<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1998;
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 OF OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
OF 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
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
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
----------------
If this Form is a post effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. [_]
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 being filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended,
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 MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE(1)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par 1,702,748
value.................. shares $5.59 $9,521,361 $2,809
- ------------------------------------------------------------------------------
</TABLE>
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(1) In accordance with Rule 457(f)(2), the total registration fee has been
calculated based on the book value of the securities to be received by the
Registrant computed as of the latest practicable date prior to February 4,
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.
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<PAGE>
[Lanier Bank & Trust Company Letterhead]
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders (the
"Meeting") of Lanier Bank & Trust Company ("Lanier") to be held at the main
office of Lanier, 214 Dahlonega Road, Cumming, Georgia 30040, on March 25,
1998, at 5:00 p.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 16, 1997, as amended on January 22,
1998 (the "Agreement") and the related Plan of Merger entered into with
Premier Bank on December 16, 1997, as amended on January 22, 1998 (the
"Plan"), pursuant to which Lanier will merge with and into Premier Bank, a
wholly owned Georgia banking subsidiary of Premier (the "Merger"). Upon
consummation of the Merger, each share of Lanier common stock ("Lanier Common
Stock") issued and outstanding (except for shares held by Lanier shareholders
who perfect their dissenters' rights of appraisal) will be converted into and
exchanged for the right to receive 1.980 shares of Premier common stock
("Premier Common Stock"). Holders of Lanier stock options will receive options
to purchase Premier Common Stock in exchange for their Lanier stock options.
Following the Merger, A. Lee Wilhelm will become President of the Central
Metro Division of Premier Bank, and John E. Aderhold shall be elected to serve
on the Board of Directors of Premier. 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 Proxy Statement/Prospectus carefully and consider
thoughtfully the information set forth therein. The Agreement, the Plan 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 Lanier Common Stock owned by such
member in favor of the Agreement, the Plan and the Merger.
IT IS IMPORTANT TO UNDERSTAND THAT APPROVAL OF THE AGREEMENT, THE PLAN AND
THE MERGER REQUIRES THE AFFIRMATIVE VOTE OF TWO-THIRDS OF THE SHARES OF LANIER
COMMON STOCK ENTITLED TO VOTE AT THE MEETING. CONSEQUENTLY, A FAILURE TO VOTE
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE AGREEMENT, THE PLAN AND THE
MERGER. IF YOU HAVE ANY QUESTIONS CONCERNING THE DELIVERY OF THE ENCLOSED
PROXY CARD, PLEASE CALL ME AT (770) 887-1732.
Accordingly, whether or not you plan to attend the Meeting, you are urged to
complete, sign, and return promptly the enclosed proxy card. If you attend the
Meeting, you may vote in person if you wish, even if you previously have
returned your proxy card. ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO
VOTE FOR APPROVAL OF THE AGREEMENT, THE PLAN AND THE MERGER BY MARKING THE
ENCLOSED PROXY CARD "FOR" THE AGREEMENT, THE PLAN AND THE MERGER.
Sincerely,
A. Lee Wilhelm,
President
Cumming, Georgia
February , 1998
<PAGE>
[LANIER BANK & TRUST COMPANY LETTERHEAD]
LANIER BANK & TRUST COMPANY
214 DAHLONEGA ROAD
CUMMING, GEORGIA 30040
(770) 887-1732
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 25, 1998
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Lanier Bank & Trust Company ("Lanier") will be held at the main
office of Lanier, 214 Dahlonega Road, Cumming, Georgia 30040, on March 25,
1998, at 5:00 p.m., local time, for the following purpose:
1. Merger. To consider and vote on the Agreement and Plan of
Reorganization dated December 16, 1997, as amended on January 22, 1998 (the
"Agreement") by and between Premier Bancshares, Inc. ("Premier") and Lanier
and the related Plan of Merger entered into with Premier Bank, a wholly-
owned subsidiary of Premier, dated December 16, 1997, as amended on January
22, 1998 (the "Plan") pursuant to which (i) Premier will acquire all of the
issued and outstanding shares of Lanier common stock ("Lanier Common
Stock") through the merger of Lanier with and into Premier Bank (the
"Merger"), and (ii) each share of Lanier Common Stock will be converted
into 1.980 shares of Premier common stock, as described more fully in the
accompanying 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, the Plan and the Merger requires the affirmative
vote of two-thirds of the outstanding shares of Lanier Common Stock entitled
to vote at the Meeting. Only shareholders of record at the close of business
on February 15, 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 LANIER COMMON
STOCK VOTE "FOR" THE AGREEMENT, THE PLAN 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
Lanier 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
John E. Aderhold,
Chairman
Cumming, Georgia
February , 1998
<PAGE>
PROXY STATEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 25, 1998
LANIER BANK & TRUST COMPANY
214 DAHLONEGA ROAD
CUMMING, GEORGIA 30040
(770) 887-1732
----------------
PROSPECTUS
OF
PREMIER BANCSHARES, INC.
2180 ATLANTA PLAZA
950 EAST PACES FERRY ROAD
ATLANTA, GEORGIA 30326
(404) 814-3090
FOR
1,702,748 SHARES OF PREMIER COMMON 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
Lanier Bank & Trust Company ("Lanier") upon consummation of the proposed
merger (the "Merger") described herein, pursuant to which Lanier will merge
with and into Premier Bank pursuant to the terms of that certain Agreement and
Plan of Reorganization dated as of December 16, 1997, as amended on January
22, 1998, by and between Premier and Lanier (the "Agreement") and the related
Plan of Merger dated as of December 16, 1997, as amended on January 22, 1998,
by and between Lanier and Premier Bank (the "Plan"). A copy of the Agreement
and the Plan is attached to this Proxy Statement/Prospectus as Appendix A.
On the effective date of the Merger (the "Effective Date"), except as
otherwise described herein, (i) Lanier will merge with and into Premier Bank
pursuant to the terms of the Plan, (ii) each outstanding share of the $5.00
par value common stock of Lanier ("Lanier Common Stock") (except for shares
held by stockholders who perfect their dissenters' rights of appraisal) will
be converted into 1.980 shares of Premier Common Stock. Premier Bank will be
the surviving bank of the Merger (the "Surviving Bank") and the separate
existence of Lanier will cease.
This Prospectus also constitutes a Proxy Statement of Lanier and is being
furnished to the shareholders of Lanier in connection with the solicitation of
proxies by the Lanier Board of Directors. The proxies solicited by the Lanier
Board of Directors will be used at the Special Meeting of Shareholders of
Lanier (the "Lanier Meeting") to be held on March 25, 1998, including any
adjournment thereof, to consider and vote on the proposed Merger and to
transact such other business as may properly come before the Lanier Meeting or
any adjournments thereof. This Proxy Statement/Prospectus and the accompanying
proxy cards are first being mailed to shareholders of Lanier on or about
February 15, 1998.
SEE "RISKS FACTORS" COMMENCING ON PAGE 12 FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE PREMIER
COMMON STOCK OFFERED HEREBY.
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 PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is February , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION..................................................... 1
INCORPORATION BY REFERENCE................................................ 2
SUMMARY................................................................... 3
The Parties............................................................. 3
Special Meeting of Lanier Shareholders.................................. 3
The Merger; Exchange Ratio.............................................. 4
Dissenters' Rights...................................................... 4
Reasons for the Merger.................................................. 4
Fairness Opinion........................................................ 5
Effective Date.......................................................... 5
Exchange of Stock Certificates.......................................... 5
Regulatory Approvals and Other Conditions............................... 5
Waiver, Amendment, and Termination of the Agreement and the Plan........ 6
Directors and Executive Officers Following the Merger................... 6
Interests of Certain Persons in the Merger.............................. 6
Material Federal Income Tax Consequences of the Merger.................. 6
Accounting Treatment.................................................... 7
Certain Differences in Rights of Shareholders........................... 7
Comparative Market Prices of Common Stock............................... 7
Comparative Per Share Data.............................................. 7
Selected Pro Forma Financial Data....................................... 10
Risk Factors............................................................ 11
RISK FACTORS.............................................................. 12
Management of Growth.................................................... 12
Highly Competitive Business............................................. 12
Volatility of Stock Price............................................... 12
Dependence on Senior Management......................................... 12
Capability of Premier's Data Processing Software to Accommodate the Year
2000................................................................... 12
THE LANIER MEETING........................................................ 13
General................................................................. 13
Record Date; Vote Required.............................................. 13
THE MERGER................................................................ 14
General................................................................. 14
Treatment of Lanier Options............................................. 14
Background of and Reasons for the Merger................................ 14
Fairness Opinion........................................................ 16
Effective Date of the Merger............................................ 19
Distribution of Stock Certificates After the Merger..................... 20
Conditions to Consummation of the Merger................................ 20
Regulatory Approvals.................................................... 21
Rights of Dissenting Shareholders....................................... 21
Waiver, Amendment, and Termination of the Agreement and the Plan........ 23
Conduct of Business Pending the Merger.................................. 23
Directors and Executive Officers Following the Merger................... 24
Employment Agreements................................................... 24
Interests of Certain Persons in the Merger.............................. 24
Material Federal Income Tax Consequences of the Merger.................. 25
Accounting Treatment.................................................... 26
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Expenses and Fees....................................................... 27
Resales of Premier Common Stock......................................... 27
Description of Premier Common Stock....................................... 27
Certain Differences in Rights of Shareholders............................. 27
Authorized Capital Stock................................................ 28
Removal of Directors.................................................... 28
Vote Required for Shareholder Approval.................................. 28
Actions by Shareholders Without a Meeting............................... 29
Special Meeting of Shareholders......................................... 29
Number of Directors..................................................... 29
COMPARATIVE MARKET PRICES AND DIVIDENDS................................... 30
Premier Market Prices................................................... 30
Recent Prices........................................................... 30
Dividends............................................................... 31
Shareholders of Record.................................................. 31
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.............. 32
General................................................................. 32
Notes to Pro Forma Condensed Combined Financial Statements.............. 38
BUSINESS OF PREMIER....................................................... 46
General................................................................. 46
Recent Developments..................................................... 46
SELECTED HISTORICAL FINANCIAL DATA OF PREMIER............................. 48
BUSINESS OF LANIER........................................................ 49
Markets................................................................. 49
Deposits................................................................ 49
Loans................................................................... 49
Lending Policy.......................................................... 49
Employees............................................................... 49
Competition............................................................. 49
Properties.............................................................. 50
Legal Proceedings....................................................... 50
SELECTED HISTORICAL FINANCIAL DATA OF LANIER.............................. 51
LANIER MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................... 65
CERTAIN REGULATORY CONSIDERATIONS......................................... 79
General................................................................. 79
Payment of Dividends.................................................... 80
Capital Adequacy........................................................ 81
Support of Subsidiary Institutions...................................... 82
Prompt Corrective Action................................................ 82
FDIC Insurance Assessments.............................................. 84
Safety and Soundness Standards.......................................... 85
Certain Applicable Thrift Regulations................................... 85
EXPERTS................................................................... 86
OPINIONS.................................................................. 86
INDEMNIFICATION OF OFFICERS AND DIRECTORS................................. 86
INDEX TO FINANCIAL STATEMENTS............................................. 88
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PREMIER FINANCIAL STATEMENTS.............................................. F-1
LANIER FINANCIAL STATEMENTS............................................... F-33
APPENDIX A: AGREEMENT AND PLAN OF REORGANIZATION, AS AMENDED, AND THE
RELATED PLAN OF MERGER, AS AMENDED....................................... A-1
APPENDIX B: DISSENTERS' RIGHTS PROVISIONS OF THE FINANCIAL INSTITUTIONS
CODE OF GEORGIA AND THE GEORGIA BUSINESS CORPORATIONS CODE............... B-1
APPENDIX C: OPINION OF ALEX SHESHUNOFF & CO. INVESTMENT BANKING........... C-1
</TABLE>
iii
<PAGE>
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"). 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 of
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. The address of such Web site is http://www.sec.gov.
This 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 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
and Lanier 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, Inc. 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 PROXY STATEMENT/PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY PREMIER OR LANIER. THIS 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 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 OR LANIER 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 Prospectus with respect to Premier was
supplied by Premier, and all information included herein with respect to
Lanier was supplied by Lanier.
<PAGE>
INCORPORATION BY REFERENCE
The documents listed below are hereby incorporated by reference into this
Prospectus, and all documents subsequently filed by Premier pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the date of filing such documents:
(i)Premier's Annual Report on Form 10-K and Form 10-K/A for the year
ending December 31, 1996;
(ii)Premier's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
(iii)Premier's Quarterly Report on Form 10-Q and 10-Q/A for the quarter
ending June 30, 1997.
(iv)Premier's Quarterly Report on Form 10-Q and Form 10-Q/A for the
quarter ended September 30, 1997.
(v)Premier's Current Reports on Form 8-K dated June 23, 1997 and Form 8-
K/A dated August 27, 1997, and Form 8-K and Form 8-K/A dated October 20,
1997, and Form 8-K dated December 12, 1997 and Form 8-K dated December 30,
1997.
This Proxy Statement/Prospectus incorporates documents by reference which
are not presented herein or delivered herewith. Premier will provide without
charge to each person to whom this 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 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. In order to
ensure timely delivery of the documents, any such request should be made by
February , 1998.
2
<PAGE>
SUMMARY
The following is a summary of certain information relating to the Lanier
Meeting, the 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 Proxy Statement/Prospectus. Shareholders
are urged to read carefully the entire Proxy Statement/Prospectus, including
the Appendices. As used in this Proxy Statement/Prospectus, the term "Premier"
refers to that entity and, where the context requires, to its subsidiaries.
THE PARTIES
Premier. Premier is a bank and thrift holding company headquartered in
Atlanta, Georgia, with 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, FSB ("North Georgia") and Citizens Bank of Gwinnett ("Citizens
Bank"). As of September 30, 1997, Premier had total consolidated assets of
approximately $750 million, total consolidated deposits of approximately $635
million and total consolidated shareholders' equity of approximately $64.4
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 issued 3,653,523 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 Gwinnett") and issued 2,066,834 shares of
its common stock in exchange for all the issued and outstanding shares of
Citizens Gwinnett common stock and employee and director stock options. On
January 7, 1998, the Board of Directors of Premier declared a three-for-two
stock split on the Premier Common Stock, effective January 23, 1998. New
certificates will be delivered to Premier shareholders on or about February
13, 1998. Fractional shares will not be issued and cash will be paid for
fractional shares.
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.
Additional information with respect to Premier and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Incorporation by
Reference," and "Business of Premier."
Lanier. Lanier is a Georgia chartered commercial bank headquartered in
Cumming, Georgia. Lanier provides a broad range of retail banking services
through its three offices located in Forsyth County, Georgia. As of September
30, 1997, Lanier had total assets of approximately $65 million, total deposits
of approximately $52 million and total common shareholders' equity of
approximately $9.3 million.
Lanier was incorporated in 1986 under the laws of the State of Georgia.
Lanier's principal executive offices are located at 214 Dahlonega Road,
Cumming, Georgia 30130, and its telephone number at such address is (770) 887-
1732.
SPECIAL MEETING OF LANIER SHAREHOLDERS
The Lanier Meeting will be held at 5:00 p.m., local time, on March 25, 1998,
at Lanier's main office, 214 Dahlonega Road, Cumming, Georgia 30130, for the
purpose of considering and voting on approval of the
3
<PAGE>
Agreement, the Plan and the Merger and transacting such other business as may
properly come before the meeting or any adjournments thereof. See "The Lanier
Meeting."
Only holders of record of Lanier Common Stock at the close of business on
February 15, 1998 (the "Lanier Record Date"), will be entitled to vote at the
Lanier Meeting. Approval of the Agreement, the Plan and the Merger requires
the affirmative vote of at least two-thirds of the shares of Lanier Common
Stock outstanding and entitled to vote at the Lanier Meeting. As of the Lanier
Record Date, there were 821,333 shares of Lanier Common Stock outstanding and
entitled to be voted at the Lanier Meeting.
The directors and executive officers of Lanier beneficially owned, as of the
Lanier Record Date, 233,931 shares (or approximately 28% of the outstanding
shares) of Lanier Common Stock. Each member of the Board of Directors of
Lanier has agreed to vote those shares owned by such member in favor of the
Agreement, the Plan and the Merger.
As of the Lanier Record Date, the directors and executive officers of
Premier did not beneficially own any shares of Lanier Common Stock. As of that
date, neither Lanier nor Premier held any shares of Lanier Common Stock in a
fiduciary capacity for others. See "The Lanier Meeting."
THE MERGER; EXCHANGE RATIO
The Agreement and the Plan provide for the acquisition of Lanier by Premier
pursuant to the merger of Lanier with and into Premier Bank. On the Effective
Date, each share of Lanier Common Stock issued and outstanding (excluding any
shares held by shareholders who perfect their dissenters' rights of appraisal)
will be converted into 1.980 shares of Premier Common Stock (the "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 American Stock Exchange on
the last trading day preceding the Effective Date of the Merger. See "The
Merger--General."
DISSENTERS' RIGHTS
Holders of Lanier Common Stock who dissent from the Merger are entitled to
the rights and remedies of dissenting shareholders set forth in the applicable
provisions of the Financial Institutions Code of Georgia (the "Financial
Institutions Code") and 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 Section 7-1-537 of the
Financial Institutions Code and a copy of Article 13 of the Georgia Code is
set forth in Appendix B to this 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 the Financial
Institutions Code and Article 13 of the Georgia Code, which require, among
other things, that a shareholder give Lanier notice of such holder's intent to
dissent from approval of the Agreement, the Plan and the Merger prior to the
vote of the shareholders at the Lanier Meeting and that such shareholder not
vote his or her shares in favor of the Agreement, the Plan or the Merger. Any
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 Agreement, the Plan and the Merger and thus will
not be entitled to assert dissenters' rights. See "The Merger--Rights of
Dissenting Shareholders."
REASONS FOR THE MERGER
Lanier's Board of Directors has unanimously approved the Agreement, the Plan
and the Merger and has determined that the Merger is fair to, and in the best
interests of, Lanier and its shareholders. ACCORDINGLY, LANIER'S BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT LANIER'S SHAREHOLDERS VOTE FOR APPROVAL
OF THE AGREEMENT, THE PLAN AND THE MERGER. EACH MEMBER OF THE BOARD OF
DIRECTORS OF LANIER HAS AGREED TO VOTE SUCH MEMBER'S SHARES OF LANIER COMMON
STOCK IN FAVOR OF THE AGREEMENT, THE PLAN AND THE MERGER. In approving the
Merger, Lanier's Board of Directors considered Premier's financial condition;
various
4
<PAGE>
alternatives to the Merger, including the merits of other acquisition
proposals; the consideration to be received by Lanier shareholders; the
anticipated synergies and enhanced resources and lending capabilities that
would result from the Merger; the competitive and regulatory environments for
financial institutions and commercial lending businesses generally; the income
tax aspects of the Merger as a tax-free exchange; the ability of holders of
Lanier Common Stock to exchange their Lanier Common Stock for Premier Common
Stock in connection with the Merger and thereafter have the ability to trade
such securities on the American Stock Exchange; and the likelihood that the
Merger would be approved by applicable regulatory authorities. See "The
Merger--Background of and Reasons for the Merger."
FAIRNESS OPINION
Alex Sheshunoff & Co. Investment Banking ("Sheshunoff") has rendered an
opinion to Lanier 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 Merger are fair,
from a financial point of view, to the shareholders of Lanier. Sheshunoff's
opinion is attached as Appendix C to this 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 Merger--Fairness Opinion."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time specified in
the 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
Merger will become effective upon the filing of the Certificate of Merger.
Unless otherwise agreed upon by Premier and Lanier, and subject to the
conditions to the obligations of the parties to effect the Merger, the parties
will use their reasonable efforts to cause the Effective Date to occur on 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 Merger or; (ii) the date on which the Agreement, the Plan and the Merger
are approved by the requisite vote of Lanier shareholders. The parties expect
that all conditions to consummation of the Merger will be satisfied so that
the Merger can be consummated during the second quarter of 1998, although
there can be no assurance as to whether or when the Merger will occur. See
"The Merger-- Effective Date of the Merger," "The Merger--Conditions to
Consummation of the Merger," and "The Merger--Waiver, Amendment, and
Termination of the Agreement and the Plan."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, 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 Lanier a letter of transmittal, together
with instructions for the exchange of such shareholders' certificates
representing shares of Lanier Common Stock for certificates representing
shares of Premier Common Stock. Former shareholders of Lanier will not be
entitled to receive dividends or other distributions on their shares of
Premier Common Stock until Premier has received their certificates of Lanier
Common Stock. Lanier shareholders should not send in their stock certificates
until they receive the form letter of transmittal and instructions from the
Exchange Agent. See "The Merger--Distribution of Stock Certificates After the
Merger."
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Federal Deposit Insurance
Corporation (the "FDIC") 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 the 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.
5
<PAGE>
Consummation of the Merger is subject to various other conditions, including
receipt of the required approval of the Lanier shareholders, receipt of an
opinion of counsel as to the tax-free nature of certain aspects of the Merger,
and certain other customary conditions. See "The Merger--Conditions to
Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT AND THE PLAN
The Agreement and the Plan may be terminated, and the Merger abandoned, at
any time prior to the Effective Date by mutual action of the Boards of
Directors of both Lanier and Premier, or by action of the Board of Directors
of either company under certain circumstances, including if the Merger is not
consummated by August 31, 1998, unless the failure to consummate by such time
is due to a breach of the Agreement by the party seeking to terminate. If for
any reason the Merger is not consummated, Premier will continue to operate as
a bank holding company and thrift holding company under its present management
and Lanier will continue to operate as a Georgia chartered commercial bank
under its present management. See "The Merger--Waiver, Amendment, and
Termination of the Agreement and the Plan."
DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE MERGER
The Agreement and the Plan provide that Premier Bank will be the surviving
bank of the Merger. The directors and officers of Premier Bank in office
immediately prior to the Effective Date, together with such additional persons
as may thereafter be elected, shall serve as the directors and officers of the
Surviving Bank from and after the Effective Date. In addition, at the
Effective Date, A. Lee Wilhem will be elected President of the Surviving
Bank's Central Metro Division and John E. Aderhold shall be elected to the
Board of Directors of Premier. See "The Merger--Directors and Executive
Officers following the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain executive officers and directors of Lanier have interests in the
Merger in addition to their respective interests as Lanier shareholders
generally. Those interests relate to, among other things, provisions in the
Agreement regarding indemnification and eligibility for certain Premier
employee benefits, and treatment of outstanding options to acquire Lanier
Common Stock. See "The Merger--Interests of Certain Persons in the Merger."
On the Effective Date of the Merger, Premier Bank and Mr. Wilhelm will enter
into an Employment Agreement whereby Mr. Wilhelm will initially serve as
President of the Central Metro Division of Premier Bank following the Merger.
See "The Merger--Employment Agreements."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned on the receipt of an opinion of
Womble Carlyle Sandridge & Rice, PLLC, counsel to Premier, to the effect that,
among other things: (i) the 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 Merger of Lanier Common Stock
for Premier Common Stock will not give rise to gain or loss to shareholders of
Lanier except for the recognition of gain as required by Section 302 of the
Code with respect to cash received by Lanier shareholders in lieu of
fractional shares of Premier Common Stock as a result of the Merger; (iii)
neither Premier, Premier Bank, nor Lanier will recognize income, gain or loss
as a consequence of the Merger; (iv) the aggregate tax basis of Premier Common
Stock received by Lanier shareholders pursuant to the Merger will be the same
as the tax basis of the shares of Lanier 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) the Lanier
shareholders will have the same holding period in the shares of Premier Common
Stock received pursuant to the Merger as the holding period of the shares of
Lanier Common Stock exchanged therefor provided that the Lanier Common stock
is held as capital assets on the date of the consummation of the Merger. See
"The Merger--Material Federal Income Tax Consequences of the Merger."
6
<PAGE>
DUE TO THE INDIVIDUAL NATURE OF THE INCOME TAX CONSEQUENCES OF THE MERGER,
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND FOREIGN
TAX LAWS.
ACCOUNTING TREATMENT
It is anticipated that the 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 Lanier will be carried forward and
recorded on the financial statements of Premier at their previously recorded
amounts. In order for the Merger to qualify for pooling-of-interests
accounting treatment, substantially all (90% or more) of the outstanding
Lanier Common Stock must be exchanged for Premier Common Stock. There are
certain other criteria that must be satisfied in order for the Merger to
qualify as a pooling of interests, some of which criteria cannot be satisfied
until after the Effective Date. See "The Merger--Accounting Treatment."
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
On the Effective Date, Lanier shareholders, whose rights are governed by the
Financial Institutions Code and by Lanier's Articles of Incorporation and
Bylaws, will automatically become shareholders of Premier, 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 the Merger, the
rights of Premier shareholders will differ from the rights of Lanier
shareholders in certain respects. See "The Merger--Certain Differences in
Rights of Shareholders" and "The Merger--Description of Premier Common Stock."
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. The Lanier Common Stock is not traded on
an established market. The following table sets forth the last sale price of
Premier Common Stock on December 15, 1997, the date of the last sale reported
by the American Stock Exchange prior to December 16, 1997 (the date of public
announcement of the proposed Merger) and the sale price of Lanier Common Stock
on October 6, 1997, the date of the last known sale of Lanier Common Stock
prior to December 16, 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 Proxy
Statement/Prospectus, and the sale price of the Lanier Common Stock on October
6, 1997, the date of the most recent known sale of Lanier Common Stock prior
to the mailing of this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
PREMIER COMMON STOCK LANIER COMMON STOCK
--------------------------- -------------------------
<S> <C>
$15.58 at December 15, 1997 $18.50 at October 6, 1997
(prior to announcement) (prior to announcement)
$ at , 1998 $18.50 at October 6, 1997
</TABLE>
COMPARATIVE PER SHARE DATA
The following tables present selected historical, pro forma combined, and
equivalent per share data as of and for the nine-month period ended September
30, 1997 and the years ended December 31, 1996, 1995 and 1994 assuming (i) the
acquisition of Lanier by Premier; and (ii) Premier on a pro forma basis as if
the Lanier merger had been effective and the merger with The Bank Holding
Company ("BHC") had been effective. The information is based on the historical
financial statements of Premier, Lanier and BHC. The data also retroactively
reflect the effect of Premier's (i) 1.8055-for-1 stock split on March 6, 1997;
(ii) merger with Citizens Gwinnett on December 12, 1997; and (iii) three-for-
two stock split on January 23, 1998. Premier and Lanier pro forma combined
information gives effect to the Merger on a pooling-of-interests accounting
basis and assumes the Exchange Ratio of 1.980 shares of Premier Common Stock
for each share of Lanier Common Stock.
7
<PAGE>
Premier/Lanier and BHC pro forma combined information gives effect to the
merger on a pooling-of-interests accounting basis and assumes the Exchange
Ratio of 3.900 shares of Premier Common Stock for each share of BHC Common
Stock. See "The Merger--Accounting Treatment." 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 mergers been consummated at the dates or during the periods
indicated, nor is it necessarily indicative of future results of operations or
combined financial position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Premier
and Lanier, including the respective notes thereto, and the pro forma
financial information included herein. See "Selected Historical Financial Data
of Premier" and "Selected Historical Financial Data of Lanier."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------
1997 1996 1995 1994
------------- ------- ------- -------
<S> <C> <C> <C> <C>
INCOME PER SHARE
Premier historical....................... $0.53 $ 0.46 $ 0.37 $ 0.21
Lanier historical........................ 0.67 0.97 0.87 0.57
Premier and Lanier pro forma combined(1). 0.50 0.47 0.38 0.21
Lanier pro forma Merger equivalent(2).... 0.99 0.93 0.75 0.42
DIVIDENDS DECLARED PER COMMON SHARE
Premier historical....................... $0.12 $ 0.23 $ 0.07 $ 0.05
Lanier historical........................ 0.25 0.15 0.10 0.06
Premier and Lanier pro forma combined(1)... 0.12 0.23 0.07 0.05
Lanier pro forma Merger equivalent(3).... 0.23 0.45 0.13 0.10
BOOK VALUE PER COMMON SHARE (PERIOD END)
Premier historical....................... $4.29 $ 3.80
Lanier historical........................ 11.53 11.09
Premier and Lanier pro forma combined(1). 4.42 3.99
Lanier pro forma Merger equivalent(2).... 8.75 7.90
</TABLE>
- --------
(1) Represents the combined results of Premier and Lanier as if the Merger was
consummated on January 1, 1994 and was accounted for as a pooling-of-
interests transaction.
(2) Represents pro forma combined information multiplied by the Exchange
Ratio.
(3) Represents historical dividends declared per share by Premier multiplied
by the Exchange Ratio.
(4) Represents Premier historical adjusted for the 1998 and 1997 stock splits.
8
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, -----------------
1997 1996 1995 1994
------------- ----- ----- -----
<S> <C> <C> <C> <C>
INCOME PER SHARE
Premier/Lanier pro forma(4)................... $0.50 $0.47 $0.38 $0.21
BHC historical................................ 1.96 2.24 1.94 1.21
Premier/Lanier/BHC pro forma combined(1)...... 0.50 0.48 0.39 0.22
BHC pro forma Merger equivalent(2)............ 1.95 1.87 1.52 0.86
DIVIDENDS DECLARED PER COMMON SHARE
Premier/Lanier pro forma(4)................... $0.12 $0.23 $0.07 $0.05
BHC historical................................ -- 0.25 0.25 0.25
Premier/Lanier/BHC pro forma combined(1)...... 0.12 0.23 0.07 0.05
BHC pro forma Merger equivalent(3)............ 0.47 0.90 0.27 0.20
BOOK VALUE PER COMMON SHARE (PERIOD END)
Premier/Lanier pro forma(4)................... $4.42 $3.99
BHC historical................................ 20.11 17.99
Premier/Lanier/BHC pro forma combined(1)...... 4.51 4.06
BHC pro forma Merger equivalent(2)............ 17.57 15.85
</TABLE>
- --------
(1) Represents the combined results of Premier and BHC as if the Merger was
consummated on January 1, 1994 and was accounted for as a pooling-of-
interests transaction.
(2) Represents pro forma combined information multiplied by the Exchange
Ratio.
(3) Represents historical dividends declared per share by Premier multiplied
by the Exchange Ratio.
(4) Represents Premier historical adjusted for the 1998 and 1997 stock splits
combined with Lanier.
9
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect to the
acquisition of Lanier as of the date or at the beginning of the period
indicated, assuming the acquisition is accounted for as a pooling-of-interests
transaction. The unaudited pro forma financial data includes the completion of
the preferred securities offering which was completed in the fourth quarter of
1997. The unaudited pro forma financial data is presented for informational
purposes only and is not necessarily indicative of the combined financial
position or results of operation which actually would have occurred if the
transaction had been consummated at the date and for the periods indicated or
which may be obtained in the future.
<TABLE>
<CAPTION>
AT
SEPTEMBER 30,
1997
--------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET
Total assets.................................................... $842,195
Loans and loans held for sale, net.............................. 51,043
Securities available for sale................................... 134,307
Federal funds sold.............................................. 56,659
Interest-bearing deposits in banks.............................. 1,729
Total deposits.................................................. 686,544
Other borrowings and securities sold under repurchase
agreements..................................................... 46,825
Shareholders' equity............................................ 73,450
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------- -------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Interest income..................... $49,766 $40,899 $55,765 $45,444 $36,930
Interest expense.................... 23,260 19,755 27,098 21,530 16,280
Net interest income................. 26,506 21,144 28,667 23,914 20,650
Provision (negative provision) for
loan losses........................ 694 (86) (165) (582) 260
Net interest income after provision
(negative provision) for loan
losses............................. 25,812 21,330 28,832 24,496 20,390
Other income........................ 14,973 10,041 14,468 10,079 5,572
Other expenses...................... 28,157 24,191 32,968 25,761 20,806
Income taxes........................ 3,953 1,796 2,526 2,546 1,790
Net income.......................... 8,659 5,278 7,794 6,255 3,366
Net income per common and common
equivalent share................... .50 .31 .47 .38 .21
Net income assuming full dilution... .50 .31 .47 .38 .21
</TABLE>
10
<PAGE>
The following unaudited pro forma financial data gives effect to the
combination of BHC as of the date or at the beginning of the period indicated,
assuming the acquisition is accounted for as a pooling-of-interests
transaction. The unaudited pro forma financial data is presented for
informational purposes only and is not necessarily indicative of the combined
financial position or results of operation which actually would have occurred
if the transaction had been consummated at the date and for the periods
indicated or which may be obtained in the future.
<TABLE>
<CAPTION>
AT
SEPTEMBER 30,
1997
--------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET
Total assets.................................................... $969,584
Loans and loans held for sale, net.............................. 53,320
Securities available for sale................................... 159,955
Federal funds sold.............................................. 58,919
Interest-bearing deposits in banks.............................. 1,729
Total deposits.................................................. 797,249
Other borrowings and securities sold under repurchase agree-
ments.......................................................... 47,587
Shareholders' equity............................................ 84,489
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------- -------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Interest income...................... $58,055 $48,323 $65,744 $55,007 $42,429
Interest expense..................... 27,009 23,058 31,587 26,016 18,682
Net interest income.................. 31,046 25,265 34,157 28,991 23,747
Provision (negative provision) for
loan losses......................... 744 29 (20) (492) 431
Net interest income after provision
(negative provision) for loan
losses.............................. 30,302 25,236 34,177 29,483 23,316
Other income......................... 15,813 11,022 15,765 11,419 6,109
Other expenses....................... 31,452 27,337 37,189 30,078 23,329
Income taxes......................... 4,748 2,505 3,505 3,281 2,138
Net income........................... 9,899 6,410 9,236 7,530 3,958
Net income per common and common
equivalent share.................... .50 .33 .48 .39 .22
Net income assuming full dilution.... .50 .33 .48 .39 .22
</TABLE>
RISK FACTORS
Shareholders of Lanier should carefully consider the matters set forth under
"Risk Factors." Factors to be considered, among other things, include the
ability of Premier to manage its growth and its dependence on management.
11
<PAGE>
RISK FACTORS
In addition to the other information contained in this Proxy
Statement/Prospectus, the following factors should be considered carefully by
shareholders of Lanier in evaluating the Merger.
MANAGEMENT OF GROWTH
Premier has experienced significant growth, principally through its mergers
with Premier Bancshares, Inc. on August 31, 1996, with Central and Southern on
June 23, 1997, and with Citizens Gwinnett on December 12, 1997. Premier has
also entered into an Agreement and Plan of Reorganization dated December 3,
1997 with The Bank Holding Company, a Georgia bank holding company located in
Griffin, Georgia ("BHC"), pursuant to which Premier will acquire all of the
issued and outstanding shares of common stock and preferred stock of BHC and
BHC's banking subsidiaries will be merged with and into Premier Bank. Premier
intends to continue to pursue an aggressive growth strategy for the
foreseeable future, and its future operating results will depend largely upon
its ability to successfully integrate the businesses it acquires, including
Lanier. The process of integrating acquired businesses into Premier's
operations may result in unforeseen difficulties and may require a
disproportionate amount of resources and management attention. There is no
assurance that Premier will be able to successfully enter other markets or
that any such expansion will be as profitable as existing operations. If
Premier's management is unable to manage growth effectively, Premier's
business, results of operations and financial condition could be materially
and adversely affected.
HIGHLY COMPETITIVE BUSINESS
The business of Premier is extremely competitive. Certain of Premier's
primary competitors offer substantially similar services as Premier and some
have greater market recognition and greater financial, technical, marketing
and human resources than Premier. There can be no assurance that Premier will
be able to compete successfully against existing companies or new entrants to
the banking industry.
VOLATILITY OF STOCK PRICE
The market price of the Premier Common Stock could be subject to significant
fluctuations in response to Premier's operating results and other factors, and
there can be no assurance that the market price of the Premier Common Stock
will not decline below the current market price. In addition, the stock market
has from time to time experienced price and volume volatility. These
fluctuations may be unrelated to the operating performance of particular
companies whose shares are publicly traded and may adversely affect the market
price of the Premier Common Stock.
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 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 there may be
widespread computer malfunctions. Management of Premier 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.
12
<PAGE>
THE LANIER MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of Lanier
Common Stock in connection with the solicitation by the Lanier Board of
Directors of proxies for use at the Lanier Meeting, at which Lanier
shareholders will be asked to vote upon a proposal to approve the Agreement,
the Plan and the Merger. The Lanier Meeting will be held at 5:00 p.m., local
time, on March 25, 1998, at the main office of Lanier, located at 214
Dahlonega Road, Cumming, Georgia 30040.
Lanier shareholders are requested to promptly sign, date, and return the
accompanying proxy card to Lanier in the enclosed postage-paid, addressed
envelope. A shareholder's failure to return a properly executed proxy card or
to vote at the Lanier Meeting will have the same effect as a vote against the
Agreement, the Plan and the Merger.
Any Lanier 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
Lanier a signed proxy bearing a later date, provided that such notice or proxy
is actually received by Lanier prior to the taking of the shareholder vote, or
by electing to vote in person at the Lanier Meeting. Any notice of revocation
should be sent to Lanier Bank & Trust Company, 214 Dahlonega Road, Cumming,
Georgia 30040, Attention: Bank Secretary. The shares represented by properly
executed proxies received at or prior to the Lanier 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, THE PLAN AND THE MERGER, AND IN THE
DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME
BEFORE THE LANIER MEETING. As of the date of this Proxy Statement/Prospectus,
Lanier is unaware of any other matter to be presented at the Lanier 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 Lanier,
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.
Lanier shareholders should not forward any stock certificates with their
proxy cards.
RECORD DATE; VOTE REQUIRED
Lanier's Board of Directors has established the close of business on
February 15, 1998, as the Record Date for determining the shareholders
entitled to notice of and to vote at the Lanier Meeting. Only record holders
of Lanier Common Stock as of the Record Date will be entitled to vote at the
Lanier Meeting. Approval of the Agreement, the Plan and the Merger requires
the affirmative vote of two-thirds of the shares of the Lanier Common Stock
entitled to vote at the Lanier Meeting. Therefore, an abstention or failure to
return a properly executed proxy card will have the same effect as a vote
against the Agreement, the Plan and the Merger. As of the Record Date, there
were approximately 494 holders of 821,333 shares of Lanier Common Stock
outstanding and entitled to vote at the Lanier Meeting, with each share
entitled to one vote.
The presence, in person or by proxy, of a majority of the outstanding shares
of Lanier Common Stock is necessary to constitute a quorum of the shareholders
in order to take action at the Lanier Meeting. However, the affirmative vote
of the holders of two-thirds of the Lanier Common Stock is required to approve
the Agreement, the Plan and the Merger. For these purposes, shares of Lanier
Common Stock that are present, or represented by proxy, at the Lanier Meeting
will be counted for quorum purposes regardless of whether the holder of the
shares or proxy fails to vote on the Agreement, the Plan and the Merger.
The directors and executive officers of Lanier and their affiliates
beneficially owned, as of the Record Date, 233,931 shares (or approximately
28% of the outstanding shares) of Lanier Common Stock.
As of the Record Date, the directors and executive officers of Premier and
their affiliates did not beneficially own any shares of Lanier Common Stock.
As of the Record Date, neither Lanier nor Premier held any shares of Lanier
Common Stock in a fiduciary capacity for others.
13
<PAGE>
THE MERGER
The following material describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety
by reference to the Appendices hereto, including the Agreement and the Plan,
which are attached as Appendix A to this Proxy Statement/Prospectus and
incorporated herein by reference. All shareholders are urged to read the
Appendices in their entirety.
GENERAL
Upon consummation of the Merger, Lanier will merge with and into Premier
Bank, Premier Bank will survive the Merger and the separate existence of
Lanier will cease. At the Effective Date, each share of the Lanier Common
Stock (excluding any shares held by Lanier shareholders who perfect their
dissenters' rights of appraisal) issued and outstanding will be converted into
1.980 shares of Premier Common Stock. Each share of Premier Common Stock
outstanding immediately prior to the Effective Date will remain outstanding
and unchanged as a result of the Merger. No fractional shares of Premier
Common Stock will be issued in connection with the 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 American Stock Exchange on the last trading day
preceding the Effective Date.
TREATMENT OF LANIER OPTIONS
The Agreement and the Plan provide that all rights with respect of Lanier
Common Stock pursuant to stock options granted by Lanier under its stock
option plans which are outstanding at the 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 plan under which it was issued and the
agreement by which it is evidenced. After the Effective Date, those options
will become options to purchase Premier Common Stock, with the exercise price
and the number of shares of Premier Common Stock purchasable thereunder
adjusted to reflect the Exchange Ratio. Premier may, at its election,
substitute, as of the Effective Date, stock options under the Premier
Bancshares, Inc. 1997 Stock Option Plan for all or a part of the stock options
granted by Lanier, subject to certain conditions contained in the Agreement
and the Plan.
BACKGROUND OF AND REASONS FOR THE MERGER
For the past several years, the Board of Directors of Lanier has focused on
the most appropriate methods of enhancing shareholder value. The Board has
periodically reviewed its options as a community banking organization,
including remaining as an independent bank, merging or combining with a
similar sized organization, or engaging in some form of business combination
with a larger financial institution.
In February, 1996, Lanier was approached by a larger regional bank holding
company that had expressed interest in a business combination pursuant to
which Lanier would be combined with the holding company's other banking
operations in Georgia. While the parties executed confidentiality agreements
and engaged in limited due diligence, the Board of Directors of Lanier
ultimately determined that the combination would not provide the necessary
value to its shareholders, and terminated discussions with that organization.
Following termination of the discussions with the larger organization, the
Board of Directors of Lanier determined to explore the possibility of engaging
in a business combination with certain institutions the Board believed would
be in the best position to provide value to shareholders and continue the
commitment the Board believed was important to the communities where Lanier
was located. Following the direction of the Board of Directors, the President
engaged in discussion with four institutions, and ultimately received cash
offers from two of the parties. The Board determined that the cash offers were
inadequate and that Lanier could provide greater returns to its shareholders
by remaining independent. Pursuant to that determination, Lanier terminated
discussions with potential merger partners, and continued its strategy of
remaining as an independent bank. As part of that strategy, Lanier opened a
loan production office in Cherokee County in April, 1997.
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In July, 1997, the Chief Executive Officer of Premier contacted the Chief
Executive Officer of Lanier regarding a possible business combination. Over
the next several months, there were various discussions among the parties,
leading to an offer directed to the Chief Executive Officer of Lanier on
October 21, 1997. After discussing the offer with the Lanier Board of
Directors, the Lanier Chairman of the Board and the Chief Executive Officer
rejected the offer as inadequate, but were authorized by the Board to
negotiate with Premier to obtain, if possible, a higher offer. The Board of
Directors believed that with additional consideration paid to the shareholders
of Lanier, a transaction with Premier could be in the best interests of the
shareholders.
Following additional discussions among the parties, on December 2, 1997,
Premier increased its offer to 1.9575 of its shares for each share of Lanier
common stock. In addition, the offer contemplated that Lanier would be
permitted to declare and pay a special dividend of $0.50 per share prior to
the consummation of the Merger. In addition to increasing the exchange ratio
and providing for the special dividend, the revised offer was enhanced in
several material respects, in that it provided a minimum value of $26.75 for
each share of Lanier stock based upon the trading value of Premier common
stock during a specified period and removed a cap on the aggregate value of
the consideration that might be received by the Lanier shareholders. This
offer was presented to the Board of Directors of Lanier on December 8, 1997.
While the Board did not accept the offer, the Board of Directors authorized
management of Lanier, with the assistance of counsel, to negotiate the terms
and conditions of definitive agreements setting forth the complete terms and
conditions of the Merger.
During the period from December 8 through December 11, 1997, the parties
negotiated definitive agreements pursuant to which Lanier would be acquired by
Premier. At a special meeting of the Board of Directors of Lanier held on
December 12, 1997, the Board of Directors of Lanier unanimously approved the
acquisition proposal for the reasons set forth below. The Chairman of the
Board and the President of Lanier were authorized to execute the definitive
agreements on December 16, 1997, subject to the preliminary opinion of
Lanier's investment banking firm that the transaction was fair to the
shareholders of Lanier from a financial point of view. Such an opinion was
received prior to the execution of the Agreement on December 16, 1997.
The Agreement permitted either party to terminate the proposed transaction
prior to December 31, 1997 upon discovery of a fact or circumstance that, in
the reasonable good faith judgment of the party, materially or adversely
impacted one or more of the economic benefits contemplated as a result of the
transaction. During the last fifteen days of December, Lanier reviewed certain
record of Premier, including loan files and related materials, pursuant to
this provision. Neither Premier nor Lanier indicated that it wished to
terminate the Agreement pursuant to this provision.
On January 7, 1998, the Board of Directors of Premier declared a three for
two stock split to be effective on January 23, 1998. In addition, accountants
for Premier were of the opinion that the special dividend of $0.50 per share
permitted under the Agreement might jeopardize the desired pooling of
interests accounting treatment. Based upon discussions with the Board of
Directors, its counsel and its accountants, the Board authorized an amendment
to the Agreement increasing the exchange ratio to 1.980 shares of Premier
Common Stock for each share of Lanier Common Stock, increasing the minimum
value of the exchange ratio to $27.0607 based upon the trading value of
Premier common stock during a specified period, and eliminating provision
relating to the special dividend. The Board of Directors of Lanier considered
a number of factors in approving the amendment, as discussed below, and in
addition authorized the payment of a $0.25 per share dividend to all
shareholders of record as of February 15, 1998.
On December 2, 1997, after several discussions with members of the Executive
Committee of the Board of Directors of Premier and consideration of an
analysis by Brown, Burke Capital Partners, Inc. ("BBCP") of the possible
combination with Lanier, Premier's Chief Executive Officer presented a
preliminary proposal to Lanier's Chief Executive Officer for the acquisition
of Lanier by Premier. On December 10, 1997, at a meeting of the Board of
Directors of Premier, and after a lengthy discussion and consideration of the
analysis by BBCP, Premier's management was authorized and instructed to
negotiate, with the advice of counsel, the terms and conditions of a
definitive agreement with Lanier whereby Lanier would be merged with and into
Premier Bank and all of the issued and outstanding shares of the common stock
of Lanier would be exchanged for the right to receive shares of Premier Common
Stock.
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Lanier's Reasons for the Merger. The Lanier Board of Directors has
unanimously approved the Agreement and the Plan and has determined that the
Merger is in the best interests of Lanier and its shareholders. The terms of
the Agreement and the Plan were the result of arms-length negotiations between
representatives of Lanier and representatives of Premier. Without assigning
any relative or specific weights to the factors, the Board of Directors of
Lanier considered the following material factors:
(a) the information presented to the directors by Lanier'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 a historical and prospective basis, and
(ii) the results of a due diligence review of Premier by Lanier
representatives;
(b) the alternatives to the Merger, including the merits of other potential
acquisition proposals;
(c) the enhancement of shareholder value as a result of the value of the
consideration to be received by Lanier's shareholders relative to Lanier'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 Merger;
(e) the competitive and regulatory environment for financial institutions
and commercial lending businesses generally;
(f) the income tax aspects of the Merger as a tax-free exchange of Lanier
Common Stock for Premier Common Stock;
(g) the likelihood that the Merger will be approved by applicable regulatory
authorities; and
(h) the ability of Lanier's shareholders to exchange their Lanier Common
Stock for Premier Common Stock in connection with the Merger and thereafter
have the ability to trade such securities on the American Stock Exchange.
Each member of the Board of Directors of Lanier has agreed to vote such
member's shares of Lanier Common Stock in favor of the Agreement, the Plan and
the Merger.
LANIER'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE LANIER
SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT, THE PLAN AND THE MERGER.
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Premier's Reasons for the Merger. The Premier Board of Directors has
unanimously approved the Agreement, the Plan and the Merger and has determined
that the Merger is in the best interests of Premier and its shareholders. In
approving the Agreement, the Plan and the Merger, the Premier Board of
Directors 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) Lanier'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
Forsyth County;
(b) the demographic, economic, and financial characteristics of Forsyth
County in which Lanier 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 Forsyth
County;
(d) the financial terms and income tax consequences of the proposed Merger;
and
(e) the management philosophy of Lanier and its compatibility with that of
Premier.
FAIRNESS OPINION
General
Lanier retained Alex Sheshunoff & Co. Investment Banking ("Sheshunoff"),
based upon its qualifications, expertise and reputation, to provide its
opinion of the fairness of the consideration to be received by Lanier's
shareholders in connection with the Merger. As part of its investment banking
business, Sheshunoff is regularly engaged in the valuation of securities in
connection with mergers and acquisitions and valuations for estate, corporate
and other purposes. Lanier's Board of Directors decided to retain Sheshunoff
based on its experience as a financial advisor in mergers and acquisitions of
financial institutions, and its knowledge of financial institutions. On
January 29, 1998, Sheshunoff rendered its written opinion that, as of such
date, the Merger consideration was fair, from a financial point of view, to
the holders of Lanier's common stock.
The full text of Sheshunoff's opinion which sets forth, among other things,
assumptions made, procedures followed, matters considered, and limitations on
the review undertaken, is attached as Appendix C to this Proxy
Statement/Prospectus. Lanier's shareholders are urged to read the Sheshunoff
opinion carefully and in its entirety. Sheshunoff's opinion is addressed to
Lanier's Board of Directors and does not constitute a recommendation to any
shareholder of Lanier as to how such shareholder should vote at the Lanier
Meeting.
In connection with its opinion, Sheshunoff: (i) analyzed certain internal
financial statements and other financial and operating data concerning Lanier
prepared by the management of Lanier; (ii) analyzed certain publicly available
financial statements, both audited and unaudited, of Lanier including those
included in their audited financial statements for the two years ended
December 31, 1995 and December 31, 1996 and for unaudited call reports ending
December 31, 1997; (iii) analyzed certain publicly available financial
statements, both audited and unaudited, of Premier, including those included
in Premier's Independent Auditor's Report for the two years ended December 31,
1995 and December 31, 1996 and Premier's preliminary report on the twelve
months ended December 31, 1997; (iv) reviewed certain internal confidential
financial projections of Lanier provided by the management of Lanier; (v)
discussed certain aspects of the past and current business operations,
financial condition and future prospects of Lanier and Premier with certain
members of their respective management; (vi) reviewed reported market prices
and historical trading activity of the Premier Common Stock; (vii) compared
the financial performance of Premier and the prices and trading activity of
the Premier Common Stock with that of certain other comparable publicly traded
companies and their securities; (viii) reviewed certain security analyst's
reports of the Premier Common Stock; (ix) reviewed the financial terms, to the
extent publicly available, of certain comparable precedent transactions; (x)
reviewed the Agreement; (xi) reviewed and discussed with Premier's senior
management forecasts of certain cost savings, operating efficiencies, revenue
and financial
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synergies expected to be achieved as a result of the Merger, and (xii)
performed such other analyses they have deemed appropriate.
In connection with its review, Sheshunoff relied upon and assumed the
accuracy and completeness of all of the foregoing information provided to it
by Lanier and Premier or information which is publicly available. Sheshunoff
did not assume any responsibility for independent verification of any of such
information. With respect to Lanier's internal confidential financial
projections, Sheshunoff assumed that such projections were reasonably prepared
on the basis reflecting the best currently available estimates and judgments
of the future financial performance of Lanier and did not independently verify
the validity of such assumptions. Sheshunoff did not make any independent
evaluation or appraisal of the assets or liabilities of Lanier, nor was
Sheshunoff furnished with any such appraisals. Sheshunoff did not examine any
individual loan files of Lanier. Sheshunoff is not an expert in the evaluation
of loan portfolios for the purposes of assessing the adequacy of tho allowance
for losses with respect thereto and has assumed that such allowances for each
of the companies are in the aggregate, adequate to cover such losses. We are
not experts in legal and tax matters that may impact the Merger and have
relied upon the opinion of Lanier's counsel and accountants with respect to
such matters.
With respect to Premier, Sheshunoff relied solely upon publicly available
data regarding Premier's financial condition and performance. Sheshunoff did
not conduct a due diligence review or any independent evaluation or appraisal
of the assets, liabilities or business prospects of Premier, was not furnished
with any evaluations or appraisals, and did not review any individual credit
files of Premier.
With respect to Lanier, Sheshunoff relied upon internal and publicly
available data regarding Lanier's financial condition and performance.
Sheshunoff performed a limited due diligence review of Lanier and discussed
its past financial performance and future prospects with its management.
Sheshunoff did not perform any independent evaluation or appraisal of the
assets, liabilities or business prospects of Lanier, was not furnished with
any evaluations or appraisals, and did not review any individual credit files
of Lanier.
Sheshunoff's opinion is necessarily based on economic, market and other
conditions as in effect on and the information made available to Sheshunoff as
of January 16, 1998.
In connection with rendering its opinion, Sheshunoff performed a variety of
financial analyses. The preparation of a fairness opinion 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, such an opinion is not readily susceptible to partial analysis
or summary description. Moreover, the evaluation of the fairness, from a
financial point of view, of the consideration to be received by the
shareholders of Lanier is to some extent a subjective one based on the
experience and judgment of Sheshunoff and not merely the result of
mathematical analysis of financial data. Accordingly, notwithstanding the
separate factors summarized below, Sheshunoff believes that its analyses must
be considered as a whole and that selecting portions of its analyses and of
the factors considered by it, without considering all analyses and factors,
could create an incomplete view of the evaluation process underlying its
opinion. The ranges of valuations resulting from any particular analysis
described below should not be taken to be Sheshunoff's view of the actual
value of Lanier.
In performing its analyses, Sheshunoff made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of Lanier. The analyses
performed by Sheshunoff are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than
suggested by such analyses. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold. In addition,
Sheshunoff's analyses should not be viewed as determinative of Lanier's
Board's or Lanier's Management's opinion with respect to the value of Lanier.
The following is a summary of the analyses performed by Sheshunoff in
connection with its opinion dated as of January 29, 1998:
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Analysis of Selected Transactions. Sheshunoff performed an analysis of
premiums paid in selected pending or recently completed acquisitions of
banking organizations in Georgia and in the Southeastern United States, with
comparable characteristics to the Merger. Two sets of comparable transactions
were analyzed to ensure a thorough comparison.
The first set of comparable transactions (the "state transactions") reflects
stock transactions within close proximity to Lanier and its market area. The
state transactions specifically consisted of nine (9) mergers and acquisitions
of banking organizations located in Georgia which announced stock transactions
between January 1, 1997 and December 31, 1997. The analysis yielded multiples
of the purchase price relative to: (i) book value ranging from 1.10 times to
3.30 times with an average of 2.28 times and a median of 2.34 times (compared
with the multiple in the Merger, based on the closing price of the Premier
Common Stock at January 16, 1998 and adjusted for a 3 for 2 Premier stock
split, of 3.16 times December 31, 1997 book value); (ii) core book value
ranging from 1.18 times to 4.52 times with an average of 2.95 times and a
median of 3.11 times (compared with the multiple in the Merger, based on the
closing price of the Premier Common Stock at January 16, 1998 and adjusted for
a 3 for 2 Premier stock split, of 5.81 times December 31, 1997 core book
value); (iii) last 12 months earnings ranging from 16.15 times to 22.24 times
with an average of 19.21 times and a median of 19.19 times (compared with the
multiple in the Merger, based on the closing price of the Premier Common Stock
at January 16, 1998 and adjusted for a 3 for 2 Premier stock split, of 40.24
times last 12 months earnings as of December 31, 1997); and (iv) total assets
ranging between 11.55% and 30.73% with an average of 21.42% and a median of
21.97% (compared with the multiple in the Merger, based on the closing price
of the Premier Common Stock at January 16, 1998 and adjusted for a 3 for 2
Premier stock split, of 42.22% of December 31, 1997 total assets. Core book
value is defined to be 6% of total assets.
The second set of comparable transaction (the "regional transactions")
reflects a more narrowly defined group of comparable transactions based on
profitability, asset size and regional location. The regional transactions
consisted of eleven (11) stock transactions in the Southeastern United States
between January 1, 1997 and December 31, 1997 with total assets under $200
million and a return on average equity under 10%. The analysis yielded
multiples of the transactions' purchase price relative to: (i) book value
ranging from 1.10 times to 3.36 times with an average of 2.10 times and a
median of 1.83 times (compared with the multiple in the Merger, based on the
closing price of the Premier Common Stock at January 16, 1998 and adjusted for
a 3 for 2 Premier stock split of 3.16 times December 31, 1997 book value);
(ii) core book value ranging from 1.18 times to 6.19 times with an average of
2.93 times and a median of 2.27 times (compared with the multiple in the
Merger, based on the closing price of the Premier Common Stock at January 16,
1998 and adjusted for a 3 for 2 Premier stock split, of 5.81 times December
31, 1997 core book value); (iii) last 12 months earnings ranging from 14.50
times to 40.06 times with an average of 24.04 times and a median of 19.29
times (compared with the multiple in the Merger, based on the closing price of
the Premier Common Stock at January 16, 1998 and adjusted for a 3 for 2
Premier stock split, of 40.24 times last 12 months earnings as of December 31,
1997); and (iv) total assets ranging between 11.55% and 45.79% with an average
of 21.86% and a median of 17.08% (compared with the multiple in the Merger,
based on the closing price of the Premier Common Stock at January 16, 1998 and
adjusted for a 3 for 2 Premier stock split, of 42.22% of December 31, 1997
total assets.
Discounted Cash Flow Analysis. Using discounted cash flow analysis,
Sheshunoff estimated the present value of the future stream of after-tax cash
flows that Lanier could produce through the year 2002, under various stand-
alone circumstances. Sheshunoff estimated the terminal value for Lanier at the
end of the period by applying multiples of earnings ranging from 8 times to 18
times and then discounting the cash flow streams, dividends paid to the
shareholders (assuming all earnings in excess of that required to maintain a
tangible equity to tangible asset percentage of 6% are paid out in dividends)
and terminal value using discount rates ranging from 13% to 17% chosen to
reflect different assumptions regarding the required rates of return of Lanier
and the inherent risk surrounding the underlying projections. This discounted
cash flow analysis indicated a range of $12.00 per share to $19.00 per share
based on 804,380 shares outstanding. This compares favorably to the value of
the Merger consideration of $37.46 per share, based on the closing price per
share of Premier Common Stock at January 16, 1998 and adjusted for a 3 for 2
Premier stock split.
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Sheshunoff also performed a discounted cash flow analysis using an estimated
terminal value for Lanier at the end of the period by applying multiples of
core book value ranging from 1.2 times to 2.2 times and then discounting the
cash flow streams, dividends paid to the shareholders (assuming all earnings
in excess of that required to maintain a tangible equity to tangible asset
percentage of 6% are paid out in dividends) and terminal value using discount
rates ranging from 13% to 17% chosen to reflect different assumptions
regarding the required rates of return of Lanier and the inherent risk
surrounding the underlying projections. This discounted cash flow analysis
indicated a range of $12.00 per share to $20.00 per share. This compares
favorably to the value of the Merger consideration for Lanier of $37.46 per
share, based on the closing price per share of Premier Common Stock at January
16, 1998 and adjusted for a 3 for 2 Premier stock split.
Comparable Company Analysis. Sheshunoff compared selected balance sheet
data, asset quality, capitalization and profitability measures and market
statistics using financial data at or for the twelve months ended September
30, 1997 and market data as of December 31, 1997 for Premier to a group of
selected Southeastern bank holding companies which Sheshunoff deemed to be
relevant.
The group of selected Georgia banking organizations (the "Comparable
Composite") included ABC Bancorp, Inc., Century South Banks, Inc., First
Banking Company of Southeast Georgia, First Community Bankshares, Inc., First
Sterling Banks, Inc., Habersham Bancorp, Merit Holding Corporation, PAB
Bankshares, Inc., Savannah Bancorp, Inc., Summit Bank Corp., Southwest Georgia
Financial, Synovus Financial Corp. and SunTrust Banks, Inc. This comparison,
among other things, showed that at September 30, 1997: (i) Premier's equity to
asset percentage was 8.95%, compared to median of 10.01% for the Comparable
Composite; (ii) for the last twelve months ended September 30, 1997, Premier's
return on average equity was 18.83%, compared to a median of 13.51% for the
Comparable Composite; (iii) for the last twelve months ended September 30,
1997, Premier's return on average assets was 1.61%, compared to a median of
1.35% for the Comparable Composite; (iv) as of September 30, 1997, Premier's
nonperforming assets to total assets ratio was 0.36%, compared to a median of
0.65% for the Comparable Composite; (v) as of January 16, 1998 Premier's price
per share to December 31, 1997 book value per share was 4.25 times, compared
to a median of 2.08 times for the Comparable Composite; and (vi) as of January
18, 1998, Premier's price per share to last twelve months earnings per share
as of December 31, 1997 was 25.91 times, compared to a median of 21.07 times
for the Comparable Composite.
Sheshunoff also reviewed the pricing multiples paid by Premier for other
banking organizations during 1997. On December 12, 1997, Premier completed its
transaction with Citizens Gwinnett Bankshares, Inc. Premier paid an estimated
5.12 times June 30, 1997 core book value or approximately $51.6 million based
on the adjusted closing stock price at December 12, 1997 of $17.75 per share.
Sheshunoff also compared selected stock market results of Premier to the
publicly available corresponding data of other composites which Sheshunoff
deemed to be relevant, including S&P 500 index. Results from indexing the S&P
500 and Premier's stock from 6/30/97 to 1/16/98 revealed slightly greater
price movements of Premier's stock compared to the price movements of the S&P
500 index. The price movement was significantly greater in December 1997 when
Premier announced its intent to acquire The Bank Holding Company.
Sheshunoff reviewed the security analysts report of Premier prepared by
certain security analysis. Sheshunoff expresses no opinion as to the future
market price of Premier Common Stock.
No company or transaction used in the Comparable Composite and comparable
transaction analyses is identical to Lanier or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of Lanier 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) is not in itself a
meaningful method of using comparable transaction data or comparable company
data.
Pursuant to an engagement letter dated, December 16, 1997, between Lanier
and Sheshunoff, Lanier agreed to pay Sheshunoff $25,000 for its fairness
opinion on the Merger consideration. Lanier has also agreed to
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indemnify and hold harmless Sheshunoff and its officers and employees against
certain liabilities in connection with its services trader the engagement
letter, except for liabilities resulting from the negligence of Sheshunoff.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the 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 Merger will become
effective upon the filing of the Certificate of Merger. Unless otherwise
agreed upon by Premier and Lanier, and subject to the conditions to the
obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur on 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 Merger or (ii)
the date on which the Agreement, the Plan and the Merger is approved by the
requisite vote of holders of Lanier Common Stock.
