
declaration without regulatory approval.
The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory--and possibly
additional discretionary--actions by regulators that, if undertaken, could
have a direct material effect on the financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and Bank must meet specific capital guidelines that involve
quantitative measures of the assets, liabilities, and certain off-balance-
sheet items as calculated under regulatory accounting practices. The Company
and Bank capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of
total and Tier I capital to risk-weighted assets and of Tier I capital to
average assets. Management believes, as of December 31, 1997, the Company and
the Bank meet all capital adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must
maintain minimum total risk-based, Tier I risk-based and Tier I leverage
ratios as set forth in the following table. There are no conditions or events
since that notification that management believes have changed the Bank's
category.
FB-16
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. REGULATORY MATTERS--(CONTINUED)
The Company and Bank's actual capital amounts and ratios are presented in
the following table.
AS OF DECEMBER 31, 1997:
<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------- ------------- -------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets):
Consolidated............... $26,491 16.43% $12,897 8% $16,121 10%
Bank....................... $23,907 14.83% $12,897 8% $16,121 10%
Tier I Capital (to Risk
Weighted Assets):
Consolidated............... $24,476 15.18% $ 6,449 4% $ 9,673 6%
Bank....................... $21,892 13.58% $ 6,449 4% $ 9,673 6%
Tier I Capital (to Average
Assets):
Consolidated............... $24,476 11.65% $ 8,406 4% $10,508 5%
Bank....................... $21,892 10.42% $ 8,406 4% $10,508 5%
</TABLE>
AS OF DECEMBER 31, 1996:
<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------- ------------- ------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets):
Consolidated................. $21,702 16.13% $10,764 8% $ 13,454 10%
Bank......................... $20,957 15.58% $10,764 8% $ 13,454 10%
Tier I Capital (to Risk
Weighted Assets):
Consolidated................. $20,013 14.88% $ 5,380 4% $ 8,070 6%
Bank......................... $19,268 14.32% $ 5,380 4% $ 8,070 6%
Tier I Capital (to Average As-
sets):
Consolidated................. $20,013 11.13% $ 7,192 4% $ 8,991 5%
Bank......................... $19,268 10.72% $ 7,192 4% $ 8,991 5%
</TABLE>
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments. In cases where quoted
market prices are not available, fair values are based on estimates using
discounted cash flow methods. Those methods are significantly affected by the
assumptions used, including the discount rates and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the instrument. The use of
different methodologies may have a material effect on the estimated fair value
amounts. Also, the fair value estimates presented herein are based on
pertinent information available to management as of December 31, 1997 and
1996. Such amounts have not been revalued for purposes of these financial
statements since those dates and, therefore, current estimates of fair value
may differ significantly from the amounts presented herein.
FB-17
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)
The following methods and assumptions were used by the Company in estimating
fair values of financial instruments as disclosed herein:
CASH, DUE FROM BANKS, INTEREST-BEARING DEPOSITS IN BANKS, AND FEDERAL FUNDS
SOLD:
The carrying amounts of cash, due from banks, interest-bearing deposits in
banks, and Federal funds sold approximate their fair value.
HELD-TO-MATURITY SECURITIES:
Fair values for securities are based on quoted market prices.
LOANS:
For variable-rate loans that reprice frequently and have no significant
change in credit risk, fair values are based on carrying values. For other
loans, the fair values are estimated using discounted cash flow methods, using
interest rates currently being offered for loans with similar terms to
borrowers of similar credit quality. Fair values for impaired loans are
estimated using discounted cash flow methods or underlying collateral values.
DEPOSITS:
The carrying amounts of demand deposits, savings deposits, and variable-rate
certificates of deposit approximate their fair values. Fair values for fixed-
rate certificates of deposit are estimated using discounted cash flow methods,
using interest rates currently being offered on certificates.
ACCRUED INTEREST:
The carrying amounts of accrued interest approximate their fair values.
OFF-BALANCE-SHEET INSTRUMENTS:
Fair values of the Company's off-balance-sheet financial instruments are
based on fees charged to enter into similar agreements. However, commitments
to extend credit and standby letters of credit do not represent a significant
value to the Company until such commitments are funded. The Company has
determined that these instruments do not have a distinguishable fair value and
no fair value has been assigned.
The estimated fair values of the Company's financial instruments were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------- -------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Financial assets:
Cash, due from banks,
interest-bearing deposits
in banks, and Federal
funds sold............... $ 21,073,076 $ 21,073,076 $ 31,338,064 $ 31,338,064
Securities held-to-maturi-
ty....................... 45,540,620 45,666,802 32,004,283 32,047,933
Loans..................... 142,273,247 144,320,000 117,568,540 119,000,000
Accrued interest receiv-
able..................... 1,452,514 1,452,514 1,175,645 1,175,645
Financial liabilities:
Deposits.................. 189,219,639 189,900,867 165,236,790 165,764,416
Accrued interest payable.. 1,145,529 1,145,529 1,082,640 1,082,640
</TABLE>
FB-18
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12. SUPPLEMENTAL FINANCIAL DATA
Components of other operating expenses in excess of 1% of total revenue are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996 1995
------- ------- --------
<S> <C> <C> <C>
FDIC insurance premiums............................ $15,223 $ 2,000 $173,462
OAKAR deposit assessment expense................... -- 71,917 260,000
</TABLE>
NOTE 13. PARENT COMPANY FINANCIAL INFORMATION
The following information presents the condensed balance sheets as of
December 31, 1997 and 1996 and the condensed statements of income and cash
flows for the years ended December 31, 1997, 1996 and 1995 of Button Gwinnett
Financial Corporation:
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Assets
Cash............................................... $ 2,584,147 $ 746,727
Investment in subsidiary........................... 21,892,613 19,267,556
----------- -----------
Total assets..................................... $24,476,760 $20,014,283
=========== ===========
Liabilities, other................................... $ 1,249 $ 1,339
Stockholders' equity................................. 24,475,511 20,012,944
----------- -----------
Total liabilities and stockholders' equity....... $24,476,760 $20,014,283
=========== ===========
</TABLE>
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Income
Dividends from subsidiary................ $2,400,000 $ 700,000 $1,150,000
Interest................................. 73,721 29,213 29,973
---------- ---------- ----------
2,473,721 729,213 1,179,973
---------- ---------- ----------
Expenses................................... 38,024 51,432 13,002
---------- ---------- ----------
Income before equity in undistributed
income of subsidiary.................... 2,435,697 677,781 1,166,971
Equity in undistributed income of subsid-
iary.................................... 2,427,829 3,167,023 2,130,350
---------- ---------- ----------
Net income................................. $4,863,526 $3,844,804 $3,297,321
========== ========== ==========
</TABLE>
FB-19
<PAGE>
BUTTON GWINNETT FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13. PARENT COMPANY FINANCIAL INFORMATION--(CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income........................ $ 4,863,526 $ 3,844,804 $ 3,297,321
Adjustments to reconcile net
income to net cash provided by
operating activities:
Undistributed income of subsidi-
ary.............................. (2,427,829) (3,167,023) (2,130,350)
Other operating activities........ (90) 460 (2,077)
----------- ----------- -----------
Net cash provided by operating
activities..................... 2,435,607 678,241 1,164,894
----------- ----------- -----------
FINANCING ACTIVITIES
Purchase of treasury stock........ (949,599) (56,420) (823,735)
Proceeds from exercise of stock
options.......................... 1,167,930 -- 1,125
Dividends paid.................... (816,518) (690,243) (484,658)
----------- ----------- -----------
Net cash used in financing ac-
tivities....................... (598,187) (746,663) (1,307,268)
----------- ----------- -----------
Net increase (decrease) in cash..... 1,837,420 (68,422) (142,374)
Cash at beginning of year........... 746,727 815,149 957,523
----------- ----------- -----------
Cash at end of year................. $ 2,584,147 $ 746,727 $ 815,149
=========== =========== ===========
</TABLE>
NOTE 14. BUSINESS COMBINATION
On February 5, 1998, the Company entered into an Agreement and Plan of
Reorganization with Premier Bancshares ("Premier") of Atlanta, Georgia. Under
this agreement, the Company will merge with and into Premier. Upon
consummation of the merger, each share of Company stock will be converted into
and exchanged for the right to receive 3.885 shares of Premier stock, subject
to possible adjustment as defined in the agreement. Consummation is subject to
certain conditions, including regulatory and stockholder approval.
FB-20
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
PREMIER BANCSHARES, INC.
AND
BUTTON GWINNETT FINANCIAL CORPORATION
DATED AS OF FEBRUARY 5, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Preamble.......................................................................... 1
ARTICLE I
TRANSACTIONS AND TERMS OF MERGER............................................. 1
--------------------------------
Merger....................................................................... 1
Time and Place of Closing.................................................... 2
Effective Time............................................................... 2
ARTICLE II
TERMS OF MERGER.............................................................. 2
---------------
Articles of Incorporation.................................................... 2
Bylaws....................................................................... 2
Directors and Officers....................................................... 2
ARTICLE III
MANNER OF CONVERTING SHARES.................................................. 3
---------------------------
Conversion of Shares......................................................... 3
Anti-Dilution Provisions..................................................... 6
Shares Held by Premier or Button Gwinnett.................................... 6
Conversion of Stock Options; Restricted Stock................................ 6
Dissenting Shareholders...................................................... 7
Fractional Shares............................................................ 7
ARTICLE IV
EXCHANGE OF SHARES........................................................... 7
------------------
Exchange Procedures.......................................................... 7
Rights of Former Button Gwinnett Shareholders................................ 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUTTON GWINNETT............................ 9
-------------------------------------------------
Organization, Standing, and Power............................................ 9
Authority; No Breach By Agreement............................................ 9
Common Stock.................................................................10
Button Gwinnett Subsidiaries.................................................10
Financial Statements.........................................................11
Absence of Undisclosed Liabilities...........................................11
Absence of Certain Changes or Events.........................................12
Tax Matters..................................................................12
Allowance for Possible Loan Losses...........................................13
Assets.......................................................................13
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
Environmental Matters........................................................14
Compliance with Laws.........................................................14
Labor Relations..............................................................15
Employee Benefit Plans.......................................................15
Material Contracts...........................................................17
Legal Proceedings............................................................17
Reports......................................................................18
Statements True and Correct..................................................18
Accounting, Tax and Regulatory Matters.......................................19
Charter Provisions...........................................................19
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PREMIER....................................19
-----------------------------------------
Organization, Standing, and Power............................................19
Authority; No Breach By Agreement............................................19
Capital Stock................................................................20
Premier Subsidiaries.........................................................21
Financial Statements.........................................................21
Absence of Undisclosed Liabilities...........................................22
Absence of Certain Changes or Events.........................................22
Tax Matters..................................................................22
Allowance for Possible Loan Losses...........................................23
Assets.......................................................................23
Environmental Matters........................................................24
Compliance with Laws.........................................................24
Labor Relations..............................................................25
Employee Benefit Plans.......................................................25
Material Contracts...........................................................27
Legal Proceedings............................................................27
Reports......................................................................27
Statements True and Correct..................................................28
Accounting, Tax and Regulatory Matters.......................................28
Charter Provisions...........................................................29
ARTICLE VII
CONDUCT OF BUSINESS PENDING CONSUMMATION.....................................29
----------------------------------------
Affirmative Covenants of Button Gwinnett.....................................29
Negative Covenants of Button Gwinnett........................................29
Affirmative Covenants of Premier.............................................31
Negative Covenants of Premier................................................32
Adverse Changes in Condition.................................................33
Reports......................................................................33
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
ARTICLE VIII
ADDITIONAL AGREEMENTS........................................................33
---------------------
Registration Statement; Proxy Statement; Shareholder Approval................33
Exchange Listing.............................................................34
Applications.................................................................34
Filings with State Offices...................................................34
Agreement as to Efforts to Consummate........................................34
Investigation and Confidentiality............................................35
Press Releases...............................................................35
Acquisition Proposals........................................................36
Accounting and Tax Treatment.................................................36
Agreement of Affiliates......................................................36
Employee Benefits and Contracts..............................................37
Merger of Gwinnett County Bank and Premier Bank..............................37
Indemnification..............................................................37
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............................38
-------------------------------------------------
Conditions to Obligations of Each Party......................................38
Conditions to Obligations of Premier.........................................40
Conditions to Obligations of Button Gwinnett.................................41
ARTICLE X
TERMINATION..................................................................43
-----------
Termination..................................................................43
Effect of Termination........................................................44
Non-Survival of Representations and Covenants................................44
ARTICLE XI
MISCELLANEOUS................................................................44
-------------
Definitions..................................................................44
Expenses.....................................................................52
Brokers and Finders..........................................................52
Entire Agreement.............................................................53
Amendments...................................................................53
Waivers......................................................................53
Assignment...................................................................54
Notices......................................................................54
Governing Law................................................................55
Counterparts.................................................................55
Captions.....................................................................55
Enforcement of Agreement.....................................................55
Severability.................................................................55
</TABLE>
(iii)
<PAGE>
LIST OF EXHIBITS
- ----------------
Exhibit Number Description
- -------------- -----------
1. Form of Agreement of Affiliates of Button Gwinnett. (Section
8.10).
2. Matters as to which Counsel for Button Gwinnett will opine.
(Section 9.2(d)).
3. Form of Claims/Indemnification Letter (Section 9.2(e)).
4. Matters as to which Counsel for Premier will opine. (Section
9.3(d)).
5. Form of Employment Agreement between Premier, Premier Bank
and Glenn S. White. (Section 8.11(b)).
6. Form of Employment Agreement between Premier, Premier Bank
and Andrew R. Pourchier. (Section 8.11(b)).
7. Form of Severance Pay Agreement, Premier Bank and John C.
Pentecost. (Section 8.11(b)).
8. Form of Severance Pay Agreement between Premier, Premier
Bank and Linda S. George. (Section 8.11(b)).
9. Form of Severance Pay Agreement between Premier, Premier
Bank and William P. Shaver. (Section 8.11(b)).
(iv)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of February 5, 1998 by and between PREMIER BANCSHARES, INC.
("Premier"), a corporation organized and existing under the laws of the State of
Georgia, with its principal office located in Atlanta, Georgia, and BUTTON
GWINNETT FINANCIAL CORPORATION ("Button Gwinnett"), a corporation organized and
existing under the laws of the State of Georgia, with its principal office
located in Snellville, Georgia.
PREAMBLE
--------
The Boards of Directors of Premier and Button Gwinnett are of the opinion
that the transactions described herein are in the best interests of the parties
and their respective shareholders. This Agreement provides for the merger of
Button Gwinnett with and into Premier, with Premier being the surviving
corporation of the merger. At the effective time of such merger, the outstanding
shares of capital stock of Button Gwinnett will be converted into the right to
receive shares of capital stock of the surviving corporation. As a result,
shareholders of Button Gwinnett will become shareholders of the surviving
corporation, and the subsidiary of Button Gwinnett will continue to conduct its
business and operations as a wholly-owned subsidiary of the surviving
corporation. The transactions described in this Agreement are subject to the
approvals of the Boards of Directors and the shareholders of both Button
Gwinnett and Premier, the Board of Governors of the Federal Reserve System, the
Georgia Department of Banking and Finance and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the merger (i) for federal income tax purposes shall qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code and (ii) for accounting purposes shall be accounted for as a
"pooling of interests."
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
TRANSACTIONS AND TERMS OF MERGER
--------------------------------
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
------
the Effective Time, Button Gwinnett shall be merged with and into Premier in
accordance with the provisions of Section 14-2-1101 of the GBCC and with the
effect provided in Section 14-2-1106 of the GBCC (the "Merger"). Premier shall
be the Surviving Corporation resulting from the Merger. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved and
adopted by the respective Boards of Directors of Premier and Button Gwinnett.
<PAGE>
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 10:00
-------------------------
a.m. on the date that the Effective Time occurs (or the immediately preceding
day if the Effective Time is earlier than 10:00 a.m.), or at such other time as
the Parties, acting through their chief executive officers may mutually agree.
The place of Closing shall be at the offices of Womble Carlyle Sandridge & Rice,
PLLC, Atlanta, Georgia, or such other place as may be mutually agreed upon by
the Parties.
1.3 EFFECTIVE TIME. The Merger and the other transactions contemplated
--------------
by this Agreement shall become effective on the date and at the time the
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officer of each Party, the Parties shall use
their reasonable efforts to cause the Effective Time to occur on the last
business day of the month in which occurs the last to occur of (a) the effective
date (including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and approving
or exempting the Merger, (b) the date on which the shareholders of Button
Gwinnett approve this Agreement to the extent such approval is required by
applicable Law, and (c) the date on which the shareholders of Premier approve
this Agreement to the extent such approval is required by applicable Law; or
such later date as may be mutually agreed upon in writing by the chief executive
officer of each Party.
ARTICLE II
TERMS OF MERGER
---------------
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Premier
-------------------------
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation from and after the Effective Time
until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Premier in effect immediately prior to the
------
Effective Time shall be the Bylaws of the Surviving Corporation from and after
the Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS.
----------------------
(a) The directors of the Surviving Corporation from and after the
Effective Time shall consist of the directors of Premier immediately preceding
the Effective Time, provided, however, that Glenn S. White and John D. Stephens
shall be elected to serve on the Board of Directors of the Surviving Corporation
from and after the Effective Time. Such directors shall serve as the directors
of the Surviving Corporation in accordance with the Articles of Incorporation
and Bylaws of the Surviving Corporation. John D. Stephens shall also be
appointed to serve on the Executive Committee of the Board of Directors of the
Surviving Corporation from and after the Effective Time.
2
<PAGE>
(b) The officers of the Surviving Corporation from and after the
Effective Time shall consist of the officers of Premier immediately preceding
the Effective Time, provided, however, that Glenn S. White shall be appointed to
serve as Executive Vice President of the Surviving Corporation from and after
the Effective Time.
(c) The directors of Premier Bank from and after the Effective Time
shall consist of the directors of Premier Bank immediately preceding the
Effective Time, provided, however, that Glenn S. White shall be elected to serve
on the Board of Directors of Premier Bank from and after the Effective Time, and
two (2) additional directors of Button Gwinnett immediately preceding the
Effective Time shall be selected by the Board of Directors of Premier, in its
sole discretion, to serve on the Board of Directors of Premier Bank from and
after the Effective Time. Such directors shall serve in accordance with the
Articles of Incorporation and Bylaws of Premier Bank.
(d) The executive officers of Premier Bank from and after the
Effective Time shall consist of the executive officers of Premier Bank
immediately preceding the Effective Time, provided, however, that (i) Glenn S.
White shall be appointed to serve as President of Premier Bank from and after
the Effective Time; and (ii) Andrew R. Pourchier shall be appointed to serve as
an Executive Vice President of Premier Bank from and after the Effective Time.
(e) The directors and officers of Gwinnett County Bank from and
after the Effective Time shall consist of the directors and officers of The Bank
of Gwinnett County immediately preceding the Effective Time, provided, however,
that Darrell D. Pittard and Robert C. Oliver shall be elected to serve on the
Board of Directors of The Bank of Gwinnett County from and after the Effective
Time.
(f) The directors and officers of Premier Lending from and after the
Effective Time shall consist of the directors and officers of Premier Lending
immediately preceding the Effective Time, provided, however, that Andrew R.
Pourchier shall be elected to serve on the Board of Directors of Premier Lending
from and after the Effective Time.
ARTICLE III
MANNER OF CONVERTING SHARES
---------------------------
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3,
--------------------
at the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of Premier Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of Button Gwinnett Common Stock (excluding shares
held by Premier or Button Gwinnett or any of their respective Subsidiaries, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted) issued and outstanding at the
3
<PAGE>
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive 3.885 shares of Surviving Corporation Common
Stock, subject to possible adjustment as provided in Section 3.1(c) (the
"Exchange Ratio"):
(c) The Exchange Ratio shall be adjusted in the event both of the
following conditions are satisfied:
(1) the Average Closing Price shall be less than the
product of (i) 0.90 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the Average
Closing Price by the Starting Price (such number being
referred to herein as the "Premier Ratio") shall be
less than (ii) the quotient obtained by dividing the
Index Price on the Determination Date by the Index
Price on the Starting Date and subtracting .05 from the
quotient in this clause 2(ii) (such number being
referred to herein as the "Index Ratio").
In the event both of the above conditions are satisfied, the Exchange Ratio
shall be increased to equal the lesser of (i) quotient obtained by dividing (1)
the product of 0.90, the Starting Price, and the Exchange Ratio by (2) the
Average Closing Price and (ii) the quotient obtained by dividing (1) the product
of the Index Ratio and the Exchange Ratio by (2) the Premier Ratio. Following
any such adjustment to the Exchange Ratio as provided in this Section 3.1(c),
any references in this Agreement to the "Exchange Ratio" shall thereafter be
deemed to refer to the "Exchange Ratio" as so adjusted. The provisions of this
Section 3.1(c) are subject to the provisions of Section 10.1(g).
For purposes of this Section 3.1(c) and Section 10.1(g), the following
terms shall have the meanings indicated.
"Average Closing Price" shall mean the average of the last sales
prices of Premier Common Stock as reported on the American Stock Exchange
(as reported by The Wall Street Journal or, if not reported thereby, any
other authoritative source) for the 10 consecutive full trading days in
which such shares are traded on the American Stock Exchange ending at the
close of trading on the Determination Date.
"Determination Date" shall mean the date on which the Registration
Statement is declared effective by the SEC.
"Index Group" shall mean the 17 bank holding companies listed below,
the common stocks of all of which shall be publicly traded and as to which
there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies are removed
from the Index
4
<PAGE>
Group, the weights (which shall be determined based upon the number of
outstanding shares of common stock) shall be redistributed proportionately
for purposes of determining the Index Price. The 17 bank holding companies
and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
--------------------------------- ----------------
<S> <C>
AmSouth Bancorporation 3.93%
BB&T Corporation 7.14%
Compass Bancshares, Inc. 2.58%
Fifth Third Bancorp 10.71%
First American Corporation 2.38%
First Security Corporation 3.66%
First Tennessee National Corporation 3.42%
First Virginia Banks, Inc. 2.16%
Hibernia Corporation 2.28%
Huntington Bancshares, Inc. 5.84%
Mercantile Bancorporation, Inc. 5.96%
SouthTrust Corporation 5.44%
Star Banc Corporation 4.26%
Summit Bancorp 7.95%
SunTrust Banks, Inc. 13.29%
Union Planters Corporation 4.61%
Wachovia Corporation 14.39%
------
Total 100.00%
======
</TABLE>
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the last sale
prices of the companies composing the Index Group.
"Starting Date" with regard to the Index Price shall mean the second
full trading day after the announcement by Premier in a press release of
the Merger.
"Starting Price" shall mean $19.42, which reflects the three-for-two
stock split of the Premier Common Stock, the record date of which was
January 23, 1998.
If any company belonging to the Index Group declares or effects a
stock dividend, reclassification, recapitalization, stock-split, combination,
exchange of shares, or similar transaction between the date of this Agreement
and the Determination Date, the prices for the common stock of such company
shall be appropriately adjusted for the purposes of applying this Section
3.1(c).
5
<PAGE>
3.2 ANTI-DILUTION PROVISIONS. In the event Premier or Button Gwinnett
------------------------
changes the number of shares of Premier Common Stock or Button Gwinnett Common
Stock, respectively, issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend or similar recapitalization with respect
to such stock and the record date therefor (in the case of a stock dividend) or
the effective date therefor (in the case of a stock split or similar
recapitalization) shall be after the date hereof and prior to the Effective
Time, the Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY PREMIER OR BUTTON GWINNETT. Each of the shares of
-----------------------------------------
Button Gwinnett Common Stock held by any Premier Company or by any Button
Gwinnett Company, in each case other than in a fiduciary capacity or as a result
of debts previously contracted, shall be canceled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
3.4 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK.
---------------------------------------------
(a) At the Effective Time, all rights with respect to Button
Gwinnett Common Stock pursuant to stock options granted by Button Gwinnett under
the Button Gwinnett Stock Plans ("Button Gwinnett Options"), which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to Surviving Corporation Common
Stock, and the Surviving Corporation shall assume each Button Gwinnett Option,
in accordance with the terms of the Button Gwinnett Stock Plan and stock option
agreement by which it is evidenced. From and after the Effective Time, (i) each
Button Gwinnett Option assumed by the Surviving Corporation may be exercised
solely for shares of Surviving Corporation Common Stock, (ii) the number of
shares of Surviving Corporation Common Stock subject to such Button Gwinnett
Option shall be equal to the number of shares of Button Gwinnett Common Stock
subject to such Button Gwinnett Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, (iii) the per share exercise price under each
such Button Gwinnett Option shall be adjusted to reflect the Exchange Ratio, and
(iv) the shares of Surviving Corporation Common Stock underlying each Button
Gwinnett Option shall remain registered under the Securities Act. 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." Button
Gwinnett and Premier agree to take all necessary steps to effect the provisions
of this Section 3.4.
(b) Premier may, at its election, substitute, as of the Effective
Time, stock options under the Premier Bancshares, Inc. 1997 Stock Option Plan
(the "Premier Stock Option Plan") for all or a part of the Button Gwinnett
Options, subject to the following conditions: (i) the requirements of Section
3.4(a) shall be met; (ii) such substitution shall not constitute a modification,
extension or renewal of any of the Button Gwinnett Options which are incentive
stock options; (iii) the substituted options shall continue in effect in all
material respects on the same terms and conditions as contained in the document
granting the Button Gwinnett Options; and (iv) each grant of a substitute option
to any individual who shall be deemed subject to Section 16 of the 1934 Act
shall have been specifically approved in advance by the full Board of Directors
of Premier or by a
6
<PAGE>
committee consisting solely of "non-employee" directors as defined in Rule 16b-
3. As soon as practicable following the Effective Time, 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.
3.5 DISSENTING SHAREHOLDERS. Any holder of shares of Button Gwinnett
-----------------------
Common Stock who perfects such holder's dissenters' rights of appraisal in
accordance with and as contemplated by Section 14-2-1106 of 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 has surrendered to Button
Gwinnett the certificate or certificates representing shares for which payment
is being made. In the event that after the Effective Time a dissenting
shareholder of Button Gwinnett 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 Button Gwinnett Common Stock is entitled under this
Article III (without interest) upon surrender by such holder of the certificate
or certificates representing shares of Button Gwinnett Common Stock held by such
holder.
3.6 FRACTIONAL SHARES. Notwithstanding any other provision of this
-----------------
Agreement, each holder of shares of Button Gwinnett Common Stock exchanged
pursuant to the Merger, or of options to purchase shares of Button Gwinnett
Common Stock, who would otherwise have been entitled to receive a fraction of a
share of Surviving Corporation Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Surviving Corporation Common Stock multiplied by the market value of one share
of Surviving Corporation Common Stock at the Effective Time, in the case of
shares exchanged pursuant to the Merger, or the date of exercise, in the case of
options. The market value of one share of Surviving Corporation Common Stock at
the Effective Time or the date of exercise, as the case may be, shall be the
last sale price of such common stock on the American Stock Exchange (as reported
by The Wall Street Journal or, if not reported thereby, any other authoritative
source) on the last trading day preceding the Effective Time or the date of
exercise, as the case may be. No such holder will be entitled to dividends,
voting rights, or any other rights as a stockholder in respect of any fractional
shares.
ARTICLE IV
EXCHANGE OF SHARES
------------------
4.1 EXCHANGE PROCEDURES. Unless the parties otherwise agree, the
-------------------
Surviving Corporation shall use its best efforts to mail to the former holders
of Button Gwinnett Common Stock appropriate transmittal materials within two (2)
weeks after the Effective Time which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of Button
7
<PAGE>
Gwinnett Common Stock shall pass, only upon proper delivery of such certificates
to the Surviving Corporation. After the Effective Time, each holder of shares of
Button Gwinnett Common Stock (other than shares to be canceled pursuant to
Section 3.3 of this Agreement or shares as to which dissenters' rights have been
perfected as provided in Section 3.5 of this Agreement) issued and outstanding
at the Effective Time shall surrender the certificate or certificates
representing such shares to the Surviving Corporation and shall promptly upon
surrender thereof receive in exchange therefor the consideration provided in
Section 3.1 and 3.6 of this Agreement, together with all undelivered dividends
or distributions in respect of such shares (without interest thereon) pursuant
to Section 4.2 of this Agreement. The Surviving Corporation shall not be
obligated to deliver the consideration to which any former holder of Button
Gwinnett Common Stock is entitled as a result of the Merger until such holder
surrenders his or her certificate or certificates representing the shares of
Button Gwinnett Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of Button Gwinnett Common Stock so surrendered shall
be duly endorsed as the Surviving Corporation may require. Any other provision
of this Agreement notwithstanding, the Surviving Corporation shall not be liable
to a holder of Button Gwinnett Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 RIGHTS OF FORMER BUTTON GWINNETT SHAREHOLDERS. The stock transfer
---------------------------------------------
books of Button Gwinnett shall be closed as to holders of Button Gwinnett Common
Stock immediately prior to the Effective Time and no transfer of Button Gwinnett
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Button
Gwinnett Common Stock (other than shares to be canceled pursuant to Section 3.3
or shares as to which dissenters' rights have been perfected as provided in
Section 3.5 of this Agreement) shall from and after the Effective Time represent
for all purposes only the right to receive the consideration provided in Section
3.1 and 3.6 of this Agreement in exchange therefor. To the extent permitted by
Law, former holders of record of Button Gwinnett Common Stock shall be entitled
to vote after the Effective Time at any meeting of Surviving Corporation
shareholders the number of whole shares of Surviving Corporation Common Stock
into which their respective shares of Button Gwinnett Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing Button Gwinnett Common Stock for certificates representing
Surviving Corporation Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by the
Surviving Corporation on the Surviving Corporation Common Stock, the record date
for which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of Surviving Corporation Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate representing
shares of Button Gwinnett Common Stock issued and outstanding at the Effective
Time until such holder surrenders such certificate for exchange as provided in
Section 4.1 of this Agreement. However, upon surrender of such Button Gwinnett
Common Stock certificate, both the Surviving Corporation Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered cash payments to be paid for fractional
share
8
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interests (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
OF BUTTON GWINNETT
------------------
Button Gwinnett hereby represents and warrants to Premier as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Button Gwinnett is a corporation
---------------------------------
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia and is duly registered as a bank holding company under the BHC
Act. Button Gwinnett has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Button
Gwinnett is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Button Gwinnett.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) Button Gwinnett has the corporate power and authority necessary
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Button
Gwinnett, subject to the approval of this Agreement by the holders of a majority
of the outstanding shares of Button Gwinnett Common Stock, which is the only
shareholder vote required for approval of this Agreement and consummation of the
Merger by Button Gwinnett. Subject to such requisite shareholder approval, this
Agreement represents a legal, valid and binding obligation of Button Gwinnett,
enforceable against Button Gwinnett in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Button
Gwinnett, nor the consummation by Button Gwinnett of the transactions
contemplated hereby, nor compliance by Button Gwinnett with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of Button Gwinnett's Articles of Incorporation or Bylaws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Button Gwinnett Company under, any
Contract or Permit of any Button Gwinnett Company, where such Default or Lien,
or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Button Gwinnett,
or (iii)
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subject to receipt of the requisite approvals referred to in Section 9.1 (b) of
this Agreement, violate any Law or Order applicable to any Button Gwinnett
Company or any of their respective Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Button Gwinnett, no notice to, filing with, or
Consent of any public body or authority is necessary for the consummation by
Button Gwinnett of the Merger and the other transactions contemplated in this
Agreement.
5.3 COMMON STOCK.
------------
(a) The authorized common stock of Button Gwinnett consists of
5,000,000 shares of Button Gwinnett Common Stock, of which 1,432,477 shares are
issued and outstanding as of the date of this Agreement and not more than
1,555,286 shares will be issued and outstanding at the Effective Time (as a
result of the exercise of outstanding options). All of the issued and
outstanding shares of capital stock of Button Gwinnett are duly and validly
issued and outstanding and are fully paid and nonassessable under the GBCC.
None of the outstanding shares of capital stock of Button Gwinnett has been
issued in violation of any preemptive rights of the current or past shareholders
of Button Gwinnett. Button Gwinnett has reserved ___________ shares of Button
Gwinnett Common Stock for issuance under the Button Gwinnett Stock Plans,
pursuant to which options to purchase not more than 122,809 shares of Button
Gwinnett Common Stock are outstanding as of the date of this Agreement and not
more than 122,809 will be outstanding at the Effective Time.
(b) The authorized preferred stock of Button Gwinnett consists of
5,000,000 shares of Button Gwinnett $.01 par value preferred stock none of which
are issued and outstanding.
(c) Except as set forth in Section 5.3(a) of this Agreement, or as
disclosed in Section 5.3 of the Button Gwinnett Disclosure Memorandum, there are
---------------------
no shares of capital stock or other equity securities of Button Gwinnett
outstanding and no outstanding Rights relating to the capital stock of Button
Gwinnett.
5.4 BUTTON GWINNETT SUBSIDIARIES. Button Gwinnett has disclosed in
----------------------------
Section 5.4 of the Button Gwinnett Disclosure Memorandum all of the Button
---------------------
Gwinnett Subsidiaries as of the date of this Agreement. Except as disclosed in
Section 5.4 of the Button Gwinnett Disclosure Memorandum, Button Gwinnett or one
---------------------
of its Subsidiaries owns all of the issued and outstanding shares of capital
stock of each Button Gwinnett Subsidiary. No equity securities of any Button
Gwinnett Subsidiary are or may become required to be issued (other than to
another Button Gwinnett Company) by reason of any Rights, and there are no
Contracts by which any Button Gwinnett Subsidiary is bound to issue (other than
to another Button Gwinnett Company) additional
10
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shares of its capital stock or Rights, or by which any Button Gwinnett Company
is or may be bound to transfer any shares of the capital stock of any Button
Gwinnett Subsidiary (other than to another Button Gwinnett Company). There are
no Contracts relating to the rights of any Button Gwinnett Company to vote or to
dispose of any shares of the capital stock of any Button Gwinnett Subsidiary.
All of the shares of capital stock of each Button Gwinnett Subsidiary held by a
Button Gwinnett Company are fully paid and nonassessable under the applicable
Law of the jurisdiction in which such Subsidiary is incorporated or organized
and are owned by a Button Gwinnett Company free and clear of any Lien. Each
Button Gwinnett Subsidiary is either a bank, a savings association or a
corporation and is duly organized, validly existing, and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is organized and
has the corporate power and authority necessary for it to own, lease and operate
its Assets and to carry on its business as now conducted. Each Button Gwinnett
Subsidiary is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Button Gwinnett. Each Button Gwinnett Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund or the Savings Association Insurance
Fund, as appropriate.
5.5 FINANCIAL STATEMENTS. Button Gwinnett has included in Section 5.5
---------------------
of the Button Gwinnett Disclosure Memorandum copies of all Button Gwinnett
---------------------
Financial Statements for periods ended prior to the date hereof and will deliver
to Premier copies of all Button Gwinnett Financial Statements prepared
subsequent to the date hereof. The Button Gwinnett Financial Statements (as of
the dates thereof and for the periods covered thereby) (a) are, or if dated
after the date of this Agreement will be, in accordance with the books and
records of the Button Gwinnett Companies, which are or will be, as the case may
be, complete and correct and which have been or will have been, as the case may
be, maintained in accordance with good business practices, and (b) present or
will present, as the case may be, fairly the consolidated financial position of
the Button Gwinnett Companies as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows of Button
Gwinnett Companies for the periods indicated, in accordance with GAAP (subject
to any exceptions as to consistency specified therein or as may be indicated in
the notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material in amount or effect).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Button Gwinnett Company has
-----------------------------------
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Button Gwinnett except Liabilities which
are accrued or reserved against in the consolidated balance sheets of Button
Gwinnett as of December 31, 1996 and December 31, 1997, included in Button
Gwinnett Financial Statements or reflected in the notes thereto. No Button
Gwinnett Company has incurred or paid any Liability since December 31, 1997,
except for such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice
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<PAGE>
and which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Button Gwinnett.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
-------------------------------------
except as disclosed in Section 5.7 of the Button Gwinnett Disclosure Memorandum,
---------------------
(a) there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Button Gwinnett, and (b) the Button Gwinnett Companies have 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 Button Gwinnett provided in Article VII of this Agreement.
5.8 TAX MATTERS.
------------
(a) All Tax returns required to be filed by or on behalf of any of
the Button Gwinnett Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired, except to the extent that
all such failures to file, taken together, are not reasonably likely to have a
Material Adverse Effect on Button Gwinnett and all returns filed are complete
and accurate to the Knowledge of Button Gwinnett. All Taxes shown on filed
returns have been paid. As of the date of this Agreement, there is no audit
examination, deficiency or refund Litigation with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a Material Adverse Effect on Button Gwinnett, except as
reserved against in the Button Gwinnett Financial Statements delivered prior to
the date of this Agreement or as disclosed in Section 5.8(a) of the Button
Gwinnett Disclosure Memorandum. All Taxes and other Liabilities due with
---------------------
respect to completed and settled examinations or concluded Litigation have been
paid.
(b) Except as disclosed in Section 5.8(b) of the Button Gwinnett
Disclosure Memorandum, none of the Button Gwinnett Companies has executed an
- ---------------------
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect, and no unpaid tax
deficiency has been asserted in writing against or with respect to any Button
Gwinnett Company, which deficiency is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Button Gwinnett.
(c) Adequate provision for any Taxes due or to become due for any of
the Button Gwinnett Companies for the period or periods through and including
the date of the respective Button Gwinnett Financial Statements has been made
and is reflected on such Button Gwinnett Financial Statements.
(d) Deferred Taxes of the Button Gwinnett Companies have been
provided for in accordance with GAAP.
(e) Each of the Button Gwinnett Companies is in compliance with, and
its records contain all information and documents (including, without
limitation, properly completed IRS Forms
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W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Button Gwinnett.
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible loan
-----------------------------------
or credit losses (the "Allowance") shown on the consolidated balance sheets of
Button Gwinnett included in the most recent Button Gwinnett Financial Statements
dated prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of Button Gwinnett included in the Button Gwinnett
Financial Statements as of dates subsequent to the execution of this Agreement
will be, as of the dates thereof, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide for losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables) of the Button Gwinnett Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
the Button Gwinnett Companies as of the dates thereof except where the failure
of such Allowance to be so adequate is not reasonably likely to have a Material
Adverse Effect on Button Gwinnett.
5.10 ASSETS. Except as disclosed in Section 5.10 of the Button Gwinnett
-------
Disclosure Memorandum or as disclosed or reserved against in the Button Gwinnett
- ---------------------
Financial Statements, the Button Gwinnett Companies have good and marketable
title, free and clear of all Liens, to all of their respective Assets. All
material tangible properties used in the businesses of the Button Gwinnett
Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with Button Gwinnett's past
practices. All Assets which are material to the business of the Button Gwinnett
Companies and held under leases or subleases by any of the Button Gwinnett
Companies are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The policies of fire, theft,
liability and other insurance maintained with respect to the Assets or
businesses of the Button Gwinnett Companies provide adequate coverage under
current industry practices against loss or Liability, and the fidelity and
blanket bonds in effect as to which any of the Button Gwinnett Companies is a
named insured are reasonably sufficient. The Assets of the Button Gwinnett
Companies include all assets required to operate the business of the Button
Gwinnett Companies as presently conducted.
5.11 ENVIRONMENTAL MATTERS. Except as disclosed in Section 5.11 of the
----------------------
Button Gwinnett Disclosure Memorandum:
---------------------
(a) To the Knowledge of Button Gwinnett, each Button Gwinnett
Company, its Participation Facilities and its Loan Properties are, and have
been, in compliance with all Environmental Laws, except for noncompliance which
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Button Gwinnett.
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(b) There is no Litigation pending or to the Knowledge of Button
Gwinnett threatened before any court, governmental agency or authority or other
forum in which any Button Gwinnett Company or any of its Loan Properties or
Participation Facilities has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance with any Environmental Law or (ii) relating to the Release into
the Environment of any Hazardous Material (as defined below), whether or not
occurring at, on, under or involving a site owned, leased or operated by any
Button Gwinnett Company or any of its Loan Properties or Participation
Facilities, except for such Litigation pending or threatened the resolution of
which is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Button Gwinnett, and to the Knowledge of Button
Gwinnett, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of Button Gwinnett, there have been no releases
of Hazardous Material in, on, under or affecting any Participation Facility or
Loan Property, except such as are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Button Gwinnett.
5.12 COMPLIANCE WITH LAWS. Button Gwinnett is duly registered as a bank
---------------------
holding company under the BHC Act. Each Button Gwinnett Company has in effect
all Permits necessary for it to own, lease or operate its Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Button Gwinnett, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Button Gwinnett.
Except as disclosed in Section 5.12 of the Button Gwinnett Disclosure
----------
Memorandum, no Button Gwinnett Company:
- ----------
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Button Gwinnett; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any Button Gwinnett Company is not in
compliance with any of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Button
Gwinnett, (ii) threatening to revoke any Permits, the revocation of which is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Button Gwinnett, or (iii) requiring any Button Gwinnett Company to
enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
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<PAGE>
5.13 LABOR RELATIONS. No Button Gwinnett Company is the subject of any
----------------
Litigation asserting that it or any other Button Gwinnett Company has committed
an unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel it or any other Button Gwinnett
Company to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving any Button
Gwinnett Company, pending or, to its Knowledge, threatened, nor, to its
Knowledge, is there any activity involving any Button Gwinnett Company's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
5.14 EMPLOYEE BENEFIT PLANS.
-----------------------
(a) Button Gwinnett has disclosed in Section 5.14 of the Button
Gwinnett Disclosure Memorandum and delivered or made available to Premier prior
---------------------
to the execution of this Agreement copies in each case of all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plans, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including, without limitation, "employee
benefit plans" as that term is defined in Section 3(3) of ERISA, currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
any Button Gwinnett Company or Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "Button Gwinnett Benefit Plans"). Any of the
Button Gwinnett Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to herein as a
"Button Gwinnett ERISA Plan." Each Button Gwinnett ERISA Plan which is also a
"defined benefit plan" (as defined in Section 414(j) of the Internal Revenue
Code) is referred to herein as a "Button Gwinnett Pension Plan." No Button
Gwinnett Pension Plan is or has been a multi-employer plan within the meaning of
Section 3(37) of ERISA.
(b) All Button Gwinnett Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Button Gwinnett.
The only Button Gwinnett ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code is a master or prototype arrangement
which is the subject of a favorable determination letter from the Internal
Revenue Service, and Button Gwinnett is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. To the
Knowledge of Button Gwinnett, no Button Gwinnett Company nor any other party has
engaged in a transaction with respect to any Button Gwinnett Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any Button Gwinnett Company to a tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts
which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Button Gwinnett.
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<PAGE>
(c) Neither Button Gwinnett nor any ERISA Affiliate of Button Gwinnett
maintains an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA that is or was subject to Title IV of ERISA.
(d) Neither Button Gwinnett nor any ERISA Affiliate of Button Gwinnett
has any past, present or future obligation or liability to contribute to any
multi-employer plan, as defined in Section 3(37) of ERISA.
(e) Except as disclosed in Section 5.14(e) of the Button Gwinnett
Disclosure Memorandum, (i) no Button Gwinnett Company has any obligations for
- ---------------------
retiree health and life benefits under any of the Button Gwinnett Benefit Plans,
except as required by Section 601 of ERISA and Section 4980B of the Code; (ii)
there are no restrictions on the rights of any Button Gwinnett Company to amend
or terminate any such Plan; and (iii) any amendment or termination of any such
Plan will not cause any Button Gwinnett Company to incur any Liability that is
reasonably likely to have a Material Adverse Effect on Button Gwinnett.
(f) Except as disclosed in Section 5.14(f) of the Button Gwinnett
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
- ---------------------
the consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any employee of
any Button Gwinnett Company from any Button Gwinnett Company under any Button
Gwinnett Benefit Plan or otherwise, (ii) increase any benefits otherwise payable
under any Button Gwinnett Benefit Plan, or (iii) result in any acceleration of
the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including, without limitation, entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Button Gwinnett Company and their respective
beneficiaries have been fully reflected on the Button Gwinnett Financial
Statements to the extent required by and in accordance with GAAP.
(h) Button Gwinnett and each ERISA Affiliate of Button Gwinnett has
complied with the continuation of coverage requirements of Section 1001 of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA
Sections 601 through 608 in a manner that will not cause any Button Gwinnett
Company to incur any Liability that is reasonably likely to have a Material
Adverse Effect on Button Gwinnett.
(i) Except as disclosed in Section 5.14(i) of the Button Gwinnett
Disclosure Memorandum, neither Button Gwinnett nor any ERISA Affiliate of Button
Gwinnett is obligated, contingently or otherwise, under any agreement to pay any
amount which would be treated as a "parachute payment," as defined in Section
280G(b) of the Internal Revenue Code (determined without regard to Section
280G(b)(2)(A)(ii) of the Internal Revenue Code).