No assurance can be provided that the necessary shareholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. Premier and Lanier anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated in the second quarter of 1998. However, delays in the consummation
of the Merger could occur.
The Board of Directors of either Premier or Lanier generally may terminate
the Agreement and the Plan if the Merger is not consummated by August 31,
1998, unless the failure to consummate by that date is the result of a breach
of the Agreement by the party seeking termination. See "--Conditions to
Consummation of the Merger" and "--Waiver, Amendment, and Termination of the
Agreement and the Plan."
DISTRIBUTION OF STOCK CERTIFICATES AFTER THE 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 Lanier a letter of transmittal, together with instructions for
the exchange of such shareholders' certificates representing shares of Lanier
Common Stock for certificates representing shares of Premier Common Stock.
LANIER 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 Lanier Common
Stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of Lanier 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 Merger and a check for the
amount to be paid in lieu of any fractional share interest, without interest.
After the Effective Date, holders of record of Lanier Common Stock as of the
Effective Date will be entitled to vote at any meeting of Premier shareholders
the number of shares of Premier Common Stock into which their Lanier Common
Stock has been converted, regardless of whether such shareholders have
surrendered their certificates of Lanier Common Stock. NO DIVIDEND OR OTHER
DISTRIBUTION PAYABLE AFTER THE EFFECTIVE DATE WITH RESPECT TO PREMIER COMMON
STOCK, HOWEVER, WILL BE PAID TO THE HOLDER OF ANY UNSURRENDERED LANIER 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 Effective Date, there will be no transfers of shares of Lanier
Common Stock on Lanier's stock transfer books. If certificates representing
shares of Lanier Common Stock are presented for transfer after the Effective
Date, they will be canceled and exchanged for the shares of Premier Common
Stock, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
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(a) approval of the Merger from the FDIC and the Georgia Department without
any conditions or restrictions that would, in the reasonable good faith
judgment of either party, so materially adversely impact the economic benefits
of the transactions contemplated by the Agreement and the Plan as to render
inadvisable the consummation of the Merger, and the expiration of all
applicable waiting periods;
(b) approval by the holders of two-thirds of the shares of Lanier Common
Stock entitled to vote on the Agreement, the Plan and the Merger;
(c) the receipt of all consents by both parties required for the
consummation of the 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;
(d) 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 Merger will constitute a tax-free reorganization within the meaning of
Section 368(a)(1)(A) of the Code; (ii) the exchange in the Merger of Lanier
Common Stock for Premier Common Stock will not give rise to gain or loss to
the shareholders of Lanier 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 of appraisal; and (iii) neither
Premier nor Lanier will recognize gain or loss as a consequence of the Merger;
(e) approval for listing on the American Stock Exchange of the shares of
Premier Common Stock to be issued in the Merger; and
(f) receipt of letters from Mauldin & Jenkins, LLC and Bricker & Melton,
P.A. dated as of the Effective Date, confirming that the Merger will qualify
for pooling-of-interests accounting treatment.
Consummation of the Merger also is subject to the satisfaction or waiver of
various other conditions specified in the Agreement, including, among others:
(i) the delivery by Premier and Lanier of opinions of their respective counsel
and certificates executed by their duly authorized officers as to compliance
with the Agreement; and (ii) as of the 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 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
Agreement. Applications for the approvals described below have been submitted
to the appropriate regulatory agencies.
Premier and Lanier are not aware of any material governmental approvals or
actions that are required for consummation of the 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 Merger requires the prior approval of the FDIC. In granting its
approval, the FDIC must take into consideration, among other factors, the
financial and managerial resources and future prospects of the institutions
and the convenience and needs of the communities to be served. The relevant
statutes prohibit the FDIC from approving the Merger (i) if it would result in
a monopoly or be in furtherance of any combination or conspiracy to monopolize
or attempt to monopolize the business of banking in any part of the United
States or (ii) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it
would be a restraint of trade in any other manner, unless the FDIC finds that
any anticompetitive effects are outweighed clearly by the public interest and
the probable effect of the transaction in meeting the convenience and needs of
the communities to be served. Under the Bank Merger Act, the Merger may not be
consummated until the thirtieth (30th) day, which may be shortened to the
fifteenth (15th) day, following the date of FDIC approval, during which time,
the United States Department of Justice may challenge the transaction
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on antitrust grounds. The commencement of any antitrust action would stay the
effectiveness of the FDIC's approval, unless a court specifically orders
otherwise.
The Merger is also subject to the approval of the Georgia Department. In its
evaluation, the Georgia Department will take into account considerations
similar to those applied by the FDIC.
RIGHTS OF DISSENTING SHAREHOLDERS
By virtue of the provisions of the Financial Institutions Code applicable to
Georgia state banks and trust companies, the rights of shareholders who desire
to dissent from the Merger are governed by the provisions of Section 14-2-1301
et seq. of the Georgia Code. Pursuant to such provisions, if the Merger is
consummated, any shareholder of record of Lanier who objects to the 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 Lanier Common
Stock. 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 Lanier in writing of the name and address of each person on whose
behalf he or she 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 Lanier Common Stock equals the value of the shares immediately
before the Effective Date of the Merger, excluding any appreciation or
depreciation in anticipation of the Merger.
Any Lanier shareholder desiring to receive payment of the fair value of his
or her Lanier Common Stock in accordance with the requirements of the Georgia
Code: (a) must deliver to Lanier prior to the time the shareholder vote on the
Agreement and the Plan is taken, a written notice of his or her intent to
demand payment for his or her shares if such Merger is consummated; (b) must
not vote his or her shares in favor of the Agreement or the Plan; and (c) must
demand payment and deposit the stock certificates representing Lanier Common
Stock in accordance with the terms of a notice which will be sent to such
shareholder by Premier no later than 10 days after the Merger is consummated.
A filing of the written notice of intent to dissent with respect to the Merger
should be sent to: Lanier Bank & Trust Company, 214 Dahlonega Road, Cumming,
Georgia 30040, Attention: President. A VOTE AGAINST THE AGREEMENT AND THE PLAN
ALONE WILL NOT SATISFY THE REQUIREMENTS FOR THE SEPARATE WRITTEN NOTICE OF
INTENT TO DISSENT TO THE MERGER, THE SEPARATE WRITTEN DEMAND FOR PAYMENT OF
THE FAIR VALUE OF SHARES OF LANIER 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.
Within 10 days of the later of the Effective Date or receipt of a payment
demand by a shareholder who deposits his or her stock certificates in
accordance with the Lanier's dissenters' notice sent to those shareholders who
notified Lanier of their intent to dissent, described in (c) above, Premier
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: (a) Lanier'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; (b) an explanation of how the interest
was calculated; (c) 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 (d) 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 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 Lanier Common Stock.
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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 Forsyth 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 Financial Institutions Code and the Georgia Code relating to statutory
dissenters' rights and is qualified in its entirety by reference to the
dissenters' rights provisions of the Financial Institutions Code and the
Georgia Code, which are reproduced in full in Appendix B to this Proxy
Statement/Prospectus and which are incorporated herein by this reference.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT AND THE PLAN
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Premier and
Lanier approved by their respective Boards of Directors; provided, however,
that after approval by the holders of Lanier Common Stock, no amendment that
would require further approval by such shareholders under the Financial
Institutions Code may be made without the approval of such shareholders.
The Agreement and the Plan may be terminated, and the Merger abandoned, at
any time prior to the Effective Date, either before or after approval by the
Lanier 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 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 Lanier Common Stock shall not have approved
the Agreement and the Plan in accordance with the provisions of the
Financial Institutions 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 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;
(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
Agreement which cannot be or has not been cured within thirty (30) days
after the giving of written notice to the beaching 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
Merger cannot be satisfied or fulfilled by the date specified in the
Agreement;
(vi)by mutual consent of the Board of Directors of Premier and Lanier;
(vii)by either party if the Merger shall not have been consummated by
August 31, 1998, unless the failure to consummate by that date is the
result of a breach of the Agreement by the party seeking termination; or
(viii)by the Board of Directors of either party if the average closing
price of the Premier Common Stock for the ten trading day period ending on
the day immediately prior to the effective date of the Registration
Statement, is less than $12.00 per share.
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If the Agreement and the Plan are 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 MERGER
Each of Lanier 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 Agreement and the Plan or adversely affect in any material respect the
ability of either party to perform its covenants and agreements under the
Agreement.
Lanier has agreed not to take certain actions relating to the operation of
its business pending consummation of the Merger without the prior approval of
Premier. 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) with
the exception of the exercise of stock options outstanding on the date of the
Agreement, changing its authorized or issued capital stock or paying any
dividend or other distribution in respect of its capital stock, except that
Lanier is permitted to declare and pay prior to the Effective Date, cash
dividends not to exceed, in the aggregate, $.25 per share; (iv) disposing of
any asset having a book value in excess of $50,000 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 for damages in excess
of $50,000 or which imposes material restrictions upon its operations; (vii)
entering into, modifying or terminating any material contract except in the
ordinary course of business; (viii) entering into or amending any employment
contract between Lanier and any person that Lanier does not have the
unconditional right to terminate without liability; (ix) making 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 (x) granting any increase in
compensation or benefits to any employees of Lanier whose annual salary
exceeds $35,000, except in accordance with past practice or previously
approved by the Board of Directors of Lanier.
DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE MERGER
Management. The officers and directors of Premier Bank in office immediately
prior to the Effective Date, together with such additional persons as may
thereafter be elected, shall serve as the officers and directors of Premier
Bank from and after the Effective Date in accordance with the Articles of
Incorporation and Bylaws of Premier Bank. In addition, on the Effective Date,
A. Lee Wilhelm will be elected President of Premier Bank's Central Metro
Division. In addition, at the Effective Date, John E. Aderhold shall be
elected to the Board of Directors of Premier to serve on such board until the
annual meeting of Premier shareholders to be held in the second quarter of
1999. The remaining members of the Lanier Board of Directors on the Effective
Date shall be appointed to serve as members of Premier's Marketing and
Development Board for Forsyth County.
John E. Aderhold, age 72, has served as Chairman of the Board of Directors
of Lanier since 1986. Mr. Aderhold also served as Chairman of Rayloc
Corporation, an automobile parts company located in Cumming, Georgia until his
retirement in February of 1993.
EMPLOYMENT AGREEMENTS
On the Effective Date of the Merger, Premier Bank will enter into a seven
month employment agreement with Mr. Wilhelm which shall provide that Mr.
Wilhelm shall serve as President of Premier Bank's Central
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Metro Division. Under the employment agreement, Mr. Wilhelm's annual base
salary will be $135,000. In addition, Premier will grant Mr. Wilhelm an option
to purchase 30,000 shares of Premier Common Stock at an exercise price of ten
dollars ($10.00) per share. These options shall vest on the earlier to occur
of (i) six months from the Effective Date, provided Mr. Wilhelm remains
employed with Premier Bank; or (ii) termination of employment other than as a
result of a termination for cause. The employment agreement also contains a
one year confidentiality covenant.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Agreement provides that Premier shall indemnify, defend, and hold
harmless each person who was entitled to indemnification from Lanier for a
period of three years after the Effective Date, against all losses, claims,
damages, liabilities, costs, expenses, judgments, fines and amounts paid in
settlement in connection with any litigation arising out of actions or
omissions occurring at or prior to the Effective Date to the full extent
permitted by Georgia law and Lanier's Articles of Incorporation and Bylaws.
The Agreement also provides that, after the Effective Date, Premier will
provide generally to officers and employees of Lanier 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
Lanier prior to the Effective Date will be treated as service with Premier or
its subsidiaries. The Agreement further provides that Premier will honor all
employment, severance, consulting, and other compensation contracts previously
disclosed to Premier between Lanier and any current or former director,
officer, or employee, and all provisions for vested amounts earned or accrued
through the Effective Date under Lanier's benefit plans.
Certain terms of Mr. Wilhelm's employment agreement with Premier Bank are
more favorable to Mr. Wilhelm than the terms of his current employment with
Lanier. Such more favorable terms include the granting of options to purchase
Premier Common Stock and the provision of certain additional perquisites not
currently provided to Mr. Wilhelm by Lanier. Such perquisites include
participation in all incentive, savings and retirement plans maintained by
Premier and applicable to senior executive officers of Premier Bank.
As of the Record Date, the directors and executive officers of Lanier
beneficially owned no shares of Premier Common Stock.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF MATERIAL ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE 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 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 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 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 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.
In connection with the filing of the Registration Statement, Womble Carlyle
Sandridge & Rice, PLLC delivered a tax opinion to Premier and Lanier ("Tax
Opinion"). The following discussion summarizes the material income tax
consequences to the shareholders of Premier and Lanier, and is qualified in
its entirety by
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reference to such Tax Opinion, which is an exhibit to the Registration
Statement. In connection with the Tax Opinion, Womble Carlyle Sandridge &
Rice, PLLC has relied upon such factual assumptions as are customary in
similar tax opinions and certain representations made by Premier and Lanier in
the Merger Agreement, and by Premier and Lanier to Womble Carlyle Sandridge &
Rice, PLLC. The accuracy of the Tax Opinion is dependent upon the correctness
of the factual assumptions and representations upon which the Tax Opinion is
premised.
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
Lanier concerning certain federal income tax consequences of the proposed
Merger under federal income tax law. The Tax Opinion will not be binding upon
the IRS or the courts. It is such firm's opinion that if the Merger is
consummated as proposed:
(a) The Merger will be a tax-free reorganization within the meaning of
Section 368(a) of the Code.
(b) The shareholders of Lanier will recognize no gain or loss upon the
exchange of their Lanier 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 Lanier Common Stock of cash in lieu of fractional
shares.
(c) Cash received by a dissenting shareholder of Lanier will be treated as
having been received by such shareholder as a distribution in
redemption of his or her Lanier Common Stock, subject to the provisions
and limitations of section 302 of the Code. If, as a result of such
distribution, a shareholder owns no Premier Common Stock either
directly or through the application of section 318(a) of the Code, the
redemption will be a complete termination of interest within the
meaning of section 302(b)(3) of the Code and such cash will be treated
as a distribution in exchange for his or her Lanier Common Stock, as
provided in section 302(a) of the Code. Under section 1001 of the Code,
gain (or subject to the limitations of section 267 of the Code) loss
will be realized and recognized by such shareholder in an amount equal
to the difference between the amount of such cash and the adjusted
basis of the Lanier Common Stock surrendered. Holders of Lanier Common
Stock electing to exercise dissenters' rights should consult their own
tax advisors as to the tax treatment in their particular circumstances.
(d) No income, gain or loss will be recognized by Premier, Premier Bank, or
Lanier as a consequence of the Merger.
(e) The aggregate tax basis of Premier Common Stock received by holders of
Lanier Common Stock pursuant to the Merger will be the same tax basis
of the shares of Lanier 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.
(f) The holding period of the shares of Premier Common Stock received by
the Lanier shareholders will include the holding period of the shares
of Lanier Common Stock exchanged therefor, provided that the Lanier
Common Stock is held as capital assets on the date of the consummation
of the Merger.
Among other things, the opinion of Womble Carlyle Sandridge & Rice, PLLC is
based on Lanier shareholders' maintaining sufficient equity ownership interest
in Premier after the 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., Lanier) 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 Lanier Common Stock and Premier
Common Stock held by Lanier shareholders and otherwise sold, redeemed or
disposed of prior to or shortly after the 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 Merger. In addition to the foregoing
requirements, certain additional matters must be true with respect to the
Merger. Premier believes that the factual matters will be satisfied.
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THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN OR OTHER TAX
CONSEQUENCES OF THE MERGER OR THE TAX TREATMENT OF OPTIONS THAT ARE OR HAVE
BEEN RECEIVED AS COMPENSATION. 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 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 Lanier will be carried forward and
recorded on the financial statements of Premier at their previously recorded
amounts. In order for the Merger to qualify for pooling-of-interests
accounting treatment, substantially all (90% or more) of the outstanding
Lanier Common Stock must be exchanged for Premier Common Stock. There are
certain other criteria that must be satisfied in order for the Merger to
qualify as a pooling of interests, some of which criteria cannot be satisfied
until after the Effective Date.
For information concerning certain conditions to be imposed on the exchange
of Lanier Common Stock for Premier Common Stock in the Merger by affiliates of
Lanier and certain restrictions to be imposed on the transferability of the
Premier Common Stock received by those affiliates in the 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 Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement and the Plan, including fees and expenses of its own financial or
other consultants, investment bankers, accountants, and counsel.
The 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 Merger and (ii) (x) $50,000 if the breach was not willful
or (y) $500,000 if the breach was willful or if the Agreement was terminated
in contemplation of a competing proposal to acquire Lanier.
RESALES OF PREMIER COMMON STOCK
The shares of Premier Common Stock to be issued to Lanier shareholders in
the 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, Lanier (such persons are
referred to hereinafter as "affiliates" and generally include executive
officers, directors, and 10% shareholders) at the time of the Lanier Meeting.
Affiliates may not sell shares of Premier Common Stock acquired in connection
with the 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 Lanier after the consummation of the Merger have been published.
Each person who Lanier reasonably believes to be an affiliate of Lanier 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 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.
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DESCRIPTION OF PREMIER COMMON STOCK
Premier is currently authorized to issue 20,000,000 shares of Premier Common
Stock, of which 15,238,776 shares were issued and outstanding at February 3,
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 September 30, 1997, under
such requirements and guidelines, Premier's combined subsidiaries had
$1,057,000, respectively, 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 SHAREHOLDERS
General. As a result of the Merger, holders of Lanier Common Stock will be
exchanging their shares of a Georgia chartered commercial bank governed by the
Financial Institutions Code and Lanier's Articles of Incorporation and Bylaws,
for shares of Premier, a Georgia corporation governed by the Georgia Code and
Premier's Articles of Incorporation and Bylaws. The following is a summary of
the material differences in the rights of shareholders of Premier and Lanier.
This summary does not purport to be a complete discussion of, and is qualified
in its entirety by reference to, the Financial Institutions Code, the Georgia
Code and the Articles of Incorporation and Bylaws of Premier and Lanier.
Authorized Capital Stock. Premier is currently authorized to issue
20,000,000 shares of common stock, $1.00 par value, of which 15,238,776 shares
were outstanding as of February 3, 1998. No other class of common stock is
currently authorized.
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.
Lanier is authorized to issue 2,000,000 shares of Lanier Common Stock, $5.00
par value, of which 859,974 shares of Lanier Common Stock were issued and
outstanding as of the Record Date. No other class of common stock is
authorized. Pursuant to the Financial Institutions Code, Lanier's Board of
Directors may issue additional shares of Lanier Common Stock up to the maximum
authorized in Lanier's Articles of Incorporation, without shareholder
approval. Lanier's Articles of Incorporation do not provide the shareholders
of Lanier with preemptive rights to purchase or subscribe to any unissued
authorized shares of Lanier Common Stock.
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. The term "cause"
shall mean (i) the adjudication of such director as incompetent by a court
having jurisdiction in the matter, (ii) the conviction of such director of a
felony, (iii) the failure of such director to accept office either in writing
or by attendance at no less than one of the first two meetings of the Premier
Board of Directors following his or her election or (iv) the failure of such
director to attend regular meetings of the Premier Board of Directors for six
consecutive meetings without having been excused by the Premier Board of
Directors.
Under Lanier's Bylaws, the entire Board of Directors or any individual
director may be removed from office with or without cause by the affirmative
vote of the holders of a majority of the shares entitled to vote at an
election of directors. In addition, the Board of Directors may remove a
director from office if such director is adjudicated an incompetent by a
court, if he is convicted of a felony, if he files for protection from
creditors under bankruptcy laws, if he does not, within 60 days of his
election, accept the office in writing or by attendance at a meeting of the
Board of Directors and fulfill any other requirements for holding the office
of director, or if
29
<PAGE>
he fails to attend regular meetings of the Board of Directors for six
consecutive meetings without having been excused by the Board of Directors.
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, Premier's Articles of Incorporation, or Premier's Bylaws.
Lanier's Bylaws provide that at all meetings of the shareholders, the
presence in person or by proxy of the holders of more than one-half of the
shares outstanding and entitled to vote shall constitute a quorum. If a quorum
is present, a majority of the shares represented at the meeting and entitled
to vote on the subject matter shall determine any matter coming before the
meeting unless a different vote is required by the Financial Institutions
Code, or Lanier's Articles of Incorporation or Bylaws.
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.
Lanier's Bylaws provide that any action required by the Financial
Institutions Code to be taken at 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.
Lanier's Bylaws provide that special meetings of shareholders may be called
by Lanier upon the written request of the holders of 25% or more of all the
shares of capital stock of Lanier entitled to vote in an election of
directors. Special meetings of shareholders may also be called at any time by
the President, Chairman of the Board, or the Board of Directors. Notice must
be given in writing not less than 10 nor more than 50 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 18 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 17 members.
Lanier'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
resolution of the shareholders. The Board of Directors may increase or
decrease the number of directors by not more than two (2) 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 Lanier's Board of Directors presently
consists of eight members.
30
<PAGE>
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 listed 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 the 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>
CALENDAR PERIOD
- ---------------
SALES PRICE
-----------
HIGH LOW
----- -----
<S> <C> <C>
1995
First Quarter...................................................... $5.10 $4.57
Second Quarter..................................................... 5.54 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 6.93
Fourth Quarter..................................................... 7.84 6.93
1997
First Quarter...................................................... $9.46 $7.84
Second Quarter..................................................... 11.67 9.25
Third Quarter...................................................... 14.00 10.08
Fourth Quarter..................................................... 17.92 13.08
1998
First Quarter (through February, 1997)............................. $ $
</TABLE>
LANIER MARKET PRICES
Lanier Common Stock is not listed for quotation on the American Stock
Exchange or on any other stock exchange. The price of the Lanier Common Stock
in the last known transaction, which occurred on October 6, 1997, was $18.50
per share. The price of Lanier Common Stock in the last known transaction
prior to December 16, 1997 (the date the Merger was publicly announced) was
$18.50 per share and occurred on October 6, 1997. Based on transactions of
which Lanier's management is aware, sales of Lanier Common Stock from January
1, 1995 to January 1, 1996 were in a price range of $13.50 to $18.00 per
share. All sales of Lanier Common Stock during 1996 were for a price of $16.50
per share. Sales of Lanier Common Stock from January 1, 1997 until January 1,
1998 were in a price range of $16.50 to $18.50 per share. No assurance can be
given that the stated price range represents the actual market value of Lanier
Common Stock.
RECENT PRICES
On February , 1998, the last day on which Premier Common Stock was traded
prior to the mailing of this 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 15, 1997, the date of
the last sale reported by the American Stock Exchange prior to December 16,
1997 (the date the proposed Merger was publicly announced), the last reported
sales price of Premier Common Stock was $15.58 per share. The last known sales
price of Lanier Common Stock was $18.50 per share and occurred on October 6,
1997.
31
<PAGE>
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 $.31 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 $.08 dividend in May, 1997, based on
Premier's performance in the first quarter of 1997, paid a $.09 dividend in
August, 1997 based on Premier's performance in the second quarter of 1997 and
paid a $.10 dividend in November, 1997 based on Premier's performance in the
third 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.
The payment of cash dividends to the holders of Lanier Common Stock is
subject to authorization by the Board of Directors of Lanier. During fiscal
1996, Lanier paid a $0.15 per share cash dividend on April 17, 1996. During
fiscal 1997 Lanier paid a 5% stock dividend and a $0.25 per share cash
dividend on April 30, 1997.
Premier is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends from its
subsidiaries, which subsidiaries are subject to certain legal restrictions on
the amount of dividends they are permitted to pay. Lanier is also subject to
certain legal restrictions on the amount of dividends it is permitted to pay
to its shareholders. See "Certain Regulatory Considerations--Payment of
Dividends."
SHAREHOLDERS OF RECORD
As of the Record Date, there were approximately 1,261 holders of record of
Premier Common Stock, and 494 holders of record of Lanier Common Stock.
32
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
GENERAL
The following unaudited pro forma condensed combined financial statements
are presented assuming the Merger will be accounted for as a pooling of
interests and reflect the combination of the historical consolidated financial
statements of Premier and Lanier. The pro forma condensed combined balance
sheet has been prepared as if the acquisition had been consummated at the
beginning of the period covered. The pro forma condensed combined statements
of income have been prepared as if the acquisition had been consummated on
January 1, 1994. The following financial statements do not reflect any
anticipated cost savings which may be realized by Premier after consummation
of the Merger.
The pro forma information does not purport to represent what Premier's and
Lanier's combined results of operations actually would have been if the Merger
had occurred on January 1, 1994.
PREMIER BANCSHARES, INC.
PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED PRO FORMA
SECURITIES ADJUSTMENTS PRO FORMA
PREMIER ISSUANCE LANIER DEBIT (CREDIT) COMBINED
-------- ---------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks. $ 28,566 $ $ 2,189 $ $ 30,755
Interest-bearing
deposits in banks...... 1,729 1,729
Federal Funds sold...... 9,299 27,455 19,905 56,659
Securities held to
maturity............... 462 462
Securities available-
for-sale............... 124,922 9,385 134,307
Loans held for sale..... 51,043 51,043
Loans................... 509,426 30,517 539,943
Less allowance for loan
losses................. 8,850 664 9,514
-------- ------- ------- ------- --------
Loans, net............. 500,576 0 29,853 0 530,429
-------- ------- ------- ------- --------
Premises and equipment.. 19,630 1,949 21,579
Goodwill and other
intangibles............ 2,507 2,507
Other assets............ 11,508 1,217 12,725
-------- ------- ------- ------- --------
Total assets........... $749,780 $27,455 $64,960 $ 0 $842,195
======== ======= ======= ======= ========
Deposits
Noninterest-bearing.... $ 86,118 $ $11,887 $ $ 98,005
Interest-bearing....... 548,555 39,984 588,539
-------- ------- ------- ------- --------
Total deposits......... 634,673 0 51,871 686,544
Federal funds purchased
and securities sold
under repurchase
agreements............. 13,503 3,500 17,003
Other borrowings........ 29,822 29,822
Other liabilities....... 7,358 313 (250) 7,921
-------- ------- ------- ------- --------
Total liabilities...... 685,356 0 55,684 (250) 741,290
-------- ------- ------- ------- --------
Guaranteed preferred
beneficial interests in
the Company's
subordinated
debentures............. 27,455 27,455
-------- ------- ------- ------- --------
Common stock............ 10,003 4,022 (2,573)(1 & 2) 16,598
Capital surplus......... 31,923 3,858 2,573 (1 & 2) 33,208
Retained earnings....... 21,906 1,383 250 23,039
Unrealized gains
(losses) on securities
available-for-sale, net
of tax................. 592 13 605
-------- ------- ------- ------- --------
64,424 0 9,276 250 73,450
-------- ------- ------- ------- --------
Total liabilities and
stockholders' equity.. $749,780 $27,455 $64,960 $ 0 $842,195
======== ======= ======= ======= ========
</TABLE>
See Notes to Pro Forma Combined Financial Statements
33
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED PRO FORMA
SECURITIES ADJUSTMENTS PRO FORMA
PREMIER ISSUANCE LANIER DEBIT (CREDIT) COMBINED
---------- ---------- ------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Interest income......... $ 46,126 $ $3,640 $ $49,766
Interest expense........ 21,811 1,449 -- 23,260
---------- ---- ------- ---- ----------
Net interest income... 24,315 0 2,191 26,506
Provision for loan
losses................. 694 -- -- 694
---------- ---- ------- ---- ----------
Net interest income
after provision for
loan losses............ 23,621 0 2,191 -- 25,812
---------- ---- ------- ---- ----------
Other income............ 3,356 339 3,695
Service charges on
deposit accounts..... 757 757
Gain on sale of
subsidiary........... 9,881 9,881
Mortgage loan income.. (31) 5 (26)
Security transactions,
net.................. 545 121 -- 666
---------- ---- ------- ---- ----------
Other................. 14,508 0 465 -- 14,973
---------- ---- ------- ---- ----------
Other expenses
Salaries and employee
benefits............. 15,893 1,048 16,941
Occupancy and
equipment expenses... 3,530 222 3,752
Other operating
expenses............. 6,903 561 -- 7,464
---------- ---- ------- ---- ----------
26,326 0 1,831 -- 28,157
---------- ---- ------- ---- ----------
Income before income
taxes.................. 11,803 0 825 -- 12,628
Income tax expense...... 3,681 272 -- 3,953
---------- ---- ------- ---- ----------
Income before minority
interest in net income
of subsidiary.......... 8,122 0 553 -- 8,675
---------- ---- ------- ---- ----------
Minority interest in net
income of subsidiary... 8 8 -- -- 16
---------- ---- ------- ---- ----------
Net income.............. $ 8,114 $ $553 $-- $ 8,659
========== ==== ======= ==== ==========
Net income per share of
common stock........... $ 0.53 $ $0.67 $ 0.50
========== ==== ======= ==========
Average shares
outstanding............ 15,378,687 819,745 17,284,868
========== ==== ======= ==========
</TABLE>
See Notes to Pro Forma Combined Financial Statements
34
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED PRO FORMA
SECURITIES ADJUSTMENTS PRO FORMA
PREMIER ISSUANCE LANIER DEBIT (CREDIT) COMBINED
----------- ---------- -------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Interest income......... $ 37,569 $-- $ 3,330 $-- $ 40,899
Interest expense........ 18,443 1,312 -- 19,755
----------- ---- -------- ---- -----------
Net interest income... 19,126 0 2,018 21,144
Provision for loan
losses................. (86) -- -- (86)
----------- ---- -------- ---- -----------
Net interest income
after provision for
loan losses............ 19,212 0 2,018 -- 21,230
----------- ---- -------- ---- -----------
Other income
Service charges on
deposit accounts..... 2,668 344 3,012
Mortgage loan income.. 6,326 6,326
Security transactions,
net.................. 147 147
Other................. 529 27 -- 556
----------- ---- -------- ---- -----------
9,670 0 371 -- 10,041
----------- ---- -------- ---- -----------
Other expenses
Salaries and employee
benefits............. 13,292 955 14,247
Occupancy and
equipment expenses... 2,875 197 3,072
Other operating
expenses............. 6,433 439 -- 6,872
----------- ---- -------- ---- -----------
22,600 0 1,591 -- 24,191
----------- ---- -------- ---- -----------
Income before income
taxes.................. 6,282 0 798 -- 7,080
Income tax expense...... 1,544 252 -- 1 ,796
----------- ---- -------- ---- -----------
Income before minority
interest in net income
of subsidiary.......... 4,738 0 546 -- 5,284
----------- ---- -------- ---- -----------
Minority interest in net
income of subsidiary... 6 8 -- -- 6
----------- ---- -------- ---- -----------
Net income.............. $ 4,732 $ 0 $ 546 $-- $ 5,278
=========== ==== ======== ==== ===========
Net income per share of
common stock........... $ 0.31 $-- $0.67 $ 0.31
=========== ==== ======== ===========
Average shares
outstanding............ 15,119,873 810,300 16,906,951
=========== ==== ======== ===========
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements
35
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED PRO FORMA
SECURITIES ADJUSTMENTS PRO FORMA
PREMIER ISSUANCE LANIER DEBIT (CREDIT) COMBINED
----------- ---------- -------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Interest income......... $ 51,271 $ $ 4,494 $-- $ 55,765
Interest expense........ 25,343 1,755 -- 27,098
----------- --- -------- ---- -----------
Net interest income... 25,928 0 2,739 28,667
Provision for loan
losses................. (115) (50) -- (165)
----------- --- -------- ---- -----------
Net interest income
after provision for
loan losses............ 26,043 0 2,789 -- 28,832
----------- --- -------- ---- -----------
Other income
Service charges on
deposit accounts..... 2,334 445 2,779
Mortgage loan income.. 8,901 8,901
Security transactions,
net.................. 147 147
Other................. 2,574 67 -- 2,641
----------- --- -------- ---- -----------
13,956 0 512 -- 14,468
----------- --- -------- ---- -----------
Other expenses
Salaries and employee
benefits............. 18,309 1,294 19,603
Occupancy and
equipment expenses... 3,902 268 4,170
Other operating
expenses............. 8,577 618 -- 9,195
----------- --- -------- ---- -----------
30,788 0 2,180 -- 32,968
----------- --- -------- ---- -----------
Income before income
taxes.................. 9,211 0 1,121 -- 10,332
Income tax expense...... 2,194 332 -- 2 526
----------- --- -------- ---- -----------
Income before minority
interest in net income
of subsidiary.......... 7,017 0 789 -- 7,806
----------- --- -------- ---- -----------
Minority interest in net
income of subsidiary... 12 -- -- 12
----------- --- -------- ---- -----------
Net income.............. $ 7,005 $ 0 $ 789 $-- $ 7,794
=========== === ======== ==== ===========
Net income per share of
common stock........... $ 0.46 $ $ 0.97 $ 0.47
=========== === ======== ===========
Average shares
outstanding............ 15,123,656 811,122 16,740,239
=========== === ======== ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
36
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED PRO FORMA
SECURITIES ADJUSTMENTS PRO FORMA
PREMIER ISSUANCE LANIER DEBIT (CREDIT) COMBINED
----------- ---------- -------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Interest income......... $ 41,006 $ $ 4,438 $-- $ 45,444
Interest expense........ 19,874 1,656 -- 21,530
----------- --- -------- ---- -----------
Net interest income... 21,132 0 2,782 23,914
Provision for loan
losses................. (582) -- -- (582)
----------- --- -------- ---- -----------
Net interest income
after provision for
loan losses............ 21,714 0 2,782 -- 24,496
Other income
Service charges on
deposit accounts..... 2,051 377 2,428
Mortgage loan income.. 5,967 5,967
Security transactions,
net.................. (235) (235)
Other................. 1,867 52 -- 1,919
----------- --- -------- ---- -----------
9,650 0 429 -- 10,079
----------- --- -------- ---- -----------
Other expenses
Salaries and employee
benefits............. 13,690 1,236 14,926
Occupancy and
equipment expenses... 2,786 277 3,063
Other operating
expenses............. 7,134 638 -- 7,772
----------- --- -------- ---- -----------
23,610 0 2,151 -- 25,761
----------- --- -------- ---- -----------
Income before income
taxes.................. 7,754 0 1,060 -- 8,814
Income tax expense...... 2,188 358 -- 2 546
----------- --- -------- ---- -----------
Income before minority
interest in net income
of subsidiary.......... 5,566 0 702 -- 6,268
----------- --- -------- ---- -----------
Minority interest in net
income of subsidiary... 13 -- -- 13
----------- --- -------- ---- -----------
Net income.............. $ 5,553 $ 0 $ 702 $-- $ 6,255
=========== === ======== ==== ===========
Net income per share of
common stock........... $ 0.37 $ $0.87 $ 0.38
=========== === ======== ==== ===========
Average shares
outstanding............ 15,000,563 808,418 16,605,898
=========== === ======== ==== ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
37
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED PRO FORMA
SECURITIES ADJUSTMENTS PRO FORMA
PREMIER ISSUANCE LANIER DEBIT (CREDIT) COMBINED
----------- ---------- -------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Interest income......... $ 33,516 $ 3,414 $ 36,930
Interest expense........ 15,086 1,194 -- 16,280
----------- --- -------- --- -----------
Net interest income... 18,430 0 2,220 -- 20,650
Provision for loan
losses................. 365 (105) -- 260
----------- --- -------- --- -----------
Net interest income
after provision for
loan losses............ 18,065 0 2,325 -- 20,390
----------- --- -------- --- -----------
Other income
Service charges on
deposit accounts..... 2,096 347 -- 2,443
Mortgage loan income.. 1,284 -- 1,284
Security transactions,
net.................. 212 -- 212
Other................. 1,579 54 -- 1,633
----------- --- -------- --- -----------
5,171 0 401 -- 5,572
----------- --- -------- --- -----------
Other expenses
Salaries and employee
benefits............. 9,834 1,091 -- 10,925
Occupancy and
equipment expenses... 2,453 277 -- 2,730
Other operating
expenses............. 6,477 674 -- 7,151
----------- --- -------- --- -----------
18,764 0 2,042 -- 20,806
----------- --- -------- --- -----------
Income before income
taxes.................. 4,472 0 684 -- 5,156
Income tax expense...... 1,559 231 -- 1,790
----------- --- -------- --- -----------
Income before minority
interest in net income
of subsidiary.......... 2,913 0 453 -- 3,366
----------- --- -------- --- -----------
Minority interest in net
income of subsidiary... -- -- -- --
----------- --- -------- --- -----------
Net income.............. $ 2,913 $ 0 $ 453 $-- $ 3,366
=========== === ======== === ===========
Net income per share of
common stock........... $ 0.21 $ 0.57 -- $ 0.21
=========== === ======== === ===========
Average shares
outstanding............ 13,704,395 805,990 -- 15,299,100
=========== === ======== === ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
38
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) The unaudited pro forma condensed combined balance sheet as of September
30, 1997 and condensed combined statements of income for the nine months
ended September 30, 1997 and 1996 and for the years ended December 31,
1996, 1995 and 1994 have been prepared based upon the historical
consolidated balance sheets and statements of income, which give effect to
the Merger accounted for as a pooling-of-interests, based on the Exchange
Ratio. The pro forma financial statements include all adjustments
necessary to reflect the acquisition 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 and Lanier and notes thereto included elsewhere in
this Proxy Statement/Prospectus.
(2) 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 1.980 shares of Premier Common Stock.
<TABLE>
<S> <C>
Issuance of Premier shares (1,592,672 at $1.00 par value).... $ 1,592,672
Retirement of Lanier shares (804,380 at $5.00 par value)..... (4,021,900)
-----------
Net effect on common stock................................... (2,429,228)
===========
</TABLE>
The issuance of shares shown above is based on the current number of shares
outstanding.
(3) The pro forma condensed combined statements of income do not include the
estimated direct costs associated with the acquisition. The estimated
merger expenses of Premier and Lanier are $150,000 and $100,000,
respectively. As of December 31, 1997, all of the estimated expenses
remained to be paid.
(4) Provided below is the pro forma adjustment necessary to reflect the
Premier three-for-two stock split declared on January 7, 1998.
<TABLE>
<S> <C>
Current common shares outstanding.............................. $10,003,016
Additional shares issued....................................... 5,001,508
-----------
Common shares outstanding after split.......................... 15,004,524
===========
</TABLE>
(5) Net income per common and common equivalent share was computed by dividing
net income by the weighted average number of shares of common stock and
common stock equivalents outstanding during each period, restated for the
1998 and 1997 Premier stock splits and to reflect the merger of Premier
and Central and Southern in June 1997 and the merger of Premier and
Citizens in December 1997. Common stock equivalents include stock options.
(6) The unaudited pro forma condensed combined balance sheet as of September
30, 1997 includes the preferred securities offering which was completed
during the fourth quarter of 1997.
The following unaudited pro forma combined balance sheet as of September 30,
1997 and the unaudited pro forma combined statement of income for the nine
months ended September 30, 1997 and 1996 and the years ended December 31,
1996, 1995 and 1994 have been prepared to reflect the acquisition by Premier
(after the proposed acquisition of Lanier) of 100% of BHC accounted for as a
pooling of interests and reflect the combination of the historical
consolidated financial statements of Premier, Lanier and BHC. The pro forma
combined balance sheet has been prepared as if the acquisition had been
consummated at the beginning of the period covered. The pro forma combined
statements of income have been prepared as if the acquisition had been
consummated on January 1, 1994. The following financial statements do no
reflect any anticipated cost savings which may be realized by Premier after
the consummation of the mergers.
The pro forma information does not purport to represent what Premier's,
Lanier's and BHC's combined results of operations actually would have been if
the mergers had occurred on January 1, 1994.
39
<PAGE>
PREMIER BANCSHARES, INC.
PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
AND CITIZENS PRO FORMA
GWINNETT ADJUSTMENTS PRO FORMA
COMBINED BHC DEBIT (CREDIT) COMBINED
------------ -------- -------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks..... $ 30,755 $ 3,044 $ $ 33,799
Interest-bearing deposits in
banks...................... 1,729 1,729
Federal funds sold.......... 56,659 2,260 58,919
Securities held to maturity. 462 462
Securities available-for-
sale....................... 134,307 25,648 159,955
Loans held for sale......... 51,043 2,277 53,320
Loans....................... 539,943 87,020 626,963
Less allowance for loan
losses..................... 9,514 883 10,397
-------- -------- ---- --------
Loans, net................ 530,429 86,137 0 616,566
-------- -------- ---- --------
Premises and equipment...... 21,579 3,633 25,212
Goodwill and other
intangibles................ 2,507 2,231 4,738
Other assets................ 12,725 2,159 14,884
-------- -------- ---- --------
Total assets.............. $842,195 $127,389 $ 0 $969,584
======== ======== ==== ========
Deposits
Noninterest-bearing....... $ 98,005 $ 14,976 $ $112,981
Interest-bearing.......... 588,539 95,729 684,268
-------- -------- ---- --------
Total deposits.......... 686,544 110,705 797,249
Federal funds purchased and
securities sold under
repurchase agreements...... 17,003 685 17,688
Other borrowings............ 29,822 77 29,899
Other liabilities........... 7,921 2,287 (200) 10,408
-------- -------- ---- --------
Total liabilities......... 741,290 113,754 (200) 855,244
-------- -------- ---- --------
Guaranteed preferred
beneficial interests in
Premier's subordinated
debentures................. 27,455 27,455
-------- -------- ---- --------
Redeemable preferred stock.. 2,446 2,446
-------- -------- ---- --------
Common stock................ 16,598 2,782 612 (1 & 2) 18,768
Capital surplus............. 33,208 4,492 (612)(1 & 2) 38,312
Retained earnings........... 23,039 4,016 200 26,855
Unrealized gains (losses) on
securities available-for-
sale, net of tax........... 605 (101) 504
-------- -------- ---- --------
73,450 11,189 200 84,439
-------- -------- ---- --------
Total liabilities and
stockholders' equity..... $842,195 $127,389 $ 0 $969,584
======== ======== ==== ========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
40
<PAGE>
PREMIER BANCSHARES, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
AND CITIZENS PRO FORMA
GWINNETT ADJUSTMENTS PRO FORMA
COMBINED BHC DEBIT (CREDIT) COMBINED
------------ ------- -------------- -----------
<S> <C> <C> <C> <C>
Interest income............... $ 49,766 $ 8,289 $ -- $ 58,055
Interest expense.............. 23,260 3,749 -- 27,009
---------- ------- ------ -----------
Net interest income......... 26,506 4,540 -- 31,046
Provision for loan losses..... 694 50 -- 744
---------- ------- ------ -----------
Net interest income after
provision for loan losses.... 25,812 4,490 -- 30,302
========== ======= ====== ===========
Other income
Service charges on deposit
accounts................... 3,695 413 4,108
Gain on sale of subsidiary.. 757 757
Mortgage loan income........ 9,881 317 10,198
Security transactions, net.. (26) (26)
Other....................... 666 110 -- 776
---------- ------- ------ -----------
14,973 840 -- 15,813
---------- ------- ------ -----------
Other expenses
Salaries and employee
benefits................... 16,941 1,547 18,488
Occupancy and equipment
expense.................... 3,752 500 4,252
Other operating expenses.... 7,464 1,248 -- 8,712
---------- ------- ------ -----------
28,157 3,295 -- 31,452
---------- ------- ------ -----------
Income before income taxes.... 12,628 2,035 -- 14,663
Income tax expense............ 3,953 795 -- 4,748
---------- ------- ------ -----------
Income before minority
interest in net income of
subsidiary................... 8,675 1,240 -- 9,915
---------- ------- ------ -----------
Minority interest in net
income of subsidiary......... 16 -- 16
---------- ------- ------ -----------
Net income.................... $ 8,659 $ 1,240 $ -- $ 9,899
========== ======= ====== ===========
Net income per share of common
stock........................ $ 0.50 $ 1.96 $ 0.50
========== ======= ===========
Average shares outstanding.... 17,284,868 556,525 $19,455,315
========== ======= ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
41
<PAGE>
PREMIER BANCSHARES, INC.
PRO FORMA COMBINED BALANCE STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
AND CITIZENS PRO FORMA
GWINNETT ADJUSTMENTS PRO FORMA
COMBINED BHC DEBIT (CREDIT) COMBINED
------------ ------- -------------- -----------
<S> <C> <C> <C> <C>
Interest income................ $ 40,899 $ 7,424 $ -- $ 48,323
---------- ------- ----- -----------
Interest expense............... 19,755 3,303 -- 23,058
Net interest income.......... 21,144 4,121 -- 25,265
Provision for loan losses...... (86) 115 -- 29
---------- ------- ----- -----------
Net interest income after
provision for loan losses..... 21,230 4,006 -- 25,236
---------- ------- ----- -----------
Other income
Service charges on deposit
accounts.................... 3,012 397 3,409
Mortgage loan income......... 6,326 410 6,736
Security transactions, net... 147 14 161
Other........................ 556 160 -- 716
---------- ------- ----- -----------
10,041 981 -- 11,022
---------- ------- ----- -----------
Other expenses
Salaries and employee
benefits.................... 14,247 1,559 15,806
Occupancy and equipment
expense..................... 3,072 443 3,515
Other operating expenses..... 6,872 1,144 -- 8,016
---------- ------- ----- -----------
24,191 3,146 -- 27,337
---------- ------- ----- -----------
Income before income taxes..... 7,080 1,841 -- 8,921
Income tax expense............. 1,796 709 -- 2,505
---------- ------- ----- -----------
Income before minority interest
in net income of subsidiary... 5,284 1,132 -- 6,416
---------- ------- ----- -----------
Minority interest in net income
of subsidiary................. 6 -- -- 6
---------- ------- ----- -----------
Net income..................... $ 5,278 $ 1,132 $ -- $ 6,410
========== ======= ===== ===========
Net income per share of common
stock......................... $ 0.31 $ 1.77 $ 0.33
========== ======= ===========
Average shares outstanding..... 16,906,951 556,525 $19,077,398
========== ======= ===========
</TABLE>
42
<PAGE>
PREMIER BANCSHARES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
AND CITIZENS PRO FORMA
GWINNETT ADJUSTMENTS PRO FORMA
COMBINED BHC DEBIT (CREDIT) COMBINED
------------ ------- -------------- -----------
<S> <C> <C> <C> <C>
Interest income............... $ 55,765 $ 9,979 $ -- $ 65,744
Interest expense.............. 27,098 4,489 -- 31,587
---------- ------- ----- -----------
Net interest income......... 28,667 5,490 -- 34,157
Provision for loan losses..... (165) 145 -- (20)
---------- ------- ----- -----------
Net interest income after
provision for loan losses.... 28,832 5,345 -- 34,177
---------- ------- ----- -----------
Other income
Service charges on deposit
accounts................... 2,779 541 -- 3,320
Mortgage loan income........ 8,901 545 -- 9,446
Security transactions, net.. 147 16 -- 163
Other....................... 2,641 195 -- 2,836
---------- ------- ----- -----------
14,468 1,297 -- 15,765
---------- ------- ----- -----------
Other expenses
Salaries and employee
benefits................... 19,603 2,084 -- 21,687
Occupancy and equipment
expense.................... 4,170 598 -- 4,768
Other operating expenses.... 9,195 1,539 -- 10,734
---------- ------- ----- -----------
32,968 4,221 -- 37,189
---------- ------- ----- -----------
Income before income taxes.... 10,332 2,421 -- 12,753
Income tax expense............ 2,526 979 -- 3,505
---------- ------- ----- -----------
Income before minority
interest in net income of
subsidiary................... 7,806 1,442 -- 9,248
---------- ------- ----- -----------
Minority interest in net
income of subsidiary......... 12 -- -- 12
---------- ------- ----- -----------
Net income.................... $ 7,794 $ 1,442 $ -- $ 9,236
========== ======= ===== ===========
Net income per share of common
stock........................ $ 0.47 $ 2.24 $ 0.48
========== ======= ===========
Average shares outstanding.... 16,740,239 556,525 $18,910,686
========== ======= ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
43
<PAGE>
PREMIER BANCSHARES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
AND CITIZENS PRO FORMA
GWINNETT ADJUSTMENTS PRO FORMA
COMBINED BHC DEBIT (CREDIT) COMBINED
------------ ------- -------------- -----------
<S> <C> <C> <C> <C>
Interest income.............. $ 45,444 $ 9,563 $ $ 55,007
Interest expense............. 21,530 4,486 -- 26,016
---------- ------- ---- -----------
Net interest income........ 23,914 5,077 -- 28,991
Provision for loan losses.... (582) 90 -- (492)
---------- ------- ---- -----------
Net interest income after
provision for loan losses... 24,496 4,987 -- 29,483
---------- ------- ---- -----------
Other income
Service charges on deposit
accounts.................. 2,428 521 2,949
Mortgage loan income....... 5,967 526 6,493
Security transactions, net. (235) (1) (236)
Other...................... 1,919 294 -- 2,213
---------- ------- ---- -----------
10,079 1,340 -- 11,419
---------- ------- ---- -----------
Other expenses
Salaries and employee
benefits.................. 14,926 2,171 17,097
Occupancy and equipment
expense................... 3,063 521 3,584
Other operating expenses... 7,772 1,625 -- 9,397
---------- ------- ---- -----------
25,761 4,317 -- 30,078
---------- ------- ---- -----------
Income before income taxes... 8,814 2,010 -- 10,824
Income tax expense........... 2,546 735 -- 3,281
---------- ------- ---- -----------
Income before minority
interest in net income of
subsidiary.................. 6,268 1,275 -- 7,543
---------- ------- ---- -----------
Minority interest in net
income of subsidiary........ 13 -- 13
---------- ------- ---- -----------
Net income................... $ 6,255 $ 1,275 $-- $ 7,530
========== ======= ==== ===========
Net income per share of
common stock................ $ 0.38 $ 1.94 $ 0.39
========== ======= ===========
Average shares outstanding... 16,605,898 556,525 $18,776,345
========== ======= ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
44
<PAGE>
PREMIER BANCSHARES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
AND CITIZENS PRO FORMA
GWINNETT ADJUSTMENTS PRO FORMA
COMBINED BHC DEBIT (CREDIT) COMBINED
------------ ------- -------------- -----------
<S> <C> <C> <C> <C>
Interest income................ $ 36,930 $ 5,499 $ -- $ 42,429
Interest expense............... 16,280 2,402 -- 18,682
---------- ------- ----- -----------
Net interest income.......... 20,650 3,097 -- 23,747
Provision for loan losses...... 260 171 -- 431
---------- ------- ----- -----------
Net interest income after
provision for loan losses..... 20,390 2,926 -- 23,316
---------- ------- ----- -----------
Other income
Service charges on deposit
accounts.................... 2,443 297 2,740
Mortgage loan income......... 1,284 123 1,407
Security transactions, net... 212 212
Other........................ 1,633 117 -- 1,750
---------- ------- ----- -----------
5,572 537 -- 6,109
---------- ------- ----- -----------
Other expenses
Salaries and employee
benefits.................... 10,925 1,197 12,122
Occupancy and equipment
expense..................... 2,730 246 2,976
Other operating expenses..... 7,151 1,080 -- 8,231
---------- ------- ----- -----------
20,806 2,523 -- 23,329
---------- ------- ----- -----------
Income before income taxes..... 5,156 940 -- 6,096
Income tax expense............. 1,790 348 -- 2,138
---------- ------- ----- -----------
Income before minority interest
in net income of subsidiary... 3,366 592 -- 3,958
---------- ------- ----- -----------
Minority interest in net income
of subsidiary................. 0 -- 0
---------- ------- ----- -----------
Net income..................... $ 3,366 $ 592 $ -- $ 3,958
========== ======= ===== ===========
Net income per share of common
stock......................... $ 0.21 $ 1.21 $ 0.22
========== ======= ===== ===========
Average shares outstanding..... 5,299,100 49,943 $17,053,878
========== ======= ===== ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
45
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) The unaudited pro forma condensed combined balance sheet as of September
30, 1997 and condensed combined statements of income for the nine months
ended September 30, 1997 and 1996 and for the years ended December 31,
1996, 1995 and 1994 have been prepared based upon the historical
consolidated balance sheets and statements of income, which give effect to
the Merger accounted for as a pooling-of-interests, based on the Exchange
Ratio. The pro forma financial statements include all adjustments
necessary to reflect the acquisition 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 and BHC and notes thereto included elsewhere in this
Proxy Statement/Prospectus.
(2) Provided below is the pro forma adjustment necessary to reflect the
business combination of Premier and BHC accounted for as a pooling-of-
interests. Each outstanding share of BHC Common Stock will be exchanged
for 3.90 shares of Premier Common Stock.
<TABLE>
<S> <C>
Issuance of Premier shares (2,170,447 at $1.00 par value)...... $2,170,447
Retirement of BHC shares (556,525 at $5.00 par value).......... (2,782,625)
Net effect on common stock..................................... (612,178)
==========
</TABLE>
The issuance of shares shown above is based on the current number of shares
outstanding.
(3) The pro forma condensed combined statements of income do not include the
estimated direct costs associated with the acquisition. The estimated
merger expenses of Premier and BHC are $ and $ , respectively. As of
January 31, 1998, approximately $ of the estimated expenses remained to
be paid.
(4) Net income per common and common equivalent share was computed by dividing
net income by the weighted average number of shares of common stock and
common stock equivalents outstanding during each period, restated for the
Premier stock splits and to reflect the merger of Premier and Central and
Southern in June 1997 and the merger of Premier and Citizens in December
1997. Common stock equivalents include stock options.
46
<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.
On June 23, 1997, Premier merged with the Central and Southern and issued
3,653,523 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 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
Financial Condition. As of December 31, 1997, Premier had total consolidated
assets of approximately $793 million, total consolidated deposits of
approximately $653 million and total consolidated shareholders' equity of
approximately $69 million.
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 the above-referenced 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 will be consummated during the first quarter of 1998.
Premier Capital Trust I. In order to increase its Tier 1 capital and thereby
increase its lending capabilities, Premier sold $29,639,175 in subordinated
debentures to Premier Capital Trust I in connection with a public offering by
Premier Capital Trust I of its preferred securities. Premier Capital Trust I
is a recently formed Delaware statutory business trust. Premier Capital Trust
I issued $28,750,000 in preferred securities in an underwritten public
offering on November 10, 1997 (the "Offering"). Premier acquired all of the
common securities of Premier Capital Trust I which represents an aggregate
liquidation amount equal to 3% of the total capital of Premier Capital Trust
I. Premier Capital Trust I invested the gross proceeds of the Offering
(including the proceeds from the sale of the common securities to Premier) in
$29,639,175 of 9.00% subordinated debentures issued by Premier. Premier added
the proceeds from the sale of the subordinated debentures to its general funds
to be used for general corporate purposes, including the repayment of certain
short-term borrowings. For financial reporting purposes, Premier Capital Trust
I is related as a subsidiary of Premier and, accordingly, the accounts of
Premier Capital Trust I are included in the consolidated financial statements
of Premier.
47
<PAGE>
Acquisition of The Bank Holding Company. On December 3, 1997, Premier
entered into an Agreement and Plan of Reorganization with The Bank Holding
Company ("BHC"), a Georgia bank holding company located in Griffin, Georgia.
In connection with this agreement, as amended, each issued and outstanding
shares of BHC common stock will be exchanged for the right to receive 3.90
shares of Premier Common Stock, and each outstanding share of BHC preferred
stock will be exchanged for the right to receive one share of Premier
preferred stock. Following consummation of this transaction, the two banking
subsidiaries of BHC, First Community Bank of Henry County and The Bank of
Spalding County, will become subsidiaries of Premier. However, as soon as
practicable following the merger with BHC, Premier intends to merge First
Community Bank of Henry County and The Bank of Spalding County with and into
Premier Bank.
On January 7, 1998, the Board of Directors of Premier declared a three-for-
two split of the Premier Common Stock, effective January 23, 1998. Fractional
shares will not be issued and cash will be paid for fractional shares based on
the closing price of the Premier Common Stock on January 23, 1998 on the
American Stock Exchange.
48
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF PREMIER
The following selected financial data is derived from the consolidated
financial statements of Premier. The financial highlights have been restated
to reflect the business combinations of First Alliance Bancorp, Inc. and
Premier Bancshares, Inc. which was consummated on August 31, 1996 and Premier
and Central and Southern which was consummated on June 23, 1997 and Premier
and Citizens Gwinnett which was consummated on December 12, 1997. The
financial statements for the years ended December 31, 1992 through 1996 and
the six months ended June 30, 1997, and the operating data for the years ended
December 31, 1992 through 1996 and the nine months ended September 30, 1997
are derived from financial statements which reflect, in the opinion of
Premier's management, all normal recurring adjustments necessary to present
fairly such information for such periods. Net income per share has been
adjusted for the business combinations and Premier's 1.8055-for-one stock
split on March 6, 1997 and Premier's three-for-two stock split on January 23,
1998. The following data should be read in conjunction with Premier's
consolidated financial statements and the related notes contained elsewhere in
this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
AS OF AND FOR THE
AS OF AND FOR THE YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------------------------------------- ------------------------
1992 1993 1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED RESULTS OF OP-
ERATIONS DATA:
Interest income........ $ 44,919 $ 36,685 $ 33,516 $ 41,006 $ 51,271 $ 37,569 $ 46,126
Interest expense....... 24,277 17,371 15,086 19,874 25,343 18,443 21,811
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income.... 20,642 19,314 18,430 21,132 25,928 19,126 24,315
Provision (negative
provision) for loan
losses................ 12,668 3,902 365 (582) (115) (86) 694
Other income........... 4,292 4,742 5,171 9,650 13,956 9,670 14,508
Other expense.......... 15,690 19,267 18,764 23,610 30,788 22,600 26,326
Income (loss) before
income tax expense
(benefit) and minority
interest.............. (3,424) 887 4,472 7,754 9,211 6,282 11,803
Income tax expense
(benefit)............. (1,007) (81) 1,.559 2,188 2,194 1,544 3,681
Minority interest in
net income of subsidi-
ary................... 13 12 6 8
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)...... $ (2,417) $ 968 $ 2,913 $ 5,553 $ 7,005 $ 4,732 $ 8,114
=========== =========== =========== =========== =========== =========== ===========
PER SHARE DATA:
Net income (loss)...... $ (0.20) $ 0.08 $ 0.21 $ 0.37 $ 0.46 $ 0.31 $ 0.53
Cash dividends de-
clared................ -- -- 0.05 0.07 0.23 0.20 0.12
Weighted average shares
outstanding........... 12,043,358 12,900,000 13,704,395 15,000,563 15,123,656 15,119,873 15,378,687
SELECTED BALANCE SHEET
DATA:
Total assets........... $ 486,141 $ 461,211 $ 430,375 $ 553,584 $ 677,273 $ 642,901 $ 749,780
Securities available
for sale.............. 131,402 140,673 123,776 146,608 151,055 147,570 124,992
Loans held for sale.... 4,446 26,047 25,912 24,408 17,413 51,043
Loans, net............. 294,950 246,549 232,351 304,087 393,030 370,654 500,576
Federal funds sold..... 17,441 27,774 35,134 19,282 51,397 41,668 9,299
Total deposits......... 440,691 408,671 360,604 456,012 577,212 549,557 634,673
Total borrowings....... 1,027 4,990 21,599 35,466 35,472 31,504 43,325
Total liabilities...... 447,261 416,406 385,454 498,426 619,789 587,190 685,356
Total shareholders' eq-
uity.................. 38,880 44,805 44,921 55,158 57,484 55,711 64,424
</TABLE>
49
<PAGE>
BUSINESS OF LANIER
Lanier was organized as a commercial bank under the laws of Georgia in
October, 1986.
At September 30, 1997, Lanier had total assets of approximately $65 million,
total deposits of approximately $52 million and total shareholders' equity of
approximately $9.3 million. Lanier's principal executive offices are located
at 214 Dahlonega Road, Cumming, Georgia 30040, and its telephone number at
that address is (770) 887-1732.
MARKETS
Lanier conducts general banking activities primarily in Forsyth County,
Georgia.
DEPOSITS
Lanier offers a full range of depository accounts and services to both
consumers and businesses. At September 30, 1997, Lanier's deposits, totaling
an aggregate of approximately $51.9 million, consisted of approximately $11.9
million in non-interest-bearing demand deposits (23% of total deposits);
approximately $12.7 million in interest-bearing demand deposits (24% of total
deposits); approximately $3.0 million in savings deposits (6% of total
deposits); approximately $17.9 million in time deposits in amounts less than
$100,000 (34% of total deposits); and approximately $6.4 million in time
deposits of $100,000 or more (13% of total deposits).
LOANS
Lanier makes 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. Lanier also makes direct installment loans
to consumers on both a secured and unsecured basis.
LENDING POLICY
The current lending strategy of Lanier is 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 Lanier's primary trade areas. Secured loans can be made to customers
outside Lanier's trade areas who are well established and have net worth and
collateral to support the loan. Real estate loans usually are made only when
such loans are secured by real property located in Forsyth County, and to a
lesser extent by real property located in Fulton, Cherokee and Hall Counties.
Lanier provides each lending officer with written guidelines for lending
activities. Lending authority is delegated by the Board of Directors of Lanier
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 January 1, 1998, Lanier had 33 full-time employees and 3 part-time
employees. Lanier is not a party to any collective bargaining agreement, and
management believes that the employer relations are good.
COMPETITION
The banking business is highly competitive. Lanier competes with other
banks, many of which are substantially larger and have greater financial
resources. In particular, Lanier competes with six other banks in Forsyth
County. To the extent that Lanier must maintain non-interest-earning reserves
against deposits, it 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
50
<PAGE>
banks, savings and loan associations and other financial institutions and the
increased competition from investment bankers and brokers and other financial
service organizations may have a significant impact on the competitive
environment in which Lanier operates.
PROPERTIES
The executive offices of Lanier are located at 214 Dahlonega Road, Cumming,
Georgia 30040. Lanier operates two additional branches in Forsyth County which
are located at 521 Lakeland Plaza, Cumming, Georgia 30040 and 2323 Canton
Highway, Cumming, Georgia 30040.
LEGAL PROCEEDINGS
There are no material pending proceedings to which Lanier is a party or of
which any of its properties are subject; nor are there material proceedings
known to Lanier to be contemplated by any governmental authority; nor are
there material proceedings known to Lanier, pending or contemplated, in which
any director, officer or affiliate or any principal security holder of Lanier,
or any associate of any of the foregoing, is a party or has an interest
adverse to Lanier.
51
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF LANIER
The following tables present certain selected historical financial
information for Lanier. The per share data for Lanier have been adjusted to
reflect a 5% stock dividend effected by Lanier on February 26, 1997. The data
should be read in conjunction with the historical financial statements,
related notes, and other financial information concerning Lanier incorporated
by reference or included herein. Interim unaudited data for the nine-month
periods ended September 30, 1997 and 1996, of Lanier reflect, in the opinion
of the management of Lanier, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data. Results
for the interim periods are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
AT OR FOR THE YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- ------------------
1996 1995 1994 1993 1992 1997 1996
--------- --------- --------- --------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income.. $ 4,494 $ 4,438 $ 3,414 $ 3,316 $ 3,880 $ 3,640 $ 3,330
Total interest expense. 1,755 1,656 1,194 1,293 1,866 1,449 1,312
Net interest income.... 2,739 2,782 2,220 2,023 2,014 2,191 2,018
Provision for loan
losses (benefit)...... (50) -- (105) (208) 50 -- --
Net interest income
after loan loss
provision (benefit)... 2,789 2,782 2,325 2,231 1,964 2,191 2,018
Noninterest income..... 512 429 402 402 435 465 371
Noninterest expense.... 2,180 2,151 2,043 2,183 2,018 1,831 1,591
Income tax expense..... 332 358 231 136 130 272 252
Net income............. $ 789 $ 702 $ 453 $ 314 $ 251 $ 553 $ 546
PER SHARE DATA:
Net income............. $ 0.97 $ 0.87 $ 0.56 $ 0.39 $ 0.31 $ 0.67 $ 0.67
Cash dividends......... 0.15 0.10 0.06 0.06 0.00 0.25 0.15
Book value--Adjusted
for stock dividends... 11.09 10.28 9.39 8.94 8.60 11.53 10.71
OTHER INFORMATION:
Average number of
shares outstanding for
earnings per share
calculation........... 811 808 806 800 800 820 810
AVERAGE BALANCES:
Total assets........... $ 55,578 $ 52,594 $ 51,609 $ 48,741 $ 50,437 $ 63,812 $ 56,203
Earning assets......... 51,765 48,545 47,018 43,908 45,607 58,582 51,804
Loans.................. 28,843 31,036 29,100 28,673 31,735 30,179 29,339
Deposits............... 46,637 43,228 42,610 41,559 43,325 54,169 47,108
Stockholders' equity... 8,103 7,885 7,335 7,020 6,757 9,038 8,385
STATEMENT OF CONDITION
DATA:
Total assets........... $ 70,089 $ 59,299 $ 52,374 $ 50,816 $ 46,629 $ 64,960 $ 61,522
Securities............. 12,480 8,716 8,743 8,726 7,686 9,822 12,764
Federal funds sold and
securities purchased
under agreements to
resell................ 19,110 14,120 8,580 8,075 3,010 19,905 14,105
Loans, net of unearned
income................ 29,849 31,963 29,803 28,396 28,949 30,517 28,995
Total deposits......... 57,394 47,072 41,689 43,502 39,577 51,871 49,139
Short-term debt........ 3,500 3,500 3,000 -- -- 3,500 3,500
Stockholders' equity... 8,877 8,230 7,513 7,157 6,882 9,276 8,573
PERFORMANCE RATIOS:
Return on average
assets(1)............. 1.42% 1.33% 0.88% 0.64% 0.50% 1.16% 1.29%
Return on average
stockholders'
equity(1)............. 9.74 8.90 6.16 4.47 3.71 8.16 8.68
Net interest margin.... 5.29 5.73 4.72 4.59 4.39 4.99 5.19
Efficiency(2).......... 66.72 66.64 77.95 90.02 85.97 66.45 66.34
Dividend payout........ 14.45 10.40 9.07 12.42 0.00 24.30 20.88
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
AT OR FOR THE YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- ------------------
1996 1995 1994 1993 1992 1997 1996
--------- --------- --------- --------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET QUALITY RATIOS:
Net charge-offs to
average loans, net of
unearned income....... 0.01% 0.51% 0.36% 0.51% 1.52% 0.04% 0.01%
Problem assets to net
loans and other real
estate(3)............. 4.15 3.30 5.15 6.56 9.88 2.53 4.36
Nonperforming assets to
net loans and other
real estate(4)........ 4.23 3.25 5.96 6.98 9.41 2.60 4.25
Allowance for loan
losses to loans, net
of unearned income.... 2.27 2.29 2.99 3.87 5.02 2.18 2.51
Allowance for loan
losses to
nonperforming assets.. 1.68 1.37 0.71 1.50 1.29 2.09 1.96
LIQUIDITY AND CAPITAL
RATIOS:
Average stockholders'
equity to average
assets................ 14.58% 14.99% 14.21% 14.40% 13.40% 14.16% 14.92%
Average loans to
average deposits...... 61.85 71.79 68.29 68.99 73.25 55.71 62.28
Tier 1 risk-based
capital(5)............ 25.07 23.95 26.54 26.07 24.32 24.81 25.87
Total risk-based
capital(5)............ 26.33 25.21 27.81 27.35 25.62 26.07 27.13
Tier 1 leverage(5)..... 15.04 14.97 15.60 14.71 14.67 15.01 15.27
</TABLE>
- --------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income (taxable-
equivalent basis) and noninterest income net of gains (losses) from
security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(4) Nonperforming loans include problem assets, as defined above, and loans 90
days or more past due.
(5) The risk-based capital ratios are based upon 1992 risk-based capital
guidelines. Under the 1992 rules, the required minimum Tier 1 and Total
risk-based capital ratios are 4% and 8%, respectively. The minimum
leverage ratio of Tier 1 Capital to Total Assets is 3% to 5%.
53
<PAGE>
DAILY AVERAGE BALANCES, INTEREST/EXPENSE AND AVERAGE YIELDS EARNED AND RATES
PAID
(IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------
1997 1996
-------------------------- --------------------------
AVERAGE INCOME/ YIELDS/ AVERAGE INCOME/ YIELDS/
BALANCES EXPENSES RATES(4) BALANCES EXPENSES RATES(4)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans(1)(3).............. $30,179 $2,414 10.67% $29,339 $2,349 10.67%
Investment Securities:
Taxable................. 10,593 509 6.41% 11,272 539 6.38%
Tax-exempt(2)........... 461 18 5.21% 453 18 5.30%
Federal funds sold and
securities purchased
under agreements to
resell.................. 17,349 699 5.37% 10,719 423 5.26%
Deposits in banks........ -- -- -- 21 1 6.34%
------- ------ ------- ------
Total earnings assets... 58,582 3,640 8.28% 51,804 3,330 8.57%
------- ------ ------- ------
Other assets............. 5,230 4,399
------- -------
Total assets............ $63,812 $56,203
======= =======
Liabilities and Stock-
holders' Equity
Interest-bearing
deposits:
NOW accounts............ $10,232 $ 246 3.21% $ 5,035 $ 83 2.20%
Money market accounts... 5,644 142 3.35% 5,644 138 3.26%
Savings................. 3,079 60 2.60% 3,153 61 2.58%
Time $100,000 and over.. 6,200 271 5.83% 6,592 304 6.15%
Other time.............. 17,857 723 5.40% 17,255 715 5.52%
Federal funds purchased.. 169 7 5.52% 255 11 5.75%
------- ------ ------- ------
Total interest-bearing
liabilities............ 43,181 1,449 4.47% 37,934 1,312 4.61%
------- ------ ------- ------
Noninterest-bearing
liabilities............. 11,157 9,429
Other liabilities........ 436 455
Stockholders' Equity..... 9,038 8,385
------- -------
Total Liabilities and
Stockholders' Equity... $63,812 $56,203
======= =======
Net interest income/Net
interest rate spread.... $2,191 3.81% $2,018 3.96%
====== ===== ====== =====
Net interest margin...... 4.99% 5.19%
===== =====
</TABLE>
- --------
(1) Interest income includes loan fees of $216,000 and $187,000 for the nine-
month periods ended September 30, 1997 and 1996, respectively.
(2) Yield includes the effects of taxable equivalent adjustments using a 34
percent Federal tax rate.
(3) Average loan balance includes non-accrual loans and overdrafts of $349,000
and $378,000 for the nine-month periods ended September 30, 1997 and 1996.
(4) Annualized.
54
<PAGE>
DAILY AVERAGE BALANCES, INTEREST/EXPENSE AND AVERAGE YIELDS EARNED AND RATES
PAID
(IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------
1996 1995
-------------------------- --------------------------
AVERAGE INCOME/ YIELDS/ AVERAGE INCOME/ YIELDS/
BALANCES EXPENSES RATES(4) BALANCES EXPENSES RATES(4)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans(1)(3)............. $28,843 $3,157 10.95% $31,036 $3,362 10.83%
Investment Securities:
Taxable................ 11,567 736 6.36% 8,381 547 6.53%
Tax-exempt(2).......... 463 24 5.18% 433 23 5.31%
Federal funds sold...... 10,876 576 5.30% 8,349 482 5.77%
Deposits in banks....... 16 1 6.25% 346 24 6.94%
------- ------ ------- ------
Total earnings assets.. 51,765 4,494 8.68% 48,545 4,438 9.14%
------- ------ ------- ------
Other assets............ 3,813 4,049
------- -------
Total assets........... $55,578 $52,594
======= =======
Liabilities and
Stockholders' Equity
Interest bearing
deposits:
NOW accounts........... $ 5,374 $ 122 2.27% $ 4,850 $ 109 2.25%
Money market accounts.. 5,824 191 3.28% 4,453 142 3.19%
Savings................ 3,098 81 2.62% 2,951 77 2.61%
Time $100,000 and over. 6,498 407 6.26% 5,763 347 6.02%
Other time............. 17,257 940 5.45% 16,588 911 5.49%
Federal funds purchased. 265 14 5.28% 1,067 70 6.56%
------- ------ ------- ------
Total interest-bearing
liabilities........... 38,316 1,755 4.58% 35,672 1,656 4.64%
------- ------ ------- ------
Noninterest-bearing
liabilities............ 8,586 8,623
Other liabilities....... 573 414
Stockholders' Equity.... 8,103 7,885
------- -------
Total Liabilities and
Stockholders' Equity.. $55,578 $52,594
======= =======
Net interest income/Net
interest rate spread... $2,739 4.10% $2,782 4.50%
====== ===== ====== =====
Net interest margin..... 5.29% 5.73%
===== =====
</TABLE>
- --------
(1) Interest income includes loan fees of $264,000 and $282,000 in 1996 and
1995, respectively.
(2) Yield includes the effects of taxable equivalent adjustments using a 34
percent Federal tax rate.
(3) Average loan balance includes non-accrual loans and overdrafts of $414,000
and $545,000 for 1996 and 1995, respectively.
55
<PAGE>
ANALYSIS OF CHANGES IN NET INTEREST INCOME (1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 1997 COMPARED TO YEAR ENDED YEAR ENDED
SEPTEMBER 1996 1996 COMPARED TO 1995 1995 COMPARED TO 1994
INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO
----------------------------- ----------------------------- ------------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL VOLUME RATE TOTAL
--------- -------- -------- --------- -------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Loans................... $ 67 $ (2) $ 65 $ (238) $ 34 $ (204) $ 218 $ 497 $ 715
Investment Securities:
Taxable................ (32) 2 (30) 208 (20) 188 98 39 137
Tax-exempt............. 0 0 0 2 (1) 1 12 2 14
Federal funds sold and
securities purchased
under agreements to
resell................. 277 (1) 276 145 (51) 94 42 130 172
Deposits in banks....... (1) -- (1) (23) 0 (23) (26) 11 (15)
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total interest income.. 311 (1) 310 94 (38) 56 344 679 1,023
-------- -------- -------- -------- -------- -------- -------- -------- ---------
INTEREST EXPENSE:
Deposits:
NOW accounts........... 86 77 163 10 3 13 10 (1) 9
Money market accounts.. 0 4 4 43 6 49 (8) 29 21
Savings................ (1) 0 (1) 4 0 4 (5) 0 (5)
Time $100,000 and over. (18) (15) (33) 40 20 60 38 186 224
Other time............. 26 (18) 8 (13) 42 29 23 124 147
Federal funds purchased. (4) 0 (4) (53) (3) (56) 70 (4) 66
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total interest expense. 89 48 137 31 68 99 128 334 462
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Net Change.............. $ 222 $ (49) $ 173 $ 63 $ (106) $ (43) $ 216 $ 345 $ 561
======== ======== ======== ======== ======== ======== ======== ======== =========
</TABLE>
- --------
(1) Changes in net interest income are attributed to either changes in average
balances (volume change) or changes in average rates (rate change) for
earning assets and sources of funds on which interest is received or paid.
As a result of the numerous and simultaneous volume and rate changes
during any year, it is not possible to allocate the changes precisely
between volume and rate. For purposes of this table, changes that are not
solely due to volume changes or to rate changes have been attributed
proportionally to rates and to volume.
(2) Interest income includes the effects of taxable equivalent adjustments
using a 34 percent Federal tax rate for all time periods.
56
<PAGE>
INTEREST RATE SENSITIVITY ANALYSIS
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
<TABLE>
<CAPTION>
REPRICING WITHIN(1)
-----------------------------------------------
LESS THAN THREE- SIX-
THREE SIX TWELVE OVER ONE
SEPTEMBER 30, 1997 IMMEDIATE MONTHS MONTHS MONTHS YEAR TOTAL
- ------------------ --------- --------- ------ ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Fixed rate loans(2).... $ -- $7,698 $3,477 $ 5,421 $ 9,950 $26,546
Variable rate loans(2). -- 3,971 -- -- -- 3,971
Investments............ -- 500 537 -- 8,785 9,822
Interest-bearing
deposits.............. -- -- -- -- -- --
Federal funds sold and
securities purchased
under agreements to
resell................ 19,905 -- -- -- -- 19,905
------ ------ ------ ------- ------- -------
Total earning assets... 19,905 12,169 4,014 5,421 18,735 60,244
------ ------ ------ ------- ------- -------
Interest-bearing liabil-
ities:(3)
Interest-bearing
deposits.............. 12,657 -- -- -- -- 12,657
Savings................ 3,003 -- -- -- -- 3,003
Time $100,000 and over. -- 916 1,739 2,403 1,407 6,465
Other time............. -- 4,935 4,609 5,014 3,301 17,859
Federal funds
purchased............. 3,500 -- -- -- -- 3,500
------ ------ ------ ------- ------- -------
Total interest-bearing
liabilities........... 19,160 5,851 6,348 7,417 4,708 43,484
------ ------ ------ ------- ------- -------
Interest-sensitivity
gap.................... 745 6,318 (2,334) (1,996) 14,027 16,760
------ ------ ------ ------- ------- -------
Cumulative interest-sen-
sitivity gap........... $ 745 $7,063 $4,729 $ 2,733 $16,760 $16,760
====== ====== ====== ======= ======= =======
Ratio of interest-
sensitive assets to
interest-sensitive
liabilities............ 103.89% 207.98% (63.23)% (73.09)% 397.94% 138.54%
Ratio of cumulative
interest-sensitivity
gap to total earning
assets................. 1.24% 11.72% 7.85% 4.54% 27.82% 27.82%
</TABLE>
- --------
(1) The repricing dates (which may differ from maturity dates) for various
assets and liabilities do not consider external factors that might affect
the interest rate sensitivity of assets and liabilities.
(2) Excludes overdrafts and nonaccrual loans.
(3) Savings, NOW and money market accounts can be repriced at any time;
therefore, all such balances are included in Immediate. Consumer time and
other time deposit balances are classified according to their remaining
maturities.
57
<PAGE>
INTEREST RATE SENSITIVITY ANALYSIS
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
<TABLE>
<CAPTION>
REPRICING WITHIN(1)
--------------------------------------------------
LESS THAN THREE- SIX-
THREE SIX TWELVE OVER ONE
DECEMBER 31, 1996 IMMEDIATE MONTHS MONTHS MONTHS YEAR TOTAL
- ----------------- --------- --------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Fixed rate loans(2).... $ -- $ 5,636 $ 5,889 $ 5,828 $ 8,270 $25,623
Variable rate loans(2). -- 4,226 -- -- -- 4,226
Investments............ -- 1,184 -- -- 11,296 12,480
Interest-bearing
deposits.............. -- -- -- -- -- --
Federal funds sold..... 19,110 -- -- -- -- 19,110
------- ------- ------- ------- ------- -------
Total earning assets... 19,110 11,046 5,889 5,828 19,566 61,439
------- ------- ------- ------- ------- -------
Interest-bearing liabil-
ities:(3)
Interest-bearing
deposits.............. 21,190 -- -- -- -- 21,190
Savings................ 2,954 -- -- -- -- 2,954
Time $100,000 and over. -- 946 1,323 1,419 1,979 5,667
Other time............. -- 5,549 3,878 3,797 4,885 18,109
Federal funds
purchased............. 3,500 -- -- -- -- 3,500
------- ------- ------- ------- ------- -------
Total interest-bearing
liabilities........... 27,644 6,495 5,201 5,216 6,864 51,420
------- ------- ------- ------- ------- -------
Interest-sensitivity
gap.................... (8,534) 4,551 688 612 12,702 10,019
------- ------- ------- ------- ------- -------
Cumulative interest-sen-
sitivity gap........... $(8,534) $(3,983) $(3,295) $(2,683) $10,019 $10,019
======= ======= ======= ======= ======= =======
Ratio of interest-
sensitive assets to
interest-sensitive
liabilities............ (69.13)% 170.07% 113.23% 111.73% 285.05% 119.48%
Ratio of cumulative
interest-sensitivity
gap to total earning
assets................. (13.89)% (6.48)% (5.36)% (4.37)% 16.31% 16.31%
</TABLE>
- --------
(1) The repricing dates (which may differ from maturity dates) for various
assets and liabilities do not consider external factors that might affect
the interest rate sensitivity of assets and liabilities.
(2) Excludes overdrafts and nonaccrual loans.
(3) Savings, NOW and money market accounts can be repriced at any time;
therefore, all such balances are included in Immediate. Consumer time and
other time deposit balances are classified according to their remaining
maturities.
58
<PAGE>
INVESTMENT SECURITIES AMORTIZED COST AND MARKET VALUE
(IN THOUSANDS)
Securities classified as held to maturity:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
State and political subdivisions........ $ 462 $16 $-- $ 478
------- --- ---- -------
Total................................. $ 462 $16 $-- $ 478
======= === ==== =======
<CAPTION>
DECEMBER 31, 1996
---------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
State and political subdivisions........ $ 463 $16 $-- $ 479
------- --- ---- -------
Total................................. $ 463 $16 $-- $ 479
======= === ==== =======
Securities classified as available for sale:
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. Government agencies................ $ 8,992 $12 $-- $ 9,004
Mortgage-backed securities.............. 348 8 356
------- --- ---- -------
Total................................. $ 9,340 $20 $-- $ 9,360
======= === ==== =======
<CAPTION>
DECEMBER 31, 1996
---------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. Government Agencies................ $11,487 $ 2 $ 46 $11,443
Mortgage-backed securities.............. 568 6 -- 574
------- --- ---- -------
Total................................. $12,055 $ 8 $ 46 $12,017
======= === ==== =======
</TABLE>
59
<PAGE>
INVESTMENT SECURITIES MATURITY SCHEDULE
(IN THOUSANDS)
Securities classified as held to maturity:
<TABLE>
<CAPTION>
MATURITY
-----------------------------------------------
WITHIN AFTER ONE BUT AFTER
SEPTEMBER 30, 1997 ONE YEAR WITHIN FIVE YEARS FIVE YEARS
------------------ ------------ ------------------- ------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ---------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
States and political subdivisions
(1)............................. $ -- -- $ -- -- $462 7.04%
------ ---------- ----
Total securities............... $ -- $ -- $462
====== ========== ====
<CAPTION>
MATURITY
-----------------------------------------------
WITHIN AFTER ONE BUT AFTER
DECEMBER 31, 1996 ONE YEAR WITHIN FIVE YEARS FIVE YEARS
----------------- ------------ ------------------- ------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ---------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
States and political subdivisions
(1)............................. $ -- -- $ 254 5.09% $209 5.35%
------ ---------- ----
Total securities............... $ -- $ 254 $209
====== ========== ====
Securities classified as available for sale:
<CAPTION>
MATURITY
-----------------------------------------------
WITHIN AFTER ONE BUT AFTER
SEPTEMBER 30, 1997 ONE YEAR WITHIN FIVE YEARS FIVE YEARS
------------------ ------------ ------------------- ------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ---------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
U.S. Government agencies......... $1,038 5.90% $ 8,180 6.45% $-- --
Mortgage-backed securities....... -- -- -- -- 142 7.96%
------ ---------- ----
Total securities............... $1,038 $ 8,180 $142
====== ========== ====
<CAPTION>
MATURITY
-----------------------------------------------
WITHIN AFTER ONE BUT AFTER
DECEMBER 31, 1996 ONE YEAR WITHIN FIVE YEARS FIVE YEARS
----------------- ------------ ------------------- ------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ---------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
U.S. Government agencies......... $1,182 4.27% $ 10,670 6.47% $-- --
Mortgage-backed securities....... -- -- -- -- 165 7.91%
====== ========== ====
Total securities............... $1,182 $ 10,670 $165
====== ========== ====
</TABLE>
- --------
(1) Weighted average yields on tax-exempt obligations have been computed on a
fully tax-equivalent basis using a tax rate of 34 percent.
60
<PAGE>
LOAN PORTFOLIO
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
SEPTEMBER 30, 1997 1996 1995
--------------------- ---------------- ----------------
% LOAN % LOAN % LOAN
TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
---------- ---------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial... $ 2,210 7.2% $ 1,539 5.2% $ 1,564 4.9%
Real estate--mortgage... 16,346 53.7% 17,346 58.1% 18,674 58.4%
Real estate--construc-
tion and land develop-
ment................... 6,253 20.4% 5,882 19.7% 7,000 21.9%
Installment and other
consumer............... 5,708 18.7% 5,082 17.0% 4,725 14.8%
---------- -------- ------- ----- ------- -----
Total................. $ 30,517 100.0% $29,849 100.0% $31,963 100.0%
========== ======== ======= ===== ======= =====
</TABLE>
SELECTED LOAN MATURITY AND INTEREST RATE SENSITIVITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
MATURITY
----------------------------------
AFTER ONE AFTER
ONE YEAR BUT WITHIN FIVE
SEPTEMBER 30, 1997 OR LESS FIVE YEARS YEARS TOTAL
------------------ -------- ---------- ------ -------
<S> <C> <C> <C> <C>
Commercial, financial....................... $ 1,760 $ 388 $ 62 $ 2,210
Real estate--mortgage....................... 9,737 4,333 2,276 16,346
Real estate--construction and land
development................................ 5,926 321 6 6,253
Installment and other consumer.............. 3,144 1,495 1,069 5,708
------- ------ ------ -------
Total..................................... $20,567 $6,537 $3,413 $30,517
======= ====== ====== =======
<CAPTION>
MATURITY
----------------------------------
AFTER ONE AFTER
ONE YEAR BUT WITHIN FIVE
DECEMBER 31, 1996 OR LESS FIVE YEARS YEARS TOTAL
----------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C>
Commercial, financial....................... $ 1,226 $ 270 $ 43 $ 1,539
Real estate--mortgage....................... 9,914 5,017 2,415 17,346
Real estate--construction and land
development................................ 5,574 302 6 5,882
Installment and other consumer.............. 2,799 1,331 952 5,082
------- ------ ------ -------
Total..................................... $19,513 $6,920 $3,416 $29,849
======= ====== ====== =======
</TABLE>
61
<PAGE>
LOAN INTEREST RATE SENSITIVITY DUE TO REPRICING AND MATURITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
SEPTEMBER 30, 1997 1996 1995
------------------------------------ ----------------
FIXED VARIABLE FIXED VARIABLE FIXED VARIABLE
RATE RATE RATE RATE RATE RATE
--------- ----------------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
One year and under....... $ 15,018 $ 3,971 $15,689 $4,226 $20,155 $4,668
Due after one year but
within five years....... 11,468 -- 9,874 -- 7,128 --
Due after five years..... 60 -- 60 -- 12 --
--------- -------- ------- ------ ------- ------
Total.................. $ 26,546 $ 3,971 $25,623 $4,226 $27,295 $4,668
========= ======== ======= ====== ======= ======
</TABLE>
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------
1997 1996 1995
----------------- ------------ ------------
<S> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES:
Balances at beginning of period.. $ 677 $ 731 $ 890
------- ------------ ------------
Charge-offs:
Commercial and financial......... -- 12 4
Real estate--mortgage............ -- -- --
Real estate and construction..... -- 23 167
Installment and other consumer... 14 2 3
------- ------------ ------------
Total.......................... 14 37 174
------- ------------ ------------
Recoveries:
Commercial, financial............ -- 5 --
Real estate--mortgage............ -- -- --
Real estate and construction..... -- 24 8
Installment and other consumer... 1 4 7
------- ------------ ------------
Total.......................... 1 33 15
------- ------------ ------------
Net charge-offs.................. 13 4 159
Provision (benefit) charged
(credited) to income............ -- (50) --
------- ------------ ------------
Balance at end of period......... $ 664 $ 677 $ 731
======= ============ ============
Loans outstanding at period end.. $30,517 $ 29,849 $ 31,963
Ratio of allowance for loan loss
to loans outstanding at the end
of the period................... 2.18% 2.27% 2.29%
Average loans outstanding during
the period...................... $30,179 $ 28,843 $ 31,036
Ratio of net charge-offs to
average loans outstanding during
the period...................... 0.04% 0.01% 0.51%
</TABLE>
62
<PAGE>
ALLOCATION OF ALLOWANCE FOR LOAN LOSS
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
SEPTEMBER 30, 1997 1996 1995
-------------------- --------------- ---------------
% LOAN % LOAN % LOAN
TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
-------- ---------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial.... $ 45 7.2% $ 35 5.2% $ 36 4.9%
Real estate--mortgage.... 157 53.7% 160 58.1% 152 58.4%
Real estate--
construction............ 135 20.4% 133 19.7% 160 21.9%
Consumer................. 124 18.7% 115 17.0% 108 14.8%
Unallocated(1)........... 203 -- 234 -- 275 --
-------- --------- ---- ----- ---- -----
Total.................. $ 664 100.0% $677 100.0% $731 100.0%
======== ========= ==== ===== ==== =====
</TABLE>
- --------
(1) Unallocated amount represents amount exceeding general and specific
reserves by loan category.
NONPERFORMING ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------
1997 1996 1995
------------- ------ ------
<S> <C> <C> <C>
Loans in nonaccrual status......................... $317 $ 402 $ 533
Other real estate owned............................ 452 900 515
---- ------ ------
Total nonperforming assets....................... $769 $1,302 $1,048
==== ====== ======
Accruing loans past due 90 days or more............ $ 18 $ 0 $ 6
Restructured loans................................. 0 0 0
---- ------ ------
$ 18 $ 0 $ 6
==== ====== ======
Interest on nonaccrual loans:
Interest that would have been recorded under
original terms.................................. $ 35 $ 41 $ 44
Interest actually recorded....................... 5 0 14
---- ------ ------
Foregone interest................................ $ 30 $ 41 $ 30
==== ====== ======
</TABLE>
As a matter of policy, Lanier places loans on a nonaccrual status whenever
collection becomes doubtful or when payment of interest or principal is 90
days past due.
All problem assets are disclosed above.
DEPOSIT AVERAGES
(IN THOUSANDS, EXCEPT OR PERCENTAGES)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
NINE MONTHS ENDED -------------------------------------------
SEPTEMBER 30, 1997 1996 1995
--------------------- --------------------- ---------------------
AMOUNT EXPENSE RATE AMOUNT EXPENSE RATE AMOUNT EXPENSE RATE
------- ------- ----- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest-bearing..... $11,157 $ -- -- $ 8,586 $ -- -- $ 8,623 $ -- --
NOW..................... 10,232 246 3.21% 5,374 122 2.27% 4,850 109 2.25%
Money market............ 5,644 142 2.35% 5,824 191 3.28% 4,453 142 3.19%
Savings................. 3,079 60 2.60% 3,098 81 2.62% 2,951 77 2.61%
Time, $100,000 and over. 6,200 271 5.83% 6,498 407 6.26% 5,763 347 6.02%
Other time.............. 17,857 723 5.40% 17,257 940 5.45% 16,588 911 5.49%
------- ------ ------- ------ ------- ------
Total.................. $54,169 $1,442 $46,637 $1,741 $43,228 $1,586
======= ====== ======= ====== ======= ======
</TABLE>
63
<PAGE>
COMPOSITION OF AVERAGE DEPOSITS
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
NINE MONTHS ENDED -----------------------------------------
SEPTEMBER 30, 1997 1996 1995
-------------------- -------------------- --------------------
% OF DEPOSIT % OF DEPOSIT % OF DEPOSIT
TO TOTAL TO TOTAL TO TOTAL
AMOUNT DEPOSITS AMOUNT DEPOSITS AMOUNT DEPOSITS
------- ------------ ------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing..... $11,157 20.6% $ 8,586 18.4% $ 8,623 20.0%
NOW..................... 10,232 18.9% 5,374 11.5% 4,850 11.2%
Money market............ 5,644 10.4% 5,824 12.6% 4,453 10.3%
Savings................. 3,079 5.7% 3,098 6.6% 2,951 6.8%
Time, $100,000 and over. 6,200 11.4% 6,498 13.9% 5,763 13.3%
Other time.............. 17,857 33.0% 17,257 37.0% 16,588 38.4%
------- ------ ------- ------ ------- ------
Total.................. $54,169 100.0% $46,637 100.0% $43,228 100.0%
======= ====== ======= ====== ======= ======
</TABLE>
MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------
1997 1996 1995
------------- ------ ------
<S> <C> <C> <C>
Months to maturity:
Under 3 months.................................... $ 916 $ 946 $1,632
3 to 6 months..................................... 1,739 1,323 1,648
6 to 12 months.................................... 2,403 1,419 1,749
Over 12 months.................................... 1,407 1,979 1,670
------ ------ ------
Total........................................... $6,465 $5,667 $6,699
====== ====== ======
</TABLE>
FUNDS PURCHASED (1)
(IN THOUSANDS, EXCEPT FOR RATES)
<TABLE>
<CAPTION>
PERIOD ENDED DAILY AVERAGE
---------------- ------------- MAXIMUM
WEIGHTED OUTSTANDING
AVERAGE AT ANY
BALANCE RATE BALANCE RATE MONTH-END
------- -------- ------- ----- -----------
<S> <C> <C> <C> <C> <C>
September 30, 1997................... $3,500 6.58% $ 169 5.52% $3,500
December 31, 1996.................... $3,500 7.32% $ 265 5.28% $3,500
December 31. 1995.................... $3,500 6.03% $1,067 6.56% $3,500
</TABLE>
- --------
(1) Consists of federal funds purchased that mature either overnight or at a
fixed maturity generally not exceeding three months. Rates on overnight
funds reflect current market rates. Rates on fixed maturity borrowing are
set at the time of borrowing.
RATIOS AND OTHER DATA
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- -------------
1997 1996 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Return on average assets............................ 1.16% 1.29% 1.42% 1.33%
Return on average equity............................ 8.16% 8.68% 9.74% 8.90%
Net interest margin................................. 4.99% 5.19% 5.29% 5.73%
Common stock dividend payout ratio.................. 24.30% 20.88% 14.45% 10.40%
Average earning assets to average assets............ 91.80% 92.17% 93.14% 92.30%
Average equity to average assets ratio.............. 14.16% 14.92% 14.58% 14.99%
Efficiency ratio.................................... 66.45% 66.34% 66.72% 66.64%
</TABLE>
64
<PAGE>
CAPITAL RATIOS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- -------------
1997 1996 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
LEVERAGE RATIOS:
Leverage ratio.................................... 15.01% 15.27% 15.04% 14.97%
Tangible leverage ratio........................... 15.01% 15.27% 15.04% 14.97%
RISK-BASED CAPITAL RATIOS:
Tier I risk-based capital ratio................... 24.81% 25.87% 25.07% 23.95%
Total risk-based capital ratio.................... 26.07% 27.13% 26.33% 25.21%
</TABLE>
Equity component of capital ratios does not include unrealized loss on
investment securities, net of tax, included in shareholders' equity accounts.
65
<PAGE>
LANIER MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis sets forth the major factors which
affected Lanier's results of operations and financial condition for the
periods shown. These comments are intended to supplement and highlight
information and should be read in conjunction with the financial statements,
related notes and selected financial data presented elsewhere in this
document.
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
The purpose of this discussion is to focus on significant changes in the
financial condition and results of operations of Lanier for the nine-month
periods ended September 30, 1997 and 1996. The discussion and analysis is
intended to supplement and highlight information contained in the financial
statements and selected financial data presented elsewhere in this document.
The following should be read in conjunction with the financial statements of
Lanier contained herein.
Summary
Net income for the nine months ended September 30, 1997 was $553,000, an
increase of $7,000 or 1.3% over earnings of $546,000 in 1996. The earnings
improvement was primarily the net result of an 8.6% increase in net interest
income, offset by a 15.1% increase in operating expenses, which include
approximately $12,000 additional expenses incurred to open a loan production
office, $46,500 to settle two lawsuits, and a 7.9% increase in income taxes.
Net income per share was $0.67 in the first nine months of 1997 compared to
$0.67 in 1996. The return on average assets was 1.16% in the first nine months
of 1997 compared to 1.29% in the first nine months of 1996. The return on
average equity was 8.16% for the nine months ended September 30, 1997 and
8.68% for the nine months ended September 30, 1996.
Earning Assets
Average earnings assets were $58.6 million for the first nine months of
1997, an increase of $6.8 million or 12.9% from $51.8 million for the first
nine months of 1996. This increase is primarily due to investing seasonal
local municipality deposits which averaged $1.9 million for the nine months
ended September 30, 1997, with a maximum amount outstanding at any month-end
during the period of $22.3 million, representing the purchase of securities
with a fair market value of $24.5 million. Total earning assets decreased $1.2
million from $61.4 million at December 31, 1996 to $60.2 million at September
30, 1997 due to the net of increases in loans and federal funds sold and
securities purchased under agreements to resell, reduced by decreases in
investment securities and the seasonal public funds. At September 30, 1997,
the mix of earning assets was comprised of total loans at 50.7%, investment
securities at 16.3%, federal funds and securities purchased under agreements
to resell at 33.0% of total earning assets. At December 31, 1996, total loans
were 48.6%, investment securities were 20.3% and federal funds sold were 31.1%
of total earning assets.
Loans outstanding at September 30, 1997 totaled $30.5 million, an increase
of $700,000 or 2.3% from December 31, 1996 outstanding of $29.8 million.
Increases from December 31, 1996 were primarily in commercial loans of
$700,000, real estate construction loans of $400,000, and installment and
other consumer loans of $600,000 offset by a $1.0 million decrease in real
estate mortgages. Construction loan outstandings increased in 1997 due to new
customers and funding of residential construction loan commitments in excess
of loan payoffs.
The composition of Lanier's total investment securities portfolio reflects
Lanier's investment strategy of maximizing portfolio yields commensurate with
risk and liquidity considerations. The primary objectives of Lanier's
investment strategy are to maintain an appropriate level of liquidity and to
provide a source of interest income with minimal credit risk.
66
<PAGE>
Investment securities totaled $9.8 million at September 30, 1997, a decrease
of $2.7 million from December 31, 1996 and $3.0 million from September 30,
1996. The decrease in investment securities was due to a strategy of
redeploying into higher yielding loans to take advantage of higher yields
available during 1997.
During the first nine months of 1997, no investment securities were sold.
Net unrealized gains in Lanier's investment securities held to maturity at
September 30, 1997 totaled $16,000, compared to a net gain of $16,000 at
December 31, 1996. Net unrealized gain in securities available-for-sale was
$20,000 at September 30, 1997, compared to a gain of $8,000 at December 31,
1996. The lack of change in unrealized gains in investment securities held to
maturity at September 30, 1997 from September 30, 1996 is due to the stable
general level of interest rates.
Federal funds sold and securities purchased under agreements to resell
totaled $19.9 million at September 30, 1997, which represented an increase of
$800,000 from $19.1 million at December 31, 1996 and $5.8 million from $14.1
million at September 30, 1996. The increase was attributable to the continued
deployment of excess liquidity in investment securities to federal funds sold
to take advantage of increases in the general level of interest rates in 1997
and invest seasonal local municipality deposits which averaged $1.9 million in
1997.
Deposits
Deposits averaged $54.2 million during the first nine months of 1997
compared to $47.1 million during the first nine months of 1996. Total deposits
at September 30, 1997 of $51.9 million represented a decrease of $5.5 million
from $57.3 million at December 31, 1996. The decrease was due primarily to a
decrease of $5.7 million in interest-bearing deposits, primarily from the
seasonal local municipality public funds.
Liquidity Management
Liquidity is the ability to convert assets into cash or cash equivalents
without significant loss and to raise additional funds by increasing
liabilities. Liquidity management involves maintaining Lanier's ability to
meet day-to-day cash flow requirements to ensure the availability of an
adequate level of funds to meet loan demand and deposit withdrawal needs of
Lanier's customers. Lanier actively manages the levels, types and maturities
of earning assets in relation to the sources of funds available to ensure
adequate funding will be available at all times.
Federal funds sold, securities purchased under agreements to resell,
investment securities, and deposits in banks scheduled to mature within one
year totaled $20.9 million at September 30, 1997, and represented the primary
source of Lanier's liquidity. The entire amount was available for liquidity
needs.
Lanier's loan-to-deposit ratio averaged 55.7% during the first nine months
of 1997 compared to 62.3% for the first nine months of 1996. The ratio
declined during the 1997 period due to loan payoffs matching loan originations
and deposit growth exceeding loan demand. This decline significantly augmented
the liquidity position of Lanier during the first nine months of 1997.
Lanier has short-term funding available through federal funds purchased
lines of credit with correspondent banks. Federal funds lines totaled $4.5
million at September 30, 1997. At September 30, 1997 $1.0 million was
available for liquidity needs.
Interest Rate Sensitivity Management
Interest rate sensitivity is a function of the repricing characteristics of
Lanier's portfolio of assets and liabilities. The repricing characteristics
are the time frames within which the interest-bearing assets and liabilities
are subject to change in interest rates either at replacement, repricing or
maturity during the life of the instruments. Interest rate sensitivity
management focuses on the maturity structure of assets and liabilities and
their repricing characteristics during periods of change in market interest
rates. Effective interest rate sensitivity management seeks to ensure that
both assets and liabilities respond to changes in interest rates within an
67
<PAGE>
acceptable time frame, thereby minimizing the effect of interest rate
movements on net interest income. Interest rate sensitivity is measured as the
difference between the volumes of assets and liabilities in Lanier's current
portfolio that are subject to repricing at various time horizons of one year
or less, one to five years and over five years. The difference is known as
interest rate sensitivity gap.
At September 30, 1997, 68.9% of total earning assets may reprice during the
next twelve months, compared to 89.2% of interest-bearing liabilities. For the
one-to-five year time frame, the corresponding relationships are 31.1% and
10.8%, respectively. At December 31, 1996, 68.2% of earning assets would
reprice in the next twelve months compared to 86.7% of total interest-bearing
liabilities. For the one-to-five year period, 31.8% and 13.3% could reprice,
respectively. Lanier is considered liability sensitive since its deposits will
reprice faster than its assets.
Lanier has not entered into any off-balance sheet interest rate contracts,
such as swaps, caps and floors, to alter its interest rate sensitivity.
Capital Resources
Stockholders' equity at September 30, 1997 was $9.3 million, an increase of
$400,000 from December 31, 1996 and $700,000 from September 30, 1996.
Retention of earnings, net of dividends paid, accounted for all the increase
in stockholders' equity during the nine-month period ended September 30, 1997
and year ended December 31, 1996. The investment market valuation reserve also
changed from $56,000 loss at September 30, 1996, $25,000 loss at December 31,
1996 to a $13,000 gain at September 30, 1997.
A strong capital position, which is vital to the continued profitability of
Lanier, also promotes depositor and investor confidence and provides a solid
foundation for the future growth of the organization. Lanier's capital
requirements have been met through the initial capitalization of Lanier and
through the retention of earnings.
Average stockholders' equity as a percentage of total average assets is one
measure used to determine capital strength. Lanier's ratio of average
stockholders' equity to total average assets for the nine months ended
September 30, 1997 was 14.2% compared to 14.6% at December 31, 1996 and 14.9%
at September 30, 1996. The decrease in this ratio during 1997 as compared to
December 31, 1996, resulted from the assets increasing. The decrease from
September 30, 1996, was the result of capital increasing slower than total
assets. For key equity and asset ratios for Lanier, see "Selected Historical
Financial Data of Lanier."
Two important indicators of capital adequacy in the banking industry are the
leverage ratio and the tangible leverage ratio. The leverage ratio is defined
as common stockholders' equity minus goodwill and other intangibles disallowed
by bank regulators, divided by quarterly average assets minus goodwill and
other disallowed intangibles. The tangible leverage ratio is defined as common
stockholders' equity, minus all intangibles, divided by quarterly average
assets minus all intangibles. Because Lanier has no intangibles, Lanier's
leverage ratio is the same as its tangible leverage ratio. This ratio was
15.01% at September 30, 1997 and 15.04% at December 31, 1996.
Risk-based capital guidelines take into consideration risk factors, as
defined by regulators, associated with various categories of assets. Under the
guidelines, capital strength is measured by two tiers, which are used in
conjunction with risk-adjusted assets to determine risk-based capital ratios.
Lanier's Tier I capital, which consists of equity, amounted to $9,263,000 at
September 30, 1997. Tier II capital, equivalent to the allowance for loan
losses amount, was $469,000 at September 30, 1997. Tier I capital plus the
Tier II capital components is referred to as Total Qualifying Capital and was
$9,732,000 at September 30, 1997. The percentage ratios as calculated under
the guidelines were 24.81% and 26.07% for Tier I and Total Qualifying Capital,
respectively, at September 30, 1997. The risk-based capital ratios have
declined in 1997 because risk assets grew faster than equity during the year.
68
<PAGE>
The capitalization of Lanier has always exceeded the minimum ratios required
for "well capitalized" banks as defined by federal regulators, currently 5%
leverage capital, 6% Tier I capital and 10% Total Qualifying Capital. Lanier
continually monitors these ratios to ensure that it exceeds the guideline
ratios.
Income Taxes
The effective tax rate as a percentage of pretax income was 34% in both the
nine month periods ended September 30, 1997 and 1996.
Dividends
Bank regulations restrict the amount of dividends which Lanier may pay
without obtaining prior approval. If Lanier meets certain requirements
pertaining to credit quality and capital ratios, dividends may be paid to
stockholders if the aggregate amount of dividends declared in the calendar
year does not exceed 50% of the net profits after taxes, but before dividends,
for the previous calendar year.
Impact of Inflation and Changing Prices
A bank's asset and liability structure is substantially different from that
of an industrial company in that virtually all assets and liabilities of a
bank are monetary in nature. Management believes the impact of inflation on
financial results depends upon the company's ability to react to changes in
interest rates and, by such reaction, reduce the inflationary impact on
performance. Interest rates do not necessarily move in the same direction, or
at the same magnitude, as the prices of other goods and services. Management
seeks to manage the relationship between interest- sensitive assets and
liabilities in order to protect against wide interest rate fluctuations,
including those resulting from inflation. In addition, management periodically
reviews its pricing of services and adjusts its pricing consistent with the
cost increases since the last price adjustment.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income rose 8.6% from $2,018,000 in the nine months ended
September 30, 1996 to $2,191,000 in the nine months ended September 30, 1997.
This increase in net interest income can be attributed to growth in loans and
a decrease in interest margins, partly offset by growth in time deposits.
During the nine months ended September 30, 1997, the net interest margin was
4.99% on average earning assets of $58,582,000. In the nine months ended
September 30, 1996, the net interest margin was 5.19% on average earning
assets of $51,804,000. The average yield on earning assets decreased 29 basis
points to 8.28% in the nine months ended September 30, 1997 from 8.57% in the
nine months ended September 30, 1996, primarily due to decreases in loans and
investment securities increasing the federal funds sold and securities
purchased under agreements to resell.
Allowance for Loan Losses
The allowance for loan losses represents management's estimate of the amount
required to provide for potential losses inherent in the loan portfolio. In
its continuing evaluation of the allowance and its adequacy, management
considers Lanier's loan loss experience, the amount of past due and non-
performing loans, current and anticipated economic conditions, underlying
collateral values securing loans and other factors which affect the allowance
for loan losses.
While it is Lanier's policy to charge-off in the current period the loans in
which a loss is considered probable, there are additional risks of future
losses which cannot be quantified precisely or attributed to particular loans
or classes of loans. Because these risks include the state of the economy,
management's judgment as to the adequacy of the allowance is necessarily
approximate and imprecise.
In assessing the adequacy of the allowance, management relies predominately
on its periodic review of the loan portfolio, which is undertaken both to
ascertain whether there are probable losses which must be charged-off
69
<PAGE>
and to assess the risk characteristics of the portfolio in the aggregate. This
review encompasses the judgment of management, utilizing internal loan rating
standards, guidelines provided by the banking regulatory authorities governing
Lanier, their loan portfolio review as part of the bank examination process,
and the annual review performed by the certified public accountants auditing
Lanier's financial statement.
The provision for loan losses charged to operations in the nine months ended
September 30, 1997 and September 30, 1996 was zero for both periods. Lanier
had provided for a significant amount of problem loans in prior years and, due
to reductions in problem loans, the reserve for loan losses was more than
adequately funded. Net charge- offs were approximately $13,000 or 0.04% of
average loans outstanding during the nine months ended September 30, 1997 as
compared to $2,000 or 0.01% of average loans outstanding during the nine
months ended September 30, 1996. At September 30, 1997, the allowance for loan
losses was $664,000 or 2.18% of loans outstanding as compared to $729,000 or
2.51% of loans outstanding at September 30, 1996. The allowance for loan
losses as a multiple of net loans charged off was 51.08 times and 364.50 times
for the nine months ended September 30, 1997 and 1996, respectively.
At September 30, 1997, Lanier had aggregate non-accrual loans of $317,000, a
decrease of $54,000 from $371,000 at September 30, 1996. The ratio of non-
accrual loans to total loans was 1.04% at September 30, 1997 and 1.28% at
September 30, 1996. At September 30, 1997, there were approximately $18,000 in
loans past due 90 days or more and still accruing.
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan" ("SFAS 114") was issued in May 1993. SFAS
114 addresses the accounting by creditors for impairment of certain loans. It
requires that losses on loans be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or
the fair value of the collateral if the loan is collateral dependent. Lanier
adopted SFAS 114 on January 1, 1995. At September 30, 1997 and 1996, Lanier
held impaired loans as defined by SFAS 114 of approximately $144,000 and for
which specific allocations of approximately $45,000 have been established
within the allowance for loan losses. The average recorded investment and
related interest income recognized on these loans were approximately $144,000
and zero, respectively for the nine months ended September 30, 1997.
Non-interest Income
Non-interest income was $465,000 for the nine months ended September 30,
1997 compared to $371,000 for the nine months ended September 30, 1996, a
25.3% increase. Deposit growth was largely attributable to a new public funds
relationship which was established in December 1996. The average balance of
the public funds deposits for the nine months ended September 30, 1997, was
$4,228,892. As a result of deposit growth from public funds, rather than
private funds, fees on deposits have decreased 1.45%, or approximately $5,000,
in the nine months ended September 30, 1997 compared to the nine months ended
September 30, 1996. Other income increased 348.1% in the nine months ended
September 30, 1997 compared to the nine months ended September 30, 1996. This
increase can be primarily attributed to a sale of other real estate owned,
which resulted in a gain of approximately $71,000 or 262.9%.
Non-interest Expense
Non-interest expense increased 15.1%, or approximately $240,000, to
$1,831,000 during the nine months ended September 30, 1997 as compared to
$1,591,000 for the nine months ended September 30, 1996. Salaries and other
personnel expense increased 9.7% or $93,000 to $1,048,000 in the nine months
ended September 30, 1997 as compared to $955,000 in the nine months ended in
September 30, 1996, and other operating expense increased 23.1% or $147,000.
The increase in other operating expenses is partially due to the opening of a
loan production office for approximately $12,000 and the payment of legal fees
and settlement of two suits totaling approximately $46,500.
FDIC insurance premiums paid in the nine months ended September 30, 1997
increased approximately $3,000 or 300%, compared to the nine months ended
September 30, 1996.
70
<PAGE>
Net non-interest expense (defined as non-interest expense less non-interest
income) as a percentage of average assets increased from 1.98% for the nine
months ended September 30, 1996 to 2.14% for the nine months ended September
30, 1997. The expense of the loan production office, an additional salary for
the office and settlement of legal suits contributed to the decreased rates.
The efficiency ratio (non-interest expense divided by the sum of net interest
income [taxable-equivalent basis] and noninterest income net of gains [losses]
from security transactions) was 66.45% for the nine months ended September 30,
1997 compared to 66.34% for the nine months ended September 30, 1996.
Income Taxes
At September 30, 1997 and 1996, Lanier's net deferred tax asset was $236,500
and $244,800, respectively. No valuation allowance was recorded for this asset
since taxable income exists in the available carryback periods in an amount
which would ensure realization of the asset.
In the nine months ended September 30, 1997, Lanier recorded an income tax
provision of approximately $272,000, reflecting an effective tax rate of
33.0%. This compared with a provision of approximately $252,000 for the nine
months ended September 30, 1996 and a 31.6% effective tax rate.
Capital Resources
At September 30, 1997, Lanier's Tier I leverage capital ratio was 15.01%
compared to 15.27% at September 30, 1996. At September 30, 1997, Lanier's Tier
1 risk-based capital ratio was 24.81% compared to 25.87% at September 30,
1996. At September 30, 1997, Lanier's total risk-based capital ratio was
26.07% compared to 27.13% at September 30, 1996. These ratios exceed the
minimum capital adequacy guidelines imposed by regulatory authorities on banks
and bank holding companies, which are 4% for core capital and 8% for total
risk-based capital.
Lanier does not have any commitments which it believes would reduce its
capital to levels inconsistent with the regulatory definition of a "well
capitalized" financial institution.
YEARS ENDED DECEMBER 31, 1996 AND 1995
The purpose of this discussion is to focus on significant changes in the
financial condition and results of operations of Lanier for the two years
ended December 31, 1996 and 1995. The discussion and analysis is intended to
supplement and highlight information contained in the financial statements and
selected financial data presented elsewhere in this document.
Summary
Net income for 1996 was $789,000, an increase of $87,000 over a net income
of $702,000 in 1995. Net income per share was $0.97 in 1996 compared to a per
share income of $0.87 in 1995. The return on average assets was 1.42% in 1996
and 1.33% in 1995. The return on average equity was 9.74% for 1996 and 8.90%
in 1995. The earnings improvement was the net result of a 1.55% decline in net
interest income, a $50,000 benefit from reversal of allowance for loan losses,
and a 19.35% improvement in noninterest income. Operating expenses in 1996
were 1.3% higher than the previous year due to the full year expense
recognition for branch operations.
Earning Assets
Average earning assets were $51.8 million in 1996, an increase of $3.3
million from $48.5 million in 1995. Average earning assets in 1996 increased
6.8% over 1995 due to increases in both average federal funds sold and
investment securities which was funded by an increase in deposits. The average
earning asset mix continued to change during 1996 with total loans at 55.7%,
investment securities at 23.2% and federal funds including deposits in banks
at 21.1% of total earning assets. In 1995, total loans were 63.9%, investment
securities at
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18.2% and federal funds and deposits in banks at 17.9% of total earning
assets. The lower percentage of loans in Lanier's earning assets during 1996
contributed to a decrease in net interest income, which was offset somewhat by
the approximate 36% increase in average balance of investment securities over
1995.
Average loans decreased $2.2 million or 7.1% in 1996, with most of the
decrease concentrated in real estate mortgage loans. Total loans outstanding
at December 31, 1996 of $29.8 million represented a decrease of $2.1 million
or 6.6% from the December 31, 1995, level of $31.9 million. The decline in the
portfolio resulted from Lanier's ongoing efforts to maintain the loan
portfolio through the origination of loans and workout of problem loans.
Lanier's average loan-to-deposit ratio was 61.8% in 1996 and 71.8% in 1995.
The 1996 decrease in this ratio resulted from Lanier's inability to generate
loans at a faster pace than deposit growth. Real estate construction loans
decreased 16.0%, installment and other consumer loans increased 7.5% and real
estate mortgage loans decreased 7.1% along with a decline in commercial loans
of 1.6%. Real estate construction loans of $5.9 million at December 31, 1996
represented 19.8% of total loans outstanding compared to $7.0 million or 21.9%
of total loans at December 31, 1995. The decrease in real estate construction
lending during 1996 was due to a slightly lower level of new home construction
and opportunities to increase market share for local loans.
In 1994, Lanier adopted FAS 115 which required that securities available for
sale be reported at their market value, with unrealized gains and losses, net
of taxes, shown as a separate component of stockholders' equity. During 1996
and 1995, Lanier reported securities available for sale at the lower of cost
or market with any valuation adjustment reflected in stockholders' equity as
required by generally accepted accounting principles and held-to-maturity
securities were reported at amortized cost in both.
The composition of Lanier's total investment securities portfolio reflects
Lanier's investment strategy of maximizing portfolio yields commensurate with
risk and liquidity considerations. The primary objectives of Lanier's
investment strategy are to maintain an appropriate level of liquidity and
provide a source of interest income with minimal credit risk.
During 1996 and 1995, no investment securities were sold. Unrealized losses
in Lanier's available for sale portfolio were $38,200 in 1996, compared to
unrealized net gains of $49,400 in 1995.
Average federal funds sold increased 30.3% or $2.5 million in 1996 to $10.8
million. The average balance of interest-bearing deposits in other banks
decreased 95.4% or $330,000 to $16,000. There were no foreign time deposits
during 1996 and 1995.
Deposits
Changes in the markets served by Lanier were reflected in the liability mix
during 1996. Interest-bearing liabilities consisted primarily of interest-
bearing deposits in 1996 and 1995. Year-end deposit balances increased 21.9%
or $10.3 million in 1996. Approximately, $8.2 million was on deposit at
December 31, 1996, from a newly established relationship with a local
government entity. Declining interest rates during 1996 and 1995 and the
deposit relationship established with a local government entity and their
deposit base enabled Lanier to restructure the mix of deposits away from
consumer-oriented sources of funds.
During 1996, the average balance of non-interest bearing deposits, savings,
NOW and money market accounts increased 9.1% or $2.0 million compared to an
increase in time deposits of 6.3% or $1.4 million.
Liquidity Management
Liquidity is the ability to convert assets into cash or cash equivalents
without significant loss and to raise additional funds by increasing
liabilities. Liquidity management involves maintaining Lanier's ability to
meet day-to-day cash flow requirements to ensure the availability of an
adequate level of funds to meet loan demand and deposit withdrawal needs of
Lanier's customers. Lanier actively manages the levels, types and maturities
of earning assets in relation to the sources of funds available to assure
adequate funding will be available at all
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times. The $8.2 million additional public funds on deposit at December 31,
1996, were required to have marketable securities pledged.
Federal funds sold and investments scheduled to mature within one year
totaled $20.3 million in 1996 and represented the primary sources of Lanier's
liquidity.
Another source of liquidity is Lanier's ability to sell loans and loan
participations to other financial institutions and investors. In addition, the
construction loans originated by Lanier have a repayment period usually less
than nine months which provides flexibility to Lanier in managing its level of
loan commitments and loan funding.
Lanier has short-term funding available through federal funds purchased
lines of credit with correspondent banks. Federal funds lines totaled $4.5
million at December 31, 1996. At December 31, 1996, $1.0 million was available
for liquidity needs.
Interest Rate Sensitivity Management
Interest rate sensitivity is a function of the repricing characteristics of
Lanier's portfolio of assets and liabilities. The repricing characteristics
are the time frames within which the interest-bearing assets and liabilities
are subject to change in interest rates either at replacement, repricing or
maturity during the life of the instruments. Interest rate sensitivity
management focuses on the maturity structure of assets and liabilities and
their repricing characteristics during periods of changes in market interest
rates. Effective interest rate sensitivity management seeks to ensure that
both assets and liabilities respond to changes in interest rates within an
acceptable time frame, thereby minimizing the effect of interest rate
movements on net interest rates within an acceptable time frame, thereby
minimizing the effect of interest rate movements on net interest income.
Interest rate sensitivity is measured as the difference between the volumes of
assets and liabilities in Lanier's current portfolio that are subject to
repricing at various time horizons of one year or less, one to five years and
over five years. The difference is known as interest rate sensitivity gaps.
Variable rate loans totaling $4.2 million and $4.7 million at December 31,
1996 and 1995, respectively, and will reprice within one year. During 1997,
68.2% of earning assets will reprice compared to 86.7% of funding sources. For
the one-to-five year time frame, the corresponding relationships are 31.8% and
13.3%, respectively.
Lanier has not entered into any off-balance sheet interest rate contracts,
such as swaps, caps and floors, to alter its interest rate sensitivity.
Capital Resources
Stockholders' equity at December 31, 1996, reflected an increase of 7.8% or
$647,000 from December 31, 1995. Net income, reduced by dividends paid,
accounted for all of the increase in stockholders' equity in 1996 and 1995.
A strong capital position, which is vital to the continued profitability of
Lanier, also promotes depositor and investor confidence and provides a solid
foundation for the future growth of the organization. Lanier's capital
requirements have been met primarily through the initial capitalization of
Lanier and through the retention of earnings.
Average stockholder's equity as a percentage of total average assets is one
measure used to determine capital strength. The ratio of average stockholders'
equity to average assets for 1996 was 14.6% compared to 14.9% in 1995 due to a
$3.0 million average increase in assets. This ratio also declined because the
mix of earning assets was increased by $3.2 million and more heavily weighted
toward federal funds sold with a lower risk weighting than loans and
investment securities, in contrast to the prior period. For key equity and
asset ratios for Lanier for each reporting period, see, "Selected Historical
Financial Data of Lanier."
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Two important indicators of capital adequacy in the banking industry are the
leverage ratio and the tangible leverage ratio. The leverage ratio is defined
as common stockholders' equity minus goodwill and other intangibles disallowed
by bank regulators, divided by total average assets minus goodwill and other
disallowed intangibles. The tangible leverage ratio is defined as common
stockholders' equity, minus all intangibles, divided by total average assets
minus all intangibles. Since Lanier has no intangibles, its leverage ratio and
tangible leverage ratio were 15.04% at December 31, 1996 and 14.97% at
December 31, 1995.
Risk-based capital guidelines take into consideration risk factors, as
defined by Lanier's regulators, associated with various categories of assets.
Under the guidelines, capital strength is measured by two tiers, which are
used in conjunction with risk-adjusted assets to determine risk-based capital
ratios. Lanier's Tier I capital, which consists of equity less goodwill,
amounted to $8,902,000 at December 31, 1996. Tier II capital, equivalent to
the allowance for loan losses, was $446,000 at December 31, 1996. Tier I
capital plus the Tier II capital components is referred to as Total Qualifying
Capital and was $9,348,000 at year-end 1996. The percentage ratios as
calculated under the risk-based guidelines were 25.1% and 26.3% for Tier I and
Total Qualifying Capital, respectively, at December 31, 1996.
The regulatory capitalization of Lanier has always exceeded the minimum
ratios of 5% leverage capital, 6% Tier I capital and 10% Total Qualifying
Capital required in 1996 for "well capitalized" banks as defined by Lanier's
regulators. Lanier continually monitors these ratios to ensure that it exceeds
the guideline ratios.
Income Taxes
The effective tax rate as a percentage of pretax income was 34% in both the
nine month periods ended September 30, 1997 and 1996.
Dividends
Bank regulations restrict the amount of dividends which Lanier may pay
without obtaining prior approval. If Lanier meets certain requirements
pertaining to credit quality and capital ratios, dividends may be paid to
stockholders if the aggregate amount of dividends declared in the calendar
year does not exceed 50% of the net profits after taxes, but before dividends,
for the previous calendar year.
Impact of Inflation and Changing Prices
A bank's asset and liability structure is substantially different from that
of an industrial company in that virtually all assets and liabilities of a
bank are monetary in nature. Management believes the impact of inflation on
financial results depends upon Lanier's ability to react to changes in
interest rates and, by such reaction, reduce the inflationary impact on
performance. Interest rates do not necessarily move in the same direction, or
at the same magnitude, as the prices of other goods and services. As discussed
previously, management seeks to manage the relationship between interest-
sensitive assets and liabilities in order to protect against wide interest
rate fluctuations, including those resulting from inflation. In addition,
management periodically reviews its pricing of services and adjusts its
pricing consistent with the cost increases since the last price adjustment.
RESULTS OF OPERATIONS--1996 VERSUS 1995
Net Interest Income
Net interest income decreased $43,000 or 1.5% from $2,782,000 in 1995 to
$2,739,000 in 1996. During 1996, the net interest margin was 5.29% on average
earning assets of $51,765,000. In 1995, the net interest margin was 5.73% on
average earning assets of $48,545,000. The average yield on earning assets
decreased 46 basis points to 8.68% in 1996 from 9.14% in 1995. These decreases
can be attributed to a slight decrease in loans combined with an increase in
lower yielding investments in addition to an increase in interest earning
demand deposit and time deposit accounts.
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Allowance for Loan Losses
The allowance for loan losses represents management's estimate of the amount
which is adequate to provide for potential losses inherent in the loan
portfolio. In its continuing evaluation of the allowance and its adequacy,
management considers Lanier's loan loss experience, the amount of past due and
non-performing loans, current and anticipated economic conditions, underlying
collateral values securing loans and other factors which affect the allowance
for loan losses.
While it is Lanier's policy to charge-off in the current period the loans in
which a loss is considered probable, there are additional risks of future
losses which cannot be quantified precisely or attributed to particular loans
or classes of loans. Because these risks include the state of the economy,
management's judgment as to the adequacy of the allowance is necessarily
approximate and imprecise.
In assessing the adequacy of the allowance, management relies predominately
on its periodic review of the loan portfolio, which is undertaken both to
ascertain whether there are probable losses which must be charged-off and to
assess the risk characteristics of the portfolio in the aggregate. This review
encompasses the judgment of management, utilizing internal loan rating
standards, guidelines provided by the banking regulatory authorities governing
Lanier, their loan portfolio review as part of the bank examination process,
and the annual review performed by the certified public accountants auditing
Lanier's financial statements.