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(j) Other than routine claims for benefits, to the Knowledge of Button
Gwinnett, there are no actions, audits, investigations, suits or claims pending
against any Button Gwinnett Benefit Plan, any trust or other funding agency
created thereunder, or against any fiduciary of any Button Gwinnett Benefit Plan
or against the assets of any Button Gwinnett Benefit Plan.
5.15 MATERIAL CONTRACTS. Except as disclosed in Section 5.15 of the
------------------
Button Gwinnett Disclosure Memorandum or otherwise reflected in the Button
---------------------
Gwinnett Financial Statements, none of the Button Gwinnett Companies, nor any of
their respective Assets, businesses or operations, is a party to, or is bound or
affected by, or receives benefits under, (a) any employment, severance,
termination, consulting or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $10,000, excluding "at will"
employment arrangements, (b) any Contract relating to the borrowing of money by
any Button Gwinnett Company or the guarantee by any Button Gwinnett Company of
any such obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds, Federal Home Loan Bank advances, fully-secured
repurchase agreements, trade payables, and Contracts relating to borrowings or
guarantees made in the ordinary course of business), (c) any Contracts between
or among Button Gwinnett Companies, and (d) any other Contract (excluding this
Agreement) or amendment thereto that is required to be filed as an exhibit to a
Form 10-KSB or Form 10-QSB filed by Button Gwinnett with the SEC as of the date
of this Agreement that has not been filed as an exhibit to any Button Gwinnett
Form 10-KSB or 10-QSB filed with the SEC (together with all Contracts referred
to in Sections 5.10 and 5.14(a) of this Agreement, the "Button Gwinnett
Contracts"). None of the Button Gwinnett Companies is in Default under any
Button Gwinnett Contract, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Button
Gwinnett. All of the indebtedness of any Button Gwinnett Company for money
borrowed is prepayable at any time by such Button Gwinnett Company without
penalty or premium.
5.16 LEGAL PROCEEDINGS. Except as disclosed in Section 5.16 of the
-----------------
Button Gwinnett Disclosure Memorandum, there is no Litigation instituted or
---------------------
pending, or, to the Knowledge of Button Gwinnett, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Button Gwinnett
Company, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Button Gwinnett, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Button Gwinnett Company, that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Button Gwinnett.
5.17 REPORTS. Since January 1, 1996, each Button Gwinnett Company has
-------
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with (a) the SEC,
including, but not limited to, Forms 10-KSB, Forms 10-QSB, Forms 8-K, and Proxy
Statements, (b) other Regulatory Authorities, and (c) any applicable state
securities or banking authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Button Gwinnett).
As of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects
17
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with all applicable Laws. As of its respective date, each such report and
document to Button Gwinnett's Knowledge did not, in any material respect,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
5.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
---------------------------
or other writing furnished or to be furnished by any Button Gwinnett Company or
any Affiliate thereof to Premier pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a Material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Button Gwinnett Company or any Affiliate thereof for inclusion
in the Registration Statement to be filed by Premier with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any Material fact, or omit to state any Material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Button Gwinnett Company or any Affiliate thereof for inclusion
in the Proxy Statement to be mailed to Button Gwinnett's shareholders in
connection with the Button Gwinnett Shareholders' Meeting, and any other
documents to be filed by a Button Gwinnett Company or any Affiliate thereof with
the SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Proxy Statement, when first mailed to the shareholders of
Button Gwinnett, be false or misleading with respect to any Material fact, or
omit to state any Material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Button Gwinnett Shareholders' Meeting, be false or misleading
with respect to any Material fact, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Button Gwinnett Shareholders' Meeting. All
documents that any Button Gwinnett Company or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all Material respects
with the provisions of applicable Law.
5.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No Button Gwinnett Company
--------------------------------------
or any Affiliate thereof has taken any action, or agreed to take any action, or
has any Knowledge of any fact or circumstance that is reasonably likely to (a)
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or treatment as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the second
sentence of such Section. To the Knowledge of Button Gwinnett, there exists no
fact, circumstance, or reason why the requisite Consents referred to in Section
9.1(b) of this Agreement cannot be received in a timely manner without the
imposition of any condition or restriction of the type described in the second
sentence of such Section 9.1(b).
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5.20 CHARTER PROVISIONS. Each Button Gwinnett Company has taken all
------------------
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and will
not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any Button Gwinnett
Company or restrict or impair the ability of the Surviving Corporation to vote,
or otherwise to exercise the rights of a shareholder with respect to, shares of
any Button Gwinnett Company that may be acquired or controlled by it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PREMIER
-----------------------------------------
Premier hereby represents and warrants to Button Gwinnett as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Premier is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and is duly registered as a bank holding company under the BHC Act.
Premier has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. Premier is duly qualified
or licensed to transact business as a foreign corporation in good standing in
the States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Premier.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) Premier has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Premier,
subject to the approval of this Agreement by the holders of a majority of the
outstanding Premier Common Stock, which is the only shareholder vote required
for approval of this Agreement and consummation of the Merger by Premier.
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid and binding obligation of Premier, enforceable against Premier in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Premier,
nor the consummation by Premier of the transactions contemplated hereby
(assuming approval by the shareholders of Premier of the required increase in
the number of authorized shares of Premier Common Stock in order to consummate
the Merger), nor compliance by Premier with any of the
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provisions hereof will (i) conflict with or result in a breach of any provision
of Premier's Articles of Incorporation or Bylaws, or (ii) constitute or result
in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Premier Company under, any Contract or
Permit of any Premier Company, where such Default or Lien, or any failure to
obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Premier, or (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of this Agreement, violate
any Law or Order applicable to any Premier Company or any of their respective
Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Premier, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by Premier of the
Merger and the other transactions contemplated in this Agreement.
6.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of Premier consists of 20,000,000
shares of Premier Common Stock, of which 15,238,776 shares were issued and
outstanding as of the date of this Agreement. All of the issued and outstanding
shares of Premier Common Stock are, and all of the shares of Surviving
Corporation Common Stock to be issued in exchange for shares of Button Gwinnett
Common Stock upon consummation of the Merger, when issued in accordance with the
terms of this Agreement, will be, duly and validly issued and outstanding and
fully paid and nonassessable under the GBCC. None of the outstanding shares of
Premier Common Stock has been, and none of the shares of Surviving Corporation
Common Stock to be issued in exchange for shares of Button Gwinnett Common
Stock upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of Premier.
(b) Premier has issued $29,639,175 of 9.00% Subordinated Debentures
to Premier Capital Trust I, a statutory business trust organized and existing
under the laws of the State of Delaware. The Subordinated Debentures will mature
on December 31, 2027. The Subordinated Debentures were purchased by Premier
Capital Trust I with the proceeds of the public offering of 1,150,000 shares of
9.00% Cumulative Trust Preferred Securities and sale of Common Securities to
Premier. Premier owns all of the Common Securities issued by Premier Capital
Trust I. The Common Securities and the Preferred Securities represent undivided
beneficial interests in the assets of Premier Capital Trust I.
(c) Except as set forth in Sections 6.3(a) and 6.3(b) of this
Agreement, or as disclosed in Section 6.3(c) of the Premier Disclosure
----------
Memorandum, there are no shares of capital stock or other equity securities of
- ----------
Premier outstanding and no outstanding Rights relating to the capital stock of
Premier.
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6.4 PREMIER SUBSIDIARIES. Premier has disclosed in Section 6.4 of the
--------------------
Premier Disclosure Memorandum all of the Premier Subsidiaries as of the date of
---------------------
this Agreement. Except as disclosed in Section 6.4 of the Premier Disclosure
----------
Memorandum, Premier or one of its Subsidiaries owns all of the issued and
- ----------
outstanding shares of capital stock of each Premier Subsidiary. No equity
securities of any Premier Subsidiary are or may become required to be issued
(other than to another Premier Company) by reason of any Rights, and there are
no Contracts by which any Premier Subsidiary is bound to issue (other than to
another Premier Company) additional shares of its capital stock or Rights, or by
which any Premier Company is or may be bound to transfer any shares of the
capital stock of any Premier Subsidiary (other than to another Premier Company).
There are no Contracts relating to the rights of any Premier Company to vote or
to dispose of any shares of the capital stock of any Premier Subsidiary. All of
the shares of capital stock of each Premier Subsidiary held by a Premier Company
are fully paid and nonassessable under the applicable Law of the jurisdiction in
which such Subsidiary is incorporated or organized. Each Premier Subsidiary is
either a bank, a savings association, a corporation or a limited liability
company and is duly organized, validly existing, and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is organized and
has the corporate power and authority necessary for it to own, lease and operate
its Assets and to carry on its business as now conducted. Each Premier
Subsidiary is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Premier. Each Premier Subsidiary that is a depository institution is
an "insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund, as appropriate.
6.5 FINANCIAL STATEMENTS. Premier has included in Section 6.5 of the
--------------------
Premier Disclosure Memorandum copies of all Premier Financial Statements for
---------------------
periods ended prior to the date hereof and will deliver to Button Gwinnett
copies of all Premier Financial Statements prepared subsequent to the date
hereof. The Premier Financial Statements (as of the dates thereof and for the
periods covered thereby) (a) are, or if dated after the date of this Agreement
will be, in accordance with the books and records of the Premier Companies,
which are or will be, as the case may be, complete and correct and which have
been or will have been, as the case may be, maintained in accordance with good
business practices, and (b) present or will present, as the case may be, fairly
the consolidated financial position of the Premier Companies as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the Premier Companies for the periods indicated, in
accordance with GAAP (subject to exceptions as to consistency specified therein
or as may be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments that are not material in
amount or effect).
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Premier Company has any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Premier, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of
21
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Premier as of December 31, 1996 and December 31, 1997, included in the Premier
Financial Statements or reflected in the notes thereto. No Premier Company has
incurred or paid any Liability since December 31, 1997, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Premier.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
------------------------------------
except as disclosed in Section 6.7 of the Premier Disclosure Memorandum, (a)
---------------------
there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Premier, and (b) the Premier Companies have 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 Premier
provided in Article VII of this Agreement.
6.8 TAX MATTERS.
-----------
(a) All Tax returns required to be filed by or on behalf of any of
the Premier Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired, except to the extent that all
such failures to file, taken together, are not reasonably likely to have a
Material Adverse Effect on Premier, and all returns filed are complete and
accurate to the Knowledge of Premier. All Taxes shown on filed returns have been
paid. As of the date of this Agreement, there is no audit examination,
deficiency or refund Litigation with respect to any Taxes that is reasonably
likely to result in a determination that would have, individually or in the
aggregate, a Material Adverse Effect on Premier, except as reserved against in
the Premier Financial Statements delivered prior to the date of this Agreement
or as disclosed in Section 6.8(a) of the Premier Disclosure Memorandum. All
---------------------
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) Except as disclosed in Section 6.8(b) of the Premier Disclosure
----------
Memorandum none of the Premier Companies has executed an extension or waiver of
- ----------
any statute of limitations on the assessment or collection of any Tax due that
is currently in effect, and no unpaid tax deficiency has been asserted in
writing against or with respect to any Premier Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Premier.
(c) Adequate provision for any Taxes due or to become due for any of
the Premier Companies for the period or periods through and including the date
of the respective Premier Financial Statements has been made and is reflected on
such Premier Financial Statements.
(d) Deferred Taxes of the Premier Companies have been provided for
in accordance with GAAP.
(e) Each of the Premier Companies is in compliance with, and its
records contain all information and documents (including, without limitation,
properly completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements
22
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under federal, state and local Tax Laws, and such records identify with
specificity all accounts subject to backup withholding under Section 3406 of the
Internal Revenue Code, except for such instances of noncompliance and such
omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Premier.
6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The Allowance shown on the
-----------------------------------
consolidated balance sheets of Premier included in the most recent Premier
Financial Statements dated prior to the date of this Agreement was, and the
Allowance shown on the consolidated balance sheets of Premier included in the
Premier Financial Statements as of dates subsequent to the execution of this
Agreement will be, as of the dates thereof, adequate (within the meaning of GAAP
and applicable regulatory requirements or guidelines) to provide for losses
relating to or inherent in the loan and lease portfolios (including accrued
interest receivables) of the Premier Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
the Premier Companies as of the dates thereof except where the failure of such
Allowance to be so adequate is not reasonably likely to have a Material Adverse
Effect on Premier.
6.10 ASSETS. Except as disclosed in Section 6.10 of the Premier
-------
Disclosure Memorandum or as disclosed or reserved against in the Premier
- ---------------------
Financial Statements, the Premier Companies have good and marketable title, free
and clear of all Liens, to all of their respective Assets. All material
tangible properties used in the businesses of the Premier Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Premier's past practices. All Assets which
are material to Premier's business on a consolidated basis, which are held under
leases or subleases by any of the Premier Companies, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other Laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought), and each such Contract is in
full force and effect. The policies of fire, theft, liability and other
insurance maintained with respect to the Assets or businesses of the Premier
Companies provide adequate coverage under current industry practices against
loss or Liability, and the fidelity and blanket bonds in effect as to which any
of the Premier Companies is a named insured are reasonably sufficient.
6.11 ENVIRONMENTAL MATTERS. Except as disclosed in Section 6.11 of the
---------------------
Premier Disclosure Memorandum:
---------------------
(a) To the Knowledge of Premier, each Premier Company, its
Participation Facilities and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for noncompliance which is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Premier.
(b) There is no Litigation pending or to the Knowledge of Premier
threatened before any court, governmental agency or authority or other forum in
which any Premier Company or any of its Loan Properties or Participation
Facilities has been or, with respect to threatened
23
<PAGE>
Litigation, may be named as a defendant or potentially responsible party (i) for
alleged noncompliance with any Environmental Law or (ii) relating to the Release
into the Environment of any Hazardous Material (as defined below), whether or
not occurring at, on, under or involving a site owned, leased or operated by any
Premier Company or any of its Loan Properties or Participation Facilities,
except for such Litigation pending or threatened the resolution of which is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Premier or to the Knowledge of Premier, there is no reasonable basis
for any such Litigation.
(c) To the Knowledge of Premier, there have been no releases of
Hazardous Material in, on, under or affecting any Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Premier.
6.12 COMPLIANCE WITH LAWS. Premier is duly registered as a bank holding
--------------------
and thrift holding company under the BHC Act and HOLA, respectively. Each
Premier Company has in effect all Permits necessary for it to own, lease or
operate its Assets and to carry on its business as now conducted, except for
those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Premier, and
there has occurred no Default under any such Permit, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier. Except as disclosed in Section 6.12 of the Premier
Disclosure Memorandum, no Premier Company:
- ---------------------
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier; and
(b) has received any notification or communication from any agency
or department of federal, state, or local government or any Regulatory Authority
or the staff thereof (i) asserting that any Premier Company is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Premier, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Premier,
or (iii) requiring any Premier Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
6.13 LABOR RELATIONS. No Premier Company is the subject of any
---------------
Litigation asserting that it or any other Premier Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Premier Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any Premier
24
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Company, pending or, to its Knowledge, threatened, nor, to its Knowledge, is
there any activity involving any Premier Company's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
6.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Premier has disclosed in Section 6.14 of the Premier Disclosure
----------
Memorandum and delivered or made available to Button Gwinnett prior to the
- ----------
execution of this Agreement copies in each case of all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plans, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including, without limitation, "employee benefit
plans" as that term is defined in Section 3(3) of ERISA, currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by any
Premier Company or Affiliate thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Premier Benefit Plans"). Any of the Premier Benefit Plans which is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "Premier ERISA Plan." Each Premier ERISA Plan
which is also a "defined benefit plan" (as defined in Section 414(j) of the
Internal Revenue Code) is referred to herein as a "Premier Pension Plan." No
Premier Pension Plan is or has been a multi-employer plan within the meaning of
Section 3(37) of ERISA.
(b) All Premier Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Premier. Each Premier ERISA Plan
which is intended to be qualified under Section 401(a) of the Internal Revenue
Code is a master or prototype arrangement which is the subject of a favorable
determination letter from the Internal Revenue Service, and Premier is not aware
of any circumstances likely to result in revocation of any such favorable
determination letter. To the Knowledge of Premier, no Premier Company nor any
other party has engaged in a transaction with respect to any Premier Benefit
Plan that, assuming the taxable period of such transaction expired as of the
date hereof, would subject any Premier Company to a tax or penalty imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in
amounts which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Premier.
(c) Neither Premier nor any ERISA Affiliate of Premier maintains or
has maintained an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA that is or was subject to Title IV of ERISA.
(d) Neither Premier nor any ERISA Affiliate of Premier has any past,
present or future obligation or liability to contribute to any multi-employer
plan, as defined in Section 3(37) of ERISA.
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(e) Except as disclosed in Section 6.14(e) of the Premier Disclosure
----------
Memorandum, (i) no Premier Company has any obligations for retiree health and
- ----------
life benefits under any of the Premier Benefit Plans, except as required by
Section 601 of ERISA and Section 4980B of the Code; (ii) there are no
restrictions on the rights of any Premier Company to amend or terminate any such
Plan; and (iii) any amendment or termination of any such Plan will not cause any
Premier Company to incur any Liability that is reasonably likely to have a
Material Adverse Effect on Premier.
(f) Except as disclosed in Section 6.14(f) of the Premier Disclosure
----------
Memorandum, neither the execution and delivery of this Agreement nor the
- ----------
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any employee of
any Premier Company from any Premier Company under any Premier Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Premier
Benefit Plan, or (iii) result in any acceleration of the time of payment or
vesting of any such benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including, without limitation, entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Premier Company and their respective beneficiaries have
been fully reflected on the Premier Financial Statements to the extent required
by and in accordance with GAAP.
(h) Premier and each ERISA Affiliate of Premier has complied with the
continuation of coverage requirements of Section 1001 of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601
through 608 in a manner that will not cause any Premier Company to incur any
Liability that is reasonably likely to have a Material Adverse Effect on
Premier.
(i) Except as disclosed in Section 6.14(i) of the Premier Disclosure
----------
Memorandum, neither Premier nor any ERISA Affiliate of Premier is obligated,
- ----------
contingently or otherwise, under any agreement to pay any amount which would be
treated as a "parachute payment," as defined in Section 280G(b) of the Internal
Revenue Code (determined without regard to Section 280G(b)(2)(A)(ii) of the
Internal Revenue Code).
(j) Other than routine claims for benefits, to the Knowledge of
Premier there are no actions, audits, investigations, suits or claims pending
against any Premier Benefit Plan, any trust or other funding agency created
thereunder, or against any fiduciary of any Premier Benefit Plan or against the
assets of any Premier Benefit Plan.
6.15 MATERIAL CONTRACTS. Except as disclosed in Section 6.15 of the
------------------
Premier Disclosure Memorandum or otherwise reflected in the Premier Financial
---------------------
Statements, none of the Premier Companies, nor any of their respective Assets,
businesses or operations, is a party to, or is bound or affected by, or receives
benefits under, (a) any Contract relating to the borrowing of money by any
Premier Company or the guarantee by any Premier Company of any such obligation
(other than
26
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Contracts evidencing deposit liabilities, purchases of federal funds, Federal
Home Loan Bank advances, fully-secured repurchase agreements, trade payables,
and Contracts relating to borrowings or guarantees made in the ordinary course
of business), and (b) any other Contract (excluding this Agreement) or amendment
thereto that is required to be filed as an exhibit to a Form 10-K or Form 10-Q
filed by Premier with the SEC as of the date of this Agreement that has not been
filed as an exhibit to any Premier Form 10-K filed with the SEC (together with
all Contracts referred to in Sections 6.10 and 6.14(a) of this Agreement, the
"Premier Contracts"). None of the Premier Companies is in Default under any
Premier Contract, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Premier.
6.16 LEGAL PROCEEDINGS. Except as disclosed in Section 6.16 of the
-----------------
Premier Disclosure Memorandum, there is no Litigation instituted or pending, or,
---------------------
to the Knowledge of Premier, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Premier Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Premier, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Premier Company, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Premier.
6.17 REPORTS. Since January 1, 1997, each Premier Company has timely
-------
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (a) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and Proxy
Statements, (b) other Regulatory Authorities, and (c) any applicable state
securities or banking authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Premier). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respect with all applicable Laws. As of its respective date, each such report
and document to Premier's Knowledge did not, in any material respects, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
6.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
---------------------------
or other writing furnished or to be furnished by any Premier Company or any
Affiliate thereof to Button Gwinnett pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of Material fact or will omit to state a Material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Premier Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Premier with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any Material fact, or omit to state any Material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Premier Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Premier's shareholders in
27
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connection with the Premier Shareholders' Meeting, and any other documents to be
filed by any Premier Company or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of Premier, be false or
misleading with respect to any Material fact, or omit to state any Material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Premier
Shareholders' Meeting, be false or misleading with respect to any Material fact,
or omit to state any Material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Premier Shareholders' Meeting. All documents that any Premier Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all Material respects with the provisions of applicable Law.
6.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No Premier Company or any
--------------------------------------
Affiliate thereof has taken any action, or agreed to take any action, or has any
Knowledge of any fact or circumstance that is reasonably likely to (a) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or treatment as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement. To the Knowledge of Premier,
there exists no fact, circumstance, or reason why the requisite Consents
referred to in Section 9.1(b) of this Agreement cannot be received in a timely
manner without the imposition of any condition or restriction of the type
described in the second sentence of such Section 9.1(b).
6.20 CHARTER PROVISIONS. Each Premier Company has taken all action so
------------------
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any Premier Company or restrict or
impair the ability of the Surviving Corporation to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of any Premier
Company that may be acquired or controlled by it.
ARTICLE VII
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
7.1 AFFIRMATIVE COVENANTS OF BUTTON GWINNETT. Unless the prior written
----------------------------------------
consent of Premier shall have been obtained, and except as otherwise
contemplated herein or disclosed in the Button Gwinnett Disclosure Memorandum,
---------------------
Button Gwinnett shall, and shall cause each of its Subsidiaries, from the date
of this Agreement until the Effective Time or termination of this Agreement: (a)
to operate its business in the usual, regular and ordinary course; (b) to
preserve intact its business organization and Assets and maintain its rights and
franchises; (c) to use its reasonable efforts to cause its representations and
warranties to be correct at all times; and (d) to take no action which would (i)
adversely affect the ability of any Party to obtain any Consents required for
the
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transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) or
9.1(c) of this Agreement or (ii) adversely affect in any material respect the
ability of either Party to perform its covenants and agreements under this
Agreement.
7.2 NEGATIVE COVENANTS OF BUTTON GWINNETT. Except as disclosed in the
-------------------------------------
Button Gwinnett Disclosure Memorandum, from the date of this Agreement until the
---------------------
earlier of the Effective Time or the termination of this Agreement, Button
Gwinnett covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following without the prior written consent of the chief executive officer of
Premier, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any Button Gwinnett Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Button Gwinnett Company to another
Button Gwinnett Company) in excess of an aggregate of $100,000 (for the Button
Gwinnett Companies on a consolidated basis) except in the ordinary course of the
business of the Button Gwinnett Companies consistent with past practices (which
shall include, for any of its Subsidiaries, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or Federal
Home Loan Bank, and entry into repurchase agreements fully secured by U.S.
government or agency securities), or impose, or suffer the imposition, on any
Asset of any Button Gwinnett Company 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 Button Gwinnett Disclosure Memorandum); or
---------------------
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any Button Gwinnett Company, or declare or pay any dividend or
make any other distribution in respect of Button Gwinnett's capital stock;
provided, however, that Button Gwinnett may (to the extent legally and
contractually permitted to do so) pay an annual cash dividend of up to $1.00 per
share in the first quarter of 1998 for fiscal year 1997 and pay a quarterly
dividend of up to $0.25 per share for each quarter of fiscal year 1998 (except
for any quarter during which the Effective Time occurs provided that the Button
Gwinnett shareholders will receive the Premier dividend for such quarter) on the
shares of Button Gwinnett Common Stock; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as disclosed in Section 7.2(d) of the Button
Gwinnett Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
---------------------
issuance of or enter into any Contract to issue, sell, pledge,
29
<PAGE>
encumber, or authorize the issuance of or otherwise permit to become
outstanding, any additional shares of Button Gwinnett Common Stock or any other
capital stock of any Button Gwinnett Company, or any stock appreciation rights,
or any option, warrant, conversion, or other right to acquire any such stock, or
any security convertible into any such stock; or
(e) except as disclosed in Section 7.2(e) of the Button Gwinnett
Disclosure Memorandum, adjust, split, combine or reclassify any capital stock of
- ---------------------
any Button Gwinnett Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Button Gwinnett Common
Stock or sell, lease, mortgage or otherwise dispose of or otherwise encumber (i)
any shares of capital stock of any Button Gwinnett Subsidiary (unless any such
shares of stock are sold or otherwise transferred to another Button Gwinnett
Company) or (ii) any Asset having a book value in excess of $50,000 other than
in the ordinary course of business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities or securities of like maturity or grade or general
obligations of states and municipalities, purchase any securities or make any
material investment, either by purchase of stock or securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other than a
wholly-owned Button Gwinnett Subsidiary; or otherwise acquire direct or indirect
control over any Person, other than in connection with (i) foreclosures in the
ordinary course of business, or (ii) acquisitions of control by The Bank of
Gwinnett County in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to any employees
whose annual salary exceeds $35,000 of any Button Gwinnett Company (including
such discretionary increases as may be contemplated by existing employment
agreements), except in accordance with past practice or previously approved by
the Board of Directors of Button Gwinnett, in each case as disclosed in Section
7.2(g) of the Button Gwinnett Disclosure Memorandum or as required by Law; pay
---------------------
any severance or termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this Agreement and
disclosed in Section 7.2(g) of the Button Gwinnett Disclosure Memorandum; enter
---------------------
into or amend any severance agreements with officers of any Button Gwinnett
Company; grant any general increase in compensation to all employees; grant any
increase in fees or other increases in compensation or other benefits to
directors of any Button Gwinnett Company; or voluntarily accelerate the vesting
of any stock options or other stock-based compensation or employee benefits; or
(h) enter into or amend any employment Contract between any Button
Gwinnett Company and any Person (unless such amendment is required by Law) that
the Button Gwinnett Company does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered), at any
time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Button Gwinnett Company
or make any material change in or to any existing employee benefit plans of any
Button Gwinnett Company 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; or
30
<PAGE>
(j) 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; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Button Gwinnett
Company for money damages in excess of $50,000 or which imposes material
restrictions upon the operations of any Button Gwinnett Company; or
(l) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.
7.3 AFFIRMATIVE COVENANTS OF PREMIER. Unless the prior written consent
--------------------------------
of Button Gwinnett shall have been obtained, and except as otherwise
contemplated herein or as disclosed in the Premier Disclosure Memorandum,
---------------------
Premier shall, and shall cause each of its Subsidiaries, from the date of this
Agreement until the Effective Time or termination of this Agreement: (a) to
operate its business in the usual, regular and ordinary course; (b) to preserve
intact its business organization and Assets and maintain its rights and
franchises; (c) to use its reasonable efforts to cause its representations and
warranties to be correct at all times; and (d) to take no action which would (i)
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) or
9.1(c) of this Agreement or (ii) adversely affect in any Material respect the
ability of either Party to perform its covenants and agreements under this
Agreement.
7.4 NEGATIVE COVENANTS OF PREMIER. Except as disclosed in the Premier
-----------------------------
Disclosure Memorandum, from the date of this Agreement until the earlier of the
- ---------------------
Effective Time or the termination of this Agreement, Premier covenants and
agrees that it will not do or agree or commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the following without the
prior written consent of the chief executive officer of Button Gwinnett, which
consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation (other than to increase the
number of authorized shares of Premier Common Stock), Bylaws or other governing
instruments of any Premier Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Premier Company to another Premier
Company) in excess of an aggregate of $100,000 (for the Premier Companies on a
consolidated basis) except in the ordinary course of the business of Premier
Companies consistent with past practices (which shall include, for Premier Bank,
creation of deposit liabilities, purchases of federal funds, advances from the
Federal Reserve Bank or Federal Home Loan Bank, and entry into repurchase
agreements fully secured by U.S. government or agency securities), or impose, or
suffer the imposition, on any Asset of any Premier Company of any Lien or
permit any such Lien to exist (other than in connection with
31
<PAGE>
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); or
---------------------
(c) adjust, split, combine or reclassify any capital stock of any
Premier Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Premier Common Stock or sell, lease,
mortgage or otherwise dispose of or otherwise encumber (i) any shares of capital
stock of any Premier Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another Premier Company) or (ii) any Asset having a
book value in excess of $50,000 other than in the ordinary course of business
for reasonable and adequate consideration; or
(d) except for purchases of U.S. Treasury securities or U.S.
Government agency securities or securities of like maturity or grade or general
obligations of states and municipalities, purchase any securities or make any
material investment, either by purchase of stock or securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other than a
wholly-owned Premier Subsidiary; or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures in the ordinary
course of business, or (ii) acquisitions of control by Premier Bank in its
fiduciary capacity; or
(e) grant any increase in compensation or benefits to any employees
whose annual salary exceeds $35,000 of any Premier Company (including such
discretionary increases as may be contemplated by existing employment
agreements), except in accordance with past practice or previously approved by
the Board of Directors of Premier, in each case as disclosed in Section 7.4(e)
of the Premier Disclosure Memorandum or as required by Law; pay any severance or
---------------------
termination pay or any bonus other than pursuant to written policies or written
Contracts in effect on the date of this Agreement and disclosed in Section
7.4(e) of the Premier Disclosure Memorandum; enter into or amend any severance
---------------------
agreements with officers of any Premier Company; grant any general increase in
compensation to all employees (except in accordance with past practice); grant
any increase in fees or other increases in compensation or other benefits to
directors of any Premier Company; or voluntarily accelerate the vesting of any
stock options or other stock-based compensation or employee benefits; or
(f) 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; or
(g) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.
7.5 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
----------------------------
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (a) is reasonably likely to have,
32
<PAGE>
individually or in the aggregate, a Material Adverse Effect on it or (b) is
reasonably likely to cause or constitute a material breach of any of its
representations, warranties, or covenants contained herein, and to use its
reasonable efforts to prevent or promptly to remedy the same.
7.6 REPORTS. Each Party and its Subsidiaries shall file all reports
-------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
-------------------------------------------------------------
(a) As soon as reasonably practicable after execution of this
Agreement, Premier shall file the Registration Statement with the SEC, and shall
use its reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of Surviving Corporation Common Stock upon consummation of the
Merger. Button Gwinnett shall furnish all information concerning it and the
holders of its capital stock as Premier may reasonably request in connection
with such action.
(b) Button Gwinnett shall call a shareholders' meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of this Agreement
and such other related matters as Button Gwinnett deems appropriate.
(c) Premier shall call its annual shareholders meeting, to be held on
May 16, 1998, one purpose of which will be to vote upon approval of this
Agreement and to increase the number of authorized shares of Premier Common
Stock in order to consummate the Merger.
(d) In connection with the Button Gwinnett Shareholders' Meeting, (i)
Premier shall prepare and file with the SEC on Button Gwinnett's behalf a Proxy
Statement (which shall be included in the Registration Statement) and mail it to
Button Gwinnett's shareholders, (ii) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement, (iii) the Board of Directors of Button Gwinnett shall
recommend (subject to compliance with the fiduciary duties of the members of the
Board of Directors as advised by counsel) to its shareholders the approval of
this Agreement and (iv) the Board of Directors and officers of Button Gwinnett
shall use their reasonable efforts to obtain such shareholders' approval
(subject to compliance with their fiduciary duties as advised by counsel).
8.2 EXCHANGE LISTING. Premier shall use its reasonable efforts to list,
----------------
prior to the Effective Time, on the American Stock Exchange the shares of
Surviving Corporation Common Stock to be issued to the holders of Button
Gwinnett Common Stock pursuant to the Merger.
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<PAGE>
8.3 APPLICATIONS. Premier shall promptly prepare and file, and Button
------------
Gwinnett shall cooperate in the preparation and, where appropriate, filing of,
applications with the Board of Governors of the Federal Reserve System and the
Georgia Department of Banking and Finance seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
--------------------------
conditions of this Agreement, Premier shall execute and file the Certificate of
Merger with the Secretary of State of the State of Georgia in connection with
the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
-------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts 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, as promptly as practicable so as to permit
consummation of the Merger at the earliest possible date and to otherwise enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other Party hereto to that end (it being understood that any amendments
to the Registration Statement filed by Premier in connection with the Surviving
Corporation Common Stock to be issued in the Merger shall not violate this
covenant), including, without limitation, using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement. Each Party shall use, and shall
cause each of its Subsidiaries to use, its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
---------------------------------
(a) Prior to the Effective Time, each Party will keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations, and
financial positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return all documents and copies thereof and all work papers containing
confidential information received from the other Party, except for one copy of
any materials prepared by that Party or any attorney for or other representative
of that Party based upon such confidential information.
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<PAGE>
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, Premier and Button
--------------
Gwinnett 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 8.7 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.
8.8 ACQUISITION PROPOSALS. Except with respect to this Agreement and
---------------------
the transactions contemplated hereby, neither Button Gwinnett nor any Affiliate
thereof no any investment banker, attorney, accountant or other representative
(collectively, "Representatives") retained by Button Gwinnett shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of a Button Gwinnett's Board of
Directors as advised by counsel, neither Button Gwinnett nor any Affiliate or
Representative thereof shall furnish any non-public information that it is not
legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but Button Gwinnett may
communicate information about such an Acquisition Proposal to its shareholders
if and to the extent that it is required to do so in order to comply with its
legal obligations as advised by counsel. Button Gwinnett shall promptly notify
Premier orally and in writing in the event that it receives any inquiry or
proposal relating to any such transaction. Unless the prior written consent of
Premier is obtained, Button Gwinnett shall (a) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and (b) direct and
use its reasonable efforts to cause all of its Representatives not to engage in
any of the foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes and
----------------------------
agrees to use its reasonable efforts 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 for federal income tax purposes. Each of the Parties further undertakes
and agrees to use its reasonable best efforts to cause the Merger to be
eligible, and to take no action which would cause the Merger not to be accounted
for as a "pooling of interests."
8.10 AGREEMENT OF AFFILIATES. Button Gwinnett has disclosed in Section
-----------------------
8.10 of the Button Gwinnett Disclosure Memorandum all Persons whom it reasonably
---------------------
believes is an "affiliate" of Button Gwinnett for purposes of Rule 145 under the
1933 Act. Button Gwinnett shall use its reasonable efforts to cause each such
Person to deliver to Premier and Button Gwinnett, not later than thirty (30)
days after the date of this Agreement, a written agreement, substantially in the
form of Exhibit 1, providing that such Person will not sell, pledge, transfer or
---------
otherwise dispose of the shares of Button Gwinnett Common Stock held by such
Person except as contemplated by such
35
<PAGE>
agreement or by this Agreement and will not sell, pledge, transfer or otherwise
dispose of the shares of Surviving Corporation Common Stock to be received by
such Person upon consummation of the Merger except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder. The
Surviving Corporation shall be entitled to place restrictive legends upon
certificates for shares of Surviving Corporation Common Stock issued to
Affiliates of Button Gwinnett pursuant to this Agreement to enforce the
provisions of this Section 8.10. The Surviving Corporation shall not be required
to maintain the effectiveness of the Registration Statement under the 1933 Act
for the purposes of resale of Surviving Corporation Common Stock by such
Affiliates.
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<PAGE>
8.11 EMPLOYEE BENEFITS AND CONTRACTS.
-------------------------------
(a) Following the Effective Time, the Surviving Corporation shall
provide generally to officers and employees of the Button Gwinnett Companies who
continue employment with the Surviving Corporation or its Subsidiaries following
the Effective Time employee benefits under employee benefit plans, on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the Premier Companies to their similarly situated officers
and employees. For purposes of participation under such employee benefit plans,
the service of the employees of the Button Gwinnett Companies prior to the
Effective Time shall be treated as service with a Premier Company participating
in such employee benefit plans, provided that, with respect to any employee
benefit plan where the benefits are funded through insurance, the granting of
such service shall be subject to the consent of the appropriate insurer and may
be conditioned upon an employee's participation in a Button Gwinnett Benefit
Plan of the same type immediately prior to the Effective Time.
(b) The Surviving Corporation and its Subsidiaries also shall honor
in accordance with their terms all employment, severance, consulting and other
compensation Contracts disclosed in Section 8.11 of the Button Gwinnett
Disclosure Memorandum to Premier between any Button Gwinnett Company and any
- ----------------------
current or former director, officer, or employee thereof and all provisions for
vested benefits accrued through the Effective Time under the Button Gwinnett
Benefit Plans. Premier and Premier Bank as appropriate shall enter into a three
year employment agreement with Glenn S. White, a two year employment agreement
with Andrew R. Pourchier and contracts with Linda S. George, William P. Shaver
and John C. Pentecost in substantially the forms attached hereto as Exhibits
--------
5-9.
- ---
8.12 MERGER OF GWINNETT COUNTY BANK AND PREMIER BANK. Contemporaneously
------------------------------------------------
with the Closing or as soon as practicable thereafter, Gwinnett County Bank
shall be merged with and into Premier Bank.
8.13 INDEMNIFICATION.
---------------
(a) Subject to the conditions set forth in paragraph (b) below, for a
period of four and one-half (4 1/2) years after the Effective Time, the
Surviving Corporation shall indemnify, defend, and hold harmless the present and
former directors, officers, employees, and agents of the Button Gwinnett
Companies (each, an "Indemnified Party") against all Liabilities arising out of
actions or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the full extent permitted under
Georgia Law and by Button Gwinnett's Articles of Incorporation and Bylaws as in
effect on the date hereof, including provisions relating to advances of expenses
incurred in the defense of any Litigation. Without limiting the foregoing, in
any case in which approval by Premier is required to effect any indemnification,
the Surviving Corporation shall direct, at the election of the Indemnified
Party, that the determination of any such approval shall be made by independent
counsel mutually agreed upon between Premier and the Indemnified Party.
37
<PAGE>
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) above, upon learning of any such Liability or Litigation within
the four and one-half (4 1/2) year period after the Effective Time, shall
promptly notify Premier within ten (10) days thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) Premier
shall have the right to assume the defense thereof and Premier shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Premier elects not to assume
such defense or counsel for the Indemnified Parties and advises that there are
substantive issues which raise conflicts of interest between Premier and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Premier shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties promptly as statements therefor are received; provided,
however, that Premier shall be obligated pursuant to this paragraph (b) to pay
for only one firm of counsel for all Indemnified Parties in any jurisdiction,
(ii) the Indemnified Parties will cooperate in the defense of any such
Litigation; and (iii) Premier shall not be liable for any settlement effected
without its prior written consent; and provided further that Premier shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
(c) If the Surviving Corporation or any of its successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall transfer
all or substantially all of its assets to any Person, then and in each case,
proper provision shall be made so that the successors and assigns of Premier
shall assume the obligations set forth in this Section 8.13.
(d) The provisions of this Section 8.13 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party, his or her heirs
and representatives.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
---------------------------------------
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) Shareholder Approval. The shareholders of Premier and Button
--------------------
Gwinnett shall have approved this Agreement, and the consummation of the
transactions contemplated hereby, including the Merger and with respect to
Premier, an increase in the number of authorized shares of Premier Common Stock,
as and to the extent required by Law, the American Stock Exchange or by the
provisions of any governing instruments.
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(b) Regulatory Approvals. All Consents of, filings and
--------------------
registrations with, and notifications to all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in full
force and effect and all waiting periods required by Law shall have expired. No
Consent obtained from any Regulatory Authority which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in a
manner (including, without limitation, requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of the Board of Directors of either Party would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement as to render inadvisable the consummation of the Merger.
(c) Consents and Approvals. Each Party shall have obtained any and
----------------------
all Consents required for consummation of the Merger (other than those referred
to in Section 9.1(b) of this Agreement) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent so obtained which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of either
Party would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(d) Registration Statement. The Registration Statement shall be
----------------------
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of the Surviving Corporation Common Stock issuable pursuant to the Merger
shall have been received.
(e) Exchange Listing. The shares of Surviving Corporation Common
----------------
Stock issuable pursuant to the Merger shall have been approved for listing on
the American Stock Exchange.
(f) Tax Matters. Premier and Button Gwinnett shall have received a
-----------
written opinion of counsel from Womble Carlyle Sandridge & Rice, PLLC, in form
reasonably satisfactory to them (the "Tax Opinion"), to the effect that for
federal income tax purposes (i) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, (ii) the
exchange in the Merger of Button Gwinnett Common Stock for Surviving Corporation
Common Stock will not give rise to gain or loss to the shareholders of Button
Gwinnett with respect to such exchange (except to the extent of any cash
received), and (iii) neither Premier nor Button Gwinnett will recognize gain or
loss as a consequence of the Merger (except for income and deferred gain
recognized pursuant to Treasury regulations issued under Section 1502 of the
Internal Revenue Code). In rendering such Tax Opinion, counsel shall be
entitled to rely upon representations of officers of Premier and Button Gwinnett
reasonably satisfactory in form and substance to such counsel.
39
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(g) Affiliate Agreements. The Parties shall have received from each
--------------------
affiliate of Button Gwinnett the affiliates letter referred to in Section 8.10
hereof.
(h) Pooling Letter. The Parties shall have received a letter from
--------------
Mauldin & Jenkins, LLC, and from Ernst & Young L.L.P. dated as of the Effective
Time, to the effect that the Merger will qualify for pooling-of-interests
accounting treatment under Accounting Principles Board Opinion No. 16 if closed
and consummated in accordance with this Agreement.
9.2 CONDITIONS TO OBLIGATIONS OF PREMIER. The obligations of Premier to
------------------------------------
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Premier pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
-------------------------------
9.2(a), the accuracy of the representations and warranties of Button Gwinnett
set forth or referred to in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Button Gwinnett set forth in Section 5.3 of this Agreement shall
be true and correct (except for inaccuracies which are de minimis in amount).
The representations and warranties of Button Gwinnett set forth in Section 5.19
of this Agreement shall be true and correct in all Material respects. There
shall not exist inaccuracies in the representations and warranties of Button
Gwinnett set forth in this Agreement (excluding the representations and
warranties set forth in Sections 5.3 and 5.19) such that the aggregate effect of
such inaccuracies would have, or is reasonably likely to have, a Material
Adverse Effect on Button Gwinnett; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"Material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of Button Gwinnett to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. Button Gwinnett shall have delivered to Premier
------------
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.2(a) and 9.2(b) of
this Agreement have been satisfied, and (ii) certified copies of resolutions
duly adopted by Button Gwinnett's Board of Directors and shareholders evidencing
the taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as Premier and
its counsel shall request.
40
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(d) Opinion of Counsel. Button Gwinnett shall have delivered to
------------------
Premier an opinion of Powell Goldstein Frazer & Murphy LLP, counsel to Button
Gwinnett, dated as of the Effective Time, in form reasonably satisfactory to
Premier, as to the matters set forth in Exhibit 2 hereto.
---------
(e) Claims/Indemnification Letters. Each of the directors and
------------------------------
officers of Button Gwinnett shall have executed and delivered to Premier letters
in substantially the form of Exhibit 3 hereto.
---------
(f) 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 Button Gwinnett
shareholders in connection with the Merger is fair, from a financial point of
view, to the shareholders of Premier.
(g) 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 any action
therefor initiated which, in the good faith judgment of the Board of Directors
of Premier, it is not in the best interests of the shareholders of Premier to
contest; and there shall not have been instituted or be pending any action or
proceeding by any United States federal or state government or governmental
agency or instrumentality (i) challenging or seeking to restrain or prohibit the
consummation of the Merger or seeking material damages in connection with the
Merger; or (ii) seeking to prohibit Premier's or the Surviving Corporation's
ownership or operation of all or a material portion of Premier's or Button
Gwinnett's business or assets, or compel Premier or the Surviving Corporation to
dispose of or hold separate all or a material portion of Premier's or Button
Gwinnett's business or assets as a result of the Merger, which, in any case, in
the reasonable judgment of Premier based upon a legal opinion from legal
counsel, could result in the relief sought being obtained.