The benefit from loan loss reserves credited to operations in 1996 was
$50,000. Management of Lanier reevaluated the adequacy of the allowance for
loan losses and determined that due to the decrease in problem loans that the
reserve for loan losses was over provided and reversed $50,000 of the over
funding. In 1995, no benefit or provision was credited or charged to
operations. Net charge-offs were $3,498 or 0.01% of average loans outstanding
during 1996 as compared to net charge-offs of $159,272 or 0.51% of average
loans outstanding during 1995. At December 31, 1996, the allowance for loan
losses was $677,360 or 2.27% of loans outstanding as compared to $730,858 or
2.28% of loans outstanding at December 31, 1995. The allowance for loan losses
as a multiple of net loans charged off was 193.6 times and 4.59 times for the
years ended December 31, 1996 and 1995, respectively.
At December 31, 1996, Lanier had aggregate non-accrual loans of $402,000 a
decrease from $533,000 at the prior year end. The ratio of non-accrual loans
to total loans was 1.34% at December 31, 1996 and 1.67% at December 31, 1995.
At December 31, 1996, there were no loans past due 90 days or more and still
accruing compared to $6,000 at December 31, 1995.
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan" ("SFAS 114") was issued in May 1993. SFAS
114 addresses the accounting by creditors for impairment of certain loans. It
requires that losses on loans be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or
the fair value of the collateral if the loan is collateral dependent. Lanier
adopted SFAS 114 on January 1, 1995. At December 31, 1996 and 1995, Lanier
held impaired loans as defined by SFAS 114 of approximately $144,000 and
$681,000 for which specific allocations of approximately $45,000 and $113,000
respectively have been established within the allowance for loan losses. The
average recorded investment and related interest income recognized on these
loans were approximately $187,000 and zero in 1996 and $766,000 and $14,000 in
1995, respectively.
Non-interest Income
Non-interest income was $512,000 for the year ended December 31, 1996
compared to $429,000 for 1995, a 19.3% increase. Deposit growth increased fees
on deposits 18.0%, or $68,000 to $445,000 in 1996 compared to $377,000 in
1995. Other income rose 29.1% to $67,000 in 1996 compared to $52,000 in 1995.
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Non-interest Expense
Non-interest expense increased 1.4%, or $29,000 to $2,180,000 during 1996 as
compared to $2,151,000 for 1995. Salaries and other personnel expense
increased 4.8% to $1.3 million in 1996 as compared to $1.2 million in 1995,
and other operating expense decreased 3.2% to $886,000 in 1996 from $915,000
in 1995.
FDIC insurance premiums paid in 1996 decreased $44,000, or 95.7%, to $2,000
compared to $46,000 in 1995. During 1995 the FDIC determined that the Bank
Insurance Fund was adequately funded in accordance with regulations and
substantially lowered the assessment beginning in the third quarter of 1995
and continuing through 1996. Net non- interest expense (defined as non-
interest expense less non-interest income) as a percentage of average assets
decreased from 3.15% in 1995 to 2.69% in 1996. The efficiency ratio (non-
interest expense divided by the sum of net interest income [taxable-equivalent
basis] and noninterest income net of gains [losses] from security
transactions) was 66.72% in 1996 compared to 66.64% in 1995.
Income Taxes
At December 31, 1996 and 1995, Lanier's net deferred tax asset was $256,000
and $199,000 respectively. No valuation allowance was recorded for these
assets since taxable income exists in the available carryback periods in an
amount which would ensure realization of the asset.
In 1996 and 1995, Lanier recorded income tax provisions of $332,000 and
$358,000, respectively reflecting an effective tax rate of 29.6% and 33.8%
respectively. This decrease was primarily due to the $50,000 reversal in the
allowance for loan losses for which taxes had been previously provided.
Capital Resources
At December 31, 1996, Lanier's Tier 1 Leverage capital ratio was 15.04%
compared to 14.97% at December 31, 1995. At December 31, 1996, Lanier's Tier 1
risk-based capital ratio was 25.07% compared to 23.95% at the prior year- end.
At December 31, 1996, Lanier's total risk based capital ratio was 26.33%
compared to 25.21% at the prior year end. These ratios exceed the minimum
capital adequacy guidelines imposed by regulatory authorities on banks and
bank holding companies, which are 4% for core capital and 8% for total risk
based capital.
Lanier does not have any commitments which it believes would reduce its
capital to levels inconsistent with the regulatory definition of a "well
capitalized" financial institution.
YEARS ENDED DECEMBER 31, 1995 AND 1994
Summary
Net income for 1995 was $702,000, an increase of $249,000 or 55.0% over net
income of $453,000 in 1994. Net income per share was $0.87 in 1995 compared to
a per share income of $0.57 in 1995. The return on average assets was 1.33% in
1995 and 0.88% in 1994. The return on average equity was 8.90% for 1995 and
6.16% in 1994. The earnings improvement can be attributed to growth in loans
and investments and an increase in interest margins partly reduced by growth
in time deposits.
Earning Assets
Average earning assets were $48.5 million in 1995, an increase of $1.5
million or 3.2% from $47.0 million in 1994. Average loans increased $1.9
million or 6.5% to $31.0 million in 1995 compared to $29.1 million in 1994.
Lanier's average loan-to-deposit ratio was 71.8% in 1995 compared to 68.3% in
1994. Problem loans decreased from $1.3 million to $533,000 during 1995. Total
loan balances increased $2.1 million or 7.1% to $31.9 million as of December
31, 1995 compared to $29.8 million at December 31, 1994.
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Deposits
Average deposits were $43.2 million in 1995 and $42.6 million in 1994, an
increase of $600,000 or 1.4%.
Year-end deposit balances increased $5.4 million or 12.9% from $41.7 million
at December 31, 1994 to $47.1 million at December 31, 1995.
Capital Resources
Average stockholders' equity as a percentage of total average assets for
1995 was 14.99% compared to 14.21% in 1994.
At December 31, 1995 and 1994, the Tier 1 leverage capital was 14.97% and
15.60%, respectively. Also, the Tier 1 risk-based capital ratio was 23.95% and
26.54%, respectively. The Total risk-based capital ratio was 25.21% and
27.81%, respectively. These ratios declined primarily due to the increase in
earning assets.
Lanier continuously monitors these ratios to ensure that it exceeds the
guideline ratios.
Impact of Inflation and Changing Prices
A bank's asset and liability structure is substantially different from that
of an industrial company in that virtually all assets and liabilities of a
bank are monetary in nature. Management believes the impact of inflation on
financial results depends upon Lanier's ability to react to changes in
interest rates and, by such reaction, reduce the inflationary impact on
performance. Interest rates do not necessarily move in the same direction, or
at the same magnitude, as the prices of other goods and services. As discussed
previously, management seeks to manage the relationship between interest-
sensitive assets and liabilities in order to protect against wide interest
rate fluctuations, including those resulting from inflation. In addition,
management periodically reviews its pricing of services and adjusts its
pricing consistent with the cost increases since the last price adjustment.
RESULTS OF OPERATIONS--1995 VERSUS 1994
Net Interest Income
Net interest income rose $562,000 or 25.3% from $2,220,000 in 1994 to
$2,782,000 in 1995. This increase in net interest income can be attributed to
growth in loans and investments and an increase in interest margins, partly
offset by growth in time deposits. During 1995, the net interest margin was
5.73% on average earning assets of $48,545,000. In 1994, the net interest
margin was 4.72% on average earning assets of $47,018,000. The average yield
on earning assets increased 188 basis points to 9.14% in 1995 from 7.26% in
1994.
Allowance for Loan Losses
The allowance for loan losses represents management's estimate of an amount
adequate to provide for potential losses inherent in the loan portfolio. In
its continuing evaluation of the allowance and its adequacy, management
considers Lanier's loan loss experience, the amount of past due and non-
performing loans, current and anticipated economic conditions, underlying
collateral values securing loans and other factors which affect the allowance
for loan losses.
While it is Lanier's policy to charge-off in the current period the loans in
which a loss is considered probable, there are additional risks of future
losses which cannot be quantified precisely or attributed to particular loans
or classes of loans. Because these risks include the state of the economy,
management's judgment as to the adequacy of the allowance is necessarily
approximate and imprecise.
In assessing the adequacy of the allowance, management relies predominately
on its periodic review of the loan portfolio, which is undertaken both to
ascertain whether there are probable losses which must be charged-off and to
assess the risk characteristics of the portfolio in the aggregate. This review
encompasses the judgment of
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management, utilizing internal loan rating standards, guidelines provided by
the banking regulatory authorities governing Lanier, their loan portfolio
review as part of the bank examination process, and the annual review
performed by the certified public accountants auditing Lanier's financial
statements.
There was no provision for loan losses charged to operations in 1995. In
1994, a $105,000 benefit was credited to operations due to a significant
reduction in problem loans that allowed a reversal of excess reserve
requirements. Net charge-offs were $159,272 or 0.51% of average loans
outstanding during 1995 as compared to $103,562 or 0.36% of average loans
outstanding during 1994. At December 31, 1995, the allowance for loan losses
was $730,858 or 2.28% of loans outstanding as compared to $890,130 or 2.99% of
loans outstanding at December 31, 1994. The allowance for loan losses as a
multiple of net loans charged off was 4.59 times and 8.60 times for the years
ended December 31, 1995 and 1994, respectively.
At December 31, 1995, Lanier had aggregate non-accrual loans of $533,000, a
decrease from $1,260,000 at the prior year end. Nonaccrual loans were
diligently worked by management of Lanier and many customer relationships paid
off the loan or moved it to another bank. The ratio of non-accrual loans to
total loans was 1.67% at December 31, 1995 and 4.22% at December 31, 1994. At
December 31, 1995, there were approximately $6,000 in loans past due 90 days
or more and still accruing compared to $290,000 at December 31, 1994.
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan" ("SFAS 114") was issued in May 1993. SFAS
114 addresses the accounting by creditors for impairment of certain loans. It
requires that losses on loans be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or
the fair value of the collateral if the loan is collateral dependent. Lanier
adopted SFAS 114 on January 1, 1995. At December 31, 1995, Lanier held
impaired loans as defined by SFAS 114 of approximately $681,000 for which
specific allocations of approximately $113,000 have been established within
the allowance for loan losses. The average recorded investment and related
interest income recognized on these loans were approximately $766,000 and
$14,000 in 1995.
Non-Interest Income
Non-interest income was $429,000 for the year ended December 31, 1995
compared to $402,000 for 1994, which was a 6.7% increase. Deposit growth
increased fees on deposits by 8.6%, or $30,000, to $377,000 in 1995 compared
to $347,000 in 1994. Other income fell $2,000 or 4.1% in 1995 compared to
1994.
Non-Interest Expense
Non-interest expense increased 5.3%, or $108,000, to $2,151,000 during 1995
as compared to $2,043,000 for 1994. Salaries and other personnel expense
increased 13.2%, or $144,000 to $1,236,000 in 1995 as compared to $1,092,000
for 1994, and other operating expense decreased 3.8% or $36,000.
FDIC insurance premiums paid in 1995 was $46,000 which represents a decrease
of $57,000, or 55.0%, compared to $103,000 for 1994.
Net non-interest expense (defined as non-interest expense less non-interest
income) as a percentage of average assets decreased from 3.18% in 1994 to
3.15% in 1995 due to net changes discussed above. The efficiency ratio (non-
interest expense divided by the sum of net interest income [taxable-equivalent
basis] and noninterest income net of gains [losses] from security
transactions) was 66.64% in 1995 compared to 77.95% in 1994.
Income Taxes
At December 31, 1995, Lanier's net deferred tax asset was $199,000. No
valuation allowance was recorded for this asset since taxable income exists in
the available carryback periods in an amount which would ensure realization of
the asset.
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In 1995, Lanier recorded an income tax provision of $358,000, reflecting an
effective tax rate of 33.8%. This compared with a provision of $231,000 in
1994 and a 33.8% effective tax rate.
Capital Resources
At December 31, 1995, Lanier's Tier 1 Leverage capital ratio was 14.97%
compared to 15.60% at December 31, 1994. At December 31, 1995, Lanier's total
risk based capital ratio was 25.21% compared to 27.81% at the prior year end.
At December 31, 1995, Lanier's Tier 1 risk-based capital ratio was 23.95%
compared to 26.54% at the prior year- end. These ratios exceed the minimum
capital adequacy guidelines imposed by regulatory authorities on banks and
bank holding companies, which are 4% for core capital and 8% for total risk
based capital.
Lanier does not have any commitments which it believes would reduce its
capital to levels inconsistent with the regulatory definition of a "well
capitalized" financial institution.
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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 and Lanier.
GENERAL
Premier is a bank holding company registered with the Federal Reserve and
the Georgia Department under the BHC Act and the Georgia BHC Act. As such,
Premier is subject to the supervision, examination and reporting requirements
of the BHC Act and the regulations of the Federal Reserve and the Georgia BHC
Act. Premier is also a thrift holding company registered with the OTS under
the Federal Home Owners' Loan Act and the Georgia BHC Act. As a thrift holding
company, Premier is subject to the regulation, supervision, examination and
reporting requirements of the OTS and the Georgia Department. Lanier is a
Georgia chartered commercial bank. As such, Lanier is subject to the
supervision, examination and reporting requirements of the Georgia Department
and the FDIC.
The BHC 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 association.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to 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 concerned 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
including the parties' performance under the Community Reinvestment Act of
1977.
The BHC Act, as amended by the interstate banking provisions of the Riegle-
Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate
Banking Act"), which became effective on September 29, 1995, repealed the
prior statutory restrictions on interstate acquisitions of banks by bank
holding companies, such that Premier, and any other bank holding company
located in Georgia may now acquire a bank located in any other state, and any
bank holding company located outside Georgia may lawfully acquire any Georgia-
based bank, regardless of state law to the contrary, in either case subject to
certain deposit-percentage, aging requirements, and other restrictions. The
Interstate Banking Act also generally provides that, after June 1, 1997,
national and state-chartered banks may branch interstate through acquisitions
of banks in other states.
In response to the Interstate Banking Act, the Georgia General Assembly
adopted the Georgia Interstate Banking Act which became 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
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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 BHC 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 BHC Act does not place territorial limitations on
permissible non-banking activities of bank holding companies. Despite prior
approval, the Federal Reserve has the power to order a 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.
Lanier and each bank and thrift subsidiary of Premier are members of the
FDIC, and as such, their deposits are insured by the FDIC to the maximum
extent provided by law. Lanier and each bank and thrift subsidiary of Premier
are also subject to numerous state and federal statutes and regulations that
affect their business, activities, and operations, and each is supervised and
examined by one or more state or federal bank regulatory agencies.
Lanier, Premier Bank, Central and Southern Bank, and Citizens 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 banking
regulator for Lanier and each of the subsidiaries of Premier, as well as the
Georgia Department in the case of Lanier, Premier Bank, Central and Southern
Bank and Citizens Bank, regularly examine the operations of Lanier, Premier
Bank, Citizens Bank, North Georgia and Central and Southern Bank and are given
authority to approve or disapprove mergers, consolidations, the establishment
of branches, and similar corporate actions. The federal banking regulators and
the Georgia Department also have the power to prevent the continuance or
development of unsafe or unsound banking practices or other violations of law.
PAYMENT OF DIVIDENDS
Premier is a legal entity separate and distinct from its banking and other
subsidiaries. The principal sources of cash flow of Premier, including cash
flow to pay dividends to its shareholders, are dividends from Premier Bank,
Premier Lending, Central and Southern Bank, North Georgia and Citizens Bank.
There are statutory and regulatory limitations on the payment of dividends by
the subsidiary depository institutions to Premier, as well as by Premier to
its shareholders. Lanier is also subject to statutory and regulatory
limitations on the payment of dividends to its 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
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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 September 30, 1997, under dividend restrictions imposed under federal and
state laws, Premier Bank, Central and Southern Bank, North Georgia, Premier
Lending and Citizens Bank, without obtaining governmental approvals, could
declare aggregate dividends to Premier of approximately $1,057,000. At
September 30, 1997. Lanier, without obtaining governmental approvals, could
declare dividends to its shareholder of approximately $ .
The payment of dividends by Lanier and Premier and its respective
subsidiaries may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Lanier, Premier and Premier's subsidiary depository institutions are
required to comply with the capital adequacy standards established by the
Federal Reserve in the case of Premier, and the appropriate federal banking
regulator in the case of Lanier and each of Premier's subsidiary depository
institutions. 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 September 30, 1997, Premier's consolidated
Total Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e.,
the ratio of Tier 1 Capital to risk-weighted assets) were 11.85% and 10.60%,
respectively. At September 30, 1997, Lanier's unconsolidated Total Risk-Based
Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e., the ratio of Tier
1 Capital to risk weighted assets) were 26.07% and 24.81%, 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 those 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 September 30, 1997 was 8.24%.
Lanier's Leverage Ratio at September 30, 1997 was 15.01%. 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.
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Lanier and each of Premier's subsidiary depository institutions are 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. Lanier and each of the
subsidiary depository institutions of Premier were in compliance with
applicable minimum capital requirements as of September 30, 1997. Neither
Lanier, Premier, nor any of Premier's 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 is expected to act as a source of
financial strength for, and to commit resources to support, each of its
banking subsidiaries. This support may be required at times when, absent such
Federal Reserve policy, Premier may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of its banking
subsidiaries are subordinate in right of payment to deposits and to certain
other indebtedness of such banks. In the event of a bank holding company's
bankruptcy, any commitment by a bank holding company to a federal bank
regulatory agency to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(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. The subsidiary depository institutions of Premier are
subject to these cross-guarantee provisions. 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,
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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 meet its capital restoration plan, subject to certain
limitations. The obligation of a controlling bank 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.
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)
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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, without
regulatory approval.
At September 30, 1997, Lanier and all of the subsidiary depository
institutions of Premier had the requisite capital levels to qualify as "well
capitalized."
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a 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
risk-based assessment 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, 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 been 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.
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 basis 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
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FICO assessments. Effective January 1, 1997, FICO assessments 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.
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.
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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 September 30, 1997, approximately % of North Georgia's assets were
invested in Qualified Thrift Investments as currently defined.
Liquidity Requirements. Thrift institutions, including North Georgia, are
required to maintain average daily balances of liquid assets sufficient to
meet the institution's foreseeable cash needs. Specifically, 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 North Georgia at
September 30, 1997, was %.
EXPERTS
The consolidated financial statements of Premier appearing in this Proxy
Statement/Prospectus have been audited by Mauldin & Jenkins, L.L.C.,
independent accountants, to the extent and for the years indicated in their
report appearing elsewhere herein, and are included in reliance upon such
report and upon the authority of such firm as experts in accounting and
auditing. The financial statements of Lanier appearing in this Proxy
Statement/Prospectus have been audited by Bricker & Melton, P.A., independent
accountants, to the extent and for the years indicated in their report
appearing elsewhere herein, and are included in reliance upon such report and
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
Merger and certain income tax consequences of the Merger will be passed upon
by Womble Carlyle Sandridge & Rice, PLLC, Atlanta, Georgia.
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
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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 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
Premier.
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 of 1933.
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 or 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.
88
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PREMIER BANCSHARES, INC.
Table of Contents.......................................................... F-1
Independent Auditor's Report............................................... F-2
Financial Statements
Consolidated Balance Sheets.............................................. F-3
Consolidated Statements of Income........................................ F-4
Consolidated Statements of Stockholder's Equity.......................... F-5
Consolidated Statements of Cash Flows.................................... F-6
Notes to Consolidated Financial Statements............................... F-8
LANIER BANK & TRUST COMPANY
Unaudited Financial Statements--September 30, 1997......................... F-34
Balance Sheets........................................................... F-35
Statements of Income..................................................... F-37
Statements of Cash Flows................................................. F-39
Notes to Financial Statements............................................ F-41
Financial Statements--December 31, 1996, 1995, and 1994.................... F-45
Independent Auditors' Report............................................. F-46
Balance Sheets........................................................... F-47
Statements of Income..................................................... F-49
Statements of Changes in Stockholders' Equity............................ F-51
Statements of Cash Flows................................................. F-52
Notes to Financial Statements............................................ F-54
</TABLE>
89
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT............................................... F-2
FINANCIAL STATEMENTS
Consolidated balance sheets.............................................. F-3
Consolidated statements of income........................................ F-4
Consolidated statements of stockholders' equity.......................... F-5
Consolidated statements of cash flows.................................... F-6
Notes to consolidated financial statements............................... F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Premier Bancshares, Inc.
and Subsidiaries
Atlanta, Georgia
We have audited the accompanying consolidated balance sheets of PREMIER
BANCSHARES, INC. AND SUBSIDIARIES as of December 31, 1996 and 1995, and the
related statements of income, stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1996. 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 did not audit the financial statements of Central and Southern
Holding Company and Citizens Gwinnett Bankshares, Inc., two companies which
were pooled with Premier Bancshares, Inc. in 1997, as explained in Note 2 to
the consolidated financial statements, which statements are included in the
restated 1996 financial statements and reflect total assets of $383.1 million
and $316.1 million as of December 31, 1996 and 1995, respectively, and total
revenues of $30.4 million, $25.2 million and $24.8 million for the three years
in the period ended December 31, 1996. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to data included for Central and Southern Holding Company and Citizens
Gwinnett Bankshares, Inc., is based solely on the report of the other
auditors.
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, based upon our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Premier Bancshares, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Mauldin & Jenkins, L.L.C.
Atlanta, Georgia
January 31, 1997, except for Note 2 as to
which the date is June 23, 1997 and December 12, 1997
F-2
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks............................ $ 23,419,031 $ 21,617,039
Interest-bearing deposits in banks................. 2,797,173 12,447,819
Federal funds sold................................. 51,397,410 19,282,208
Securities available-for-sale...................... 151,054,720 146,607,575
Loans held for sale................................ 24,408,287 25,912,226
Loans.............................................. 400,633,298 310,863,184
Less allowance for loan losses..................... 7,602,890 6,776,228
------------ ------------
Loans, net........................................ 393,030,408 304,086,956
Premises and equipment............................. 17,728,535 12,197,947
Other real estate owned............................ 1,151,652 1,109,205
Goodwill and other intangibles..................... 2,827,063 2,467,541
Other assets....................................... 9,458,823 7,855,323
------------ ------------
Total assets..................................... $677,273,102 $553,583,839
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing demand........................ $ 73,653,053 $ 64,107,763
Interest-bearing demand........................... 118,682,627 90,259,371
Savings........................................... 56,629,485 37,147,563
Time, $100,000 and over........................... 95,322,940 80,428,923
Other time........................................ 232,923,863 184,068,326
------------ ------------
Total deposits................................... 577,211,968 456,011,946
Federal funds purchased and securities sold under
repurchase agreements............................. 11,864,486 4,338,634
Federal Home Loan Bank advances.................... 4,625,000 11,125,000
Other borrowings................................... 18,983,075 20,002,855
Other liabilities.................................. 7,090,859 6,930,277
------------ ------------
Total liabilities................................ 619,775,388 498,408,712
------------ ------------
Minority interest in subsidiary.................... 13,618 16,754
------------ ------------
Commitments and contingent liabilities
Stockholders' equity
Common stock, par value $1 at December 31, 1996
and $5 at December 31, 1995; 20,000,000 shares
authorized; 10,078,799 and 8,180,580 issued,
respectively..................................... 10,078,799 40,902,900
Capital surplus................................... 32,960,765 2,114,164
Retained earnings................................. 15,519,650 11,933,555
Unrealized gains on securities available-for-sale,
net of tax....................................... 58,322 755,192
------------ ------------
58,617,536 55,705,811
Treasury stock, at cost (123,494 and 59,528
shares).......................................... (1,133,440) (547,438)
------------ ------------
Total stockholders' equity....................... 57,484,096 55,158,373
------------ ------------
Total liabilities and stockholders' equity....... $677,273,102 $553,583,839
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME
Loans................................... $39,658,998 $30,628,166 $24,464,527
Taxable securities...................... 7,802,013 7,526,809 6,648,208
Nontaxable securities................... 1,301,509 960,118 999,771
Deposits in banks....................... 437,233 185,827 76,858
Other short-term investments............ 2,071,294 1,705,084 1,327,100
----------- ----------- -----------
Total interest income.................. 51,271,047 41,006,004 33,516,464
----------- ----------- -----------
INTEREST EXPENSE
Deposits................................ 22,566,954 17,540,276 14,376,356
Other borrowings........................ 2,776,163 2,333,460 710,155
----------- ----------- -----------
Total interest expense................. 25,343,117 19,873,736 15,086,511
----------- ----------- -----------
Net interest income.................... 25,927,930 21,132,268 18,429,953
PROVISION FOR LOAN LOSSES................ (114,994) (581,941) 365,000
----------- ----------- -----------
Net interest income after provision for
loan losses........................... 26,042,924 21,714,209 18,064,953
----------- ----------- -----------
OTHER INCOME
Service charges on deposit accounts..... 2,333,775 2,051,225 2,096,430
Other service charges and fees.......... 1,375,896 892,834 450,957
Gain on mortgage loans held for sale.... 4,720,267 2,327,916 99,969
Mortgage loan fees...................... 4,180,748 3,638,835 1,183,601
Net realized gains (losses) on sales of
securities............................. 147,332 (235,177) 212,407
Other operating income.................. 1,197,844 974,105 1,127,453
----------- ----------- -----------
Total other income..................... 13,955,862 9,649,738 5,170,817
----------- ----------- -----------
OTHER EXPENSES
Salaries and employee benefits.......... $18,309,384 $13,689,749 $ 9,833,460
Occupancy and equipment, net............ 3,901,666 2,786,399 2,452,959
Stationery and supplies................. 725,327 534,466 500,444
Deposit insurance....................... 539,756 529,171 946,887
Goodwill amortization expense........... 207,489 199,225 --
Other operating expenses................ 7,104,060 5,871,171 5,029,671
----------- ----------- -----------
Total other expenses................... 30,787,682 23,610,181 18,763,421
----------- ----------- -----------
Income before income taxes and minority
interest in net income of subsidiary.. 9,211,104 7,753,766 4,472,349
INCOME TAX EXPENSE....................... 2,194,103 2,187,981 1,559,080
----------- ----------- -----------
Net income before minority interest in
net income of subsidiary.............. 7,017,001 5,565,785 2,913,269
MINORITY INTEREST IN NET INCOME OF
SUBSIDIARY.............................. 11,850 12,709 --
----------- ----------- -----------
NET INCOME............................... $ 7,005,151 $ 5,553,076 $ 2,913,269
=========== =========== ===========
NET INCOME PER SHARE OF COMMON STOCK..... $ 0.69 $ 0.56 $ 0.31
=========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING...... 10,082,437 10,000,375 9,136,263
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
UNREALIZED GAINS
PREFERRED STOCK COMMON STOCK GUARANTEE OF (LOSSES) ON
-------------------- ------------------------ CAPITAL RETAINED INDEBTEDNESS SECURITIES AVAILABLE-
SHARES PAR VALUE SHARES PAR VALUE SURPLUS EARNINGS OF ESOP FOR-SALE, NET OF TAX
------- ----------- ---------- ------------ ----------- ----------- ------------ ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER
31, 1993......... 37,969 $ 1,708,605 7,413,973 $ 37,069,865 $ -- $ 6,047,893 $(22,500) $ --
Net income...... -- -- -- -- -- 2,913,269 -- --
Common stock
dividends
declared........ -- -- -- -- -- (557,678) -- --
Preferred stock
dividends
declared........ -- -- -- -- -- (178,913) -- --
Stock issued.... -- -- 33,588 167,940 207,072 -- -- --
Conversion of
preferred stock
into common
stock........... (37,969) (1,708,605) 379,690 1,898,450 (189,845) -- -- --
Principal
reduction on
ESOP
indebtedness.... -- -- -- -- -- -- 22,500 --
Net change in
unrealized gains
(losses) on
securities
available-for-
sale, net of
tax............. -- -- -- -- -- 50,483 -- (2,508,149)
------- ----------- ---------- ------------ ----------- ----------- -------- -----------
BALANCE, DECEMBER
31, 1994......... -- -- 7,827,251 39,136,255 17,227 8,275,054 -- (2,508,149)
Net income...... -- -- -- -- -- 5,553,076 -- --
5% stock
dividend........ -- -- 76,206 381,030 628,699 (1,012,822) -- --
Stock issued.... -- -- 284,773 1,423,865 1,698,049 -- -- --
Common stock
dividends
declared........ -- -- -- -- -- (881,753) -- --
Acquisition of
treasury stock.. -- -- -- -- -- -- -- --
Cash paid to
dissenting
stockholders.... -- -- (7,650) (38,250) (229,811) -- -- --
Net change in
unrealized gains
(losses) on
securities
available-for-
sale, net of
tax............. -- -- -- -- -- -- -- 3,263,341
------- ----------- ---------- ------------ ----------- ----------- -------- -----------
BALANCE, DECEMBER
31, 1995......... -- -- 8,180,580 40,902,900 2,114,164 11,933,555 -- 755,192
Net income...... -- -- -- -- -- 7,005,151 -- --
Stock options
exercised....... -- -- 2,250 2,250 20,250 -- -- --
Common stock
dividends
declared........ -- -- -- -- -- (3,419,056) -- --
Recapitalization. -- -- -- (32,722,320) 32,722,320 -- -- --
Acquisition of
treasury stock.. -- -- -- -- -- -- -- --
1.8055 stock
split........... -- -- 1,895,969 1,895,969 (1,895,969) -- -- --
Net change in
unrealized gains
(losses) on
securities
available-for-
sale, net of
tax............. -- -- -- -- -- -- -- (696,870)
------- ----------- ---------- ------------ ----------- ----------- -------- -----------
BALANCE, DECEMBER
31, 1996......... -- $ -- 10,078,799 $ 10,078,799 $32,960,765 $15,519,650 $ -- $ 58,322
======= =========== ========== ============ =========== =========== ======== ===========
<CAPTION>
TREASURY STOCK TOTAL
-------------------- STOCKHOLDERS'
SHARES PAR VALUE EQUITY
------- ------------ -------------
<S> <C> <C> <C>
BALANCE, DECEMBER
31, 1993......... -- $ -- $44,803,863
Net income...... -- -- 2,913,269
Common stock
dividends
declared........ -- -- (557,678)
Preferred stock
dividends
declared........ -- -- (178,913)
Stock issued.... -- -- 375,012
Conversion of
preferred stock
into common
stock........... -- -- --
Principal
reduction on
ESOP
indebtedness.... -- -- 22,500
Net change in
unrealized gains
(losses) on
securities
available-for-
sale, net of
tax............. -- -- (2,457,666)
------- ------------ -------------
BALANCE, DECEMBER
31, 1994......... -- -- 44,920,387
Net income...... -- -- 5,553,076
5% stock
dividend........ -- -- (3,093)
Stock issued.... -- -- 3,121,914
Common stock
dividends
declared........ -- -- (881,753)
Acquisition of
treasury stock.. 59,528 (547,438) (547,438)
Cash paid to
dissenting
stockholders.... -- -- (268,061)
Net change in
unrealized gains
(losses) on
securities
available-for-
sale, net of
tax............. -- -- 3,263,341
------- ------------ -------------
BALANCE, DECEMBER
31, 1995......... 59,528 (547,438) 55,158,373
Net income...... -- -- 7,005,151
Stock options
exercised....... -- -- 22,500
Common stock
dividends
declared........ -- -- (3,419,056)
Recapitalization. -- -- --
Acquisition of
treasury stock.. 63,966 (586,002) (586,002)
1.8055 stock
split........... -- -- --
Net change in
unrealized gains
(losses) on
securities
available-for-
sale, net of
tax............. -- -- (696,870)
------- ------------ -------------
BALANCE, DECEMBER
31, 1996......... 123,494 $(1,133,440) $57,484,096
======= ============ =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income before minority interest
in net income of subsidiaries..... $ 7,017,001 $ 5,565,785 $ 2,913,269
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation, amortization and
accretion........................ 1,561,358 1,218,690 1,267,558
Provision for loan losses......... (114,994) (581,941) 365,000
Deferred income taxes............. 55,778 217,509 (99,565)
Net (increase) decrease in loans
held for sale.................... 1,503,939 (12,958,178) (679,265)
Net realized (gains) losses on
sales of securities.............. (147,332) 235,177 (212,407)
Gain on sale of branches.......... -- -- (115,324)
Other operating activities........ (2,977,154) 2,004,151 1,928,699
------------- ------------ ------------
Net cash provided by (used in)
operating activities............ 6,898,596 (4,298,807) 5,367,965
------------- ------------ ------------
INVESTING ACTIVITIES
Purchases of securities available-
for-sale.......................... (76,348,770) (46,266,499) (12,308,410)
Proceeds from sales of securities
available-for-sale................ 19,320,488 16,059,120 2,702,013
Proceeds from maturities of
securities available-for-sale..... 51,771,074 13,971,831 14,917,805
Purchases of securities held-to-
maturity.......................... -- (20,352,439) (12,522,748)
Proceeds from sales of securities
held-to-maturity.................. -- 4,560,718 5,076,098
Proceeds from maturities of
securities held-to-maturity....... -- 16,275,345 15,302,112
Net (increase) decrease in Federal
funds sold........................ (32,115,202) 15,851,485 (5,344,693)
Net (increase) decrease in
interest-bearing deposits in
banks............................. 9,650,646 (12,034,730) 2,560,911
Net (increase) decrease in loans... (88,963,167) (34,069,500) 12,883,119
Proceeds from sales of premises and
equipment......................... 26,673 13,830 31,616
Purchase of premises and equipment. (7,045,082) (2,647,515) (926,364)
Sale of branches................... -- -- (40,928,208)
Net cash acquired in business
combinations...................... -- 678,430 --
Organization costs................. -- (51,723) --
Proceeds from sale of other real
estate............................ 80,071 735,135 520,185
Investment in subsidiary........... -- (5,894,871) --
------------- ------------ ------------
Net cash used in investing
activities...................... (123,623,269) (53,171,383) (18,036,564)
------------- ------------ ------------
</TABLE>
F-6
<PAGE>
PREMIER BANCSHARES, INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Net increase (decrease) in deposits. $121,200,022 $ 64,376,564 $ (4,788,615)
Net increase (decrease) Federal
funds purchased and repurchase
agreements......................... 7,525,852 (2,376,366) 6,715,000
Net increase (decrease) in other
borrowings......................... (1,019,780) 3,145,207 9,892,895
Net decrease in Federal Home Loan
Bank advances...................... (6,500,000) (2,059,990) --
Dividends paid...................... (2,100,941) (884,846) (736,591)
Dividends paid to minority
shareholder........................ (14,986) -- --
Acquisition of treasury stock....... (586,002) (547,438) --
Proceeds from exercise of stock
options............................ 22,500 -- --
Proceeds from common stock issued... -- 3,121,914 375,012
Payments to dissenting shareholders. -- (268,061) --
------------ ------------ ------------
Net cash provided by financing
activities........................ 118,526,665 64,506,984 11,457,701
------------ ------------ ------------
Net increase (decrease) in cash and
due from banks...................... 1,801,992 7,036,794 (1,210,898)
Cash and due from banks at beginning
of year............................. 21,617,039 14,580,245 15,791,143
------------ ------------ ------------
Cash and due from banks at end of
year................................ $ 23,419,031 $ 21,617,039 $ 14,580,245
============ ============ ============
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest........................... $ 24,783,469 $ 19,225,390 $ 20,011,603
Income taxes....................... $ 2,661,306 $ 2,075,004 $ 2,205,556
BUSINESS COMBINATION
Net cash acquired................... $ 678,430
============
Securities available-for-sale....... $ 1,563,926
Loans held for sale................. 7,829,133
Loans............................... 37,517,520
Premises and equipment.............. 1,401,710
Other assets........................ 1,240,845
Goodwill............................ 2,547,828
Deposits............................ (31,031,023)
Advances from Federal Home Loan
Bank............................... (13,184,990)
Subordinated debentures............. (1,974,394)
Other liabilities................... (694,114)
------------
Net assets acquired, net of cash
and due from banks of $678,430.... $ 5,216,441
============
NONCASH TRANSACTIONS
Unrealized (gains) losses on
securities available-for-sale...... $ 1,017,785 $ (2,475,255) $ 1,746,774
Principal balances of loans
transferred to other real estate... 528,650 1,007,373 1,411,739
Transfer of investment securities
from held-to-maturity to available-
for-sale........................... -- 39,499,557 17,110,926
Financed sales of other real estate. -- 235,000 100,000
Conversion of preferred stock into
common stock....................... -- -- 1,708,605
Reduction of note payable and
guarantee of ESOP indebtedness..... -- -- 22,500
</TABLE>
See Notes to Consolidated Financial Statements.
F-7
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Premier Bancshares, Inc., (the "Company" and formerly First Alliance/Premier
Bancshares, Inc.) is a bank and thrift holding company whose business is
conducted by its wholly-owned subsidiaries, First Alliance Bank located in
Marietta, Georgia, Premier Bank located in Acworth, Georgia, Central and
Southern Bank of Georgia located in Milledgeville, Georgia, Central and
Southern Bank of North Georgia, FSB located in Greensboro, Georgia, Premier
Lending Corporation ("Lending") located in Atlanta, Georgia, and Interim
Alliance Corporation d/b/a Alliance Finance located in Smyrna, Georgia, an 80%
owned subsidiary.
The Company is not engaged in any substantial business other than the normal
financial services provided by its subsidiaries. However, the Company incurs
operating expenses in connection with evaluating and pursuing potential
business acquisitions.
First Alliance Bank is a commercial bank with operations in Marietta and
Kennesaw, Georgia. First Alliance Bank provides a full range of banking
services to individual and corporate customers in its primary market area of
Cobb County and surrounding counties.
Premier Bank was acquired by the Company during 1995 in a business
combination accounted for as a purchase. Premier Bank provides a full range of
banking services to individual and corporate customers in its primary market
area of Cobb County and surrounding counties.
Central and Southern Bank of Georgia ("Milledgeville") and Central and
Southern Bank of North Georgia, FSB ("North Georgia") were acquired by the
Company on June 23, 1997 in a business combination accounted for as a pooling
of interests. They provide a full range of banking services to individuals and
corporate customers in their primary market areas of central and north
Georgia, respectively.
Citizens Bank of Gwinnett was acquired by the Company on December 12, 1997
in a business combination accounted for as a pooling of interests. It provides
a full range of banking services to individuals and corporate customers in
their primary market areas of Gwinnett, Fulton and Forsyth counties.
Premier Lending Corporation, Inc. originates, processes, funds and sells
residential mortgage loans, construction loans and commercial finance loans
primarily in the metropolitan Atlanta area. The majority of the mortgage loans
are sold to independent third party investors with servicing released and a
significant portion of the construction and commercial finance loans are
participated to affiliated and non-affiliated financial institutions.
Alliance Finance provides lending and financing services to consumer and
business enterprises. The Finance Company's primary activities consist of
origination of consumer loans including mortgage loans, retail sales financing
and related insurance products.
NAME CHANGE
In January 1997, the Company changed its name from First Alliance/Premier
Bancshares, Inc. to Premier Bancshares, Inc.
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.
F-8
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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 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 and its subsidiaries maintain 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. Marketable equity securities are carried at fair value
with net unrealized gains and losses included in stockholders' equity. Other
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 include primarily mortgage loans which are carried at
the lower of aggregate cost or fair value. The determination of fair value
includes consideration of outstanding commitments from investors, related
origination fees and costs, and commitment fees paid. Gains and losses are
recognized at settlement dates and are determined by the difference between
the selling price and the carrying value of the loans sold. The Company sells
all mortgage loans on a servicing released basis. The Company's practice is to
originate mortgage loans subject to existing purchase commitments from third
party investors.
LOANS
Loans are carried at their principal amounts outstanding less unearned
income, net deferred loan fees and costs and the allowance for loan losses.
Interest income on most loans is credited to income based on the principal
amount outstanding. Interest on other loans is recognized on the sum-of-the-
months method, the results of which are not materially different from
generally accepted accounting principles.
Loan origination fees and certain direct costs incurred in originating most
loans are deferred and recognized as income over the life of the loan. Fees
and costs incurred in origination of other loans are recognized at the time
the loan is recorded. The results of operations are not materially different
than the results which would be obtained by accounting for all loan fees and
costs in accordance with generally accepted accounting principles.
F-9
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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. When accrual of interest is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to the
extent cash payments are received.
The Company adopted the provisions of Statement of Financial Accounting
Standard No. 114, "Accounting by Creditors for Impairment of a Loan" as
amended by Statement of Financial Accounting Standard No. 118, "Accounting by
Creditors for Impairment of a Loan--Income Recognition and Disclosures", on
January 1, 1995.
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.
The Company considers the following type loans to be impaired:
(1) all nonaccrual loans, (2) loans that have been restructured in a
troubled debt restructuring provided that the restructured loan agreement
specifies an interest rate that is less than the Company would be willing
to accept at the time of the restructuring for a new loan with comparable
risk or the loan becomes impaired based on the terms specified by the
restructured loan agreement, and (3) any other loan in which management
does not expect to collect all contractual principal and interest payments
in accordance with the terms of the loan agreement.
The Company has not identified large groups of smaller-balance homogeneous
loans which are collectively evaluated for impairment. Any loan that meets the
characteristics as described above are considered to be impaired regardless of
loan type or balance.
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.
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
F-10
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
allowance for loan losses. Subsequent gains or losses on sale and any
subsequent adjustment to the value are recorded as other expenses.
GOODWILL
The excess of the purchase price over the fair value of net assets acquired
is being amortized using the straight-line method over a period not to exceed
20 years. On an ongoing basis, management reviews the valuation and
amortization of goodwill. As part of this review, management considers the
value and future benefits of the net earnings generated by the net assets
acquired to determine that no impairment has occurred.
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 is recorded for those deferred
tax items for which it is more likely than not that realization will not
occur.
The Company and the subsidiaries file a consolidated income tax return. Each
entity provides for income taxes based on its contribution to income taxes
(benefits) of the consolidated group.
NET INCOME PER COMMON SHARE
Net income per common share is computed by dividing net income by the
weighted average number of shares of common stock and common stock equivalents
outstanding. Common stock equivalents consist of stock options and warrants.
NOTE 2. RECENT ACQUISITIONS
On June 23, 1997, the Company acquired all of the outstanding common stock
of Central and Southern Holding Company ("C&S") in exchange for 3,653,523
shares of the Companys outstanding common stock.
On December 12, 1997, the Company acquired all of the outstanding common
stock of Citizens Gwinnett Bankshares, Inc. ("Citizens") in exchange for
2,066,834 shares of the Companys outstanding common stock.
The acquisitions of C&S and Citizens have been accounted for as poolings of
interests and, accordingly, all prior financial statements have been restated
to include the accounts and operations of the pooled companies. Net interest
income and net income of the separate companies for periods preceding the
mergers are summarized as follows:
F-11
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2. RECENT ACQUISITIONS, CONTINUED
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net interest income
Premier................................................ $11,734 $ 9,020 $ 6,843
C&S.................................................... 8,280 7,893 7,852
Citizens............................................... 5,914 4,219 3,735
------- ------- -------
Combined............................................... $25,928 $21,132 $18,430
======= ======= =======
Net income
Premier................................................ $ 2,552 $ 2,002 $ 291
C&S.................................................... 2,954 2,559 1,617
Citizens............................................... 1,511 1,005 1,005
------- ------- -------
Combined............................................... $ 7,017 $ 5,566 $ 2,913
======= ======= =======
</TABLE>
NOTE 3. 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, 1996:
U. S. Government and agency
securities................ $ 71,597,017 $ 136,268 $ (347,667) $ 71,385,618
State and municipal securi-
ties...................... 22,815,334 712,291 (49,413) 23,478,212
Mortgage-backed securities. 54,110,785 301,417 (645,588) 53,766,614
Other securities........... 2,479,345 -- (55,069) 2,424,276
------------ ---------- ----------- ------------
$151,002,481 $1,149,976 $(1,097,737) $151,054,720
============ ========== =========== ============
December 31, 1995:
U. S. Government and agency
securities................ $ 64,504,267 $ 547,411 $ (334,361) $ 64,717,317
State and municipal securi-
ties...................... 18,650,638 778,293 (13,985) 19,414,946
Mortgage-backed securities. 60,399,553 661,880 (474,119) 60,587,314
Other securities........... 1,916,045 -- (28,047) 1,887,998
------------ ---------- ----------- ------------
$145,470,503 $1,987,584 $ (850,512) $146,607,575
============ ========== =========== ============
</TABLE>
The amortized cost and fair value of securities as of December 31, 1996 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 other securities are not included in the maturity categories in
the following summary.
F-12
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3. SECURITIES, CONTINUED
<TABLE>
<CAPTION>
SECURITIES AVAILABLE-FOR-
SALE
-------------------------
AMORTIZED FAIR
COST VALUE
------------ ------------
<S> <C> <C>
Due in one year or less.............................. $ 12,584,819 $ 12,626,186
Due from one year to five years...................... 51,602,396 51,742,898
Due from five to ten years........................... 12,061,563 12,310,755
Due after ten years.................................. 18,163,573 18,183,991
Mortgage-backed securities........................... 54,110,785 53,766,614
Other securities..................................... 2,479,345 2,424,276
------------ ------------
$151,002,481 $151,054,720
============ ============
</TABLE>
Securities with a carrying value of approximately $57,564,000 and
$58,159,000 at December 31, 1996 and 1995, respectively, were pledged to
secure public deposits and for other purposes.
Gains and losses on sales of securities consist of the following:
<TABLE>
<CAPTION>
HELD-TO-MATURITY
------------------
1995 1994
-------- --------
<S> <C> <C>
Gross gains................................................. $ 725 $244,162
Gross losses................................................ (31,503) (3,187)
-------- --------
Net realized gains (losses)................................. $(30,778) $240,975
======== ========
</TABLE>
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE
-----------------------------
1996 1995 1994
-------- --------- --------
<S> <C> <C> <C>
Gross gains..................................... $195,685 $ 138,163 $ 1,431
Gross losses.................................... (48,353) (342,562) (29,999)
-------- --------- --------
Net realized gains (losses)..................... $147,332 $(204,399) $(28,568)
======== ========= ========
</TABLE>
There were no sales of securities held-to-maturity for the year ended
December 31, 1996.
The Company sold during the third quarter of 1995 securities classified as
held-to-maturity, with a carrying amount of $4,560,718, recognizing a net loss
of $30,778, in response to changes in the bond market and management's
evaluation of the securities portfolio. The circumstances leading to the sale
of these securities were identified as an isolated instance based on prudent
business decisions.
During 1994, the Company sold securities classified as held-to-maturity,
with a carrying amount of $5,076,098, recognizing a net gain of $240,975. The
sales occurred in connection with the sale of two branch facilities of Central
and Southern Bank of Georgia. The sale of the branches altered the interest
rate risk of Central and Southern Bank of Georgia's assets and liabilities and
the sales of securities were required to restructure the interest rate risk to
an acceptable level.
In late 1995, the Financial Accounting Standards Board ("FASB") issued an
implementation guide relating to SFAS No. 115. Included in this guide was a
one-time opportunity to reallocate investments between categories without
calling into question the validity of the classifications. Accordingly, in
December 1995, the Company transferred all of its held-to-maturity portfolio
to available-for-sale, resulting in a net unrealized gain of $751,283.
F-13
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. LOAN AND ALLOWANCE FOR LOAN LOSSES
The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
Commercial, financial, and agricultural............. $104,229,525 $ 91,040,199
Real estate--construction........................... 117,586,450 70,843,190
Real estate--mortgage............................... 137,417,375 109,567,333
Consumer and other.................................. 41,971,072 40,365,308
------------ ------------
401,204,422 311,816,030
Unearned income..................................... (593,489) (781,653)
Net deferred loan (fees) costs...................... 22,365 (171,193)
Allowance for loan losses........................... (7,602,890) (6,776,228)
------------ ------------
Loans, net.......................................... $393,030,408 $304,086,956
============ ============
</TABLE>
Changes in the allowance for loan losses for the years ended December 31,
1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ----------- -----------
<S> <C> <C> <C>
BALANCE, BEGINNING OF YEAR................ $6,776,228 $ 6,388,580 $ 6,953,463
Allowance acquired in acquisitions....... -- 294,309 --
Provision for loan losses................ (114,994) (581,941) 365,000
Loans charged off........................ (603,335) (1,757,202) (4,033,375)
Recoveries............................... 1,544,991 2,432,482 3,103,492
---------- ----------- -----------
BALANCE, END OF YEAR...................... $7,602,890 $ 6,776,228 $ 6,388,580
========== =========== ===========
</TABLE>
As a result of evaluations of the adequacy of the allowance for loan losses,
a decline in loans charged off and continued significant recoveries of loans
previously charged off, management decided to reduce the provision for loan
losses during 1996 and 1995.
The total recorded investment in impaired loans was $1,531,510 and
$1,118,463 at December 31, 1996 and 1995, respectively. None of these had a
specific allowance for loan losses at December 31, 1996 and 1995 determined in
accordance with generally accepted accounting principles. The average recorded
investment in impaired loans for 1996 and 1995 was $1,617,284 and $1,649,000,
respectively. Interest income on impaired loans of $118,085, $10,155, and
$48,760 was recognized for cash payments for the years ended December 31,
1996, 1995, and 1994, respectively.
The Company has granted loans to certain related parties including
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, 1996
are as follows:
<TABLE>
<S> <C>
BALANCE, BEGINNING OF YEAR......................................... $ 5,805,900
Advances.......................................................... 1,906,601
Repayments........................................................ (1,840,081)
-----------
BALANCE, END OF YEAR............................................... $ 5,872,420
===========
</TABLE>
F-14
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
Land and buildings.................................... $14,110,250 $11,513,802
Furniture and equipment............................... 10,727,704 8,013,502
Construction in progress.............................. 1,481,254 89,668
----------- -----------
26,319,208 19,616,972
Accumulated depreciation.............................. (8,590,673) (7,419,025)
----------- -----------
$17,728,535 $12,197,947
=========== ===========
</TABLE>
Depreciation expense was approximately $1,488,515, $1,040,295, and
$1,159,407 for the years ended December 31, 1996, 1995, and 1994,
respectively.
NOTE 6. OTHER BORROWINGS
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
The balance of securities sold under repurchase agreements was $11,864,486
and $3,658,634 at December 31, 1996 and 1995, respectively.
SUBORDINATED DEBENTURES
Subordinated debt of Alliance Finance and Premier Lending consists of fixed
rate debentures which are payable on demand or mature at twelve, twenty-four
or thirty-six months after date of issue. The debentures have various
principal amounts and interest is payable monthly. The Company may repay the
debentures for a price equal to 100% of the principal plus any unpaid interest
to date of redemption without penalty. A summary of the outstanding debentures
by interest rate and maturity are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
---------- ----------
<S> <C> <C>
7.50% due on demand...................................... $4,236,971 $ --
7.50% due in 1997........................................ 70,000 --
7.50% due February 20, 1999.............................. 70,000 --
8.00% due on demand...................................... 1,327,000 1,194,000
8.00% due in 1998........................................ 35,000 35,000
8.50% due on demand...................................... 90,000 --
10.0% due on demand...................................... 25,000 25,000
---------- ----------
$5,853,971 $1,254,000
========== ==========
</TABLE>
F-15
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. OTHER BORROWINGS, CONTINUED
Lines of credit at December 31, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Revolving line of credit of $4,000,000 with a
nonaffiliated institution, bearing interest at prime
less .50% (7.75% at December 31, 1996) due on October
31, 1997. Line is secured by all commercial finance
notes receivable, stock of the Company's subsidiaries
and guaranteed by the Company........................ $2,320,000 $ --
Revolving line of credit of $4,000,000 with a
nonaffiliated institution, bearing interest at prime
less .50% (7.75% at December 31, 1996), due October
31, 1997. Line is secured by stock of the Company's
subsidiaries and guaranteed by the Company........... 3,675,000 --
Revolving line of credit of $3,000,000 with a
nonaffiliated institution, bearing interest at prime
less .50% (7.75% at December 31, 1996), due October
31, 1997. Line is secured by accounts receivable of
Alliance Finance, all stock of the Company's
subsidiaries and guaranteed by the Company........... 475,000 --
Line of credit of $2,500,000 with a nonaffiliated
institution, bearing interest at prime less .75%
payable quarterly, due June 1997. Line is secured by
stock of Central and Southern Bank of Georgia, a
subsidiary of the Company............................ 1,600,000 250,000
Treasury, tax, and loan note option account with the
Federal Reserve Bank of Atlanta, due on demand,
bearing interest at 5.148% at December 31, 1996,
collateralized by securities......................... 828,259 --
Line of credit of $100,000 with a nonaffiliated
institution, bearing interest at prime (8.25% at
December 31, 1996), due December 1997................ 49,069 6,069
Line of credit of $505,000 with a nonaffiliated
institution, bearing interest at prime plus 1% (9.25%
at December 31, 1995), matured on August 14, 1996.... -- 505,000
Revolving warehouse line of credit of $30,000,000 with
a nonaffiliated institution, bearing interest at an
annual rate varying from published rates on high-
graded unsecured commercial paper plus 1.75% to plus
3%, matured October 21, 1995......................... -- 13,584,642
Revolving line of credit of $3,000,000 with a
nonaffiliated institution, bearing interest at prime
(8.50% at December 31, 1995) matured February 15,
1996................................................. -- 1,085,000
---------- -----------
$8,947,328 $15,430,711
========== ===========
</TABLE>
Long-term debt at December 31, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Note payable in the amount of $4,000,000, due in eight
annual instalments of $500,000 beginning April 1, 1999
with interest due quarterly at prime less .50% (7.75%
at December 31, 1996), due April 1, 2006. Note payable
is secured by all stock of the Company's subsidiaries
and guaranteed by the Company......................... $4,000,000 $ --
Note payable in the amount of $3,000,000, due in annual
instalments of $300,000 with interest due quarterly at
prime plus 1% (9.25% at December 31, 1995) to October
28, 2006 collateralized by 320,000 shares of common
stock of Premier Bank................................. -- 3,000,000
Note payable in the amount of $1,500,000 due in monthly
instalments of $11,364 with interest at 85% of prime
(6.90% at December 31, 1996) to March 1998,
collateralized by Citizens banking facility........... 181,776 318,144
---------- ----------
$4,181,776 $3,318,144
========== ==========
</TABLE>
F-16
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. OTHER BORROWINGS, CONTINUED
In connection with the long-term debt, the Company has agreed, among other
covenants, to during the term of the loan: (1) maintain earnings at a level
equal to or above .60 percent of average assets; (2) maintain reserves for
possible loan losses at a level of not less than 1% of total gross loans,
excluding residential first mortgage loans on owner-occupied single family
dwellings, of the Banks; (3) maintain in aggregate a total risk based capital
ratio of no less than 10.0% and Tier 1 capital to average total assets of no
less than 6.0%; and (4) not permit its capital to be less than $20,000,000.
Aggregate maturities required on long-term debt at December 31, 1996 were as
follows:
<TABLE>
<S> <C>
1998.......................... $ 181,776
1999.......................... 500,000
2000.......................... 500,000
2001.......................... 500,000
Thereafter.................... 2,500,000
----------
$4,181,776
==========
</TABLE>
NOTE 7. FEDERAL HOME LOAN BANK ADVANCES
Federal Home Loan Bank advances consisted of the following at December 31,
1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Advance from the Federal Home Loan Bank with interest at
6.79%, due on August 1, 2001. Interest is payable
monthly................................................ $1,000,000 $ --
Advance from the Federal Home Loan Bank with interest at
6.99%, due on September 15, 1997. Interest is payable
monthly................................................ 1,000,000 1,000,000
Advance from the Federal Home Loan Bank with interest at
8.27%, due on December 8, 1997. Interest is payable
monthly................................................ 1,750,000 1,750,000
Advance from the Federal Home Loan Bank with interest at
8.41%, due on December 8, 1999. Interest is payable
monthly................................................ 875,000 875,000
Advance from the Federal Home Loan Bank with interest at
the one month LIBOR rate plus 20 basis points (6.17% at
December 31, 1995), due on May 31, 2005................ -- 5,000,000
Advance from the Federal Home Loan Bank with interest
based on the Federal Home Loan Bank's cost of funds
plus .25% (5.85% at December 31, 1995), matured on
January 2, 1996........................................ -- 1,000,000
Variable rate advances from the Federal Home Loan Bank
with interest based on the Federal Home Loan Bank's
cost of funds plus .25% (6.10% December 31, 1995),
matured on October 12, 1996............................ -- 1,000,000
Variable rate advances from the Federal Home Loan Bank
with interest based on the Federal Home Loan Bank's
cost of funds plus .25% (6.10% at December 31, 1995),
matured on November 3, 1996............................ -- 500,000
---------- -----------
$4,625,000 $11,125,000
========== ===========
</TABLE>
The advances from the Federal Home Loan Bank are collateralized by a blanket
floating lien on qualifying first mortgages and pledges of certain securities
and the Company's Federal Home Loan Bank stock.
F-17
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. SALE OF BRANCHES AND CONVERSION
On August 1, 1994, the Central and Southern Bank of Georgia sold two
branches located in Douglas and McRae, Georgia to an unrelated commercial
bank. The Bank received approximately $40,700,000 in exchange for
approximately $43,400,000 in deposits and related accrued interest, premises
and equipment with a net book value of approximately $1,700,000, and other
assets of approximately $900,000 which included approximately $535,000 of
unamortized deposit premiums. A gain was recorded of approximately $115,000.
The sale was financed through borrowings under repurchase agreements and
available cash and cash equivalents.
On January 16, 1996, final regulatory approval was received to convert the
Central and Southern Bank of North Georgia (formerly Central and Southern Bank
of Greensboro) to a federal savings bank charter. The conversion was completed
during the first quarter of 1996. The primary purpose of the conversion was to
allow the Bank to branch into other markets in the North Georgia area.
NOTE 9. DEFERRED COMPENSATION PLANS
First Alliance Bank has three deferred compensation plans providing for the
deferral of director fees and certain retirement benefits for the directors.
The first retirement benefit plan was put in place in January, 1994. The
Bank accrues an amount equal to the present value of the estimated benefit to
be paid under the plan. The accrual recorded for the years ended December 31,
1996, 1995 and 1994 was $103,994, $89,303 and $50,601, respectively. The plan
was terminated effective December 31, 1996 and no additional benefits will be
accrued under this plan.
The Banks other plans allow the directors to defer up to $500 per month of
their monthly directors fees. The first plan covers one current and one former
director. Under that plan, the monthly amount deferred is utilized to purchase
life insurance on those directors. The Bank's liability under that plan is
equal to the cash value of those policies. The second plan is similar to the
first except deferred fees are recorded in a liability account monthly plus an
interest amount based on the current market rate accrued annually. During
1996, 1995 and 1994, an amount of $38,260, $31,322 and $21,200, respectively,
was deferred by the directors and recorded as a liability of the Bank.
In conjunction with these plans, several universal life insurance policies
were purchased by the Bank. The Bank is the owner of the policies which insure
the lives of certain directors. These policies may be used by the Bank as
funding vehicles for plan obligations. The directors are general creditors of
the Bank and have no specific claims on these assets.
NOTE 10. EMPLOYEE BENEFIT PLANS
PROFIT SHARING PLAN
The Company has two contributory profit sharing plans covering substantially
all employees, subject to certain minimum age and service requirements.
Contributions to the plan charged to expense were $158,252, $117,933, and
$91,975 for the years ended December 31, 1996, 1995 and 1994, respectively.
Premier Bank had a defined contribution 401(k) plan covering all full-time
employees, subject to certain minimum service requirements. This 401(k) plan
was terminated on January 30, 1996 with the individual participants funds
being disbursed on that date. There were no contributions to the plan for the
year ended December 31, 1996 and the period from acquisition to December 31,
1995.
F-18
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. EMPLOYEE BENEFIT PLANS, CONTINUED
PENSION PLAN
The Company has a noncontributory, trusteed pension plan. Effective April
15, 1994, the plan was amended to freeze participation in the plan.
Participants as of April 15, 1994 became fully vested and no new benefits will
accrue. Pension expense recorded by the Company for 1996, 1995, and 1994
included the following components:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Interest cost on projected benefit
obligation.................................. $ 38,381 $ 31,518 $ 41,572
Return on plan assets........................ (29,127) (30,313) (17,777)
Net amortization and deferral................ (13,497) (5,463) (59,831)
-------- -------- --------
Pension benefit.............................. $ (4,243) $ (4,258) $(36,036)
======== ======== ========
</TABLE>
The Company's funding policy provides that payments to the plan shall be
consistent with minimum government funding requirements plus additional
amounts which may be approved by the Company.
The following table sets forth the plans funded status and amounts
recognized in the Company's consolidated balance sheets at December 31, 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of approximately $608,000 in 1996 and
$662,000 in 1995..................................... $ 611,640 $ 666,860
========= =========
Projected benefit obligation.......................... $(611,640) $(666,860)
Plan assets at fair value, primarily consisting of
investments in common stock and money market funds... 549,595 537,992
--------- ---------
Plan assets less than projected benefit obligation.... (62,045) (128,868)
Unrecognized net gain................................. (64,712) (2,132)
--------- ---------
Accrued pension cost.................................. $(126,757) $(131,000)
========= =========
</TABLE>
A weighted average discount rate of 6.48% and 6.26% was used in 1996 and
1995, respectively. The expected long-term rate of return on assets was 8% in
1996 and 1995.
HEALTH CARE PLAN
In addition to the Company's defined benefit pension plan, the Company has
sponsored a defined benefit health care plan that provides post retirement
medical benefits to retired employees. Effective January 1, 1993, the Company
discontinued the plan but will continue to provide benefits to individuals who
had retired or were eligible for retirement as of December 31, 1993.
The following table presents the health care plans funded status reconciled
with amounts recognized in the Company's consolidated balance sheets at
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Accumulated post retirement benefit obligation
("APBO")............................................. $ 372,508 $ 397,190
Unrecognized net gain from experience different than
assumed.............................................. (208,699) (254,298)
--------- ---------
Accrued post retirement benefit cost included in other
liabilities.......................................... $ 163,809 $ 142,892
========= =========
</TABLE>
F-19
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. EMPLOYEE BENEFIT PLANS, CONTINUED
Net periodic post retirement benefit cost for the years ended December 31,
1996, 1995, and 1994 includes the following:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Amortization of unrecognized net gain................ $15,468 $14,068 $15,468
Interest cost........................................ 26,346 27,916 29,740
------- ------- -------
Net periodic post retirement benefit cost........... $41,814 $41,984 $45,208
======= ======= =======
</TABLE>
For measurement purposes, a 9% annual rate of increase in the per capita
cost of covered benefits (i.e., health care cost trend rate) was assumed for
1996. A 13% annual rate of increase was assumed for 1995. The rate was assumed
to decrease gradually to 5% by the year 2004 and remain at that level
thereafter. A one percent increase in the medical trend rate assumed at
December 31, 1996 would have resulted in an increase to the APBO at December
31, 1996 of $29,221 and would have increased 1996 post retirement benefit cost
by $2,119. The weighted average discount rate used in determining the
accumulated post retirement benefit obligation was 7.5% and 7.25% at December
31, 1996 and 1995, respectively.
INCENTIVE STOCK OPTION PLANS
The Company has an Employee Incentive Stock Option Plan. Under the Plan, the
Company can grant to key personnel options to purchase an aggregate of 270,825
shares of the Company's common stock at a price not less than the fair market
value of such shares on the date the option is granted. The option period will
not exceed ten years from date of grant.
The Company also has an employee and a director stock option plan whereby
72,220 and 58,679 shares, respectively, of common stock have been reserved for
stock options. Under the employee plan, the Company can grant to key personnel
options to purchase common stock at a price not less than the fair market
value of such shares on the date the option is granted. The option period will
not exceed ten years from date of grant.
Under the director plan, each eligible director who attends at least 75% of
the meetings of the Company's Board and related committee meetings shall
receive an option to purchase 903 shares annually of common stock. The options
expire ten years from the date of grant. All options granted were exercisable
at December 31, 1996. Other pertinent information related to the options is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1996 1995 1994
----------------- ----------------- ----------------
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..................... 245,080 $5.48 157,179 $5.03 121,040 $4.74
Granted.................. 50,555 8.80 96,026 6.22 36,139 6.00
Exercised................ (4,062) 5.54 -- -- -- --
Terminated............... (903) 5.54 (8,125) 5.54 -- --
------- ------- -------
Under option, end of the
year..................... 290,670 6.06 245,080 5.48 157,179 5.03
======= ======= =======
</TABLE>
F-20
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. EMPLOYEE BENEFIT PLANS, CONTINUED
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
WEIGHTED REMAINING
RANGE -AVERAGE CONTRACTUAL
OF EXERCISE LIFE IN
NUMBER PRICES PRICE YEARS
------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Under option, end of year.............. 209,088 $4.25-$6.25 $5.16 7.7
81,582 $7.50-$8.86 $8.36 9.6
-------
290,670
=======
</TABLE>
As permitted by Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123), 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, 1996 and 1995.
If the Company had recognized compensation cost in accordance with SFAS No.
123, net income and net income per share would have been reduced as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995
------------------ ------------------
NET NET
INCOME INCOME
PER PER
NET INCOME SHARE NET INCOME SHARE
---------- ------ ---------- ------
<S> <C> <C> <C> <C>
As reported............................ $7,005,151 $ 0.69 $5,553,076 $ 0.56
Stock-based compensation, net of
related tax effect.................... (71,567) (0.01) (68,676) (0.01)
---------- ------ ---------- ------
As adjusted............................ $6,933,584 $ 0.68 $5,484,400 $ 0.55
========== ====== ========== ======
</TABLE>
The per share weighted-average fair value of stock options granted during
1996 and 1995 was $2.15 and $1.08, respectively, using the Black Scholes
option pricing model and the following assumptions:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Risk-free interest rate............................... 6.45% 6.45%
Expected life of the options.......................... 7-10 Years 7-10 Years
Expected dividends (as a percent of the fair value of
the stock)........................................... 2.68% 3.85%
Volatility............................................ 9.73% 10.03%
</TABLE>
NOTE 11. SEGMENT REPORTING
The Company's operations include two primary business segments: banking and
mortgage banking activities. The Company, primarily through its subsidiary
banks, offers banking services including a full range of commercial and
corporate banking services. Mortgage banking activities are provided by
Lending and include the origination of residential mortgage loans for sale to
various investors and origination of construction and commercial finance loans
for participation with other financial institutions.
F-21
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11. SEGMENT REPORTING, CONTINUED
<TABLE>
<CAPTION>
INDUSTRY SEGMENTS
---------------------------------------------------------------
HOLDING BANKING MORTGAGE
FOR THE YEAR ENDED DECEMBER 31, 1996 COMPANY SUBSIDIARIES BANKING ELIMINATIONS CONSOLIDATED
- ------------------------------------ ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues from unaffiliated
customers.................. $ 32,547 $ 53,524,908 $11,669,454 $ -- $ 65,226,909
Revenues from affiliates.... 7,641,415 236,953 -- (7,878,368) --
----------- ------------ ----------- ------------ ------------
Total revenue........... $ 7,673,962 $ 53,761,861 $11,669,454 $ (7,878,368) $ 65,226,909
=========== ============ =========== ============ ============
Income from continuing
operations before income
taxes...................... $ 6,250,775 $ 9,906,689 $ 598,302 $ (7,544,662) $ 9,211,104
=========== ============ =========== ============ ============
Identifiable assets at
December 31, 1996.......... $64,596,426 $668,098,651 $13,052,684 $(68,474,659) $677,273,102
=========== ============ =========== ============ ============
Depreciation expense........ $ 10,200 $ 1,285,959 $ 192,356 $ 1,488,515
=========== ============ =========== ============
Premises and equipment
acquisitions............... $ 1,112,516 $ 5,150,022 $ 782,544 $ 7,045,082
=========== ============ =========== ============
<CAPTION>
INDUSTRY SEGMENTS
---------------------------------------------------------------
HOLDING BANKING MORTGAGE
FOR THE YEAR ENDED DECEMBER 31, 1995 COMPANY SUBSIDIARIES BANKING ELIMINATIONS CONSOLIDATED
- ------------------------------------ ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues from unaffiliated
customers.................. $ 848,513 $ 43,025,684 $ 6,781,545 $ -- $ 50,655,742
Revenues from affiliates.... 4,497,297 197,878 -- (4,695,175) --
----------- ------------ ----------- ------------ ------------
Total revenue........... $ 5,345,810 $ 43,223,562 $ 6,781,545 $ (4,695,175) $ 50,655,742
=========== ============ =========== ============ ============
Income (loss) from
continuing operations
before income taxes........ $ 5,158,723 $ 8,230,209 $ 629,454 $ (6,264,620) $ 7,753,766
=========== ============ =========== ============ ============
Identifiable assets at
December 31, 1995.......... $58,687,240 $533,885,295 $21,690,588 $(60,679,284) $553,583,839
=========== ============ =========== ============ ============
Depreciation expense........ $ 7,030 $ 943,078 $ 90,187 $ 1,040,295
=========== ============ =========== ============
Premises and equipment
acquisitions............... $ -- $ 2,528,548 $ 118,967 $ 2,647,515
=========== ============ =========== ============
</TABLE>
F-22
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11. SEGMENT REPORTING, CONTINUED
<TABLE>
<CAPTION>
INDUSTRY SEGMENTS
----------------------------------------------------------------
HOLDING BANKING MORTGAGE
FOR THE YEAR ENDED DECEMBER 31, 1994 COMPANY SUBSIDIARIES BANKING ELIMINATIONS CONSOLIDATED
- ------------------------------------ ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues from unaffiliated
customers.................. $ -- $ 36,772,323 $ 1,914,958 $ -- $ 38,687,281
Revenues from affiliates.... 3,217,469 -- -- (3,217,469) --
----------- ------------ ----------- ------------ ------------
Total revenue........... $ 3,217,469 $ 36,772,323 $ 1,914,958 $ (3,217,469) $ 38,687,281
=========== ============ =========== ============ ============
Income (loss) from
continuing operations
before income taxes........ $ 1,756,209 $ 6,961,910 $(1,040,097) $ (3,205,673) $ 4,472,349
=========== ============ =========== ============ ============
Identifiable assets at
December 31, 1994.......... $34,825,421 $346,204,045 $ 7,920,414 $(33,427,804) $355,522,076
=========== ============ =========== ============ ============
Depreciation expense........ $ 68,506 $ 1,090,901 $ -- $ 1,159,407
=========== ============ =========== ============
Premises and equipment
acquisitions............... $ 192,121 $ 734,243 $ -- $ 926,364
=========== ============ =========== ============
</TABLE>
NOTE 12. INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Current.................. $2,643,267 $1,970,472 $1,305,012
Benefit of net operating
loss carryforward....... (236,575) -- --
Valuation allowance
adjustment.............. (691,367) (262,000) 327,388
Deferred................. 478,778 479,509 (73,320)
---------- ---------- ----------
Income tax expense...... $2,194,103 $2,187,981 $1,559,080
========== ========== ==========
</TABLE>
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,
-----------------------------------------------------------
1996 1995 1994
------------------- ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Income taxes at
statutory rate......... $3,131,775 34% $2,636,280 34% $1,520,599 34%
Nondeductible merger
expenses.............. 142,021 2 36,462 -- 6,257 --
Valuation allowance
adjustment............ (691,367) (8) (262,000) (3) 327,388 7
Tax-exempt interest
income................ (382,558) (4) (273,213) (4) (311,323) (7)
Alternative minimum tax
credit................ -- -- -- -- (37,135) (1)
Other items, net....... (5,768) -- 50,452 1 53,294 1
---------- --- ---------- --- ---------- ---
Income tax expense...... $2,194,103 24% $2,187,981 28% $1,559,080 34%
========== === ========== === ========== ===
</TABLE>
F-23
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12. INCOME TAXES, CONTINUED
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1995
---------- -----------
<S> <C> <C>
Deferred tax assets:
Loan loss reserves................................... $ 277,517 $ 289,095
Deferred compensation................................ 150,896 97,215
Write-down on other real estate...................... 88,918 134,829
Write-down of mutual funds........................... 18,885 18,885
Pension.............................................. 44,540 44,540
Postretirement benefits other than pensions.......... 48,583 48,583
Net operating loss carryforward...................... 585,067 821,642
Alternative minimum tax carryforwards................ 588,939 777,635
Georgia tax credits.................................. 100,755 72,423
Other................................................ 45,030 143
Securities available-for-sale........................ 6,083 --
Valuation allowance.................................. (415,294) (1,106,661)
---------- -----------
1,539,919 1,198,329
---------- -----------
Deferred tax liabilities:
Depreciation and amortization........................ 721,362 697,451
Deferred loan fees, net of cost...................... 141,507 59,119
Securities available-for-sale........................ -- 391,415
Cash method accounting on certain receivables........ 144,250 131,030
Change in accounting method.......................... -- 33,892
Other................................................ 66,410 29,119
---------- -----------
1,073,529 1,342,026
---------- -----------
Net deferred tax assets (liabilities)................. $ 466,390 $ (143,697)
========== ===========
</TABLE>
At December 31, 1996, the Company has available net operating loss
carryforwards of approximately $1,379,000 for Federal income tax purposes. If
unused, the carryforwards will expire beginning in 2009. Utilization of the
net operating loss carryforwards is subject to the separate return limitations
and change of ownership rules of the Internal Revenue Code of 1996.
The Company's Federal alternative minimum tax credits can be carried forward
indefinitely.
NOTE 13. COMMITMENTS AND CONTINGENT LIABILITIES
The Company enters into firm commitments to sell mortgage loans which it has
originated at agreed upon prices. The sales price for the loans is set based
on market rates at the time the commitment is entered into. The Company
generally has ten days after a mortgage loan closes in which to provide the
investor with the loan documentation, at which time the investor will fund the
loan. The investor bears the interest rate risk on the loan from the time of
the commitment. The Company's risk is limited to specific recourse provisions
within the agreement with the investor and its ability to provide the required
loan documentation to the investor within the commitment period.
F-24
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13. COMMITMENTS AND CONTINGENT LIABILITIES, CONTINUED
The Company sells mortgage loans to investors under various blanket
agreements. Under the agreements, investors generally have a limited right of
recourse to the Company for normal representations and warranties and, in some
cases, for delinquencies within the first three to six months which lead to
loan default and foreclosure. Management believes that the risk of loss to the
Company as a result of these provisions is insignificant.
The Company enters into residential construction and commercial loan
commitments in advance of closing to fund loans to its customers at locked-in
interest rates in the normal course of business. These instruments, to the
extent they are not covered by investor purchase commitments, involve credit
and interest rate risk in excess of the amount recognized in the financial
statements.
In the normal course of business, the Company has entered into off-balance-
sheet financial instruments which are not reflected in the financial
statements. These financial instruments include commitments to extend credit
and standby letters of credit. Such financial instruments are included in the
financial statements when funds are disbursed or the instruments become
payable. These instruments involve, to varying degrees, elements of credit
risk in excess of the amount recognized in the balance sheet.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for unfunded mortgage loan
commitments, residential construction and commercial loan commitments,
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,
------------------------
1996 1995
------------ -----------
<S> <C> <C>
Unfunded mortgage loan commitments.................... $ 20,000,000 $31,968,000
Residential construction and commercial loan
commitments.......................................... 27,277,198 18,526,425
Commitments to extend credit.......................... 90,122,000 46,968,000
Standby letters of credit............................. 1,383,000 1,866,000
------------ -----------
$138,782,198 $99,328,425
============ ===========
</TABLE>
At December 31, 1996, the Company had agreements with unaffiliated
institutions allowing it to sell participations in loans at the Company's
option. The unused participation amount was $36,082,936 at December 31, 1996.
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.
F-25
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13. COMMITMENTS AND CONTINGENT LIABILITIES, CONTINUED
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 consolidated financial statements.
LEASE OBLIGATIONS:
The Company leases ten office facilities and certain equipment under
noncancelable lease agreements.
The future minimum lease commitments at December 31, 1996 are summarized as
follows:
<TABLE>
<CAPTION>
Years
Ending
December
31,
<S> <C>
1997 $ 588,336
1998 580,444
1999 411,395
2000 253,157
2001 115,991
----------
$1,949,323
==========
</TABLE>
Rental expense for the years ended December 31, 1996, 1995 and 1994 was
$755,981, $116,583, and $58,777, respectively.
The Bank leases the land on which its main office is located for $5,717 per
month for five years with renewal options up to forty years. Escalation
features include a 5% increase every five years plus an additional amount
added which shall be the average yearly amount for the Consumer Price Index
(CPI) for metropolitan Atlanta for the previous five years, not to exceed 8%
per year. At any time after the first five years, the Bank may exercise an
option to purchase the property for $1,000,000.
The Company also leases various other equipment under short-term leases.
NOTE 14. CONCENTRATIONS OF CREDIT
The Company originates primarily commercial, residential, and consumer loans
to customers in the metro Atlanta area, 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 the metro Atlanta area.
Sixty-four percent of the Company's loan portfolio is concentrated in loans
secured by real estate of which 29% consists of construction loans. A
substantial portion of these loans are secured by real estate in the Company's
primary market areas. 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.
The banking subsidiaries, as a matter of policy, do not generally extend
credit to any single borrower or group of related borrowers in excess of
regulatory limits.
F-26
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15. REGULATORY MATTERS
The banking subsidiaries are subject to certain restrictions on the amount
of dividends that may be declared without prior regulatory approval. At
December 31, 1996, approximately $4,105,000 of retained earnings were
available for dividend declaration without supervisory 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. Premier Bank must also have core capital equal to 3% of
adjusted total assets and tangible capital equal to 1.5% of adjusted total
assets. These additional requirements are in accordance with the Office of
Thrift Supervision, their primary regulator. Management believes, as of
December 31, 1996, the Company and Banks meet all capital adequacy
requirements to which they are subject.
As of December 31, 1996 and 1995, notification from the FDIC categorized
First Alliance Bank Milledgeville and North Georgia as well capitalized and
Premier Bank as adequately capitalized, respectively, under the regulatory
framework for prompt corrective action. To be categorized as adequately
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.
F-27
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15. REGULATORY MATTERS, CONTINUED
The Company and Bank's actual capital amounts and ratios are presented in
the following table.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
FOR CAPITAL UNDER PROMPT
ADEQUACY 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.................. $59,787 12.57% $38,051 8% $ 47,563 10%
First Alliance Bank........... $18,716 14.02% $10,680 8% $ 13,350 10%
Premier Bank.................. $ 6,221 8.57% $ 5,807 8% $ 7,259 10%
Milledgeville................. $19,064 20.00% $ 7,805 8% $ 9,757 10%
North Georgia................. $ 5,810 12.00% $ 3,946 8% $ 4,933 10%
Citizens Bank................. $11,338 10.90% $ 8,315 8% $ 10,394 10%
Tier I Capital
(to Risk Weighted Assets):
Consolidated.................. $54,430 11.45% $19,015 4% $ 28,522 6%
First Alliance Bank........... $17,044 12.74% $ 5,351 4% $ 8,027 6%
Premier Bank.................. $ 5,819 8.02% $ 2,902 4% $ 4,353 6%
Milledgeville................. $17,822 18.00% $ 3,903 4% $ 5,854 6%
North Georgia................. $ 5,187 11.00% $ 1,973 4% $ 2,960 6%
Citizens Bank................. $10,303 9.90% $ 4,158 4% $ 6,236 6%
Tier I Capital
(to Average Assets):
Consolidated.................. $54,430 8.15% $26,714 4% $ 33,393 5%
First Alliance Bank........... $17,044 8.89% $ 7,669 4% $ 9,586 5%
Milledgeville................. $17,822 12.00% $ 6,004 4% $ 7,505 5%
Citizens Bank................. $10,303 6.70% $ 6,161 4% $ 7,702 5%
Core Capital
Premier Bank.................. $ 5,819 5.85% $ 2,984 3%
North Georgia................. $ 5,187 7.00% $ 2,140 3%
Tangible Capital
Premier Bank.................. $ 5,819 5.85% $ 1,492 1.5%
North Georgia................. $ 5,187 7.00% $ 1,070 1.5%
</TABLE>
NOTE 16. 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
F-28
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 16. FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
management as of December 31, 1996 and 1995. 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.
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.
SECURITIES AVAILABLE-FOR-SALE:
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.
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.
The carrying amount of loans held for sale approximates fair value.
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.
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS, FEDERAL HOME LOAN BANK ADVANCES
AND OTHER BORROWINGS:
The fair values of Federal Home Loan Bank advances and other borrowings are
estimated using discounted cash flow methods based on the Company's current
incremental borrowing rates for similar types of borrowing arrangements. The
fair value of variable-rate other borrowings and securities sold under
repurchase agreements approximate the carrying value.
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 do not represent a significant value to the Company
F-29
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 16. FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
until such commitments are funded or closed. 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, 1996 DECEMBER 31, 1995
------------------------- -------------------------
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............... $ 77,613,614 $ 77,613,614 $ 53,347,066 $ 53,347,066
Securities available-for-
sale..................... 151,054,720 151,054,720 146,607,575 146,607,575
Loans..................... 417,438,695 418,112,719 329,999,182 330,600,133
Accrued interest
receivable............... 4,509,543 4,509,543 4,010,671 4,010,671
Financial liabilities:
Deposits.................. $577,211,968 $578,864,126 $456,011,946 $456,472,839
Federal funds purchased
and securities sold under
repurchase agreements.... 11,864,486 11,864,486 4,338,634 4,338,634
Federal Home Loan Bank
advances................. 4,625,000 4,722,254 11,125,000 11,292,000
Other borrowings.......... 18,983,075 18,985,225 20,002,855 21,170,021
Accrued interest payable.. 3,202,670 3,202,670 2,643,022 2,643,022
</TABLE>
NOTE 17. BUSINESS COMBINATIONS
On August 31, 1996, First Alliance Bancorp, Inc. effected a business
combination with Premier Bancshares, Inc. by exchanging 746,530 shares of its
common stock for all the outstanding common and preferred stock of Premier
Bancshares, Inc. Premier Bancshares, Inc. is a thrift holding company whose
business is conducted by its wholly-owned subsidiaries, Premier Bank and
Premier Lending, as discussed in Note 1. Subsequent to the business
combination, the combined holding company changed its name to Premier
Bancshares, Inc. The combination was accounted for as a pooling of interest
and, accordingly, all prior financial statements have been restated to include
Premier Bancshares, Inc. The results of operations of the separate companies
for the periods prior to the combination are summarized as follows:
<TABLE>
<CAPTION>
REVENUES NET INCOME
----------- ----------
<S> <C> <C>
Eight months ended August 31, 1996
First Alliance Bancorp, Inc. .......................... $10,800,000 $1,501,000
Premier Bancshares, Inc. .............................. 11,707,000 115,000
----------- ----------
$22,507,000 $1,616,000
=========== ==========
Year ended December 31, 1995
First Alliance Bancorp, Inc. .......................... $14,244,000 $1,850,000
Premier Bancshares, Inc. .............................. 11,209,000 139,000
----------- ----------
$25,453,000 $1,989,000
=========== ==========
</TABLE>
On May 1, 1995, Premier Bancshares, Inc. acquired all of the stock of
Allatoona Federal Savings Bank for $5,496,458, including expenses related to
the merger totaling $339,973. The purchase price was funded through
F-30
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 17. BUSINESS COMBINATIONS, CONTINUED
the sale of preferred stock and a loan obtained from a third party financial
institution in the amount of $3 million. The excess of the total acquisition
cost over the fair value of the net assets acquired of $2,779,772 is being
amortized over a period of fifteen years. The acquisition was accounted for as
a purchase and the results of operations of Allatoona Federal Savings Banks
since the date of acquisition are included in the consolidated financial
statements.
The consolidated statement of income for the year ended December 31, 1995
includes the combined operations of the Company and Allatoona since
acquisition. Allatoona's results of operations included are for the period
from April 28, 1995 through December 31, 1995. The net loss for the month
ended April 28, 1995 was $123,395, as summarized below:
<TABLE>
<S> <C>
Interest income................................................... $ 330,556
Interest expense.................................................. 193,925
---------
Net interest income............................................. 136,631
Plus noninterest income........................................... 215,090
Less noninterest expense.......................................... 475,116
---------
Net loss........................................................ $(123,395)
=========
</TABLE>
Upon the acquisition of Allatoona, the mortgage operations of Allatoona were
combined with the mortgage operations of Premier Lending Corporation. The
commercial banking operations continued to operate as Premier Bank.
On January 31, 1995, First Alliance Bancorp, Inc. acquired Interim Alliance
Corporation (d/b/a Alliance Finance) in exchange for 80% of the outstanding
common stock owned personally by the President of First Alliance Bancorp, Inc.
The price paid for the stock was $28,000, which represents $25,000 for the
initial capitalization of the Company plus $3,000 of incidental expenses. The
acquisition was accounted for as a purchase.
NOTE 18. COMMON STOCK SPLIT
On February 24, 1997, the Company declared a 1.8055 stock split for shares
of record as of March 6, 1997. All share and per share data reflect the split.
The effect of the split is presented retroactively within stockholders' equity
at December 31, 1996 by transferring from capital surplus to common stock the
additional shares times the par value.
NOTE 19. PARENT COMPANY FINANCIAL INFORMATION
The following information presents the condensed balance sheets of Premier
Bancshares, Inc. at December 31, 1996 and 1995 and the statements of income
and cash flows for the years ended December 31, 1996, 1995 and 1994:
F-31
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 19. PARENT COMPANY FINANCIAL INFORMATION, CONTINUED
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Assets
Cash.................................................. $ 1,215,035 $ 360,729
Interest-bearing deposits with bank subsidiary........ 21,251 39,252
Investment in subsidiaries............................ 61,164,777 56,763,542
Building, net......................................... 1,102,316 --
Other assets.......................................... 1,093,047 1,523,717
----------- -----------
Total assets......................................... $64,596,426 $58,687,240
=========== ===========
Liabilities
Other borrowings...................................... $ 5,649,069 $ 3,256,069
Other liabilities..................................... 1,463,261 272,798
----------- -----------
7,112,330 3,528,867
----------- -----------
Stockholders' equity................................... 57,484,096 55,158,373
----------- -----------
Total liabilities and stockholders' equity........... $64,596,426 $58,687,240
=========== ===========
</TABLE>
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
INCOME
Interest on deposits...................... $ 23,553 $ 50,713 $ --
Interest and fees on loans................ -- 424,137 652,652
Dividends from subsidiaries............... 3,982,755 2,132,920 409,694
Other income.............................. 93,238 401,372 1,274,102
---------- ---------- ----------
4,099,546 3,009,142 2,336,448
---------- ---------- ----------
EXPENSES
Salaries and employee benefits............ 55,742 910,896 1,939,227
Interest.................................. 360,159 336,025 333,511
Other expenses............................ 1,007,286 746,833 1,103,480
---------- ---------- ----------
Total expenses........................... 1,423,187 1,993,754 3,376,218
---------- ---------- ----------
Income (loss) before income tax benefits
and equity in undistributed income of
subsidiaries and minority interest in
net income of subsidiary subsidiaries... 2,676,359 1,015,388 (1,039,770)
INCOME TAX BENEFITS........................ (766,226) (407,062) (152,315)
---------- ---------- ----------
Income (loss) before equity in
undistributed income of subsidiaries and
minority interest in net income of
subsidiary.. 3,442,585 1,422,450 (887,455)
EQUITY IN UNDISTRIBUTED INCOME OF
SUBSIDIARIES.............................. 3,574,416 4,143,335 3,800,724
---------- ---------- ----------
Income before minority interest in net
income of subsidiary.................... 7,017,001 5,565,785 2,913,269
MINORITY INTEREST IN NET INCOME OF
SUBSIDIARY................................ 11,850 12,709 --
---------- ---------- ----------
Net income............................... $7,005,151 $5,553,076 $2,913,269
========== ========== ==========
</TABLE>
F-32
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 19. PARENT COMPANY FINANCIAL INFORMATION, CONTINUED
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income before minority interest in net
income of subsidiary..................... $7,017,001 $5,565,785 $2,913,269
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation............................. 10,200 7,030 68,506
Amortization............................. 33,498 30,315 20,585
Undistributed income of subsidiaries..... (3,574,416) (4,143,335) (3,800,724)
Net increase in loans held for sale...... -- (456,640) (679,265)
Other operating activities............... 417,627 313,927 (136,195)
---------- ---------- ----------
Net cash provided by (used in) operating
activities............................. 3,903,910 1,317,082 (1,613,824)
---------- ---------- ----------
INVESTING ACTIVITIES
Net (increase) decrease in interest-
bearing deposits......................... 18,001 232,632 130,658
Net increase in loans..................... -- (1,646,888) (810,759)
Purchase of premises and equipment........ (1,112,516) -- (192,121)
Investment in subsidiaries................ (1,683,646) (7,739,452) --
Proceeds from sale of premises and
equipment................................ -- 19,893 --
Organization costs........................ -- (51,723) --
---------- ---------- ----------
Net cash used in investing activities... (2,778,161) (9,185,538) (872,222)
---------- ---------- ----------
FINANCING ACTIVITIES
Net increase in borrowings................ 2,393,000 5,694,635 879,263
Dividends paid............................ (2,100,941) (884,846) (586,591)
Proceeds from exercise of stock options... 22,500 -- --
Proceeds from common stock issued......... -- 3,121,913 375,012
Proceeds from redemption of subsidiary
common stock............................. -- -- 2,000,000
Purchase of treasury stock................ (586,002) (547,438) --
Payments to dissenting shareholders....... -- (268,061) --
---------- ---------- ----------
Net cash provided by (used in) financing
activities............................. (271,443) 7,116,203 2,667,684
---------- ---------- ----------
Net increase (decrease) in cash........... 854,306 (752,253) 181,638
Cash at beginning of year................. 360,729 1,112,982 931,344
---------- ---------- ----------
Cash at end of year....................... $1,215,035 $ 360,729 $1,112,982
========== ========== ==========
</TABLE>
F-33
<PAGE>
LANIER BANK & TRUST COMPANY
UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
F-34
<PAGE>
LANIER BANK & TRUST COMPANY
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------
DECEMBER 31,
1997 1996 1996
------- ------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks......................... $ 2,189 $ 2,762 $ 5,676
Federal funds sold and securities purchased un-
der agreements to resell....................... 19,905 14,105 19,110
Interest-bearing deposits in other financial in-
stitutions..................................... -- -- --
Investment securities held to maturity (market
value of $478, $464 and $479 as of the respec-
tive dates).................................... 462 463 463
Investment securities available for sale........ 9,360 12,301 12,017
Other investments............................... 25 25 25
Loans........................................... 30,517 28,995 29,849
Allowance for loan losses..................... (664) (729) (677)
------- ------- -------
Loans, net.................................. 29,853 28,266 29,172
Premises and equipment.......................... 1,949 1,959 1,969
Other real estate............................... 452 900 900
Accrued interest receivable..................... 375 420 433
Other assets.................................... 390 321 324
------- ------- -------
Total Assets................................ $64,960 $61,522 $70,089
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand................... $11,887 $10,594 $ 9,474
Interest-bearing demand and money market..... 12,657 12,148 21,190
Savings...................................... 3,003 2,976 2,954
Time deposits of $100,000 or more............ 6,465 6,026 5,667
Other time deposits.......................... 17,859 17,395 18,109
------- ------- -------
Total Deposits.............................. 51,871 49,139 57,394
Federal funds purchased....................... 3,500 3,500 3,500
Accrued interest payable...................... 227 212 231
Other liabilities............................. 86 98 87
------- ------- -------
Total Liabilities........................... 55,684 52,949 61,212
------- ------- -------
STOCKHOLDERS' EQUITY
Common stock.................................. 4,022 3,811 3,830
Surplus....................................... 3,858 3,407 3,418
Retained earnings............................. 1,383 1,411 1,654
Market valuation.............................. 13 (56) (25)
------- ------- -------
Total Stockholders' Equity.................. 9,276 8,573 8,877
------- ------- -------
Total Liabilities and Stockholders' Equity.. $64,960 $61,522 $70,089
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-35
<PAGE>
LANIER BANK & TRUST COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-------------------
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
INTEREST INCOME
Loans, including fees.................................... $ 2,414 $ 2,349
Investment securities:
U.S. Treasury securities................................ -- 32
U.S. Government agencies and corporations............... 509 507
States and political subdivisions....................... 18 18
Federal funds sold and securities purchased under agree-
ments to resell......................................... 699 423
Interest-bearing deposits in other financial institu-
tions................................................... -- 1
--------- ---------
Total Interest Income.................................. 3,640 3,330
--------- ---------
INTEREST EXPENSE
Interest-bearing demand and money market deposits........ 388 221
Savings.................................................. 60 61
Time deposits of $100,000 or more........................ 271 304
Other time deposits...................................... 723 715
Federal funds purchased.................................. 7 11
--------- ---------
Total Interest Expense................................. 1,449 1,312
--------- ---------
Net Interest Income.................................... 2,191 2,018
PROVISION FOR LOAN LOSSES.................................. -- --
--------- ---------
Net Interest Income After Provision for Loan Losses...... 2,191 2,018
--------- ---------
OTHER INCOME
Service charges on deposit accounts...................... 339 344
Investment securities gains, net......................... 5 --
Other income............................................. 121 27
--------- ---------
Total Other Income..................................... 465 371
--------- ---------
OTHER EXPENSE
Salaries and other compensation.......................... $ 887 $ 814
Employee benefits........................................ 161 141
Net occupancy and equipment expense...................... 222 197
Professional and other outside services.................. 48 57
Deposit insurance assessment............................. 4 1
Net expense of other real estate......................... 28 16
Other expense............................................ 481 365
--------- ---------
Total Other Expense.................................... 1,831 1,591
--------- ---------
Income Before Income taxes............................. 825 798
INCOME TAX EXPENSE......................................... 272 252
--------- ---------
Net Income............................................. $ 553 $ 546
========= =========
Earnings per share......................................... $ 0.67 $ 0.67
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-36
<PAGE>
LANIER BANK & TRUST COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS
ENDED SEPTEMBER
30,
----------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................. $ 553 $ 546
Adjustments to reconcile net income to net cash provided by
operating activities:
Net amortization (accretion) of investment securities..... (1) 4
Net loan fees deferred.................................... (22) 11
Depreciation and amortization of premises and equipment... 84 72
Provision for loan losses................................. -- --
(Increase) in other assets................................ (67) (83)
Decrease in interest receivable........................... 58 21
(Decrease) in interest payable............................ (4) (22)
(Decrease) in other liabilities........................... (1) (165)
------- -------
Net Cash Provided by Operating Activities................ 600 384
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest-bearing deposits in other finan-
cial institutions......................................... -- 100
Purchases of investment securities available for sale...... (2,500) (5,984)
Maturities of investment securities available for sale..... 5,157 1,936
Loan originations, net of principal repayments............. (690) 2,328
Purchases of premises and equipment........................ (63) (42)
Proceeds from sales of other real estate................... 519 150
------- -------
New Cash Provided (used) by Investing Activities......... 2,423 (1,512)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand, money market and savings
accounts.................................................. (6,070) 3,107
Time deposits accepted, net of repayments.................. 547 (1,040)
Cash dividends paid........................................ (192) (114)
------- -------
New Cash Provided (used) by Financing Activities......... (5,715) 1,953
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......... $(2,692) $ 825
CASH AND CASH EQUIVALENTS AT BEGINNING OF NINE-MONTH PERIOD.. 24,786 16,042
------- -------
CASH AND CASH EQUIVALENTS AT END OF NINE-MONTH PERIOD........ $22,094 $16,867
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH PAID:
Interest................................................... $ 1,454 $ 1,334
======= =======
Income taxes............................................... $ 311 $ 468
======= =======
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING AND INVESTING
ACTIVITIES:
Acquisition of real estate in settlement of loans.......... $ -- $ 535
======= =======
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-37
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements of Lanier Bank & Trust
Company ("the Lanier Bank") have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
these statements do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. All such adjustments are of a normal
recurring nature. Operating results for the nine months ended September 30,
1997, are not necessarily indicative of the results that may be expected for
the year ended December 31, 1997. For additional pertinent information, refer
to the audited financial statements and footnotes thereto, selected financial
data and management's discussion and analysis included elsewhere in the proxy
statement.
TRANSFERS AND SERVICING OF FINANCIAL ASSETS
Lanier Bank adopted Statement of Financial Accounting Standards No. 125
(SFAS 125), "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" on January 1, 1997. This statement provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. This statement utilizes the
financial-components approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes
liabilities when extinguished.
SFAS 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996, and is to be
applied prospectively. Earlier or retroactive application is not permitted.
However, in December 1996, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 127 (SFAS 127), "Deferral of
the Effective Date of Certain Provisions of FASB Statement No. 125." This
statement defers the effective date to December 31, 1997 for certain
provisions of SFAS 125. The deferred provisions relate to repurchase
agreements, dollar-roll transactions, securities lending, and similar
transactions. The effective date for all other transfers and servicing of
financial assets is unchanged. The adoption of SFAS 125 did not have a
material impact on Lanier Bank's financial statements.
PENDING ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings Per Share." This statement
is effective for financial statements issued for periods ending after December
15, 1997. This statement supersedes Accounting Principles Board Opinion No. 15
(APB 15), "Earnings Per Share," and simplifies earnings per share computations
by replacing primary earnings per share with basic earnings per share, which
shows no effects from dilutive securities. Entities with complex capital
structures will have to show diluted earnings per share, which is similar to
the fully diluted earnings per share computation under APB 15. Had SFAS 128
been effective on September 30, 1997, Lanier Bank would have had basic
earnings per share of $.69 and $.68 and diluted earnings per share of $.67 and
$.67 for the nine months ended September 30, 1997 and for the year ended
December 31, 1996, respectively.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 129 (SFAS 129), "Disclosure of Information About
Capital Structure." This statement is effective for financial statements
issued for periods ending after December 15, 1997. This statement consolidates
existing disclosure requirements on capital structure. The adoption of SFAS
129 is not expected to have a significant impact on the financial condition or
results of operations of Lanier Bank.
F-38
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS--(CONTINUED)
NOTE A--BASIS OF PRESENTATION (CONTINUED)
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income."
SFAS 130 is effective January 1, 1998. Under SFAS 130, a company will begin
showing changes in assets and liabilities in a new comprehensive income
statement or alternative presentation as opposed to showing some of the items
as transactions in shareholders' equity accounts. Upon adoption, all
comparative annual and interim financial statements will present a
comprehensive income statement or alternative disclosure, for all years
presented. The adoption of SFAS 130 is not expected to have a significant
impact on the financial condition or results of operations of Lanier Bank.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 is effective January 1, 1998,
and requires disclosure of certain financial information by segments of a
company's business. The adoption of SFAS 131 is not expected to have a
significant impact on the financial condition or results of operations of
Lanier Bank.
NOTE B--EARNINGS PER SHARE
Earnings per share have been computed based on the weighted average number
of common shares outstanding during the period, after retroactive
consideration of the April 1997 stock dividend of 38,303 shares, which totaled
819,745 and 810,300 shares for the nine-month periods ended September 30, 1997
and 1996, respectively. Stock options are considered to be common stock
equivalents for purposes of calculating earnings per share.
NOTE C--INVESTMENT SECURITIES
The amortized cost and estimated market value of investment securities held
to maturity at September 30, 1997, are presented below:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
State and political subdivisions..... $462 $16 $-- $478
---- --- ---- ----
$462 $16 $-- $478
==== === ==== ====
</TABLE>
The amortized cost and estimated market value of securities held to maturity
at September 30, 1997, by contractual maturity, are shown as follows. Expected
maturities of certain securities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED MARKET
COST VALUE
--------- ------
<S> <C> <C>
Due in one year or less..................................... $-- $--
Due in one through five years............................... -- --
Due after five years........................................ 462 478
---- ----
$462 $478
==== ====
</TABLE>
F-39
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS--(CONTINUED)
NOTE C--INVESTMENT SECURITIES, CONTINUED
Securities available for sale at amortized cost and carrying value at
September 30, 1997, are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government agencies............. $8,992 $12 $-- $9,004
Mortgage-backed securities........... 348 8 -- 356
------ --- --- ------
$9,340 $20 $-- $9,360
====== === === ======
</TABLE>
The amortized cost and estimated market value of securities available for
sale at September 30, 1997, by contractual maturity, are shown below. Expected
maturities of certain securities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED MARKET
COST VALUE
--------- ------
<S> <C> <C>
Due in one year or less.................................... $1,037 $1,038
Due in one through five years.............................. 8,167 8,180
Due after five years....................................... 136 142
------ ------
$9,340 $9,360
====== ======
</TABLE>
Other investments totaling $25,000 are comprised of stock in Community
Financial Services, Inc.
In 1997, Lanier Bank began purchasing securities under agreement to resell
substantially identical securities, to invest seasonal local municipality
deposits. At September 30, 1997, there were no securities purchased under
agreement to resell outstanding.
The amounts advanced under the agreements represent short-term loans and are
reflected as a receivable in the statement of financial condition when
balances are outstanding. During 1997, securities purchased from the Bankers'
Bank were put in Lanier Bank's account at the Bankers' Bank. The agreement to
resell these securities has a daily maturity. Securities purchased under
agreement to resell transactions were all with the Bankers' Bank and averaged
$1,878,000 for the nine-month period ended September 30, 1997, with a maximum
amount outstanding at any month-end during the period of $22,250,000
representing the purchase of securities with a fair market value of
$24,475,000.
NOTE D--SHORT-TERM BORROWINGS
At September 30, 1997 and 1996 and at December 31, 1996, the Bank had
$3,500,000 outstanding under its unsecured lines of credit for Federal funds
purchased from other banks at a weighted average interest rate of 6.58 percent
at September 30, 1997 and 7.32 percent at December 31, 1996. These lines have
overnight maturity and an average amount outstanding and weighted average
interest rates of approximately $169,000 and $255,000 and 5.52 percent and
5.75 percent for the nine-month periods ended September 30, 1997 and 1996,
respectively.
NOTE E--PROPOSED MERGER
On December 16, 1997, the Lanier Bank signed a definitive merger agreement
whereby Premier Bancshares, Inc. ("Premier") would acquire all of the issued
and outstanding shares of common stock of the Lanier Bank in exchange for
Premier common stock. The definitive merger agreement provides for an exchange
of 1.980 shares of Premier common stock for each outstanding share of Lanier
Bank's common stock subject to adjustment in
F-40
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS--(CONTINUED)
NOTE E--PROPOSED MERGER, CONTINUED
the event the average closing price of Premier's common stock is less than
$20.50 for the ten-trading day period prior to the filing of the registration
statement. Premier intends to account for the acquisition as a pooling of
interests.
NOTE F--SUPPLEMENTAL FINANCIAL DATA
Components of other expense in excess of 1 percent of total income are as
follows at September 30:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Director fees..................................................... $ 77 $ 63
Data processing services.......................................... 112 86
Office supplies................................................... 45 41
</TABLE>
F-41
<PAGE>
LANIER BANK & TRUST COMPANY
CUMMING, GEORGIA
FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
F-42
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Lanier Bank & Trust Company
Cumming, Georgia
We have audited the accompanying balance sheets of Lanier Bank & Trust
Company as of December 31, 1996 and 1995, and the related statements of
income, changes in stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are
the responsibility of Lanier Bank & Trust Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lanier Bank & Trust
Company as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for each of the three years in the period ended December
31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note A to the financial statements, in 1996 Lanier Bank &
Trust Company changed its method of disclosure for stock-based compensation.
Bricker & Melton, P.A.
February 7, 1997
Duluth, Georgia
F-43
<PAGE>
LANIER BANK & TRUST COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks (Note B).................... $ 5,676,240 $ 1,921,818
Federal funds sold.................................. 19,110,000 14,120,000
Interest-bearing deposits in other financial
institutions....................................... -- 100,000
Investment securities held to maturity at cost
(market value of $479,180 and $482,497 at December
31, 1996 and 1995, respectively) (Note C).......... 463,067 463,988
Investment securities available for sale (Note C)... 12,016,547 8,252,290
Other investments (Note C).......................... 25,000 25,000
Loans (Notes D and J)............................... 29,849,663 31,962,946
Reserve for loan losses............................. (677,360) (730,858)
----------- -----------
Net loans......................................... 29,172,303 31,232,088
Premises and equipment, net (Note E)................ 1,969,134 1,988,943
Other real estate, net (Note F)..................... 899,795 515,181
Accrued interest receivable......................... 433,279 440,919
Other assets (Note H)............................... 323,651 238,362
----------- -----------
TOTAL ASSETS.................................... $70,089,016 $59,298,589
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits (Note M):
Noninterest-bearing demand....................... $ 9,473,739 $ 9,482,590
Interest-bearing demand and money market......... 21,190,147 10,232,565
Savings.......................................... 2,953,757 2,896,068
Time deposits of $100,000 or more................ 5,666,506 6,699,113
Other time deposits.............................. 18,109,475 17,761,472
----------- -----------
Total Deposits.................................. 57,393,624 47,071,808
Federal funds purchased (Note G).................. 3,500,000 3,500,000
Accrued interest payable.......................... 231,188 233,719
Other liabilities................................. 87,425 263,188
----------- -----------
Total Liabilities............................... 61,212,237 51,068,715
----------- -----------
STOCKHOLDERS' EQUITY (Note K)
Common stock, par value $5: 2,000,000 shares
authorized, 766,077 and 762,134 shares issued and
outstanding, respectively........................ $ 3,830,385 $ 3,810,670
Surplus........................................... 3,417,902 3,407,617
Retained earnings................................. 1,653,685 978,999
Market valuation reserve on investment securities
available for sale (Note C)...................... (25,193) 32,588
----------- -----------
Total Stockholders' Equity...................... 8,876,779 8,229,874
----------- -----------
Commitments and contingent liabilities (Notes L and
N)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...... $70,089,016 $59,298,589
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-44
<PAGE>
LANIER BANK & TRUST COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees...................... $3,157,309 $3,361,765 $2,646,818
Investment securities:
U.S. Treasury securities.................. 32,496 327,092 192,622
U.S. Government agencies and corporations. 655,660 158,850 148,348
Mortgage-backed securities................ 47,994 61,737 69,856
States and political subdivisions......... 23,817 22,474 8,279
Federal funds sold......................... 575,519 482,383 310,015
Interest-bearing deposits in other finan-
cial institutions......................... 1,131 23,571 38,387
---------- ---------- ----------
Total Interest Income.................... 4,493,926 4,437,872 3,414,325
---------- ---------- ----------
INTEREST EXPENSE
Interest-bearing demand and money market
deposits.................................. 313,339 250,901 220,595
Savings.................................... 80,565 76,890 82,284
Time deposits of $100,000 or more.......... 406,971 346,849 122,321
Other time deposits........................ 940,375 910,877 763,787
Federal funds purchased.................... 13,551 70,413 4,826
---------- ---------- ----------
Total Interest Expense................... 1,754,801 1,655,930 1,193,813
---------- ---------- ----------
Net Interest Income...................... 2,739,125 2,781,942 2,220,512
BENEFIT FROM LOAN LOSS RESERVE (Note D)...... 50,000 -- 105,000
---------- ---------- ----------
Net Interest Income after Benefit from
Loan Loss Reserve....................... 2,789,125 2,781,942 2,325,512
---------- ---------- ----------
OTHER INCOME
Service charges on deposit accounts........ 445,308 377,468 347,470
Investment securities gains, net (Note C).. -- -- --
Other income............................... 66,561 51,569 53,795
---------- ---------- ----------
Total Other Income....................... 511,869 429,037 401,265
---------- ---------- ----------
OTHER EXPENSE
Salaries and other compensation............ 1,106,573 1,047,637 924,803
Employee benefits (Note I)................. 187,820 187,652 166,608
Net occupancy and equipment expense (Note
E)........................................ 267,670 277,261 277,080
Professional and other outside services.... 70,202 91,065 134,054
Deposit insurance assessment............... 2,000 46,412 103,145
Net expense of other real estate (Note F).. 20,906 20,523 (3,490)
Other expense (Note O)..................... 524,882 480,026 440,417
---------- ---------- ----------
Total Other Expense...................... 2,180,053 2,150,576 2,042,617
---------- ---------- ----------
Income before Income Taxes............... 1,120,941 1,060,403 684,160
INCOME TAX EXPENSE (Note H).................. 331,935 358,276 231,151
---------- ---------- ----------
Net Income............................... $ 789,006 $ 702,127 $ 453,009
========== ========== ==========
EARNINGS PER SHARE (Note K).................. $ .97 $ .87 $ .57
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-45
<PAGE>
LANIER BANK & TRUST COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK MARKET
------------------ RETAINED VALUATION
SHARES PAR VALUE SURPLUS EARNINGS RESERVE TOTAL
------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1993................... 691,342 $3,456,710 $2,841,545 $ 858,658 $ -- $7,156,913
Net income.............. -- -- -- 453,009 -- 453,009
Cash dividends paid--
$.06 per share........ -- -- -- (41,481) -- (41,481)
Stock dividend--6 per-
cent................... 41,480 207,400 316,920 (524,320) -- --
Market valuation adjust-
ment................... -- -- -- -- (55,092) (55,092)
------- ---------- ---------- ---------- -------- ----------
BALANCE AT DECEMBER 31,
1994................... 732,822 3,664,110 3,158,465 745,866 (55,092) 7,513,349
Net income.............. -- -- -- 702,127 -- 702,127
Cash dividends paid--
$.10 per share........ -- -- -- (73,282) -- (73,282)
Stock dividend--4 per-
cent................... 29,312 146,560 249,152 (395,712) -- --
Market valuation adjust-
ment................... -- -- -- -- 87,680 87,680
------- ---------- ---------- ---------- -------- ----------
BALANCE AT DECEMBER 31,
1995................... 762,134 3,810,670 3,407,617 978,999 32,588 8,229,874
Net income.............. -- -- -- 789,006 -- 789,006
Cash dividends paid--
$.15 per share........ -- -- -- (114,320) -- (114,320)
Proceeds from stock op-
tions exercised........ 3,943 19,715 10,285 -- -- 30,000
Market valuation adjust-
ment................... -- -- -- -- (57,781) (57,781)
------- ---------- ---------- ---------- -------- ----------
BALANCE AT DECEMBER 31,
1996................... 766,077 $3,830,385 $3,417,902 $1,653,685 $(25,193) $8,876,779
======= ========== ========== ========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-46
<PAGE>
LANIER BANK & TRUST COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................ $ 789,006 $ 702,127 $ 453,009
Adjustments to reconcile net income to
net cash provided by operating
activities:
Net amortization (accretion) of in-
vestment securities................ 4,472 16,750 (27,599)
Net loan fees deferred.............. 24,774 (10,953) 15,148
Depreciation and amortization of
premises and equipment............. 97,974 103,370 117,169
Provision for other real estate
losses............................. -- -- 20,000
Benefit from loan loss reserve...... (50,000) -- (105,000)
Deferred income tax provision (bene-
fit)............................... (26,941) 32,594 120,198
(Increase) decrease in other assets. (28,580) 38,979 37,284
(Increase) decrease in interest re-
ceivable........................... 7,640 (160,684) 14,587
Increase (decrease) in interest pay-
able............................... (2,531) 126,521 (13,683)
Increase (decrease) in other liabil-
ities.............................. (175,763) 198,386 29,130
----------- ----------- -----------
Net Cash Provided by Operating Ac-
tivities.......................... 640,051 1,047,090 660,243
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest-bearing
deposits in other financial
institutions......................... 100,000 694,321 98,679
Purchases of investment securities
held to maturity..................... -- (539,893) (5,173,299)
Purchases of investment securities
available for sale................... (5,984,063) (4,501,104) (300,000)
Maturities of investment securities
held to maturity..................... -- 4,281,416 3,739,830
Maturities of investment securities
available for sale................... 2,128,706 902,299 1,635,850
Loan originations, net of principal
repayments........................... 1,550,397 (2,613,432) (1,525,913)
Purchases of premises and equipment... (78,165) (45,633) (362,055)
Proceeds from sales of other real es-
tate................................. 150,000 30,191 869,883
----------- ----------- -----------
Net Cash Used by Investing Activi-
ties.............................. (2,133,125) (1,791,835) (1,017,025)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand, money market
and savings accounts................. $11,006,420 $ 481,345 $ 13,648
Time deposits accepted, net of repay-
ments................................ (684,604) 4,901,409 (1,827,051)
Net increase in federal funds pur-
chased............................... -- 500,000 3,000,000
Proceeds from exercise of stock op-
tions................................ 30,000 -- --
Cash dividends paid................... (114,320) (73,282) (41,481)
----------- ----------- -----------
Net Cash Provided by Financing Ac-
tivities.......................... 10,237,496 5,809,472 1,145,116
----------- ----------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS............................ 8,744,422 5,064,727 788,334
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR................................ 16,041,818 10,977,091 10,188,757
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
YEAR................................... $24,786,240 $16,041,818 $10,977,091
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH PAID:
Interest.............................. $ 1,757,332 $ 1,529,409 $ 1,207,496
=========== =========== ===========
Income taxes.......................... $ 325,695 $ 111,000 $ 85,000
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH
FINANCING AND INVESTING ACTIVITIES:
Acquisition of real estate in settle-
ment of loans........................ $ 534,614 $ 305,004 $ --
=========== =========== ===========
Transfer of investment securities to
available for sale................... $ -- $ -- $ 5,983,259
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-47
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996, 1995 AND 1994
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Lanier Bank & Trust Company provides a full range of banking services in
Forsyth County and the surrounding area.
The accounting and reporting policies of Lanier Bank & Trust Company (the
"Bank") conform to generally accepted accounting principles and to general
practices within the banking industry. The following is a summary of the more
significant of these policies.
The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could differ
significantly from those estimates. Material estimates that are particularly
susceptible to significant change in the near term relate to the determination
of the allowance for loan losses and the valuation of other real estate
acquired in connection with foreclosures or in satisfaction of loans.
Management believes that the allowance for loan losses is adequate and the
valuation of other real estate is appropriate. While management uses available
information to recognize losses on loans, future additions to the allowance or
valuation reserves for other real estate may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Bank's allowance
for loan losses and valuation of other real estate. Such agencies may require
the Bank to recognize additions to the allowance or valuation adjustments to
other real estate based on their judgments about information available to them
at the time of their examination.
INTEREST-BEARING DEPOSITS IN OTHER FINANCIAL INSTITUTIONS
The Bank purchases certificates of deposit from various financial
institutions. These certificates are in the amount of $100,000 or less and
are, therefore, fully insured by the Federal Deposit Insurance Corporation.
Interest-bearing deposits are reported at cost. Interest income is accrued
based on the principal amounts outstanding.
INVESTMENT SECURITIES
Investment securities held to maturity are reported at amortized cost.
Investment securities available for sale are reported at fair market value,
with unrealized gains and losses reported as a separate component of
stockholders' equity, net of the related tax effect. Other investments are
reported at cost and, accordingly, earnings are reported when interest is
accrued or when dividends are received.
Premium and discount on all investment securities are amortized (deducted)
and accreted (added), respectively, to interest income on the effective yield
method over the period to the maturity of the related securities. Premium and
discount on mortgage-backed securities are amortized (deducted) and accreted
(added), respectively, to interest income using a method which approximates a
level yield over the period to maturity of the related securities taking into
consideration assumed prepayment patterns.
Gains or losses on disposition are computed by the specific identification
method for all securities.
LOANS
Loans are reported at the gross amount outstanding, less net deferred loan
fees and a valuation allowance for loan losses. Interest income on all loans
is recognized over the terms of the loans based on the unpaid daily
F-48
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
principal amount outstanding. If the collectibility of interest appears
doubtful, the accrual thereof is discontinued. Loan origination fees, net of
direct loan origination costs, are deferred and recognized as income over the
life of the related loan on a level-yield basis. Interest income on impaired
loans is recognized using both the cash basis and the accrual method.
The Bank adopted the provisions of Statement of Financial Accounting
Standards No. 114 (SFAS 114), "Accounting by Creditors for Impairment of a
Loan," as amended by Statement of Financial Accounting Standards No. 118 (SFAS
118), "Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosure," on January 1, 1995. Management, considering current information
and events regarding the borrowers' ability to repay their obligations,
considers a loan to be impaired when it is probable that the Bank will be
unable to collect all amounts due according to the contractual terms of the
loan. When a loan is considered to be impaired, the amount of the impairment
is measured based on the present value of expected future cash flows
discounted at the note's effective interest rate, or at the loan's fair value
if the loan is collateral dependent. Impairment losses are included in the
allowance for loan losses through a charge to the provision. Cash receipts on
impaired loans are applied to reduce the principal amount of such loans until
the principal has been recovered and are recognized as interest income,
thereafter. There was no significant impact on the financial condition or
results of operations of the Bank upon adoption.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for loan
losses charged to expense. The allowance represents an amount which, in
management's judgment, will be adequate to absorb probable losses on existing
loans that may become uncollectible. Management's judgment in determining the
adequacy of the allowance is based on evaluations of the collectibility of
loans and takes into consideration such factors as changes in the nature and
volume of the loan portfolio, current economic conditions that may affect the
borrower's ability to pay, overall portfolio quality and review of specific
problem loans. Periodic revisions are made to the allowance when circumstances
which necessitate such revisions become known. Recognized losses are charged
to the allowance for loan losses, while subsequent recoveries are added to the
allowance.
PREMISES AND EQUIPMENT
Premises and equipment are reported at cost less accumulated depreciation
and amortization. For financial reporting purposes, depreciation and
amortization are computed using primarily straight-line methods over the
estimated useful lives of the assets. Expenditures for maintenance and repairs
are charged to operations as incurred, while major repairs and betterments are
capitalized. When property is disposed of, the related cost and accumulated
depreciation are removed from the accounts and any gain or loss is reflected
in income. For federal tax reporting purposes, depreciation and amortization
are computed using primarily accelerated methods.
OTHER REAL ESTATE
Other real estate represents property acquired through foreclosure or in
settlement of loans and is recorded at the lower of cost or fair value less
estimated selling expenses and a valuation allowance for losses. The allowance
represents an amount which, in management's judgement, will be adequate to
absorb probable losses. Losses incurred in the acquisition of foreclosed
properties are charged against the allowance for loan losses at the time of
foreclosure. Provisions for subsequent devaluation of other real estate are
charged against the current period's operations. Losses on disposal of other
real estate are charged to the valuation allowance for losses.
F-49
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
INCOME TAXES
The tax effect of transactions is recorded at current tax rates in the
periods the transactions are reported for financial statement purposes.
Deferred income taxes are established for the temporary differences between
the financial reporting basis and the tax basis of the Bank's assets and
liabilities at enacted tax rates expected to be in effect when such amounts
are realized or settled.
EARNINGS PER SHARE
Earnings per share has been computed based on the weighted average number of
shares outstanding during the period, after retroactive consideration of any
stock dividends authorized, which totaled 811,122, 808,418 and 805,990 shares
for the years ended December 31, 1996, 1995 and 1994, respectively. Stock
options, as described in Note K, are considered to be common stock equivalents
for purposes of calculating earnings per share.
STOCK-BASED COMPENSATION
The Bank accounts for stock options under Accounting Principles Board
Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees." Under APB
25, because the exercise price of the Bank's stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.
Effective January 1, 1996, the Bank adopted the disclosure requirements of
Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting
for Stock-Based Compensation." As provided by SFAS 123, the Bank has elected
to continue applying the provisions of APB 25 in determining its net income
relative to stock-based compensation. The Bank has adopted the SFAS 123
requirement that a company disclose the pro forma net income and pro forma
earnings per share, as if the alternative fair- value-based accounting method
in SFAS 123 had been used in determining net income. The adoption of SFAS 123
did not have a significant impact on the financial condition or results of
operations of the Bank.
FINANCIAL INSTRUMENTS
In the ordinary course of business, the Bank has entered into off-balance-
sheet financial instruments consisting of commitments to extend credit and
standby letters of credit. Such financial instruments are recorded in the
financial statements when they are funded or related fees are incurred or
received.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The Bank uses the following methods and assumptions in estimating fair
values of financial instruments (see Note P):
Cash and cash equivalents--The carrying amount of cash and cash equivalents
approximates fair value.
Interest-bearing deposits--The carrying amount of interest-bearing deposits
approximates fair value.
Investment securities--The fair value of investment securities held to
maturity and available for sale is estimated based on bid quotations received
from independent pricing services. The carrying amount of other investments
approximates fair value.
Loans--For variable rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying values.
For all other loans, fair values are calculated by discounting the contractual
F-50
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
cash flows using estimated market discount rates which reflect the credit and
interest rate risk inherent in the loan, or by using the current rates at
which similar loans would be made to borrowers with similar credit ratings and
for the same remaining maturities.
Deposits--The fair value of deposits with no stated maturity, such as
demand, NOW and money market, and savings accounts, is equal to the amount
payable on demand at year-end. The fair value of certificates of deposit is
based on the discounted value of contractual cash flows using the rates
currently offered for deposits of similar remaining maturities.
Short-term borrowings--The carrying amount of federal funds purchased and
other short-term borrowings approximates fair value.
Accrued interest--The carrying amount of accrued interest receivable and
payable approximates fair value.
Off-balance-sheet instruments--Fair values for off-balance-sheet lending
commitments are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
borrower's credit standing.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include cash
on hand, amounts due from banks and federal funds sold. Generally, federal
funds are purchased and sold for one-day periods.
LONG-LIVED ASSETS
Effective January 1, 1996, the Bank adopted Statement of Financial
Accounting Standards No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The provisions
of SFAS 121 require the Bank to review long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The adoption of SFAS 121 did not have a
significant impact on the financial condition or results of operations of the
Bank.
PENDING ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 125 (SFAS 125), "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." SFAS 125 is
effective for such transactions entered into subsequent to December 31, 1996,
and for certain excess servicing rights recorded at December 31, 1996. Under
SFAS 125, a company recognizes the financial and servicing assets it controls
and the liabilities it has incurred and derecognizes financial assets when
control has been surrendered and liabilities when extinguished. The Financial
Accounting Standards Board has issued Statement of Financial Accounting
Standards No. 127 (SFAS 127), "Deferral of the Effective Date of FASB
Statement No. 125," which delays the effective date of certain provisions of
SFAS 125 until 1998. The adoption of SFAS 125 and SFAS 127 is not expected to
have a significant impact on the financial condition or results of operations
of the Bank.
NOTE B--CASH AND DUE FROM BANKS
The Federal Reserve Board requires that banks maintain reserve balances with
the Federal Reserve Bank or in cash. At December 31, 1996 and 1995, the Bank's
reserve requirement averaged approximately $308,000 and $238,000,
respectively. The Bank maintained cash balances which were adequate to meet
this requirement.
F-51
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE C--INVESTMENT SECURITIES
The amortized cost and estimated market value of investment securities held
to maturity are as follows at December 31:
<TABLE>
<CAPTION>
1996
---------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
States and political
subdivisions................. $ 463,067 $16,113 $ -- $ 479,180
=========== ======= ======= ===========
<CAPTION>
1995
---------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
States and political
subdivisions................. $ 463,988 $18,509 $ -- $ 482,497
=========== ======= ======= ===========
The amortized cost and estimated market value of investment securities
available for sale are as follows at December 31:
<CAPTION>
1996
---------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Government agencies and
corporations................. $11,486,906 $ 2,179 $45,860 $11,443,225
Mortgage-backed securities.... 567,813 5,509 -- 573,322
----------- ------- ------- -----------
$12,054,719 $7,688 $45,860 $12,016,547
=========== ======= ======= ===========
<CAPTION>
1995
---------------------------------------------
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities...... $ 1,604,191 $ 6,747 $ -- $ 1,610,938
U.S. Government agencies and
corporations................. 5,800,430 49,536 21,875 5,828,091
Mortgage-backed securities.... 798,292 14,969 -- 813,261
----------- ------- ------- -----------
$ 8,202,913 $71,252 $21,875 $ 8,252,290
=========== ======= ======= ===========
</TABLE>
Other investments are comprised of stock in Community Financial Services,
Inc.
At December 31, 1996, the unrealized loss on available for sale securities,
net of the related deferred taxes of $12,979, is $25,193 and is included as a
separate component of stockholders' equity. At December 31, 1995, the
unrealized gain on available for sale securities, net of the related deferred
taxes of $16,788, is $32,588 and is included as a separate component of
stockholders' equity.
F-52
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE C--INVESTMENT SECURITIES, CONTINUED
The amortized cost and estimated market value of investment securities held
to maturity and available for sale at December 31, 1996, by contractual
maturity, are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
without call or prepayment penalties. Mortgage-backed securities have been
allocated based on stated maturity dates after considering assumed prepayment
patterns.