9.3 CONDITIONS TO OBLIGATIONS OF BUTTON GWINNETT. The obligations of
--------------------------------------------
Button Gwinnett to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Button Gwinnett pursuant to Section
11.6(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
-------------------------------
9.3(a), the accuracy of the representations and warranties of Premier set forth
or referred to in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties of
Premier set forth in Section 6.3 of this Agreement shall be true and correct
(except for inaccuracies which are de minimis in amount). The representations
and warranties of Premier set forth in Section 6.19 of this Agreement shall be
true and correct in all material respects. There shall not exist inaccuracies
in the representations and warranties set forth in this Agreement (excluding the
representations and warranties set forth in
41
<PAGE>
Sections 6.3 and 6.19) such that the aggregate effect of such inaccuracies would
have, or is reasonably likely to have a Material Adverse Effect on Premier;
provided that, for purposes of this sentence only, those representations and
warranties which are qualified by reference to "material" or "Material Adverse
Effect" shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of Premier to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. Premier shall have delivered to Button Gwinnett
------------
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by Premier's Board of Directors evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Button Gwinnett and its counsel shall request.
(d) Opinion of Counsel. Premier shall have delivered to Button
------------------
Gwinnett an opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to
Premier, dated as of the Effective Time, in Form reasonably acceptable to Button
Gwinnett, as to matters set forth in Exhibit 4 hereto.
---------
(e) Button Gwinnett Fairness Opinion. Button Gwinnett 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 Button Gwinnett
shareholders in connection with the Merger is fair, from a financial point of
view, to the shareholders of Button Gwinnett.
(f) 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 any action
therefor initiated which, in the good faith judgment of the Board of Directors
of Button Gwinnett, it is not in the best interests of the shareholders of
Button Gwinnett to contest; and there shall not have been instituted or be
pending any action or proceeding by any United States federal or state
government or governmental agency or instrumentality (i) challenging or seeking
to restrain or prohibit the consummation of the Merger or seeking material
damages in connection with the Merger; or (ii) seeking to prohibit Premier's or
the Surviving Corporation's ownership or operation of all or a material portion
of Premier's or Button Gwinnett's business or assets, or compel Premier or the
Surviving Corporation to dispose of or hold separate all or a material portion
of Premier's or Button Gwinnett's business or assets as a result of the Merger,
which, in any case, in the reasonable judgment of Button Gwinnett based upon a
legal opinion from legal counsel, could result in the relief sought being
obtained.
42
<PAGE>
ARTICLE X
TERMINATION
-----------
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
-----------
and notwithstanding the approval of this Agreement by the shareholders of
Premier and Button Gwinnett, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Button Gwinnett and
the Board of Directors of Premier; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Button Gwinnett and Section 9.3(a) in
the case of Premier or in Material breach of any covenant or agreement contained
in this Agreement) in the event of a material breach by the other Party of any
representation or warranty contained in this Agreement which cannot be or has
not been cured within thirty (30) days after the giving of written notice to the
breaching Party of such breach and which breach would provide the non-breaching
Party the ability to refuse to consummate the Merger under the standard set
forth in Section 9.2(a) of this Agreement in the case of Premier and Section
9.3(a) of this Agreement in the case of Button Gwinnett; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Button Gwinnett and Section 9.3(a) in
the case of Premier or in the Material breach of any covenant or other agreement
contained in this Agreement) in the event of a Material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot be
or has not been cured within thirty (30) days after the giving of written notice
to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Button Gwinnett and Section
9.3(a) in the case of Premier or in the material breach of any covenant or
agreement contained in this Agreement) (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other transactions
contemplated hereby shall have been denied by final nonappealable action of such
authority or if any action taken by such authority is not appealed within the
time limit for appeal, or (ii) if the shareholders of Button Gwinnett fail to
vote their approval of this Agreement and the transactions contemplated hereby
as required by the GBCC at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon; or (iii) if the
shareholders of Premier fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the GBCC at the Shareholders'
Meeting where the transactions were presented to such shareholders for approval
and voted upon; or
43
<PAGE>
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated on or before September 30, 1998, but only
if the failure to consummate the transactions contemplated hereby on or before
such date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Button Gwinnett and Section 9.3(a) in
the case of Premier or in the material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions precedent
to the obligations of such Party to consummate the Merger (other than as
contemplated by Section 10.1(d) of this Agreement) cannot be satisfied or
fulfilled by the date specified in Section 10.1(e) of this Agreement; or
(g) By the Board of Directors of either Party in the event that the
Premier Ratio (as defined in Section 3.1(c)) is either less than 0.70 or greater
than 1.30.
(h) By the Board of Directors of either Party on or before two (2)
business days following the business day of receipt of the Disclosure
----------
Memorandum of the other Party (which receipt shall not be later than February
- ----------
13, 1998), in the event that such Party, after a review of the Disclosure
----------
Memorandum provided by the other Party, determines not to proceed with the
- ----------
Merger.
10.2 EFFECT OF TERMINATION. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that the provisions of
this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
---------------------------------------------
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except for this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.10, 8.11 and 8.13 of this Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 DEFINITIONS. Except as otherwise provided herein, the capitalized
-----------
terms set forth below (in their singular and plural forms as applicable) shall
have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
44
<PAGE>
"ACQUISITION PROPOSAL" shall mean any tender offer or exchange offer or any
proposal for a merger (other than the Merger), acquisition of all of the stock
or Assets of, or other business combination involving Button Gwinnett or any of
its Subsidiaries or the acquisition of a substantial equity interest in, or a
substantial portion of the Assets of Button Gwinnett or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Reorganization, including
the Exhibits delivered pursuant hereto and incorporated herein by reference.
"ALLOWANCE" shall have the meaning provided in Section 5.9 of this
Agreement.
"ASSETS" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"BUTTON GWINNETT BENEFIT PLANS" shall have the meaning set forth in Section
5.14 of this Agreement.
"BUTTON GWINNETT COMMON STOCK" shall mean the $.01 par value common stock
of Button Gwinnett.
"BUTTON GWINNETT COMPANIES" shall mean, collectively, Button Gwinnett and
all Button Gwinnett Subsidiaries.
"BUTTON GWINNETT DISCLOSURE MEMORANDUM" shall mean the written information
---------------------
entitled "Button Gwinnett Disclosure Memorandum" delivered on or prior to
---------------------
February 13, 1998 to Premier describing in reasonable detail the matters
contained therein, specifically referencing each Section of this Agreement under
which such disclosure is being made.
"BUTTON GWINNETT FINANCIAL STATEMENTS" shall mean (a) the consolidated
balance sheets (including related notes and schedules, if any) of Button
Gwinnett as of December 31, 1997, and December 31, 1996 and 1995, and the
related statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for each of the three fiscal
years ended December 31, 1997, 1996 and 1995, included in the Button Gwinnett
Disclosure Memorandum, and (b) the consolidated balance sheets (including
- ---------------------
related notes and schedules, if any) of Button
45
<PAGE>
Gwinnett and related statements of income, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) included in any SEC
Documents filed with respect to periods ended subsequent to December 31, 1997.
"BUTTON GWINNETT OPTIONS" shall have the meaning set forth in Section 3.4
of this Agreement.
"BUTTON GWINNETT STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of Button Gwinnett disclosed in Section
5.14 of the Button Gwinnett Disclosure Memorandum.
---------------------
"BUTTON GWINNETT SUBSIDIARIES" shall mean the subsidiaries of Button
Gwinnett.
"CLOSING" shall mean the closing of the transactions contemplated hereby,
as described in Section 1.2 of this Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"DEFAULT" shall mean (a) any breach or violation of or default under any
Contract, Order or Permit, (b) any occurrence of any event that with the passage
of time or the giving of notice or both would constitute a breach or violation
of or default under any Contract, Order or Permit, or (c) any occurrence of any
event that with or without the passage of time or the giving of notice would
give rise to a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under, any
Contract, Order or Permit.
"EFFECTIVE TIME" shall mean the date and time at which the Merger becomes
effective as defined in Section 1.3 of this Agreement.
"ENVIRONMENT" shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601(8).
"ENVIRONMENTAL LAWS" shall mean all Laws pertaining to pollution or
protection of the environment and which are administered, interpreted or
enforced by the United States Environmental Protection Agency and state and
local agencies with primary jurisdiction over pollution or protection of the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et. seq., the
-------
Resource,
46
<PAGE>
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et. seq., the Toxic
-------
Substance Control Act, 15 U.S.C. (S) 2601, et. seq., and all implementing
-------
regulations and state counterparts of such acts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" shall refer to a relationship between entities such that
the entities would, now or at any time in the past, constitute a "single
employer" within the meaning of Section 414 of the Internal Revenue Code.
"ERISA PLAN" shall have the meaning provided in Section 5.14 of this
Agreement.
"EXCHANGE RATIO" shall have the meaning provided in Section 3.1 of this
Agreement.
"EXHIBITS" 1 through 9, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"GEORGIA CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be
executed by the Surviving Corporation and filed with the Secretary of State of
the State of Georgia relating to the Merger as contemplated by Section 1.1 of
this Agreement.
"HAZARDOUS MATERIAL" shall mean any substance which is a "hazardous
substance"or "toxic substance" as defined in the Comprehensive Environment
Response, Compensation, and Liability Act, 42 U.S.C. (S)9601 et seq., or any
------
other substance or material defined, designated, classified or regulated as
hazardous or toxic under any Environmental Law, specifically including asbestos
requiring abatement, removal or encapsulation pursuant to the requirements of
Environmental Laws of polychlorinated biphenyls, and petroleum and petroleum
products).
"HOLA" shall mean the Home Owners Loan Act of 1933, as amended.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person shall mean the knowledge
after due inquiry of the Chairman, President, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer, or any Senior or Executive Vice
President of such Person.
47
<PAGE>
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including, without limitation, those promulgated,
interpreted or enforced by any of the Regulatory Authorities.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or other security arrangement,
or any adverse right or interest, charge, or claim of any nature whatsoever on,
or with respect to, any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable; (ii) for depository institution
Subsidiaries of a Party, pledges to secure deposits and (iii) other Liens
incurred in the ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including, without limitation, Contracts related to it),
or the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their Affiliates
by Regulatory Authorities other than the violations of law section from such
reports.
"LOAN PROPERTY" shall mean any property owned by the Party in question or
by any of its Subsidiaries or in which such Party or Subsidiary holds a security
interest, and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change or
occurrence which has a material adverse impact on (a) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (b) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (w) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(x) changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (y) actions and omissions of a Party (or any
of its Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the
48
<PAGE>
transactions contemplated hereby, or (z) the Merger and compliance with the
provisions of this Agreement on the operating performance of the Parties.
"MERGER" shall mean the merger of Button Gwinnett with and into Premier
referred to in Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
(including any property or facility held in a joint venture) and, where required
by the context, said term means the owner or operator of such facility or
property, but only with respect to such facility or property.
"PARTY" shall mean either Premier or Button Gwinnett, and "Parties" shall
mean both Premier and Button Gwinnett.
"PERMIT" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets,
Liabilities, or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"PREMIER BANK" shall mean Premier Bank, a Georgia state-chartered bank and
a Premier Subsidiary.
"PREMIER BENEFIT PLANS" shall have the meaning set forth in Section 6.14 of
this Agreement.
"PREMIER COMMON STOCK" shall mean the $1.00 par value common stock of
Premier.
"PREMIER COMPANIES" shall mean, collectively, Premier and all Premier
Subsidiaries.
"PREMIER DISCLOSURE MEMORANDUM" shall mean the written information entitled
---------------------
"Premier Disclosure Memorandum" delivered on or prior to February 13, 1998 to
---------------------
Button Gwinnett describing in reasonable detail the matters contained therein
and, with respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.
49
<PAGE>
"PREMIER FINANCIAL STATEMENTS" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of Premier as of December
31, 1997 and 1996, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for each of the three years ended December 31, 1997, 1996 and 1995, and (b)
the consolidated balance sheets (including related notes and schedules, if any)
of Premier and related statements of income, changes in shareholders' equity,
and cash flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to December 31, 1997.
"PREMIER LENDING" shall mean Premier Lending Corporation, a Georgia
corporation and a Premier Subsidiary.
"PREMIER STOCK PLANS" shall mean the existing stock option and other stock-
based compensation plans of Premier.
"PREMIER SUBSIDIARIES" shall mean the Subsidiaries of Premier at the
Effective Time.
"PROXY STATEMENT" shall mean (a) the proxy statement used by Button
Gwinnett to solicit the approval of its shareholders of the transactions
contemplated by this Agreement and (b) the proxy statement used by Premier to
solicit the approval of its shareholders of the transactions contemplated by
this Agreement, both of which shall be included in the prospectus of the
Surviving Corporation relating to shares of Surviving Corporation Common Stock
to be issued to the shareholders of Button Gwinnett.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form S-4,
or other appropriate form, filed with the SEC by Premier under the 1933 Act with
respect to the shares of Surviving Corporation Common Stock to be issued to the
shareholders of Button Gwinnett in connection with the transactions contemplated
by this Agreement and which shall include the Proxy Statements.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Office of Thrift Supervision (including its
predecessor, the Federal Home Loan Bank Board), the Office of the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, all state regulatory
agencies having jurisdiction over the Parties and their respective Subsidiaries,
the NASD and the SEC.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
50
<PAGE>
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
Button Gwinnett or the meeting of the shareholders of Premier to be held
pursuant to Section 8.1 of this Agreement, including any adjournment or
adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks, associations or
other entities of which the entity in question owns or controls 50% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 50% or more of the outstanding equity securities
is owned directly or indirectly by its parent; provided, however, there shall
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"SURVIVING CORPORATION" shall mean Premier as the surviving corporation
resulting from the Merger,
"SURVIVING CORPORATION COMMON STOCK" shall mean the $1.00 par value common
stock of the Surviving Corporation.
"TAX" OR "TAXES" shall mean any federal, state, county, local or foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise, occupancy and other taxes, assessments, charges,
fares or impositions, including interest, penalties and additions imposed
thereon or with respect thereto.
"THE BANK OF GWINNETT COUNTY" shall mean The Bank of Gwinnett County, a
Georgia chartered commercial bank and a Button Gwinnett Subsidiary.
"YEAR 2000 PROBLEM" shall mean any problem affecting the ability of any
Button Gwinnett Company to continue operation as an ongoing business or to
provide the usual and customary services of any Button Company, relating to the
failure of software, hardware or other computer equipment to: (a) store all
date-related information and process all data interfaces involving dates in a
manner that unambiguously identifies the century, for all date values before,
during or after the Year 2000; (b) calculate, sort, report and otherwise operate
correctly and in a consistent manner for all date information processed by any
software, hardware or other computer equipment, whether before, during or after
the Year 2000; (c) calculate, sort, report and otherwise operate correctly, in a
consistent manner and without interruption regardless whether the date on which
the software, hardware or other computer equipment is operated or executed is
before, during or after the Year 2000; (d) report and display all dates with a
four-digit date so that the century is unambiguously
51
<PAGE>
identified; and (e) handle all leap years, including but not limited to the Year
2000 leap year, correctly.
Any singular term in this Agreement shall be deemed to include the plural, and
any plural term the singular. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 EXPENSES.
--------
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants and
counsel, except that each of the Parties shall bear and pay (i) one-half of the
filing fees payable in connection with the Registration Statement and the
applications filed with other Regulatory Authorities, and (ii) one-half of the
costs incurred in connection with the printing or copying of the Proxy
Statements.
(b) Notwithstanding the provisions of Section 11.2(a) of this
Agreement, if for any reason this Agreement is terminated pursuant to Sections
10.1(b) or 10.1(c) of this Agreement, the breaching Party agrees to pay the non-
breaching Party (i) an amount equal to the reasonable and documented fees and
expenses incurred by such non-breaching Party in connection with the examination
and investigation of the breaching 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 banking consultants, accountants,
attorneys and other agents and (ii) (x) $150,000 if the breach is not willful or
(y) $1,000,000 if the breach is willful or this Agreement is terminated in
contemplation of an Acquisition Proposal, which sums represent compensation for
the non-breaching Party's loss as a result of the transactions contemplated by
this Agreement not being consummated. Final settlement with respect to payment
of such fees and expenses shall be made within thirty (30) days after the
termination of this Agreement. This Section 11.2(b) shall be the non-breaching
Party's sole and exclusive remedy for actionable breach by the breaching Party
under this Agreement.
11.3 BROKERS AND FINDERS. Each of the Parties represents and warrants
-------------------
that neither it nor any of its officers, directors, employees or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby, other than Brown, Burke Capital Partners, Inc. employed by Premier and
The Carson Medlin Company employed by Button Gwinnett. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by Premier or Button Gwinnett, each
of Premier and Button Gwinnett, as the case may be, agrees to indemnify and hold
the other Party harmless of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
----------------
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement
52
<PAGE>
between the Parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Section 8.10 and Section 8.13 of this
Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
----------
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, however, that after
any such approval by the holders of Premier Common Stock or Button Gwinnett
Common Stock, there shall be made no amendment that pursuant to the GBCC
requires further approval by such shareholders without the further approval of
such shareholders.
11.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, Premier, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by Button Gwinnett, to waive or extend the time for the compliance or
fulfillment by Button Gwinnett of any and all of its 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. No such waiver shall be
effective unless in writing and signed by a duly authorized officer of Premier.
(b) Prior to or at the Effective Time, Button Gwinnett, acting
through its Board of Directors, chief executive officer or other authorized
officer, 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
compliance or fulfillment by Premier of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Button Gwinnett under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing and signed by a duly authorized officer of Button
Gwinnett.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
53
<PAGE>
11.8 NOTICES. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, or by courier or overnight carrier, to the persons at
the addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
Premier: Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Telecopy Number: (404) 814-3672
Attention: Darrell D. Pittard
Chairman and CEO
Copy to Counsel: Womble Carlyle Sandridge & Rice, PLLC
Suite 700
1275 Peachtree Street, N.E.
Atlanta, Georgia 30309
Telecopy Number: (404) 888-7490
Attention: Steven S. Dunlevie, Esq.
Button Gwinnett: Button Gwinnett Financial Corporation
150 South Perry Street, S.W.
Lawrenceville, Georgia 30045
Telecopy Number: (770) 822-1521
Attention: Glenn S. White
President
Copy to Counsel: Powell, Goldstein, Frazer & Murphy, LLP
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy Number: (404) 572-6999
Attention: Kathryn L. Knudson, Esq.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws, except to the extent that the federal laws of the
United States may apply to the Merger.
54
<PAGE>
11.10 COUNTERPARTS. This Agreement 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.
11.11 CAPTIONS. The captions contained in this Agreement are for
--------
reference purposes only and are not part of this Agreement.
11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.13 SEVERABILITY. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
[SIGNATURES ON NEXT PAGE]
55
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: PREMIER BANCSHARES, INC.
/s/ Barbara J. Burtt By: /s/ Darrell D. Pittard
- ------------------------- -----------------------------
Secretary Darrell D. Pittard
Chairman and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: BUTTON GWINNETT FINANCIAL
CORPORATION
/s/ By: /s/ Glenn S. White
- ------------------------- -------------------------------
Secretary Glenn S. White
President
[CORPORATE SEAL]
56
<PAGE>
Appendix B
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
PREMIER BANCSHARES, INC.
AND
THE BANK HOLDING COMPANY
Dated as of December 3, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Preamble .........................................................................................................1
ARTICLE I
TRANSACTIONS AND TERMS OF MERGER.........................................................................1
--------------------------------
1.1 Merger..........................................................................................1
1.2 Time and Place of Closing.......................................................................2
1.3 Effective Time..................................................................................2
ARTICLE II
- ----------
TERMS OF MERGER..........................................................................................2
---------------
2.1 Articles of Incorporation.......................................................................2
2.2 Bylaws..........................................................................................2
2.3 Directors and Officers..........................................................................2
ARTICLE III
- -----------
MANNER OF CONVERTING SHARES..............................................................................3
---------------------------
3.1 Conversion of Shares............................................................................3
3.2 Anti-Dilution Provisions........................................................................3
3.3 Conversion of Stock Options; Restricted Stock...................................................3
3.4 Dissenting Shareholders.........................................................................4
3.5 Fractional Shares...............................................................................4
ARTICLE IV
- ----------
EXCHANGE OF SHARES.......................................................................................5
------------------
4.1 Exchange Procedures.............................................................................5
4.2 Rights of Former BHC Shareholders...............................................................5
ARTICLE V
- ---------
REPRESENTATIONS AND WARRANTIES OF BHC. .................................................................6
-------------------------------------
5.1 Organization, Standing, and Power...............................................................6
5.2 Authority; No Breach By Agreement...............................................................6
5.3 Capital Stock...................................................................................7
5.4 BHC Subsidiaries................................................................................7
5.5 Financial Statements............................................................................8
5.6 Absence of Undisclosed Liabilities..............................................................8
5.7 Absence of Certain Changes or Events............................................................8
5.8 Tax Matters.....................................................................................9
5.9 Allowance for Possible Loan Losses.............................................................10
5.10 Assets.........................................................................................10
5.11 Environmental Matters..........................................................................10
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.12 Compliance with Laws...........................................................................11
5.13 Labor Relations................................................................................11
5.14 Employee Benefit Plans.........................................................................11
5.15 Material Contracts.............................................................................13
5.16 Legal Proceedings..............................................................................14
5.17 Reports........................................................................................14
5.18 Statements True and Correct....................................................................14
5.19 Accounting, Tax and Regulatory Matters.........................................................15
5.20 Charter Provisions.............................................................................15
5.21 Millennium Compliance..........................................................................15
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PREMIER...............................................................15
-----------------------------------------
6.1 Organization, Standing, and Power..............................................................15
6.2 Authority; No Breach By Agreement..............................................................16
6.3 Capital Stock..................................................................................17
6.4 Financial Statements...........................................................................17
6.5 Absence of Undisclosed Liabilities.............................................................17
6.6 Absence of Certain Changes or Events...........................................................18
6.7 Compliance with Laws...........................................................................18
6.8 Legal Proceedings..............................................................................18
6.9 Statements True and Correct....................................................................19
6.10 Accounting, Tax and Regulatory Matters.........................................................19
ARTICLE VII
CONDUCT OF BUSINESS PENDING CONSUMMATION................................................................19
----------------------------------------
7.1 Affirmative Covenants of BHC...................................................................19
7.2 Negative Covenants of BHC......................................................................20
7.3 Affirmative Covenants of Premier...............................................................22
7.4 Adverse Changes in Condition...................................................................22
7.5 Reports........................................................................................22
ARTICLE VIII
ADDITIONAL AGREEMENTS...................................................................................22
---------------------
8.1 Registration Statement; Proxy Statement; Shareholder Approval..................................22
8.2 Exchange Listing...............................................................................23
8.3 Applications...................................................................................23
8.4 Filings with State Offices.....................................................................23
8.5 Agreement as to Efforts to Consummate..........................................................23
8.6 Investigation and Confidentiality..............................................................24
8.7 Press Releases.................................................................................24
8.8 Acquisition Proposals..........................................................................24
8.9 Accounting and Tax Treatment...................................................................25
8.10 Agreement of Affiliates........................................................................25
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
8.11 Employee Benefits and Contracts................................................................25
8.12 Authorization of Preferred Stock...............................................................26
8.13 Merger of Premier Bank, Henry County Bank and Spalding County Bank.............................26
8.14 Other Acquisitions, Mergers, or Combinations involving a Premier Company.......................26
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.......................................................26
-------------------------------------------------
9.1 Conditions to Obligations of Each Party........................................................26
9.2 Conditions to Obligations of Premier...........................................................28
9.3 Conditions to Obligations of BHC...............................................................29
ARTICLE X
TERMINATION.............................................................................................31
-----------
10.1 Termination....................................................................................31
10.2 Effect of Termination..........................................................................32
10.3 Non-Survival of Representations and Covenants..................................................32
ARTICLE XI
MISCELLANEOUS...........................................................................................33
-------------
11.1 Definitions....................................................................................33
11.2 Expenses.......................................................................................40
11.3 Brokers and Finders............................................................................40
11.4 Entire Agreement...............................................................................41
11.5 Amendments.....................................................................................41
11.6 Waivers........................................................................................41
11.7 Assignment.....................................................................................42
11.8 Notices........................................................................................42
11.9 Governing Law..................................................................................43
11.10 Counterparts...................................................................................43
11.11 Captions.......................................................................................43
11.12 Enforcement of Agreement.......................................................................43
11.13 Severability...................................................................................43
</TABLE>
iii
<PAGE>
LIST OF EXHIBITS
- ----------------
Exhibit
Number Description
- ------- -----------
1. Form of Agreement of Affiliates of BHC. (Section 8.10).
2. Matters as to which Counsel for BHC will opine. (Section 9.2(d)).
3. Form of Claims/Indemnification Letter (Section 9.2(e)).
4. Matters as to which Counsel for Premier will opine. (Section 9.3(d)).
5. Form of Employment Agreement between Premier Bank, Premier Bancshares,
Inc., and Charles B. Blackmon (Sections 2.3 and 8.11(b)).
iv
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of December 3, 1997 by and between PREMIER BANCSHARES, INC.
("Premier"), a corporation organized and existing under the laws of the State of
Georgia, with its principal office located in Atlanta, Georgia, and THE BANK
HOLDING COMPANY ("BHC"), a corporation organized and existing under the laws of
the State of Georgia, with its principal office located in Griffin, Georgia.
Preamble
--------
The Boards of Directors of Premier and BHC are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the merger of BHC with and
into Premier, with Premier being the surviving corporation of the merger. At
the effective time of such merger, the outstanding shares of capital stock of
BHC will be converted into the right to receive shares of capital stock of the
surviving corporation. As a result, shareholders of BHC will become
shareholders of the surviving corporation, and each of the subsidiaries of BHC
will continue to conduct its business and operations as a wholly-owned
subsidiary of the surviving corporation. The transactions described in this
Agreement are subject to the approvals of the Boards of Directors of Premier and
BHC, the shareholders of BHC, the Board of Governors of the Federal Reserve
System, the Georgia Department of Banking and Finance and the satisfaction of
certain other conditions described in this Agreement. It is the intention of
the parties to this Agreement that the merger (i) for federal income tax
purposes shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code and (ii) for accounting purposes shall be
accounted for as a "pooling of interests."
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
---------
TRANSACTIONS AND TERMS OF MERGER
--------------------------------
1.1 Merger. Subject to the terms and conditions of this Agreement, at
------
the Effective Time, BHC shall be merged with and into Premier in accordance with
the provisions of Section 14-2-1101 of the GBCC and with the effect provided in
Section 14-2-1106 of the GBCC (the "Merger"). Premier shall be the Surviving
Corporation resulting from the Merger. The Merger shall be consummated pursuant
to the terms of this Agreement, which has been approved and adopted by the
respective Boards of Directors of Premier and BHC.
1
<PAGE>
1.2 Time and Place of Closing. The Closing will take place at 10:00
-------------------------
a.m. on the date that the Effective Time occurs (or the immediately preceding
day if the Effective Time is earlier than 10:00 a.m.), or at such other time as
the Parties, acting through their chief executive officers may mutually agree.
The place of Closing shall be at the offices of Womble Carlyle Sandridge & Rice,
PLLC, Atlanta, Georgia, or such other place as may be mutually agreed upon by
the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by
--------------
this Agreement shall become effective on the date and at the time the Georgia
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officer of each Party, the Parties shall use
their reasonable efforts to cause the Effective Time to occur on the last
business day of the month in which occurs the last to occur of (a) the effective
date (including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and approving
or exempting the Merger, and (b) the date on which the shareholders of BHC
approve this Agreement to the extent such approval is required by applicable
Law; or such later date as may be mutually agreed upon in writing by the chief
executive officer of each Party.
ARTICLE II
----------
TERMS OF MERGER
---------------
2.1 Articles of Incorporation. The Articles of Incorporation of Premier
-------------------------
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation after the Effective Time until
otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Premier in effect immediately prior to the
------
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 Directors and Officers. The directors of the Surviving Corporation
----------------------
from and after the Effective Time shall consist of the Directors of Premier on
the date hereof, provided however that one (1) director of BHC as of the date
hereof shall be selected by the Board of Directors of Premier, in its sole
discretion, to serve on the Board of Directors of the Surviving Corporation from
and after the Effective Time in accordance with the Articles of Incorporation
and Bylaws of the Surviving Corporation. The officers of the Surviving
Corporation from and after the Effective Time shall consist of the officers of
Premier on the date hereof. Such officers, together with such additional
persons as may thereafter be elected, shall serve as the officers of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. At the Effective Time of the Merger,
Darrell D. Pittard and Robert C. Oliver will be elected to the board of
directors of Henry County Bank and Spalding County
2
<PAGE>
Bank. At the Effective Time, Premier and Premier Bank shall enter into an
employment agreement with Charles B. Blackmon in substantially the form attached
hereto as Exhibit "5."
------------
ARTICLE III
-----------
MANNER OF CONVERTING SHARES
---------------------------
3.1 Conversion of Shares. Subject to the provisions of this Article
--------------------
III, at the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, the shares of the constituent corporations
shall be converted as follows:
(a) Each share of Premier Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of BHC Common Stock issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive 2.67 shares of Surviving Corporation Common
Stock (the "Exchange Ratio").
(c) Each share of BHC Preferred Stock issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive one share of Surviving Corporation Preferred
Stock.
3.2 Anti-Dilution Provisions. In the event Premier or BHC changes the
------------------------
number of shares of Premier Common Stock or BHC Common Stock, respectively,
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or similar recapitalization with respect to such stock and the
record date therefor (in the case of a stock dividend) or the effective date
therefor (in the case of a stock split or similar recapitalization) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.3 Conversion of Stock Options; Restricted Stock.
---------------------------------------------
(a) At the Effective Time, all rights with respect to BHC Common
Stock pursuant to stock options granted by BHC ("BHC Options"), which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to Surviving Corporation Common
Stock, and the Surviving Corporation shall assume each BHC Option, in accordance
with the terms of the stock option agreements by which each such option is
evidenced. From and after the Effective Time, (i) each BHC Option assumed by the
Surviving Corporation may be exercised solely for shares of Surviving
Corporation Common Stock, (ii) the number of shares of Surviving Corporation
Common Stock subject to such BHC Option shall be equal to the number of shares
of BHC Common Stock subject to such BHC Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such BHC 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
3
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stock option which is an "incentive stock option." BHC and Premier agree to take
all necessary steps to effect the provisions of this Section 3.3.
(b) Premier may at its election substitute as of the Effective Time
stock options under the Premier Bancshares, Inc. 1997 Stock Option Plan (the
"Premier Stock Option Plan") for all or a part of the BHC Options, subject to
the following conditions: (i) the requirements of Section 3.4(a) shall be met;
(ii) such substitution shall not constitute a modification, extension or renewal
of any of the BHC 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 document granting the BHC Options; and (iv) each
grant of a substitute option to any individual who shall be deemed subject to
Section 16 of the 1934 Act 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.
3.4 Dissenting Shareholders. Any holder of shares of BHC Common Stock
-----------------------
who perfects such holder's dissenters' rights of appraisal in accordance with
and as contemplated by Section 14-2-1106 of 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 BHC the
certificate or certificates representing shares for which payment is being made.
In the event that after the Effective Time a dissenting shareholder of BHC 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 BHC Common Stock
is entitled under this Article III (without interest) upon surrender by such
holder of the certificate or certificates representing shares of BHC Common
Stock held by such holder.
3.5 Fractional Shares. Notwithstanding any other provision of this
-----------------
Agreement, each holder of shares of BHC Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Surviving Corporation Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Surviving Corporation Common Stock multiplied by the market value of one share
of Surviving Corporation Common Stock at the Effective Time. The market value
of one share of Surviving Corporation Common Stock at the Effective Time shall
be the last sale price of such common stock on the American Stock Exchange on
the last trading day preceding the Effective Time. No such holder will be
entitled to dividends, voting rights, or any other rights as a stockholder in
respect of any fractional shares.
4
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ARTICLE IV
----------
EXCHANGE OF SHARES
------------------
4.1 Exchange Procedures. Unless the parties otherwise agree, promptly
-------------------
after the Effective Time, the Surviving Corporation shall mail to the former
holders of BHC Common Stock and to the former holders of BHC Preferred Stock
appropriate transmittal materials which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of BHC Capital Stock shall pass, only upon proper delivery
of such certificates to the Surviving Corporation. After the Effective Time,
each holder of shares of BHC Capital Stock (other than shares as to which
dissenters' rights have been perfected as provided in Section 3.4 of this
Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Surviving
Corporation and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1 and 3.5 of this Agreement,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2 of this Agreement.
The Surviving Corporation shall not be obligated to deliver the consideration to
which any former holder of BHC Capital Stock is entitled as a result of the
Merger until such holder surrenders his or her certificate or certificates
representing the shares of BHC Capital Stock for exchange as provided in this
Section 4.1. The certificate or certificates of BHC Capital Stock so
surrendered shall be duly endorsed as the Surviving Corporation may require.
Any other provision of this Agreement notwithstanding, the Surviving Corporation
shall not be liable to a holder of BHC Capital Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 Rights of Former BHC Shareholders. At the Effective Time, the stock
---------------------------------
transfer books of BHC shall be closed as to holders of BHC Capital Stock
immediately prior to the Effective Time and no transfer of BHC Capital Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of BHC Capital Stock (other
than shares as to which dissenters' rights have been perfected as provided in
Section 3.4 of this Agreement) shall from and after the Effective Time represent
for all purposes only the right to receive the consideration provided in Section
3.1 and 3.5 of this Agreement in exchange therefor. To the extent permitted by
Law, former holders of record of BHC Common Stock shall be entitled to vote
after the Effective Time at any meeting of Surviving Corporation shareholders
the number of whole shares of Surviving Corporation Common Stock into which
their respective shares of BHC Common Stock are converted, regardless of whether
such holders have exchanged their certificates representing BHC Common Stock for
certificates representing Surviving Corporation Common Stock in accordance with
the provisions of this Agreement. Whenever a dividend or other distribution is
declared by the Surviving Corporation on the Surviving Corporation Capital
Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of Surviving Corporation Capital Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any certificate representing
5
<PAGE>
shares of BHC Capital Stock issued and outstanding at the Effective Time until
such holder surrenders such certificate for exchange as provided in Section 4.1
of this Agreement. However, upon surrender of such BHC Capital Stock
certificate, both the Surviving Corporation Capital Stock certificate (together
with all such undelivered dividends or other distributions without interest) and
any undelivered cash payments to be paid for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented by
such certificate.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF BHC
------
BHC hereby represents and warrants to Premier as follows:
5.1 Organization, Standing, and Power. BHC is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia and is duly registered as a bank holding company under the BHC Act. BHC
has the corporate power and authority to carry on its business as now conducted
and to own, lease and operate its Assets. BHC is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BHC.
5.2 Authority; No Breach By Agreement.
---------------------------------
(a) BHC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of BHC, subject to the approval
of this Agreement by the holders of a majority of the outstanding BHC Common
Stock, which is the only shareholder vote required for approval of this
Agreement and consummation of the Merger by BHC. Subject to such requisite
shareholder approval, this Agreement represents a legal, valid and binding
obligation of BHC, enforceable against BHC in accordance with its terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by BHC, nor
the consummation by BHC of the transactions contemplated hereby, nor compliance
by BHC with any of the provisions hereof will (i) conflict with or result in a
breach of any provision of BHC's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any BHC Company under, any
6
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Contract or Permit of any BHC Company, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on BHC, or (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of this Agreement, violate
any Law or Order applicable to any BHC Company or any of their respective
Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BHC, no notice to, filing with, or Consent of any
public body or authority is necessary for the consummation by BHC of the Merger
and the other transactions contemplated in this Agreement.
5.3 Capital Stock.
-------------
(a) The authorized capital stock of BHC consists of (i) 10,000,000
shares of BHC Common Stock, of which 556,525 shares are issued and outstanding
as of the date of this Agreement and not more than 556,525 shares will be issued
and outstanding at the Effective Time and (ii) 50,000 shares of BHC Preferred
Stock, of which 40,770 shares are issued and outstanding as of the date of this
Agreement and not more than 40,770 shares will be issued and outstanding at the
Effective Time. All of the issued and outstanding shares of capital stock of BHC
are duly and validly issued and outstanding and are fully paid and nonassessable
under the GBCC. None of the outstanding shares of capital stock of BHC has been
issued in violation of any preemptive rights of the current or past shareholders
of BHC.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
disclosed in Section 5.3 of the BHC Disclosure Memorandum, there are no shares
---------------------
of capital stock or other equity securities of BHC outstanding and no
outstanding Rights relating to the capital stock of BHC.
5.4 BHC Subsidiaries. BHC has disclosed in Section 5.4 of the BHC
----------------
Disclosure Memorandum all of the BHC Subsidiaries as of the date of this
- ---------------------
Agreement. Except as disclosed in Section 5.4 of the BHC Disclosure Memorandum,
---------------------
BHC or one of its Subsidiaries owns all of the issued and outstanding shares of
capital stock of each BHC Subsidiary. No equity securities of any BHC
Subsidiary are or may become required to be issued (other than to another BHC
Company) by reason of any Rights, and there are no Contracts by which any BHC
Subsidiary is bound to issue (other than to another BHC Company) additional
shares of its capital stock or Rights, or by which any BHC Company is or may be
bound to transfer any shares of the capital stock of any BHC Subsidiary (other
than to another BHC Company), and there are no Contracts by which any BHC
Subsidiary is bound to issue (other than to another BHC Company) additional
shares of its capital stock. There are no Contracts relating to the rights of
any BHC Company to vote or to dispose of any shares of the capital stock of any
BHC Subsidiary. All of the shares of capital stock of each BHC Subsidiary held
by a BHC Company are fully paid and nonassessable under the applicable Law
7
<PAGE>
of the jurisdiction in which such Subsidiary is incorporated or organized and
are owned by the BHC Company free and clear of any Lien. Each BHC Subsidiary is
either a bank, a savings association or a corporation and is duly organized,
validly existing, and (as to corporations) in good standing under the Laws of
the jurisdiction in which it is organized and has the corporate power and
authority necessary for it to own, lease and operate its Assets and to carry on
its business as now conducted. Each BHC Subsidiary is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on BHC. Each BHC Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund or the Savings Association Insurance
Fund, as appropriate.
5.5 Financial Statements. BHC has disclosed in Section 5.5 of the BHC
--------------------
Disclosure Memorandum, and has delivered to Premier copies of, all BHC Financial
- ---------------------
Statements prepared for periods ended prior to the date hereof and will deliver
to Premier copies of all BHC Financial Statements prepared subsequent to the
date hereof. The BHC Financial Statements (as of the dates thereof and for the
periods covered thereby) (a) are, or if dated after the date of this Agreement
will be, in accordance with the books and records of the BHC Companies, which
are or will be, as the case may be, complete and correct and which have been or
will have been, as the case may be, maintained in accordance with good business
practices, and (b) present or will present, as the case may be, fairly the
consolidated financial position of the BHC Companies as of the dates indicated
and the consolidated results of operations, changes in shareholders' equity, and
cash flows of BHC Companies for the periods indicated, in accordance with GAAP
(subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments that are not material in amount or
effect).
5.6 Absence of Undisclosed Liabilities. No BHC Company has any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BHC except Liabilities which are accrued
or reserved against in the consolidated balance sheets of BHC as of December 31,
1996 and September 30, 1997, included in the BHC Financial Statements or
reflected in the notes thereto. No BHC Company has incurred or paid any
Liability since September 30, 1997, except for such Liabilities incurred or paid
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BHC.
5.7 Absence of Certain Changes or Events. Since September 30, 1997,
------------------------------------
except as disclosed in Section 5.7 of the BHC Disclosure Memorandum, (a) there
---------------------
have been no events, changes or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
BHC, and (b) the BHC Companies have not taken any action, or failed to take any
action, prior to the date of this Agreement, which action or failure, if
8
<PAGE>
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 BHC provided in
Article VII of this Agreement.
5.8 Tax Matters.
-----------
(a) All Tax returns required to be filed by or on behalf of any of
the BHC Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
September 30, 1997, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on BHC and all returns filed are complete and accurate to the
Knowledge of BHC. All Taxes shown on filed returns have been paid. As of the
date of this Agreement, there is no audit examination, deficiency or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on BHC, except as reserved against in the BHC Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 5.8(a) of the BHC Disclosure Memorandum. All Taxes and other Liabilities
---------------------
due with respect to completed and settled examinations or concluded Litigation
have been paid.
(b) Except as disclosed in Section 5.8(b) of the BHC Disclosure
----------
Memorandum, none of the BHC Companies has executed an extension or waiver of any
- ----------
statute of limitations on the assessment or collection of any Tax due that is
currently in effect, and no unpaid tax deficiency has been asserted in writing
against or with respect to any BHC Company, which deficiency is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
BHC.
(c) Adequate provision for any Taxes due or to become due for any of
the BHC Companies for the period or periods through and including the date of
the respective BHC Financial Statements has been made and is reflected on such
BHC Financial Statements.
(d) Deferred Taxes of the BHC Companies have been provided for in
accordance with GAAP.
(e) Each of the BHC Companies is in compliance with, and its records
contain all information and documents (including, without limitation, properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on BHC.
(f) There are no Liens with respect to Taxes upon any of the assets
of the BHC Companies.
9
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5.9 Allowance for Possible Loan Losses. The allowance for possible loan
----------------------------------
or credit losses (the "Allowance") shown on the consolidated balance sheets of
BHC included in the most recent BHC Financial Statements dated prior to the date
of this Agreement was, and the Allowance shown on the consolidated balance
sheets of BHC included in the BHC Financial Statements as of dates subsequent to
the execution of this Agreement will be, as of the dates thereof, adequate
(within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for losses relating to or inherent in the loan and lease
portfolios (including accrued interest receivables) of the BHC Companies and
other extensions of credit (including letters of credit and commitments to make
loans or extend credit) by the BHC Companies as of the dates thereof except
where the failure of such Allowance to be so adequate is not reasonably likely
to have a Material Adverse Effect on BHC.
5.10 Assets. Except as disclosed in Section 5.10 of the BHC Disclosure
------ ----------
Memorandum or as disclosed or reserved against in the BHC Financial Statements,
- ----------
the BHC Companies have good and marketable title, free and clear of all Liens,
to all of their respective Assets. All material tangible properties used in the
businesses of the BHC Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
BHC's past practices. All Assets which are material to BHC's business on a
consolidated basis, held under leases or subleases by any of the BHC Companies,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. The policies of fire, theft, liability
and other insurance maintained with respect to the Assets or businesses of the
BHC Companies provide adequate coverage under current industry practices against
loss or Liability, and the fidelity and blanket bonds in effect as to which any
of the BHC Companies is a named insured are reasonably sufficient. The Assets
of the BHC Companies include all assets required to operate the business of the
BHC Companies as presently conducted.
5.11 Environmental Matters.
---------------------
(a) Except as disclosed in Section 5.11(a) of the BHC Disclosure
----------
Memorandum, to the Knowledge of BHC, each BHC Company, its Participation
- ----------
Facilities and its Loan Properties are, and have been, in compliance with all
Environmental Laws, except for noncompliance which is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on BHC.
(b) To the Knowledge of BHC, there is no Litigation pending or
threatened before any court, governmental agency or authority or other forum in
which any BHC Company or any of its Loan Properties or Participation Facilities
has been or, with respect to threatened Litigation, may be named as a defendant
or potentially responsible party (i) for alleged noncompliance with any
Environmental Law or (ii) relating to the release into the Environment of any
Hazardous Material, whether or not occurring at, on, under or involving a site
owned, leased or operated by any BHC Company or any of its Loan Properties or
Participation Facilities, except for such Litigation pending
10
<PAGE>
or threatened the resolution of which is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BHC and to the
Knowledge of BHC, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of BHC, there have been no releases of
Hazardous Material in, on, under or affecting any Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on BHC.
5.12 Compliance with Laws. BHC is duly registered as a bank holding
--------------------
company under the BHC Act. Each BHC Company has in effect all Permits necessary
for it to own, lease or operate its Assets and to carry on its business as now
conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
BHC, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BHC. Except as disclosed in Section 5.12
of the BHC Disclosure Memorandum, no BHC Company:
---------------------
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BHC; and
(b) has received any notification or communication from any agency
or department of federal, state, or local government or any Regulatory Authority
or the staff thereof (i) asserting that any BHC Company is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BHC, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on BHC, or
(iii) requiring any BHC Company to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
5.13 Labor Relations. No BHC Company is the subject of any Litigation
---------------
asserting that it or any other BHC Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other BHC Company to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any BHC Company, pending or, to its
Knowledge, threatened, nor, to its Knowledge, is there any activity involving
any BHC Company's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.14 Employee Benefit Plans.
----------------------
(a) BHC has disclosed in Section 5.14 of the BHC Disclosure
----------
Memorandum and delivered or made available to Premier prior to the execution of
- ----------
this Agreement copies in each case
11
<PAGE>
of all pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other incentive
plans, all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including, without
limitation, "employee benefit plans" as that term is defined in Section 3(3) of
ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any BHC Company or Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "BHC Benefit Plans"). Any of the BHC Benefit
Plans which is an "employee pension benefit plan," as that term is defined in
Section 3(2) of ERISA, is referred to herein as a "BHC ERISA Plan." Each BHC
ERISA Plan which is also a "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code) is referred to herein as a "BHC Pension Plan." No
BHC Pension Plan is or has been a multi-employer plan within the meaning of
Section 3(37) of ERISA.
(b) All BHC Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BHC. Each BHC ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service, and
BHC is not aware of any circumstances likely to result in revocation of any such
favorable determination letter. To the Knowledge of BHC, no BHC Company nor any
other party has engaged in a transaction with respect to any BHC Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any BHC Company to a tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts
which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BHC.
(c) BHC maintains an "employee pension benefit plan," within the
meaning of Section 3(2) of ERISA that is or was subject to Title IV of ERISA.
(d) Neither BHC nor any ERISA Affiliate of BHC has any past, present
or future obligation or liability to contribute to any multi-employer plan, as
defined in Section 3(37) of ERISA.
(e) Except as disclosed in Section 5.14(e) of the BHC Disclosure
----------
Memorandum, (i) no BHC Company has any obligations for retiree health and life
- ----------
benefits under any of the BHC Benefit Plans, except as required by Section 6.01
of ERISA and Section 4980B of the Internal Revenue Code; (ii) there are no
restrictions on the rights of any BHC Company to amend or terminate any such
Plan; and (iii) any amendment or termination of any such Plan will not cause any
BHC Company to incur any Liability that is reasonably likely to have a Material
Adverse Effect on BHC.
12
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(f) Except as disclosed in Section 5.14(f) of the BHC Disclosure
----------
Memorandum, neither the execution and delivery of this Agreement nor the
- ----------
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any employee of
any BHC Company from any BHC Company under any BHC Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any BHC Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including, without limitation, entitlements under any
executive compensation, supplemental retirement, or employment agreement) of
employees and former employees of any BHC Company and their respective
beneficiaries have been fully reflected on the BHC Financial Statements to the
extent required by and in accordance with GAAP.
(h) BHC and each ERISA Affiliate of BHC has complied with the
continuation of coverage requirements of Section 1001 of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601
through 608.
(i) Neither BHC nor any ERISA Affiliate of BHC is obligated,
contingently or otherwise, under any agreement to pay any amount which would be
treated as a "parachute payment," as defined in Section 280G(b) of the Internal
Revenue Code (determined without regard to Section 280G(b)(2)(A)(ii) of the
Internal Revenue Code).
(j) Other than routine claims for benefits, there are no actions,
audits, investigations, suits or claims pending, or threatened against any BHC
Benefit Plan, any trust or other funding agency created thereunder, or against
any fiduciary of any BHC Benefit Plan or against the assets of any BHC Benefit
Plan.
5.15 Material Contracts. Except as disclosed in Section 5.15 of the BHC
------------------
Disclosure Memorandum or otherwise reflected in the BHC Financial Statements,
- ---------------------
none of the BHC Companies, nor any of their respective Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (a) any employment, severance, termination, consulting or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $10,000, excluding "at will" employment arrangements, (b) any Contract
relating to the borrowing of money by any BHC Company or the guarantee by any
BHC Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, Federal Home Loan Bank advances, fully-
secured repurchase agreements, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (c) any
Contracts between or among BHC Companies, and (d) any other Contract (excluding
this Agreement) or amendment thereto that is required to be filed as an exhibit
to a Form 10-K or Form 10-Q filed by BHC with the SEC as of the date of this
Agreement if BHC were required to file a Form 10-K or Form 10-Q with the SEC
(together with all Contracts referred to in Sections 5.10 and 5.14(a) of this
Agreement, the "BHC Contracts"). None of the BHC Companies is in Default under
any BHC Contract, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material
13
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Adverse Effect on BHC. All of the indebtedness of any BHC Company for money
borrowed is prepayable at any time by such BHC Company without penalty or
premium.
5.16 Legal Proceedings. Except as disclosed in Section 5.16 of the BHC
------------------
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
- ---------------------
Knowledge of BHC, threatened (or unasserted but considered probable of assertion
and which if asserted would have at least a reasonable probability of an
unfavorable outcome) against any BHC Company, or against any Asset, interest, or
right of any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BHC, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any BHC Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BHC.
5.17 Reports. Since January 1, 1997, each BHC Company has timely filed
--------
all reports and statements, together with any amendments required to be made
with respect thereto, that it was required to file with (a) the Regulatory
Authorities, and (b) any applicable state securities or banking authorities
(except, in the case of state securities authorities, failures to file which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BHC). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its respective
date, each such report and document to BHC's Knowledge did not, in any material
respects, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
5.18 Statements True and Correct. No statement, certificate, instrument
----------------------------
or other writing furnished or to be furnished by any BHC Company or any
Affiliate thereof to Premier pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
BHC Company or any Affiliate thereof for inclusion in the Registration Statement
to be filed by Premier with the SEC will, when the Registration Statement
becomes effective, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by any BHC
Company or any Affiliate thereof for inclusion in the Proxy Statement to be
mailed to BHC's shareholders in connection with the BHC Shareholders' Meeting,
and any other documents to be filed by a BHC Company or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of BHC, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the BHC Shareholders' Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of
14
<PAGE>
any proxy for the BHC Shareholders' Meeting. All documents that any BHC Company
or any Affiliate thereof is responsible for filing with any Regulatory Authority
in connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable Law.
5.19 Accounting, Tax and Regulatory Matters. No BHC Company or any
---------------------------------------
Affiliate thereof has taken any action, or agreed to take any action, or has any
Knowledge of any fact or circumstance that is reasonably likely to (a) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or treatment as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the second sentence of such
Section. To the Knowledge of BHC, there exists no fact, circumstance, or reason
why the requisite Consents referred to in Sections 9.1(b) and (c) of this
Agreement cannot be received in a timely manner without the imposition of any
condition or restriction of the type described in the second sentence of such
Sections 9.1(b) and (c).
5.20 Charter Provisions. Each BHC Company has taken all action so that
-------------------
the entering into of this Agreement and the consummation of the Merger and the
other transactions contemplated by this Agreement do not and will not result in
the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any BHC Company or restrict or impair
the ability of the Surviving Corporation to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of any BHC Company that may be
acquired or controlled by it.
5.21 Millennium Compliance. BHC represents and warrants that each BHC
----------------------
Company has tested and assessed its software, hardware, and other computer
equipment to ensure that there will not be a Year 2000 Problem. BHC further
represents and warrants that each BHC Company has prepared and implemented a
written plan of action to ensure that the software, hardware, and other computer
equipment owned, licensed, or used by each BHC Company will not be the subject
of a failure in any such software, hardware, or other computer equipment. BHC
further represents and warrants that each BHC Company has contacted and received
assurances from all key suppliers of goods and services to each BHC Company,
including but not limited to suppliers of computer software, computer hardware,
and other computer equipment, that each of the software, hardware, and other
computer equipment owned, licensed, or used by such supplier will not be the
subject of failures in any such software, hardware, or other computer equipment.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF PREMIER
-----------------------------------------
Premier hereby represents and warrants to BHC as follows:
6.1 Organization, Standing, and Power. Premier is a corporation duly
----------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and is duly registered
15
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as a bank holding company and thrift holding company under the BHC Act and HOLA,
respectively. Premier has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Premier is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Premier.
6.2 Authority; No Breach By Agreement.
----------------------------------
(a) Premier has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Premier.
This Agreement represents a legal, valid and binding obligation of Premier,
enforceable against Premier in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Premier, nor the consummation by Premier of the transactions contemplated
hereby, nor compliance by Premier with any of the provisions hereof will (i)
conflict with or result in a breach of any provision of Premier's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Premier Company under, any Contract or Permit of any Premier
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Premier, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any Premier Company or any of their respective Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Premier, no notice to, filing with, or Consent of any
public body or authority is necessary for the consummation by Premier of the
Merger and the other transactions contemplated in this Agreement.
16
<PAGE>
6.3 Capital Stock.
--------------
(a) The authorized capital stock of Premier consists of (i)
20,000,000 shares of Premier Common Stock, of which 8,077,863 shares were issued
and outstanding as of the date of this Agreement and (ii) 2,000,000 shares of
Premier Preferred Stock, of which no shares are issued and outstanding as of the
date of this Agreement. All of the issued and outstanding shares of Premier
Capital Stock are, and all of the shares of Surviving Corporation Capital Stock
to be issued in exchange for shares of BHC Capital Stock upon consummation of
the Merger, when issued in accordance with the terms of this Agreement and the
Registration Statement, will be duly and validly issued and outstanding and
fully paid and nonassessable under the GBCC. None of the outstanding shares of
Premier Capital Stock has been, and none of the shares of Surviving Corporation
Capital Stock to be issued in exchange for shares of BHC Capital Stock upon
consummation of the Merger will be, issued in violation of any preemptive rights
of the current or past shareholders of Premier.
(b) Premier has issued $29,639,175 of 9.00% Subordinated Debentures
to Premier Capital Trust I, a statutory business trust organized and existing
under the laws of the State of Delaware. The Subordinated Debentures will mature
on December 31, 2027. The Subordinated Debentures were purchased by Premier
Capital Trust I with the proceeds of the public offering of 1,150,000 shares of
9.00% Cumulative Trust Preferred Securities and sale of Common Securities to
Premier. Premier owns all of the Common Securities issued by Premier Capital
Trust I. The Common Securities and the Preferred Securities represent undivided
beneficial interests in the assets of Premier Capital Trust I.
(c) Except as set forth in Section 6.3(a) of this Agreement, there
are no shares of capital stock or other equity securities of Premier outstanding
and no outstanding Rights relating to the capital stock of Premier.
6.4 Financial Statements. The Premier Financial Statements (as of the
---------------------
dates thereof and for the periods covered thereby) (a) are, or if dated after
the date of this Agreement will be, in accordance with the books and records of
the Premier Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained in
accordance with good business practices, and (b) present or will present, as the
case may be, fairly the consolidated financial position of the Premier Companies
as of the dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows of the Premier Companies for the periods
indicated, in accordance with GAAP (subject to exceptions as to consistency
specified therein or as may be indicated in the notes thereto or, in the case of
interim financial statements, to normal recurring year-end adjustments that are
not material in amount or effect).
6.5 Absence of Undisclosed Liabilities. No Premier Company has any
-----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Premier, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Premier as of
December 31, 1996 and September 30, 1997, included in the Premier Financial
17
<PAGE>
Statements or reflected in the notes thereto. No Premier Company has incurred or
paid any Liability since September 30, 1997, except for such Liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Premier.
6.6 Absence of Certain Changes or Events. Since September 30, 1997,
-------------------------------------
except as disclosed in SEC Documents filed by Premier prior to the date of this
Agreement, (a) there have been no events, changes or occurrences which have had,
or are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier, and (b) the Premier Companies have 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 Premier provided in Article VII of this Agreement.
6.7 Compliance with Laws. Premier is duly registered as a bank holding
---------------------
and thrift holding company under the BHC Act and HOLA, respectively. Each
Premier Company has in effect all Permits necessary for it to own, lease or
operate its Assets and to carry on its business as now conducted, except for
those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Premier, and
there has occurred no Default under any such Permit, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier. None of the Premier Companies:
(a) is in violation of any Laws, Orders or Permits applicable to
its business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier; and
(b) has received any notification or communication from any agency
or department of federal, state, or local government or any Regulatory Authority
or the staff thereof (i) asserting that any Premier Company is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Premier, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Premier,
or (iii) requiring any Premier Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
6.8 Legal Proceedings. Except to the extent specifically reserved
------------------
against in the Premier Financial Statements dated prior to the date of this
Agreement, there is no Litigation instituted or pending, or, to the Knowledge of
Premier, threatened (or unasserted but considered probable of assertion and
which if asserted would have at least a reasonable probability of an unfavorable
outcome) against any Premier Company, or against any Asset, interest, or right
of any of them, that
18
<PAGE>
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Premier Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Premier.
6.9 Statements True and Correct. No statement, certificate, instrument
----------------------------
or other writing furnished or to be furnished by any Premier Company or any
Affiliate thereof to BHC pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
Premier Company or any Affiliate thereof for inclusion in the Registration
Statement to be filed by Premier with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
any Premier Company or any Affiliate thereof for inclusion in any documents to
be filed by any Premier Company or any Affiliate thereof with the SEC or any
other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. All documents that any Premier Company or
any Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.10 Accounting, Tax and Regulatory Matters. No Premier Company or any
---------------------------------------
Affiliate thereof has taken any action, or agreed to take any action, or has any
Knowledge of any fact or circumstance that is reasonably likely to (a) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or treatment as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement. To the Knowledge of Premier,
there exists no fact, circumstance, or reason why the requisite Consents
referred to in Sections 9.1(b) and (c) of this Agreement cannot be received in a
timely manner without the imposition of any condition or restriction of the type
described in the second sentence of such Sections 9.1(b) and (c).
ARTICLE VII
-----------
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
7.1 Affirmative Covenants of BHC. Unless the prior written consent of
-----------------------------
Premier shall have been obtained, and except as otherwise contemplated herein or
disclosed in the BHC Disclosure Memorandum, BHC shall, and shall cause each of
---------------------
its Subsidiaries to, from the date of this Agreement until the Effective Time or
termination of this Agreement: (a) operate its business in the usual, regular
and ordinary course; (b) preserve intact its business organization and Assets
and
19
<PAGE>
maintain its rights and franchises; (c) use its reasonable efforts to cause its
representations and warranties to be correct at all times; and (d) take no
action which would (i) adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby without imposition of
a condition or restriction of the type referred to in the last sentence of
Section 9.1(b) or 9.1(c) of this Agreement or (ii) adversely affect in any
material respect the ability of either Party to perform its covenants and
agreements under this Agreement.
7.2 Negative Covenants of BHC. Except as disclosed in the BHC
--------------------------
Disclosure Memorandum, from the date of this Agreement until the earlier of the
- ---------------------
Effective Time or the termination of this Agreement, BHC covenants and agrees
that it will not do or agree or commit to do, or permit any of its Subsidiaries
to do or agree or commit to do, any of the following without the prior written
consent of the chief executive officer of Premier, which consent shall not be
unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any BHC Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a BHC Company to another BHC Company)
in excess of an aggregate of $100,000 (for the BHC Companies on a consolidated
basis) except in the ordinary course of the business of BHC Companies consistent
with past practices (which shall include, for any of its Subsidiaries, creation
of deposit liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any BHC Company 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 BHC Disclosure Memorandum); or
---------------------
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any BHC Company, or declare or pay any dividend or make any
other distribution in respect of BHC's capital stock except for dividends
legally and contractually required to be paid in respect of the BHC Preferred
Stock; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as disclosed in Section 7.2(d) of the BHC
Disclosure Memorandum, issue, sell, pledge, encumber, authorize the issuance of
- ---------------------
or enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of or otherwise permit to become outstanding, any additional shares of
BHC Capital Stock or any other capital stock of any BHC Company, or any stock
appreciation rights, or any option, warrant, conversion, or other right to
acquire any such stock, or any security convertible into any such stock; or
20
<PAGE>
(e) except as disclosed in Section 7.2(e) of the BHC Disclosure
----------
Memorandum, adjust, split, combine or reclassify any capital stock of any BHC
- ----------
Company or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of BHC Capital Stock or sell, lease, mortgage or
otherwise dispose of or otherwise encumber (i) any shares of capital stock of
any BHC Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another BHC Company) or (ii) any Asset having a book value in
excess of $50,000 other than in the ordinary course of business for reasonable
and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities or securities of like maturity or grade or general
obligations of states and municipalities, purchase any securities or make any
material investment, either by purchase of stock or securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other than a
wholly-owned BHC Subsidiary; or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures in the ordinary
course of business, or (ii) acquisitions of control by Henry County Bank or
Spalding County Bank in their fiduciary capacities; or
(g) grant any increase in compensation or benefits to any employees
whose annual salary exceeds $35,000 of any BHC Company (including such
discretionary increases as may be contemplated by existing employment
agreements), except in accordance with past practice or previously approved by
the Board of Directors of BHC, in each case as disclosed in Section 7.2(g) of
the BHC Disclosure Memorandum or as required by Law; pay any severance or
---------------------
termination pay or any bonus other than pursuant to written policies or written
Contracts in effect on the date of this Agreement and disclosed in Section
7.2(g) of the BHC Disclosure Memorandum; enter into or amend any severance
---------------------
agreements with officers of any BHC Company; grant any general increase in
compensation to all employees; grant any increase in fees or other increases in
compensation or other benefits to directors of any BHC Company; or voluntarily
accelerate the vesting of any stock options or other stock-based compensation or
employee benefits; or
(h) enter into or amend any employment Contract between any BHC
Company and any Person (unless such amendment is required by Law) that the BHC
Company does not have the unconditional right to terminate without Liability
(other than Liability for services already rendered), at any time on or after
the Effective Time; or
(i) adopt any new employee benefit plan of any BHC Company or make
any material change in or to any existing employee benefit plans of any BHC
Company 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; or
(j) 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; or
21
<PAGE>
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any BHC Company for
money damages in excess of $50,000 or which imposes material restrictions upon
the operations of any BHC Company; or
(l) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.
7.3 Affirmative Covenants of Premier. Unless the prior written consent
---------------------------------
of BHC shall have been obtained, Premier shall, and shall cause each of its
Subsidiaries, from the date of this Agreement until the Effective Time or
termination of this Agreement: (a) to operate its business in the usual,
regular and ordinary course; (b) to preserve intact its business organization
and Assets and maintain its rights and franchises; (c) to use its reasonable
efforts to cause its representations and warranties to be correct at all times;
and (d) to take no action which would (i) adversely affect the ability of any
Party to obtain any Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type referred to in the
last sentence of Section 9.1(b) or 9.1(c) of this Agreement or (ii) adversely
affect in any material respect the ability of either Party to perform its
covenants and agreements under this Agreement.
7.4 Adverse Changes in Condition. Each Party agrees to give written
-----------------------------
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (a) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (b) is reasonably likely to cause
or constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
--------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed.
ARTICLE VII
-----------
ADDITIONAL AGREEMENTS
---------------------
8.1 Registration Statement; Proxy Statement; Shareholder Approval.
--------------------------------------------------------------
(a) As soon as reasonably practicable after execution of this
Agreement, Premier shall file the Registration Statement with the SEC, provided
BHC has provided, on a reasonably timely basis, all information concerning BHC
necessary for inclusion in the Registration Statement, and shall use its
reasonable efforts to cause the Registration Statement to become effective under
the 1933 Act as reasonably practicable after the filing thereof and take any
action required to be taken under the applicable state Blue Sky or securities
Laws in connection with the issuance of the shares of Surviving Corporation
Common Stock upon consummation of the Merger. BHC shall furnish all information
concerning it and the holders of its capital stock as Premier may reasonably
request in connection with such action.
22
<PAGE>
(b) BHC shall call a Shareholders' Meeting, to be held within
forty-five (45) days after the Registration Statement is declared effective by
the SEC, for the purpose of voting upon approval of this Agreement and such
other related matters as BHC deems appropriate.
(c) In connection with the BHC Shareholders' Meeting, (i) Premier
shall prepare and file with the SEC, on BHC's behalf, a Proxy Statement (which
shall be included in the Registration Statement); (ii) BHC shall mail the Proxy
Statement to all of its shareholders; (iii) BHC shall furnish Premier with all
information concerning BHC that Premier may reasonably request in connection
with such Proxy Statement, (iv) the Board of Directors of BHC shall recommend
(subject to compliance with the fiduciary duties of the members of the Board of
Directors as advised by counsel) to its shareholders the approval of this
Agreement and (v) the Board of Directors and officers of BHC shall use their
reasonable efforts to obtain such shareholders' approval (subject to compliance
with their fiduciary duties as advised by counsel).
8.2 Exchange Listing. Premier shall use its reasonable efforts to list,
-----------------
prior to the Effective Time, on the American Stock Exchange the shares of
Surviving Corporation Common Stock to be issued to the holders of BHC Common
Stock pursuant to the Merger.
8.3 Applications. Premier shall promptly prepare and file, and BHC
-------------
shall cooperate in the preparation and, where appropriate, filing of,
applications with the Board of Governors of the Federal Reserve System and the
Georgia Department of Banking and Finance seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
8.4 Filings with State Offices. Upon the terms and subject to the
---------------------------
conditions of this Agreement, Premier shall execute and file the Georgia
Certificate of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
--------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts 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, as promptly as practicable so as to permit
consummation of the Merger at the earliest possible date and to otherwise enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other Party hereto to that end (it being understood that any amendments
to the Registration Statement filed by Premier in connection with the Surviving
Corporation Common Stock to be issued in the Merger shall not violate this
covenant), including, without limitation, using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article IX of this Agreement. Each Party shall use, and shall
cause each of its Subsidiaries to use, its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
23
<PAGE>
8.6 Investigation and Confidentiality.
----------------------------------
(a) Prior to the Effective Time, each Party will keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations, and
financial positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return all documents and copies thereof and all work papers containing
confidential information received from the other Party, except for one copy of
any materials prepared by that Party or any attorney for or other representative
of that Party based upon such confidential information.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered and which represents, or is reasonably
likely to represent, either a material breach of any representation, warranty,
covenant or agreement of the other Party or which has had or is reasonably
likely to have a Material Adverse Effect on the other Party.
8.7 Press Releases. Prior to the Effective Time, Premier and BHC 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 8.7 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.
8.8 Acquisition Proposals. Except with respect to this Agreement and
----------------------
the transactions contemplated hereby, neither BHC nor any Affiliate of BHC nor
any investment banker, attorney, accountant or other representative
(collectively, "Representatives") retained by BHC shall directly or indirectly
solicit any Acquisition Proposal by any Person. Except to the extent necessary
to comply with the fiduciary duties of BHC's Board of Directors as advised by
counsel, BHC or any Affiliate or Representative of BHC shall not furnish any
non-public information that it is not legally obligated to furnish, negotiate
with respect to, or enter into any Contract with respect to, any Acquisition
Proposal, but BHC may communicate information about such an Acquisition Proposal
to its shareholders if and to the extent that it is required to do so in order
to comply with its legal obligations as advised by counsel. BHC shall promptly
notify Premier orally and in writing in the event that BHC receives any inquiry
or proposal relating to any such transaction. Unless the prior written consent
of Premier is obtained, BHC shall (a) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and (b) direct and
use its reasonable efforts to cause all of its Representatives not to engage in
any of the foregoing.
24
<PAGE>
8.9 Accounting and Tax Treatment. Each of the Parties undertakes and
-----------------------------
agrees to use its reasonable efforts 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 for federal income tax purposes. Each of the Parties further undertakes
and agrees to use its reasonable best efforts 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."
8.10 Agreement of Affiliates. BHC has disclosed in Section 8.10 of the
------------------------
BHC Disclosure Memorandum all Persons whom it reasonably believes is an
---------------------
"affiliate" of BHC for purposes of Rule 145 under the 1933 Act. BHC shall use
its reasonable efforts to cause each such Person to deliver to Premier and BHC,
not later than thirty (30) days after the date of this Agreement, a written
agreement, substantially in the form of Exhibit "1", providing that such Person
-----------
will not sell, pledge, transfer or otherwise dispose of the shares of BHC
Capital Stock held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer or otherwise dispose of the
shares of Surviving Corporation Capital Stock to be received by such Person upon
consummation of the Merger except in compliance with applicable provisions of
the 1933 Act and the rules and regulations thereunder. The Surviving
Corporation shall be entitled to place restrictive legends upon certificates for
shares of Surviving Corporation Capital Stock issued to Affiliates of BHC
pursuant to this Agreement to enforce the provisions of this Section 8.10. The
Surviving Corporation shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of
Surviving Corporation Capital Stock by such Affiliates.
8.11 Employee Benefits and Contracts.
--------------------------------
(a) Following the Effective Time, the Surviving Corporation shall
provide generally to officers and employees of the BHC Companies who continue
employment with the Surviving Corporation or its Subsidiaries following the
Effective Time employee benefits under employee benefit plans, on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the Premier Companies to their similarly situated officers
and employees. For purposes of participation under such employee benefit plans,
the service of the employees of the BHC Companies prior to the Effective Time
shall be treated as service with a Premier Company participating in such
employee benefit plans, provided that, with respect to any employee benefit plan
where the benefits are funded through insurance, the granting of such service
shall be subject to the consent of the appropriate insurer and may be
conditioned upon an employee's participation in a BHC Benefit Plan of the same
type immediately prior to the Effective Time.
(b) The Surviving Corporation and its Subsidiaries also shall honor
in accordance with their terms all employment, severance, consulting and other
compensation Contracts disclosed in Section 8.11 of the BHC Disclosure
----------
Memorandum to Premier between any BHC Company and any current or former
- ----------
director, officer, or employee thereof and all provisions for vested benefits
accrued through the Effective Time under the BHC Benefit Plans. The Surviving
Corporation shall enter into a one year employment agreement with Charles B.
Blackmon in substantially the form attached hereto as Exhibit "5".
-----------
25
<PAGE>
(c) The Surviving Corporation shall make a good faith effort to
keep as many of the officers and employees of the BHC Companies employed as
possible in the same or comparable positions as they are currently employed,
consistent with such sound and efficient management practices as the Surviving
Corporation and the Surviving Corporation Subsidiaries, as the case may be,
shall deem appropriate.
8.12 Authorization of Preferred Stock. Premier shall establish a series
---------------------------------
of preferred stock (the "Surviving Corporation Preferred Stock") to permit the
conversion of shares described in Section 3.1(b) of this Agreement. The terms
of the Surviving Corporation Preferred Stock shall be the same, in all material
respects, as the BHC Preferred Stock.
8.13 Merger of Premier Bank, Henry County Bank and Spalding County Bank.
-------------------------------------------------------------------
Contemporaneously with the Closing or as soon as practicable thereafter, Henry
County Bank and Spalding County Bank shall be merged with and into Premier Bank
with Premier Bank being the Surviving Bank.
8.14 Other Acquisitions, Mergers, or Combinations involving a Premier
-----------------------------------------------------------------
Company. Notwithstanding anything contained in this Agreement to the contrary,
- -------
Premier or any Premier Company may enter into and consummate an acquisition,
merger, or combination of, with, or involving any bank, bank holding company,
thrift, thrift holding company, mortgage company, or other financial services
company without the prior consent of BHC.
ARTICLE IX
----------
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
9.1 Conditions to Obligations of Each Party. The respective obligations
----------------------------------------
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) Shareholder Approval. The shareholders of BHC shall have
---------------------
approved this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law, the American
Stock Exchange, Inc. or by the provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and
---------------------
registrations with, and notifications to all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in full
force and effect and all waiting periods required by Law shall have expired. No
Consent obtained from any Regulatory Authority which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in a
manner (including, without limitation, requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of the Board of Directors of either
26
<PAGE>
Party would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(c) Consents and Approvals. Each Party shall have obtained any and
-----------------------
all Consents required for consummation of the Merger (other than those referred
to in Section 9.1(b) of this Agreement) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent so obtained which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of either
Party would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(d) Registration Statement. The Registration Statement shall be
----------------------
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of the Surviving Corporation Common Stock issuable pursuant to the Merger
shall have been received.
(e) Exchange Listing. The shares of Surviving Corporation Common
-----------------
Stock issuable pursuant to the Merger shall have been approved for listing on
the American Stock Exchange.
(f) Tax Matters. Premier and BHC shall have received a written
------------
opinion of counsel from Womble Carlyle Sandridge & Rice, PLLC, in form
reasonably satisfactory to them (the "Tax Opinion"), to the effect that for
federal income tax purposes (i) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, (ii) the
exchange in the Merger of BHC Common Stock for Surviving Corporation Common
Stock and BHC Preferred Stock for Surviving Corporation Preferred Stock will not
give rise to gain or loss to the shareholders of BHC with respect to such
exchange (except to the extent of any cash received), and (iii) neither Premier
nor BHC will recognize gain or loss as a consequence of the Merger (except for
income and deferred gain recognized pursuant to Treasury regulations issued
under Section 1502 of the Internal Revenue Code). In rendering such Tax
Opinion, counsel shall be entitled to rely upon representations of officers of
Premier and BHC reasonably satisfactory in form and substance to such counsel.
(g) Affiliate Agreements. The Parties shall have received from each
---------------------
affiliate of BHC the affiliates agreement referred to in Section 8.10 hereof.
(h) Pooling of Interests Letter. The Parties shall have received a
----------------------------
letter from Mauldin & Jenkins, LLC dated as of the Effective Time, to effect
that the Merger will qualify
27
<PAGE>
for pooling-of-interests accounting treatment under Accounting Principles Board
Opinion No. 16 if closed and consummated in accordance with this Agreement.
9.2 Conditions to Obligations of Premier. The obligations of Premier to
-------------------------------------
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Premier pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
-------------------------------
9.2(a), the accuracy of the representations and warranties of BHC set forth or
referred to in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties of
BHC set forth in Section 5.3 of this Agreement shall be true and correct (except
for inaccuracies which are de minimis in amount). The representations and
warranties of BHC set forth in Section 5.19 of this Agreement shall be true and
correct in all material respects. There shall not exist inaccuracies in the
representations and warranties of BHC set forth in this Agreement (excluding the
representations and warranties set forth in Sections 5.3 and 5.19) such that the
aggregate effect of such inaccuracies would have, or is reasonably likely to
have, a Material Adverse Effect on BHC; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
----------------------------------------
agreements and covenants of BHC to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. BHC shall have delivered to Premier (i) a
-------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Sections 9.2(a) and 9.2(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by BHC's Board of Directors and shareholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Premier and its counsel
shall request.
(d) Opinion of Counsel. BHC shall have delivered to Premier an
-------------------
opinion of Robert H. Smalley, Jr., Esquire, counsel to BHC, dated as of the
Effective Time, in form reasonably satisfactory to Premier, as to the matters
set forth in Exhibit "2" hereto.
-----------
28
<PAGE>
(e) Claims/Indemnification Letters. Each of the directors and
------------------------------
officers of BHC shall have executed and delivered to Premier letters in
substantially the form of Exhibit "3" hereto.
-----------
(f) Premier Fairness Opinion. In the event Premier should elect to
------------------------
obtain a fairness opinion from a financial advisory firm of its choosing, then,
in such event, Premier shall have received from such firm a letter, dated not
more than five (5) business days prior to the date of the Registration
Statement, to the effect that, in the opinion of such firm, the consideration to
be paid to BHC shareholders in connection with the Merger is fair, from a
financial point of view, to the shareholders of Premier.
(g) 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 any action
therefor initiated which, in the good faith judgment of the Board of Directors
of Premier, it is not in the best interests of the shareholders of Premier to
contest; and there shall not have been instituted or be pending any action or
proceeding by any United States federal or state government or governmental
agency or instrumentality (i) challenging or seeking to restrain or prohibit the
consummation of the Merger or seeking material damages in connection with the
Merger; or (ii) seeking to prohibit Premier's or the Surviving Corporation's
ownership or operation of all or a material portion of Premier's or BHC's
business or assets, or compel Premier or the Surviving Corporation to dispose of
or hold separate all or a material portion of Premier's or BHC's business or
assets as a result of the Merger, which, in any case, in the reasonable judgment
of Premier based upon a legal opinion from legal counsel, could result in the
relief sought being obtained.
9.3 Conditions to Obligations of BHC. The obligations of BHC to perform
---------------------------------
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by BHC pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
-------------------------------
9.3(a), the accuracy of the representations and warranties of Premier set forth
or referred to in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties of
Premier set forth in Section 6.3 of this Agreement shall be true and correct
(except for inaccuracies which are de minimis in amount). The representations
and warranties of Premier set forth in Section 6.10 of this Agreement shall be
true and correct in all material respects. There shall not exist inaccuracies
in the representations and warranties set forth in this Agreement (excluding the
representations and warranties set forth in Sections 6.3 and 6.10) such that the
aggregate effect of such inaccuracies would have, or is reasonably likely to
have a Material Adverse Effect on Premier; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
reference to "material" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
29
<PAGE>
(b) Performance of Agreements and Covenants. Each and all of the
----------------------------------------
agreements and covenants of Premier to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. Premier shall have delivered to BHC (i) a
-------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by Premier's Board of Directors evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as BHC and its counsel shall request.
(d) Opinion of Counsel. Premier shall have delivered to BHC an
-------------------
opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to Premier, dated as
of the Effective Time, in form reasonably acceptable to BHC, as to matters set
forth in Exhibit "4" hereto.
-----------
(e) BHC Fairness Opinion. In the event BHC should elect to obtain a
--------------------
fairness opinion from a financial advisory firm of its choosing, then, in such
event, BHC shall have received from such firm a letter, dated not more than five
(5) business days prior to the date of the Registration Statement, to the effect
that, in the opinion of such firm, the consideration to be paid to BHC
shareholders by Premier in connection with the Merger is fair, from a financial
point of view, to the shareholders of BHC.
(f) 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 any action
therefor initiated which, in the good faith judgment of the Board of Directors
of BHC, it is not in the best interests of the shareholders of BHC to contest;
and there shall not have been instituted or be pending any action or proceeding
by any United States federal or state government or governmental agency or
instrumentality (i) challenging or seeking to restrain or prohibit the
consummation of the Merger or seeking material damages in connection with the
Merger; or (ii) seeking to prohibit Premier's or the Surviving Corporation's
ownership or operation of all or a material portion of Premier's or BHC's
business or assets, or compel Premier or the Surviving Corporation to dispose of
or hold separate all or a material portion of Premier's or BHC's business or
assets as a result of the Merger, which, in any case, in the reasonable judgment
of BHC based upon a legal opinion from legal counsel, could result in the relief
sought being obtained.
30
<PAGE>
ARTICLE X
---------
TERMINATION
-----------
10.1 Termination. Notwithstanding any other provision of this Agreement,
------------
and notwithstanding the approval of this Agreement by the shareholders of BHC,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Board of Directors of BHC and the Board
of Directors of Premier; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of BHC and Section 9.3(a) in the case of
Premier or in the material breach of any covenant or agreement contained in this
Agreement) in the event of a material breach by the other Party of any
representation or warranty contained in this Agreement which cannot be or has
not been cured within thirty (30) days after the giving of written notice to the
breaching Party of such breach and which breach would provide the non-breaching
Party the ability to refuse to consummate the Merger under the standard set
forth in Section 9.2(a) of this Agreement in the case of Premier and Section
9.3(a) of this Agreement in the case of BHC; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of BHC and Section 9.3(a) in the case of
Premier or in the material breach of any covenant or other agreement contained
in this Agreement) in the event of a material breach by the other Party of any
covenant or agreement contained in this Agreement which cannot be or has not
been cured within thirty (30) days after the giving of written notice to the
breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of BHC and Section 9.3(a) in the
case of Premier or in the material breach of any covenant or agreement contained
in this Agreement) (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated hereby shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
or (ii) if the shareholders of BHC fail to vote their approval of this Agreement
and the transactions contemplated hereby as required by the GBCC at the
Shareholders' Meeting where the transactions were presented to such shareholders
for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that both
parties are in breach of any representation or warranty contained in the
Agreement under the applicable standard
31
<PAGE>
set forth in Section 9.2(a) or 9.3(a) and only in the case of an event described
in 10.1(d)(i)-(ii) above; or
(f) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated on or before August 31, 1998, but only if
the failure to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(f); or
(g) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of BHC and Section 9.3(a) in the case of
Premier or in the material breach of any covenant or other agreement contained
in this Agreement) in the event that any of the conditions precedent to the
obligations of such Party to consummate the Merger (other than as contemplated
by Section 10.1(d) of this Agreement) cannot be satisfied or fulfilled by the
date specified in Section 10.1(f) of this Agreement; or
(h) By the Board of Directors of Premier, at any time prior to the
15th day after execution of this Agreement without any Liability in the event
that the review of the Assets, business, financial condition, results of
operations, and prospects of BHC undertaken by it or any of the disclosures
contained in BHC's Disclosure Memorandum causes the Board of Directors of
---------------------
Premier to determine, in its reasonable good faith judgment, that a fact or
circumstance exists or is likely to exist or result which materially and
adversely impacts one or more of the economic benefits to Premier of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger; or
(i) By the Board of Directors of Premier, at any time, if the average
closing price of the Premier Common Stock, as reported on the American Stock
Exchange, is less than $15.00 per share or greater than $30.00 per share for any
ten (10) day trading period prior to the effective date of the Registration
Statement; or
(j) By the Board of Directors of Premier, at any time, if it
determines in its sole discretion that the Merger cannot be accounted for as a
"pooling of interests."
10.2 Effect of Termination. In the event of the termination and
----------------------
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that the provisions of
this Section 10.2 and Article XI and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment.
10.3 Non-Survival of Representations and Covenants. The respective
----------------------------------------------
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except for this Section 10.3 and
Articles II, III, IV and XI and Section 8.10 of this Agreement.
32
<PAGE>
ARTICLE XI
----------
MISCELLANEOUS
-------------
11.1 Definitions. Except as otherwise provided herein, the capitalized
------------
terms set forth below (in their singular and plural forms as applicable) shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Acquisition Proposal" shall mean any tender offer or exchange offer or any
proposal for a merger (other than the Merger), acquisition of all of the stock
or Assets of, or other business combination involving BHC or any of its
Subsidiaries or the acquisition of a substantial equity interest in, or a
substantial portion of the Assets of BHC or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in such capacity.
"Agreement" shall mean this Agreement and Plan of Reorganization, including
the Exhibits delivered pursuant hereto and incorporated herein by reference.
"Allowance" shall have the meaning provided in Section 5.9 of this
Agreement.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"BHC Benefit Plans" shall have the meaning set forth in Section 5.14 of
this Agreement.
"BHC Capital Stock" shall mean, collectively, the BHC Common Stock, the BHC
Preferred Stock, and any other class or series of capital stock of BHC.
"BHC Common Stock" shall mean the $5.00 par value common stock of BHC.
"BHC Companies" shall mean, collectively, BHC and all BHC Subsidiaries.
33
<PAGE>
"BHC Disclosure Memorandum" shall mean the written information entitled
"BHC Disclosure Memorandum" delivered on, or within five (5) days following, the
---------------------
date of this Agreement to Premier describing in reasonable detail the matters
contained therein, specifically referencing each Section of this Agreement under
which such disclosure is being made.
"BHC ERISA Plan" shall have the meaning provided in Section 5.14 of this
Agreement.
"BHC Financial Statements" shall mean (a) the consolidated balance sheets
(including related notes and schedules, if any) of BHC as of September 30, 1997
and as of December 31, 1996 and as of December 31, 1995, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the nine months ended September 30,
1997, and for each of the three fiscal years ended December 31, 1996 included in
the BHC Disclosure Memorandum, and (b) the consolidated balance sheets
---------------------
(including related notes and schedules, if any) of BHC and related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) filed with respect to periods ended subsequent to
September 30, 1997.
"BHC Options" shall have the meaning set forth in Section 3.3 of this
Agreement.
"BHC Preferred Stock" shall mean the $60.00 par value preferred stock of
BHC.
"BHC Subsidiaries" shall mean the subsidiaries of BHC.
"Closing" shall mean the closing of the transactions contemplated hereby,
as described in Section 1.2 of this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"Default" shall mean (a) any breach or violation of or default under any
Contract, Order or Permit, (b) any occurrence of any event that with the passage
of time or the giving of notice or both would constitute a breach or violation
of or default under any Contract, Order or Permit, or (c) any occurrence of any
event that with or without the passage of time or the giving of notice would
give rise to a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under, any
Contract, Order or Permit.
34
<PAGE>
"Effective Time" shall mean the date and time at which the Merger becomes
effective as defined in Section 1.3 of this Agreement.
"Environment" shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601(8).
"Environmental Laws" shall mean all Laws pertaining to pollution or
protection of the environment and which are administered, interpreted or
enforced by the United States Environmental Protection Agency and state and
local agencies with primary jurisdiction over pollution or protection of the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et. seq., the
-------
Resource, Conservation and Recovery Act, 42 U.S.C. (S) 6901 et. seq., the Toxic
-------
Substance Control Act, 15 U.S.C. (S) 2601, et. seq., and all implementing
-------
regulations and state counterparts of such acts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall refer to a relationship between entities such that
the entities would, now or at any time in the past, constitute a "single
employer" within the meaning of Section 414 of the Internal Revenue Code.
"Exchange Ratio" shall have the meaning provided in Section 3.1 of this
Agreement.
"Exhibits" 1 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof and may be referred to
in this Agreement and any other related instrument or document without being
attached thereto.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code (Chapter 2 of Title
14 of the Official Code of Georgia).
"Georgia Certificate of Merger" shall mean the Certificate of Merger to be
executed by the Surviving Corporation and filed with the Secretary of State of
the State of Georgia relating to the Merger as contemplated by Section 1.1 of
this Agreement.
"Hazardous Material" shall mean any substance which is a "hazardous
substance"or "toxic substance" as defined in the Comprehensive Environment
Response, Compensation, and Liability Act, 42 U.S.C. (S)9601 et seq., or any
------
other substance or material defined, designated, classified or regulated as
hazardous or toxic under any Environmental Law, specifically including asbestos
requiring abatement, removal or encapsulation pursuant to the requirements of
Environmental Laws, polychlorinated biphenyls, and petroleum and petroleum
products).
35
<PAGE>
"Henry County Bank" shall mean the First Community Bank of Henry County, a
Georgia chartered commercial bank and a BHC Subsidiary.
"HOLA" shall mean the Home Owners Loan Act of 1933, as amended.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person shall mean the knowledge
after due inquiry of the Chairman, President, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer, or any Senior or Executive Vice
President of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including, without limitation, those promulgated,
interpreted or enforced by any of the Regulatory Authorities.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or other security arrangement,
or any adverse right or interest, charge, or claim of any nature whatsoever on,
or with respect to, any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable; (ii) for depository institution
Subsidiaries of a Party, pledges to secure deposits and (iii) other Liens
incurred in the ordinary course of the banking business.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including, without limitation, Contracts related to it),
or the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their Affiliates
by Regulatory Authorities other than the violations of law section from such
reports.
"Loan Property" shall mean any property owned by the Party in question or
by any of its Subsidiaries or in which such Party or Subsidiary holds a security
interest, and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
36
<PAGE>
"Material" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"Material Adverse Effect" on a Party shall mean an event, change or
occurrence which has a material adverse impact on (a) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (b) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (w) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(x) changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (y) actions and omissions of a Party (or any
of its Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, or (z) the Merger and
compliance with the provisions of this Agreement on the operating performance of
the Parties.
"Merger" shall mean the merger of BHC with and into Premier referred to in
Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"Participation Facility" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
(including any property or facility held in a joint venture) and, where required
by the context, said term means the owner or operator of such facility or
property, but only with respect to such facility or property.
"Party" shall mean either Premier or BHC, and "Parties" shall mean both
Premier and BHC.
"Permit" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets,
Liabilities, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Premier Bank" shall mean Premier Bank, a Georgia chartered commercial bank
and a Premier Subsidiary.
37
<PAGE>
"Premier Capital Stock" shall mean, collectively, the Premier Common Stock
and any other class or series of capital stock of Premier.
"Premier Common Stock" shall mean the $1.00 par value common stock of
Premier.
"Premier Companies" shall mean, collectively, Premier and all Premier
Subsidiaries.
"Premier Financial Statements" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of Premier as of
September 30, 1997, and as of December 31, 1996 and 1995, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the nine months ended September 30,
1997, and for each of the three years ended December 31, 1996, as filed by
Premier in SEC Documents and (b) the consolidated balance sheets (including
related notes and schedules, if any) of Premier and related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to September 30, 1997.
"Premier Subsidiaries" shall mean the Subsidiaries of Premier at the
Effective Time.
"Proxy Statement" shall mean the proxy statement used by BHC to solicit the
approval of its shareholders of the transactions contemplated by this Agreement,
which shall be included in the Registration Statement of the Surviving
Corporation relating to shares of Surviving Corporation Common Stock to be
issued to the shareholders of BHC.
"Registration Statement" shall mean the Registration Statement on Form S-4,
or other appropriate form, filed with the SEC by Premier under the 1933 Act with
respect to the shares of Surviving Corporation Common Stock to be issued to the
shareholders of BHC in connection with the transactions contemplated by this
Agreement and which shall include the Proxy Statement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Office of Thrift Supervision (including its
predecessor, the Federal Home Loan Bank Board), the Office of the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, all state regulatory
agencies having jurisdiction over the Parties and their respective Subsidiaries,
the NASD and the SEC.
"Rights" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
38
<PAGE>
"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Shareholder's Meeting" shall mean the meeting of the shareholders of BHC
to be held pursuant to Section 8.1 of this Agreement, including any adjournment
or adjournments thereof.
"Spalding County Bank" shall mean The Bank of Spalding County, a Georgia
chartered commercial bank and a BHC Subsidiary.