<TABLE>
<CAPTION>
INVESTMENT SECURITIES INVESTMENT SECURITIES
HELD TO MATURITY AVAILABLE FOR SALE
---------------------- -----------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
---------------------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or less...... $ -- $ -- $ 1,184,312 $ 1,182,437
Due after one year through
five years.................. 253,693 258,617 10,709,671 10,669,985
Due after five years through
ten years................... 209,374 220,563 -- --
Due after ten years.......... -- -- 160,736 164,125
---------- ---------- ----------- -----------
$ 463,067 $ 479,180 $12,054,719 $12,016,547
========== ========== =========== ===========
</TABLE>
There were no sales of investment securities during 1996, 1995 and 1994.
Investment securities with amortized costs of $10,186,906 and $501,161 and
market values of $10,143,719 and $506,158 at December 31, 1996 and 1995,
respectively, were pledged to secure public funds and certain other deposits
as required by law.
At December 31, 1996, the Bank has no outstanding off-balance-sheet
derivative financial instruments such as swaps, options, futures or forward
contracts.
NOTE D--LOANS
Major classifications of loans are as follows at December 31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Commercial......................................... $ 1,539,312 $ 1,564,236
Real estate--commercial............................ 4,818,985 5,423,118
Real estate--mortgage.............................. 10,976,071 12,846,760
Real estate--construction.......................... 5,910,211 6,999,760
Installment and simple interest individual......... 6,658,629 5,157,843
----------- -----------
Total loans...................................... 29,903,208 31,991,717
Less: Net deferred loan fees....................... (53,545) (28,771)
Allowance for loan losses.......................... (677,360) (730,858)
----------- -----------
Loans, net....................................... $29,172,303 $31,232,088
=========== ===========
</TABLE>
Most of the Bank's business activity is with customers located within
Forsyth County and the surrounding area. As of December 31, 1996 and 1995, the
Bank had approximately $22,000,000 and $25,000,000, respectively, of its loan
portfolio secured by real estate.
Nonaccrual loans totaled $401,516, $533,266 and $1,260,774 at December 31,
1996, 1995 and 1994, respectively. If such loans had been on a full-accrual
basis, interest income would have been approximately $41,000, $44,000 and
$116,000 higher in 1996, 1995 and 1994, respectively. The Bank has
approximately $144,000 and $681,000 in loans which are impaired under SFAS 114
at December 31, 1996 and 1995,
F-53
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE D--LOANS, CONTINUED
respectively. The allowance for loan losses related to these loans is
approximately $45,000 and $113,000 in 1996 and 1995, respectively. The average
outstanding amount of impaired loans during 1996 and 1995 was approximately
$187,000 and $766,000, respectively. Interest income recognized on the cash
basis was $0 and $14,000 in 1996 and 1995, respectively.
The following is a summary of transactions in the allowance for loan losses
for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
-------- --------- ----------
<S> <C> <C> <C>
Balance, beginning of
year................... $730,858 $ 890,130 $1,098,692
Benefit credited to
expense................ (50,000) -- (105,000)
Loans charged off....... (36,698) (172,779) (111,160)
Recoveries of loans
previously charged off. 33,200 13,507 7,598
-------- --------- ----------
Balance, end of year.... $677,360 $ 730,858 $ 890,130
======== ========= ==========
</TABLE>
NOTE E--PREMISES AND EQUIPMENT
Premises and equipment are comprised of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Land................................................ $ 957,740 $ 957,740
Buildings........................................... 1,186,370 1,186,370
Furniture, fixtures and equipment................... 831,203 753,038
Leasehold improvements.............................. 41,619 41,619
----------- ----------
3,016,932 2,938,767
Less accumulated depreciation and amortization...... (1,047,798) (949,824)
----------- ----------
Premises and equipment, net......................... $ 1,969,134 $1,988,943
=========== ==========
</TABLE>
Depreciation and amortization expense totaled $97,974, $103,370 and $117,169
in 1996, 1995 and 1994, respectively.
Certain Bank facilities and equipment are leased under various operating
leases. During 1996, the Bank leased additional facilities under a cancellable
lease to open a loan production office. Management's expectations are to open
the new office during the first quarter of 1997. The Bank also leases a branch
facility under a noncancellable lease which expires March 31, 2002. Rental
expense was $31,012, $28,874 and $28,077 in 1996, 1995 and 1994, respectively.
Future minimum rental commitments under noncancellable leases are:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------
<S> <C>
1997................................................................ $ 29,042
1998................................................................ 30,132
1999................................................................ 31,036
2000................................................................ 31,967
2001................................................................ 32,926
--------
$155,103
========
</TABLE>
F-54
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE F--OTHER REAL ESTATE
Other real estate is comprised of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Other real estate........................................ $939,795 $555,181
Less reserve for losses.................................. (40,000) (40,000)
-------- --------
Other real estate, net................................... $899,795 $515,181
======== ========
</TABLE>
An analysis of the reserve for losses on other real estate is as follows for
the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Balance, beginning of year......................... $40,000 $40,000 $ 73,000
Provision charged to expense....................... -- -- 20,000
Losses charged off................................. -- -- (15,000)
Reversals due to sales............................. -- -- (38,000)
------- ------- --------
Balance, end of year............................... $40,000 $40,000 $ 40,000
======= ======= ========
</TABLE>
Net expense of other real estate totaled $20,906 and $20,523 for the years
ended December 31, 1996 and 1995, respectively. Net income from other real
estate totaled $3,490 for the year ended December 31, 1994.
NOTE G--SHORT-TERM BORROWINGS
The Bank utilizes short-term borrowings as needed for liquidity purposes in
the form of federal funds purchased. The Bank has unsecured lines of credit
for federal funds purchased from other banks totaling $4,500,000. At December
31, 1996 and 1995, $3,500,000 was outstanding under these lines, which had an
overnight maturity and weighted average interest rate of 7.32 percent and 6.03
percent, respectively. The maximum amount outstanding during 1996 and 1995 was
$3,500,000. The average amount outstanding and weighted average interest rates
were $265,000 and $1,067,000 and 5.28 percent and 6.56 percent for 1996 and
1995, respectively.
NOTE H--INCOME TAXES
The following are the components of income tax expense as provided for the
years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current income tax provision.................... $358,876 $325,682 $110,953
Deferred income tax provision (benefit)......... (26,941) 32,594 120,198
-------- -------- --------
$331,935 $358,276 $231,151
======== ======== ========
</TABLE>
F-55
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE H--INCOME TAXES
A reconciliation of income tax computed at statutory rates to total income
taxes is as follows for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- --------
<S> <C> <C> <C>
Pretax income............................. $1,120,941 $1,060,403 $684,160
========== ========== ========
Income tax computed at federal statutory
tax rate................................. $ 381,120 $ 360,537 $232,614
Increase (decrease) resulting from:
Tax-exempt dividends.................... (580) (551) (736)
Tax-exempt interest..................... (8,066) (4,971) (2,370)
Other, net.............................. (40,539) 3,261 1,643
---------- ---------- --------
$ 331,935 $ 358,276 $231,151
========== ========== ========
</TABLE>
The following summarizes the tax effects of temporary differences which
comprise the net deferred tax assets at December 31:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Deferred tax assets:
Reserve for loan losses........................ $153,368 $159,741 $232,105
Other real estate.............................. 65,606 62,417 8,796
Nonaccrual loans............................... 20,325 15,439 40,864
Deferred loan fees............................. 25,575 18,069 14,345
Market valuation adjustment.................... 12,978 -- 28,380
Other, net..................................... 2,841 -- --
-------- -------- --------
Total deferred tax assets.................... 280,693 255,666 324,490
======== ======== ========
Deferred tax liabilities:
Accumulated depreciation....................... 24,674 26,900 37,041
Market valuation adjustment.................... -- 16,788 --
Other, net..................................... -- 12,666 10,375
-------- -------- --------
Total deferred tax liabilities............... 24,674 56,354 47,416
-------- -------- --------
Net deferred tax assets...................... $256,019 $199,312 $277,074
======== ======== ========
</TABLE>
The net deferred tax asset is included as a component of other assets in the
balance sheets.
NOTE I--EMPLOYEE BENEFITS
The Bank sponsors an Internal Revenue Code Section 125 Cafeteria Plan that
covers substantially all employees. Contributions to the plan are determined
by the Board of Directors based on employee participation. The Bank made no
contributions to the plan in 1996, 1995 and 1994.
NOTE J--RELATED PARTY TRANSACTIONS
At December 31, 1996 and 1995, the Bank had direct and indirect loans which
aggregated $1,382,509 and $1,604,116, respectively, outstanding to or for the
benefit of certain of the Bank's officers, directors, and their related
interests. During 1996, $247,584 of such loans were made and repayments
totaled $469,191. These loans were made in the ordinary course of business in
conformity with normal credit terms, including interest rates and collateral
requirements prevailing at the time for comparable transactions with other
borrowers. These individuals and their related interests also maintain
customary demand and time deposit accounts with the Bank.
F-56
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE K--STOCKHOLDERS' EQUITY
The Bank is 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
Bank's financial statements. The regulations require the Bank to meet specific
capital adequacy guidelines that involve quantitative measures of the Bank's
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital classification is 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 Bank to maintain minimum amounts and ratios (set forth in the
table below) of Tier 1 capital (as defined in the regulations) to total
average assets (as defined), and minimum ratios of Tier 1 and total capital
(as defined) to risk weighted assets (as defined). As of December 31, 1996 and
1995, the most recent notification from the Federal Deposit Insurance
Corporation categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. There are no conditions or events
since that notification that management believes has changed the Bank's
category. To be considered well capitalized and adequately capitalized (as
defined) under the regulatory framework for prompt corrective action, the Bank
must maintain minimum Tier 1 leverage, Tier 1 risk-based, and total risk-based
ratios as set forth in the table. The Bank's actual capital amounts and ratios
are also presented in the table.
<TABLE>
<CAPTION>
1996
-------------------------------------------------------
ADEQUATELY
WELL CAPITALIZED CAPITALIZED
REQUIREMENT REQUIREMENT ACTUAL
AMOUNT (RATIO) AMOUNT (RATIO) AMOUNT (RATIO)
-------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Tier 1 Capital (to
Average Assets)........ $ ^ 2,960,000 ^ 5.0% $ 1,776,000 3.0% $ 8,902,000 15.0%
Tier 1 Capital (to Risk
Weighted Assets)....... $ ^ 2,967,000 ^ 6.0% $ 1,978,000 4.0% $ 8,902,000 18.0%
Total Capital (to Risk
Weighted Assets)....... $ ^ 4,945,000 ^ 10.0% $ 3,956,000 8.0% $ 9,520,000 19.3%
<CAPTION>
1995
-------------------------------------------------------
ADEQUATELY
WELL CAPITALIZED CAPITALIZED
REQUIREMENT REQUIREMENT ACTUAL
AMOUNT (RATIO) AMOUNT (RATIO) AMOUNT (RATIO)
-------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Tier 1 Capital (to
Average Assets)........ $ ^ 2,964,000 ^ 5.0% $ 1,778,000 3.0% $ 8,197,000 13.8%
Tier 1 Capital (to Risk
Weighted Assets)....... $ ^ 3,485,000 ^ 6.0% $ 2,323,000 4.0% $ 8,197,000 14.1%
Total Capital (to Risk
Weighted Assets)....... $ ^ 5,809,000 ^ 10.0% $ 4,646,000 8.0% $ 8,923,000 15.4%
</TABLE>
Management believes, as of December 31, 1996, that the Bank meets all
capital requirements to which it is subject.
Banking regulations limit the amount of dividends that the Bank may pay
without obtaining prior approval. Under current state banking laws, the
approval of the Georgia Department of Banking and Finance will be required if
the total of all dividends declared in the calendar year exceeds 50 percent of
the net profits, after taxes but before dividends, for the previous calendar
year, and if the ratio of equity capital to adjusted total assets is less than
6 percent. During 1996, the Bank could pay approximately $351,000 in dividends
without prior approval or violation of regulatory capital requirements.
The Bank has a nonqualified incentive stock option plan covering certain
officers and employees under which options to purchase shares of the Bank's
common stock are granted at either the fair market value or the book value per
share of stock at the date of grant. Options may be granted upon the
discretion of the Board of
F-57
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE K--STOCKHOLDERS' EQUITY, CONTINUED
Directors, but must be exercised within ten years from the date of grant.
Options were established for 33,750 shares of the Bank's common stock.
Summarized information related to these options is as follows at December 31:
<TABLE>
<CAPTION>
1996 1995
---------------- ---------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
------ -------- ------ --------
<S> <C> <C> <C> <C>
Outstanding, beginning of year............. 23,745 $9.39 23,745 $9.39
Granted during year........................ 5,000 10.92 -- --
Exercised during year...................... (3,943) 7.61 -- --
Expired during year........................ -- -- -- --
------ ----- ------ -----
Outstanding, end of year................... 24,802 $9.98 23,745 $9.39
====== ===== ====== =====
Options exercisable at year end............ 24,802 23,745
====== ======
Weighted average fair value of options
granted during the year................... $ 8.80
======
</TABLE>
During 1996, the Bank's stockholders approved a fixed stock option plan
which allows for a total of 60,000 options to be granted to members of the
Board of Directors. The exercise price for each option shall be the greater of
$16.50 per share or the book value per share of stock at the date of grant.
Options are to be granted annually based on Board service, and expire in five
years after date of grant. Summarized information related to these options is
as follows at December 31, 1996:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
------- --------
<S> <C> <C>
Outstanding, beginning of year............................. -- $ --
Granted during year........................................ 14,500 16.50
Exercised during year...................................... -- --
Expired during year........................................ -- --
------- ------
Outstanding, end of year................................... 14,500 $16.50
======= ======
Options exercisable at year end............................ 14,500
=======
Weighted average fair value of options granted during the
year...................................................... $ 3.08
=======
</TABLE>
The following table summarizes information about the Bank's two fixed stock
option plans at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- -------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISABLE AT EXERCISE
PRICE DECEMBER 31, 1996 LIFE PRICE DECEMBER 31,1996 PRICE
-------- ----------------- ----------- -------- ---------------- --------
<S> <C> <C> <C> <C> <C>
$8.90-
10.92 23,052 6.8 $ 9.43 23,052 $ 9.43
16.50 14,500 4.3 16.50 14,500 16.50
17.14 1,750 3.0 17.14 1,750 17.14
------ --- ------ ------ ------
39,302 5.7 $12.39 39,302 $12.39
====== === ====== ====== ======
</TABLE>
F-58
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE K--STOCKHOLDERS' EQUITY, CONTINUED
At December 31, 1996, the Bank has two stock-based compensation plans which
are described in the preceding table. The Bank applies APB 25 and related
Interpretation in accounting for its plans. Accordingly, no compensation cost
has been recognized for the Bank's stock option plans in 1996 or 1995. Had
compensation cost for the Bank's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method of SFAS 123, the Bank's net income and
earnings per share would have been reduced to the pro forma amounts indicated
as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------
1996 1995
--------- ---------
<S> <C> <C>
Net income
As reported............................................ $ 789,006 $ 702,127
Pro forma.............................................. 730,490 702,127
Earnings per share
As reported............................................ $ .97 $ .87
Pro forma.............................................. .90 .87
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1996: dividend yield of 0.9 percent, expected
volatility of 0 percent, risk-free interest rate of 6.0 percent, and expected
lives of five to nine years.
NOTE L--OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amounts recognized in the
balance sheets. The contract amounts of these instruments reflect the extent
of involvement the Bank has in particular classes of financial instruments.
The Bank'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 amounts of these
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments 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. At December 31, 1996 and 1995,
unfunded commitments to extend credit were approximately $6,927,000 and
$5,285,000, respectively. The Bank's experience has been that approximately 90
percent of loan commitments are drawn upon by customers.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. These 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. At December 31, 1996
and 1995, commitments under letters of credit aggregated approximately
$157,000 and $134,000, respectively. The Bank has not been required to perform
on any standby letters of credit during 1996 and 1995.
F-59
<PAGE>
LANIER BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE L--OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS, (CONTINUED)
The Bank evaluates each customer's creditworthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Bank upon
extension of credit, is based on management's credit evaluation of the other
party. Collateral held varies but may include accounts receivable, inventory,
property, plant and equipment, and income-producing commercial properties on
those commitments for which collateral is deemed necessary.
NOTE M--DEPOSIT CONCENTRATION
During 1996, the Bank signed an agreement to provide customary banking
services to the Forsyth County Tax Commissioner for 1997. The deposits will be
collateralized by pledging investment securities as required by state law. At
December 31, 1996, the Bank had approximately $8,234,000 in deposits from the
Forsyth County Tax Commissioner and its related entities. There were no
deposit concentrations in 1995.
NOTE N--LITIGATION
The Bank is a defendant in other legal actions arising from its normal
business activities. The outcome of these actions cannot presently be
determined; however, management believes that those actions are without merit
or that the ultimate liability, if any, resulting from them will not
materially affect the Bank's financial position.
NOTE O--SUPPLEMENTAL FINANCIAL DATA
Components of other expense in excess of 1 percent of total income are as
follows at December 31:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Directors' fees.................................. $ 86,375 $ 66,800 $ 56,600
Data processing services......................... 126,855 109,465 104,800
Office supplies.................................. 62,873 60,952 55,460
</TABLE>
NOTE P--FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of the Bank's financial instruments are as follows
at December 31:
<TABLE>
<CAPTION>
1996 1995
----------------------- -----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents. $24,786,240 $24,786,240 $16,041,818 $16,041,818
Interest-bearing deposits. -- -- 100,000 100,000
Investment securities held
to maturity.............. 463,067 479,180 463,988 482,497
Investment securities
available for sale....... 12,016,547 12,016,547 8,252,290 8,252,290
Other investments......... 25,000 25,000 25,000 25,000
Loans..................... 29,903,208 29,843,402 31,991,717 32,121,000
Accrued interest
receivable............... 433,279 433,279 440,919 440,919
Financial liabilities:
Noncontractual deposits... $33,617,643 $33,617,643 $22,611,223 $22,611,223
Contractual deposits...... 23,775,981 23,871,085 24,460,585 24,556,000
Short-term borrowings..... 3,500,000 3,500,000 3,500,000 3,500,000
Accrued interest payable.. 231,188 231,188 233,719 233,719
Off-balance-sheet
instruments:
Undisbursed credit lines.. $ 6,913,146 $ 5,353,888
Standby letters of credit. 156,686 134,594
</TABLE>
F-60
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
PREMIER BANCSHARES, INC.
AND
LANIER BANK & TRUST COMPANY
DATED AS OF DECEMBER 16, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Preamble.............................................................................. 1
ARTICLE I
TRANSACTIONS AND TERMS OF MERGER................................................. 2
--------------------------------
1.1 Merger..................................................................... 2
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..................................................................... 3
2.3 Directors and Officers..................................................... 3
2.4 Business of Surviving Bank................................................. 3
2.5 Assumption of Rights....................................................... 3
2.6 Assumption of Liabilities.................................................. 3
ARTICLE III
MANNER OF CONVERTING SHARES...................................................... 4
---------------------------
3.1 Conversion of Shares....................................................... 4
3.2 Anti-Dilution Provisions................................................... 4
3.3 Shares Held By Lanier or Premier........................................... 4
3.4 Conversion of Stock Options; Restricted Stock.............................. 5
3.5 Dissenting Shareholders.................................................... 5
3.6 Fractional Shares.......................................................... 6
ARTICLE IV
- ----------
EXCHANGE OF SHARES............................................................... 6
------------------
4.1 Exchange Procedures........................................................ 6
4.2 Rights of Former Lanier Shareholders....................................... 7
ARTICLE V
- ---------
REPRESENTATIONS AND WARRANTIESOF LANIER.......................................... 7
---------------------------------------
5.1 Organization, Standing, and Power.......................................... 7
5.2 Authority; No Breach By Agreement.......................................... 8
5.3 Capital Stock.............................................................. 9
5.4 Lanier Subsidiaries........................................................ 9
5.5 Financial Statements....................................................... 9
5.6 Absence of Undisclosed Liabilities......................................... 9
5.7 Absence of Certain Changes or Events....................................... 9
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
5.8 Tax Matters............................................................... 10
5.9 Allowance for Possible Loan Losses........................................ 11
5.10 Assets.................................................................... 11
5.11 Environmental Matters..................................................... 11
5.12 Compliance with Laws...................................................... 12
5.13 Labor Relations........................................................... 12
5.14 Employee Benefit Plans.................................................... 12
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 Premier Subsidiaries...................................................... 18
6.5 SEC Filings; Financial Statements......................................... 18
6.6 Absence of Undisclosed Liabilities........................................ 19
6.7 Absence of Certain Changes or Events...................................... 19
6.8 Tax Matters............................................................... 19
6.9 Allowance for Possible Loan Losses........................................ 20
6.10 Environmental Matters..................................................... 21
6.11 Employee Benefit Plans.................................................... 21
6.12 Compliance with Laws...................................................... 23
6.13 Legal Proceedings......................................................... 23
6.14 Statements True and Correct............................................... 24
6.15 Accounting, Tax and Regulatory Matters.................................... 24
6.16 Reports................................................................... 24
6.17 Millennium Compliance..................................................... 25
ARTICLE VII
CONDUCT OF BUSINESS PENDING CONSUMMATION........................................ 25
----------------------------------------
7.1 Affirmative Covenants of Lanier........................................... 25
7.2 Negative Covenants of Lanier.............................................. 25
7.3 Affirmative Covenants of Premier.......................................... 27
7.4 Adverse Changes in Condition.............................................. 28
7.5 Reports................................................................... 28
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
ARTICLE VIII
ADDITIONAL AGREEMENTS............................................................ 28
---------------------
8.1 Registration Statement; Proxy Statement; Shareholder Approval.............. 28
8.2 Exchange Listing........................................................... 29
8.3 Applications............................................................... 29
8.4 Agreement as to Efforts to Consummate...................................... 29
8.5 Investigation and Confidentiality.......................................... 29
8.6 Press Releases............................................................. 30
8.7 Acquisition Proposals...................................................... 30
8.8 Accounting and Tax Treatment............................................... 30
8.9 Agreement of Affiliates.................................................... 30
8.10 Employee Benefits and Contracts............................................ 31
8.11 Other Acquisitions, Mergers, or Combinations involving a Premier Company... 31
8.12 Indemnification............................................................ 32
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE................................ 33
-------------------------------------------------
9.1 Conditions to Obligations of Each Party.................................... 33
9.2 Conditions to Obligations of Premier....................................... 34
9.3 Conditions to Obligations of Lanier........................................ 35
ARTICLE X
TERMINATION...................................................................... 37
-----------
10.1 Termination................................................................ 37
10.2 Effect of Termination...................................................... 38
10.3 Non-Survival of Representations and Covenants.............................. 38
ARTICLE XI
MISCELLANEOUS.................................................................... 39
-------------
11.1 Definitions................................................................ 39
11.2 Expenses................................................................... 46
11.3 Brokers and Finders........................................................ 46
11.4 Entire Agreement........................................................... 47
11.5 Amendments................................................................. 47
11.6 Waivers.................................................................... 47
11.7 Assignment................................................................. 48
11.8 Notices.................................................................... 48
11.9 Governing Law.............................................................. 49
11.10 Counterparts............................................................... 49
11.11 Captions................................................................... 49
11.12 Enforcement of Agreement................................................... 49
11.13 Severability............................................................... 49
</TABLE>
iv
<PAGE>
LIST OF EXHIBITS
- ----------------
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
1. Plan of Merger between Lanier and Premier Bank (Preamble)
2. Form of Agreement of Affiliates of Lanier. (Section 8.9).
3. Matters as to which Counsel for Lanier will opine. (Section 9.2(d)).
4. Form of Claims/Indemnification Letter (Section 9.2(e)).
5. Matters as to which Counsel for Premier will opine. (Section 9.3(d)).
6. Form of Employment Agreement between Premier Bank, Premier and A. Lee
Wilhelm (Sections 2.3 and 8.10(b)).
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of December 16, 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 LANIER BANK
& TRUST COMPANY ("Lanier"), a commercial bank organized and existing under the
laws of the State of Georgia, with its principal office located in Cumming,
Georgia.
PREAMBLE
--------
The Boards of Directors of Lanier and Premier 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 acquisition of Lanier
by Premier pursuant to the merger (the "Merger") of Lanier with and into Premier
Bank, a commercial bank organized and existing under the laws of the State of
Georgia and a wholly owned subsidiary of Premier, with its principal office
located in Atlanta, Georgia. At the effective time of the Merger, the
outstanding shares of the common stock of Lanier shall be converted into the
right to receive shares of the common stock of Premier. As a result,
shareholders of Lanier will become shareholders of Premier. The Merger shall be
consummated pursuant to the Plan of Merger between Lanier and Premier Bank, the
form of which is attached hereto as Exhibit "1". The transactions described in
-----------
this Agreement are subject to the approvals of the Boards of Directors of
Lanier, Premier and Premier Bank, the shareholders of Lanier and Premier Bank,
the Federal Deposit Insurance Corporation, the Georgia Department of Banking and
Finance and the satisfaction of certain other conditions described in this
Agreement. The transactions described in this Agreement and the Plan of Merger
are also subject to either the approval of the Board of Governors of the Federal
Reserve System or a determination by the Board of Governors of the Federal
Reserve System (or the Federal Reserve Bank of Atlanta acting pursuant to
delegated authority) that no such approval is required. 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" transaction.
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:
1
<PAGE>
ARTICLE I
---------
TRANSACTIONS AND TERMS OF MERGER
--------------------------------
1.1 MERGER. Subject to the terms and conditions of this Agreement and
------
the Plan of Merger, at the Effective Time, Lanier shall be merged with and into
Premier Bank as authorized by Section 7-1-530 of the Financial Institutions Code
of Georgia and in accordance with the provisions of Sections 7-1-531, 7-1-532
and 7-1-533 of the Financial Institutions Code of Georgia. Premier Bank shall
be the Surviving Bank resulting from the Merger and shall continue to be
operated as a wholly owned subsidiary of Premier. 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 Lanier and Premier, and the
terms of a Plan of Merger to be entered into by Premier Bank and Lanier, which
has been approved and adopted by the Board of Directors of Lanier and will be
approved and adopted by the Board of Directors of Premier Bank within thirty
(30) days of the execution of this Agreement.
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 duly authorized 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 duly authorized officers 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 Lanier
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 duly
authorized officers of each Party.
ARTICLE II
----------
TERMS OF MERGER
---------------
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Premier
-------------------------
Bank in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Bank from and after the Effective Time until
otherwise amended or repealed.
2
<PAGE>
2.2 BYLAWS. The Bylaws of Premier Bank in effect immediately prior to
------
the Effective Time shall be the Bylaws of the Surviving Bank from and after the
Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Premier Bank in office
----------------------
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving Bank
from and after the Effective Time in accordance with the Articles of
Incorporation and Bylaws of the Surviving Bank. The officers of Premier Bank in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the officers of the
Surviving Bank from and after the Effective Time in accordance with the Bylaws
of the Surviving Bank. In addition, at the Effective Time, A. Lee Wilhelm will
be elected President of Premier Bank's Central Metro Division, and Premier and
Premier Bank shall enter into an employment agreement with Mr. Wilhelm in
substantially the form attached hereto as Exhibit "6". The remaining members of
-----------
the Lanier Board of Directors prior to the Effective Time shall be appointed to
serve as members of Premier's Marketing and Development Board for Forsyth County
commencing immediately following the Effective Time. In addition, at the
Effective Time, John E. Aderhold shall be elected to the Board of Directors of
Premier to serve on such board until the annual meeting of Premier shareholders
to be held in the second quarter of 1999. After such meeting, Mr. Aderhold
shall be appointed to serve as an Honorary Director of Premier in accordance
with the Bylaws of Premier.
2.4 BUSINESS OF SURVIVING BANK. The business of the Surviving Bank from
--------------------------
and after the Effective Time shall continue to be that of a commercial bank
organized under the laws of the State of Georgia. The business shall be
conducted from its main office located in Atlanta, Georgia, or such other place
as Premier may determine, and at its legally established branches, which shall
also include the main office and all branches, whether in operation or approved
but unopened, at the Effective Time, of Lanier.
2.5 ASSUMPTION OF RIGHTS. At the Effective Time, the separate existence
--------------------
and corporate organization of Lanier shall be merged into and continued in the
Surviving Bank. All rights, franchises, and interests of both Premier Bank and
Lanier in and to every type of property (real, personal, and mixed), and all
choses in action of both Premier Bank and Lanier shall be transferred to and
vested in the Surviving Bank without any deed or other transfer. The Surviving
Bank, upon consummation of the Merger and without any order or other action on
the part of any court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations, and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver, and committee of estates of incompetent persons, and in every other
fiduciary capacity, in the same manner and to the same extent as such rights,
franchises and interests were held or enjoyed by either Premier Bank or Lanier
at the Effective Time.
2.6 ASSUMPTION OF LIABILITIES. All liabilities and obligations of both
--------------------------
Premier Bank and Lanier of every kind and description shall be assumed by the
Surviving Bank, and the
3
<PAGE>
Surviving Bank shall be bound thereby in the same manner and to the same extent
that Premier Bank and Lanier were so bound at the Effective Time.
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 or
banks 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 Premier Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(c) Each share of Lanier Common Stock (excluding shares held by
Lanier or by any Premier Company, which shares shall be canceled as provided in
Section 3.3 of this Agreement, in each case other than in a fiduciary capacity
or in satisfaction of debts previously contracted) issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive 1.305 shares of Premier Common Stock (the
"Exchange Ratio"). In the event that the average closing price of the Premier
Common Stock is less than $20.50 for the ten trading day period ending on the
day immediately prior to the effective date of the Registration Statement
("Average Closing Price"), then the Exchange Ratio shall be increased to that
number of shares of Premier Common Stock which, when multiplied by the Average
Closing Price, equals $26.7525. The provisions of this Section 3.1(c) are
subject to Section 10.1(h) of this Agreement.
3.2 ANTI-DILUTION PROVISIONS. In the event Premier or Lanier changes
------------------------
the number of shares of Premier Common Stock or Lanier 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 SHARES HELD BY LANIER OR PREMIER. Each of the shares of Lanier
--------------------------------
Common Stock held by Lanier or by any Premier Company, in each case other than
in a fiduciary capacity or in satisfaction of debts previously contracted, shall
be canceled and retired at the Effective Time, and no consideration shall be
issued in exchange therefor.
4
<PAGE>
3.4 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK.
---------------------------------------------
(a) At the Effective Time, all rights with respect to Lanier Common
Stock pursuant to stock options granted by Lanier ("Lanier Options") under the
Lanier Stock Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to Premier
Common Stock, and Premier shall assume each Lanier Option, in accordance with
the terms of the Lanier Stock Plan and stock option agreement by which it is
evidenced. From and after the Effective Time, (i) each Lanier Option assumed by
Premier may be exercised solely for shares of Premier Common Stock, (ii) the
number of shares of Premier Common Stock subject to such Lanier Option shall be
equal to the number of shares of Lanier Common Stock subject to such Lanier
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
and (iii) the per share exercise price under each such Lanier Option shall be
adjusted by dividing the per share exercise price under each such Lanier Option
by the Exchange Ratio and rounding down to the nearest cent. 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." Lanier 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 Lanier 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 Lanier 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 Lanier
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.
3.5 DISSENTING SHAREHOLDERS. Any holder of shares of Lanier Common
-----------------------
Stock who perfects such holder's dissenters' rights of appraisal in accordance
with and as contemplated by Section 7-1-537 of the Financial Institutions Code
of Georgia and 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 Law;
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 Financial Institutions Code of Georgia and the GBCC and
surrendered to the Surviving Bank the certificate or certificates representing
the shares for which payment is being made. In the event
5
<PAGE>
that after the Effective Time a dissenting shareholder of Lanier fails to
perfect, or effectively withdraws or loses, such holder's right to appraisal and
of payment for such holder's shares, Premier shall issue and deliver the
consideration to which such holder of shares of Lanier Common Stock is entitled
under this Article III (without interest) upon surrender by such holder of the
certificate or certificates representing shares of Lanier Common Stock held by
such holder.
3.6 FRACTIONAL SHARES. Notwithstanding any other provision of this
-----------------
Agreement, each holder of shares of Lanier Common Stock exchanged pursuant to
the Merger, or of options to purchase shares of Lanier Common Stock, who would
otherwise have been entitled to receive a fraction of a share of Premier 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 Premier Common Stock multiplied by the market
value of one share of Premier 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 Premier 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. Promptly after the Effective Time, Premier
-------------------
shall cause SunTrust Bank, Atlanta, or such other exchange agent selected by
Premier and reasonably satisfactory to Lanier (the "Exchange Agent") to mail to
the former holders of Lanier Common 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 Lanier Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent.
After the Effective Time, each holder of shares of Lanier Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement) issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1, 3.2 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. Premier shall not be obligated to
deliver the consideration to which any former holder of Lanier Common Stock is
entitled as a result of the Merger until such holder surrenders his or her
certificate or certificates representing the shares of Lanier Common Stock for
exchange as provided in this Section 4.1. The certificate or certificates of
Lanier Common Stock so surrendered shall be duly endorsed as the Exchange Agent
may require. Any other provision of this Agreement notwithstanding, neither
Premier, the Surviving Bank, nor the Exchange Agent shall be liable to a holder
of Lanier Common Stock for any amounts paid or property delivered in good faith
to a public official pursuant to any applicable abandoned property Law.
6
<PAGE>
4.2 RIGHTS OF FORMER LANIER SHAREHOLDERS. At the Effective Time, the
------------------------------------
stock transfer books of Lanier shall be closed as to holders of Lanier Common
Stock immediately prior to the Effective Time and no transfer of Lanier 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 Lanier
Common Stock (other than shares as to which dissenters' rights have been
perfected as provided in Section 3.5 of this Agreement or shares to be canceled
pursuant to Section 3.3 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 Lanier Common Stock shall
be entitled to vote after the Effective Time at any meeting of Premier
shareholders the number of whole shares of Premier Common Stock into which their
respective shares of Lanier Common Stock are converted, regardless of whether
such holders have exchanged their certificates representing Lanier Common Stock
for certificates representing Premier Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by Premier on the Premier 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 Premier Common Stock
as of any time subsequent to the Effective Time shall be delivered to the holder
of any certificate representing shares of Lanier 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 Lanier Common Stock certificate, both the Premier 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 interests (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF LANIER
---------
Lanier hereby represents and warrants to Premier as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Lanier is a commercial bank duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia. Lanier has the power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. Lanier 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 Lanier. Lanier is an "insured
institution" as such term is defined in the Federal Deposit Insurance Act and
application regulations thereunder, and the deposits therein are insured by the
Bank Insurance Fund, to the maximum extent permitted by law.
7
<PAGE>
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) Lanier has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and the Plan
of Merger and to consummate the transactions contemplated hereby and thereby,
subject to the approval of this Agreement and the Plan of Merger by the holders
of two-thirds of the outstanding shares of Lanier Common Stock. The execution,
delivery and performance of this Agreement and the Plan of Merger and the
consummation of the transactions contemplated herein and therein, including the
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Lanier, subject to the approval of this
Agreement and the Plan of Merger by the holders of two-thirds of the outstanding
shares of Lanier Common Stock, which is the only shareholder vote required for
approval of this Agreement and the Plan of Merger and consummation of the Merger
by Lanier. Subject to such requisite shareholder approval, this Agreement
represents and, when executed and delivered, the Plan of Merger will represent,
legal, valid and binding obligations of Lanier, enforceable against Lanier in
accordance with their respective 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) Except as disclosed in Section 5.2(b) of the Lanier Disclosure
----------
Memorandum, neither the execution and delivery of this Agreement and the Plan of
- ----------
Merger by Lanier, nor the consummation by Lanier of the transactions
contemplated hereby or thereby, nor compliance by Lanier with any of the
provisions hereof or thereof will (i) conflict with or result in a breach of any
provision of Lanier'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 Lanier under, any Contract or Permit of
Lanier, 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 Lanier, 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 Lanier or any of its 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 Lanier, no notice to, filing with, or Consent of any
public body or authority is necessary for the consummation by Lanier of the
Merger and the other transactions contemplated in this Agreement or the Plan of
Merger.
8
<PAGE>
5.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of Lanier consists of 2,000,000
shares of Lanier Common Stock, of which 804,380 shares are issued and
outstanding as of the date of this Agreement and not more than 859,974 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
common stock of Lanier are duly and validly issued and outstanding and are fully
paid and nonassessable. None of the outstanding shares of Lanier Common Stock
has been issued in violation of any preemptive rights of the current or past
shareholders of Lanier.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
disclosed in Section 5.3 of the Lanier Disclosure Memorandum, there are no
---------------------
shares of capital stock or other equity securities of Lanier outstanding and no
outstanding Rights relating to the capital stock of Lanier.
5.4 LANIER SUBSIDIARIES. Lanier has no Subsidiaries.
-------------------
5.5 FINANCIAL STATEMENTS. Lanier has disclosed in Section 5.5 of the
--------------------
Lanier Disclosure Memorandum, and has delivered to Premier copies of, all Lanier
---------------------
Financial Statements prepared for periods ended prior to the date hereof and
will deliver to Premier copies of all Lanier Financial Statements prepared
subsequent to the date hereof. The Lanier 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 Lanier,
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 financial position of Lanier as of the dates indicated and the results of
operations, changes in shareholders' equity, and cash flows of Lanier 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. Lanier does not have any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Lanier except Liabilities which are
accrued or reserved against in the balance sheets of Lanier as of December 31,
1996 and September 30, 1997, included in the Lanier Financial Statements or
reflected in the notes thereto. Lanier has not 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 Lanier.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1997,
------------------------------------
except as disclosed in Section 5.7 of the Lanier Disclosure Memorandum, (a)
---------------------
there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the
9
<PAGE>
aggregate, a Material Adverse Effect on Lanier, and (b) Lanier has not taken any
action, or failed to take any action, prior to the date of this Agreement, which
action or failure, if taken after the date of this Agreement, would represent or
result in a material breach or violation of any of the covenants and agreements
of Lanier provided in Article VII of this Agreement.
5.8 TAX MATTERS.
-----------
(a) All Tax returns required to be filed by or on behalf of Lanier
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 Lanier and all returns filed are complete and accurate to the
Knowledge of Lanier. 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 Lanier, except as reserved against in the Lanier Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 5.8(a) of the Lanier 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 Lanier Disclosure
----------
Memorandum, Lanier has not 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 Lanier, which deficiency is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Lanier.
(c) Adequate provision for any Taxes due or to become due for
Lanier for the period or periods through and including the date of the
respective Lanier Financial Statements has been made and is reflected on such
Lanier Financial Statements.
(d) Deferred Taxes of Lanier have been provided for in accordance
with GAAP.
(e) Lanier 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 Lanier.
(f) There are no Liens with respect to Taxes upon any of the Assets
of Lanier, the aggregate effect of which would constitute a Material Adverse
Effect on Lanier.
10
<PAGE>
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible loan
----------------------------------
or credit losses (the "Allowance") shown on the balance sheets of Lanier
included in the most recent Lanier Financial Statements dated prior to the date
of this Agreement was, and the Allowance shown on the balance sheets of Lanier
included in the Lanier 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 Lanier and other extensions of
credit (including letters of credit and commitments to make loans or extend
credit) by Lanier 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 Lanier.
5.10 ASSETS. Except as disclosed in Section 5.10 of the Lanier
------
Disclosure Memorandum or as disclosed or reserved against in the Lanier
- ---------------------
Financial Statements, Lanier has good and marketable title, free and clear of
all Liens, to all of their respective Assets, except where such defects in title
or such Liens are not reasonably likely to have a Material Adverse Effect on
Lanier. All material tangible properties used in the businesses of Lanier are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with Lanier's past practices. All Assets
which are material to Lanier's business, held under leases or subleases by
Lanier, 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 Lanier provide adequate coverage under current industry practices
against loss or Liability, and the fidelity and blanket bonds in effect as to
which Lanier is a named insured are reasonably sufficient. The Assets of Lanier
include all assets required to operate the business of Lanier as presently
conducted.
5.11 ENVIRONMENTAL MATTERS. Except as disclosed in Section 5.11 of the
---------------------
Lanier Disclosure Memorandum:
---------------------
(a) to the Knowledge of Lanier, Lanier, 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 Lanier.
(b) to the Knowledge of Lanier, there is no Litigation pending or
threatened before any court, governmental agency or authority or other forum in
which Lanier 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 Lanier or any of its Loan Properties or
Participation Facilities, except for such Litigation pending or threatened
11
<PAGE>
the resolution of which is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Lanier and to the Knowledge of Lanier,
there is no reasonable basis for any such Litigation.
(c) to the Knowledge of Lanier, 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 Lanier.
5.12 COMPLIANCE WITH LAWS. Lanier 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
Lanier, 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 Lanier. Except as disclosed in Section
5.12 of the Lanier Disclosure Memorandum, Lanier:
---------------------
(a) is not 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 Lanier; and
(b) has not 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 Lanier 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 Lanier, (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 Lanier,
or (iii) requiring Lanier 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. Lanier is not the subject of any Litigation
---------------
asserting that it has committed an unfair labor practice (within the meaning of
the National Labor Relations Act or comparable state law) or seeking to compel
it to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving Lanier,
pending or, to its Knowledge, threatened, nor, to its Knowledge, is there any
activity involving Lanier's employees seeking to certify a collective bargaining
unit or engaging in any other organization activity.
5.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Lanier has disclosed in Section 5.14 of the Lanier Disclosure
----------
Memorandum and delivered or made available to Premier prior to the execution of
- ----------
this Agreement copies in each
12
<PAGE>
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 Lanier 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 "Lanier Benefit Plans"). None of
the Lanier Benefit Plans is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA or a "defined benefit plan" as that term is
defined in Section 414(j) of the Internal Revenue Code.
(b) Except as disclosed in Section 5.14(b) of the Lanier 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
Lanier from Lanier under any Lanier Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Lanier Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(c) 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 Lanier and their respective beneficiaries have
been fully reflected on the Lanier Financial Statements to the extent required
by and in accordance with GAAP.
(d) Lanier is not 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).
(e) To the Knowledge of Lanier, other than routine claims for
benefits, there are no actions, audits, investigations, suits or claims pending,
or threatened against any Lanier Benefit Plan, any trust or other funding agency
created thereunder, or against any fiduciary of any Lanier Benefit Plan or
against the assets of any Lanier Benefit Plan.
5.15 MATERIAL CONTRACTS. Except as disclosed in Section 5.15 of the
------------------
Lanier Disclosure Memorandum or otherwise reflected in the Lanier Financial
---------------------
Statements, Lanier is not, nor are any of its respective Assets, businesses or
operations, a party to, or 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
$25,000, excluding "at will" employment arrangements, (b) any Contract relating
to the borrowing of money by any Lanier Company or the guarantee by any Lanier
Company of any such obligation (other than
13
<PAGE>
Contracts evidencing deposit liabilities, purchases or sales 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 (c) 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 Lanier with the SEC as of the date of this
Agreement if Lanier 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 "Lanier Contracts"). Lanier is not in Default under any Lanier
Contract, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Lanier. All of
the indebtedness of Lanier for money borrowed is prepayable at any time by
Lanier without penalty or premium.
5.16 LEGAL PROCEEDINGS. Except as disclosed in Section 5.16 of the
-----------------
Lanier Disclosure Memorandum, there is no Litigation instituted or pending, or,
---------------------
to the Knowledge of Lanier, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against Lanier, 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 Lanier, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against Lanier, that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Lanier.
5.17 REPORTS. Since January 1, 1997, Lanier 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
Lanier). 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 Lanier'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 Lanier 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 Lanier 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 Lanier or any Affiliate thereof
for inclusion in the Proxy Statement to be mailed to Lanier's shareholders in
connection with the Lanier Shareholders' Meeting, and any other documents to be
filed by Lanier or any Affiliate thereof with the SEC or any other Regulatory
14
<PAGE>
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 Lanier, 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 Lanier
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
Lanier Shareholders' Meeting. All documents that Lanier 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. After conferring with its
--------------------------------------
legal counsel and independent certified public accountants, neither Lanier nor
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, (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; or (c) preclude such certified public accountants from
delivering the letter referred to in Section 9.1(h) hereof. To the Knowledge of
Lanier, 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. Lanier 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 Lanier or restrict or impair the ability of
Premier to vote, or otherwise to exercise the rights of a shareholder with
respect to, shares of Lanier that may be acquired or controlled by it.
5.21 MILLENNIUM COMPLIANCE. Lanier has made inquiry of its software and
---------------------
date processing providers with respect to the existence of any Year 2000
Problem, has been advised that no such problem exists, and has no knowledge that
such statements by its providers are not correct.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF PREMIER
-----------------------------------------
Premier hereby represents and warrants to Lanier 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
<PAGE>
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) Except as set forth in Section 6.2(b) of the Premier Disclosure
----------
Memorandum, 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>
(d) Premier Bank has the power and authority necessary to execute,
deliver and perform its obligations under the Plan of Merger and to consummate
the transactions contemplated thereby. The execution, delivery and performance
of the Plan of Merger and the transactions contemplated thereby will be duly and
validly authorized by all necessary action in respect thereof on the part of
Premier Bank. The Plan of Merger represents a legal, valid and binding
obligation of Premier Bank, enforceable against Premier Bank 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).
(e) Neither the execution and delivery of the Plan of Merger by
Premier Bank, nor the consummation by Premier Bank of the transactions
contemplated thereby, nor compliance by Premier Bank with any of the provisions
thereof, will conflict with or result in a breach of any provision of Premier
Bank's Articles of Incorporation or Bylaws, or Contract or agreement by which it
or its Assets is bound, the breach of which would have a Material Adverse Effect
on Premier Bank.
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
Common Stock are, and all of the shares of Premier Common Stock to be issued in
exchange for shares of Lanier Common 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 Common
Stock has been, and none of the shares of Premier Common Stock to be issued in
exchange for shares of Lanier 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 Section 6.3(a) 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
17
<PAGE>
equity securities of Premier outstanding and no outstanding Rights relating to
the capital stock of Premier.
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 a Premier Company) by reason of any options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of any such Subsidiary, and there are no Contracts
by which any Premier Subsidiary is bound to issue (other than to a Premier
Company) additional shares of its capital stock or options, warrants, or rights
to purchase or acquire any additional shares of its capital stock 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 a 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 duly
authorized, validly issued, and fully paid and nonassessable under the
applicable corporation Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the Premier Company free and clear of
any Lien. Each Premier Subsidiary is either a bank, a savings association or a
corporation, and is duly organized, validly existing, and in good standing under
the Laws of the jurisdiction in which it is chartered or incorporated or
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. The Premier Subsidiaries that are depository institutions
are "insured institutions" 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 applicable.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
----------------------------------
(a) Premier has filed all forms, reports and documents required to be
filed by Premier with the SEC since January 1, 1996 (collectively, the "Premier
SEC Reports"). The Premier 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 Premier SEC Reports or
necessary in order to make
18
<PAGE>
the statements in such Premier SEC Reports, in light of the circumstances under
which they were made, not misleading.
(b) Each of the Premier Financial Statements (including, in each case,
any related notes) contained in the Premier SEC Reports, including any Premier
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 Premier 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.
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 Premier as of
December 31, 1996 and September 30, 1997, included in the Premier Financial
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.
6.7 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 and 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 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 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
19
<PAGE>
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 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.
(f) There are no Liens with respect to Taxes upon any of the Assets of
the Premier Companies, the aggregate effect of which would constitute a Material
Adverse Effect on Premier.
6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible loan
-----------------------------------
or credit losses (the "Allowance") shown on the 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.
20
<PAGE>
6.10 ENVIRONMENTAL MATTERS.
---------------------
(a) Except as disclosed in Section 6.10 of the Premier Disclosure
----------
Memorandum, 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) To the Knowledge of Premier, there is no Litigation pending or
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 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 Premier 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 and 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.
6.11 EMPLOYEE BENEFIT PLANS.
-----------------------
(a) Premier has disclosed in Section 6.11 of the Premier 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 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.
21
<PAGE>
(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 has received 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) Premier 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 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.
(e) Except as disclosed in Section 6.11 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 6.01 of ERISA and Section 4980B of the Internal Revenue 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 6.11 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.
22
<PAGE>
(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.
(i) 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, there are no actions,
audits, investigations, suits or claims pending, or threatened 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.
6.12 COMPLIANCE WITH LAWS. Premier is duly registered as a bank holding
---------------------
company and a 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, 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.
6.13 LEGAL PROCEEDINGS. Except as disclosed in Section 6.13 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
23
<PAGE>
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.
6.14 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 Lanier 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.
6.15 ACCOUNTING, TAX AND REGULATORY MATTERS. After conferring with its
---------------------------------------
legal counsel and certified public accountants, 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, (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement; or (c) preclude such certified
public accountants from delivering the letter referred to in Section 9.1(h)
hereof. 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).
6.16 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 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
24
<PAGE>
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 respects 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.
6.17 MILLENNIUM COMPLIANCE. Premier has made inquiry of its software and
----------------------
data processing providers with respect to the existence of any Year 2000
Problem, has been advised that no such problem exists, and has no knowledge that
such statements by its providers are not correct.
ARTICLE VII
-----------
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
7.1 AFFIRMATIVE COVENANTS OF LANIER. Unless the prior written consent
--------------------------------
of Premier shall have been obtained, and except as otherwise contemplated herein
or disclosed in the Lanier Disclosure Memorandum, Lanier 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 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 LANIER. Except as disclosed in the Lanier
-----------------------------
Disclosure Memorandum, from the date of this Agreement until the earlier of the
- ---------------------
Effective Time or the termination of this Agreement, Lanier 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 Lanier Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Lanier Company to another Lanier
Company) in excess of an aggregate of $100,000 (for the Lanier Companies on a
consolidated basis) except in the ordinary course of the business of Lanier
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
25
<PAGE>
agreements fully secured by U.S. government or agency securities), or impose, or
suffer the imposition, on any Asset of any Lanier 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 Lanier 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 Lanier Company, or declare or pay any dividend or make any
other distribution in respect of any Lanier Common Stock; provided that Lanier
may (to the extent legally able to do so), but shall not be obligated to,
declare and pay, prior to the Effective Time, cash dividends not to exceed, in
the aggregate, $.50 per share; 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 Lanier
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
Lanier Common Stock or any other capital stock of any Lanier 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 Lanier Disclosure
----------
Memorandum, adjust, split, combine or reclassify any capital stock of any Lanier
- ----------
Company or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of Lanier Common Stock or sell, lease, mortgage or
otherwise dispose of or otherwise encumber (i) any shares of capital stock of
any Lanier Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another Lanier 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 Lanier 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 Lanier in its fiduciary
capacity; or
(g) grant any increase in compensation or benefits to any employees
whose annual salary exceeds $35,000 of any Lanier Company (including such
discretionary increases as may be contemplated by existing employment
agreements), except in accordance with past
26
<PAGE>
practice or previously approved by the Board of Directors of Lanier, in each
case as disclosed in Section 7.2(g) of the Lanier 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 Lanier Disclosure Memorandum;
---------------------
enter into or amend any severance agreements with officers of any Lanier
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 Lanier 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 Lanier
Company and any Person (unless such amendment is required by Law) that the
Lanier 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 Lanier Company or make
any material change in or to any existing employee benefit plans of any Lanier
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
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Lanier Company
for money damages in excess of $50,000 or which imposes material restrictions
upon the operations of any Lanier 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 Lanier 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; (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; and (e) shall, in Premier's
capacity as sole shareholder of Premier Bank, approve the Plan of Merger and the
consummation of the Merger.
27
<PAGE>
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
Lanier has provided, on a reasonably timely basis, all information concerning
Lanier 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 soon 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 Premier Common
Stock upon consummation of the Merger. Lanier shall furnish all information
concerning it and the holders of its capital stock as Premier may reasonably
request in connection with such action.
(b) Lanier 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 the Plan
of Merger and such other related matters as Lanier deems appropriate.
(c) In connection with the Lanier Shareholders' Meeting, (i) Premier
shall prepare and file with the SEC, on Lanier's behalf, a Proxy Statement
(which shall be included in the Registration Statement); (ii) Lanier shall mail
the Proxy Statement to all of its shareholders; (iii) the Parties shall furnish
to each other all information concerning them that they may reasonably request
in connection with such Proxy Statement; (iv) the Board of Directors of Lanier
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 the Plan of Merger; and (v) the Board of
Directors and officers of Lanier shall use their reasonable efforts to obtain
such shareholders' approval (subject to compliance with their fiduciary duties
as advised by counsel).
28
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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
Premier Common Stock to be issued to the holders of Lanier Common Stock pursuant
to the Merger.
8.3 APPLICATIONS. Premier shall promptly prepare and file, and Lanier
-------------
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement and the Plan of Merger seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement and the Plan of Merger.
8.4 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 Premier
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.
8.5 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.
(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
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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.
8.6 PRESS RELEASES. Prior to the Effective Time, Premier and Lanier
---------------
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
8.6 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.
8.7 ACQUISITION PROPOSALS. Except with respect to this Agreement and
----------------------
the transactions contemplated hereby, neither Lanier nor any Affiliate of Lanier
nor any investment banker, attorney, accountant or other representative
(collectively, "Representatives") retained by Lanier shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of Lanier's Board of Directors as
advised by counsel, Lanier or any Affiliate or Representative of Lanier 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 Lanier 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. Lanier shall promptly notify Premier orally and in writing in the
event that Lanier receives any inquiry or proposal relating to any such
transaction. Unless the prior written consent of Premier is obtained, Lanier
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.
8.8 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."
8.9 AGREEMENT OF AFFILIATES. Lanier has disclosed in Section 8.9 of the
------------------------
Lanier Disclosure Memorandum all Persons whom it reasonably believes is an
---------------------
"affiliate" of Lanier for purposes of Rule 145 under the 1933 Act. Lanier shall
use its reasonable efforts to cause each such Person to deliver to Premier and
Lanier, not later than thirty (30) days after the date of this Agreement, a
written agreement, substantially in the form of Exhibit "2", providing that such
-----------
Person will not sell, pledge, transfer or otherwise dispose of the shares of
Lanier Common 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 Premier Common Stock to be
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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. Premier shall be entitled to place restrictive legends upon
certificates for shares of Premier Common Stock issued to Affiliates of Lanier
pursuant to this Agreement to enforce the provisions of this Section 8.9.
Premier shall not be required to maintain the effectiveness of the Registration
Statement under the 1933 Act for the purposes of resale of Premier Common Stock
by such Affiliates.
8.10 EMPLOYEE BENEFITS AND CONTRACTS.
--------------------------------
(a) Following the Effective Time, Premier shall provide generally to
officers and employees of the Lanier Companies who, at or after the Effective
Time, become employees of a Premier Company, 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 Lanier
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
Lanier Benefit Plan of the same type immediately prior to the Effective Time.
(b) Premier and its Subsidiaries also shall honor in accordance with
their terms all employment, severance, consulting and other compensation
Contracts disclosed in Section 8.10(b) of the Lanier Disclosure Memorandum to
---------------------
Premier between any Lanier Company and any current or former director, officer,
or employee thereof and all provisions for vested benefits accrued through the
Effective Time under the Lanier Benefit Plans. Premier and Premier Bank shall
enter into a one-year employment agreement with A. Lee Wilhelm in substantially
the form attached hereto as Exhibit "6".
-----------
8.11 OTHER ACQUISITIONS, MERGERS, OR COMBINATIONS INVOLVING A PREMIER
-----------------------------------------------------------------
COMPANY. Notwithstanding anything contained in this Agreement to the contrary,
- -------
Premier or any Premier Comany 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 ("Combination") without the prior consent of Lanier provided that if the
Combination is announced after the tenth business day prior to the Effective
Date of the Registration Statement and if such Combination is a "Significant
Combination" as defined below, Premier has either received an opinion from an
investment banking firm reasonably satisfactory to Lanier that the transaction
is fair to the shareholders of Lanier from a financial point of view, or
consummation of the transaction is conditioned upon delivery of such an opinion
either prior to filing any registration statement in connection with the
combination or prior to consummation of the Combination. A Significant
Combination involves: (i) a transaction in which Premier is to be the surviving
entity and involves the issuance of 2,000,000 or more shares of Premier
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Common Stock, or securities convertible into shares of Premier Common Stock
which upon issuance or conversion would represent 25 percent or more of the
outstanding shares of Premier Common Stock, or a cash or equivalent
consideration in excess of $45 million; (ii) a transaction in which Premier is
not the surviving entity; or (iii) a transaction in which Premier is selling
more than 30% of its consolidated assets at the time of the transaction. Absent
compliance with the provisions of this Section 8.11, Premier shall not enter
into a Significant Combination absent the prior written consent of Lanier.
8.12 INDEMNIFICATION.
----------------
(a) Subject to the conditions set forth in paragraph (b) below, for a
period of three (3) years after the Effective Time, Premier shall indemnify,
defend, and hold harmless each person entitled to indemnification from Lanier
(each, an "Indemnified Party") against all losses, claims, damages, liabilities,
costs, expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement in connection with any Litigation arising out of
actions or omissions occurring at or prior to the Effective time (including,
without limitation, the transactions contemplated by this Agreement) to the full
extent permitted by Georgia Law and Lanier's Articles of Incorporation and
Bylaws, in each case 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 Lanier would
have been required to effectuate indemnification, Premier shall make such
determination in its discretion; provided, however, that the Indemnified Party
may elect to require that the determination of such approval be made by
independent counsel mutually agreed upon by Premier and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) above, upon learning of any such Liability or Litigation within
the three (3) 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 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) In the event Premier or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall
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be made so that the successors and assigns of Premier shall assume the
obligations set forth in this Section 8.12.
(d) The provisions of this Section 8.12 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
successors, 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 Lanier shall have
---------------------
approved this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law or the
provisions of any governing instruments. In addition, the shareholders of Lanier
shall have approved, and Premier, in its capacity as sole shareholder of Premier
Bank, shall have approved the Plan of Merger.
(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
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<PAGE>
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 Premier Common Stock issuable pursuant to the
Merger shall have been received.
(e) Exchange Listing. The shares of Premier Common Stock issuable
-----------------
pursuant to the Merger shall have been approved for listing on the American
Stock Exchange.
(f) Tax Matters. Premier and Lanier 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 Lanier Common Stock for Premier Common Stock will not
give rise to gain or loss to the shareholders of Lanier with respect to such
exchange (except to the extent of any cash received), and (iii) neither Premier
nor Lanier 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 Lanier reasonably satisfactory in form and substance to such
counsel.
(g) Affiliate Agreements. The Parties shall have received from each
---------------------
affiliate of Lanier the affiliates agreement referred to in Section 8.9 hereof.
(h) Pooling of Interests Letter. The Parties shall have received a
----------------------------
letter from Mauldin & Jenkins, LLC, and from Bricker & Melton, P.C. 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 Lanier 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
Lanier set forth in Section 5.3 of this Agreement shall be true and correct
(except for inaccuracies which are de minimis in amount). Each and every other
representation and warranty of Lanier set forth in Article V of this Agreement
shall be true and correct.
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(b) Performance of Agreements and Covenants. Each and all of the
----------------------------------------
agreements and covenants of Lanier 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. Lanier shall have delivered to Premier (i) a
-------------
certificate, dated as of the Effective Time and signed on its behalf by its
president 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
Lanier'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. Lanier shall have delivered to Premier an
-------------------
opinion of Alston & Bird LLP, counsel to Lanier, dated as of the Effective Time,
in form reasonably satisfactory to Premier, as to the matters set forth in
Exhibit "3" hereto.
- -----------
(e) Claims/Indemnification Letters. Each of the directors and
------------------------------
officers of Lanier shall have executed and delivered to Premier letters in
substantially the form of Exhibit "4" hereto, which letters shall be dated and
-----------
effective as of the Effective Time.
(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 Lanier 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 ownership or operation of all or a
material portion of Premier's or Lanier's business or assets, or compel Premier
to dispose of or hold separate all or a material portion of Premier's or
Lanier'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 counsel,
could result in the relief sought being obtained.
9.3 CONDITIONS TO OBLIGATIONS OF LANIER. The obligations of Lanier to
------------------------------------
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject
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to the satisfaction of the following conditions, unless waived by Lanier
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). Each and every other
reprsentation and warranty of Premier set forth in Article VI of this Agreement
shall be true and correct.
(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 Lanier (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 Lanier and its counsel shall request.
(d) Opinion of Counsel. Premier shall have delivered to Lanier an
-------------------
opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to Premier, dated as
of the Effective Time, in form reasonably acceptable to Lanier, as to matters
set forth in Exhibit "4" hereto.
-----------
(e) Lanier Fairness Opinion. Lanier shall have received from Sterne,
-----------------------
Agee & Leach, Inc., or such other financial advisory firm as Lanier shall select
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 Lanier shareholders in connection with the Merger is
fair, from a financial point of view, to the shareholders of Lanier.
(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 Lanier, it is not in the best interests of the shareholders of Lanier 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 ownership or operation of all or a
material portion of Premier's or Lanier's business or assets, or compel Premier
to dispose of or hold separate all or a material
36
<PAGE>
portion of Premier's or Lanier's business or assets as a result of the Merger,
which, in any case, in the reasonable judgment of Lanier based upon a legal
opinion from counsel, could result in the relief sought being obtained.
ARTICLE X
---------
TERMINATION
-----------
10.1 TERMINATION. Notwithstanding any other provision of this Agreement
------------
and the Plan of Merger, and notwithstanding the approval of this Agreement by
the shareholders of Lanier, 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 Lanier 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 Lanier 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 Lanier; 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 Lanier 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 Lanier 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 Lanier fail to vote their approval of this
Agreement and the Plan of Merger and the transactions contemplated hereby as
37
<PAGE>
required by the Financial Institutions Code of Georgia and 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 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(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 Lanier 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 Premier or Lanier, 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 Lanier (in the case of the
review by Premier) or Premier (in the case of the review by Lanier) causes the
Board of Directors of the reviewing Party 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 the reviewing Party of the transactions contemplated by this
Agreement and the Plan of Merger so as to render inadvisable the consummation of
the Merger; provided, however, that in the event the investigation during such
period discloses a fact or circumstance that constitutes a breach of a warranty
or representation contained in this Agreement, and the Party discovering such
breach elects not to terminate this Agreement, such fact or circumstance shall
not later be asserted as a breach of a warranty or representation contained in
this Agreement so as to give rise to a subsequent right of termination or right
to refuse to close the transactions contemplated hereby; or
(h) By the Board of Directors of Premier or Lanier, at any time and
without Liability, if the Average Closing Price of the Premier Common Stock, as
reported on the American Stock Exchange, is less than $18.00 per share.
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 8.5(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 Sections 8.9 and 8.12 of this Agreement.
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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 Lanier or any of its
Subsidiaries or the acquisition of a substantial equity interest in, or a
substantial portion of the Assets of Lanier 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 Plan of Merger and the other Exhibits delivered pursuant hereto and
incorporated herein by reference.
"ALLOWANCE" shall have the meaning provided in Section 5.9 and Section 6.9
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.
"AVERAGE CLOSING PRICE" shall have the meaning set forth in Section 3.1(c)
of this Agreement.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CLOSING" shall mean the closing of the transactions contemplated hereby,
as described in Section 1.2 of this Agreement.
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"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
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Resource, Conservation and Recovery Act, 42 U.S.C. (S) 6901 et. seq., the Toxic
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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 6, 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 or thereto.
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"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 Bank and filed with the Secretary of State of the
State of Georgia relating to the Merger as contemplated by Sections 1.1 and 1.3
of this Agreement.
"HAZARDOUS MATERIAL" shall mean any substance which is a "hazardous
substance"or "toxic substance" as defined in the Comprehensive Environmental
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).
"HOLA" shall mean the Home Owners Loan Act of 1933, as amended.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.12 of
this Agreement.
"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.
"LANIER BENEFIT PLANS" shall have the meaning set forth in Section 5.14 of
this Agreement.
"LANIER COMMON STOCK" shall mean the $5.00 par value common stock of
Lanier.
"LANIER COMPANIES" shall mean, collectively, Lanier and all Lanier
Subsidiaries.
"LANIER DISCLOSURE MEMORANDUM" shall mean the written information entitled
"Lanier Disclosure Memorandum" delivered on or prior to 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.
"LANIER FINANCIAL STATEMENTS" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of Lanier 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 Lanier
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Disclosure Memorandum, and (b) the consolidated balance sheets (including
- ---------------------
related notes and schedules, if any) of Lanier 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.
"LANIER OPTIONS" shall have the meaning set forth in Section 3.4 of this
Agreement.
"LANIER SUBSIDIARIES" shall mean the subsidiaries of Lanier.
"LANIER STOCK PLANS" shall mean the existing stock option and other stock-
based compensation plans of Lanier disclosed in Section 5.14 of the Lanier
Disclosure Memorandum.
- ----------------------
"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 Parties that are
depository institutions or for depository institutions that are 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.
"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.
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"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 Lanier with and into Premier Bank
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 Lanier, and "Parties" shall mean both
Premier and Lanier.
"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.
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<PAGE>
"PREMIER BANK" shall mean Premier Bank, a Georgia chartered commercial bank
and a Premier Subsidiary.
"PREMIER BANK COMMON STOCK" shall mean the $5.00 par value common stock of
Premier Bank.
"PREMIER BENEFIT PLANS" shall have the meaning set forth in Section 6.11 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 the date of this
---------------------
Agreement to Lanier describing in reasonable detail the matters contained
therein, specifically referencing each Section of this Agreement under which
such disclosure is being made.
"PREMIER ERISA PLAN" shall have the meaning set forth in Section 6.11 of
this Agreement.
"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 Lanier to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement and the Plan of Merger, which shall be included in the Registration
Statement of Premier relating to shares of Premier Common Stock to be issued to
the shareholders of Lanier.
"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 Premier Common Stock to be issued to the shareholders
of Lanier 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
44
<PAGE>
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.
"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
Lanier 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 BANK" shall mean Premier Bank, as the surviving bank resulting
from the Merger.
"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 either
Lanier or any Premier Company to continue operation as an ongoing business or to
provide the usual and customary services of such 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
45
<PAGE>
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.
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(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 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.
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
Sterne, Agee & Leach, Inc. (or such other financial advisory firm as may be
selected by Lanier) employed by Lanier. In the event
46
<PAGE>
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 Lanier,
each of Premier and Lanier, 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 8.9 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 Lanier Common Stock, there shall be made no
amendment that pursuant to the Financial Institutions Code of Georgia or the
GBCC requires further approval by such shareholders without the further approval
of such shareholders.
11.6 WAIVERS.
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(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 Lanier, to waive or extend the time for the compliance or
fulfillment by Lanier 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, Lanier, acting through its
Board of Directors, president 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 Lanier 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 Lanier.
(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.
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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
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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.
Lanier: Lanier Bank & Trust Company
214 Dahlonega Road
Cumming, Georgia 30130
Telecopy Number: (770) 887-3925
Attention: A. Lee Wilhelm
President
Copy to Counsel: John L. Douglas, Esq.
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Telecopy Number: (404) 881-7777
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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]
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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
- ----------------------------- -----------------------------------
Barbara J. Burtt Darrell D. Pittard
Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: LANIER BANK & TRUST COMPANY
/s/ John E. Aderhold By: /s/ A. Lee Wilhelm
- ----------------------------- -----------------------------------
John E. Aderhold A. Lee Wilhelm
Chairman President
[BANK SEAL]
<PAGE>
PLAN OF MERGER
THIS PLAN OF MERGER (this "Plan of Merger") is made and entered into as of
the 16th day of December, 1997, by and between LANIER BANK & TRUST COMPANY
("Lanier"), a commercial bank organized and existing under the laws of the State
of Georgia, with its principal office located in Cumming, Georgia, and PREMIER
BANK ("Premier Bank"), a commercial bank organized and existing under the laws
of the State of Georgia, with its principal office located in Atlanta, Georgia.
PREAMBLE
Each of the Boards of Directors of Premier Bank and Lanier deem it
advisable and in the best interests of their respective institutions and the
shareholders thereof for Lanier to be merged into Premier Bank (the "Merger") on
the terms and conditions provided in this Plan of Merger. This Plan of Merger is
made and entered into pursuant to an Agreement and Plan of Reorganization (the
"Agreement"), dated as of December 16, 1997, by and between Lanier and Premier
Bancshares, Inc. ("Premier"). At the Effective Time of the Merger, the
outstanding shares of the common stock of Lanier shall be converted into the
right to receive shares of the common stock of Premier. As a result,
shareholders of Lanier shall become shareholders of Premier. It is intended
that the Merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and that the Merger for accounting purposes shall be accounted for as a
"pooling of interests" transaction.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Premier Bank and Lanier hereby
make, adopt, and approve this Plan of Merger in order to set forth the terms and
conditions of the merger of Lanier with and into Premier Bank.
ARTICLE I
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:
"Agreement" shall mean the Agreement and Plan of Reorganization, dated
as of December 16, 1997, by and between Lanier and Premier, including each
of the exhibits delivered pursuant thereto and incorporated therein by
reference.
"Certificate of Merger" shall mean the certificate of merger issued by
the Secretary of State of the State of Georgia under Section 7-1-535 of the
Financial Institutions Code of Georgia.
<PAGE>
"Closing" shall mean the closing of the transactions contemplated
hereunder, as described in Section 5.1 of this Plan of Merger.
"Effective Time" shall mean the date and time on which the Merger
contemplated by this Plan of Merger becomes effective pursuant to the laws
of the State of Georgia, as defined in Section 5.2 of this Plan of Merger.
"Exchange Agent" shall have the meaning specified in Section 4.1 of
this Plan of Merger.
"Exchange Ratio" shall have the meaning specified in Section 3.1(c) of
this Plan of Merger.
"GBCC" shall mean the Georgia Business Corporation Code (Chapter 2 of
Title 14 of the Official Code of Georgia).
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Lanier Common Stock" shall mean the $5.00 par value common stock of
Lanier.
"Lanier Companies" shall mean, collectively, Lanier and all Lanier
subsidiaries.
"Merger" shall mean the merger of Lanier with and into Premier Bank,
as provided in Article II of this Plan of Merger.
"Party" shall mean either Premier Bank or Lanier and "Parties" shall
mean both Premier Bank and Lanier.
"Premier Bank Common Stock" shall mean the $5.00 par value common
stock of Premier Bank.
"Premier Common Stock" shall mean the $1.00 par value common stock of
Premier.
"Premier Companies" shall mean, collectively, Premier and all Premier
subsidiaries.
"Surviving Bank" shall mean Premier Bank as the surviving bank
resulting from the Merger.
2
<PAGE>
ARTICLE II
TERMS OF MERGER
2.1 MERGER. Subject to the terms of this Plan of Merger and the
------
Agreement, at the Effective Time, Lanier shall be merged with and into Premier
Bank as authorized by Section 7-1-530 of the Financial Institutions Code of
Georgia and in accordance with the provisions of Sections 7-1-531, 7-1-532, and
7-1-533 of the Financial Institutions Code of Georgia. Premier Bank shall be
the Surviving Bank resulting from the Merger and shall be a wholly-owned
subsidiary of Premier and shall continue to be governed by the laws of the State
of Georgia as a commercial bank operating under the name of "Premier Bank." The
Merger shall be consummated pursuant to the terms of this Plan.
2.2 SURVIVING BANK. The business of the Surviving Bank from and after
--------------
the Effective Time shall continue to be that of a commercial bank organized
under the laws of the State of Georgia. The business shall be conducted from its
main office located in Atlanta, Georgia and its legally established branches,
which shall also include the main office and all branches, whether in operation
or approved but unopened, at the Effective Time, of Lanier.
2.3 ASSUMPTION OF RIGHTS. At the Effective Time, the separate existence
--------------------
and corporate organization of Lanier shall be merged into and continued in the
Surviving Bank. All rights, franchises, and interests of both Premier Bank and
Lanier in and to every type of property (real, personal, and mixed), and all
choses in action of both Premier Bank and Lanier shall be transferred to and
vested in the Surviving Bank without any deed or other transfer. The Surviving
Bank, upon consummation of the Merger and without any order or other action on
the part of any court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations, and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver, and committee of estates of incompetent persons, and in every other
fiduciary capacity, in the same manner and to the same extent as such rights,
franchises, and interests were held or enjoyed by either Premier Bank or Lanier
at the Effective Time.
2.4 ASSUMPTION OF LIABILITIES. All liabilities and obligations of both
-------------------------
Premier Bank and Lanier of every kind and description shall be assumed by the
Surviving Bank, and the Surviving Bank shall be bound thereby in the same manner
and to the same extent that Premier Bank and Lanier were so bound at the
Effective Time.
2.5 ACCOUNTS AND DEPOSITS. All accounts and deposits of Premier Bank and
---------------------
Lanier shall be and continue to be accounts and deposits of the Surviving Bank,
without change in their respective terms, maturity, minimum required balances or
withdrawal value. As of the Effective Time, each account or deposit of Premier
Bank or Lanier shall be considered for dividend or interest purposes as an
account or deposit of the Surviving Bank from the time said account or deposit
was opened in Premier Bank and Lanier and at all times thereafter until such
account or deposit ceases to be an account or deposit of the Surviving Bank.
3
<PAGE>
2.6 ARTICLES OF INCORPORATION. As authorized by Section 7-1-536(d) of
-------------------------
the Financial Institutions Code of Georgia, the Articles of Incorporation of
Premier Bank in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Bank from and after the Effective
Time until otherwise amended or repealed.
2.7 BYLAWS. The Bylaws of Premier Bank in effect immediately prior to
------
the Effective Time shall be the Bylaws of the Surviving Bank from and after the
Effective Time until otherwise amended or repealed.
2.8 BOARD OF DIRECTORS. Upon the Effective Time, the Board of Directors
------------------
of the Surviving Bank shall consist initially of the following ten (10)
individuals, who shall include the directors of Premier Bank in office
immediately prior to the Effective Time and shall continue to serve for the
terms to which such directors are elected prior to the Effective Time:
Billy L. Askea 4600 Somerset Road
Smyrna, Georgia 30082
Candler M. Broom, Sr. 813 West Ponce de Leon Avenue
Decatur, Georgia 30030
James R. Eaton 4253 Lakeview Street
Acworth, Georgia 30101
Edwin T. Elliott 899 Still Road
Lawrenceville, Georgia 30246
Jo S. Hill 1013 Lenox Valley
Atlanta, Georgia 30324
Charles E. Holmes 4960 Burnt Hickory Road
Kennesaw, Georgia 30152
Robert C. Oliver 722 Canterbury Road
Gainesville, Georgia 30506
Darrell D. Pittard 5385 Peachtree-Dunwoody Road, #503
Atlanta, Georgia 30342
4
<PAGE>
A. McKoy Rose, Jr. 201 Whitlock Avenue
Marietta, Georgia 30064
Robert E. Wilson 528 Hilldale Drive
Decatur, Georgia 30030
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 Premier Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(c) Each share of Lanier Common Stock (excluding shares held by
Lanier or by any Premier Company, which shares shall be canceled pursuant
to Section 3.3 of this Plan of Merger, in each case other than in a
fiduciary capacity or in satisfaction of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be outstanding
and shall be converted into and exchanged for the right to receive 1.305
shares of Premier Common Stock (the "Exchange Ratio"). In the event that
the average closing price of the Premier Common Stock is less than $20.50
for the ten trading day period ending on the day immediately prior to the
effective date of the Registration Statement ("Average Closing Price"),
then the Exchange Ratio shall be increased to that number of shares of
Premier Common Stock which, when multiplied by the Average Closing Price,
equals $26.7525. The provisions of this Section 3.1(c) are subject to
Section 10.1(h) of the Agreement.
3.2 ANTI-DILUTION PROVISIONS. In the event Lanier or Premier changes the
------------------------
number of shares of Lanier Common Stock or Premier 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 shall be prior to the Effective Time, the Exchange Ratio
shall be proportionately adjusted.
3.3 SHARES HELD BY LANIER OR PREMIER. Shares of Lanier Common Stock held
--------------------------------
by any Lanier Company or by any Premier Company, in each case other than in a
fiduciary capacity or
5
<PAGE>
in satisfaction of debts previously contracted, shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. Any holder of shares of Lanier Common Stock
-----------------------
who perfects such holder's dissenters' rights of appraisal in accordance with
and as contemplated by Section 7-1-537 of the Financial Institutions Code of
Georgia and Section 14-2-1106 of the GBCC shall be entitled to receive the value
of such shares in cash as determined pursuant to such provisions of law;
provided, however, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied with the
applicable provisions of Section 7-1-537 of the Financial Institutions Code of
Georgia and Section 14-2-1106 of the GBCC and surrendered to the Surviving Bank
the certificate or certificates representing the shares for which payment is
being made. In the event that after the Effective Time a dissenting shareholder
of Lanier fails to perfect, or effectively withdraws or loses, such holder's
right to appraisal and of payment for such holder's shares, Premier shall issue
and deliver the consideration to which such holder of shares of Lanier Common
Stock is entitled under this Article III (without interest) upon surrender by
such holder of the certificate or certificates representing shares of Lanier
Common Stock held by such holder.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this Plan
-----------------
of Merger, each holder of shares of Lanier Common Stock exchanged pursuant to
the Merger, or of options to purchase shares of Lanier Common Stock, who would
otherwise have been entitled to receive a fraction of a share of Premier 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 Premier Common Stock multiplied by the market
value of one share of Premier 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 Premier Common Stock at the Effective
Time or the date of exercise, as the case may be, shall be the last sale price
of the Premier 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, in the case of shares
exchanged pursuant to the Merger, and the date of exercise, in the case of
options. No such holder will be entitled to dividends, voting rights, or any
other rights as a shareholder in respect of any fractional shares.
3.6 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK.
---------------------------------------------
(a) At the Effective Time, all rights with respect to Lanier Common
Stock pursuant to stock options ("Lanier Options") granted by Lanier under
the Lanier Stock Plans (as defined in the Agreement), which are outstanding
at the Effective Time, whether or not exercisable, shall be converted into
and become rights with respect to Premier Common Stock, and Premier shall
assume each Lanier Option, in accordance with the terms of the Lanier Stock
Plan and stock option agreement by which it is evidenced. From and after
the Effective Time, (i) each Lanier Option assumed by Premier may be
exercised solely for shares of Premier Common Stock, (ii) the number of
shares of Premier Common Stock subject to such Lanier Option shall be equal
to the number of shares of Lanier
6
<PAGE>
Common Stock subject to such Lanier Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such Lanier Option shall be adjusted by dividing
the per share exercise price under each such Lanier Option by the Exchange
Ratio and rounding down to the nearest cent. 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."
Lanier and Premier agree to take all necessary steps to effectuate the
foregoing provisions of this Section 3.6.
(b) All restrictions or limitations on transfer with respect to
Lanier Common Stock awarded under the Lanier Stock Plans or any other plan,
program, or arrangement of any Lanier Company, to the extent that such
restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program, or arrangement, shall
remain in full force and effect with respect to shares of Premier Common
Stock into which such restricted stock is converted pursuant to Section 3.1
of this Plan of Merger.
ARTICLE IV
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Premier
-------------------
shall cause SunTrust Bank, Atlanta, or such other exchange agent selected by
Premier and reasonably satisfactory to Lanier (the "Exchange Agent") to mail to
the former shareholders of Lanier appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of Lanier Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of Lanier Common Stock (other than shares
to be canceled pursuant to Section 3.3 of this Plan of Merger) issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares, to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Plan of Merger, together with all undelivered dividends
or distributions in respect of such shares (without interest thereon) pursuant
to Section 4.2 of this Plan of Merger. To the extent required by Section 3.5 of
this Plan of Merger, each holder of shares of Lanier Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional share of Premier Common Stock to which such holder may be otherwise
entitled (without interest). Premier shall not be obligated to deliver the
consideration to which any former holder of Lanier Common Stock is entitled as a
result of the Merger until such holder surrenders his or her certificates of
Lanier Common Stock for exchange as provided in this Section 4.1. The
certificate of Lanier Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Plan of Merger
notwithstanding, neither Premier, the Surviving Bank, nor the Exchange Agent
shall be liable to a holder of Lanier Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property law.
7
<PAGE>
4.2 RIGHTS OF FORMER LANIER STOCKHOLDERS. At the Effective Time, the
------------------------------------
stock transfer books of Lanier shall be closed as to holders of Lanier Common
Stock immediately prior to the Effective Time, and no transfer of Lanier 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 Plan of Merger, each certificate theretofore representing shares of Lanier
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Plan of Merger or as to which the holder thereof has perfected dissenters'
rights of appraisal as contemplated by Section 3.4 of this Plan of Merger) shall
from and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Sections 3.1 and 3.5 of this Plan of
Merger in exchange therefor. To the extent permitted by law, former
shareholders of record of Lanier shall be entitled to vote after the Effective
Time at any meeting of Premier shareholders the number of whole shares of
Premier Common Stock into which their respective shares of Lanier Common Stock
are converted, regardless of whether such holders have exchanged their
certificates representing Lanier Common Stock for certificates representing
Premier Common Stock in accordance with the provisions of this Plan of Merger.
Whenever a dividend or other distribution is declared by Premier on the Premier
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 of
Premier Common Stock issuable pursuant to this Plan of Merger, but no dividend
or other distribution payable to the holders of record of Premier Common Stock
as of any time subsequent to the Effective Time shall be delivered to the holder
of any certificate representing shares of Lanier 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 Plan of Merger. However, upon
surrender of such Lanier Common Stock certificate, both the Premier 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 interests (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE V
CLOSING AND EFFECTIVE DATE
5.1 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 occurs earlier than 10:00 A.M.), or at such other time as the
Parties, acting through their duly authorized 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.
5.2 EFFECTIVE TIME. The Merger and the other transactions contemplated
--------------
by the Agreement and this Plan of Merger shall become effective on the date and
at the time that the Georgia Certificate of Merger reflecting the Merger is
issued by the Secretary of State of the State of Georgia (the "Effective Time").
Subject to the terms and conditions thereof, unless otherwise mutually agreed
upon in writing by the duly authorized officers of each party to the Agreement,
the parties to the Agreement 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 (i) the effective date
8
<PAGE>
(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 (ii) the date on which the shareholders of Lanier
approve the 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 duly
authorized officers of each Party.
ARTICLE VI
EFFECTIVENESS
6.1 CONDITIONS PRECEDENT. Consummation of the Merger is conditioned upon
--------------------
the approval of the Merger by the shareholders of Lanier and the sole
shareholder of Premier Bank, as and to the extent required by law, and the
receipt of the requisite regulatory approvals as set forth in the Agreement.
Additionally, consummation of the Merger is conditioned upon the fulfillment of
the conditions precedent set forth in Article IX of the Agreement or the waiver
of such conditions as provided in Section 11.6 of the Agreement.
6.2 TERMINATION. This Plan of Merger shall be terminated without the
-----------
necessity of action by either Party hereto upon termination of the Agreement as
provided in Article X of the Agreement.
6.3 AMENDMENTS. To the extent permitted by law, this Plan of Merger 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 Lanier Common Stock, there shall
be made no amendment decreasing the consideration to be received by Lanier
shareholders without the further approval of such shareholders.
6.4 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 on behalf of it and Premier Bank any Default
in the performance of any term of this Plan of Merger by Lanier, to waive
or extend the time for the compliance or fulfillment by Lanier of any and
all of its obligations under this Plan of Merger, and to waive any or all
of the conditions precedent to the obligations of Premier under this Plan
of Merger, 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, Lanier, acting through its
Board of Directors, president, or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Plan of
Merger by Premier Bank, to waive or extend the time for the compliance or
fulfillment by Premier or Premier Bank of any and all of their obligations
under this Plan of Merger, and to waive any or all of the conditions
precedent to the obligations of Lanier under this Plan of Merger, except
any condition
9
<PAGE>
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 Lanier.
ARTICLE VII
MISCELLANEOUS
7.1 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, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth in
Section 11.8 of the Agreement (or at such other address as may be provided
thereunder), and shall be deemed to have been delivered as of the date so
personally delivered or mailed; provided, however, that notice of termination of
this Plan of Merger shall be effective only upon actual delivery of such notice
to the Party entitled to the same.
7.2 GOVERNING LAW. This Plan of Merger shall be governed by and
-------------
construed in accordance with the laws of the State of Georgia.
7.3 COUNTERPARTS. This Plan of Merger 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.
7.4 INCONSISTENT PROVISIONS. The Parties agree that, to the extent any
-----------------------
of the provisions of this Plan of Merger shall conflict or be inconsistent with
any provision of the Agreement, the provisions of the Agreement shall control
and prevail and the Parties hereto agree to execute such amendments to this Plan
of Merger to conform the provisions hereof to the provisions of the Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
10
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger 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.
LANIER BANK & TRUST COMPANY
ATTEST:
By: /s/ John E. Aderhold By: /s/ A. Lee Wilhelm
---------------------------- -----------------------------
John E. Aderhold, Chairman A. Lee Wilhelm, President
[BANK SEAL]
PREMIER BANK
ATTEST:
By: /s/ Robert C. Oliver By: /s/ Darrell D. Pittard
---------------------------- -----------------------------
Robert C. Oliver, President Darrell D. Pittard, Chairman
[BANK SEAL]
11
<PAGE>
EXHIBIT 2
---------
AFFILIATE AGREEMENT
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Lanier Bank & Trust Company
214 Dahlonega Road
Cumming, Georgia 30130
Gentlemen:
The undersigned is a shareholder of Lanier Bank & Trust Company ("Lanier"),
a commercial bank organized and existing under the laws of the State of Georgia,
and will become a shareholder of Premier Bancshares, Inc. ("Premier") pursuant
to the transactions described in the Agreement and Plan of Reorganization, dated
as of December 16, 1997 (the "Agreement"), by and between Lanier and Premier and
the Plan of Merger, dated as of December 16, 1997 (the "Plan of Merger") by and
between Lanier and Premier Bank ("Premier Bank"), a commercial bank organized
and existing under the laws of the State of Georgia. Under the terms of the
Agreement and the Plan of Merger, Premier Bank and Lanier will be merged (the
"Merger") and the shares of common stock of Lanier ("Lanier Common Stock") will
be converted into shares of common stock of Premier ("Premier Common Stock").
This Affiliate Agreement represents an agreement between the undersigned and
Premier regarding certain rights and obligations of the undersigned in
connection with the shares of Premier 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 Premier hereby agree as follows:
Affiliate Status. The undersigned understands and agrees that as to
----------------
Lanier 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 Premier Common Stock into which the undersigned's shares of Lanier
Common Stock are converted upon consummation of the Merger until such time as
Premier
<PAGE>
notifies the undersigned that the requirements of SEC Accounting Series 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 Premier and Lanier. Premier agrees that it will publish
such results within 45 days after the end of the first fiscal quarter of Premier
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 Lanier Common Stock beneficially owned by
the undersigned as of the date of the shareholders' meeting of Lanier held
to approve the Merger.
(b) The Premier Common 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 Premier Common Stock has not been registered under the
1933 Act and that shares of Premier Common 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 Premier is under no obligation to file a registration
----------------------------------------------------------------------
statement with the SEC covering the disposition of the undersigned's shares
---------------------------------------------------------------------------
of Premier Common 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 Lanier shareholders to sell or
otherwise dispose of the Premier Common 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 Lanier Common Stock outstanding immediately
prior to the Merger. The undersigned has no prearrangement, plan or
intention to sell or otherwise dispose of
2
<PAGE>
an amount of the undersigned's Premier Common 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 Premier Common Stock
received by the undersigned pursuant to the Merger will be given to Premier'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 Premier 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 Premier) or (ii) Rule 144 (in the case of
shares issued to an individual who is an affiliate of
Premier) of the Rules and Regulations of such Act, or (c) in
accordance with a legal opinion satisfactory to counsel for
Premier 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 Premier
securities issued subsequent to the original issuance of Premier Common Stock
pursuant to the Merger as a result of any stock dividend, stock split or other
recapitalization as long as Premier Common 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 Premier Common Stock
received by the undersigned pursuant to the Merger, or at the expiration of the
restrictive period set forth in Rule 145(d), Premier, upon the request of the
undersigned, will cause the certificates representing the shares of Premier
Common 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 Premier of an opinion of its counsel to the effect
that such legend may be removed.
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 Premier Common Stock received by the undersigned, to
the extent the undersigned believes necessary, with the undersigned's counsel or
counsel for Lanier.
3
<PAGE>
6. Filing of Reports by Premier. Premier 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 Premier Common 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 Premier Common 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 Premier Common Stock
together with such additional information as the transfer agent may reasonably
request. If Premier's counsel concludes that such proposed sale or transfer
complies with the requirements of Rule 145(d), Premier shall cause such counsel
to provide such opinions as may be necessary to Premier'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 Premier or becomes a director or officer
of Premier upon consummation of the Merger, among other things, any sale of
Premier Common 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 Premier 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 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 _______________,
1998.
Very truly yours,
___________________________________
Signature
4
<PAGE>
___________________________________
Print Name
AGREED TO AND ACCEPTED as of
______________________, 1998.
PREMIER BANCSHARES, INC.
By:_____________________________
Darrell D. Pittard, Chairman and
Chief Executive Officer
AGREED TO AND ACCEPTED as of
______________________, 1998.
LANIER BANK & TRUST COMPANY
By:_____________________________
A. Lee Wilhelm, President
5
<PAGE>
EXHIBIT 3
---------
MATTERS AS TO WHICH
COUNSEL TO LANIER WILL OPINE*
1. Lanier is a commercial bank 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. Lanier's authorized capital stock consists of 2,000,000 shares of
Lanier Common Stock, of which 804,380 shares were outstanding as of the date
hereof. The outstanding shares of Lanier Common Stock are duly authorized,
validly issued, fully paid and nonassessable. None of the outstanding shares of
Lanier Common Stock has been issued in violation of any statutory preemptive
rights. Except as disclosed in Lanier's Disclosure Memorandum dated
---------------------
____________________, 1997, to our knowledge, there are no options,
subscriptions, warrants, calls, rights or commitments obligating Lanier to issue
equity securities or acquire its equity securities.
3. The execution and delivery by Lanier of the Agreement and the Plan of
Merger do not, and if Lanier were now to perform its obligations under the
Agreement and the Plan of Merger such performance would not, result in any
violation of the Articles of Incorporation or Bylaws of any Lanier Company, or,
to our knowledge, result in any breach of, or default or acceleration under, any
material Contract or Order to which a Lanier Company is a party or by which a
Lanier Company is bound.
4. Lanier has duly authorized the execution and delivery of the Agreement
and the Plan of Merger and all performance by Lanier thereunder, and has duly
executed and delivered the Agreement and the Plan of Merger.
5. The Agreement and the Plan of Merger are enforceable against Lanier in
accordance with their respective 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.
<PAGE>
EXHIBIT 4
---------
CLAIMS/INDEMNIFICATION LETTER
_______________________, 1998
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 16, 1997, by and
between Lanier Bank & Trust Company ("Lanier") and Premier Bancshares, Inc.
("Premier") which, along with the Plan of Merger (the "Plan of Merger"), dated
as of December 16, 1997, by and between Lanier and Premier Bank, provides for
the merger (the "Merger") of Lanier and Premier Bank.
Concerning claims which I may have against Lanier or its subsidiaries in my
capacity as an officer or director:
(a) Premier shall assume all liability (to the extent Lanier was so
liable) for claims for indemnification arising under Lanier's Articles of
Incorporation or Bylaws or under any indemnification contract disclosed to
Premier, as existing on December 15, 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) In my capacity as an officer or a director, I am not aware that I
have any claims (other than those referred to in paragraph (a) above)
against Lanier (other than routine deposit, loan and other banking services
conducted in the ordinary course of business with Lanier); and
(d) I hereby release Lanier from any and all claims which I am aware
that I have against it in my capacity as an officer or a director, other
than those referred to in paragraph (a) above.
By executing this letter on behalf of Lanier, you shall acknowledge the
assumption by Premier of the liabilities described in paragraph (a) above.
Sincerely,
__________________________________
Signature of Officer or Director
<PAGE>
__________________________________
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)
above, as of this _____ day of _______________, 1998.
PREMIER BANCSHARES, INC.
By: ______________________________________
Darrell D. Pittard, Chairman and Chief
Executive Officer
2
<PAGE>
EXHIBIT 5
---------
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 Bank is a commercial bank 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.
3. 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 Premier Common Stock to be issued in
exchange for Lanier Common Stock upon consummation of the Merger, when issued in
accordance with the terms of the Agreement and the Plan of Merger 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
Premier Common Stock to be issued in exchange for shares of Lanier Common Stock
upon consummation of the Merger will be, issued in violation of any statutory or
preemptive rights. Except as previously disclosed in writing to Lanier, to our
knowledge, there are no options, subscriptions, warrants, calls, rights or
commitments obligating Premier to issue equity securities or acquire its equity
securities.
4. The execution and delivery by Premier of the Agreement, and the
execution and delivery by Premier Bank of the Plan of Merger, do not, and if
Premier and Premier Bank were now to perform its obligations under the Agreement
and the Plan of Merger 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.
5. 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. Premier Bank has duly authorized the execution and delivery of
the Plan of Merger and all performance by Premier Bank thereunder and has duly
executed and delivered the Plan of Merger.
6. The Agreement is enforceable against Premier in accordance with its
terms, and the Plan of Merger is enforceable against Premier Bank 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.
<PAGE>
EXHIBIT 6
---------
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT ("Agreement") is made and entered into effective as of
the ___ day of ___________, 1998 (the "Effective Date"), by and among PREMIER
BANCSHARES, INC., a Georgia corporation ("the Company"); PREMIER BANK, a wholly-
owned Georgia banking subsidiary of the Company ("Employer"); and A. LEE WILHELM
("Employee").
W I T N E S S E T H:
WHEREAS, as of the Effective Date, Lanier Bank & Trust Company, a
Georgia chartered commercial bank, merged with and into Employer;
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 its best
interests;
WHEREAS, the Boards of Directors of Employer and the Company 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, the Company has joined in this Agreement for the purpose,
inter alia, of granting the stock options 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
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 of Employee's
employment under this Agreement 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(c) 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 the Central
Metro Division of Employer, 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
<PAGE>
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,
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 seven (7) full calendar
-
months thereafter, unless earlier terminated pursuant to this Agreement or
unless Employee dies before the end of such period, in which case the
period of employment shall be deemed to continue until the end of the month
of such death. Following the initial period, the employment of Employee
shall continue under the terms of this Agreement, but may be terminated by
either party upon sixty (60) days' prior written notice (which notice may
--
be given prior to the expiration of the initial period).
(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
<PAGE>
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 at
------------------
Employer's office in Cumming, 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 is to an office more than
thirty-five (35) miles from the Cumming office and Employee elects to move
--
his principal residence, the 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 and/or the 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 and/or the Company, in
addition to any rights or remedies which Employer and/or the Company may
possess, shall be entitled to injunctive and other equitable relief to
prevent the breach of this Agreement by Employee.
<PAGE>
4. Compensation.
------------
(a) Salary. Subject to the provisions of paragraph 6 hereof, Employer
------
shall pay Employee, as compensation for serving as President of the Central
Metro Division of Employer, an initial Base Salary of $135,000; 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. Employer shall
coordinate the first payment of salary hereunder with the last payment of
salary received by Employee from Lanier Bank & Trust Company, such that
Employee shall have been fully compensated for all services to Employer and
Lanier Bank & Trust Company. Employee's Base Salary and any Incentive
Compensation (as defined in paragraph 4(c) hereof) shall be reviewed and
approved at least annually by the Boards of Directors of Employer and the
Company, or any committee(s) designated thereby. Said Boards or
Committee(s), if warranted in their discretion, may increase (but may not
decrease) Employee's Base Salary to reflect Employee's performance.
(b) Stock Options. 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, the Company shall grant to Employee, on the Effective
Date of this Agreement, an option to purchase 30,000 shares of the Company
------
common stock at an exercise price of ten dollars ($10.00) per share. The
-----
above-referenced options shall vest 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 of this Agreement by Employer other than as
a result of a Termination for Cause pursuant to paragraph 6(a) of this
Agreement. The options may be exercised by Employee at any time
<PAGE>
and from time to time during the ten (10) year period following the vesting
of such--options, in whole or in part, upon payment of the exercise price
for the number of shares of stock being acquired pursuant to such exercise.
(c) Incentive Compensation. During the Term of Employment and in
----------------------
addition to the aforesaid Base Salary, Employee shall be entitled to such
additional Incentive Compensation as may be awarded from time to time by
the Boards of Directors of Employer and/or the Company or any committee(s)
designated thereby in their 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, pronouncements, directives, or orders issued or
promulgated by any governing regulatory agency and with any agreements by
and between Employer and/or the Company and such regulatory agencies, (ii)
consistent with the safe and sound operation of Employer and the Company,
(iii) closely monitored by the Boards of Directors of Employer and the
Company 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.
(d) "Golden Parachute" Provision. Notwithstanding anything contained
----------------------------
in this Agreement to the contrary, any payments made to Employee pursuant
to this Agreement, or otherwise to Employee, are subject to and conditioned
upon their compliance with 12 U.S.C. (S) 1828(k) and any regulations
promulgated thereunder. Employer and Company each represent that none of
the events or circumstances described in 12 C.F.R. 359.1(f)(ii) exists or
that the agreement to make payments hereunder is entered into in
contemplation of such events.
<PAGE>
5. Participation in Benefit Plans.
------------------------------
(a) Incentive, Savings and Retirement Plans. During the employment
---------------------------------------
period, Employee shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally
to senior executive officers of Employer, on the same basis as such other
senior executive officers, and, unless prohibited by such incentive,
savings and retirement plans, with full credit given for Employee's total
accumulated years of service at Lanier Bank & Trust Company for purposes of
determining vesting and eligibility.
(b) Welfare Benefit Plans. During the employment period, Employee
---------------------
and/or Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by Employer to the extent
applicable generally to senior executive officers of Employer, and, unless
prohibited by such welfare benefit plans, with full credit given for
Employee's total accumulated years of service at Lanier Bank & Trust
Company for purposes of determining vesting and eligibility.
(c) Expenses and Fringe Benefits. During the employment period,
----------------------------
Employee shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by Employee, and to receive fringe benefits,
in accordance with the policies, practices and procedures of Employer to
the extent applicable generally to other senior executive officers of
Employer.
6. Payments to Employee Upon Termination of Employment. The Boards of
---------------------------------------------------
Directors of Employer and the Company may terminate Employee's employment under
this Agreement at any time upon sixty (60) days prior written notice; but any
--
termination other than Termination for
<PAGE>
Cause shall not prejudice Employee's right to compensation or other benefits
under this Agreement. Employee may voluntarily terminate his employment under
this Agreement upon sixty (60) days prior written notice. The rights and
--
obligations of Employer and/or the Company 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
except that Termination for Cause shall not affect the right of Employee to
exercise the options referred to in paragraph 4(b) hereof to the extent
vested, provided that such options shall, notwithstanding anything
contained in paragraph 4(b) hereof to the contrary, be exercised within
ninety (90) days following Termination for Cause; and further, except that,
--
Termination for Cause shall not affect rights provided under the various
employee benefit plans referred to in paragraph 5 hereof to the extent
rights or benefits are accrued prior to such termination. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Employee to perform
Employee's duties with Employer (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
performance is delivered to Employee by the Board of Employer which
specifically identifies the manner in which the Board believes that
Employee has not performed Employee's duties;
(ii) Employee's personal dishonesty, willful misconduct, or
breach of a fiduciary duty from which he derives a personal profit;
(iii) Employee's willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) involving
moral turpitude or which represents
<PAGE>
reckless disregard for principles of safety and soundness applicable to
banks, or any final cease and desist order; or
(iv) Employee's willful breach of any material term or condition
of this Agreement.
For purposes of this provision, no act or failure to act, on the part of
Employee, shall be considered "willful" or a breach of fiduciary duty unless it
is done, or omitted to be done, by Employee in bad faith or without reasonable
belief that Employee's action or omission was in the best interests of Employer.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board of Employer or based upon the advice of counsel for
Employer shall be conclusively presumed to be done, or omitted to be done, by
Employee in good faith and in the best interests of Employer. The cessation of
employment of Employee shall not be deemed to be for Cause unless and until
there shall have been delivered to Employee a copy of a resolution duly adopted
by the affirmative vote of not less than a majority of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to Employee and Employee is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, Employee is guilty of the conduct described in
subparagraph (i), (ii), (iii) or (iv) above, and specifying the particulars
thereof in detail.
(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
<PAGE>
beneficiary or beneficiaries, or to his estate, as the case may be, as
liquidated damages, in lieu of all other claims for salary, a severance
payment equal to the following:
(i) if the termination occurs upon notice given by the Company
or Employer prior to the expiration of the initial seven (7) month term of
-
this Agreement, the longer of sixty (60) days' Base Salary or the amount of
--
Base Salary that would be payable for the duration of the seven month term;
or
(ii) if the termination occurs upon notice given by the Company
or Employer after the expiration of the initial seven (7) month term of
-
this Agreement, or occurs upon notice given by Employee, sixty (60) days'
--
Base Salary;
plus, in the event of either (i) or (ii) above, the pro-rata portion of the
Incentive Compensation to which Employee would have been entitled had he
remained an employee throughout the period for which Incentive Compensation is
calculated.
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 and the
Company 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 and/or the Company may in their
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. Vested rights of
Employee shall not otherwise be affected.
<PAGE>
(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 and the
Company 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. Nondisclosure of Confidential Information. Employee acknowledges
-----------------------------------------
that, as an officer of Employer, he will have access to certain confidential or
proprietary information possessed by Employer or the Company or relating to its
or their business, or the business of Lanier Bank & Trust Company, and
including, without limitation, customer lists, details of client or consultant
contracts, current and anticipated customer requirements, pricing policies price
lists, market studies, business plans, operational methods, marketing plans or
strategies, product development techniques or plans, computer software programs,
financial information and data, business acquisition plans, and new personnel
acquisition plans, some of which information would constitute a trade secret
under the common law or statutory law of the State of Georgia ("Confidential
Information"). Employee understands and agrees that the Confidential
Information constitutes a valuable asset of Employer and the Company,
respectively, and may not be converted to Employee's own use. Accordingly,
Employee hereby agrees that for one (1) year period thereafter (the "Restricted
Period"), reveal, divulge, or disclose to any person not expressly authorized by
Employer or the Company any Confidential Information, and Employee shall not,
directly or indirectly, at any time during the Restricted Period use or make use
of any Confidential Information in connection with any business activity other
than that of Employer or the Company. Notwithstanding anything contained herein
to the contrary, Employee shall not be restricted form
<PAGE>
disclosing or using Confidential Information that: (i) is or becomes generally
available to the public other than as a result of an unauthorized disclosure by
Employee or his agent; (ii) becomes available to Employee in a manner that is
not in contravention of applicable law from a source (other than Employer or the
Company or one of its or their officers, employees, agents or representatives)
that is not bound by a confidential relationship with Employer or the Company or
by a confidentiality or other similar agreement; (iii) was known to Employee on
a non-confidential basis and not in contravention of applicable law or a
confidentiality or other similar agreement before its disclosure to Employee by
Employer or the Company or one of its or their officers, employees, agents or
representatives; or (iv) is required to be disclosed by law, court order or
other legal process; provided, however, that in the event disclosure is required
by law, Employee shall provide Employer and the Company, as the case may be,
with prompt notice of such requirement so that Employer or the Company, as the
case may be, may seek an appropriate protective order prior to any such required
disclosure by Employee.
9. Source of Payments. All payments provided in paragraphs 4 and 6
------------------
hereof shall be paid in cash from the general funds of Employer as provided
herein (with the exception of the stock options referred to in paragraph 4(b) of
this Agreement to be granted to Employee by the Company), and no special or
separate fund shall be established by Employer or the 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
Company may make to meet the obligations hereunder.
10. Injunctions. In view of the irreparable harm and damage which
-----------
Employer and the Company would sustain as a result of a breach by Employee of
the covenants or agreements under paragraph 8 hereof, and in view of the lack of
an adequate remedy at law to protect Employer's
<PAGE>
and the Company's interests, Employer and the Company shall have the right to
receive, and Employee hereby consents to the issuance of, a permanent injunction
enjoining Employee from any violation of the covenants and agreements set forth
in paragraph 8 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 Company
are or may be entitled at law or in equity respecting this Agreement.
11. 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 in the event the court determines that the actions of the party
or parties against whom final judgment is obtained were reckless, or in willful
disregard of the obligations of this Agreement, or the court otherwise so
orders.
12. Federal Income Tax Withholding. Employer and the 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.
13. Effect of Prior Agreements. This Agreement, together with the letter
--------------------------
from Darrell D. Pittard to Employee dated December 11, 1997, 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 and/or the Company and Employee, including, without
limitation, any employment agreement or understanding between Employee and
Lanier Bank & Trust Company.
<PAGE>
14. 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 and the
Company; provided, however, that nothing in this paragraph 14(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, the Company and Employee and their
respective heirs, successors, assigns, and legal representatives.
15. 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
<PAGE>
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.
16. 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.
17. 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.
18. 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.
19. 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.
20. 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
<PAGE>
at the address stated below or to such changed address as the addressee may have
given by a similar notice:
To Employer: President
Premier Bank
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
To the Company: Chairman and Chief Executive officer
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Copied to: Steven S. Dunlevie, Esq.
Womble Carlyle Sandridge & Rice, PLLC
Suite 700
1275 Peachtree Street
Atlanta, Georgia 30309
To Employee: Mr. A. Lee Wilhelm
214 Dahlonega Road
Cumming, Georgia 30130
IN WITNESS WHEREOF, Employer and the Company have caused this
Agreement to be executed and their seal to be affixed hereunto by their duly
authorized officers, and Employee has signed this Agreement, as of the Effective
Date.
ATTEST: PREMIER BANCSHARES, INC.
______________________ By:_______________________________________
Secretary Darrell D. Pittard
(CORPORATE SEAL) Chairman and Chief Executive Officer
ATTEST: PREMIER BANK
______________________ By:_______________________________________
Secretary Robert C. Oliver
(BANK SEAL) President
<PAGE>
______________________ _________________________________________(SEAL)
Witness A. LEE WILHELM
<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 16, 1997, between Premier
Bancshares, Inc. ("Premier") and Lanier Bank & Trust Company ("Lanier"), is made
and entered into as of the 22nd 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 for the purpose of
increasing the Exchange Ratio contained in the Agreement, and to amend a
negative covenant of Lanier regarding the payment of dividends on the Lanier
Common Stock; and
WHEREAS, the Boards of Directors of Premier and Lanier have
unanimously approved the Agreement and this First Amendment;
NOW, THEREFORE, in consideration of the premises, mutual covenants,
and agreements herein contained, the receipt and sufficiency of which are hereby
acknowledged, and for the purpose of amending the Agreement, Premier and Lanier
hereby agree as follows:
1. That Section 3.1(c) of the Agreement be deleted in its entirety
and the following new Section 3.1(c) be inserted in lieu thereof:
(c) Each share of Lanier Common Stock (excluding shares held by Lanier or
by any Premier Company, which shares shall be canceled as provided in
Section 3.3 of this Agreement, in each case other than in a fiduciary
capacity or in satisfaction of debts previously contracted) issued and
outstanding at the Effective Time shall cease to be outstanding and shall
be converted into and exchanged for the right to receive 1.980 shares of
Premier Common Stock (the "Exchange Ratio"). In the event that the average
closing price of the Premier Common Stock is less than $13.667 for the ten
trading day period ending on the day immediately prior to the effective
date of the Registration Statement ("Average Closing Price"), then the
Exchange Ratio shall be increased to that number of shares of Premier
Common Stock which, when multiplied by the Average Closing Price, equals
$27.0607. The provisions of this Section 3.1(c) are subject to Section
10.1(h) of this Agreement.
2. That Section 7.2(c) of the Agreement is hereby amended by
decreasing the maximum allowable cash dividend from $.50 per share to $.25 per
share.
3. That Section 10.1(h) of the Agreement be deleted in its entirety
and the following new Section 10.1(h) be inserted in lieu thereof:
(h) By the Board of Directors of Premier or Lanier, at any time and without
Liability, if the Average Closing Price of the Premier Common Stock, as
reported on the American Stock Exchange, is less than $12.00 per share.
<PAGE>
4. Notwithstanding any other provision of the Agreement to the
contrary, Sections 3.1(c) and 10.1(h) of the Agreement, as amended by this First
Amendment, shall not be adjusted or amended as a result of the three-for-two
stock split of the Premier Common Stock declared by the Premier Board of
Directors which becomes effective on January 23, 1998.
5. (See below)**
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.
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
- ---------------------------- -------------------------------
Barbara J. Burtt, Secretary Darrell D. Pittard, Chairman
[CORPORATE SEAL]
Attest: LANIER BANK & TRUST COMPANY
/s/ John E. Aderhold /s/ A. Lee Wilhelm
- ---------------------------- -------------------------------
John E. Aderhold, Chairman A. Lee Wilhelm, President
[BANK SEAL]
** 5. Exhibit 6 to the Agreement is hereby amended as set forth on
Exhibit A attached hereto and incorporated herein by this reference.
<PAGE>
EXHIBIT A
5. Exhibit 6 to the Agreement is hereby amended by replacing the first
sentence of Paragraph 4(b) thereof with the following:
In recognition of the services to be provided by Employee to Employer
and as an incentive for Employee to remain in the employ of the
Employer, the Company shall grant to Employee, on the Effective Date of
this Agreement, an option to purchase 30,000 shares of the Company
common stock at an exercise price of ten dollars ($10.00) per share.
Neither the number of shares nor the exercise price shall be adjusted to
reflect the three for two stock split of the Company common stock
effective January 23, 1998, but shall be adjusted to reflect any further
stock splits, stock dividends or similar recapitalizations with respect
to such stock effective after January 23, 1998 as provided in Section
3.2 of the Agreement and Plan of Reorganization between the Company and
Lanier Bank & Trust Company, dated as of December 16, 1997, as amended
effective January 22, 1998, in the same manner and with the same effect
as would typically be provided in a qualified stock option plan.
Further, in the event that on the Effective Date of this Agreement the
average closing price of the Company common stock for the ten trading
day period ending on the day prior to the Effective Date (the "Average
Trading Price") is less than the closing price on December 16, 1997 (the
"Execution Date Closing Price"), then the number of options shall be
increased to that number of shares which, when multiplied by the
difference between the Average Trading Price and $10.00 equals 30,000
times the difference between the Execution Date Closing Price and
$10.00.
<PAGE>
FIRST AMENDMENT TO PLAN OF MERGER
This First Amendment (the "First Amendment") to Plan of Merger (the
"Plan of Merger"), dated December 16, 1997, between Lanier Bank & Trust Company
("Lanier") and Premier Bank ("Premier Bank"), is made and entered into as of the
22nd day of January, 1998. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed to them in the Plan of
Merger.
WHEREAS, the parties desire to amend the Plan of Merger for the
purpose of increasing the Exchange Ratio contained in the Plan of Merger; and
WHEREAS, the Boards of Directors of Premier Bank and Lanier have
unanimously approved the Plan of Merger and this First Amendment;
NOW, THEREFORE, in consideration of the premises, mutual covenants,
and agreements herein contained, the receipt and sufficiency of which are hereby
acknowledged, and for the purpose of amending the Plan of Merger, Premier Bank
and Lanier hereby agree as follows:
1. That Section 3.1(c) of the Plan of Merger be deleted in its
entirety and the following new Section 3.1(c) be inserted in lieu thereof:
(c) Each share of Lanier Common Stock (excluding shares held by Lanier or
by any Premier Company, which shares shall be canceled as provided in
Section 3.3 of this Plan of Merger, in each case other than in a fiduciary
capacity or in satisfaction of debts previously contracted) issued and
outstanding at the Effective Time shall cease to be outstanding and shall
be converted into and exchanged for the right to receive 1.980 shares of
Premier Common Stock (the "Exchange Ratio"). In the event that the average
closing price of the Premier Common Stock is less than $13.667 for the ten
trading day period ending on the day immediately prior to the effective
date of the Registration Statement ("Average Closing Price"), then the
Exchange Ratio shall be increased to that number of shares of Premier
Common Stock which, when multiplied by the Average Closing Price, equals
$27.0607. The provisions of this Section 3.1(c) are subject to Section
10.1(h) of the Agreement.
2. Notwithstanding any other provision of the Plan of Merger to the
contrary, Section 3.1(c) of the Plan of Merger, as amended by this First
Amendment, shall not be adjusted or amended as a result of the three-for-two
stock split of the Premier Common Stock declared by the Premier Board of
Directors which becomes effective on January 23, 1998.
Except as specifically amended herein the Plan of Merger 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.
<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 BANK
/s/ Robert C. Oliver /s/ Darrell D. Pittard
- ---------------------------- -----------------------------
Robert C. Oliver, President Darrell D. Pittard, Chairman
[BANK SEAL]
Attest: LANIER BANK & TRUST COMPANY
/s/ John E. Aderhold /s/ A. Lee Wilhelm
- ---------------------------- -----------------------------
John E. Aderhold, Chairman A. Lee Wilhelm, President
[BANK SEAL]
<PAGE>
APPENDIX B
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;
B-2
<PAGE>
(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
B-3
<PAGE>
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;
B-4
<PAGE>
(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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<PAGE>
(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
B-6
<PAGE>
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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<PAGE>
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.
B-8
<PAGE>
APPENDIX C
[ALEX SHESHUNOFF & CO. INVESTMENT BANKING LETTERHEAD APPEARS HERE]
January 29, 1998
Board of Directors
Lanier Bank & Trust Company
214 Dahlonega Road
Cumming, Georgia 30040
Members of the Board:
We understand that Lanier Bank & Trust Company, Cumming, Georgia, ("Lanier") and
Premier Bancshares, Inc., Atlanta, Georgia, ("Premier") entered into an
Agreement and Plan of Reorganization (the "Agreement"), which provides, among
other things, for the acquisition of all of the capital stock of Lanier by means
of a merger of Lanier with and into Premier (the "Merger"). Pursuant to the
Agreement, at the effective time of the Merger, the outstanding common shares of
the common stock of Lanier ("Lanier Common Stock") shall be converted into and
exchanged for the right to receive 1.980 shares (the "Exchange Ratio") of the
common stock of Premier ("Premier Common Stock"). In the event that the average
closing price of the Premier Common Stock is less than $13.667 for the ten
trading day period ending on the day immediately prior to the effective date of
the Registration Statement ("Average Closing Price"), then the Exchange Ratio
shall be increased to that number of shares of Premier Common Stock which, when
multiplied by the Average Closing Price, equals $27.0607.
You requested our opinion, as to whether the Exchange Ratio is fair from a
financial point of view to the holders of Lanier's Common Stock.
In connection with our opinion, we: (i) reviewed a copy of the Agreement; (ii)
reviewed certain publicly available financial statements and other information
of Lanier and Premier, respectively; (iii) reviewed certain internal financial
statements and other financial and operating data concerning Lanier provided to
us by its management; (iv) analyzed certain budget and financial projections of
Lanier provided by its management; (v) analyzed certain publicly available
financial analyses and estimates of Premier provided by independent banking
industry securities analysts; (vi) reviewed the reported prices and share
trading activity for Premier Common Stock; (vii) discussed the past and current
operations, financial condition, and future prospects of Lanier with its
executive management; (viii) compared Lanier and Premier from a financial point
<PAGE>
Board of Directors
Lanier Bank & Trust Company
January 26, 1998
Page 2
of view with certain other banking companies that we deemed to be relevant; (ix)
reviewed the financial terms, to the extent publicly available, of certain
comparable merger transactions in the Southeastern United States and in Georgia,
and; (x) performed such other analyses and reviews as we deemed appropriate.
We assumed and relied upon, without independent verification, the accuracy and
completeness of the information supplied or otherwise made available to us by
Lanier and Premier for the purposes of this opinion. Where appropriate, we used
information from publicly available sources that we believe to be reliable,
however, we cannot guarantee the accuracy or completeness of such information.
We are not experts in legal and tax matters which may impact the Merger, and
have relied upon the opinion of Lanier's counsel and accountants with respect to
such matters.
We did not make an independent evaluation of the assets or liabilities of
Lanier, nor have we been furnished with any such appraisals. We did not perform
an independent due diligence review of Premier but reviewed and relied upon
publicly available information on Premier. Lanier's management provided us with
verbal estimates of financial forecasts. With respect to budgets and such
financial forecasts, we assumed that they were reasonable and reflect the best
currently available estimates and judgments of management of Lanier. We have
further assumed that in the course of obtaining the necessary regulatory and
third party consents for the Merger, no restriction will be imposed that will
have a material adverse effect on the contemplated benefits of the Merger or the
transactions contemplated thereby, and that the Merger will be consummated in
accordance with the terms of the Agreement, without any amendments to, and
without any waiver by Lanier of, any of the material conditions to its
obligations thereunder.
We are not experts in the evaluation of loan portfolios for the purpose of
assessing the adequacy of the allowance for losses with respect thereto and
assumed that such allowances for each of the companies are in the aggregate,
adequate to cover such losses. In addition, we did not review any individual
credit files or make an independent evaluation, appraisal or physical inspection
of the assets or individual properties of Lanier or Premier, nor were we
furnished with any such evaluations or appraisals.
C-2
<PAGE>
Board of Directors
Lanier Bank & Trust Company
January 26, 1998
Page 3
Our opinion is necessarily based on economic, market and other conditions as in
effect on January 16, 1998, and the information made available to us as of the
date hereof. Events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. We assumed that there are no
material changes in Lanier's or Premier' assets, financial condition, results of
operations, business or prospects since the respective dates of their last
financial information reviewed by us, and that off-balance sheet activities of
Lanier and Premier will not materially impact the future financial position or
results of operation of Lanier and Premier. We assumed the Merger will be
completed as set forth in the Agreement and that no material changes will be
made or restrictions imposed by regulatory or other parties on the terms of the
Agreement.
Our opinion is limited to the fairness, from a financial point of view, to the
holders of Lanier's Common Stock of the Exchange Ratio and does not address
Lanier's underlying business decision to undertake the Merger. Moreover, this
letter, and the opinion expressed herein, do not constitute a recommendation to
any stockholder as to any approval of the Merger or the Agreement. It is
understood that this letter is for the information of the Board of Directors of
Lanier and may not be used for any other purpose without our prior written
consent, except that this opinion may be included in its entirety in any filing
made by Lanier or Premier with the Securities and Exchange Commission with
respect to the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Exchange Ratio is fair from a financial point of view to Lanier's
common shareholders.
Very truly yours,
/s/ Alex Sheshunoff & Co. Investment Banking
--------------------------------------------
ALEX SHESHUNOFF & CO. INVESTMENT BANKING
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
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 advance 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 Premier.
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 of 1933.
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.
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)
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated December 16, 1997, between
Premier and Lanier. (Included as Appendix A to the Proxy
Statement/Prospectus contained herein.)
2.2 Plan of Merger dated December 16, 1997, between Premier Bank and
Lanier. (Included in Appendix A to the Proxy Statement/Prospectus
contained herein.)
2.3 First Amendment to Agreement and Plan of Reorganization dated January
22, 1998, between Premier and Lanier. (Included in Appendix A to the
Proxy Statement/Prospectus contained herein.)
2.4 First Amendment to Plan of Merger dated January 22, 1998, between
Premier Bank and Lanier. (Included in Appendix A to the Proxy
Statement/Prospectus contained herein.)
3.1 Articles of Incorporation of Premier, as amended, through February 6,
1997. (Incorporated by reference as Exhibit 3.1 to Premier's Form 10-K
for the fiscal year ended December 31, 1996.)
3.2 Bylaws of Premier. (Incorporated by reference as Exhibit 3.2 from
Premier's Form 10-QSB for the quarter ended September 30, 1996.)
4.1 Form of Stock Certificate. (Incorporated by reference as Exhibit 4.1
to Premier'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.
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 10.4 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 Premier Bancshares, Inc. Directors' Stock Option Plan. (Incorporated
by reference as Exhibit 10.15 to Premier's Form 10-K for the fiscal
year ended December 31, 1996.)
10.18 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.)
10.19 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.)
10.20 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.)
10.21 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.)
10.22 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.)
10.23 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.)
10.24 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.)
10.25 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>
10.26 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.)
10.27 Loan and Security Agreement dated June 12, 1997 by and among Premier,
Premier Lending, Alliance Finance, Inc. and The Bankers Bank.
10.28 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.
10.29 Agreement and Plan of Reorganization dated December 3, 1997 by and
between Premier and BHC.
10.30 First Amendment to Agreement and Plan of Reorganization dated December
18, 1997 by and between Premier and BHC.
10.31 Second Amendment to Agreement and Plan of Reorganization dated
December 23, 1997 by and between Premier and BHC.
10.32 Third Amendment to Agreement and Plan of Reorganization dated December
31, 1997 by and between Premier and BHC.
10.33 Fourth Amendment to Agreement and Plan of Reorganization dated January
15, 1997 by and between Premier and BHC.
11.1 Statement of Per Share Earnings.
21.1 Subsidiaries of Premier.
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit
5.)
23.2 Consent of Mauldin & Jenkins, L.L.C.
23.3 Consent of Bricker & Melton, P.A.
23.4 Consent of Alex Shesunoff & Co.
24.1 Power of Attorney. (See signature page to the Registration Statement.)
27.1 Financial Data Schedule.
99.1 Proxy Card for Lanier Bank & Trust Company.
</TABLE>
- --------
(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) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(2) 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 SEC such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event
II-4
<PAGE>
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.
(3) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(4) 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 FEBRUARY 2, 1998.
Premier Banchares, 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 to 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 February 2,
- ------------------------------------- 1998
N. MICHAEL ANDERSON
/s/ George S. Carpenter Director February 2,
- ------------------------------------- 1998
GEORGE S. CARPENTER
/s/ James L. Coxwell Director February 2,
- ------------------------------------- 1998
JAMES L. COXWELL
/s/ Donald N. Ellis Director February 2,
- ------------------------------------- 1998
DONALD N. ELLIS
/s/ William M. Evans, Jr. Director February 2,
- ------------------------------------- 1998
WILLIAM M. EVANS, JR.
II-6
<PAGE>
SIGNATURE TITLE DATE
/s/ John H. Ferguson Director February 2,
- ------------------------------------- 1998
JOHN H. FERGUSON
/s/ Robert E. Flournoy, III Director February 2,
- ------------------------------------- 1998
ROBERT E. FLOURNOY
/s/ James E. Freeman Director February 2,
- ------------------------------------- 1998
JAMES E. FREEMAN
/s/ Albert F. Grandy Director February 2,
- ------------------------------------- 1998
ALBERT F. GRANDY
/s/ Robin R. Howell Director February 2,
- ------------------------------------- 1998
ROBIN R. HOWELL
/s/ Billy H. Martin Director February 2,
- ------------------------------------- 1998
BILLY H. MARTIN
/s/ Thomas J. Martin Director February 2,
- ------------------------------------- 1998
THOMAS J. MARTIN
/s/ C. Steve McQuaig Director February 2,
- ------------------------------------- 1998
C. STEVE MCQUAIG
/s/ Robert C. Oliver Director, President February 2,
- ------------------------------------- and Chief Operating 1998
ROBERT C. OLIVER Officer
II-7
<PAGE>
SIGNATURE TITLE DATE
/s/ Thomas E. Owen, Jr. Director February 2,
- ------------------------------------- 1998
THOMAS E. OWEN, JR.
/s/ Darrell D. Pittard Chairman and Chief February 2,
- ------------------------------------- Executive Officer 1998
DARRELL D. PITTARD (principal
executive officer)
/s/ Michael E. Ricketson Chief Financial February 2,
- ------------------------------------- Officer and 1998
MICHAEL E. RICKETSON Executive Vice
President
(principal
financial and
accounting officer)
II-8
<PAGE>
EXHIBIT 5.1
February 4, 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
1,702,748 Shares of Common Stock (the "Registration Statement")
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 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 1,702,748 shares of Common 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.
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 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
A Professional Limited Liability Company
/s/ Womble Carlyle Sandridge & Rice, PLLC
<PAGE>
EXHIBIT 8.1
Direct Dial: (404) 872-7000
Direct Fax: (404)888-7490
E-mail: wcsr.com
February 4, 1998
Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Lanier Bank & Trust Company
214 Dahlonega Road
Cumming, Georgia 30130
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
Lanier Bank & Trust Company ("Lanier") dated as of December 16, 1997
(the "Reorganization Agreement")
Ladies and Gentlemen:
We have acted as counsel to Premier in connection with the registration of
1,702,748 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 Merger, Lanier, a Georgia banking corporation, will merge into
Premier Bank, a wholly owned subsidiary of Premier, pursuant to Georgia law, and
each outstanding share of Lanier 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. Lanier 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, updated until and through the date of Closing, in which officers
of Lanier and officers of Premier make certain representations on behalf of
Lanier and Premier regarding the Merger (the "Tax Certificates"). We also have
<PAGE>
EXHIBIT 10.27
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement"), entered into as of June
12, 1997, by and among PREMIER BANCSHARES, INC., a Georgia corporation (the
"Holding Company"), PREMIER LENDING CORPORATION, a Georgia corporation ("Premier
Lending"), ALLIANCE FINANCE, INC., a Georgia corporation ("Alliance Finance,"
and, together with the Holding Company and Premier Lending, each a "Borrower"
and collectively the "Borrowers"), and THE BANKERS BANK, a Georgia banking
corporation (the "Lender").