"Subsidiaries" shall mean all those corporations, banks, associations or
other entities of which the entity in question owns or controls 50% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, however,
there shall not be included any such entity acquired through foreclosure or any
such entity the equity securities of which are owned or controlled in a
fiduciary capacity.
"Surviving Corporation" shall mean Premier as the surviving corporation
resulting from the Merger to be known as Premier Bancshares, Inc.
"Surviving Corporation Capital Stock" shall mean the Surviving Corporation
Common Stock, the Surviving Corporation Preferred Stock, and any other class or
series of capital stock of the Surviving Corporation.
"Surviving Corporation Common Stock" shall mean the $1.00 par value common
stock of the Surviving Corporation.
"Surviving Corporation Preferred Stock" shall mean the preferred stock of
the Surviving Corporation as described in Section 8.12 of this Agreement.
"Tax" or "Taxes" shall mean any federal, state, county, local or foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise, occupancy and other taxes, assessments, charges,
fares or impositions, including interest, penalties and additions imposed
thereon or with respect thereto.
"Year 2000 Problem" shall mean any problem affecting the ability of any BHC
Company to continue operation as an ongoing business or to provide the usual and
customary services of any BHC Company, relating to the failure of software,
hardware or other computer equipment to: (a) store all date-related information
and process all data interfaces involving dates in a manner that
39
<PAGE>
unambiguously identifies the century, for all date values before, during or
after the Year 2000; (b) calculate, sort, report and otherwise operate correctly
and in a consistent manner for all date information processed by any software,
hardware or other computer equipment, whether before, during or after the Year
2000; (c) calculate, sort, report and otherwise operate correctly, in a
consistent manner and without interruption regardless whether the date on which
the software, hardware or other computer equipment is operated or executed is
before, during or after the Year 2000; (d) report and display all dates with a
four-digit date so that the century is unambiguously identified; and (e) handle
all leap years, including but not limited to the Year 2000 leap year, correctly.
Any singular term in this Agreement shall be deemed to include the plural, and
any plural term the singular. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 Expenses.
---------
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants and
counsel, except that each of the Parties shall bear and pay (i) one-half of the
filing fees payable in connection with the Registration Statement and the
applications filed with other Regulatory Authorities, and (ii) one-half of the
costs incurred in connection with the printing or copying of the Proxy Statement
and the Registration Statement.
(b) Notwithstanding the provisions of Section 11.2(a) of this
Agreement, if for any reason this Agreement is terminated pursuant to Sections
10.1(b) or 10.1(c) of this Agreement, the breaching Party agrees to pay the non-
breaching Party (i) an amount equal to the reasonable and documented fees and
expenses incurred by such non-breaching Party in connection with the examination
and investigation of the breaching 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 banking consultants, accountants,
attorneys and other agents and (ii) (x) $50,000 if the breach is not willful or
(y) $500,000 if the breach is willful or this Agreement is terminated in
contemplation of an Acquisition Proposal, which sums represent compensation for
the non-breaching Party's loss as a result of the transaction contemplated by
this Agreement not being consummated. Final settlement with respect to payment
of such fees and expenses shall be made within thirty (30) days after the
termination of this Agreement.
11.3 Brokers and Finders. Each of the Parties represents and warrants
--------------------
that neither it nor any of its officers, directors, employees or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby, other than Brown, Burke Capital Partners, Inc. employed by Premier. In
the event of a claim by any
40
<PAGE>
broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by Premier or BHC, each of Premier and
BHC, as the case may be, agrees to indemnify and hold the other Party harmless
of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein,
-----------------
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Section 8.10 and Section 8.13 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may
-----------
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, however, that after
any such approval by the holders of BHC Common Stock, there shall be made no
amendment that pursuant to the GBCC requires further approval by such
shareholders without the further approval of such shareholders.
11.6 Waivers.
--------
(a) Prior to or at the Effective Time, Premier, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by BHC, to waive or extend the time for the compliance or fulfillment
by BHC of any and all of its 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. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Premier.
(b) Prior to or at the Effective Time, BHC, acting through its Board
of Directors, chief executive officer or other authorized officer, 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 compliance or fulfillment by
Premier of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of BHC under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of BHC.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
41
<PAGE>
11.7 Assignment. Except as expressly contemplated hereby, neither this
-----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
--------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, or by courier or overnight carrier, to the persons at
the addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
Premier: Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Telecopy Number: (404) 814-3672
Attention: Darrell D. Pittard
Chairman and Chief Executive Officer
Copy to Counsel: Womble Carlyle Sandridge & Rice, PLLC
Suite 700
1275 Peachtree Street, N.E.
Atlanta, Georgia 30309
Telecopy Number: (404) 888-7490
Attention: Steven S. Dunlevie, Esq.
BHC: The Bank Holding Company
201 West Taylor Street
Post Office Box 1439
Griffin, Georgia 30224
Telecopy Number: (770) 954-9730
Attention: Charles B. Blackmon
President and Chief Executive Officer
Copy to Counsel: Robert H. Smalley, Jr., Esq.
115 North Sixth Street
Griffin, Georgia 30224
Telecopy Number: (770) 228-5018
42
<PAGE>
11.9 Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws, except to the extent that the federal laws of the
United States may apply to the Merger.
11.10 Counterparts. This Agreement 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.
11.11 Captions. The captions contained in this Agreement are for
---------
reference purposes only and are not part of this Agreement.
11.12 Enforcement of Agreement. The Parties hereto agree that irreparable
-------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.13 Severability. Any term or provision of this Agreement which is
-------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
43
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: PREMIER BANCSHARES, INC.
/s/ Barbara J. Burtt, Secretary By: /s/ Darrell D. Pittard
- ------------------------------- --------------------------------------
Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: THE BANK HOLDING COMPANY
/s/ Barbara A. Price By: /s/ Charles B. Blackmon
- -------------------------------- --------------------------------------
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
44
<PAGE>
EXHIBIT 1
---------
AFFILIATE AGREEMENT
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
The Bank Holding Company
201 West Taylor Street
Griffin, Georgia 30224
Gentlemen:
The undersigned is a shareholder of The Bank Holding Company ("BHC"), a
corporation organized and existing under the laws of the State of Georgia, and
will become a shareholder of Premier Bancshares, Inc. ("Premier" or the
"Surviving Corporation") pursuant to the transactions described in the Agreement
and Plan of Reorganization, dated as of December 2, 1997 (the "Agreement"), by
and between BHC and Premier. Under the terms of the Agreement, Premier and BHC
will be merged (the "Merger") and the shares of common stock of BHC ("BHC Common
Stock") will be converted into shares of common stock of the Surviving
Corporation ("Surviving Corporation Common Stock") and the shares of preferred
stock of BHC ("BHC Preferred Stock") will be converted into shares of preferred
stock of the Surviving Corporation ("Surviving Corporation Preferred Stock").
This Affiliate Agreement represents an agreement between the undersigned and the
Surviving Corporation regarding certain rights and obligations of the
undersigned in connection with the shares of the Surviving Corporation to be
received by the undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and the Surviving Corporation hereby agree as follows:
Affiliate Status. The undersigned understands and agrees that as to
----------------
BHC the undersigned is an "affiliate" under Rule 145(c) as defined in Rule 405
of the Rules and Regulations of the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that the undersigned will be such an "affiliate" at the time of the
Merger.
Initial Restriction on Disposition. The undersigned agrees that the
----------------------------------
undersigned will not, except by operation of law, by will or under the laws of
descent and distribution, sell, transfer, or otherwise dispose of the
undersigned's interests in, or reduce the undersigned's risk relative to, any of
the shares of the Surviving Corporation Common Stock into which the
undersigned's shares of BHC Common Stock are converted upon consummation of the
Merger until such time as the Surviving Corporation notifies the undersigned
that the requirements of SEC Accounting Series
<PAGE>
Release Nos. 130 and 135 ("ASR 130 and 135") have been met. The undersigned
understands that ASR 130 and 135 relate to publication of financial results of
post-Merger combined operations of the Surviving Corporation and BHC. The
Surviving Corporation agrees that it will publish such results within 45 days
after the end of the first fiscal quarter of the Surviving Corporation
containing the required period of post-Merger combined operations and that it
will notify the undersigned promptly following such publication.
Covenants and Warranties of Undersigned. The undersigned represents,
---------------------------------------
warrants and agrees that:
(a) During the 30 days immediately preceding the effective time of the
Merger, the undersigned will not, except by operation of law, by will, or
under the laws of descent and distribution, sell, transfer, or otherwise
dispose of the undersigned's interests in, or reduce the undersigned's risk
relative to, any of the shares of BHC Common Stock or BHC Preferred Stock
beneficially owned by the undersigned as of the date of the shareholders'
meeting of BHC held to approve the Merger.
(b) The Surviving Corporation Common Stock or the Surviving
Corporation Preferred Stock received by the undersigned as a result of the
Merger will be taken for the undersigned's own account and not for others,
directly or indirectly, in whole or in part.
(c) The undersigned understands that any distribution by the
undersigned of the Surviving Corporation Common Stock or the Surviving
Corporation Preferred Stock has not been registered under the 1933 Act and
that shares of the Surviving Corporation Common Stock or the Surviving
Corporation Preferred Stock received pursuant to the Merger can only be
sold by the undersigned (1) following registration under the 1933 Act, or
(2) in conformity with the volume and other requirements of Rule 145(d)
promulgated by the SEC as the same now exist or may hereafter be amended,
or (3) to the extent some other exemption from registration under the 1933
Act might be available. The undersigned understands that the Surviving
----------------------------------------------
Corporation is under no obligation to file a registration statement with
------------------------------------------------------------------------
the SEC covering the disposition of the undersigned's shares of the
-------------------------------------------------------------------
Surviving Corporation Common Stock or the Surviving Corporation Preferred
-------------------------------------------------------------------------
Stock.
------
(d) The undersigned is aware that the Merger is to be treated as a
tax-free reorganization under Section 368 of the Internal Revenue Code
("Code") for federal income tax purposes. The undersigned agrees to treat
the transaction in the same manner for federal income tax purposes. The
undersigned acknowledges that Section 1.368-1(b) of the Income Tax
Regulations requires "continuity of interest" in order for the Merger to be
treated as tax-free under Section 368 of the Code. This requirement is
satisfied if, taking into account those who dissent from the Merger, there
is no plan or intention on the part of the BHC shareholders to sell or
otherwise dispose of the Surviving Corporation Common Stock or Surviving
Corporation Preferred Stock to be received in the Merger that will reduce
such shareholders' ownership to a number of shares having, in the
aggregate, a value at the time of the Merger of less than 50% of the total
fair market value of the BHC Common Stock or
2
<PAGE>
BHC Preferred Stock outstanding immediately prior to the Merger. The
undersigned has no prearrangement, plan or intention to sell or otherwise
dispose of an amount of the undersigned's Surviving Corporation Common
Stock or Surviving Corporation Preferred Stock to be received in the Merger
which would cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees that
------------------------
stop transfer instructions with respect to the shares of the Surviving
Corporation Common Stock or the Surviving Corporation Preferred Stock received
by the undersigned pursuant to the Merger will be given to the Surviving
Corporation's transfer agent and that there will be placed on the certificates
for such shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of
interests" and may not be sold, nor may the owner thereof reduce his
risks relative thereto in any way, until such time as the Surviving
Corporation has published the financial results covering at least 30
days of combined operations after the effective date of the merger
through which the business combination was effected. In addition, the
shares represented by this certificate may not be sold, transferred or
otherwise disposed of except or unless (a) covered by an effective
registration statement under the Securities Act of 1933, as amended,
(b) in accordance with (i) Rule 145(d) (in the case of shares issued
to an individual who is not an affiliate of the Surviving Corporation)
or (ii) Rule 144 (in the case of shares issued to an individual who is
an affiliate of the Surviving Corporation) of the Rules and
Regulations of such Act, or (c) in accordance with a legal opinion
satisfactory to counsel for the Surviving Corporation that such sale
or transfer is otherwise exempt from the registration requirements of
such Act."
Such legend will also be placed on any certificate representing the Surviving
Corporation securities issued subsequent to the original issuance of the
Surviving Corporation Common Stock or the Surviving Corporation Preferred Stock
pursuant to the Merger as a result of any stock dividend, stock split or other
recapitalization as long as the Surviving Corporation Common Stock or the
Surviving Corporation Preferred Stock issued to the undersigned pursuant to the
Merger has not been transferred in such manner to justify the removal of the
legend therefrom. If the provisions of Rules 144 and 145 are amended to
eliminate restrictions applicable to the Surviving Corporation Common Stock or
the Surviving Corporation Preferred Stock received by the undersigned pursuant
to the Merger, or at the expiration of the restrictive period set forth in Rule
145(d), the Surviving Corporation, upon the request of the undersigned, will
cause the certificates representing the shares of the Surviving Corporation
Common Stock or Surviving Corporation Preferred Stock issued to the undersigned
in connection with the Merger to be reissued free of any legend relating to the
restrictions set forth in Rules 144 and 145(d) upon receipt by the Surviving
Corporation of an opinion of its counsel to the effect that such legend may be
removed.
3
<PAGE>
5. Understanding of Restrictions on Dispositions. The undersigned has
---------------------------------------------
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his or her ability to sell, transfer or otherwise
dispose of the shares of the Surviving Corporation Common Stock or the Surviving
Corporation Preferred Stock received by the undersigned, to the extent the
undersigned believes necessary, with the undersigned's counsel or counsel for
BHC.
6. Filing of Reports by the Surviving Corporation. The Surviving
----------------------------------------------
Corporation agrees, for a period of two years after the effective date of the
Merger, to file on a timely basis all reports required to be filed by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, so
that the public information provisions of Rule 145(d) promulgated by the SEC as
the same are presently in effect will be available to the undersigned in the
event the undersigned desires to transfer any shares of the Surviving
Corporation Common Stock or the Surviving Corporation Preferred Stock issued to
the undersigned pursuant to the Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to sell or
--------------------------
otherwise transfer the shares of the Surviving Corporation Common Stock or the
Surviving Corporation Preferred Stock received by the undersigned in connection
with the Merger at any time during the restrictive period set forth in Rule
145(d), the undersigned will provide the necessary representation letter to the
transfer agent for the Surviving Corporation Common Stock and the Surviving
Corporation Preferred Stock together with such additional information as the
transfer agent may reasonably request. If the Surviving Corporation's counsel
concludes that such proposed sale or transfer complies with the requirements of
Rule 145(d), the Surviving Corporation shall cause such counsel to provide such
opinions as may be necessary to the Surviving Corporation's transfer agent so
that the undersigned may complete the proposed sale or transfer.
8. Acknowledgments. The undersigned recognizes and agrees that the
---------------
foregoing provisions also apply to (a) the undersigned's spouse, (b) any
relative of the undersigned or of the undersigned's spouse who has the same home
as the undersigned, (c) any trust or estate in which the undersigned, the
undersigned's spouse, and any such relative collectively own at least a 10%
beneficial interest or of which any of the foregoing serves as trustee, executor
or in any similar capacity and (d) any corporation or other organization in
which the undersigned, the undersigned's spouse and any such relative who
collectively owns at least 10% of any class of equity securities or of the
equity interest. The undersigned further recognizes that, in the event that the
undersigned is a director or officer of the Surviving Corporation or becomes a
director or officer of the Surviving Corporation upon consummation of the
Merger, among other things, any sale of the Surviving Corporation Common Stock
or the Surviving Corporation Preferred Stock by the undersigned within a period
of less than six months following the effective time of the Merger may subject
the undersigned to liability pursuant to Section 16(b) of the Securities
Exchange Act of 1934, as amended.
9. Miscellaneous. This Affiliate Agreement is the complete agreement
-------------
between the Surviving Corporation and the undersigned concerning the subject
matter hereof. Any notice required to be sent to any party hereunder shall be
sent by registered or certified mail, return receipt
4
<PAGE>
requested, using the addresses set forth herein or such other address as shall
be furnished in writing by the parties. This Affiliate Agreement shall be
governed by the laws of the State of Georgia.
This Affiliate Agreement is executed as of the_____ day of _______________,
1997.
Very truly yours,
-----------------------------------
Signature
-----------------------------------
Print Name
AGREED TO AND ACCEPTED as of
1997
- ----------------------,
PREMIER BANCSHARES, INC.
By:
----------------------------
AGREED TO AND ACCEPTED as of
1997
- ----------------------,
THE BANK HOLDING COMPANY
By:
----------------------------
5
<PAGE>
EXHIBIT 2
---------
MATTERS AS TO WHICH
COUNSEL TO BHC WILL OPINE*
1. BHC is a corporation duly organized, existing and in good standing
under the laws of the State of Georgia with corporate power and authority to
conduct its business as now conducted and to own and use its Assets.
2. BHC's authorized capital stock consists of 10,000,000 shares of BHC
Common Stock, of which 556,525 shares were outstanding as of the date hereof and
50,000 shares of BHC Preferred Stock, of which 40,770 shares were issued and
outstanding on the date hereof. The outstanding shares of BHC Capital Stock are
duly authorized, validly issued, fully paid and nonassessable. None of the
outstanding shares of BHC Capital Stock has been issued in violation of any
statutory preemptive rights. Except as disclosed in BHC's Disclosure Memorandum
---------------------
dated ____________________, 1997, to our knowledge, there are no options,
subscriptions, warrants, calls, rights or commitments obligating BHC to issue
equity securities or acquire its equity securities.
3. The execution and delivery by BHC of the Agreement do not, and if BHC
were now to perform its obligations under the Agreement such performance would
not, result in any violation of the Articles of Incorporation or Bylaws of any
BHC Company, or, to our knowledge, result in any breach of, or default or
acceleration under, any material Contract or Order to which a BHC Company is a
party or by which a BHC Company is bound.
4. BHC has duly authorized the execution and delivery of the Agreement
and all performance by BHC thereunder and has duly executed and delivered the
Agreement.
5. The Agreement is enforceable against BHC in accordance with its
terms.
- -----------------------------
*Pursuant to the January 1, 1992 edition of the Interpretive Standards
Applicable to Legal Opinions to Third Parties in Corporate Transactions adopted
by the Legal Opinion Committee of the Corporate and Banking Law Section of the
State Bar of Georgia.
50
<PAGE>
EXHIBIT 3
---------
CLAIMS/INDEMNIFICATION LETTER
_______________________, 1997
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Ladies and Gentlemen:
This letter is delivered pursuant to Section 9.2(e) of the Agreement and
Plan of Reorganization (the "Agreement"), dated as of December 2, 1997, by and
between The Bank Holding Company ("BHC") and Premier Bancshares, Inc.
("Premier") which provides for the merger (the "Merger") of BHC and Premier.
Concerning claims which I may have against BHC or its wholly-owned
subsidiaries, First Community Bank of Henry County and The Bank of Spalding
County, in my capacity as an officer or director:
(a) Premier shall assume all liability (to the extent BHC was so
liable) for claims for indemnification arising under BHC's Articles of
Incorporation or Bylaws or under any indemnification contract disclosed to
Premier, as existing on December 2, 1997, and for claims for salaries,
wages or other compensation, employee benefits, reimbursement of expenses,
or worker's compensation arising out of employment through the effective
time of the Merger;
(b) First Community Bank of Henry County and The Bank of Spalding
County shall retain all liability (to the extent they were so liable) for
claims for indemnification arising under their respective Articles of
Incorporation or Bylaws as existing on December 2, 1997, and for claims for
salaries, wages, or other compensation, employee benefits, reimbursement of
expenses, or worker's compensation arising out of employment through the
effective time of the Merger;
(c) In my capacity as an officer or a director, I am not aware that I
have any claims (other than those referred to in paragraphs (a) or (b)
above) against BHC, First Community Bank of Henry County or The Bank of
Spalding County (other than routine deposit, loan and other banking
services conducted in the ordinary course of business with BHC, First
Community Bank of Henry County or The Bank of Spalding County); and
(d) I hereby release BHC, First Community Bank of Henry County and The
Bank of Spalding County from any and all claims which I am aware that I
have against any of
<PAGE>
them in my capacity as an officer or a director, other than those referred
to in paragraphs (a) or (b) above.
By executing this letter on behalf of Premier, you shall acknowledge the
assumption by Premier of the liabilities described in paragraphs (a) and (b)
above.
Sincerely,
---------------------------------------
Signature of Officer or Director
---------------------------------------
Printed Name of Officer or Director
On behalf of Premier, I hereby acknowledge receipt of this letter and
affirm the assumption by Premier of the liabilities described in paragraph (a)
and (b) above, as of this _____ day of _______________, 1997.
PREMIER BANCSHARES, INC.
By:
--------------------------------------
Darrell D. Pittard, Chairman and Chief
Executive Officer
2
<PAGE>
EXHIBIT 4
---------
MATTERS AS TO WHICH
COUNSEL TO PREMIER WILL OPINE*
1. Premier is a corporation duly organized, existing and in good standing
under the laws of the State of Georgia with corporate power and authority to
conduct its business as now conducted and to own and use its Assets.
2. Premier's authorized capital stock consists of 20,000,000 shares of
Premier Common Stock, of which ______ shares were outstanding as of the date
hereof and 2,000,000 shares of Premier Preferred Stock of which no shares were
outstanding as of the date hereof. The outstanding shares of Premier Common
Stock are, and all of the shares of Surviving Corporation Capital Stock to be
issued in exchange for BHC Capital Stock upon consummation of the Merger, when
issued in accordance with the terms of the Agreement, will be, duly authorized,
validly issued, fully paid and nonassessable. None of the outstanding shares of
Premier Common Stock has been, and none of the shares of Surviving Corporation
Capital Stock to be issued in exchange for shares of BHC Capital Stock upon
consummation of the Merger will be, issued in violation of any statutory or
preemptive rights. Except as disclosed in Premier's Disclosure Memorandum dated
---------------------
_______________, 1997, to our knowledge, there are no options, subscriptions,
warrants, calls, rights or commitments obligating Premier to issue equity
securities or acquire its equity securities.
3. The execution and delivery by Premier of the Agreement do not, and if
Premier were now to perform its obligations under the Agreement such performance
would not, result in any violation of the Articles of Incorporation or Bylaws of
any Premier Company, or, to our knowledge, result in any breach of, or default
or acceleration under, any material Contract or Order to which a Premier Company
is a party or by which a Premier Company is bound.
4. Premier has duly authorized the execution and delivery of the
Agreement and all performance by Premier thereunder and has duly executed and
delivered the Agreement.
5. The Agreement is enforceable against Premier in accordance with its
terms.
- ------------------------------
*Pursuant to the January 1, 1992 edition of the Interpretive Standards
Applicable to Legal Opinions to Third Parties in Corporate Transactions adopted
by the Legal Opinion Committee of the Corporate and Banking Law Section of the
State Bar of Georgia.
53
<PAGE>
EXHIBIT 5
---------
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT ("Agreement") is made and entered into effective as of
the ____ day of _______________, 1998 (the "Effective Date"), by and among
PREMIER BANK ("Employer"), PREMIER BANCSHARES, INC. ("Holding Company"); and
CHARLES B. BLACKMON ("Employee").
WITNESSETH:
WHEREAS, Employer is a wholly owned subsidiary of Holding Company;
WHEREAS, the Board of Directors of Employer considers the
establishment and maintenance of highly competent and skilled management
personnel for Employer to be essential to protecting and enhancing the best
interests of Employer;
WHEREAS, the Board of Directors of Employer is desirous of inducing
Employee to remain in the employ of Employer, subject to the terms and
conditions hereof;
WHEREAS, Employee is desirous of remaining in the employ of Employer,
subject to the terms and conditions hereof;
WHEREAS, Holding Company has joined in this Agreement for the sole
purpose of granting the stock options and transferring the title to the
automobiles referred to in paragraph 4(b) of this Agreement; and
WHEREAS, the parties agree that the provisions of this Agreement shall
control with respect to the rights and obligations of the parties resulting from
the employment of Employee by Employer;
<PAGE>
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Definitions. The following terms used in this Agreement shall have
-----------
the following meanings:
(a) "Base Salary" shall mean the annual compensation (excluding
Incentive Compensation as defined in (c) of this paragraph and other
benefits) payable or paid to Employee pursuant to paragraph 4(a) of this
Agreement.
(b) "Event of Termination" shall mean the termination by Employer of
Employee's employment under this Agreement by written notice delivered to
Employee for any reason other than Termination for Cause as defined in (d)
-----
of this paragraph.
(c) "Incentive Compensation" shall mean that compensation payable or
paid to Employee pursuant to paragraph 4(b) of this Agreement.
(d) "Termination for Cause" shall have the meaning provided in
paragraph 6(a) of this Agreement.
2. Employment. Employer agrees to continue Employee in its employ, and
----------
Employee agrees to remain in the employ of Employer, as President of Employer's
South Metro Division, for the period stated in paragraph 3(a) hereof and upon
the other terms and conditions herein provided. Employee agrees to perform
faithfully such services as are reasonably consistent with his position and
shall from time to time be assigned to him by the Board of Directors of Employer
in a trustworthy and businesslike manner for the purpose of advancing the
interests of Employer. The Board of Directors of Employer may also from time
to time change Employee's position or alter his duties and responsibilities and
assign a new position or new duties and responsibilities that are similar in
scope
-2-
<PAGE>
and nature to Employee's existing position, duties and responsibilities without
invalidating this Agreement or effecting the termination of Employee. At all
times, Employee shall manage and conduct the business of Employer in accordance
with the policies established by the Board of Directors of Employer, and in
compliance with applicable regulations promulgated by governing regulatory
agencies. Responsibility for the supervision of Employee shall rest with the
Board of Directors of Employer, which shall review Employee's performance at
least annually. The Board of Directors of Employer shall also have the authority
to terminate Employee, subject to the provisions outlined in paragraph 6 of this
Agreement.
3. Term and Duties.
---------------
(a) Term of Employment. This Agreement and the period of Employee's
------------------
employment under this Agreement shall be deemed to have commenced as of the
Effective Date and shall continue for a period of twelve (12) full calendar
--
months thereafter, unless earlier terminated pursuant to this Agreement or
unless Employee dies before the end of such twelve (12) months, in which
--
case the period of employment shall be deemed to continue until the end of
the month of such death. On each anniversary of the Effective Date, this
Agreement and Employee's term of employment shall be extended for an
additional twelve (12) month period provided that the Board of Directors of
--
Employer determines that the performance of Employee has met said Boards'
requirements and standards and further that this Agreement shall be
extended.
(b) Performance of Duties. During the period of employment hereunder,
---------------------
except for periods of illness, disability, reasonable vacation periods, and
reasonable leaves of absence, Employee shall devote substantially all of
his business time, attention, skill, and efforts to the faithful
performance of his duties hereunder. Employee shall be entitled to
reasonable
-3-
<PAGE>
participation as a member in community, civic, or similar organizations and
the pursuit of personal investments which do not present any material
conflict of interest with Employer, or otherwise unfavorably affect the
performance of Employee's duties pursuant to this Agreement.
(c) Office of Employee. The office of Employee shall be located in
------------------
McDonough, Georgia, or at such other location within the State of Georgia
as Employer may from time to time designate; provided, however, that, in
the event such relocation required Employee to move his principal
residence, Employer shall reimburse Employee for all his reasonable moving
expenses.
(d) No Other Agreement. The Employee shall have no employment
------------------
contract or other written or oral agreement concerning employment with any
entity or person other than Employer or Holding Company during the term of
his employment under this Agreement.
(e) Uniqueness of Employee's Services. Employee hereby represents
---------------------------------
that the services to be performed by him under the terms of this Agreement
are of a special, unique, unusual, extraordinary, and intellectual
character which gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages and in an action at law.
Accordingly, Employee expressly agrees that Employer, in addition to any
rights or remedies which Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent the breach of this
Agreement by Employee.
4. Compensation.
------------
(a) Salary. Subject to the provisions of paragraph 6 hereof, Employer
------
shall pay Employee, as compensation for serving as President of Employer's
South Metro Division, an initial Base Salary of $125,000; such initial Base
--------
Salary, or any increased Base Salary, shall be payable in substantially
equal installments in accordance with the Employer's normal pay
-4-
<PAGE>
practices, but not less frequently than monthly. The Board of Directors of
Employer, if warranted in its discretion, may increase Employee's Base
Salary to reflect Employee's performance.
(b) Incentive Compensation.
----------------------
(i) In recognition of the services to be provided by Employee to
Employer and as an incentive for Employee to remain in the employ of
Employer, Holding Company shall grant to Employee on the Effective
Date of this Agreement an option to purchase 40,000 shares of Holding
Company common stock at an exercise price of ten dollars ($10.00) per
share.
(ii) As further incentive for Employee to remain in the employ
of Employer, Holding Company shall grant to Employee the option to
purchase an additional 25,000 shares of Holding Company common stock
at an exercise price of twenty dollars ($20.00) per share, upon the
fulfillment by Employee of certain performance criteria established by
the Board of Directors of Employer, which criteria will be
communicated by the Board of Directors of Employer to Employee in
writing within sixty (60) days of the Effective Date of this
Agreement. The above-referenced stock options will be granted by
Holding Company to Employee according to the following schedule: (a)
12,500 shares will be granted on January 1, 1999, but only if Employee
remains employed with Employer on such date; and (b) 12,500 shares
will be granted on January 1, 2000, but only if Employee remains
employed with Employer on such date.
(iii) During the Term of Employment and in addition to the
aforesaid Base Salary, Employee shall be entitled to such additional
Incentive Compensation as may
-5-
<PAGE>
be awarded from time to time by the Board of Directors of Employer or
any committee(s) designated thereby in its discretion. Notwithstanding
anything contained in this Agreement to the contrary, any increase to
Employee's Base Salary and any Incentive Compensation paid to Employee
shall be (i) in compliance with regulations, bulletins,
pronouncements, directives, or orders issued or promulgated by any
governing regulatory agency and with any agreements by and between
Employer and such regulatory agencies, (ii) consistent with the safe
and sound operation of Employer, (iii) closely monitored by the Board
of Directors of Employer and (iv) comparable to such compensation paid
to persons of similar responsibilities and duties in other insured
institutions of similar size, in similar locations, and under similar
circumstances including financial condition and profitability.
(iv) As an incentive for Employee's assistance in the extra
effort needed to close a merger, Employer will, if the conditions set
forth below are met, pay to Employee in cash on or before December 31,
1998, a lump sum bonus upon completion of a merger of The Bank Holding
Company with and into Premier Bancshares, Inc. (the "Merger"), based
on the following schedule: $25,000.00, if the Merger is closed on or
---------
before April 30, 1998; $20,000.00, if the Merger is closed after April
---------
30, 1998, and before June 1, 1998; or $15,000.00 if the Merger is
---------
closed after May 31, 1998, and before July 1, 1998.
(c) Automobile Allowance.
--------------------
(i) For and in consideration of the mutual covenants contained
herein, Holding Company shall, on the Effective Date of this
Agreement, transfer to Employee
-6-
<PAGE>
the title to that certain 1990 Buick Roadmaster utilized by Employee
in the conduct of business of Employer.
(ii) For and in consideration of the mutual covenants contained
herein and for the additional sum of $__________, Holding Company
shall, on the Effective Date of this Agreement, transfer to Employee
the title to that certain 1996 Buick Roadmaster, utilized as a vehicle
of Employer on the Effective Date.
(iii) Employer and/or Holding Company shall provide Employee
with an automobile allowance of $800 per month.
---
(d) "Golden Parachute" Provision. Notwithstanding anything contained
----------------------------
in this Agreement to the contrary, any payments made to Employee pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. (S)1828(k) and any regulations promulgated
thereunder.
5. Participation in Benefit Plans. The payments provided in paragraph 4
------------------------------
and 6 hereof are in addition to any benefits to which Employee may be, or may
become, entitled to, under any group hospitalization, health, dental care, or
sick leave plan; life insurance or death benefit plan; travel or accident
insurance; pension or retirement plan; stock option or ownership plan; or other
present or future group employee benefit plan or program for which senior
executive officers of Employer shall be or shall become eligible. Said benefits
shall include, without limitation, major medical/dental insurance for Employee
and his dependents.
6. Payments to Employee Upon Termination of Employment. The Board of
---------------------------------------------------
Directors of Employer may terminate Employee's employment under this Agreement
at any time; but any termination other than Termination for Cause shall not
prejudice Employee's right to compensation or other benefits under this
Agreement. Employee may voluntarily terminate his employment under
-7-
<PAGE>
this Agreement. The rights and obligations of Employer and Employee in the event
of such termination are set forth in this paragraph 6 as follows:
(a) Termination for Cause. Employee shall have no right to
---------------------
compensation or other benefits for any period after a Termination for
Cause. Termination for Cause shall be determined by the Board of Directors
of Employer in the reasonable exercise of its discretion and acting in good
faith, and shall include termination because of Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duties
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses), or a final cease-and-desist order, the
regulatory suspension or removal of Employee as defined in paragraphs 7(a)
and (b) hereof, the termination of this Agreement under paragraphs 7(c) and
(d) hereof, the failure of Employee to follow reasonable written
instructions of the Board of Directors of Employer, or a material breach of
Employee of any provision of this Agreement. Termination for Cause by
Employer shall be determined by, and shall occur only upon the passage of a
resolution by a vote of not less than a two-thirds of Employer's Board of
Directors specifying Employee's Termination for Cause and the grounds
therefor, after reasonable notice to Employee and an opportunity for him to
be heard before a meeting of the Board of Directors called in accordance
with the By-Laws of Employer. Thereafter, Employee shall be deemed to be
in material breach of this Agreement and shall have no right to receive
compensation or other benefits under this Agreement for any period
following such Termination for Cause. This provision on Termination for
Cause shall control over any and all other provisions relating to discharge
or termination for cause contained in any and all other agreements between
Employer and Employee.
-8-
<PAGE>
(b) Event of Termination. Upon the occurrence of an Event of
--------------------
Termination, Employer shall pay to Employee, or in the event of his
subsequent death, to his designated beneficiary or beneficiaries, or to his
estate, as the case may be, as liquidated damages, in lieu of all other
claims, a severance payment equal to the remaining portion of Employee's
then current Base Salary pro-rated from the date of said Event of
Termination to the expiration of the then current term of this Agreement as
stated in paragraph 3(a) of this Agreement, to be paid in full on the last
day of the month following the date of said Event of Termination.
(c) Voluntary Termination of Employment. Employee shall have no right
-----------------------------------
to compensation or other benefits under this Agreement for any period
following the voluntary termination of Employee's employment by Employee,
except as provided in paragraph 6(b) hereof.
7. Regulatory Suspension.
---------------------
(a) If Employee is suspended and/or temporarily prohibited from
participating in the conduct of the affairs of Employer by a notice served
under Sections 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. (S)1818(e)(3) or (g)(1), the obligations of Employer under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, Employer may in its discretion (i) pay Employee all or part of
the compensation withheld while its contract obligations were suspended and
(ii) reinstate in whole or in part any of its obligations which were
suspended.
(b) If Employee is removed and/or permanently prohibited from
participating in the conduct of the affairs of Employer by an order issued
under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. (S)1818(e)(4) or (g)(1), all obligations of
-9-
<PAGE>
Employer under this Agreement shall terminate as of the effective date of
the order, but vested rights of the parties hereto shall not be affected.
(c) If Employer is in "default" as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect
any vested rights of the parties hereto.
(d) All obligations under this Agreement shall be terminated, except
to the extent that it may be determined by any state or federal regulatory
agency or body having authority over Employer that continuation of this
Agreement is necessary for the continued operation of Employer, at any time
the Federal Deposit Insurance Corporation (the "FDIC") enters into an
agreement to provide assistance to or on behalf of Employer under the
authority contained in Section 13(c) of the Federal Deposit Insurance Act,
at any time the FDIC approves a supervisory merger to resolve problems
related to the operation of Employer, or when Employer is determined by the
Georgia Department of Banking and Finance, the Board of Governors of the
Federal Reserve System (or the Federal Reserve Bank of Atlanta acting
pursuant to delegated authority), or the FDIC to be in an unsafe and
unsound condition. Any rights of the parties hereto that have already
vested, however, shall not be affected by such action.
8. Covenants Against Competition and Solicitation. Employee acknowledges
----------------------------------------------
that he has performed services and/or will perform services hereunder that
directly affect Employer's business presently conducted (among other areas)
within the limits of Henry County and Spalding County in the State of Georgia.
Accordingly, the parties deem it necessary to enter into the protective
covenants set forth below, the terms and conditions of which have been
negotiated by and between the parties hereto.
-10-
<PAGE>
(a) For the period of Employee's employment with Employer and for a
period of six (6) months following the termination of such employment, for
whatever reason, Employee covenants and agrees that he shall not within the
limits of Henry County and Spalding County, Georgia, compete with Employer
or Holding Company by performing banking services that require performance
of duties substantially identical to those performed on behalf of Employer
by Employee, to wit, as a member of management, supervisor, or executive
employee for any bank, bank holding company or other financial institution
that is a competitor of Employer.
(b) For a period of twelve (12) months from the Effective Date of this
Agreement and for a period of twelve (12) months from each anniversary of
the Effective Date of this Agreement following a decision of the Board of
Directors of Employer to extend this Agreement according to the provisions
of paragraph 3(a) hereof: (i) Employee shall not, for himself or any other
party, solicit, directly or indirectly, any clients or prospective clients
of Employer with whom he personally had business contact on Employer's
behalf at any time during the last twenty-four (24) months he worked at
Employer to do any business with another company or business in competition
with Employer; and (ii) Employee shall not employ or attempt to employ or
assist in employing any employee of Employer for the purpose of having such
employee perform services for any bank or other business or organization in
competition with the business of Employer as such exists on the termination
date of Employee's employment hereunder until such employee has ceased to
be employed by Employer for a period of six (6) months.
9. Nondisclosure of Confidential Information. Employee acknowledges that
-----------------------------------------
he possesses confidential information of a special and unique nature and value
affecting and relating to both Employer's and the Holding Company's business,
including, without limitation, the identity of
-11-
<PAGE>
the customers, deposits, business records, other trade secrets, and other
similar confidential information relating to Employer and/or the Holding Company
and the business of each (all the foregoing being hereinafter collectively
referred to as "Confidential Information"). Employee recognizes and acknowledges
that all Confidential Information is the exclusive property of Employer and/or
the Holding Company respectively, constitutes trade secrets of Employer and/or
the Holding Company, is material and confidential, and greatly affects the
goodwill and the effective and successful conduct of the business of Employer
and/or the Holding Company. As a material inducement to Employer to enter into
this Agreement and to employ Employee, Employee covenants and agrees that he
will not at any time during the term of his employment under this Agreement, and
for a period of one (1) year from the end of such employment, directly or
-
indirectly, divulge, reveal, or communicate any Confidential Information to any
person, firm, corporation, or entity whatsoever, or use any Confidential
Information for his own benefit or for the benefit of others. Employee further
acknowledges that said Confidential Information has material commercial value to
Employer and/or the Holding Company so long as it is not known by competitors of
Employer and/or the Holding Company and that both Employer and the Holding
Company have taken reasonable steps to keep all such information and trade
secrets confidential.
10. Source of Payments. All payments provided in paragraphs 4 and 6
------------------
hereof, except for the stock options described in paragraph 4(b) hereof, shall
be paid in cash from the general funds of Employer and/or the Holding Company
as provided herein, and no special or separate fund shall be established by
Employer and/or the Holding Company, and no other segregation of assets shall be
made to assure payment. Employee shall have no right, title, or interest in or
to any investments which Employer and/or the Holding Company may make to meet
its obligations hereunder.
-12-
<PAGE>
11. Injunctions. In view of the irreparable harm and damage which
-----------
Employer and/or the Holding Company would sustain as a result of a breach by
Employee of the covenants or agreements under paragraphs 8 and 9 hereof, and in
view of the lack of an adequate remedy at law to protect the interests of
Employer and/or the Holding Company, Employer and/or the Holding Company shall
have the right to receive, and Employee hereby consents to the issuance of, a
permanent injunction of six (6) months in duration with respect to paragraph
8(a) hereof and one (1) year in duration with respect to paragraph 8(b) and
-
paragraph 9 hereof enjoining Employee from any violation of the covenants and
agreements set forth in paragraphs 8 and 9 hereof. The foregoing remedy shall
be in addition to, and not in limitation of, any other rights or remedies to
which Employer and/or the Holding Company is or may be entitled at law or in
equity respecting this Agreement.
12. Attorneys' Fees. In the event any party hereto is required to engage
---------------
in legal action against any other party hereto, either as plaintiff or
defendant, in order to enforce or defend any of its or his rights under this
Agreement, and such action results in a final judgment in favor of one or more
parties, then the party or parties against whom said final judgment is obtained
shall reimburse the prevailing party or parties for all legal fees and expenses
incurred by the prevailing party or parties in asserting or defending its or his
rights hereunder.
13. Federal Income Tax Withholding. Employer and/or Holding Company may
------------------------------
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
14. Effect of Prior Agreements. This Agreement contains the entire
--------------------------
understanding between the parties hereto and supersedes any prior employment
agreement and any contemporaneous oral agreement or understanding by, between,
or among Employer, Holding Company and Employee.
15. General Provisions.
------------------
-13-
<PAGE>
(a) Nonassignability. Neither this Agreement nor any right or
----------------
interest hereunder shall be assignable by Employee, his beneficiaries or
legal representatives, without the written consent of Employer; provided,
however, that nothing in this paragraph 15(a) shall preclude (i) Employee
from designating a beneficiary to receive any benefits payable hereunder
upon his death, or (ii) the executors, administrators, or other legal
representatives of Employee or his estate from assigning any rights
hereunder to the person or persons entitled thereto.
(b) No Attachment. Except as required by law, no right to receive
-------------
payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation, or to execution, attachment, levy, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void,
and of no effect.
(c) Binding Agreement. This Agreement shall be binding upon, and
-----------------
inure to the benefit of, Employer and Employee and their respective heirs,
successors, assigns, and legal representatives.
16. Modification and Waiver.
-----------------------
(a) Amendment of Agreement. This Agreement may not be modified or
----------------------
amended except by an instrument in writing, signed by the parties hereto,
and which specifically refers to this Agreement.
(b) Waiver. No term or condition of this Agreement shall be deemed to
------
have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the
party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each
waiver shall operate only as to the specific term or condition waived and
shall not
-14-
<PAGE>
constitute a waiver of such term or condition for the future or as to any
act other than that specifically waived.
17. Severability. If for any reason any provision of this Agreement is
------------
held invalid, such invalidity shall not affect any other provision of this
Agreement not held invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect.
18. Headings. The headings of paragraphs herein are included solely for
--------
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. Governing Law. This Agreement has been executed and delivered in the
-------------
State of Georgia, and its validity, interpretation, performance, and enforcement
shall be governed by the laws of said State.
20. Rights of Third Parties. Nothing herein expressed or implied is
-----------------------
intended to or shall be construed to confer upon or give to any person, firm, or
other entity, other than the parties hereto and their permitted assigns, any
rights or remedies under or by reason of this Agreement.
21. Notices. All notices, requests, demands, and other communications
-------
provided for by this Agreement shall be in writing and shall be sufficiently
given if and when mailed in the United States by registered or certified mail,
or personally delivered, to the party entitled thereto at the address stated
below or to such changed address as the addressee may have given by a similar
notice:
-15-
<PAGE>
To Employer: President
Premier Bank
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Copied to: Chairman of the Board
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
-and-
Steven S. Dunlevie, Esq.
Womble Carlyle Sandridge & Rice, PLLC
Suite 700
1275 Peachtree Street
Atlanta, Georgia 30309
To Employee: Mr. Charles B. Blackmon
12 North Cedar Street
McDonough, Georgia 30253
IN WITNESS WHEREOF, Employer and Holding Company have caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officers, and Employee has signed this Agreement, as of the Effective
Date.
ATTEST: PREMIER BANK
By:
- --------------------------- -----------------------------------
Secretary Robert C. Oliver, President
(CORPORATE SEAL)
ATTEST: PREMIER BANCSHARES, INC.
By:
- --------------------------- -----------------------------------
Barbara Burtt, Secretary Darrell D. Pittard, Chairman and Chief
Executive Officer
(CORPORATE SEAL)
-16-
<PAGE>
(SEAL)
- ---------------------------- -----------------------------------
Witness CHARLES B. BLACKMON
-17-
<PAGE>
FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This First Amendment (the "First Amendment") to Agreement and Plan of
Reorganization, (the "Agreement"), dated December 3, 1997, between Premier
Bancshares, Inc. ("Premier") and The Bank Holding Company ("BHC"), is made and
entered into as of the 18th day of December, 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 the due diligence review of BHC by
Premier.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein and in the Agreement, the receipt and legal
sufficiency of which are hereby acknowledged, and for the purpose of amending
the Agreement, Premier and BHC hereby agree as follows:
1. That Section 10.1(h) of the Agreement be deleted in its entirety
and the following new Section 10.1(h) shall be inserted in lieu thereof:
(h) By the Board of Directors of Premier, at any time prior to
the close of business on December 23, 1997, without any Liability in
the event that the review of the Assets, business, financial
condition, results of operations, and prospects of BHC undertaken by
it or any of the disclosures contained in BHC's Disclosure Memorandum
---------------------
causes the Board of Directors of Premier to determine in its
reasonable good faith judgment, that a fact or circumstance exists or
is likely to exist or result which materially and adversely impacts
one or more of the economic benefits to Premier of the transactions
contemplated by this Agreement so as to render inadvisable the
consummation of the Merger; or
Except as specifically amended herein the Agreement shall remain in full
force and effect.
The parties further agree that this First Amendment may be signed in any
number of counterparts and delivery of such counterparts may be effected by a
facsimile transmission thereof; and any such facsimile counterpart shall be
deemed to be an original, with the same effect as if the signatures thereto were
upon the same original document.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First 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
- -------------------- --------------------------------
Secretary Chairman
[CORPORATE SEAL]
Attest: THE BANK HOLDING COMPANY
/s/ Barbara A. Price /s/ Robert H. Smalley, Jr.
- -------------------- --------------------------------
Secretary Chairman
[CORPORATE SEAL]
<PAGE>
SECOND AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Second Amendment (the "Second Amendment") to Agreement and Plan
of Reorganization, (the "Agreement"), dated December 3, 1997, as amended on
December 18, 1997, between Premier Bancshares, Inc. ("Premier") and The Bank
Holding Company ("BHC"), is made and entered into as of the 23rd day of
December, 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 the due diligence review of BHC by
Premier.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein and in the Agreement, the receipt and legal
sufficiency of which are hereby acknowledged, and for the purpose of amending
the Agreement, Premier and BHC hereby agree as follows:
1. That Section 10.1(h) of the Agreement be deleted in its entirety
and the following new Section 10.1(h) shall be inserted in lieu thereof:
(h) By the Board of Directors of Premier, at any time prior to
the close of business on December 31, 1997, without any Liability in
the event that the review of the Assets, business, financial
condition, results of operations, and prospects of BHC undertaken by
Premier or any of the disclosures contained in BHC's Disclosure
----------
Memorandum causes the Board of Directors of Premier to determine in
----------
its reasonable good faith judgment, that a fact or circumstance exists
or is likely to exist or result which materially and adversely impacts
one or more of the economic benefits to Premier of the transactions
contemplated by this Agreement so as to render inadvisable the
consummation of the Merger; or
Except as specifically amended herein the Agreement shall remain in full
force and effect.
The parties further agree that this Second Amendment may be signed in any
number of counterparts and delivery of such counterparts may be effected by a
facsimile transmission thereof; and any such facsimile counterpart shall be
deemed to be an original, with the same effect as if the signatures thereto were
upon the same original document.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Second 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/ Robert C. Oliver
- ---------------------- -------------------------------------
Secretary President and Chief Operating Officer
[CORPORATE SEAL]
Attest: THE BANK HOLDING COMPANY
/s/ Barbara A. Price /s/ Robert H. Smalley, Jr.
- ---------------------- -------------------------------------
Secretary Chairman
[CORPORATE SEAL]
<PAGE>
THIRD AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Third Amendment (the "Third Amendment") to Agreement and Plan of
Reorganization, (the "Agreement"), dated December 3, 1997, as amended on
December 18, 1997 and December 23, 1997, between Premier Bancshares, Inc.
("Premier") and The Bank Holding Company ("BHC"), is made and entered into as of
the 31st day of December, 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 the due diligence review of BHC by
Premier.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein and in the Agreement, the receipt and legal
sufficiency of which are hereby acknowledged, and for the purpose of amending
the Agreement, Premier and BHC hereby agree as follows:
1. That Section 10.1(h) of the Agreement be deleted in its entirety
and the following new Section 10.1(h) shall be inserted in lieu thereof:
(h) By the Board of Directors of Premier, at any time prior to
the close of business on January 15, 1998, without any Liability in
the event that the review of the Assets, business, financial
condition, results of operations, and prospects of BHC undertaken by
Premier or any of the disclosures contained in BHC's Disclosure
----------
Memorandum causes the Board of Directors of Premier to determine in
----------
its reasonable good faith judgment, that a fact or circumstance exists
or is likely to exist or result which materially and adversely impacts
one or more of the economic benefits to Premier of the transactions
contemplated by this Agreement so as to render inadvisable the
consummation of the Merger; or
Except as specifically amended herein the Agreement shall remain in full
force and effect.
The parties further agree that this Third Amendment may be signed in any
number of counterparts and delivery of such counterparts may be effected by a
facsimile transmission thereof; and any such facsimile counterpart shall be
deemed to be an original, with the same effect as if the signatures thereto were
upon the same original document.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Third 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/ Robert C. Oliver
- -------------------- -------------------------------------
Secretary President and Chief Operating Officer
[CORPORATE SEAL]
Attest: THE BANK HOLDING COMPANY
/s/ Barbara A. Price /s/ Charles B. Blackmon
- -------------------- -------------------------------------
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
<PAGE>
FOURTH AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Fourth Amendment (the "Fourth Amendment") to Agreement and Plan
of Reorganization, (the "Agreement"), dated December 3, 1997, as amended on
December 18, 1997, December 23, 1997, and December 31, 1997, between Premier
Bancshares, Inc. ("Premier") and The Bank Holding Company ("BHC"), is made and
entered into as of the 15th day of January, 1998. 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 reflect certain
amendments to certain terms of the Agreement, including the Exchange Ratio.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein and in the Agreement, the receipt and legal
sufficiency of which are hereby acknowledged, and for the purpose of amending
the Agreement, Premier and BHC hereby agree as follows:
1. That Section 3.1(b) of the Agreement be deleted in its entirety
and the following new Section 3.1(b) shall be inserted in lieu thereof:
(b) Each share of BHC Common Stock issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive 2.60 shares of the
Surviving Corporation Common Stock (the "Exchange Ratio.")
2. That the following Section 5.22 be added to the end of Article V
of the Agreement:
5.22 SEC Filings.
(a) BHC has filed all forms, reports and documents required to
be filed by BHC with the SEC since January 1, 1996 (collectively, the
"BHC SEC Reports"). The BHC SEC Reports (i) at the time filed,
complied in all Material respects with the applicable requirements of
the 1933 Act and the 1934 Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a Material fact or omit to state a
Material fact required to be stated in such BHC SEC Reports or
necessary in order to make the statements in such BHC SEC Reports, in
light of the circumstances under which they were made, not misleading.
<PAGE>
(b) Each of the BHC Financial Statements (including, in each
case, any related notes) contained in the BHC SEC Reports, including
any BHC SEC Reports filed after the date of this Agreement until the
Effective Time, complied or will comply as to form in all Material
respects with the applicable published rules and regulations of the
SEC with respect thereto, was or will be prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC), and fairly presented or will fairly present the consolidated
financial position of BHC and its Subsidiaries as at the respective
dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be Material in
amount or effect.
3. That the following sentence be added to the end of Section 9.1(a)
of the Agreement:
The shareholders of Premier shall have approved an increase in
the number of authorized shares of Premier Common Stock sufficient for
Premier to issue the shares of Premier Common Stock pursuant to
Section 3.1(b) of this Agreement.
4. That Section 10.1(i) of the Agreement be deleted in its entirety.
5. That Exhibit "5" to the Agreement is hereby deleted in its
entirety and a new Exhibit "5", which exhibit is attached hereto and
incorporated herein, shall be inserted in lieu thereof.
6. BHC hereby acknowledges that the Board of Directors of Premier
has approved a three-for-two split of the Premier Common Stock effective January
23, 1998, and as a result of such split the Exchange Ratio shall be adjusted
accordingly.
Except as specifically amended herein the Agreement shall remain in full
force and effect.
The parties further agree that this Fourth Amendment may be signed in any
number of counterparts and delivery of such counterparts may be effected by a
facsimile transmission thereof; and any such facsimile counterpart shall be
deemed to be an original, with the same effect as if the signatures thereto were
upon the same original document.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Fourth 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
- ------------------------- -----------------------------------------
Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
Attest: THE BANK HOLDING COMPANY
/s/ Barbara A. Price /s/ Charles B. Blackmon
- ------------------------- -----------------------------------------
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
3
<PAGE>
EXHIBIT 5
---------
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT ("Agreement") is made and entered into effective as of
the ____ day of _______________, 1998 (the "Effective Date"), by and among FIRST
COMMUNITY BANK OF HENRY COUNTY ("Employer"), PREMIER BANCSHARES, INC. ("Holding
Company"), and CHARLES B. BLACKMON ("Employee").
WITNESSETH:
WHEREAS, Employer is a wholly owned subsidiary of Holding Company;
WHEREAS, the Board of Directors of Employer considers the
establishment and maintenance of highly competent and skilled management
personnel for Employer to be essential to protecting and enhancing the best
interests of Employer;
WHEREAS, the Board of Directors of Employer is desirous of inducing
Employee to remain in the employ of Employer, subject to the terms and
conditions hereof;
WHEREAS, Employee is desirous of remaining in the employ of Employer,
subject to the terms and conditions hereof;
WHEREAS, Holding Company has joined in this Agreement for the sole
purpose of granting the stock options and transferring the title to the
automobiles referred to in paragraph 4(b) of this Agreement; and
WHEREAS, the parties agree that the provisions of this Agreement shall
control with respect to the rights and obligations of the parties resulting from
the employment of Employee by Employer;
<PAGE>
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Definitions. The following terms used in this Agreement shall have
-----------
the following meanings:
(a) "Base Salary" shall mean the annual compensation (excluding
Incentive Compensation as defined in (c) of this paragraph and other
benefits) payable or paid to Employee pursuant to paragraph 4(a) of this
Agreement.
(b) "Event of Termination" shall mean the termination by Employer of
Employee's employment under this Agreement by written notice delivered to
Employee for any reason other than Termination for Cause as defined in (d)
-----
of this paragraph.
(c) "Incentive Compensation" shall mean that compensation payable or
paid to Employee pursuant to paragraph 4(b) of this Agreement.
(d) "Termination for Cause" shall have the meaning provided in
paragraph 6(a) of this Agreement.
2. Employment. Employer agrees to continue Employee in its employ, and
----------
Employee agrees to remain in the employ of Employer, in such capacity as
Employer shall determine in its sole and absolute discretion and upon the other
terms and conditions herein provided. Employee agrees to perform faithfully
such services as are reasonably consistent with his position and shall from time
to time be assigned to him by the Board of Directors of Employer in a
trustworthy and businesslike manner for the purpose of advancing the interests
of Employer. The Board of Directors of Employer may also from time to time
change Employee's position or alter his duties and responsibilities and assign a
new position or new duties and responsibilities without invalidating this
Agreement or
-2-
<PAGE>
effecting the termination of Employee. At all times, Employee shall manage and
conduct the business of Employer in accordance with the policies established by
the Board of Directors of Employer, and in compliance with applicable
regulations promulgated by governing regulatory agencies. Responsibility for the
supervision of Employee shall rest with the Board of Directors of Employer or
such official of Employer as may be designated by its Board of Directors. The
Board of Directors of Employer shall also have the authority to terminate
Employee, subject to the provisions outlined in paragraph 6 of this Agreement.
3. Term and Duties.
---------------
(a) Term of Employment. This Agreement and the period of Employee's
------------------
employment under this Agreement shall be deemed to have commenced as of the
Effective Date and shall continue for a period of twelve (12) full calendar
--
months thereafter, unless earlier terminated pursuant to this Agreement or
unless Employee dies before the end of such twelve (12) months, in which
--
case the period of employment shall be deemed to continue until the end of
the month of such death.
(b) Performance of Duties. During the period of employment hereunder,
---------------------
except for periods of illness, disability, reasonable vacation periods, and
reasonable leaves of absence, Employee shall devote substantially all of
his business time, attention, skill, and efforts to the faithful
performance of his duties hereunder. Employee shall be entitled to
reasonable participation as a member in community, civic, or similar
organizations and the pursuit of personal investments which do not present
any material conflict of interest with Employer, or otherwise unfavorably
affect the performance of Employee's duties pursuant to this Agreement.
(c) Office of Employee. The office of Employee shall be located in
------------------
McDonough, Georgia, or at such other location within the State of Georgia
as Employer may from time to
-3-
<PAGE>
time designate; provided, however, that, in the event such relocation
required Employee to move his principal residence, Employer shall reimburse
Employee for all his reasonable moving expenses.
(d) No Other Agreement. The Employee shall have no employment
------------------
contract or other written or oral agreement concerning employment
with any entity or person other than Employer or Holding Company
during the term of his employment under this Agreement.
(e) Uniqueness of Employee's Services. Employee hereby represents
---------------------------------
that the services to be performed by him under the terms of this Agreement
are of a special, unique, unusual, extraordinary, and intellectual
character which gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages and in an action at law.
Accordingly, Employee expressly agrees that Employer, in addition to any
rights or remedies which Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent the breach of this
Agreement by Employee.
4. Compensation.
------------
(a) Salary. Subject to the provisions of paragraph 6 hereof, Employer
------
shall pay Employee an initial Base Salary of $125,000; such initial Base Salary,
-------
or any increased Base Salary, shall be payable in substantially equal
installments in accordance with the Employer's normal pay practices, but not
less frequently than monthly. The Board of Directors of Employer, if warranted
in its discretion, may increase Employee's Base Salary to reflect Employee's
performance.
(b) Incentive Compensation.
----------------------
(i) In recognition of the services to be provided by Employee to
Employer and as an incentive for Employee to remain in the employ of Employer,
Holding
-4-
<PAGE>
Company shall grant to Employee on the Effective Date of this
Agreement an option to purchase 40,000 shares of Holding Company
common stock at an exercise price of Ten Dollars ($10.00) per share.
(ii) As further incentive for Employee to remain in the employ
of Employer, Holding Company shall grant to Employee the option to
purchase an additional 10,000 shares of Holding Company common stock
at an exercise price of Ten Dollars ($10.00) per share, upon (1) the
fulfillment by Employee of certain performance criteria and (2) the
attainment by Employer of certain growth and profitability criteria,
all to be established by the Board of Directors of Employer; said
criteria will be communicated by the Board of Directors of Employer to
Employee in writing within sixty (60) days of the Effective Date of
this Agreement.
(iii) As an incentive for Employee's assistance in the extra
effort needed to close a merger, Employer will, if the conditions set
forth below are met, pay to Employee, in cash, a lump sum bonus upon
completion of a merger of The Bank Holding Company with and into
Premier Bancshares, Inc. (the "Merger"), within thirty (30) days of
the Merger and based on the following schedule: $25,000.00, if the
---------
Merger is closed on or before May 31, 1998; $20,000.00, if the Merger
---------
is closed after May 31, 1998, and before July 1, 1998; or $15,000.00
---------
if the Merger is closed after June 30, 1998, and before August 1,
1998.
(iv) Notwithstanding anything contained in this Agreement to
the contrary, any increase to Employee's Base Salary and any Incentive
Compensation paid to Employee shall be (1) in compliance with
regulations, bulletins, pronouncements, directives, or orders issued
or promulgated by any governing regulatory agency and
-5-
<PAGE>
with any agreements by and between Employer and such regulatory
agencies, (2) consistent with the safe and sound operation of
Employer, (3) closely monitored by the Board of Directors of Employer
and (4) comparable to such compensation paid to persons of similar
responsibilities and duties in other insured institutions of similar
size, in similar locations, and under similar circumstances including
financial condition and profitability.
(c) Automobile Allowance.
--------------------
(i) The Holding Company shall, on the Effective Date of this
Agreement, cause to be transferred to Employee the title to that
certain 1990 Buick owned by The Bank of Spalding County.
(ii) Employer shall, on the Effective Date of this Agreement,
transfer to Employee the title to that certain 1996 Buick owned by
Employer, for and in consideration of a payment to Employer by
Employee equal to the fair market value of said vehicle at the
Effective Date hereof.
(iii) Employer and/or Holding Company shall provide Employee
with an automobile allowance of $800 per month.
---
(d) "Golden Parachute" Provision. Notwithstanding anything contained
----------------------------
in this Agreement to the contrary, any payments made to Employee pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. (S) 1828(k) and any regulations promulgated
thereunder.
5. Participation in Benefit Plans. The payments provided in paragraph 4
------------------------------
and 6 hereof are in addition to any benefits to which Employee may be, or may
become, entitled to, under any group hospitalization, health, dental care, or
sick leave plan; life insurance or death benefit plan; travel or
-6-
<PAGE>
accident insurance; pension or retirement plan; stock option or ownership plan;
or other present or future group employee benefit plan or program for which
senior executive officers of Employer shall be or shall become eligible. Said
benefits shall include, without limitation, major medical/dental insurance for
Employee and his dependents.
6. Payments to Employee Upon Termination of Employment. The Board of
---------------------------------------------------
Directors of Employer may terminate Employee's employment under this Agreement
at any time; but any termination other than Termination for Cause shall not
prejudice Employee's right to compensation or other benefits under this
Agreement. Employee may voluntarily terminate his employment under this
Agreement. The rights and obligations of Employer and Employee in the event of
such termination are set forth in this paragraph 6 as follows:
(a) Termination for Cause. Employee shall have no right to
---------------------
compensation or other benefits for any period after a Termination for
Cause. Termination for Cause shall be determined by the Board of Directors
of Employer in the reasonable exercise of its discretion and acting in good
faith, and shall include termination because of Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duties
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses), or a final cease-and-desist order, the
regulatory suspension or removal of Employee as defined in paragraphs 7(a)
and (b) hereof, the termination of this Agreement under paragraphs 7(c) and
(d) hereof, the failure of Employee to follow reasonable written
instructions of the Board of Directors of Employer, or a material breach of
Employee of any provision of this Agreement. Termination for Cause by
Employer shall be determined by, and shall occur only upon the passage of a
resolution by a vote of not less than a two-thirds of Employer's Board of
Directors specifying Employee's
-7-
<PAGE>
Termination for Cause and the grounds therefor, after reasonable notice to
Employee and an opportunity for him to be heard before a meeting of the
Board of Directors called in accordance with the By-Laws of Employer.
Thereafter, Employee shall be deemed to be in material breach of this
Agreement and shall have no right to receive compensation or other benefits
under this Agreement for any period following such Termination for Cause.
This provision on Termination for Cause shall control over any and all
other provisions relating to discharge or termination for cause contained
in any and all other agreements between Employer and Employee.
(b) Event of Termination. Upon the occurrence of an Event of
--------------------
Termination, Employer shall pay to Employee, or in the event of his
subsequent death, to his designated beneficiary or beneficiaries, or to his
estate, as the case may be, as liquidated damages, in lieu of all other
claims, a severance payment equal to the remaining portion of Employee's
then current Base Salary pro-rated from the date of said Event of
Termination to the expiration of the then current term of this Agreement as
stated in paragraph 3(a) of this Agreement, to be paid in full on the last
day of the month following the date of said Event of Termination.
(c) Voluntary Termination of Employment. Employee shall have no right
-----------------------------------
to compensation or other benefits under this Agreement for any period
following the voluntary termination of Employee's employment by Employee,
except as provided in paragraph 6(b) hereof.
7. Regulatory Suspension.
---------------------
(a) If Employee is suspended and/or temporarily prohibited from
participating in the conduct of the affairs of Employer by a notice served
under Sections 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. (S) 1818(e)(3) or (g)(1), the
-8-
<PAGE>
obligations of Employer under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, Employer may in its discretion
(i) pay Employee all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate in whole or in part
any of its obligations which were suspended.
(b) If Employee is removed and/or permanently prohibited from
participating in the conduct of the affairs of Employer by an order issued
under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. (S) 1818(e)(4) or (g)(1), all obligations of Employer under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the parties hereto shall not be affected.
8. Covenants Against Competition and Solicitation. Employee acknowledges
----------------------------------------------
that he has performed services and/or will perform services hereunder that
directly affect Employer's business presently conducted (among other areas)
within the limits of Henry County and Spalding County in the State of Georgia.
Accordingly, the parties deem it necessary to enter into the protective
covenants set forth below, the terms and conditions of which have been
negotiated by and between the parties hereto.
(a) For the period of Employee's employment with Employer and through
and including April 30, 1999, even if Employee's employment shall have been
terminated prior to said date for whatever reason, Employee covenants and
agrees that he shall not within the limits of Henry County and Spalding
County, Georgia, compete with Employer or Holding Company by performing
banking services that require performance of duties substantially identical
to those performed on behalf of Employer by Employee, to wit, as a member
of
-9-
<PAGE>
management, supervisor, or executive employee for any bank, bank holding
company or other financial institution that is a competitor of Employer.
(b) For the period of Employee's employment with Employer and through
and including April 30, 1999, even if Employee's employment shall have been
terminated prior to said date for whatever reason: (i) Employee shall not,
for himself or any other party, solicit, directly or indirectly, any
clients or prospective clients of Employer with whom he personally had
business contact on Employer's behalf at any time during the period he
worked at Employer to do any business with another company or business in
competition with Employer; and (ii) Employee shall not employ or attempt to
employ or assist in employing any employee of Employer for the purpose of
having such employee perform services for any bank or other business or
organization in competition with the business of Employer.
9. Nondisclosure of Confidential Information. Employee acknowledges that
-----------------------------------------
he possesses confidential information of a special and unique nature and value
affecting and relating to both Employer's and the Holding Company's business,
including, without limitation, the identity of the customers, deposits, business
records, other trade secrets, and other similar confidential information
relating to Employer and/or the Holding Company and the business of each (all
the foregoing being hereinafter collectively referred to as "Confidential
Information"). Employee recognizes and acknowledges that all Confidential
Information is the exclusive property of Employer and/or the Holding Company
respectively, constitutes trade secrets of Employer and/or the Holding Company,
is material and confidential, and greatly affects the goodwill and the effective
and successful conduct of the business of Employer and/or the Holding Company.
As a material inducement to Employer to enter into this Agreement and to employ
Employee, Employee covenants and agrees that he will not at any time during the
term of his employment under this Agreement, and for a period of one (1) year
-
-10-
<PAGE>
from the end of such employment, directly or indirectly, divulge, reveal, or
communicate any Confidential Information to any person, firm, corporation, or
entity whatsoever, or use any Confidential Information for his own benefit or
for the benefit of others. Employee further acknowledges that said Confidential
Information has material commercial value to Employer and/or the Holding Company
so long as it is not known by competitors of Employer and/or the Holding Company
and that both Employer and the Holding Company have taken reasonable steps to
keep all such information and trade secrets confidential.
10. Source of Payments. All payments provided in paragraphs 4 and 6
------------------
hereof, except for the stock options described in paragraph 4(b) hereof, shall
be paid in cash from the general funds of Employer and/or the Holding Company
as provided herein, and no special or separate fund shall be established by
Employer and/or the Holding Company, and no other segregation of assets shall be
made to assure payment. Employee shall have no right, title, or interest in or
to any investments which Employer and/or the Holding Company may make to meet
its obligations hereunder.
11. Injunctions. In view of the irreparable harm and damage which
-----------
Employer and/or the Holding Company would sustain as a result of a breach by
Employee of the covenants or agreements under paragraphs 8 and 9 hereof, and in
view of the lack of an adequate remedy at law to protect the interests of
Employer and/or the Holding Company, Employer and/or the Holding Company shall
have the right to receive, and Employee hereby consents to the issuance of, a
permanent injunction of six (6) months in duration with respect to paragraph
8(a) hereof and one (1) year in duration with respect to paragraph 8(b) and
-
paragraph 9 hereof enjoining Employee from any violation of the covenants and
agreements set forth in paragraphs 8 and 9 hereof. The foregoing remedy shall
be in addition to, and not in limitation of, any other rights or remedies to
which Employer and/or the Holding Company is or may be entitled at law or in
equity respecting this Agreement.
-11-
<PAGE>
12. Attorneys' Fees. In the event any party hereto is required to engage
---------------
in legal action against any other party hereto, either as plaintiff or
defendant, in order to enforce or defend any of its or his rights under this
Agreement, and such action results in a final judgment in favor of one or more
parties, then the party or parties against whom said final judgment is obtained
shall reimburse the prevailing party or parties for all legal fees and expenses
incurred by the prevailing party or parties in asserting or defending its or his
rights hereunder.
13. Federal Income Tax Withholding. Employer and/or Holding Company may
------------------------------
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
14. Effect of Prior Agreements. This Agreement contains the entire
--------------------------
understanding between the parties hereto and supersedes any prior employment
agreement and any contemporaneous oral agreement or understanding by, between,
or among Employer, Holding Company and Employee.
15. General Provisions.
------------------
(a) Nonassignability. Neither this Agreement nor any right or
----------------
interest hereunder shall be assignable by Employee, his beneficiaries or
legal representatives, without the written consent of Employer; provided,
however, that nothing in this paragraph 15(a) shall preclude (i) Employee
from designating a beneficiary to receive any benefits payable hereunder
upon his death, or (ii) the executors, administrators, or other legal
representatives of Employee or his estate from assigning any rights
hereunder to the person or persons entitled thereto.
(b) No Attachment. Except as required by law, no right to receive
-------------
payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation, or to execution, attachment, levy, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void,
and of no effect.
-12-
<PAGE>
(c) Binding Agreement. This Agreement shall be binding upon, and
-----------------
inure to the benefit of, Employer and Employee and their respective heirs,
successors, assigns, and legal representatives.
16. Modification and Waiver.
-----------------------
(a) Amendment of Agreement. This Agreement may not be modified or
----------------------
amended except by an instrument in writing, signed by the parties hereto,
and which specifically refers to this Agreement.
(b) Waiver. No term or condition of this Agreement shall be deemed to
------
have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the
party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each
waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or
as to any act other than that specifically waived.
17. Severability. If for any reason any provision of this Agreement is
------------
held invalid, such invalidity shall not affect any other provision of this
Agreement not held invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect.
18. Headings. The headings of paragraphs herein are included solely for
--------
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
-13-
<PAGE>
19. Governing Law. This Agreement has been executed and delivered in the
-------------
State of Georgia, and its validity, interpretation, performance, and enforcement
shall be governed by the laws of said State.
20. Rights of Third Parties. Nothing herein expressed or implied is
-----------------------
intended to or shall be construed to confer upon or give to any person, firm, or
other entity, other than the parties hereto and their permitted assigns, any
rights or remedies under or by reason of this Agreement.
21. Notices. All notices, requests, demands, and other communications
-------
provided for by this Agreement shall be in writing and shall be sufficiently
given if and when mailed in the United States by registered or certified mail,
or personally delivered, to the party entitled thereto at the address stated
below or to such changed address as the addressee may have given by a similar
notice:
To Employer: Chairman of the Baord
First Community Bank of Henry County
12 North Cedar Street
McDonough, Georgia 30253
Copied to: Chairman of the Board
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
-and-
Steven S. Dunlevie, Esq.
Womble Carlyle Sandridge & Rice, PLLC
Suite 700
1275 Peachtree Street
Atlanta, Georgia 30309
To Employee: Mr. Charles B. Blackmon
213 Montrose Drive
McDonough, Georgia 30253
-14-
<PAGE>
IN WITNESS WHEREOF, Employer and Holding Company have caused this
Agreement to be executed and their respective seals to be affixed hereunto by
their duly authorized officers, and Employee has signed this Agreement under
seal, as of the Effective Date.
ATTEST: FIRST COMMUNITY BANK OF HENRY COUNTY
By:
- ------------------------- --------------------------------------------
Secretary , Chairman of the Board
---------------
(CORPORATE SEAL)
ATTEST: PREMIER BANCSHARES, INC.
By:
- ------------------------- --------------------------------------------
Barbara Burtt, Secretary Darrell D. Pittard, Chairman of the Board
and Chief Executive Officer
(CORPORATE SEAL)
(SEAL)
- ------------------------- -----------------------------------------
Witness CHARLES B. BLACKMON
-15-
<PAGE>
FIFTH AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Fifth Amendment (the "Fifth Amendment") to Agreement and Plan of
Reorganization, (the "Agreement"), dated December 3, 1997, as amended on
December 18, 1997, December 23, 1997, December 31, 1997, and January 15, 1998,
between Premier Bancshares, Inc. ("Premier") and The Bank Holding Company
("BHC"), is made and entered into as of the 16th day of March, 1998. 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 reflect certain
amendments to certain terms of the Agreement.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein and in the Agreement, the receipt and legal
sufficiency of which are hereby acknowledged, and for the purpose of amending
the Agreement, Premier and BHC hereby agree as follows:
1. That Exhibit "5" to the Agreement is hereby deleted in its
-----------
entirety and a new Exhibit "5", which exhibit is attached hereto and
-----------
incorporated herein, shall be inserted in lieu thereof.
Except as specifically amended herein the Agreement shall remain in
full force and effect.
The parties further agree that this Fifth Amendment may be signed in any
number of counterparts and delivery of such counterparts may be effected by a
facsimile transmission thereof; and any such facsimile counterpart shall be
deemed to be an original, with the same effect as if the signatures thereto were
upon the same original document.
IN WITNESS WHEREOF, the parties have caused this Fifth 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 and Chief Executive Officer
[CORPORATE SEAL]
Attest: THE BANK HOLDING COMPANY
/s/ Barbara A. Price /s/ Robert H. Smalley, Jr.
- ---------------------------------- ------------------------------------------
Secretary Robert H. Smalley, Jr., Chairman
[CORPORATE SEAL]
31663.0017.6*::ODMA\PCDOCS\DOCS\80136\2
4/8/98
<PAGE>
EXHIBIT 5
---------
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT ("Agreement") is made and entered into effective as of
the day of , 1998 (the "Effective Date"), by and among FIRST
----- ----------------
COMMUNITY BANK OF HENRY COUNTY ("Employer"), PREMIER BANCSHARES, INC. ("Holding
Company"), and CHARLES B. BLACKMON ("Employee").
WITNESSETH:
WHEREAS, Employer is a wholly owned subsidiary of Holding Company;
WHEREAS, the Board of Directors of Employer considers the
establishment and maintenance of highly competent and skilled management
personnel for Employer to be essential to protecting and enhancing the best
interests of Employer;
WHEREAS, the Board of Directors of Employer is desirous of inducing
Employee to remain in the employ of Employer, subject to the terms and
conditions hereof;
WHEREAS, Employee is desirous of remaining in the employ of Employer,
subject to the terms and conditions hereof;
WHEREAS, Holding Company has joined in this Agreement for the sole
purposes of making provision for Employee's employment upon the merger of
Employer into a wholly owned subsidiary of Holding Company referred to in
paragraph 2 of this Agreement, granting the stock options referred to in
paragraph 4(b) of this Agreement, transferring the title to the automobiles
referred to in paragraph 4(c) of this Agreement, and becoming the beneficiary of
the provisions found in paragraphs 8, 9 and 11 of this Agreement;
WHEREAS, Employee acknowledges that at no time within two years of the
initiation of the business combination of Holding Company and The Bank Holding
Company, a Georgia bank holding company ("BHC"), and at no time subsequent to
the initiation of said business combination and prior to the consummation of
said business combination, was he irrevocably granted, issued, or awarded by
Holding Company or BHC any options to purchase any shares of stock in Holding
Company or BHC, nor was he irrevocably granted, issued or awarded by Holding
Company or BHC any right or entitlement in or to any options to purchase any
shares of stock in Holding Company or BHC; and
<PAGE>
WHEREAS, the parties agree that the provisions of this Agreement shall
control with respect to the rights and obligations of the parties resulting from
the employment of Employee by Employer;
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Definitions. The following terms used in this Agreement shall have
-----------
the following meanings:
(a) "Base Salary" shall mean the annual compensation (excluding
Incentive Compensation as defined in (c) of this paragraph and other
benefits) payable or paid to Employee pursuant to paragraph 4(a) of this
Agreement.
(b) "Event of Termination" shall mean the termination by Employer of
Employee's employment under this Agreement by written notice delivered to
Employee for any reason other than Termination for Cause as defined in (d)
-----
of this paragraph.
(c) "Incentive Compensation" shall mean that compensation payable or
paid to Employee pursuant to paragraph 4(b) of this Agreement.
(d) "Termination for Cause" shall have the meaning provided in
paragraph 6(a) of this Agreement.
2. Employment. Employer agrees to continue Employee in its employ, and
----------
Employee agrees to remain in the employ of Employer, as President of Employer,
for the period stated in paragraph 3(a) hereof and upon the other terms and
conditions provided herein; provided that, in the event that Holding Company
causes Employer to merge with and into one of its other wholly-owned
subsidiaries, then Employee shall serve as the President of the Henry County
division thereof and the obligations of Employer under this Agreement shall be
assumed by such subsidiary. Employee agrees to perform faithfully such services
as are reasonably consistent with his position and shall from time to time be
assigned to him by the Board of Directors of Employer, or an individual
designated by such Board, in a trustworthy and businesslike manner for the
purpose of advancing the interests of Employer. The Board of Directors of
Employer may also from time to time change Employee's position or alter his
duties and responsibilities and assign a new position or new duties
-2-
<PAGE>
and responsibilities that are similar in scope and nature to Employee's existing
position, duties and responsibilities without invalidating this Agreement or
effecting the termination of Employee. At all times, Employee shall manage and
conduct the business of Employer in accordance with the policies established by
the Board of Directors of Employer, and in compliance with applicable
regulations promulgated by governing regulatory agencies. Responsibility for the
supervision of Employee shall rest with the Board of Directors of Employer, or
an individual designated by such Board, which or who, as applicable, shall
review Employee's performance at least annually. The Board of Directors of
Employer shall also have the authority to terminate Employee, subject to the
provisions outlined in paragraph 6 of this Agreement.
3. Term and Duties.
---------------
(a) Term of Employment. This Agreement and the period of Employee's
------------------
employment under this Agreement shall be deemed to have commenced as of the
Effective Date and shall continue for a period of twenty-four (24) full
--
calendar months thereafter, unless earlier terminated pursuant to this
Agreement or unless Employee dies before the end of such twenty-four (24)
--
months, in which case the period of employment shall be deemed to continue
until the end of the month of such death. On each anniversary of the
Effective Date, this Agreement and Employee's Term of Employment shall be
extended for an additional twelve (12) month period; provided that the
--
Board of Directors of Employer determines that the performance of Employee
has met said Boards' requirements and standards and, further, that this
Agreement shall be extended.
(b) Performance of Duties. During the period of employment hereunder,
---------------------
except for periods of illness, disability, reasonable vacation periods, and
reasonable leaves of absence, Employee shall devote substantially all of
his business time, attention, skill, and efforts to the faithful
performance of his duties hereunder. Employee shall be entitled to
reasonable participation as a member in community, civic, or similar
organizations and the pursuit of personal investments which do not present
any material conflict of interest with Employer, or otherwise unfavorably
affect the performance of Employee's duties pursuant to this Agreement.
-3-
<PAGE>
(c) Office of Employee. The office of Employee shall be located in
------------------
McDonough, Georgia, or at such other location within the State of Georgia
as Employer may from time to time designate; provided, however, that, in
the event such relocation required Employee to move his principal
residence, Employer shall reimburse Employee for all his reasonable moving
expenses.
(d) No Other Agreement. The Employee shall have no employment
------------------
contract or other written or oral agreement concerning employment with any
entity or person other than Employer or Holding Company during the term of
his employment under this Agreement.
(e) Uniqueness of Employee's Services. Employee hereby represents
---------------------------------
that the services to be performed by him under the terms of this Agreement
are of a special, unique, unusual, extraordinary, and intellectual
character which gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages and in an action at law.
Accordingly, Employee expressly agrees that Employer, in addition to any
rights or remedies which Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent the breach of this
Agreement by Employee.
4. Compensation.
------------
(a) Salary. Subject to the provisions of paragraph 7 hereof,
------
Employers shall pay Employee, as compensation for serving as President of
Employers, an initial Base Salary of $140,000.00; such initial Base
-----------
Salary, or any increased Base Salary, shall be payable in substantially
equal installments in accordance with the Employers' normal pay practices,
but not less frequently than monthly. The Board of Directors of Employer,
if warranted in its discretion, may increase Employee's Base Salary to
reflect Employee's performance.
(b) Incentive Compensation.
----------------------
(i) During the Term of Employment, Employee shall participate in
any incentive bonus plans maintained by Employer its executive
officers. It is contemplated that an annual incentive bonus plan will
be maintained by Employer which will establish individual performance
goals for Employee each and every fiscal year during the Term of
Employment. The payment to Employee of any Incentive Compensation as
aforesaid shall be made by Employer in accordance with
-4-
<PAGE>
the policy or policies established by the Board of Directors of
Employer or any committee designated thereby. During the Term of
Employment, Employee shall receive a minimum Total Compensation of
$215,000.00, annually. "Employee's Total Compensation" shall
-----------
be equal to the sum of Employee's Base Salary plus any incentive bonus
paid to Employee under this paragraph 4(b)(i).
(ii) In recognition of the services to be provided by Employee to
Employer and as an incentive for Employee to remain in the employ of
Employer, Holding Company shall grant to Employee on the later of the
Effective Date of this Agreement or July 1, 1998, a non-qualified
option to purchase 10,000 shares of Holding Company common stock at an
exercise price of fifteen dollars ($15.00) per share; provided that
said options shall vest and may be exercised by Employee on the
earlier to occur of: (i) six (6) months from the Effective Date of
this Agreement, provided Employee continues in the employ of Employer
pursuant to the terms of this Agreement, or (ii) termination by
Employer of Employee's employment hereunder other than as a result of
a Termination for Cause pursuant to paragraph 6(a) of this Agreement.
(iii) In recognition of the services to be provided by Employee
to Employer and as an incentive for Employee to remain in the employ
of Employer, Holding Company shall grant to Employee on the later of
the Effective Date of this Agreement or July 1, 1998, an option to
purchase 3,000 shares of Holding Company common stock at an exercise
price equal to the average closing price of Holding Company Common
Stock during the ten (10) consecutive trading days immediately prior
to the Closing of the merger of The Bank Holding Company with and into
Premier Bancshares, Inc. (the "Merger"), as reported by the American
Stock Exchange.
(iv) In recognition of the services to be provided by Employee to
Employer and as an incentive for Employee to remain in the employ of
Employer, Holding Company shall grant to Employee in January 1999 an
option to purchase
-5-
<PAGE>
3,000 shares of Holding Company common stock at an exercise price
equal to the average closing price of Holding Company Common Stock
during the ten (10) consecutive trading days immediately prior to the
Closing of the merger of The Bank Holding Company with and into
Premier Bancshares, Inc. (the "Merger"), as reported by the American
Stock Exchange.
(v) As further incentive for Employee to remain in the employ of
Employer, Holding Company shall grant to Employee on the first (1st)
anniversary of the Effective Date of this Agreement a non-qualified
option to purchase 10,000 shares of Holding Company common stock at an
exercise price equal to sixty-five percent (65%) of the average
closing price of Holding Company Common Stock during the ten (10)
consecutive trading days immediately prior to the first (1st)
anniversary of the Effective Date of this Agreement, as reported by
the American Stock Exchange.
(vi) As further incentive for Employee to remain in the employ of
Employer, Holding Company shall grant to Employee on the second (2nd)
anniversary of the Effective Date of this Agreement a non-qualified
option to purchase 10,000 shares of Holding Company common stock at an
exercise price equal to eighty-five percent (85%) of the average
closing price of Holding Company Common Stock during the ten (10)
consecutive trading days immediately prior to the second (2nd)
anniversary of the Effective Date of this Agreement, as reported by
the American Stock Exchange.
(vii) Notwithstanding anything contained in this Agreement to the
contrary, any increase to Employee's Total Compensation and other
Incentive Compensation shall be (i) in compliance with regulations,
bulletins, pronouncements, directives, or orders issued or promulgated
by any governing regulatory agency and with any agreements by and
between Employer and such regulatory agencies, (ii) consistent with
the safe and sound operation of Employer, (iii) closely monitored by
the Board of Directors of Employer and (iv) comparable to such
compensation paid to persons
-6-
<PAGE>
of similar responsibilities and duties in other insured institutions
of similar size, in similar locations, and under similar circumstances
including financial condition and profitability.
(viii) As an incentive for Employee's assistance in the extra
effort needed to close a merger, Employer will, if the conditions set
forth below are met, pay to Employee in cash within thirty (30) days
of the Effective Date of this Agreement, a lump-sum bonus upon
completion the Merger, based on the following schedule: $25,000.00, if
---------
the Merger is closed on or before June 30, 1998; $20,000.00, if the
---------
Merger is closed after June 30, 1998, and before August 1, 1998; or
$15,000.00 if the Merger is closed after July 31, 1998, and before
----------
September 1, 1998.
(c) Automobile Allowance.
--------------------
(i) Holding Company shall, on the Effective Date of this
Agreement, cause to be transferred to Employee the title to that
certain 1990 Buick owned by The Bank of Spalding County.
(ii) Employer shall, on the Effective Date of this Agreement,
transfer to Employee the title to that certain 1996 Buick owned by
Employer, for and in consideration of a payment to Employer by
Employee equal to the fair market value of said vehicle at the
Effective Date hereof.
(iii) Employer shall provide Employee with an automobile
allowance of $800 per month.
---
(d) "Golden Parachute" Provision. Notwithstanding anything contained
----------------------------
in this Agreement to the contrary, any payments made to Employee pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. (S) 1828(k) and any regulations promulgated
thereunder.
5. Participation in Benefit Plans. The payments provided in paragraph 4
------------------------------
and 6 hereof are in addition to any benefits to which Employee may be, or may
become, entitled to, under any group hospitalization, health, dental care, or
sick leave plan; life insurance or death benefit plan; travel or accident
insurance; pension or retirement plan; stock option or ownership plan; or other
present or future group employee benefit plan or program for which senior
executive officers of
-7-
<PAGE>
Employer shall be or shall become eligible. Said benefits shall include, without
limitation, major medical/dental insurance for Employee and his dependents.
6. Payments to Employee Upon Termination of Employment. The Board of
---------------------------------------------------
Directors of Employer may terminate Employee's employment under this Agreement
at any time; but any termination other than Termination for Cause shall not
prejudice Employee's right to compensation or other benefits under this
Agreement. Employee may voluntarily terminate his employment under this
Agreement. The rights and obligations of Employer and Employee in the event of
such termination are set forth in this paragraph 6 as follows:
(a) Termination for Cause. Employee shall have no right to
---------------------
compensation or other benefits for any period after a Termination for
Cause. Termination for Cause shall be determined by the Board of Directors
of Employer in the reasonable exercise of its discretion and acting in good
faith, and shall include termination because of Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duties
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses), or a final cease-and-desist order, the
regulatory suspension or removal of Employee as defined in paragraphs 7(a)
and (b) hereof, the termination of this Agreement under paragraphs 7(c) and
(d) hereof, the failure of Employee to follow reasonable written
instructions of the Board of Directors of Employer, or a material breach of
Employee of any provision of this Agreement. Termination for Cause by
Employer shall be determined by, and shall occur only upon the passage of a
resolution by a vote of not less than a two-thirds of Employer's Board of
Directors specifying Employee's Termination for Cause and the grounds
therefor, after reasonable notice to Employee and an opportunity for him to
be heard before a meeting of the Board of Directors called in accordance
with the By-Laws of Employer. Thereafter, Employee shall be deemed to be
in material breach of this Agreement and shall have no right to receive
compensation or other benefits under this Agreement for any period
following such Termination for Cause. This provision on Termination for
Cause shall control over any and all other provisions relating to discharge
or termination for cause contained in any and all other agreements between
Employer and Employee.
-8-
<PAGE>
(b) Event of Termination. Upon the occurrence of an Event of
--------------------
Termination, Employer shall pay to Employee, or in the event of his
subsequent death, to his designated beneficiary or beneficiaries, or to his
estate, as the case may be, as liquidated damages, in lieu of all other
claims, a severance payment equal to the remaining portion of Employee's
then current Base Salary pro-rated from the date of said Event of
Termination to the expiration of the then current term of this Agreement as
stated in paragraph 3(a) of this Agreement, to be paid in full on the last
day of the month following the date of said Event of Termination.
(c) Voluntary Termination of Employment. Employee shall have no right
-----------------------------------
to compensation or other benefits under this Agreement for any period
following the voluntary termination of Employee's employment by Employee,
except as provided in paragraph 6(b) hereof.
7. Regulatory Suspension.
---------------------
(a) If Employee is suspended and/or temporarily prohibited from
participating in the conduct of the affairs of Employer by a notice served
under Sections 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. (S) 1818(e)(3) or (g)(1), the obligations of Employer under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, Employer may in its discretion (i) pay Employee all or part of
the compensation withheld while its contract obligations were suspended and
(ii) reinstate in whole or in part any of its obligations which were
suspended.
(b) If Employee is removed and/or permanently prohibited from
participating in the conduct of the affairs of Employer by an order issued
under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. (S) 1818(e)(4) or (g)(1), all obligations of Employer under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the parties hereto shall not be affected.
(c) If Employer is in "default" as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect
any vested rights of the parties hereto.
-9-
<PAGE>
(d) All obligations under this Agreement shall be terminated, except
to the extent that it may be determined by any state or federal regulatory
agency or body having authority over Employer that continuation of this
Agreement is necessary for the continued operation of Employer, at any time
the Federal Deposit Insurance Corporation (the "FDIC") enters into an
agreement to provide assistance to or on behalf of Employer under the
authority contained in Section 13(c) of the Federal Deposit Insurance Act,
at any time the FDIC approves a supervisory merger to resolve problems
related to the operation of Employer, or when Employer is determined by the
Georgia Department of Banking and Finance, the Board of Governors of the
Federal Reserve System (or the Federal Reserve Bank of Atlanta acting
pursuant to delegated authority), or the FDIC to be in an unsafe and
unsound condition. Any rights of the parties hereto that have already
vested, however, shall not be affected by such action.
8. Covenants Against Competition and Solicitation. Employee acknowledges
----------------------------------------------
that he has performed services and/or will perform services hereunder that
directly affect Employer's business presently conducted (among other areas)
within the limits of Henry County and Spalding County in the State of Georgia.
Accordingly, the parties deem it necessary to enter into the protective
covenants set forth below, the terms and conditions of which have been
negotiated by and between the parties hereto.
(a) For the period of Employee's employment with Employer and for a
period of six (6) months following the termination of such employment, for
whatever reason, Employee covenants and agrees that he shall not within the
limits of Henry County and Spalding County, Georgia, compete with Employer
or Holding Company by performing banking services that require performance
of duties substantially identical to those performed on behalf of Employer
by Employee, to-wit, as a member of management, supervisor, or executive
employee for any bank, bank holding company, or other financial institution
or financial services company that is a competitor of Employer or Holding
Company.
(b) For the period of Employee's employment with Employer and for a
period of six (6) months following the termination of such employment, for
whatever reason, Employee shall not: (i) for himself or any other party,
solicit, directly or indirectly, any
-10-
<PAGE>
clients or prospective clients of Employer with whom he personally had
business contact on Employer's behalf at any time during the last twenty-
four (24) months he worked at Employer to do any business with another
bank, bank holding company, or other financial institution or financial
services company in competition with Employer or Holding Company; and (ii)
employ or attempt to employ or assist in employing any employee of Employer
or Holding Company for the purpose of having such employee perform services
for any bank, bank holding company, or other financial institution or
financial services company in competition with the business of Employer or
Holding Company.
9. Nondisclosure of Confidential Information. Employee acknowledges that
-----------------------------------------
he possesses confidential information of a special and unique nature and value
affecting and relating to both Employer's and the Holding Company's business,
including, without limitation, the identity of the customers, deposits, business
records, other trade secrets, and other similar confidential information
relating to Employer and/or the Holding Company and the business of each (all
the foregoing being hereinafter collectively referred to as "Confidential
Information"). Employee recognizes and acknowledges that all Confidential
Information is the exclusive property of Employer and/or the Holding Company
respectively, constitutes trade secrets of Employer and/or the Holding Company,
is material and confidential, and greatly affects the goodwill and the effective
and successful conduct of the business of Employer and/or the Holding Company.
As a material inducement to Employer to enter into this Agreement and to employ
Employee, Employee covenants and agrees that he will not at any time during the
term of his employment under this Agreement, and for a period of one (1) year
-
from the end of such employment, directly or indirectly, divulge, reveal, or
communicate any Confidential Information to any person, firm, corporation, or
entity whatsoever, or use any Confidential Information for his own benefit or
for the benefit of others. Employee further acknowledges that said Confidential
Information has material commercial value to Employer and/or the Holding Company
so long as it is not known by competitors of Employer and/or the Holding Company
and that both Employer and the Holding Company have taken reasonable steps to
keep all such information and trade secrets confidential.
10. Source of Payments. All payments provided in paragraphs 4 and 6
------------------
hereof, except for the stock options described in paragraph 4(b) hereof, shall
be paid in cash from the general funds
-11-
<PAGE>
of Employer and/or the Holding Company as provided herein, and no special or
separate fund shall be established by Employer and/or the Holding Company, and
no other segregation of assets shall be made to assure payment. Employee shall
have no right, title, or interest in or to any investments which Employer and/or
the Holding Company may make to meet its obligations hereunder.
11. Injunctions. In view of the irreparable harm and damage which
-----------
Employer and/or the Holding Company would sustain as a result of a breach by
Employee of the covenants or agreements under paragraphs 8 and 9 hereof, and in
view of the lack of an adequate remedy at law to protect the interests of
Employer and/or the Holding Company, Employer and/or the Holding Company shall
have the right to receive, and Employee hereby consents to the issuance of, a
permanent injunction of six (6) months in duration with respect to paragraph
8(a) hereof and one (1) year in duration with respect to paragraph 8(b) and
-
paragraph 9 hereof enjoining Employee from any violation of the covenants and
agreements set forth in paragraphs 8 and 9 hereof. The foregoing remedy shall
be in addition to, and not in limitation of, any other rights or remedies to
which Employer and/or the Holding Company is or may be entitled at law or in
equity respecting this Agreement.
12. Attorneys' Fees. In the event any party hereto is required to engage
---------------
in legal action against any other party hereto, either as plaintiff or
defendant, in order to enforce or defend any of its or his rights under this
Agreement, and such action results in a final judgment in favor of one or more
parties, then the party or parties against whom said final judgment is obtained
shall reimburse the prevailing party or parties for all legal fees and expenses
incurred by the prevailing party or parties in asserting or defending its or his
rights hereunder.
13. Federal Income Tax Withholding. Employer and/or Holding Company may
------------------------------
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
14. Effect of Prior Agreements. This Agreement contains the entire
--------------------------
understanding between the parties hereto and supersedes any prior employment
agreement and any contemporaneous oral agreement or understanding by, between,
or among Employer, Holding Company, and Employee.
15. General Provisions.
------------------
-12-
<PAGE>
(a) Nonassignability. Neither this Agreement nor any right or
----------------
interest hereunder shall be assignable by Employee, his beneficiaries or
legal representatives, without the written consent of Employer; provided,
however, that nothing in this paragraph 15(a) shall preclude (i) Employee
from designating a beneficiary to receive any benefits payable hereunder
upon his death, or (ii) the executors, administrators, or other legal
representatives of Employee or his estate from assigning any rights
hereunder to the person or persons entitled thereto. Employer may assign
its obligations under this Agreement to any wholly-owned subsidiary of
Holding Company into which it is merged or consolidated.
(b) No Attachment. Except as required by law, no right to receive
-------------
payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation, or to execution, attachment, levy, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void,
and of no effect.
(c) Binding Agreement. This Agreement shall be binding upon, and
-----------------
inure to the benefit of, Holding Company, Employer, and Employee and their
respective heirs, successors, assigns, and legal representatives.
16. Modification and Waiver.
-----------------------
(a) Amendment of Agreement. This Agreement may not be modified or
----------------------
amended except by an instrument in writing, signed by the parties hereto,
and which specifically refers to this Agreement.
(b) Waiver. No term or condition of this Agreement shall be deemed to
------
have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the
party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each
waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or
as to any act other than that specifically waived.
17. Severability. If for any reason any provision of this Agreement is
------------
held invalid, such invalidity shall not affect any other provision of this
Agreement not held invalid, and each such other
-13-
<PAGE>
provision shall to the full extent consistent with law continue in full force
and effect. If any provision of this Agreement shall be held invalid in part,
such invalidity shall in no way affect the rest of such provision not held so
invalid, and the rest of such provision, together with all other provisions of
this Agreement, shall to the full extent consistent with law continue in full
force and effect.
18. Headings. The headings of paragraphs herein are included solely for
--------
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. Governing Law. This Agreement has been executed and delivered in the
-------------
State of Georgia, and its validity, interpretation, performance, and enforcement
shall be governed by the laws of said State.
20. Rights of Third Parties. Nothing herein expressed or implied is
-----------------------
intended to or shall be construed to confer upon or give to any person, firm, or
other entity, other than the parties hereto and their permitted assigns, any
rights or remedies under or by reason of this Agreement.
21. Notices. All notices, requests, demands, and other communications
-------
provided for by this Agreement shall be in writing and shall be sufficiently
given if and when mailed in the United States by registered or certified mail,
or personally delivered, to the party entitled thereto at the address stated
below or to such changed address as the addressee may have given by a similar
notice:
To Employer: Chairman of the Board
First Community Bank of Henry County
12 North Cedar Street
McDonough, Georgia 30253
Copied to: Chairman of the Board
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
-and-
-14-
<PAGE>
Steven S. Dunlevie, Esq.
Womble Carlyle Sandridge & Rice, PLLC
Suite 700
1275 Peachtree Street
Atlanta, Georgia 30309
To Employee: Mr. Charles B. Blackmon
12 North Cedar Street
McDonough, Georgia 30253
IN WITNESS WHEREOF, Employer and Holding Company have caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officers, and Employee has signed this Agreement, as of the Effective
Date.
ATTEST: FIRST COMMUNITY BANK OF HENRY COUNTY
By:
- ---------------------- -------------------------------------
Secretary
(CORPORATE SEAL)
ATTEST: PREMIER BANCSHARES, INC.
By:
- ---------------------------- -------------------------------------
Barbara J. Burtt, Secretary Darrell D. Pittard, Chairman and Chief
Executive Officer
(CORPORATE SEAL)
- ---------------------- -----------------------------------(SEAL)
Witness CHARLES B. BLACKMON
31663.0017.6*::ODMA\PCDOCS\DOCS\68680\9
Rev. April 8, 1998
-15-
<PAGE>
APPENDIX C
, 1998
Board of Directors
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, GA 30326
Dear Members of the Board:
You have asked us to advise you with respect to the fairness to the
shareholders of Premier Bancshares, Inc. ("Premier"), from a financial point
of view, of the exchange ratio (the "Exchange Ratio") provided for in the
Agreement and Plan of Reorganization (the "Merger Agreement") dated as of
February 5, 1998 between Premier and Button Gwinnett Financial Corporation
("Button"). The Merger Agreement provides for a merger (the "Merger") of
Premier and Button pursuant to which the common shareholders of Button will
receive 3.8850 Premier common shares for every common share of Button held.
Termination rights to the Merger are available to both Button and Premier,
respectively, as fully described in the Merger Agreement, if the trading price
of Premier common stock for a defined period prior to the effective date of
the Merger has either a) declined below $13.594 per share or b) has increased
to $25.246 per share. An upward adjustment to the Exchange Ratio would occur
if the trading price of Premier common stock for this defined period prior to
the effective date of the Merger has a) declined below $17.478 per share and
b) the decline since February 9, 1998 exceeds by more than 5% the decline in
value for a group of comparable bank holding companies over the same period.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to Premier and Button. We have
also reviewed certain other information, including financial forecasts and
budgets, provided to us by Premier and Button and have discussed the business
and prospects of Premier and Button with their respective managements.
We have also considered certain financial and stock market data of Premier
and have compared that data with similar data for other publicly held bank
holding companies. Additionally, we have considered the financial terms of
certain other comparable transactions which have recently been effected. We
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant. In connection with our review, we have not independently verified
any of the foregoing information and have relied on its being complete and
accurate in all material respects. With respect to the financial forecasts and
budgets, we have assumed that each has been reasonably prepared on bases
reflecting the best currently available estimates and judgments of Premier's
and Button's managements as to the future financial performance of Premier and
Button. We have not made an independent evaluation or appraisal of the Board
of Directors assets of Premier or Button. We have assumed that the aggregate
allowances for loan losses for both Premier and Button are adequate to cover
such losses.
It should be noted that this opinion is based on market conditions and other
circumstances existing on the date hereof and this opinion does not represent
our view as to what the value of the Premier common shares necessarily will be
when those shares are issued to the stockholders of Button upon consummation
of the Merger.
We have acted as financial advisor to Premier in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger.
C-1
<PAGE>
We agree to the inclusion of this opinion letter in the Proxy
Statement/Prospectus relating to the Merger. The opinion may not, however, be
summarized, excerpted from or otherwise publicly referred to without our prior
written consent.
Based upon and subject to the foregoing, it is our opinion that as of the
date hereof, the Exchange Ratio of the Merger is fair to the common
shareholders of Premier from a financial point of view.
Very truly yours,
Brown, Burke Capital Partners, Inc.
C-2
<PAGE>
APPENDIX D
, 1998
Board of Directors
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, GA 30326
Dear Members of the Board:
You have asked us to advise you with respect to the fairness to the
shareholders of Premier Bancshares, Inc. ("Premier"), from a financial point
of view, of the exchange ratio (the "Exchange Ratio") provided for in the
Agreement and Plan of Reorganization (the "Merger Agreement") dated as of
December 3, 1997, and as amended on December 18, 1997, December 23, 1997,
December 31, 1997 and January 15, 1998, between Premier and The Bank Holding
Company ("Bank Holding"). The Merger Agreement provides for a merger (the
"Merger") of Premier and Bank Holding pursuant to which the common
shareholders of Bank Holding will receive 3.90 Premier common shares for every
common share of Bank Holding held.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to Premier and Bank Holding. We
have also reviewed certain other information, including financial forecasts
and budgets, provided to us by Premier and Bank Holding, and have discussed
the business and prospects of Premier and Bank Holding with respective
managements.
We have also considered certain financial and stock market data of Premier
and have compared that data with similar data for other publicly held bank
holding companies. Additionally, we have considered the financial terms of
certain other comparable transactions which have recently been effected. We
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant. In connection with our review, we have not independently verified
any of the foregoing information and have relied on its being complete and
accurate in all material respects. With respect to the financial forecasts and
budgets, we have assumed that each has been reasonably prepared on bases
reflecting the best currently available estimates and judgments of Premier's
and Bank Holding's managements as to the future financial performance of
Premier and Bank Holding. We have not made an independent evaluation or
appraisal of the assets of Premier or Bank Holding. We have assumed that the
aggregate allowances for loan losses for both Premier and Bank Holding are
adequate to cover such losses.
It should be noted that this opinion is based on market conditions and other
circumstances existing on the date hereof and this opinion does not represent
our view as to what the value of the Premier common shares necessarily will be
when those shares are issued to the stockholders of Bank Holding upon
consummation of the Merger.
We have acted as financial advisor to Premier in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger.
We agree to the inclusion of this opinion letter in the Proxy
Statement/Prospectus relating to the Merger. The opinion may not, however, be
summarized, excerpted from or otherwise publicly referred to without our prior
written consent.
D-1
<PAGE>
Based upon and subject to the foregoing, it is our opinion that as of the
date hereof, the Exchange Ratio of the Merger is fair to the common
shareholders of Premier from a financial point of view.
Very truly yours,
Brown, Burke Capital Partners, Inc.
D-2
<PAGE>
APPENDIX E
, 1998
Board of Directors
Button Gwinnett Financial Corporation
150 South Perry Street
Lawrenceville, Georgia 30045
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, of the aggregate consideration to be received by the unaffiliated
shareholders of Button Gwinnett Financial Corporation ("Button Gwinnett")
under the terms of a certain proposed Agreement and Plan of Reorganization
dated as of February 5, 1998 (the "Agreement") by and between Button Gwinnett
and Premier Bancshares, Inc. ("Premier") pursuant to which Button Gwinnett
will merge with and into Premier (the "Merger"). Under the terms of the
Agreement, each of the outstanding shares of Button Gwinnett common stock
shall be converted into the right to receive 3.885 shares of Premier common
stock, subject to adjustment. The foregoing summary of the Merger is qualified
in its entirety by reference to the Agreement.
The Carson Medlin Company is a National Association of Securities Dealers,
Inc. (NASD) member investment banking firm which specializes in the securities
of southeastern United States financial institutions. As part of our
investment banking activities, we are regularly engaged in the valuation of
southeastern United States financial institutions and transactions relating to
their securities. We regularly publish our research on independent community
banks regarding their financial and stock price performance. We are familiar
with the commercial banking industry in Georgia and the Southeast and the
major commercial banks operating in that market. We have been retained by
Button Gwinnett in a financial advisory capacity to render our opinion
hereunder, for which we will receive compensation.
In reaching our opinion, we have analyzed the respective financial
positions, both current and historical, of Button Gwinnett and Premier. We
have reviewed: (i) the Agreement and Plan of Reorganization dated as of
February 5, 1998; (ii) the annual reports to shareholders of Button Gwinnett,
including audited financial statements for the five years ended December 31,
1996; (iii) the audited financial statements of Button Gwinnett for the year
ended December 31, 1997; (iv) the Proxy Statements of Button Gwinnett dated
April 2, 1997 for the annual meeting of shareholders held on April 21, 1997;
(v) the Consolidated Report of Condition and Income of The Bank of Gwinnett
County as of December 31, 1997; (vi) the Uniform Bank Performance Report for
The Bank of Gwinnett County as of September 30, 1997; (vii) the annual report
to shareholders of Premier, including audited financial statements for the
year ended December 31, 1996; (viii) the annual report on Form 10-K of Premier
for the year ended December 31, 1996; (ix) a draft of the annual report to
shareholders of Premier, including audited financial statements for the year
ended December 31, 1997; (x) unaudited pro forma combined financial statements
for Premier, Lanier Bank & Trust Company and The Bank Holding Company as of
December 31, 1997 prepared by Brown, Burke Capital Partners, Inc.; (xi) the
Consolidated Report of Condition and Income of Lanier Bank & Trust Company as
of December 31, 1997; (xii) the Consolidated Report of Condition and Income of
The Bank of Spalding County as of December 31, 1997; (xiii) the Consolidated
Report of Condition and Income of First Community Bank of Henry County as of
December 31, 1997; (xiv) a preliminary copy of the Joint Proxy
Statement/Prospectus prepared for meetings of the shareholders of Button
Gwinnett and Premier to consider the Merger; and (xv) certain other financial
and operating information with respect to the business, operations and
prospects of Button Gwinnett and Premier. We also: (i) held discussions with
members of the senior management of Button Gwinnett and had discussions with
the management of Premier regarding its historical and current business
operations, financial condition and future prospects; (ii) reviewed the
historical market prices and trading activity for the common stocks of Button
Gwinnett and Premier and compared them with those of certain publicly traded
companies which we deemed to be relevant; (iii) compared the results of
operations of Button Gwinnett and Premier with those of certain banking
companies
<PAGE>
which we deemed to be relevant; (iv) compared the proposed financial terms of
the Merger with the financial terms, to the extent publicly available, of
certain other recent business combinations of commercial banking and thrift
organizations; (v) analyzed the pro forma financial impact of the Merger on
Premier; and (vi) conducted such other studies, analyses, inquiries and
examinations as we deemed appropriate.
We have relied upon and assumed, without independent verification, the
accuracy and completeness of all information provided to us. We have not
performed or considered any independent appraisal or evaluation of the assets
of Button Gwinnett or Premier. The opinion we express herein is necessarily
based upon market, economic and other relevant considerations as they exist
and can be evaluated as of the date of this letter.
Based upon the foregoing, it is our opinion that the aggregate consideration
provided for in the Agreement is fair, from a financial point of view, to the
unaffiliated shareholders of Button Gwinnett Financial Corporation.
Very truly yours,
THE CARSON MEDLIN COMPANY
<PAGE>
APPENDIX F
SECTION 7-1-537 OF THE FINANCIAL INSTITUIONS CODE OF GEORGIA
(S) 7-1-537 - RIGHTS OF DISSENTING SHAREHOLDERS; SURRENDER OF CERTIFICATES
(a) A shareholder of a bank or trust company which is a party to a plan of
proposed merger or consolidation under this part who objects to the plan shall
be entitled to the rights and remedies of a dissenting shareholder as determined
under Chapter 2 of Title 14, known as the "Georgia Business Corporation Code."
(b) The bank or trust company into which the other or others have been merged or
consolidated, as the case may be, shall have the right to require the return of
the original certificates of stock held by each shareholder in each or either of
the institutions and in lieu thereof:
(1) To issue to each shareholder new certificates for such number of shares
of the institution into which the others shall have been merged or
consolidated; or
(2) To cause to be paid or delivered to each shareholder the amount of cash
or securities of any other corporation or combination of cash and such
securities as, under the plan of merger or consolidation, the said shareholder
may be entitled to receive.
CHAPTER 2 OF TITLE 14 OF THE GEORGIA BUSINESS CORPORATION CODE
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
(S) 14-2-1301. DEFINITIONS.
As used in this article, the term:
a. "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
b. "Corporate Action" means the transaction or other action by the
corporation that creates dissenters' rights under the Code Section 14-2-1302.
c. "Corporation" means the issuer of shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
d. "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Code Section 14-2-1302 and who exercises that right when
and in the manner required by Code Sections 14-2-1320 through 14-2-1327.
e. "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
<PAGE>
f. "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable under all
the circumstances.
g. "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
h. "Shareholder" means the record shareholder or the beneficial
shareholder.
(S) 14-2-1302. RIGHT TO DISSENT.
a. A record shareholder of the corporation is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is
required for the merger by Code Section 14-2-1103 or the articles of
incorporation and the shareholder is entitled to vote on the merger;
or
(B) If the corporation is a subsidiary that is merged with its
parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the
sale or exchange pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
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(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be
acquired for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with the procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporation action
was obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except shares of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu of fractional
shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
(S) 14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial
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shareholder and notifies the corporation in writing of the name and address of
each person on whose behalf he asserts dissenters' rights. The rights of a
partial dissenter under this Code section are determined as if the shares as to
which he dissents and his other shares were registered in the names of different
shareholders.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
(S) 14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenter's rights under Code Section 14-
2-1302 is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenter's notice described in Code Section 14-2-
1322 no later than ten days after the corporate action was taken.
(S) 14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(2) must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
(S) 14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action created dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must;
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(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the notice required in subsection (a) of this Code section is
delivered; and
(4) Be accompanied by a copy of this article.
(S) 14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his certificates in accordance
with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
(S) 14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
(S) 14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall by notice to each dissenter who complied with Code
Section 14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
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(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within said 30 days, payment for
his or her shares shall be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later.
(S) 14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertified shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
(S) 14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his shares or that the interest
due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or she
notifies the corporation of his
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or her demand in writing under subsection (a) of this Code section within 30
days after the corporation offered payment for his or her shares, as provided in
Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall provide
the information to the shareholder within ten days after receipt of a
written demand for the information; and
(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his own estimate of
the fair value of his shares and the amount of interest due and demand
payment of his estimate of the fair value of his shares and interest due.
PART 3. JUDICIAL APPRAISAL OF SHARES.
(S) 14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding
within the 60-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them or in any amendment to it. Except as
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otherwise provided in this chapter, Chapter 11 of Title 9, known as the "Georgia
Civil Practice Act," applies to any proceeding with respect to dissenters'
rights under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment.
(S) 14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section 14-2-
1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section 14-2-
1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
(S) 14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.
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APPENDIX G
ARTICLES OF AMENDMENT TO
THE ARTICLES OF INCORPORATION OF
PREMIER BANCSHARES, INC.
I.
The name of the corporation is "PREMIER BANCSHARES, INC."
II.
Article 5.a. of the Articles of Incorporation is hereby deleted and
replaced in its entirety with a new Article 5.a. as follows:
The Corporation shall have the authority to issue sixty million
(60,000,000) shares of common stock (the "Common Stock"), $1.00 par value, and
two million (2,000,000) shares of preferred stock (the "Preferred Stock").
III.
The changes made by the Articles of Amendment shall be effective upon
the filing of these Articles of Amendment with the Georgia Secretary of State.
IV.
These amendments were duly approved by the shareholders of the
corporation, upon the recommendation of the board of directors of the
corporation, in accordance with the provisions of Code Section 14-2-1003 of the
Georgia Business Corporation Code.
V.
The remainder of the Articles of Incorporation shall remain unchanged
and in full force and effect.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed by its duly authorized officer on ____________, 1998.
PREMIER BANCSHARES, INC.
By: /s/ Darrell D. Pittard
----------------------------------
Darrell D. Pittard, President
<PAGE>
APPENDIX H
1998 DECLARATION OF AMENDMENT TO
PREMIER BANCSHARES, INC.
1997 STOCK OPTION PLAN
THIS DECLARATION OF AMENDMENT is made on this 14th day of May, 1998, by
PREMIER BANCSHARES, INC. (the "Company"), a corporation duly organized and
existing under the laws of the State of Georgia.
W I T N E S S E T H:
-------------------
WHEREAS, the Company maintains the Premier Bancshares, Inc. 1997 Stock
Option Plan (the "Plan"); and
WHEREAS, the purpose of the Plan is to encourage selected individuals in
the service of the Company to increase their ownership of the common stock of
the Company (the "Common Stock") and thereby to enhance the efficiency,
soundness, profitability and shareholder value of the Company; and
WHEREAS, the Plan as adopted authorized the issuance and sale of up to
750,000 shares; and
WHEREAS, pursuant to a three-for-two stock split declared effective January
23, 1998 by the Company, the Plan now authorizes the issuance and sale of up to
1,250,000 shares; and
WHEREAS, the Company desires to amend the Plan to increase the number of
shares of Common Stock that may be issued and sold pursuant to the Plan from
1,125,000 shares to 2,000,000 shares;
NOW, THEREFORE, the Plan is hereby amended, as follows:
1. By deleting the second sentence of Section 4 of the Plan and inserting
the following sentence in lieu thereof:
"Subject to adjustment as provided in Section 10, the shares of Common
Stock that may be issued and sold pursuant to Options shall not exceed in
the aggregate 2,000,000 shares of authorized but unissued or reacquired
shares of the Common Stock of the Corporation."
Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to this Declaration of Amendment.
IN WITNESS WHEREOF, the Company has caused this Declaration of Amendment to
be executed on the day and year first above written.
PREMIER BANCSHARES, INC.
By:_____________________________
Darrell D. Pittard, Chairman
ATTEST:
___________________________
Barbara Burtt, Secretary
[CORPORATE SEAL]
<PAGE>
APPENDIX I
PREMIER BANCSHARES, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
-------
The purpose of the Premier Bancshares, Inc. Employee Stock Purchase
Plan (the "Plan") is to give eligible employees of Premier Bancshares, Inc., a
Georgia corporation (the "Corporation"), and its Subsidiaries an opportunity to
acquire shares of the common stock of the Corporation (the "Common Stock") and
to continue to promote the Corporation's best interests and enhance its long-
term performance. This purpose will be carried through the granting of options
("options") to purchase shares of the Corporation's Common Stock through payroll
deductions or other means permitted under the Plan. The Plan is intended to
comply with the requirements of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"), applicable to employee stock purchase plans. The
provisions of the Plan shall be construed so as to comply with the requirements
of Section 423 of the Code.
2. CERTAIN DEFINITIONS
-------------------
In addition to terms defined elsewhere in the Plan, the following
words and phrases shall have the meanings given below unless a different meaning
is required by the context:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Compensation Committee of the Board.
(d) "Common Stock" means shares of the common stock of the
Corporation.
(e) "Corporation" means Premier Bancshares, Inc., a Georgia
corporation.
(f) "Eligible Employee" means any employee of the Corporation or a
Subsidiary except for (i) any employee whose customary employment is less
than 20 hours per week, or (ii) any employee whose customary employment is
for not more than five months in any calendar year. For purposes of the
Plan, the employment relationship shall be treated as continuing intact
while the individual is on sick leave or other leave of absence approved by
the Corporation; provided that, where the period of leave exceeds 90 days
and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave.
(g) "Fair Market Value" of the Common Stock as of the applicable Offer
Date shall be determined in good faith by the Committee in accordance with
the following provisions:
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(i) if the shares of Common Stock are listed for trading on the
American Stock Exchange or the New York Stock Exchange, the Fair
Market Value shall be the closing sales price of the shares on the
American Stock Exchange or the New York Stock Exchange (as applicable)
on the date immediately preceding the date the option is granted, or,
if there is no transaction on such date, then on the trading date
nearest preceding the date the option is granted for which closing
price information is available, and, provided further, if the shares
are quoted on the Nasdaq National Market or the Nasdaq SmallCap Market
of the Nasdaq Stock Market but are not listed for trading on the
American Stock Exchange or the New York Stock Exchange, the Fair
Market Value shall be the closing sales price for such stock (or the
closing bid if no sales were reported) as quoted on such system on the
date immediately preceding the date the option is granted for which
such information is available; or
(ii) if the shares of Common Stock are not listed or reported in
any of the foregoing, then Fair Market Value shall be determined by
the Committee in any other manner consistent with the Code and
accompanying regulations.
Notwithstanding any provision of the Plan to the contrary, no determination
made with respect to the Fair Market Value of Common Stock subject to an
option shall be inconsistent with Section 423 of the Code or regulations
thereunder.
(h) "Offer Date" means the date of grant of an option pursuant to the
Plan. The Offer Date shall be the first date of each Purchase Period,
commencing with the Purchase Period that commences on July 1, 1998.
(i) "Option" means an option granted hereunder which will entitle a
participant to purchase shares of Common Stock in accordance with the terms
of the Plan.
(j) "Option Price" means the price per share of Common Stock subject
to an option, as determined in accordance with Section 8(b).
(k) "Participant" means an Eligible Employee who is a participant in
the Plan.
(l) "Plan" means the Premier Bancshares, Inc. Employee Stock Purchase
Plan, as it may be hereafter amended.
(m) "Purchase Date" means the date of exercise of an option granted
under the Plan. The Purchase Date shall be the last day of each Purchase
Period, commencing with the Purchase Period that terminates on December 31,
1998.
(n) "Purchase Period" means each six-month period during which an
offering to purchase Common Stock is made to Eligible Employees pursuant to
the Plan. There shall be two Purchase Periods in each fiscal year of the
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Corporation, with the first Purchase Period in a fiscal year commencing on
January 1 and ending on June 30, and the second Purchase Period in a fiscal
year commencing on July 1 and ending on December 31 of that year.
Notwithstanding the foregoing, the first Purchase Period after the
effective date of the Plan shall begin on July 1, 1998 and end on December
31, 1998. The Committee shall have the power to change the duration of
Purchase Periods (including the commencement date thereof) with respect to
future offerings without shareholder approval if such change is announced
at least five (5) days prior to the scheduled beginning of the first
Purchase Period to be affected thereafter.
(o) "Subsidiary" means any present or future corporation which (i)
would be a "subsidiary corporation" of the Corporation as that term is
defined in Section 424 of the Code and (ii) is at any time designated as a
corporation whose employees may participate in the Plan.
3. EFFECTIVE DATE
--------------
The Effective Date of the Plan shall be May 15, 1998. The first
Purchase Period during which offers to purchase Common Stock will be made shall
commence on July 1, 1998. The Plan shall have a term of 10 years unless sooner
terminated in accordance with Section 16 herein.
4. ADMINISTRATION
--------------
(a) The Plan shall be administered by the Board or, upon its
delegation, by the Committee. References to the Committee shall include
the Board if it is acting in its administrative capacity with respect to
the Plan.
(b) Any action of the Committee may be taken by a written instrument
signed by all of the members of the Committee and any action so taken by
written consent shall be as fully effective as if it had been taken by a
majority of the members at a meeting duly held and called. Subject to the
provisions of the Plan, the Committee shall have full and final authority,
in its discretion, to take any action with respect to the Plan, including,
without limitation, the following: (i) to establish, amend and rescind
rules and regulations for the administration of the Plan; (ii) to prescribe
the form(s) of any agreements or other written instruments used in
connection with the Plan; (iii) to determine the terms and provisions of
the options granted hereunder; and (iv) to construe and interpret the Plan,
the options, the rules and regulations, and the agreements or other written
instruments, and to make all other determinations necessary or advisable
for the administration of the Plan. The determinations of the Committee on
all matters regarding the Plan shall be conclusive. The Committee may
appoint one or more agents to assist in the administration of the Plan.
5. SHARES SUBJECT TO PLAN
----------------------
The aggregate number of shares of Common Stock which may be purchased
under the Plan shall not exceed 2,000,000 shares, subject to adjustment pursuant
to Section 13 herein. Shares of Common Stock granted pursuant to the Plan shall
3
<PAGE>
be authorized but unissued shares, treasury shares or shares purchased on the
open market. The Corporation hereby reserves sufficient authorized shares of
Common Stock to provide for the exercise of options granted hereunder. In the
event that any option granted under the Plan expires unexercised or is
terminated, surrendered or canceled without being exercised, in whole or in
part, for any reason, the number of shares of Common Stock subject to such
option shall again be available for grant as an option and shall not reduce the
aggregate number of shares of Common Stock available for the grant of options as
set forth herein. If, on a given Purchase Date, the number of shares with
respect to which options are to be exercised exceeds the number of shares then
available under the Plan, the Corporation shall make a pro rata allocation of
the shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.
6. ELIGIBILITY
-----------
(a) Initial Eligibility. Any Eligible Employee who shall have
-------------------
completed 90 days' employment and shall be employed by the Corporation on
any given Offer Date for a Purchase Period shall be eligible to be a
participant during such Purchase Period.
(b) Certain Limitations. Any provisions of the Plan to the contrary
-------------------
notwithstanding:
(i) No Eligible Employee shall be granted an option under the
Plan to the extent that, immediately after the option was granted, the
individual would own stock or hold outstanding options to purchase
stock (or both) possessing 5% or more of the total combined voting
power or value of all classes of stock of the Corporation or of any
parent or subsidiary of the Corporation. For purposes of this Section
6(b)(i), stock ownership of an individual shall be determined under
the rules of Section 424(d) of the Code, and stock which the employee
may purchase under outstanding options shall be treated as stock owned
by the employee.
(ii) No Eligible Employee shall be granted an option under the
Plan to the extent that his rights to purchase stock under all
employee stock purchase plans (as defined in Section 423 of the Code)
of the Corporation and any parent or subsidiary of the Corporation
would accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time of the grant of such option) for
each calendar year in which such option is outstanding at any time.
Any option granted under the Plan shall be deemed to be modified to
the extent necessary to satisfy this Section 6(b)(ii).
7. PARTICIPATION; PAYROLL DEDUCTIONS
---------------------------------
(a) Commencement of Participation. An Eligible Employee shall become
-----------------------------
a participant by completing a subscription agreement authorizing payroll
deductions on the form provided by the Corporation and filing it with the
Corporation prior to the Offer Date for the applicable Purchase Period.
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<PAGE>
Following the filing of a valid subscription agreement, payroll deductions
for a participant shall commence on the first payroll period which occurs
on or after the Offer Date for the applicable Purchase Period and shall
continue for successive Purchase Periods during which the participant is
eligible to participate in the Plan, unless withdrawn as provided in
Section 10 or Section 11 herein.
(b) Amount of Payroll Deduction; Determination of Compensation. At
----------------------------------------------------------
the time a participant files his subscription agreement authorizing payroll
deductions, he shall elect to have payroll deductions made on each payday
that he is a participant during a Purchase Period at a rate of not less
than 1% nor more than 10% of his compensation. For the purposes herein, a
participant's "compensation" during any Purchase Period means his gross
salary (including commissions, bonuses and incentive compensation, but
excluding severance pay, employee benefits and similar non-cash elements of
compensation) determined as of the date of each payroll deduction. Such
compensation rates shall be determined by the Committee in a
nondiscriminatory manner consistent with the provision of Section 423 of
the Code and the regulations thereunder.
(c) Participant's Account. All payroll deductions made for a
---------------------
participant shall be credited to his account under the Plan and shall be
withheld in whole percentages only.
(d) Changes in Payroll Deductions. A participant may discontinue his
-----------------------------
participation in the Plan as provided in Section 10, but no other change
may be made during a Purchase Period and, specifically, a participant may
not alter the amount of his payroll deductions for that Purchase Period.
(e) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 6(b) herein, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during
a Purchase Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of
the first Purchase Period which is scheduled to end in the following
calendar year, unless terminated by the participant pursuant to Section 10
herein.
(f) Participation During Leave of Absence. If a participant goes on a
-------------------------------------
leave of absence, such participant shall have the right to elect (i) to
withdraw the balance in his account pursuant to Section 10 or (ii) to
discontinue contributions to the Plan but remain a participant in the Plan.
(g) Other Methods of Participation. The Committee may, in its
------------------------------
discretion, establish additional procedures whereby Eligible Employees may
participate in the Plan by means other than payroll deduction, including,
but not limited to, delivery of funds by participants in a lump sum or
automatic charges to participants' bank accounts. Such other methods of
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<PAGE>
participation shall be subject to such rules and conditions as the
Committee may establish. The Committee may at any time amend, suspend or
terminate any participation procedures established pursuant to this Section
7(g) without prior notice to any participant or Eligible Employee.
8. GRANT OF OPTIONS
----------------
(a) Number of Option Shares. On the Offer Date of each Purchase
-----------------------
Period, a participant shall be granted an option to purchase on the
Purchase Date of such Purchase Period (at the applicable option price) such
number of shares of Common Stock as is determined by dividing the amount of
the participant's payroll deductions accumulated on the Purchase Date and
retained in the participant's account as of the Purchase Date by the
applicable option price (as determined in accordance with Section 8(b)
herein); provided that such purchase shall be subject to the limitations
set forth in Section 6(b) herein. Exercise of the option shall occur as
provided in Section 9 herein, unless the participant has withdrawn pursuant
to Section 10 herein or terminated employment pursuant to Section 11
herein.
(b) Option Price. The option price per share of Common Stock
------------
purchased with payroll deductions made during such a Purchase Period for a
participant shall be the lesser of:
(i) 90% of the Fair Market Value of a share of the Common Stock
on the Offer Date for the Purchase Period; or
(ii) 90% of the Fair Market Value of a share of the Common Stock
on the Purchase Date for the Purchase Period.
9. EXERCISE OF OPTIONS
-------------------
(a) Automatic Exercise. Unless a participant gives written notice of
------------------
withdrawal to the Corporation as provided in Section 10 or terminates
employment as provided in Section 11, his option for the purchase of Common
Stock shall be exercised automatically on the Purchase Date applicable to
such Purchase Period, and the maximum number of whole shares of Common
Stock subject to the option shall be purchased for the participant at the
applicable option price with the accumulated payroll deductions in his
account at that time (subject to the limitations set forth in Section 6(b)
herein).
(b) Termination of Option. An option granted during any Purchase
---------------------
Period shall expire on the last day of the Purchase Period, except as
otherwise provided in Sections 10 and 11.
(c) Fractional Shares. Fractional shares will not be issued under the
-----------------
Plan. Any excess payroll deductions in a participant's account which are
not sufficient to purchase a whole share will be automatically re-invested
6
<PAGE>
in a subsequent Purchase Period unless the participant withdraws his
payroll deductions pursuant to Section 10 herein or terminates employment
pursuant to Section 11 herein.
(d) Delivery of Stock. The shares of Common Stock purchased by each
-----------------
participant shall be credited to such participant's account as of the close
of business on the Purchase Date for a Purchase Period. A participant will
be issued a certificate for his shares when his participation in the Plan
is terminated, the Plan is terminated, or upon request (but in the last
case only in denominations of at least 50 shares. After the close of each
Purchase Period, a report will be sent to each participant stating the
entries made to such participant's account, the number of shares of Common
Stock purchased and the applicable option price.
10. WITHDRAWAL.
----------
A participant may withdraw all but not less than all payroll
deductions and share certificates credited to his account during a Purchase
Period at any time prior to the applicable Purchase Date by giving written
notice to the Corporation in form acceptable to the Corporation. In the event
of such withdrawal, (i) all of the participant's payroll deductions credited to
his account will be paid to him promptly (without interest) after receipt of his
notice of withdrawal, (ii) certificates for shares held in the participant's
account shall be distributed to him, (iii) such participant's option for the
Purchase Period shall be automatically terminated, and (iv) no further payroll
deductions will be made during such Purchase Period. The Corporation may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election to withdraw. A participant's
withdrawal from any Purchase Period will not have any effect upon his
eligibility to participate in any succeeding Purchase Period or in any similar
plan which may hereafter be adopted by the Corporation. Notwithstanding the
foregoing, however, if a participant withdraws during a Purchase Period, payroll
deductions shall not resume at the beginning of a succeeding Purchase Period
unless the participant delivers to the Corporation a new subscription agreement
and otherwise complies with the terms of the Plan.
11. TERMINATION OF EMPLOYMENT.
-------------------------
Upon termination of a participant's employment for any reason
(including death), or in the event that a participant ceases to be an Eligible
Employee, he shall be deemed to have withdrawn from the Plan. In such event,
all payroll deductions credited to his account during the Purchase Period
(without interest) but not yet used to exercise an option and a certificate(s)
for shares if shares are held in participant's account rather than distributed
shall be delivered to him, or, in the case of his death, to a beneficiary duly
designated on a form acceptable to the Committee pursuant to Section 17 herein.
Any unexercised options granted to a participant during such Purchase Period
shall be deemed to have expired on the date of the participant's termination of
employment (unless terminated earlier pursuant to Sections 9(b) or 10 herein),
and no further payroll deductions will be made for the individual's account.
7
<PAGE>
12. TRANSFERABILITY
---------------
Neither payroll deductions credited to a participant's account nor any
option (or rights attendant to an option) granted pursuant to the Plan may be
transferred, assigned, pledged, or hypothecated (whether by operation of law or
otherwise), except as provided by will or the applicable laws of descent or
distribution. No option shall be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an option, or levy of attachment or similar process upon the
option not specifically permitted herein, shall be null and void and without
effect, except that the Corporation may treat such act as an election to
withdraw funds during a Purchase Period in accordance with Section 10 hereof.
During a participant's lifetime, his option(s) may be exercised only by him.
13. DILUTION AND OTHER ADJUSTMENTS
------------------------------
(a) General. If there is any change in the outstanding shares of
-------
Common Stock of the Corporation as a result of a merger, consolidation,
reorganization, stock dividend, stock split distributable in shares, or
other change in the capital stock structure of the Corporation, the
Committee shall make such adjustments to options (including but not limited
to the option price and the number of shares of Common Stock covered by
each unexercised option), to the number of shares reserved for issuance
under the Plan, and to any provisions of this Plan as the Committee deems
equitable to prevent dilution or enlargement of options or otherwise
advisable to reflect such change.
(b) Merger or Asset Sale. In the event of a proposed sale of all or
--------------------
substantially all of the assets of the Corporation, or the merger of the
Corporation with or into another corporation, each outstanding option shall
be assumed or an equivalent option substituted (in either case under terms
substantially similar to the terms of the Plan) by the successor
corporation or a parent or subsidiary of the successor corporation. In the
event that the successor corporation fails to agree to assume or substitute
the option, the Purchase Period then in progress shall be shortened by
setting a new Purchase Date (the "New Purchase Date") and the Purchase
Period then in progress shall end on the New Purchase Date. The New
Purchase Date shall be before the date of the Corporation's proposed sale
or merger. The Corporation shall notify each participant in writing, at
least ten (10) business days prior to the New Purchase Date, that the
Purchase Date for the participant's option has been changed to the New
Purchase Date and that the participant's option shall be exercised
automatically on the New Purchase Date, unless prior to such date the
participant has withdrawn from the Purchase Period as provided in Section
10 hereof.
14. SHAREHOLDER APPROVAL OF ADOPTION OF PLAN
----------------------------------------
The Plan is subject to the approval of the Plan by the holders of a
majority of the outstanding shares of Common Stock of the Corporation within 12
months of the date of adoption of the Plan by the Board. The Plan shall be null
and void and of no effect if the foregoing condition is not fulfilled.
8
<PAGE>
15. LIMITATIONS ON OPTIONS
----------------------
Notwithstanding any other provisions of the Plan:
(a) The Corporation intends that options granted and Common Stock
issued under the Plan shall be treated for all purposes as granted and
issued under an employee stock purchase plan within the meaning of Section
423 of the Code and regulations issued thereunder. Any provisions required
to be included in the Plan under Section 423 and regulations issued
thereunder are hereby included as fully as though set forth in the Plan.
(b) All employees shall have the same rights and privileges under the
Plan, except that the amount of Common Stock which may be purchased by any
employee under options granted pursuant to the Plan shall bear a uniform
relationship to the compensation of employees. All rules and
determinations of the Committee in the administration of the Plan shall be
uniformly and consistently applied to all persons in similar circumstances.
16. AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
The Board may at any time and from time to time modify, amend, suspend
or terminate the Plan or any option granted hereunder, except that (i)
shareholder approval shall be required of any amendment to the extent required
under Section 423 of the Code or other applicable law or rule; and (ii) no
amendment may materially and adversely affect any option outstanding at the time
of the amendment without the consent of the holder thereof. The Plan shall
terminate in any event when the maximum number of shares of Common Stock to be
sold under the Plan (as provided in Section 5) has been purchased. Upon
termination of the Plan, certificate(s) for the full number of whole shares of
Common Stock held for each participant's benefit, the cash equivalent of any
fractional shares held for each participant and the cash, if any, credited to
such participant's account shall be distributed promptly to such participant.
17. DESIGNATION OF BENEFICIARY
--------------------------
The Committee, in its sole discretion, may authorize participants to
designate a person or persons as each such participant's beneficiary, which
beneficiary shall be entitled to the rights of the participant in the event of
the participant's death to which the participant would otherwise be entitled.
The Committee shall have sole discretion to approve the form or forms of such
beneficiary designations, to determine whether such beneficiary designations
will be accepted, and to interpret such beneficiary designations.
18. LEGAL AND OTHER REQUIREMENTS
----------------------------
The obligations of the Corporation to issue, deliver and transfer
shares of Common Stock subject to the Plan shall be subject to all applicable
laws, regulations, rules and approvals, including, but not by way of limitation,
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, if deemed necessary or appropriate by the Corporation. Certificates
9
<PAGE>
for shares of Common Stock issued hereunder may be legended as the Corporation
shall deem appropriate.
19. INTEREST
--------
No interest shall accrue on the payroll deductions of a participant in
the Plan.
20. NO OBLIGATION TO EXERCISE OPTIONS
---------------------------------
The granting of an option shall impose no obligation upon a
participant to exercise such option.
21. USE OF FUNDS
------------
The proceeds received by the Corporation from the sale of Common Stock
pursuant to options will be used for general corporate purposes, and the
Corporation shall not be obligated to segregate such payroll deductions.
22. WITHHOLDING TAXES
-----------------
Upon the exercise of any option under the Plan, in whole or in part,
or at the time some or all of the Common Stock is disposed of, a participant
must make adequate provision for the Corporation's federal, state or other tax
withholding obligations, if any, which arise from the exercise of the option or
the disposition of the Common Stock. The Corporation shall have the right to
require the participant to remit to the Corporation, or to withhold from the
participant (or both) an amount sufficient to satisfy all federal, state and
local withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for shares of Common Stock.
23. RIGHT TO TERMINATE EMPLOYMENT.
-----------------------------
Nothing in the Plan or any agreement entered into pursuant to the Plan
shall confer upon an employee the right to continue in the employment of the
Corporation or any Subsidiary or affect any right which the Corporation or any
Subsidiary may have to terminate the employment of such employee.
24. RIGHTS AS A SHAREHOLDER
-----------------------
No participant (or other person) shall have any rights as a
shareholder unless and until certificates for shares of Common Stock are issued
to him or held for his account.
25. NOTICES
-------
All notices or other communications by a participant to the
Corporation under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Corporation at the
location, or by the person, designated by the Corporation for the receipt
thereof.
10
<PAGE>
26. APPLICABLE LAW
--------------
All questions pertaining to the validity, construction and
administration of the Plan and options granted hereunder shall be determined in
conformity with the laws of Georgia, to the extent not inconsistent with Section
423 of the Code and regulations thereunder.
27. ELIMINATION OF FRACTIONAL SHARES
--------------------------------
If under any provision of the Plan which requires a computation of the
number of shares of Common Stock subject to an option, the number so computed is
not a whole number of shares of Common Stock, such number of shares of Common
Stock shall be rounded down to the next whole number.
IN WITNESS WHEREOF, this Premier Bancshares, Inc. Employee Stock
Purchase Plan has been executed in behalf of the Corporation effective as of the
___ day of ___________, 1998.
PREMIER BANCSHARES, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
- -----------------------------------
Name:
------------------------------
Title:
-----------------------------
[Corporate Seal]
11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The provisions of the Georgia Code and the Registrant's Bylaws set forth the
extent to which the Registrant's directors and officers may be indemnified
against liabilities they may incur while serving in such capacities. Under the
Registrant's Bylaws, the Registrant is required to indemnify its officers and
directors against reasonable expenses (including attorneys' fees) incurred by
them in the defense of any action, suit or proceeding to which they were made
a party, or in defense of any claim, issue or matter therein, by reason of the
fact that they are or were officers, directors, employees or agents of the
Registrant, to the extent that they have been successful, on the merits or
otherwise, in such defense. The Registrant's Bylaws also permit
indemnification of its directors and officers against any liability incurred
in connection with any threatened, pending or completed action, suit or
proceeding by reason of the fact that they are or were directors or officers
of the Registrant or who, while directors or officers of the Registrant, are
or were serving at the Registrant's request as directors, officers, partners,
trustees, employees or agents of another entity, if they acted in a manner
they believed in good faith to be in, or not opposed to, the best interests of
the Registrant, or, with respect to any criminal proceeding, had no reasonable
cause to believe their conduct was unlawful, if a determination has been made
that they have met these standards of conduct. Such indemnification in
connection with a proceeding by or in the right of the Registrant, however, is
limited to reasonable expenses, including attorneys' fees, incurred in
connection with the proceeding. The Registrant must also provide advancement
of expenses incurred by any director or officer in defending any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
officer or director to repay such advances unless it is ultimately determined
that he or she is not entitled to indemnification by the Registrant.
The Registrant may not indemnify a director or officer in connection with a
proceeding by or in the right of the Registrant in which the director or
officer was adjudged liable to the Registrant for appropriation of a business
opportunity or payment of unlawful dividends, in connection with a proceeding
in which he or she was adjudged liable on the basis that he or she improperly
received a personal benefit or for intentional misconduct or a knowing
violation of law.
The indemnification provisions of the Georgia Code are essentially identical
to those set forth above, except that the Georgia Code permits, but does not
require, a corporation to advance expenses under the circumstances for such
payments described above.
The Registrant maintains an insurance policy insuring the Registrant and its
directors and officers against certain liabilities, including liabilities
under the Securities Act of 1933.
The Registrant's Articles of Incorporation provide that no director of
Premier shall be personally liable to the Registrant or its shareholders for
monetary damages for a breach of the duty of care or of any other duty as a
director, except in the case of: (i) wrongful appropriation of any business
opportunity of the Registrant; (ii) acts or omissions not in good faith or
involving intentional misconduct or a knowing violation or law; (iii)
liability for unlawful distributions; or (iv) any transaction from which the
director derived an improper personal benefit.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits (See exhibit index immediately preceding the exhibits for the
page number where each exhibit can be found)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated February 5, 1998, between
Premier and Button Gwinnett (included as Appendix A to the Joint Proxy
Statement/Prospectus contained herein).
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 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).
3.3 Amendment to Bylaws of the Registrant (Incorporated by reference as
Exhibit 3.3 from the Registrant's Form 10-K for the fiscal year ended
December 31, 1997).
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).
5.1 Legal opinion of Womble Carlyle Sandridge & Rice, PLLC.
8.1 Tax opinion of Womble Carlyle Sandridge & Rice, PLLC (Button
Gwinnett).
8.2 Tax opinion of Womble Carlyle Sandridge & Rice, PLLC (BHC).
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 Premier's Form 10-K for
the year ended December 31, 1996).
10.2 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 Premier's Form 10-KSB for the fiscal year ended December 31,
1995).
10.3 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
Premier's Form 10-KSB for the fiscal year ended December 31, 1995).
10.4 Employment Agreement dated as of January 1, 1997 by and between
Premier Lending and George S. Phelps (Incorporated by reference as
Exhibit 10.5 to Premier's Form 10-K for the fiscal year ended December
31, 1996).
10.5 Employment Agreement dated as of January 1, 1997 by and between
Premier Lending and Michael W. Lane (Incorporated by reference as
Exhibit 10.5 to Premier'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 and Brian D. Schmitt (Incorporated by reference as
Exhibit 10.6 to Premier's Form 10-K for the fiscal year ended December
31, 1996).
10.7 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 Premier's Form 10-K for
the fiscal year ended December 31, 1996).
10.8 Employment Agreement dated as of June 23, 1997 by and among Premier
Bancshares, Inc., Premier Lending and Darrell D. Pittard (Incorporated
by reference as Exhibit 10.8 to Premier's Form 10-K for the fiscal
year ended December 31, 1996).
10.9 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 Premier's Form 10-K for the fiscal year
ended December 31, 1996).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.10 First Amendment to the Amended and Restated Stock Purchase Agreement
by and between Premier Bancshares, Inc. and Net.B@nk, Inc. dated
February 25, 1997 (Incorporated by reference as Exhibit 10.10 to
Premier's Form 10-K for the fiscal year ended December 31, 1996).
10.11 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 (Incorporated by reference as exhibit 10.12 to Premier's Form
10-Q for the quarter ended June 30, 1997).
10.12 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 Premier's Form 10-K for the fiscal year ended
December 31, 1996).
10.13 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 Premier's Form 10-K for
the fiscal year ended December 31, 1996).
10.14 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 Premier's Form 10-K for
the fiscal year ended December 31, 1996).
10.15 Third Amendment to Purchase and Assumption Agreement by and between
Premier Bank, FSB and First Alliance Bank dated May 31, 1997
(Incorporated by reference as Exhibit 10.16 to Premier's Form 10-Q for
the quarter ended June 30, 1997).
10.16 Premier Bancshares, Inc. 1997 Stock Option Plan (Incorporated by
reference as Exhibit 10.14 to Premier's Form 10-K for the fiscal year
ended December 31, 1996).
10.17 Agreement and Plan of Reorganization, dated February 3, 1997, between
Premier and Central and Southern Holding Company (Incorporated by
reference from the Joint Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement No. 333-24537).
10.18 Amendment to Agreement and Plan of Reorganization dated March 26,
1997, between Premier and Central and Southern Holding Company
(Incorporated by reference from the Joint Proxy Statement/Prospectus
contained in Premier's Form S-4 Registration Statement No. 333-24537).
10.19 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 (Incorporated by reference as Exhibit 10.21 to Premier's Form
10-Q for the quarter ended June 30, 1997).
10.20 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 (Incorporated by reference as Exhibit 10.22 to
Premier's Form 10-Q for the quarter ended June 30, 1997).
10.21 Amended and Restated Premier Bancshares, Inc. Director's Deferred
Stock Unit Plan (Incorporated by reference from Appendix E to the
Joint Proxy Statement/Prospectus contained in Premier's Form S-4
Registration Statement No. 333-36775).
10.22 Agreement and Plan of Reorganization dated June 24, 1997, between
Premier and Citizens Gwinnett (Incorporated by reference from Appendix
A to the Joint Proxy Statement/Prospectus contained in Premier's Form
S-4 Registration Statement No. 333-36775).
10.23 First Amendment to Agreement and Plan of Reorganization dated July 24,
1997, between premier and Citizens Gwinnett (Incorporated by reference
from Appendix A to the Joint Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement No. 333-36775).
10.24 Second Amendment to Agreement and Plan of Reorganization dated
September 15, 1997 between Premier and Citizens Gwinnett (Incorporated
by reference from Appendix A of the Joint Proxy Statement/Prospectus
contained in Premier's Form S-4 Registration Statement No. 333-36775).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.25 Third Amendment to Agreement and Plan of Reorganization dated
September 19, 1997 between Premier and Citizens Gwinnett (Incorporated
by reference from Appendix A of the Joint Proxy Statement/Prospectus
contained in Premier's Form S-4 Registration Statement No. 333-36775).
10.26 Loan and Security Agreement dated June 12, 1997 by and among Premier,
Premier Lending, Alliance Finance, Inc. and The Bankers Bank
(Incorporated by reference from Exhibit 10.27 of the Proxy
Statement/Prospectus contained in Premier's Form S-4 Registration
Statement 333-45601).
10.27 Employment Agreement dated as of December 11, 1990, as amended on
March 11, 1997 and December 12, 1997 by and among Citizens Bank of
Gwinnett and Thomas J. Martin (Incorporated by reference from Exhibit
10.28 of the Proxy Statement/Prospectus contained in Premier's Form S-
4 Registration Statement 333-45601).
10.28 Agreement and Plan of Reorganization dated December 3, 1997 by and
between Premier and The Bank Holding Company (Incorporated by
reference from Exhibit 10.29 of the Proxy Statement/Prospectus
contained in Premier's Form S-4 Registration Statement 333-45601).
10.29 First Amendment to Agreement and Plan of Reorganization dated December
18, 1997 by and between Premier and BHC (Incorporated by reference
from Exhibit 10.30 of the Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement 333-45601).
10.30 Second Amendment to Agreement and Plan of Reorganization dated
December 23, 1997 by and between Premier and BHC (Incorporated by
reference from Exhibit 10.31 of the Proxy Statement/Prospectus
contained in Premier's Form S-4 Registration Statement 333-45601).
10.31 Third Amendment to Agreement and Plan of Reorganization dated December
31, 1997 by and between Premier and BHC (Incorporated by reference
from Exhibit 10.32 of the Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement 333-45601).
10.32 Fourth Amendment to Agreement and Plan of Reorganization dated January
15, 1997 by and between Premier and BHC (Incorporated by reference
from Exhibit 10.33 of the Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement 333-45601).
10.33 Fifth Amendment to Agreement and Plan of Reorganization dated March
16, 1998 by and between Premier and BHC. (Included as Appendix B to
the Joint Proxy Statement/Prospectus contained herein).
10.34 Agreement and Plan of Reorganization dated February 5, 1998, by and
between Premier and Button Gwinnett Financial Corporation
(Incorporated by reference from Exhibit 2.1 to Premier's Form 8-K
dated February 5, 1998).
10.35 Stock Option Plan for the Marketing and Development Board of Gwinnett
County (Incorporated by reference from Exhibit 10.33 to Premier's Form
10-K for the year ended December 31, 1997).
12.1 Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
21.1 Subsidiaries of Premier Bancshares, Inc. (Incorporated by reference
from Exhibit 21.1 of the Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement 333-45601).
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit
5.1, Exhibit 8.1 and Exhibit 8.2)
23.2 Consent of Ernst & Young LLP
23.3 Consent of Mauldin & Jenkins, LLC
23.4 Consent of Mauldin & Jenkins, LLC
23.5 Consent of Mauldin & Jenkins, LLC
23.6 Consent of Brown, Burke Capital Partners, Inc.
23.7 Consent of The Carson Medlin Company
24.1 Power of Attorney (see signature page to the Registration Statement).
27.1 Financial Data Schedule. (Previously filed)
99.1 Proxy Card for Premier Bancshares, Inc.
99.2 Proxy Card for Button Gwinnett Financial Corporation.
99.3 Proxy Card for The Bank Holding Company
</TABLE>
II-4
<PAGE>
(b) Financial Statement Schedules
Schedules are omitted because they are not required or are not applicable,
or the required information is shown in the financial statements or notes
thereto.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of the securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions
(see Item 20), or otherwise, the Registrant has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act of 1933 and
will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF
GEORGIA, ON APRIL , 1998.
PREMIER BANCSHARES, INC.
/s/ Darrell D. Pittard
By: _________________________________
DARRELL D. PITTARD
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears on
the signature pages to this Registration Statement constitutes and appoints
Darrell D. Pittard and Robert C. Oliver, and each of them, his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned and in his or her name, place, and stead,
in any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits hereto and other documents
in connection herewith with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents and each of them, full power and
authority to do so and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ N. Michael Anderson Director April , 1998
_____________________________
N. MICHAEL ANDERSON
/s/ George S. Carpenter Director April , 1998
_____________________________
GEORGE S. CARPENTER
/s/ James L. Coxwell Director April , 1998
_____________________________
JAMES L. COXWELL
/s/ Donald N. Ellis Director April , 1998
_____________________________
DONALD N. ELLIS
/s/ William M. Evans, Jr. Director April , 1998
_____________________________
WILLIAM M. EVANS, JR.
II-6
<PAGE>
SIGNATURE TITLE DATE
/s/ John H. Ferguson Director April , 1998
_____________________________
JOHN H. FERGUSON
/s/ Robert E. Flournoy III Director April , 1998
_____________________________
ROBERT E. FLOURNOY III
/s/ James E. Freeman Director April , 1998
_____________________________
JAMES E. FREEMAN
/s/ A. F. Gandy Director April , 1998
_____________________________
A. F. GANDY
/s/ Robin R. Howell Director April , 1998
_____________________________
ROBIN R. HOWELL
/s/ Billy H. Martin Director April , 1998
_____________________________
BILLY H. MARTIN
/s/ Thomas J. Martin Director April , 1998
_____________________________
THOMAS J. MARTIN
/s/ C. Steve McQuaig Director April , 1998
_____________________________
C. STEVE MCQUAIG
/s/ Robert C. Oliver Director, President April , 1998
_____________________________ and Chief Operating
ROBERT C. OLIVER Officer
/s/ Thomas E. Owen, Jr. Director April , 1998
_____________________________
THOMAS E. OWEN, JR.
/s/ Darrell D. Pittard Chairman and Chief April , 1998
_____________________________ Executive Officer
DARRELL D. PITTARD (principal executive
officer)
/s/ Michael E. Ricketson Chief Financial April , 1998
_____________________________ Officer and
MICHAEL E. RICKETSON Executive Vice
President (principal
financial and
accounting officer)
II-7
<PAGE>
Betty O. Derrick
Direct Dial: (404) 888-7433
Direct Fax: (404) 870-4824
E-mail: [email protected]
EXHIBIT 5.1
April 20, 1998
Board of Directors
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 E. Paces Ferry Road
Atlanta, Georgia 30326
Re: Premier Bancshares, Inc.
Registration Statement on Form S-4 (the "Registration Statement")
8,212,733 Shares of Common Stock
40,770 Shares of Preferred Stock
Ladies and Gentlemen:
We have acted as counsel for Premier Bancshares, Inc. (the "Company") in
connection with the proposed public offering of the shares of its Common Stock
and Preferred Stock covered by the above-described Registration Statement.
In connection therewith, we have examined the following: (i) the
Articles of Incorporation of the Company, certified by the Secretary of State of
the State of Georgia; (ii) the Bylaws of the Company, certified as complete and
correct by the Secretary of the Company; (iii) the minute book of the Company,
certified as correct and complete by the Secretary of the Company; (iv) the
certificate of Good Standing with respect to the Company, issued by the Georgia
Secretary of State; and (v) the Registration Statement (including the exhibits
thereto).
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that:
The 8,212,733 shares of Common Stock and the 40,770 shares of Preferred
Stock covered by the Registration Statement have been legally authorized and
when issued in accordance with the terms described in said Registration
Statement, will be validly issued, fully paid and nonassessable.
<PAGE>
Board of Directors
Premier Bancshares, Inc.
April 20, 1998
Page 2
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Joint Proxy Statement/Prospectus. In giving this consent,
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
A Professional Limited Liability Company
/s/ Womble Carlyle Sandridge & Rice, PLLC
EOD:nmo
<PAGE>
EXHIBIT 8.1
Direct Dial: (404)872-7000
Direct Fax: (404)888-7490
E-mail: wcsr.com
March 20, 1998
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Re: Registration Statement on Form S-4 (the "Registration Statement") with
respect to shares issued pursuant to the Agreement and Plan of
Reorganization by and between Premier Bancshares, Inc. ("Premier") and
Button Gwinnett Financial Corporation ("Button Gwinnett") dated as of
February 5, 1998 (the "Reorganization Agreement")
Ladies and Gentlemen:
We have acted as counsel to Premier in connection with the registration of
6,042,286 shares of its Common Stock, par value $1.00 per share (the "Common
Stock"), issuable pursuant to the Reorganization Agreement, as set forth in the
Registration Statement that is being filed on the date hereof by Premier with
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). This opinion is
provided pursuant to the requirements of Item 21(a) of Form S-4 and Item
601(b)(8) of Regulation S-K. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Reorganization Agreement.
In the Reorganization, Button Gwinnett, a Georgia banking corporation, will
merge into Premier, pursuant to Georgia law, and each outstanding share of
Button Gwinnett Common Stock is to be converted into a number of shares of
Premier Common Stock determined under a formula in the Reorganization Agreement.
Cash will be paid in lieu of issuance of fractional shares. Button Gwinnett
shareholders are entitled by state law to dissent from the Merger.
In giving this opinion we have reviewed, and with your permission we have
relied upon the representations and warranties contained in or the facts
described in, the Reorganization Agreement, the Registration Statement and
certificates dated March 13, 1998, updated until and through the date of
Closing, in which officers of Button Gwinnett and officers of Premier make
certain representations on behalf of Button Gwinnett and Premier regarding the
Merger (the "Tax Certificates"). We also have reviewed such other documents as
we have considered necessary and appropriate for the purposes of this opinion.
In giving this opinion we have with your permission assumed that the
statements in the Tax Certificates are correct as of the date of this opinion
and as of the Effective Time, and any representation or statement made "to the
best of knowledge" or similarly qualified is correct without such qualification.
We have further assumed that any act that the parties have represented that they
have no plan or intent do so or cause will not occur in connection with the
Merger. As to all matters in which a person or entity has represented that such
<PAGE>
Premier Bancshares, Inc.
March 20, 1998
Page 2
person or entity either is not a party to, or does not have, or is not aware of,
any plan or intention, understanding or agreement, we have assumed that there is
in fact no such plan, intention, understanding or agreement. We also assume
that (a) the Merger will be consummated in accordance with the Reorganization
Agreement, and (b) Button Gwinnett's only outstanding stock (as that term is
used in Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code")) is the Button Gwinnett Common Stock.
Based on the foregoing, and subject to the limitations herein, we are of
the opinion that under existing law, upon consummation of the Merger in
accordance with the Reorganization Agreement, for federal income tax purposes:
(1) The Reorganization will constitute a "reorganization" within the
meaning of Section 368 of the Code.
(2) No gain or loss will be recognized by Premier or Button Gwinnett
by reason of the Merger.
(3) No gain or loss will be recognized by the shareholders of Button
Gwinnett upon the receipt of Premier Common Stock (including any
fractional share interest to which they may be entitled) solely
in exchange for their shares of Button Gwinnett Common Stock.
(4) A shareholder of Button Gwinnett who receives cash in lieu of a
fractional share of Premier Common Stock will recognize gain as
if the fractional share has been received and then redeemed for
cash equal to the amount paid by Premier in respect of such
fractional share.
(5) The aggregate tax basis of the shares (including any fractional
share interest) of Premier Common Stock received by shareholders
of Button Gwinnett who exchange all of their Button Gwinnett
Common Stock solely for shares (including any fractional share
interest) of Premier Common Stock in the Reorganization will be
the same as the aggregate tax basis of the shares (including any
fractional share interest) of Button Gwinnett Common Stock
surrendered in exchange therefor.
(6) The holding period of the shares (including any fractional share
interest) of Premier Common Stock received in the Reorganization
will include the period during which the shares (including any
fractional share interest) of Button Gwinnett Common Stock
surrendered in exchange therefor were held, provided such shares
(including any fractional share interest) of Button Gwinnett
Common Stock were held as capital assets at the Effective Time.
<PAGE>
Premier Bancshares, Inc.
March 20, 1998
Page 3
We express no opinion as to the laws of any jurisdiction other than the
United States of America. Further, our opinion is limited to the specific
conclusions set forth above, and no other opinions are expressed or implied.
The opinions stated with respect to shares of Button Gwinnett Common Stock do
not apply to any stock rights, warrants or options to acquire Button Gwinnett
Common Stock and do not apply to stock received in return for services either
directly or through the exercise of options. The opinions stated as to Button
Gwinnett shareholders are general in nature and do not necessarily apply to any
particular Button Gwinnett shareholder, and, for example, may not apply to
shareholders who are corporations, trusts, dealers in securities, financial
institutions, insurance companies or tax exempt organizations; or to persons who
are not United States citizens or resident aliens or domestic entities
(partnerships or trusts), are subject to the alternative minimum tax (to the
extent that tax affects the tax consequences), or are subject to the "golden
parachute" provisions of the Code (to the extent that tax affects the tax
consequences); or to shareholders who acquired Button Gwinnett Common Stock
pursuant to employee stock options or otherwise as compensation if such shares
are subject to any restriction related to employment, who do not hold their
shares as capital assets, or who hold their shares as part of a "straddle" or
"conversion transaction."
This opinion represents our best legal judgment, but it has no binding
effect or official status of any kind. Changes to the Code or in regulations or
rulings thereunder, or changes by the courts in the interpretation of the
authorities relied upon, may be applied retroactively and may affect the
opinions expressed herein. Any material defect in any assumption or
representation on which we have relied would adversely affect our opinion.
We furnish this opinion to you solely to support the discussion set forth
under the headings "SUMMARY--The Merger--Material Federal Income Tax
Consequences," "THE Merger--The Merger Agreement--Conditions to the Merger,"
"THE Merger--Material Federal Income Tax Consequences of the Merger" and "LEGAL
MATTERS" in the Registration Statement, and we do not consent to its use for any
other purpose. We hereby consent to be named in the Registration Statement under
the foregoing heading and to the filing of a copy of this opinion as Exhibit 8.2
to the Registration Statement. In giving this consent, we do not admit that we
are within the category of persons whose consent is required by Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
WOMBLE CARLYLE SANDRIDGE & RICE
A Professional Limited Liability Company
<PAGE>
EXHIBIT 8.2
Direct Dial: (404)872-7000
Direct Fax: (404)888-7490
E-mail: wcsr.com
March 20, 1998
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Re: Registration Statement on Form S-4 (the "Registration Statement") with
respect to shares issued pursuant to the Agreement and Plan of
Reorganization by and between Premier Bancshares, Inc. ("Premier") and
The Bank Holding Company ("BHC") dated as of December 3, 1997 (the
"Reorganization Agreement")
Ladies and Gentlemen:
We have acted as counsel to Premier in connection with the registration of
2,170,447 shares of its Common Stock, par value $1.00 per share (the "Common
Stock") and 40,770 shares of its Preferred Stock (the "Preferred Stock"),
issuable pursuant to the Reorganization Agreement, as set forth in the
Registration Statement that is being filed on the date hereof by Premier with
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). This opinion is
provided pursuant to the requirements of Item 21(a) of Form S-4 and Item
601(b)(8) of Regulation S-K. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Reorganization Agreement.
In the Reorganization, BHC, a Georgia banking corporation, will merge into
Premier, pursuant to Georgia law, and each outstanding share of BHC Common Stock
is to be converted into a number of shares of Premier Common Stock determined
under a formula in the Reorganization Agreement and each share of BHC Preferred
Stock will be converted into one share of Premier Preferred Stock. Cash will be
paid in lieu of issuance of fractional shares. BHC shareholders are entitled by
state law to dissent from the Merger.
In giving this opinion we have reviewed, and with your permission we have
relied upon the representations and warranties contained in or the facts
described in, the Reorganization Agreement, the Registration Statement and
certificates dated March 13, 1998, updated until and through the date of
Closing, in which officers of BHC and officers of Premier make certain
representations on behalf of BHC and Premier regarding the Merger (the "Tax
Certificates"). We also have reviewed such other documents as we have considered
necessary and appropriate for the purposes of this opinion.
In giving this opinion we have with your permission assumed that the
statements in the Tax Certificates are correct as of the date of this opinion
and as of the Effective Time, and any representation or statement made "to the
<PAGE>
Premier Bancshares, Inc.
March 20, 1998
Page 2
best of knowledge" or similarly qualified is correct without such qualification.
As to all matters in which a person or entity has represented that such person
or entity either is not a party to, or does not have, or is not aware of, any
plan or intention, understanding or agreement, we have assumed that there is in
fact no such plan, intention, understanding or agreement. We also assume that
(a) the Merger will be consummated in accordance with the Reorganization
Agreement, and (b) BHC's only outstanding stock (as that term is used in Section
368 of the Internal Revenue Code of 1986, as amended (the "Code")) is the BHC
Common Stock.
Based on the foregoing, and subject to the limitations herein, we are of
the opinion that under existing law, upon consummation of the Merger in
accordance with the Reorganization Agreement, for federal income tax purposes:
(1) The Reorganization will constitute a "reorganization" within the
meaning of Section 368 of the Code.
(2) No gain or loss will be recognized by Premier or BHC by reason of
the Merger.
(3) No gain or loss will be recognized by the shareholders of BHC
upon the receipt of Premier Common Stock solely in exchange for
their shares of BHC Common Stock.
(4) A shareholder of BHC who receives cash in lieu of a fractional
share of Premier Common Stock will recognize gain as if the
fractional share has been received and then redeemed for cash
equal to the amount paid by Premier in respect of such fractional
share.
(5) The aggregate tax basis of the shares (including any fractional
share interest) of Premier Common Stock received by shareholders
of BHC who exchange all of their BHC Common Stock solely for
shares of Premier Common Stock in the Reorganization will be the
same as the aggregate tax basis of the shares of BHC Common Stock
surrendered in exchange therefor.
(6) The holding period of the shares (including any fractional share
interest) of Premier Common Stock received in the Reorganization
will include the period during which the shares (including any
fractional share interest) of BHC Common Stock surrendered in
exchange therefor were held, provided such shares (including any
fractional share interest) of BHC Common Stock were held as
capital assets at the Effective Time.
<PAGE>
Premiere Bancshares, Inc.
March 20, 1998
Page 3
(7) No gain or loss will be recognized by the shareholders of BHC
upon the receipt of Premier Preferred Stock solely in exchange
for their shares of BHC Preferred Stock, assuming the BHC
Preferred Stock is "nonqualified preferred stock", as defined in
Section 351(g)(2) of the Internal Revenue Code of 1986, as
amended. Section 354(a)(2)(C)(i), which was added by the Taxpayer
Relief Act of 1997, provides that nonqualified preferred stock
received for stock other than nonqualified preferred stock shall
be treated as a taxable transaction. The Premier Preferred Stock
is nonqualified preferred stock, as such term is defined in
Section 351(g)(2). Applying the principles of Section 351(g)(2),
the BHC Preferred Stock meets the definition of nonqualified
preferred stock, subject to the fact that it was created prior to
the effective date of the Taxpayer Relief Act of 1997. Assuming
that the IRS takes the position that preferred stock created
prior to effective date of the 1997 Tax Act can constitute
nonqualified preferred stock, then the BHC Preferred Stock
surrendered for the Premier Preferred Stock shall constitute a
nonqualified preferred stock for nonqualified preferred stock
exchange and therefore should not result in gain or loss to the
BHC Preferred Shareholders. However, if the IRS takes a contrary
position, the BHC Preferred Shareholders will recognize gain, if
any, upon the receipt of the Premier Preferred Stock solely in
exchange for their BHC Preferred Stock. The gain, if any, shall
equal the difference between the fair value of the Premier
Preferred Stock received less the shareholder's adjusted basis in
the BHC Preferred Stock surrendered. The character of the gain as
ordinary or capital will be determined as provided in IRC Section
356(b).
(8) Assuming the BHC Preferred Stock is treated as nonqualified
preferred stock, the aggregate tax basis of the shares (including
any fractional share interest) of Premier Preferred Stock
received by Shareholders of BHC who exchange all of their BHC
Preferred Stock solely for shares Premier Preferred Stock in the
reorganization will be the same as the aggregate tax basis of the
shares (including any fractional share interest) of BHC Preferred
Stock surrendered in exchange therefor.
(9) Assuming the BHC Preferred Stock is treated as nonqualified
preferred stock, the holding period of the shares (including any
fractional share interest) of Premier Preferred Stock received in
the reorganization will include the period during which the
shares (including any fractional share interest) of BHC Preferred
Stock surrendered in exchange therefore were held, provided such
shares (including any fractional share interest) of BHC Preferred
Stock were held as capital assets at the Effective Time.
<PAGE>
Premier Bancshares, Inc.
March 20, 1998
Page 4
We express no opinion as to the laws of any jurisdiction other than the
United States of America. Further, our opinion is limited to the specific
conclusions set forth above, and no other opinions are expressed or implied.
The opinions stated with respect to shares of BHC Common Stock do not apply to
any stock rights, warrants or options to acquire BHC Common Stock. The opinions
stated as to BHC shareholders are general in nature and do not necessarily apply
to any particular BHC shareholder, and, for example, may not apply to
shareholders who are corporations, trusts, dealers in securities, financial
institutions, insurance companies or tax exempt organizations; or to persons who
are not United States citizens or resident aliens or domestic entities
(partnerships or trusts), are subject to the alternative minimum tax (to the
extent that tax affects the tax consequences), or are subject to the "golden
parachute" provisions of the Code (to the extent that tax affects the tax
consequences); or to shareholders who acquired BHC Common Stock pursuant to
employee stock options or otherwise as compensation if such shares are subject
to any restriction related to employment, who do not hold their shares as
capital assets, or who hold their shares as part of a "straddle" or "conversion
transaction."
This opinion represents our best legal judgment, but it has no binding
effect or official status of any kind. Changes to the Code or in regulations or
rulings thereunder, or changes by the courts in the interpretation of the
authorities relied upon, may be applied retroactively and may affect the
opinions expressed herein. Any material defect in any assumption or
representation on which we have relied would adversely affect our opinion.
We furnish this opinion to you solely to support the discussion set forth
under the headings "SUMMARY--The Merger--Material Federal Income Tax
Consequences," "THE Merger--The Merger Agreement--Conditions to the Merger,"
"THE Merger--Material Federal Income Tax Consequences of the Merger" and "LEGAL
MATTERS" in the Registration Statement, and we do not consent to its use for any
other purpose. We hereby consent to be named in the Registration Statement under
the foregoing heading and to the filing of a copy of this opinion as Exhibit 8.2
to the Registration Statement. In giving this consent, we do not admit that we
are within the category of persons whose consent is required by Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
WOMBLE CARLYLE SANDRIDGE & RICE
A Professional Limited Liability Company
<PAGE>
EXHIBIT 12.1
PREMIER BANCSHARES, INC.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------
PRO FORMA
1993 1994 1995 1996 1997 1997
------- ------- ------- ------- ------- ---------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Excluding interest on depos-
its:
Earnings:
Earnings before income tax-
es........................ $ 887 $ 4,473 $ 7,741 $ 9,199 $16,612 $16,612
Fixed charges from below... 356 724 2,361 2,951 3,776 4,066
------- ------- ------- ------- ------- -------
Earnings before fixed
charges and preferred
stock dividends........... 1,243 5,197 10,102 12,150 20,388 20,678
======= ======= ======= ======= ======= =======
Fixed charges and preferred
stock dividends:
Non-deposit interest ex-
pense..................... 342 710 2,334 2,776 3,140 3,140
Interest portion of rent
expense................... 14 14 27 175 636 636
Preferred stock dividends.. -- -- -- -- -- 290
------- ------- ------- ------- ------- -------
Fixed charges and preferred
stock dividends before
deposit interest.......... 356 724 2,361 2,951 3,776 4,066
======= ======= ======= ======= ======= =======
Ratio of earnings to combined
fixed charges and preferred
stock dividends............ 3.49x 7.18x 4.28x 4.12x 5.40x 5.09x
======= ======= ======= ======= ======= =======
Including interest on
deposits:
Earnings:
Earnings before income tax-
es........................ $ 887 $ 4,473 $ 7,741 $ 9,199 $16,612 $16,612
Fixed charges from below... 17,385 15,101 19,901 25,518 30,674 30,964
------- ------- ------- ------- ------- -------
Earnings before fixed
charges and preferred
stock dividends........... 18,272 19,574 27,642 34,717 47,286 47,576
======= ======= ======= ======= ======= =======
Fixed charges and preferred
stock dividends:
Interest on deposits....... 17,029 14,377 17,540 22,567 26,898 26,898
Non-deposit interest ex-
pense..................... 342 710 2,334 2,776 3,140 3,140
Interest portion of rent
expense................... 14 14 27 175 636 636
Preferred stock dividends.. -- -- -- -- -- 290
------- ------- ------- ------- ------- -------
Fixed charges and preferred
stock dividends before de-
posit interest............ 17,385 15,101 19,901 25,518 30,674 30,964
======= ======= ======= ======= ======= =======
Ratio of earnings to combined
fixed charges and preferred
stock dividends............ 1.05x 1.30x 1.39x 1.36x 1.54x 1.54x
======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 5, 1998, incorporated by reference in the Joint
Proxy Statement/Prospectus of Premier Bancshares, Inc. that is made a part of
the Registration Statement (Form S-4 No. 333-00000) of Premier Bancshares, Inc.
for the registration of 8,212,733 shares of its common stock and 40,770 shares
of its preferred stock, with respect to the consolidated financial statements of
Premier Bancshares, Inc. and Subsidiaries included in its Annual Report (Form
10-K) for the year ended December 31, 1997, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Atlanta, Georgia
April 17, 1998
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the April 20,
1998 Registration Statement on Form S-4 of our report, dated January 31, 1997,
except for Note 2 as to which the date is June 23, 1997 and December 12, 1997,
relating to the consolidated financial statements of Premier Bancshares, Inc.
and subsidiaries, contained in the annual report on Form 10-K for the year ended
December 31, 1997.
/s/ Mauldin & Jenkins, LLC
----------------------------
Atlanta, Georgia
April 20, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Joint Proxy Statement and
Registration Statement of our report, dated January 14, 1998, except for Note 14
as to which date is February 5, 1998, relating to the consolidated financial
statements of Button Gwinnett Financial Corporation and subsidiary, and to the
reference to our Firm under the caption "Experts" in the Prospectus.
MAULDIN & JENKINS, LLC
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
April 20, 1998
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Joint Proxy Statement and
Registration Statement of our report, dated January 29, 1998, relating to the
consolidated financial statements of The Bank Holding Company, Inc. and
subsidiaries, and to the reference to our Firm under the caption "Experts" in
the Prospectus.
MAULDIN & JENKINS, LLC
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
April 20, 1998
<PAGE>
EXHIBIT 23.6
CONSENT OF FINANCIAL ADVISOR
April 20, 1998
We hereby consent to the use of our Fairness Opinion addressed to the
Board of Directors of Premier Bancshares, Inc. which is to be used in the Form
S-4 Registration Statement and the Prospectus/Proxy Statement forming a part of
this Form S-4 Registration Statement and to all references to our firm in such
Prospectus/Proxy Statement. In giving such consent, we do not hereby admit that
we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Brown, Burke Capital Partners, Inc.
/s/ Brown, Burke Capital Partners, Inc.
<PAGE>
EXHIBIT 23.7
CONSENT OF FINANCIAL ADVISOR
April 20, 1998
We hereby consent to the use of our Fairness Opinion addressed to the
Board of Directors of Button Gwinnett Financial Corporation which is to be used
in the Form S-4 Registration Statement and the Prospectus/Proxy Statement
forming a part of this Form S-4 Registration Statement and to all references to
our firm in such Prospectus/Proxy Statement. In giving such consent, we do not
hereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
The Carson Medlin Company
/s/ The Carson Medlin Company
<PAGE>
EXHIBIT 99.1
PREMIER BANCSHARES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders and Proxy Statement and does hereby appoint Darrell D.
Pittard and Robert C. Oliver and either of them with full power of
substitution, as proxies of the undersigned to represent the undersigned and
to vote all shares of PREMIER BANCSHARES, INC. ("Premier") common stock which
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders of Premier, to be held at Swissotel Altanta, 3391
Peachtree Road, N.E., Atlanta, Georgia 30326, at 10:00 o'clock a.m. local
time, on May 28, 1998, and at any adjournment thereof.
PROPOSAL 1
Proposal to: approve the Agreement and Plan of Reorganization, dated as of
February 5, 1998 (the "Agreement") by and between Premier and Button Gwinnett
Financial Corporation ("Button Gwinnett") pursuant to which Premier will
acquire all of the issued and outstanding common stock of Button Gwinnett
("Button Gwinnett Common Stock") through the merger of Button Gwinnett with
and into Premier (the "Merger"), and each share of Button Gwinnett Common
Stock will be converted into 3.885 shares of Premier common stock ("Premier
Common Stock"), as described more fully in the accompanying Joint Proxy
Statement/Prospectus.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 2
Proposal to: elect the directors, namely, N. Michael Anderson, George S.
Carpenter, James L. Coxwell, Donald N. Ellis, William M. Evans, Jr., John H.
Ferguson, Robert E. Flournoy, III, James E. Freeman, A. F. Gandy, Robin R.
Howell, Billy H. Martin, C. Steve McQuaig, Robert C. Oliver, Thomas E. Owen,
Jr., Darrell D. Pittard and John E. Aderhold.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 3
Proposal to: ratify and approve the selection of Ernst & Young LLP as
independent public accountants for the year ending December 31, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 4
Proposal to: amend Premier's Articles of Incorporation to increase the number
of authorized shares of Premier Common Stock from 20,000,000 shares to
60,000,000 shares to allow Premier to consummate the Button Gwinnett Merger
and its proposed merger with The Bank Holding Company.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 5
Proposal to: amend Premier's 1997 Stock Option Plan to increase the number of
shares available for grant thereunder from 1,125,000 shares to 3,000,000
shares.
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
PROPOSAL 6
Proposal to: adopt the Premier Bancshares Employee Stock Purchase Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment(s),
including adjourning the Annual Meeting to permit, if necessary, further
solicitation of proxies. This Proxy may be revoked at any time prior to voting
hereof.
This proxy, when properly executed, duly returned and not revoked will be
voted. It will be voted in accordance with the directions given by the
undersigned shareholder. If no direction is made, it will be voted in favor of
the Proposal listed on this Proxy.
Signature(s)
-------------------------------------
-------------------------------------
Dated: ,
1998
NOTE: Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
the signatory is a corporation, sign
the full corporate name by a duly
authorized officer.
<PAGE>
EXHIBIT 99.2
BUTTON GWINNETT FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the Special
Meeting of Shareholders and Proxy Statement and does hereby appoint John D.
Stephens and Glenn S. White and either of them with full power of
substitution, as proxies of the undersigned to represent the undersigned and
to vote all shares of BUTTON GWINNETT FINANCIAL CORPORATION ("Button
Gwinnett") common stock which the undersigned would be entitled to vote if
personally present at the Special Meeting of Shareholders of Button Gwinnett,
to be held at the offices of Button Gwinnett at 150 South Perry Street,
Lawrenceville, Georgia, 30246, at 8:00 o'clock a.m. local time, on May 14,
1998, and at any adjournment thereof.
PROPOSAL
Proposal to: approve the Agreement and Plan of Reorganization, dated February
5, 1998 between Premier Bancshares, Inc. ("Premier") and Button Gwinnett and
to approve the merger pursuant to which Button Gwinnett will be merged with
and into Premier, and in which each issued and outstanding share of Button
Gwinnett common stock will be converted into the right to receive 3.885 shares
of Premier common stock.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment(s),
including adjourning the Special Meeting to permit, if necessary, further
solicitation of proxies. This Proxy may be revoked at any time prior to voting
hereof.
This proxy, when properly executed, duly returned and not revoked will be
voted in accordance with the directions given by the undersigned shareholder.
If no direction is made, it will be voted in favor of the Proposal listed on
this Proxy.
Signature(s)
-------------------------------------
-------------------------------------
Dated: ,
1998
NOTE: Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
the signatory is a corporation, sign
the full corporate name by a duly
authorized officer.
<PAGE>
EXHIBIT 99.3
THE BANK HOLDING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the Special
Meeting of Shareholders and Proxy Statement and does hereby appoint Robert H.
Smalley, Jr. and Charles B. Blackmon and either of them with full power of
substitution, as proxies of the undersigned to represent the undersigned and to
vote all shares of THE BANK HOLDING COMPANY ("BHC") common stock which the
undersigned would be entitled to vote if personally present at the Special
Meeting of Shareholders of BHC, to be held at the executive offices of 201 West
Taylor Street, Griffin, Georgia 30224, at 10:00 o'clock a.m. local time, on May
28, 1998, and at any adjournment thereof.
PROPOSAL
Proposal to: approve the Agreement and Plan of Reorganization, dated December
3, 1997, as amended by First Amendment dated December 18, 1997, by Second
Amendment dated December 23, 1997, by Third Amendment dated December 31, 1997,
by Fourth Amendment dated January 15, 1998 and by Fifth Amendment dated March
16, 1998 (collectively, the "Agreement"), by and between Premier Bancshares,
Inc. ("Premier") and BHC and to approve the merger (the "Merger") pursuant to
which BHC will be merged with and into Premier, and in which each issued and
outstanding share of BHC common stock will be converted into the right to
receive 3.90 shares of Premier common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment(s),
including adjourning the Special Meeting to permit, if necessary, further
solicitation of proxies. This Proxy may be revoked at any time prior to voting
hereof.
This proxy, when properly executed, duly returned and not revoked will
be voted. It will be voted in accordance with the directions given by the
undersigned shareholder. If no direction is made, it will be voted in favor of
the Proposal listed on this Proxy.
Signature(s)
--------------------------------------------
--------------------------------------------
--------------------------------------------
Dated: , 1998
------------------------
NOTE: Joint owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If the signatory is
a corporation, sign the full corporate name
by a duly authorized officer.