On the date hereof the Holding Company is borrowing $5,600,000 from the
Lender (the "Term Loan"), which will be evidenced by the Term Note, Premier
Lending is borrowing $8,000,000 from the Lender for use in its commercial
finance division (the "Commercial Finance Line"), which will be evidenced by the
Commercial Finance Note, Premier Lending is borrowing $4,000,000 from the Lender
for use as working capital (the "Premier Line"), which will be evidenced by the
Premier Note, and Alliance Finance is borrowing $3,000,000 from the Lender for
use in its personal finance business (the "Personal Finance Line"), which will
be evidenced by the Personal Finance Note. The Term Loan, the Commercial
Finance Line, the Premier Line and the Personal Finance Line are collectively
referred to herein as the "Loans," and the Term Note, the Commercial Finance
Note, the Premier Note and the Personal Finance Note are collectively referred
to herein as the "Notes." The Loans refinance certain existing loans of the
Borrowers with the Bank. The Lender is willing to make each of the Loans to the
respective Borrower thereof on the terms and conditions described below. The
Borrowers and Lender agree that the payment and performance of all obligations
relating to the Loans will be secured in part through the pledge to the Lender
of all the issued and outstanding shares of capital stock owned or hereafter
acquired by the Holding Company (the "Stock") in Premier Bank, a Georgia banking
corporation having its main office at 63 Barrett Parkway, Marietta, Georgia
30066 ("Premier Bank"), Premier Bank, FSB, a federal savings bank having its
main office at 4900 Ross Road, Acworth, Georgia 30101 ("Premier FSB"), The
Central and Southern Bank of Georgia, a Georgia banking corporation having its
main office at 150 Greene Street, Milledgeville, Georgia 31061 ("Central Bank"),
and Premier Lending. In addition, the Personal Finance Note will be secured by
all of the accounts receivable of Alliance Finance, and the Holding Company will
guarantee the repayment of the Commercial Finance Note, the Premier Note and the
Personal Finance Note pursuant to the Guarantee Agreement of even date herewith
by and between the Holding Company and the Lender. Certain capitalized terms
used in this Agreement are defined in Section 22 of this Agreement.
In consideration of the premises and the mutual agreements and
representations in this Agreement, the Lender and the Borrowers agree as
follows:
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1. SECURITY INTERESTS.
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(a) The Holding Company hereby unconditionally grants and assigns to the
Lender and its successors and assigns a continuing security interest in and
security title to the Stock. The Holding Company hereby delivers to the Lender
all of its right, title and interest in and to the Stock, together with
certificates representing the Stock and stock powers endorsed in blank, as
security for (i) all obligations of the Borrowers to the Lender hereunder, and
(ii) payment and performance of all obligations of the Borrowers to the Lender
under the Notes and the Guarantee Agreement, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due. If
the Holding Company receives, for any reason whatsoever, any additional shares
of the capital stock of Premier Bank, Premier FSB, Central Bank or Premier
Lending, such shares shall thereupon constitute Stock to be held by the Lender
under the terms of this Agreement and the Holding Company shall immediately
deliver such shares to the Lender, together with stock powers endorsed in blank
by the Holding Company. Beneficial ownership of the Stock, including all
voting, consensual and dividend rights, shall remain in the Holding Company
until the occurrence of a Default.
(b) If, prior to repayment in full of the Loan, the aggregate book value
of the Stock becomes less than $40,000,000, the Borrowers shall promptly deliver
to the Lender on demand additional collateral of a type and value acceptable to
the Lender (and the Lender's judgment in valuing same shall be conclusive) so
that the sum of the value of such additional collateral plus the aggregate book
value of the Stock is equal to or in excess of $40,000,000. The Borrowers shall
also execute any security documents the Lender may request to evidence and
perfect the Lender's rights in such additional collateral. If at any time such
additional collateral is no longer required pursuant to this Section 1(b), the
Lender shall release its security interest in such additional collateral upon
the request of the Borrowers.
(c) Alliance Finance hereby grants to the Lender a present and continuing
security interest in and security title to all of Alliance Finance's accounts,
contract rights, chattel paper, instruments, drafts and general intangibles of
every kind and description, now existing or hereafter acquired including,
without limitation, all lending accounts receivable of Alliance Finance and all
proceeds of any of the foregoing (all such items being hereinafter referred to
as the "Personal Receivables").
2. REPRESENTATIONS AND WARRANTIES. The Borrowers jointly and severally
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represent and warrant to the Lender as follows:
(a) Each Borrower is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Georgia and is qualified to
do business in all jurisdictions where such qualification is necessary. The
Holding Company is registered as a bank holding company with the Board of
Governors of the Federal Reserve System and the Georgia Department of Banking
and Finance. The chief executive office and the principal place of business
(where their records are kept) of Alliance Finance are located at 63 Barrett
Parkway, Marietta, Georgia 30066. The chief executive office and the principal
place of business (where its records are kept) of the Holding Company and
Premier Lending are located at 2180 Atlanta
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Plaza, 950 East Paces Ferry Road, Atlanta, Georgia 30326. The U.S. employer
identification numbers of the Holding Company, Premier Lending and Alliance
Finance are 58-1793778, 58-2170746, and 58-1904927, respectively.
(b) Premier Bank is a banking corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia. The
Holding Company owns all of the issued and outstanding capital stock of Premier
Bank (consisting of 352,000 shares) and there are no outstanding options,
warrants or other rights which can be converted into shares of capital stock of
Premier Bank. Premier Bank has all requisite corporate power and authority and
possesses all licenses, permits and authorizations necessary for it to own its
properties and conduct its business as presently conducted.
(c) Premier FSB is a federal savings bank duly organized, validly
existing, and in good standing under the laws of the United States. The Holding
Company owns all of the issued and outstanding capital stock of Premier FSB
(consisting of 320,550 shares) and there are no outstanding options, warrants or
other rights which can be converted into shares of capital stock of Premier FSB.
Premier FSB has all requisite corporate power and authority and possesses all
licenses, permits and authorizations necessary for it to own its properties and
conduct its business as presently conducted.
(d) Central Bank is a banking corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia. The
Holding Company will, as of the consummation of the Central Merger, as defined
below, own all of the issued and outstanding capital stock of Central Bank
(consisting of 240,000 shares) and there are no outstanding options, warrants or
other rights which can be converted into shares of capital stock of Central
Bank. Central Bank has all requisite corporate power and authority and possesses
all licenses, permits and authorizations necessary for it to own its properties
and conduct its business as presently conducted.
(e) The only Subsidiaries of the Holding Company are Premier Bank,
Premier FSB, Alliance Finance, and Premier Lending and, subject to the
consummation of the merger of Central and Southern Holding Company ("Central
Holding") with and into the Holding Company (the "Central Merger"), Central Bank
and the Central and Southern Bank of North Georgia, Greensboro, Georgia
("Central Greensboro").
(f) Each financial statement of a Borrower or any Subsidiary thereof
which has been delivered to the Lender presents fairly the financial condition
of such Borrower or Subsidiary as of the date indicated therein and the results
of its operations for the periods shown therein. There has been no material
adverse change, either existing or threatened, in the financial condition or
operations of any Borrower or Subsidiary thereof since the date of such
financial statement.
(g) Each Borrower has full power and authority to execute and perform
the Financing Documents to which it is a party. The execution, delivery, and
performance by each Borrower of the Financing Documents (i) have been duly
authorized by all requisite action by such Borrower, (ii) do not violate any
provision of law, and (iii) do not result in a breach of or constitute a default
under any agreement or other instrument to which such Borrower or any Subsidiary
thereof is a party or by which such Borrower or any Subsidiary thereof is bound.
Each of the Financing Documents constitutes the legal, valid, and binding
obligation of the Borrower or Borrowers which are a party thereto, enforceable
in accordance with its terms.
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(h) Except for the security interest created by this Agreement and as
provided in that certain Shareholders Agreement dated November 10, 1994, by and
among Alliance Finance, Charles William Milton and the Holding Company (the
"Alliance Finance Shareholders Agreement") and subject, as to the outstanding
stock of Central Bank (the "Central Stock"), to the consummation of the Central
Merger, the Holding Company owns the Stock free and clear of all liens, charges,
and encumbrances. The Stock is duly issued, fully paid and non-assessable, and,
except as provided in the Alliance Finance Shareholder Agreement and subject, as
to the Central Stock, to the consummation of the Central Merger, the Holding
Company has the unencumbered right to pledge the Stock.
(i) Except for the security interest created by this Agreement,
Alliance Finance owns the Personal Receivables free and clear of all liens,
charges, and encumbrances, and has the unencumbered right to pledge the Personal
Receivables. Each Personal Receivable represents a valid and legally enforceable
indebtedness based upon an actual and bona fide transaction in the ordinary
course of Alliance Finance's business which has been finally accepted by the
obligor thereon and for which such obligor is unconditionally liable to make
payment of the amount stated in each instrument or document evidencing the
Personal Receivables in accordance with the terms thereof, without offset,
defense or counterclaim. All statements made and all unpaid balances appearing
in instruments or documents evidencing each Personal Receivable are true and
correct and are in all respects what they purport to be, all signatures and
endorsements that appear thereon are genuine, and all signatories and endorsers
have full capacity to contract. To the knowledge of the Borrowers, each obligor
on a Personal Receivable is solvent and financially able to pay in full said
Personal Receivable as and when it matures.
(j) There is no action, arbitration, or other proceeding at law or in
equity, or by or before any court, agency, or arbitrator, nor is there any
judgment, order, or other decree pending, anticipated, or threatened against any
Borrower or any Subsidiary thereof or against any of their properties or assets
which might have a material adverse effect on such Borrower or Subsidiary, or
their respective properties or assets, or which might call into question the
validity or enforceability of the Financing Documents, or which might involve
the alleged violation by such Borrower or any Subsidiary of any law, rule or
regulation.
(k) No consent or other authorization or filing with or of any
governmental authority or other public body on the part of any Borrower or any
Subsidiary thereof is required in connection with such Borrower's execution,
delivery, or performance of the Financing Documents to which it is a party or,
if required, all such prerequisites have been fully satisfied.
(l) None of the transactions contemplated in this Agreement
(including, without limitation, the use of the proceeds of the Loans) will
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, or any regulations issued pursuant thereto.
(m) The following are attached as exhibits hereto: true, correct and
complete copies of (i) the articles of incorporation or charter of each Borrower
and each Bank Subsidiary other than Central Greensboro as in effect as of the
date here (as certified as of a recent date by the Georgia Secretary of State or
the Office of Thrift Supervision, as applicable); (ii) certificates of existence
for each Borrower and each Bank Subsidiary issued as of a recent date by the
Georgia Secretary of State or the Office of Thrift Supervision, as applicable,
(iii) the bylaws of each Borrower in effect immediately prior to the adoption of
the resolutions referred to below (which such bylaws have been in full force and
effect at all times and have not been further
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altered or amended from the adoption of such resolutions through the date
hereof); (iv) the bylaws of each Bank Subsidiary as of the date hereof; (v)
resolutions (the "Resolutions") of the Board of Directors of each Borrower duly
adopted at a meeting duly called and held on the date indicated thereon. A
quorum for the transaction of business was present and acting throughout the
meetings at which the Resolutions were adopted, and the Resolutions have been
since adoption and are now in full force and effect and have not been modified
in any respect. There have been no further amendments or other documents
affecting or altering the articles of incorporation or charter of any Borrower
or Bank Subsidiary since the date of the certifications referred to above
through the date hereof, and each Borrower and Bank Subsidiary has remained in
valid existence under the laws of Georgia or the United States, as applicable,
since such dates.
3. AFFIRMATIVE COVENANTS. Each Borrower agrees that so long as any of
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the Notes are outstanding or this Agreement is in effect:
(a) Such Borrower shall promptly furnish to the Lender: (i) not later
than 120 days after the end of each fiscal year, audited consolidated financial
statements of the Holding Company prepared in accordance with generally accepted
accounting principles ("GAAP") and certified by an independent accounting firm
acceptable to the Lender; (ii) not later than 45 days after each of the first
three quarters of each fiscal year, unaudited consolidated financial statements
of the Borrower, prepared in accordance with GAAP (subject to changes resulting
from normal year-end adjustments) and certified by the chief financial officer
of the Borrower; (iii) not later than 30 days after the end of each of the first
three quarters of each year, copies of the Report of Condition and the Report of
Income and Dividends of each of the Bank Subsidiaries; (iv) immediately after
the occurrence of a material adverse change in the business, properties,
condition, management, or prospects (financial or otherwise) of the Borrower or
any Subsidiary thereof, including, without limitation, imposition of any letter
agreement, memorandum of understanding, cease and desist order, or other similar
regulatory action involving the Borrower or any Subsidiary thereof, a statement
of the Borrower's chief executive officer or chief financial officer setting
forth in reasonable detail such change and the action which the Borrower or any
Subsidiary thereof proposes to take with respect thereto; and (v) from time to
time upon request of the Lender, such other reasonable information relating to
the operations, business, condition, management, properties, or prospects of the
Borrower or any Subsidiary thereof as the Lender may request (including meetings
with the Borrower's or Subsidiary's executive officers).
(b) Such Borrower and each Subsidiary thereof shall punctually pay
and discharge all taxes, assessments and other governmental charges or levies
imposed upon it or upon its income or upon any of its property.
(c) Such Borrower and each Subsidiary thereof shall comply in all
material respects with all requirements of constitutions, statutes, rules,
regulations, and orders and all orders and decrees of courts and arbitrators
applicable to it or its properties.
(d) Such Borrower shall immediately notify the Lender of any
significant change in executive management or any change in the beneficial
ownership of the Borrower's stock by any officer, director or 25% or greater
shareholder of the Borrower which involves 5% or more of the outstanding shares
of such stock.
(e) To the maximum extent permitted by applicable law, and provided
that the Lender's correspondent services are available and competitively priced,
the Holding Company
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shall cause each of the Bank Subsidiaries to maintain the Lender as its primary
correspondent. The Holding Company will or will cause one of the Bank
Subsidiaries to be a shareholder of Community Financial Services, Inc., the
holding company for the Lender.
4. NEGATIVE COVENANTS. The Holding Company agrees that so long as any of
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the Notes are outstanding or this Agreement is in effect:
(a) The Holding Company shall not permit its Capital during the term
of this Agreement to be less than $35,000,000.
(b) The Holding Company shall not permit the ratio of Tier 1 Capital
to average total assets (the Tier 1 Leverage Ratio) of the Holding Company or
any of the Bank Subsidiaries as of the end of any fiscal year to be less than
6.0%.
(c) The Holding Company shall not permit the Total Risk - Based
Capital Ratio or the Holding Company or any of the Bank Subsidiaries as of the
end of any fiscal quarter during the term of this Agreement to be less than
9.5%.
(d) The Holding Company shall not, and shall not permit any of the
Bank Subsidiaries to, fail to comply with any minimum capital requirement
imposed by any of their federal or state regulators.
(e) The Holding Company shall not permit its Weighted Average Return
on Assets for each fiscal year to be less than 0.60%.
(f) The Holding Company shall not permit the allowance for loan and
lease losses of any of the Bank Subsidiaries to be less than 1.00% of its gross
loans (exclusive of permanent mortgage loans secured by single family
residences) for each fiscal quarter.
(g) The Holding Company shall not permit any of the Bank Subsidiaries
to maintain an Assessment Risk Classification other than either (i) Group 1,
Subgroup A; (ii) Group 1, Subgroup B; or (iii) Group 2, Subgroup A.
(h) The Holding Company shall not receive a composite BOPEC rating,
and shall not permit any of the Bank Subsidiaries to receive a composite CAMELS
rating, from any of their respective regulators, other than two or better.
(i) The Holding Company shall not incur or permit to exist any
indebtedness or liability for borrowed money in an aggregate in excess of
$500,000.00 other than to the Lender or a wholly-owned Subsidiary of the
Borrower without prior Lender approval, except that this covenant shall not
apply to (i) the assumption of not more than $1,600,000 of indebtedness in
connection with the Central Merger which such indebtedness shall be refinanced
by the Term Loan and (ii) deposits, repurchase agreements, federal funds
borrowings, Federal Home Loan Bank advances, mortgage warehouse lines,
subordinated debt, overdrafts, and other transactions entered into by a
Subsidiary in the ordinary course of its business.
(j) The Holding Company shall not, directly or indirectly, become a
guarantor of any obligation of, or an endorser of, or otherwise assume or become
liable upon any notes, obligations, or other indebtedness of any other Person
(other than a Subsidiary) except in connection with the depositing of checks in
the normal and ordinary course of business.
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(k) Except for (i) the proposed purchase and assumption by Premier
Bank of substantially all of the assets and liabilities of Premier FSB and the
proposed subsequent sale of Premier FSB and its remaining assets and liabilities
to a third party (the "Premier Reorganization") and (ii) the consummation of the
Central Merger, the Holding Company shall not, nor permit any Subsidiary to,
transfer all or substantially all of its assets to or consolidate or merge with
any other insured financial institution (other than another Subsidiary), or
acquire all or substantially all of the properties or capital stock of any other
insured financial institution (other than another Subsidiary) without the
Lender's prior written consent, which consent shall not be unreasonably
withheld.
(l) The Holding Company shall not permit any Subsidiary to issue,
sell or otherwise dispose or part with control of any shares of any class of its
stock (other than directors' qualifying shares) except to the Holding Company or
a wholly-owned Subsidiary of the Holding Company.
(m) The Holding Company shall not sell or otherwise dispose or part
with control of any of the Stock or any other securities or indebtedness of any
Subsidiary, and the Holding Company shall not pledge or otherwise transfer or
grant a security interest in any of the capital stock or other securities of any
of its Subsidiaries; provided, however, that the Holding Company may sell its
interest in Alliance Finance in a transaction which does not result in the
recognition of a loss on the sale provided that all outstanding amounts due
under the Personal Finance Line are first paid in full and the balance due under
the Personal Finance Line remains zero (such transaction being referred to
herein as a "Qualifying Alliance Sale").
(n) No Borrower shall pay any dividend or make any other distribution
on its capital stock if any Loan is in default or if such action would, directly
or with the delivery of notice or passage of time, result in a Default.
5. ADVANCES UNDER THE LOAN. Subject to the terms and conditions of this
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Agreement, the Lender will advance the principal balance of the Term Loan to the
Holding Company upon execution and delivery of this Agreement and will advance
to Premier Lending or Alliance Finance, as applicable, the principal amounts of
the Commercial Finance Line, the Premier Line and the Personal Finance Line, in
a series of advances as requested from time to time by the applicable Borrower.
Each such advance will reduce the remaining commitment to lend under the
applicable line of credit, but repayments of advances shall permit the Borrower
to receive a re-advance of such funds; provided however, no advance or re-
advance shall be made after June 30, 1998.
(a) The Lender shall not be obligated to make any advance under any
of the Loans to a Borrower unless:
(i) All representations and warranties of the Borrowers
contained in this Agreement or the Notes shall be true in all material respects
on and as of the date of each advance of the Loan.
(ii) Each Borrower and each Subsidiary shall have performed in
all material respects all their agreements and obligations required by the
Financing Documents.
(iii) No material adverse change shall have occurred in any
Borrower's or any Subsidiary's condition (financial or otherwise), or in the
business, properties, assets,
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liabilities, prospects, or management of any Borrower or any Subsidiary since
the date of this Agreement.
(iv) No Default or event which, with the giving of notice or
passage of time (or both), would constitute a Default under the terms of this
Agreement shall have occurred.
(v) All other matters incidental to the Loans shall be
satisfactory to the Lender.
(b) In addition to the conditions to any advance under any of the
Loans to a Borrower set forth in (a) above:
(i) The Lender shall not be obligated to make any advance under
the Term Loan prior to the consummation of the Central Merger if following such
advance the outstanding principal balance of the Term Loan would exceed
$4,000,000.
(ii) The Lender shall not be obligated to make any advance under
the Commercial Finance Line prior to the consummation of the Central Merger if
following such advance the outstanding principal balance of the Commercial
Finance Line would exceed $4,000,000.
(iii) The Lender shall not be obligated to make any advance under
any of the Loans prior to such time as the Lender has obtained commitments from
respondent banks to purchase $15,600,000 in participations in the Loans if
following such advance the aggregate outstanding principal balance of the Loans
would exceed $18,600,000.
(iv) The Lender shall not be obligated to make any advances
under the Personal Finance Line following the consummation of a Qualifying
Alliance Sale.
6. DEFAULT. A "Default" shall exist if any of the following occurs:
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(a) Failure of any Borrower punctually to make any payment of any
amount payable, whether principal or interest or other amount, on any of the
Liabilities, whether at maturity, or at a date fixed for any prepayment or
partial prepayment, or by acceleration, or otherwise, if such failure is not
remedied within 10 days after notice of the default is sent from the Lender to
the Borrower.
(b) Any statement, representation, or warranty of any Borrower made
in any of the Financing Documents or at any time furnished by or on behalf of
the Borrower to the Lender shall be false or misleading in any material respect
as of the date made.
(c) Failure of any Borrower punctually and fully to comply with any
of the covenants in Section 4 of this Agreement or any of the other covenants
set forth in this Agreement if such failure is not remedied within 15 days after
notice of the default is sent from the Lender to the Borrower.
(d) The occurrence of a default under any other agreement to which
any Borrower and the Lender are parties or under any other instrument executed
by any Borrower in favor of the Lender.
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(e) If any Borrower or Subsidiary becomes insolvent as defined in the
Georgia Uniform Commercial Code or makes an assignment for the benefit of
creditors; or if any action is brought by any Borrower or Subsidiary seeking
dissolution of any Borrower or such Subsidiary or liquidation of its assets or
seeking the appointment of a trustee, interim trustee, receiver, or other
custodian for any of its property; or if any Borrower or Subsidiary commences a
voluntary case under the Federal Bankruptcy Code; or if any reorganization or
arrangement proceeding is instituted by any Borrower or any Subsidiary for the
settlement, readjustment, composition or extension of any of its debts upon any
terms; or if any action or petition is otherwise brought by any Borrower or
Subsidiary seeking similar relief or alleging that it is insolvent or unable to
pay its debts as they mature.
(f) Any action is brought against any Borrower or Subsidiary seeking
dissolution of such Borrower or Subsidiary or liquidation of any of its assets
or seeking the appointment of a trustee, interim trustee, receiver, or other
custodian for any of its property, and such action is consented to or acquiesced
in by such Borrower or Subsidiary or is not dismissed within 30 days of the date
upon which it was instituted; or any proceeding under the Federal Bankruptcy
Code is instituted against any Borrower or Subsidiary and (i) an order for
relief is entered in such proceeding or (ii) such proceeding is consented to or
acquiesced in by the Borrower or such Subsidiary or is not dismissed within 30
days of the date upon which it was instituted; or any reorganization or
arrangement proceeding is instituted against any Borrower or Subsidiary for the
settlement, readjustment, composition, or extension of any of its debts upon any
terms, and such proceeding is consented to or acquiesced in by such Borrower or
Subsidiary or is not dismissed within 30 days of the date upon which it was
instituted; or any action or petition is otherwise brought against any Borrower
or Subsidiary seeking similar relief or alleging that it is insolvent, unable to
pay its debts as they mature, or generally not paying its debts as they become
due, and such action or petition is consented to or acquiesced in by such
Borrower or Subsidiary or is not dismissed within 30 days of the date upon which
it was brought.
(g) Any Borrower or Subsidiary is in default (or an event has
occurred which, with the giving of notice or passage of time, or both, will
cause any Borrower or Subsidiary to be in default) on indebtedness to another
Person, and the amount of such indebtedness exceeds $100,000 or the acceleration
of the maturity of such indebtedness would have a material adverse effect upon
such Borrower or Subsidiary.
(h) Any other material adverse change occurs in any Borrower's
financial condition or means or ability to pay the Liabilities.
(i) Any cease and desist or other order has been threatened, noticed,
or entered against the Holding Company or any Subsidiary by any bank or bank
holding company regulatory agency or body, or the Holding Company or any
Subsidiary enters into any form of memorandum of understanding, plan of
corrective action, or letter agreement with any such regulatory agency or body,
or any other regulatory enforcement action is taken against the Holding Company
or any Subsidiary relating to the capitalization, management, or operation of
the Holding Company or any Subsidiary.
(j) Any Borrower or Subsidiary is indicted or convicted or pleads
guilty or nolo contendere to any charge that such Borrower or Subsidiary has
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violated any drug, controlled substances, money laundering, currency reporting,
racketeering, or racketeering-influenced-and-corrupt-organization statute or
regulations other forfeiture statute.
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(k) Except as contemplated in the Premier Reorganization and subject
to the consummation of the Central Merger, the Holding Company ceases to own
100% of the issued and outstanding capital stock of Premier Bank, Premier FSB,
Central Bank or Premier Lending or, unless a Qualifying Alliance Sale is
consummated, 80% of the issued and outstanding capital stock of Alliance
Finance, or ceases to control any other Bank Subsidiary.
7. REMEDIES UPON DEFAULT. Upon the occurrence of a Default, the Lender
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shall be entitled, without limitation, to exercise the following rights at any
time and from time to time, which the Borrowers hereby agree to be commercially
reasonable:
(a) declare any of the Liabilities due and payable, whereupon they
immediately will become due and payable (notwithstanding any provisions to the
contrary, and without presentment, demand, notice or protest of any kind);
(b) (i) receive all amounts payable in respect of the Collateral
otherwise payable to the Borrowers; (ii) settle all accounts, claims, and
controversies relating to the Collateral; (iii) transfer all or any part of the
Collateral into the Lender's or any nominee's name; and (iv) execute all
agreements and other instruments; bring, defend and abandon all actions and
other proceedings; and take all actions in relation to the Collateral as the
Lender in its sole discretion may determine;
(c) enforce the payment of the Stock and exercise all of the rights,
powers and remedies of the Holding Company thereunder, including the exercise of
all voting rights and other ownership or consensual rights of the Stock (but the
Lender is not hereby obligated to exercise such rights), and in connection
therewith the Holding Company hereby appoints the Lender to be the Holding
Company's true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote the
Stock in any manner the Lender deems advisable for or against all matters
submitted to a vote of shareholders, and such power-of-attorney is coupled with
an interest and irrevocable;
(d) subject to the terms and conditions of the Alliance Finance
Shareholders Agreement, sell, assign and deliver, or grant options to purchase,
all or any part of or interest in the Collateral in one or more parcels, at any
public or private sale at any exchange, any of the Lender's offices, or
elsewhere, without demand of performance, advertisement, or notice of intention
to sell or of the time or place of sale or adjournment thereof or to redeem or
otherwise (all of which are hereby expressly and irrevocably waived by the
Borrowers), for cash, on credit, or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price and on such
terms as the Lender in its sole discretion may determine; the Borrowers agree
that to the extent that notice of sale shall be required by law that at least
five business days' notice to the relevant Borrower of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification; the Lender shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given; the
Lender may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and any such sale may, without further
notice, be made at the time and place to which it was so adjourned; the
Borrowers hereby waive and release to the fullest extent permitted by law any
right or equity of redemption with respect to the Collateral, whether before or
after sale hereunder, and all rights, if any, of marshaling the Collateral and
any other security for the Loans or otherwise; at any such sale, unless
prohibited by applicable law, the Lender may bid for and purchase all or any
part of the Collateral so sold free from any such right or equity of redemption;
and the Lender shall not be liable for failure
<PAGE>
to collect or realize upon any or all of the Collateral or for any delay in so
doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto;
(e) appoint and dismiss managers or other agents for any of the
purposes mentioned in the foregoing provisions of this Section 7, all as the
Lender in its sole discretion may determine; and
(f) generally, take all such other action as the Lender in its sole
discretion may determine as incidental or conducive to any of the matters or
powers mentioned in this Section 7 and which the Lender may or can do lawfully
and use the name of any of the Borrowers for such purposes and in any
proceedings arising therefrom.
8. APPLICATION OF PROCEEDS. The proceeds of the public or private sale
-----------------------
or other disposition of any Collateral hereunder shall be applied to (i) the
costs incurred in connection with the sale, expressly including, without
limitation, any costs under Section 11(a) hereof; (ii) any unpaid interest which
may have accrued on any obligations secured hereby; (iii) any unpaid principal
on any obligations secured hereby; and (iv) damages incurred by the Lender by
reason of any breach secured against hereby, in such order as the Lender may
determine, and any remaining proceeds shall be paid over to the relevant
Borrower or others as by law provided. If the proceeds of the sale or other
disposition of the Stock are insufficient to pay all such amounts, the Borrower
shall remain liable to the Lender for the deficiency.
9. ADDITIONAL RIGHTS OF SECURED PARTIES. In addition to its other rights
------------------------------------
and privileges under this Agreement, the Lender may exercise from time to time
any and all other rights and remedies available to a secured party when a debtor
is in default under a security agreement as provided in the Uniform Commercial
Code of Georgia, or available to the Lender under any other applicable law or in
equity, including without limitation the right to any deficiency remaining after
disposition of the Collateral. The Borrowers shall pay all of the reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the Lender
in enforcing its rights under this Agreement.
10. RETURN OF COLLATERAL TO BORROWER. Upon payment in full of all
--------------------------------
principal and interest on the Notes and full performance by the Borrowers of all
covenants and other obligations under this Agreement, the Lender shall (i)
return to the Holding Company all of the then remaining Stock and all rights
received by the Lender as agent for the Borrower as a result of its possessory
interest in the Stock, and (ii) release in favor of Alliance Finance its
recorded lien covering the Personal Receivables.
11. DISPOSITION OF STOCK BY AGENT. The Stock is not registered under the
-----------------------------
various federal or state securities laws and disposition thereof after default
may be subject to prior regulatory approval and may be restricted to one or more
private (instead of public) sales in view of the lack of such registration. The
Borrowers acknowledge that upon such disposition, the Lender may approach only a
restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Stock than if the Stock were
registered pursuant to federal and state securities laws and sold on the open
market. The Borrowers, therefore, agree that:
(a) if the Lender shall, pursuant to the terms of this Agreement,
sell or cause any of the Stock to be sold at a private sale, the Lender shall
have the right to rely upon the advice and opinion of any national brokerage or
investment firm having recognized expertise and
<PAGE>
experience in connection with shares of companies in the banking industry (but
shall not be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of the Lender's action)
as to the best manner in which to expose the Stock for sale and as to the best
price reasonably obtainable at the private sale thereof; and
(b) such reliance shall be conclusive evidence that the Lender has
handled such disposition in a commercially reasonable manner.
12. BORROWER'S OBLIGATIONS ABSOLUTE. The obligations of the Borrowers
-------------------------------
under this Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any other remedies against any of the Borrowers
or any other Person, nor against other security or liens available to the Lender
or its successors, assigns or agents. Each Borrower hereby waives any right to
require that an action be brought against any other Person or require that
resort be had to any security or to any balance of any deposit account or credit
on the books of the Lender in favor of any other Person prior to any exercise of
rights or remedies hereunder, or to require resort to rights or remedies of the
Lender in connection with any of the Loans.
13. NOTICES. Except as provided otherwise in this Agreement, all notices
-------
and other communications under this Agreement are to be in writing and are to be
deemed to have been duly given and to be effective upon delivery to the party to
whom they are directed. If sent by U.S. mail, first class, certified, return
receipt requested, postage prepaid, and addressed to the Lender or to the
Borrowers at their respective addressees set forth below, such communications
are deemed to have been delivered on the second business day after being so
posted.
If to the Lender: The Bankers Bank
300 Northcreek, Suite 800
3715 Northside Parkway
Atlanta, Georgia 30327
Attn: William R. Burkett, Senior Vice President
If to the Holding Company: Premier Bancshares, Inc.
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Attn: Frank H. Roach, Executive Vice President
and Chief Financial Officer
If to Premier Lending: Premier Lending Corporation
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
Attn: Darrell D. Pittard, Chairman and Chief
Executive Officer
If to Alliance Finance: Alliance Finance, Inc.
63 Barrett Parkway
Marietta, Georgia 30066
Attn: Frank H. Roach, Chief Financial Officer
<PAGE>
A copy of all notices to the Holding Womble Carlyle Sandridge & Rice
Company, Premier Lending and 1275 Peachtree Street, N.E.
Alliance Finance shall also be sent to: Suite 700
Atlanta, Georgia 30309
Attn: Steven S. Dunlevie, Esq.
The Lender or any of the Borrowers may, by written notice to the other,
designate a different address for receiving notices under this Agreement;
provided, however, that no such change of address will be effective until
written notice thereof is actually received by the party to whom such change of
address is sent.
14. BINDING AGREEMENT. The provisions of this Agreement shall be
-----------------
construed and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the laws of the State of Georgia. This
Agreement, together with all documents referred to herein, constitutes the
entire Agreement between the Borrowers and the Lender with respect to the
matters addressed herein and may not be modified except by a writing executed by
the Lender and delivered by the Lender to the Borrowers. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original but
all of which, taken together, shall constitute one and the same instrument.
15. PARTICIPATIONS. The Lender may at any time grant participations in or
--------------
sell, assign, transfer or otherwise dispose of all or any portion of the
indebtedness of any of the Borrowers outstanding pursuant to the Financing
Documents. Each Borrower hereby agrees that any holder of a participation in,
and any assignee or transferee of, all or any portion of any amount owed by the
Borrower under the Financing Documents (i) shall be entitled to the benefits of
the provisions of this Agreement as the Lender hereunder and (ii) may exercise
any and all rights of the banker's lien, set-off or counterclaim with respect to
any and all amounts owed by the Borrower to such assignee, transferee or holder
as fully as if such assignee, transferee or holder had made the relevant Loan in
the amount of the obligation in which it holds a participation or which is
assigned or transferred to it.
16. EXPENSES. All reports and other documents or information furnished to
--------
the Lender under this Agreement shall be supplied by the Borrowers without cost
to the Lender. Further, the Borrowers shall reimburse the Lender on demand for
all out-of-pocket costs and expenses (including legal fees) incurred by the
Lender in connection with the preparation, interpretation, operation, and
enforcement of the Financing Documents or the protection or preservation of any
right or claim of the Lender with respect to such agreements. The Borrowers
will pay all taxes (if any) in connection with the Financing Documents. The
obligations of the Borrowers under this section shall survive the payment of the
Liabilities and the termination of this Agreement.
17. INDEMNIFICATION. In addition to any other amounts payable by the
---------------
Borrower under this Agreement, the Borrowers shall pay and indemnify jointly and
severally the Lender from and against all claims, liabilities, losses, costs,
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) which the Lender may (other than as a result of the gross negligence
or willful misconduct of the Lender) incur or be subject to as a consequence,
directly or indirectly, of (i) any breach by any Borrower of any warranty, term
or condition in, or the occurrence of any default under, any of the Financing
Documents, including all fees or expenses resulting from the settlement or
defense of any claims or liabilities arising as a result of any such breach or
default, (ii) the Lender's making, holding, or administering any of the
<PAGE>
Loans or the Collateral, (iii) allegations of participation or interference by
the Lender in the management, contractual relations or other affairs of any
Borrower or Subsidiary, (iv) allegations that the Lender has joint liability
with any Borrower or Subsidiary for any reason, and (v) any suit, investigation,
or proceeding as to which the Lender or such participant is involved as a
consequence, directly or indirectly, of its execution of any of the Financing
Documents, or any other event or transaction contemplated by any of the
foregoing. The obligations of the Borrowers under this Section 17 shall survive
the termination of this Agreement.
18. RIGHT TO SET-OFF. Upon the occurrence of a Default hereunder, the
----------------
Lender, without notice or demand of any kind, may hold and set off against such
of the Liabilities (whether matured or unmatured) as the Lender may elect any
balance or amount to the credit of any Borrower in any deposit, agency, reserve,
holdback or other account of any nature whatsoever maintained by or on behalf of
the Borrower with the Lender at any of its offices, regardless of whether such
accounts are general or special and regardless of whether such accounts are
individual or joint. Any Person purchasing an interest in debt obligations
under this Agreement held by the Lender may exercise all rights of offset with
respect to such interest as fully as if such Person were a holder of debt
obligations hereunder in the amount of such interest.
19. FURTHER ASSURANCES. If at any time the Lender upon advice of its
------------------
counsel shall determine that any further document shall be required to effect
this Agreement and the transactions and other agreements contemplated thereby,
each Borrower shall, and shall cause its Subsidiaries to, if requested by the
Lender, execute and deliver such document and otherwise carry out the purposes
of this Agreement.
20. SEVERABILITY. If any paragraph or part thereof shall for any reason
------------
be held or adjudged to be invalid, illegal, or unenforceable by any court of
competent jurisdiction, such paragraph or part thereof shall be deemed separate,
distinct, and independent, and the remainder of this Agreement shall remain in
full force and effect and shall not be affected by such holding or adjudication.
21. BINDING EFFECT. All rights of the Lender under the Financing
--------------
Documents shall inure to the benefit of its transferees, successors and assigns.
All obligations of the Borrowers under the Financing Documents shall bind its
legal representatives, successors, and assigns.
22. DEFINITIONS.
-----------
(a) "Assessment Risk Classification" means the assessment risk
classification assigned to each of the Bank Subsidiaries for purposes of
assessment of premiums by the Federal Deposit Insurance Corporation for deposit
insurance pursuant to 12 C.F.R. (S) 327.3(d) or the corresponding assessment
risk classification, as determined by the Lender, pursuant to any successor
assessment risk classification system.
(b) "Bank Subsidiaries" means each banking Subsidiary of the Holding
Company, now or hereafter in existence, including but not limited to Alliance
Bank and Premier Bank and, after the consummation of the Central Merger, Central
Bank and Central Greensboro.
(c) "Capital" means all capital or all components of capital, other
than any allowance for loan and lease losses and net of any intangible assets,
as defined from time to time by the primary federal regulator of the Holding
Company, Premier Bank, Premier FSB, or any other Bank Subsidiary (as the case
may be).
<PAGE>
(d) "Collateral" means and includes all property assigned or pledged
to the Lender or in which the Lender has been granted security interest or to
which the Lender has been granted security title, whether under any of the
Financing Documents or any other agreement, instrument, or document, and the
proceeds thereof.
(e) "Financing Documents" means and includes this Agreement, the
Notes, the Guarantee Agreement, and all other associated loan and collateral
documents including, without limitation, all guaranties, suretyship agreements,
stock powers, security agreements, security deeds, subordination agreements,
exhibits, schedules, attachments, financing statements, notices, consents,
waivers, opinions, letters, reports, records, assignments, documents,
instruments, information and other writings related thereto, or furnished by any
Borrower to the Lender in connection therewith or in connection with any of the
Collateral, and any amendments, extensions, renewals, modifications or
substitutions thereof or therefor.
(f) "Liabilities" means all indebtedness, liabilities, and
obligations of any Borrower of any nature whatsoever which the Lender may now or
hereafter have, own or hold, and which are now or hereafter owing to the Lender
regardless of however and whenever created, arising or evidenced, whether now,
heretofore or hereafter incurred, whether now, heretofore or hereafter due and
payable, whether alone or together with another or others, whether direct or
indirect, primary or secondary, absolute or contingent, or joint or several, and
whether as principal, maker, endorser, guarantor, surety or otherwise, and also
regardless of whether such Liabilities are from time to time reduced and
thereafter increased or entirely extinguished and thereafter reincurred,
including without limitation the Notes and any amendments, extensions, renewals,
modifications or substitutions thereof or therefor.
(g) "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
(h) "Subsidiary" means each other entity for which the Holding
Company or other relevant entity has the power, directly or indirectly, to
direct its management or policies or to vote 25% or more of any class of its
voting securities, including, without limitation, each of the Bank Subsidiaries.
(i) "Tier 1 Capital" means Tier 1 capital as defined by the capital
maintenance regulations of the primary federal bank regulatory agency of the
relevant Bank Subsidiary.
(k) "Total Risk Based Capital Ratio" means the Total risk based
capital ratio as defined by the capital maintenance regulations of the primary
federal bank regulatory agency of the Holding Company.
(l) "Weighted Average Return on Assets" means with respect to the
Holding Company, its consolidated net income for the previous calendar year plus
the amount of any interest payments by it on the Term Loan during the previous
calendar year, divided by its consolidated average assets during the previous
calendar year.
(m) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in effect from time to time.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
affixed their seals by and through their duly authorized officers, as of the day
and year first above written.
HOLDING COMPANY:
PREMIER BANCSHARES, INC.
By:____________________________________________________
Darrell Pittard
Chairman and Chief Executive Officer
Attest:________________________________________________
Barbara J. Burtt
Secretary
[CORPORATE SEAL]
PREMIER LENDING:
PREMIER LENDING CORPORATION
By:____________________________________________________
Frank H. Roach
Treasurer
Attest:________________________________________________
Barbara J. Burtt
Secretary
[CORPORATE SEAL]
ALLIANCE FINANCE:
ALLIANCE FINANCE, INC.
By:____________________________________________________
Charles William Milton
President
<PAGE>
Attest:________________________________________________
Frank H. Roach
Secretary
[CORPORATE SEAL]
LENDER:
THE BANKERS BANK
By:____________________________________________________
William R. Burkett
Senior Vice President
[BANK SEAL]
<PAGE>
EXHIBIT 10.28
CITIZENS BANK OF GWINNETT
This agreement made and entered into effective as of the 11th day of
December, 1990, between the CITIZENS BANK OF GWINNETT, DULUTH, GEORGIA ("the
Bank") and THOMAS J. MARTIN ("employee");
WHEREAS, the bank is a state bank regulated by the Georgia Department of
Banking and Finance and located in Duluth, Georgia; and
WHEREAS, employee is currently employed as President and Chief Executive
Officer of the bank; and
WHEREAS, the parties desire to enter into this agreement setting forth the
terms and conditions of the employment relationship of the bank and the
employee;
NOW, THEREFORE, it is AGREED as follows:
I. RELATIONSHIP ESTABLISHED AND DUTIES
--------------------------------------
1. The bank hereby will continue to employ the employee as President and
Chief Executive Officer, to hold the title of President and Chief Executive
Officer, and to perform such services and duties as the Board of Directors may,
from time to time, designate during the term hereof. Subject to the terms and
conditions hereof, employee will perform such duties and exercise such authority
as are customarily performed and exercised by persons holding such office,
subject to the general direction of the Board of Directors of the bank,
exercised in good faith in accordance with standards of reasonable business
judgment.
2. Employee shall serve on the Board of Directors of the bank and as a
member of its Executive Committee, subject to the terms hereof.
3. Employee accepts such employment and shall devote his full time,
attention, and efforts to the diligent performance of his duties herein
specified and as an officer and director of the bank and will not accept
employment with any other individual, corporation, partnership, governmental
authority, or any other entity, or engage in any other venture for profit which
the bank may consider to be in conflict with his or its best interest or to be
in competition with the bank's business, or which may interfere in any way with
the employee's performance of his duties hereunder. Any exception to this must
be made by notification and approval of the Board.
<PAGE>
page 2
Bank CEO Employment Agreement
II. TERMS OF EMPLOYMENT
------------------------
1. The initial term of employment under this Agreement shall continue
for three years unless such is terminated pursuant to the terms hereof or by the
first to occur of the conditions to be stated hereinafter. This Agreement will
be automatically extended each year after the initial term unless either party
gives 90 days contrary written notice to the other. The term previously stated
notwithstanding this contract shall be terminated by the earlier to occur of any
of the following:
a. the death of the employee;
b. the complete disability of employee. "Complete disability" as
used herein shall mean the inability of employee, due to illness, accident, or
other physical or mental incapacity to perform the services provided for
hereunder for an aggregate of sixty days within any period of 120 consecutive
days during the term hereof; provided, however, disability shall not constitute
a basis for discharge for cause;
c. the discharge of employee by the bank for cause. "Cause" as
used herein shall mean:
1) such negligence or misconduct as shall constitute, as a
matter of law, a breach of the covenants and obligations of employee hereunder;
2) failure or refusal of employee to comply with the
provisions of this agreement;
3) employee being convicted by any duly constituted court
with competent jurisdiction of a crime involving moral turpitude;
4) at the discretion of the Board, this contract may be
terminated if there are acts the Board feels are moral turpitude;
5) termination of the contract at the discretion of the
Board for failure to perform at acceptable levels of deposit growth and other
performance standards as determined by the Board.
Termination of employee's employment shall constitute a tender by employee
of his resignation as an officer and director of the bank. In the event of
termination the employee is entitled to severance pay equal to one month's pay
for each year employed by the bank up to six months' salary.
<PAGE>
page 3
Bank CEO Employment Agreement
III. COMPENSATION
-----------------
For all services which employee may render to the bank during the term
hereof, the bank shall pay to employee, subject to such deductions as may be
required by law;
1. Base Salary. An annual salary of $111,000 payable in equal bimonthly
installments and subject to such deductions as may be required by law, for the
first 12 months. Thereafter, annual increase reviews will be done during the
month of December for a January 1 effective increase date during the term of
this Agreement so that for the 12 months beginning on each such anniversary
date, the employee's salary increases will take effect. The Board has sole
discretion as to the amount of the CEO's compensation.
2. Performance Bonuses. Each year, a performance bonus, ranging from 0%
to 50% of annual base salary will be awarded, based upon mutually agreed upon
goals such as the Return on Average Assets achieved before the application of
taxes based upon the following formula:
a. ROA equal to .90 but less than 1% Bonus = 5%
b. ROA greater than 1.0% but less than 1.10% Bonus = 10%
c. ROA equal to 1.10% but less than 1.20% Bonus = 15%
d. ROA equal to 1.20% but less than 1.30% Bonus = 20%
e. ROA equal to 1.30% but less than 1.40% Bonus = 25%
f. ROA equal to 1.40% but less than 1.60% Bonus = 30%
g. ROA equal to 1.60% but less than 1.75% Bonus = 35%
h. ROA equal to 1.75% but less than 2.00% Bonus = 40%
i. ROA over 2.00% Bonus = 50%
<PAGE>
page 4
Bank CEO Employment Agreement
IV. OTHER BENEFITS
------------------
1. The employee shall be entitled to participate in any plan of the bank
relating to stock options, stock purchases, profit sharing, thrift, group life
insurance, medical coverage, education, or other retirement or employee benefits
that the bank may adopt for the benefit of its employees.
2. The employee shall be eligible to participate in any other benefits
which may be or become applicable to the bank's executive employees, shall be
furnished a car with all expenses of maintenance to cover all automobile use, a
reasonable expense account, the payment of reasonable expenses for attending
annual and periodic meeting of trade associations, and any other benefits which
are commensurate with the responsibilities and functions to be performed by the
employee under this Agreement. Employer also agrees to pay all reasonable
expenses in connection with the attendance and participation at said trade
association meetings by employee's spouse with Board approval.
3. At such reasonable times as the Board of Directors shall in its
discretion permit, the employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time, provided that:
a. The employee shall be entitled to an annual vacation of three
weeks per year. The employee shall schedule at least two consecutive weeks of
vacation each year.
b. The timing of vacations shall be scheduled in a reasonable manner
by the employee. The employee shall not be entitled to receive any additional
compensation from the bank on account of his failure to take a vacation; nor
shall he be entitled to accumulate unused vacation time from one calendar year
to the next.
c. In addition to the aforesaid paid vacations, the employee shall
be entitled, without loss of pay to absent himself voluntarily from the
performance of his employment with the bank for such additional periods of time
and for such valid and legitimate reasons as the Board of Directors in its
discretion may determine. Further, the Board of Directors shall be entitled to
grant to the employee a leave or leaves of absence with or without pay at such
times and upon such terms and conditions as the Board, in its discretion, may
determine.
<PAGE>
page 5
Bank CEO Employment Agreement
V. CHANGE OF CONTROL
--------------------
1. If during the term of this Agreement there is a change of control
(COC) of the bank, the Employee shall be entitled to termination or severance
pay in the event the employee's employment is terminated, except for just cause
as defined in Section II., paragraph 1, c, after the change in control. In the
event the employee is terminated after 120 days as a result of COC, the employee
shall be entitled to receive his salary through the last day of the calendar
month of the termination, or payment in lieu of the notice period. In addition,
the terminated employee shall receive an amount equal to three times his then
existing annual base salary. This payment shall also be made in connection
with, or within 120 days after, a change in control of the bank if such change
in control was opposed by the employee or the bank's Board of Directors. This
payment shall be in addition to any amount otherwise owed to the employee
pursuant to this Agreement.
2. The following items are automatically considered due and payable in
the event that change of control occurs:
a. Non-forfeitable deferred compensation shall be paid out in full.
b. Long-term performance plan objective payments as described in
Section III, 2, f, shall be declared accomplished and earned based upon
performance up to date of the COC.
c. In the event that the employee is a participant in a restricted
stock plan, or share option plan, and such plan is terminated involuntarily as a
result of the COC, all stock and options shall be declared 100% vested, and
distributed. The term "control" shall refer to the acquisition of 25% or more
of the voting securities of the bank by any person, or persons acting as a group
within the meaning of Section 13(d) of the Securities Exchange Act of 1934, or
to such acquisition of a percentage between 10 percent and 25 percent if the
Board of Directors of the bank or the Georgia Department of Banking and Finance,
the FDIC, or the Federal Reserve Bank have made a determination that such
acquisition constitutes or will constitute control of the bank. The term
"person" refers to an individual, corporation, bank, bank holding company, or
other entity.
<PAGE>
page 6
Bank CEO Employment Agreement
VI. POST TERMINATION COVENANTS
------------------------------
1. If during the term hereof employee shall cease employment hereunder
for any reason, then employee agrees that for one year following such
termination he will not be employed in the banking business or any related field
thereto in Duluth, Georgia or Gwinnett County, Georgia. Furthermore, following
such termination employee agrees that he will not, without the prior written
consent of the bank:
1) furnish anyone with the name of, or any list or lists of
customers of the bank or utilize such list or information himself for banking
purposes; or
2) furnish, use, or divulge to anyone any information acquired by
him from the bank relating to the bank's methods of doing business; or
3) contact directly or indirectly any customer of the bank for
banking solicitation purposes; or
4) hire for any other bank or employer (including himself) any
employee of the bank or directly or indirectly cause such employee to leave his
or her employment to work for another.
2. It is understood and agreed by the parties hereto that the provisions
of this section are independent of each other, and the invalidity of any such
provision or portion thereof shall not affect the validity or enforceability of
any other provisions of this agreement.
VII. WAIVER OF PROVISIONS
-------------------------
Failure of any of the parties to insist, in one or more instances, on
performance by the others in strict accordance with the terms and conditions of
this agreement shall not be deemed a waiver or relinquishment of any right
granted hereunder of the future performance of any such term or condition or of
any other term or condition of this agreement, unless such waiver is contained
in writing signed by or on behalf of all the parties.
VIII. GOVERNING LAW
-------------------
This agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia. If for any reason any
provision of this agreement shall be held by a court of competent jurisdiction
to be void or unenforceable, the same shall not affect the remaining provisions
thereof.
<PAGE>
page 7
Bank CEO Employment Agreement
IX. MODIFICATION AND AMENDMENT
------------------------------
This agreement contains the sole and entire agreement among the parties
hereto and supersedes all prior discussions and agreements among the parties,
and any such prior agreements shall, from and after the date hereof, be null and
void. This agreement shall not be modified or amended except by an instrument
in writing signed by or on behalf of the parties hereto.
X. COUNTERPARTS AND HEADINGS
----------------------------
This agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. The headings set out herein are for
convenience of reference and shall not be deemed a part of this agreement.
XI. CONTRACT NONASSIGNABLE
--------------------------
This agreement may not be assigned or transferred by any party hereto, in
whole or in part, without the prior written consent of the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the year and date first above written.
EMPLOYEE:
/s/ Darrell W. Moore /s/ Thomas J. Martin
- -------------------- --------------------
Witness Thomas J. Martin
CITIZENS BANK OF GWINNETT
/s/ Darrell W. Moore /s/ Wallace C. Lail
- -------------------- --------------------
Witness Chairman of the Board
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment made and entered into effective as of the 11 day of
March, 1997, between the Citizens Bank of Gwinnett, Duluth, Georgia (the "Bank")
and Thomas J. Martin ("Employee");
WHEREAS, Employee is currently employed as Chairman of the Board and
Chief Executive Officer of the Bank under an Employment Agreement entered into
December 11, 1990 (the "Agreement");
WHEREAS, the parties desire to amend the Agreement to clarify
entitlements of Employee in the event of a Change in Control of the Bank;
WHEREAS, this Agreement is not intended to alter the compensation and
benefits that Employee reasonably could expect to receive in the absence of a
Change in Control of the Bank;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
1.
Section V of the Agreement is hereby amended by deleting the existing
provision in its entirety and substituting the following therefor:
"If a 'Change in Control' (as defined below) occurs during the
term of this Agreement, in addition to any compensation or benefit
otherwise owed to the Employee pursuant to this Agreement, the
Employee shall become entitled to the benefits described below:
1. A single lump sum payment in the amount of $409,500.00 payable
not later than thirty (30) days following such Change in
Control; and
2. All outstanding stock options granted to the Employee under
the Citizens Gwinnett Bankshares, Inc. 1994 Employee Incentive
Stock Option Plan and the Citizens Gwinnett Bankshares, Inc.
Director Stock Option Plan (the "Stock Option Plans") shall
become 100% vested and immediately exercisable. The
provisions of this subparagraph (2) shall constitute an
amendment of the Employee's Stock Option Agreements under the
Stock Option Plans.
For the purposes of this Section V, the term "Change in Control" shall
refer to the acquisition of 25% or more of the voted securities of the
Bank by any Person, or Persons acting as a group within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, or to such
acquisition of a percentage between 10% and 25% if the Board of
Directors of the Bank or the Georgia Department of Banking and
<PAGE>
Finance, the FDIC, or the Federal Reserve Bank have made a
determination that such acquisition constitutes or will constitute
control of the Bank. The term "Person" refers to an individual,
corporation, bank, bank holding company, or other entity."
2.
The Agreement is hereby amended by adding the following as Section
XII:
"XII. Limitation on Benefits
----------------------
(1) If any of the compensation or benefits payable, or to be
provided, to Employee by the Bank under this Agreement are treated as
Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and
benefits provided under this Agreement shall be modified or reduced in
the manner provided in (2) below to the extent necessary so that the
benefits payable or to be provided to Employee under this Agreement
that are treated as Severance Payments, as well as any payments or
benefits provided outside of this Agreement that are so treated, shall
not cause the Bank to have paid an Excess Severance Payment. In
computing such amount, the parities shall take into account all
provisions of Code Section 280G, and the regulations thereunder,
including making appropriate adjustments to such calculation for
amounts established to be Reasonable Compensation. If Employee
becomes entitled to compensation and benefits under this Agreement and
such payments are considered to be Severance Payments contingent upon
a Change in Control, Employee shall be required to mitigate breach of
contract damages (but only with respect to amounts that would be
treated as Severance Payments) by reducing the amount of damages he is
entitled to receive by any compensation and benefits he earns from
subsequent employment (but shall not be required to seek such
employment) during the 12-month period after termination (or such
other period as he is entitled to extended benefits).
(2) In the event that the amount of any Severance Payments which
would be payable to or for the benefit of Employee under this
Agreement must be modified or reduced to comply with this Section XII,
Employee shall direct which Severance Payments are to be modified or
reduced; provided, however, that no increase in the amount of any
-------- -------
payment or change in the timing of the payment shall be made without
the consent of the Bank.
(3) This Section XII shall be interpreted so as to avoid the
imposition of excise taxes on Employee under Section 4999 of the Code
or the disallowance of a deduction to the Bank pursuant to Section
280G(a) of the Code with respect to amounts payable, or to be
provided, under this Agreement. Notwithstanding the foregoing, in no
event will any of the provisions of this Section XII create, without
the consent of Employee, an obligation on the part of Employee to
refund any amount to the Bank following payment of such amount.
<PAGE>
(4) In addition to the limits otherwise provided in this Section
XII, to the extent permitted by law, Employee may in his sole
discretion elect to reduce any payments or benefits he may be eligible
to receive under this Agreement to prevent the imposition of excise
taxes on Employee under Section 4999 of the Code.
(5) For purposes of this Section XII, the following definitions
shall apply:
(I) "Excess Severance Payment" - The term AExcess Severance
--------------------------
Payment" shall have the same meaning as the term "excess
parachute payment" defined in Section 280G(b)(1) of the Code.
(ii) "Severance Payment" - The term "Severance Payment" shall
-------------------
have the same meaning as the term "parachute payment" defined in
Section 280G(b)(2) of the Code.
(iii) "Reasonable Compensation" - The term "Reasonable
-------------------------
Compensation" shall have the same meaning as provided in Section
280G(b)(4) of the Code. The parties acknowledge and agree that,
in the absence of a change in existing legal authorities or the
issuance of contrary authorities, amounts received by Employee as
damages under or as a result of a breach of this Agreement shall
be considered Reasonable Compensation.
(iv) "Present Value" - The term "Present Value" shall have the
---------------
same meaning as provided in Section 280G(d)(4) of the Code."
Except as provided herein, the provisions of the Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the year and date first written above.
WITNESS: EMPLOYEE:
/s/ Darrell W. Moore /s/ Thomas J. Martin
- -------------------- --------------------
Thomas J. Martin
WITNESS: CITIZENS BANK OF GWINNETT
/s/ Joyce K. Griffin By: /s/ Wallace C. Lail, DDS
- -------------------- ------------------------
<PAGE>
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Second Amendment is made and entered into effective as of the
12th day of December, 1997, between Citizens Bank of Gwinnett (the "Bank") and
Thomas J. Martin ("Employee").
WHEREAS, prior to the date hereof, Employee was employed by Citizens
Bank of Gwinnett ("Citizens Bank") in the position of Chairman of the Board and
Chief Executive Officer under an Employment Agreement entered into December 11,
1990 (the "Agreement"), which Agreement was modified by an Amendment to
Employment Agreement ("Amendment") dated March 11, 1997;
WHEREAS, the parties desire to amend the Agreement and the Amendment
to clarify and/or amend certain entitlements and responsibilities of Employee;
WHEREAS, this Second Amendment is not intended to alter the
compensation and benefits that Employee reasonably could expect to receive in
the absence of a Change in Control of Citizens Bank; and
WHEREAS, this Second Amendment is not intended to alter the rights and
obligations as expressed in the Agreement unless specifically stated herein;
NOW THEREFORE, for and in consideration of the promises and mutual
covenants contained herein and other good and valuable consideration, the
receipt and legal sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:
A.
Section I of the Agreement is hereby amended by deleting subsections 1
and 2 thereof in their entirety and replacing said language with the following:
1. The Bank hereby appoints Employee as President of the Bank, to
perform such duties and services as the Board of Directors may,
from time to time, designate during the term hereof. Subject to
the terms and conditions hereof, Employee will perform such
duties and exercise such authority as are customarily performed
and exercised by persons holding such office, subject to the
general direction of the Board of Directors of the Bank,
exercised in good faith in accordance with standards of
reasonable business judgment.
2. Employee shall serve on the Board of Directors of Premier
Bancshares, Inc.
3. Upon consummation of the merger of the Bank with and into Premier
Bank, Employee shall be elected to serve as the President of the
East Metro Division of Premier Bank, provided Employee is
employed with the Bank immediately prior to the consummation of
such merger.
<PAGE>
B.
Section II of the Agreement is hereby amended by inserting the
following as subsection 1(d):
1. (d) the expiration of six (6) months following a Change in
Control of the Bank (as defined below).
C.
Section III of the Agreement is hereby amended by deleting subsection
1 thereof in its entirety and replacing said language with the following:
1. Base Salary. Employee's present annual base salary shall be
$136,500.00. Effective January 1, 1998, Employee's annual base
salary shall be increased to $160,000.00, said increase being
subject to the approval of the Compensation Committee of Premier
Bancshares, Inc. Employee's annual base salary shall be payable
in equal bimonthly installments and subject to such deductions as
may be required by law.
D.
Section III of the Agreement is hereby amended by inserting the
following as subsection 3:
3. Merger Incentive. As an incentive for Employee's assistance in
the extra effort needed to close a merger, the Bank will, if the
conditions set forth below are met, pay to Employee a lump sum
bonus upon completion of a merger of Citizens Gwinnett
Bankshares, Inc. with and into Premier Bancshares, Inc. (the
"Merger"), based on the following schedule:
(a) $25,000.00, if the Merger is closed on or before October 31,
1997, said bonus to be payable on or before November 30,
1997;
(b) $20,000.00, if the Merger closes after October 31, 1997, and
before December 1, 1997, said bonus to be payable on or
before December 31, 1997; or
(c) $15,000.00, if the merger closes after November 30, 1997,
and before January 1, 1998, said bonus to be payable on or
before January 31, 1998.
Employee acknowledges and understands that he will be entitled to
no bonus under this subsection if the Merger with Premier
Bancshares, Inc. closes after December 31, 1997.
-2-
<PAGE>
E.
Section III of the Agreement is hereby amended by inserting the
following as subsection 4:
4. Growth Bonus. In recognition of Employee's crucial role in the
continued growth of the Bank, the Bank will pay to Employee a
lump sum bonus based upon the following schedule if the
conditions set forth below are met:
(a) If the Bank's profit target of $2.3 million is met for
calendar year 1997 and the Bank's core assets are greater
than $156,000,000.00 at December 31, 1997, the Bank will pay
to Employee a bonus of $25,000.00, payable on or before
January 31, 1997; and
(b) If the Bank exceeds profit target of $2.3 million for
calendar year 1997 and the Bank's core assets are greater
than $156,000,000.00 at December 31, 1997, the Bank will pay
to Employee an additional lump sum bonus equal to 5% of the
amount by which the Bank's profits exceeded $2.3 million for
calendar year 1997.
F.
Section IV of the Agreement is hereby amended by inserting the
following as subsections 4, 5 and 6:
4. Throughout the term of his employment with the Bank, Employee
shall be entitled to the use of the 1997 Lexus 300 presently
owned by Citizens Bank of Gwinnett. Upon Employee's termination
from the Bank for any reason, title to said vehicle shall be
transferred to Employee.
5. Throughout the term of Employee's employment with the Bank, the
Bank shall pay the dues associated with Employee's membership in
The Tournament Player's Club and The Atlanta Athletic Club. Upon
Employee's termination from the Bank for any reason, the Bank
shall no longer be responsible for said club dues.
6. Throughout the term of Employee's employment with the Bank and
for a period of one (1) year following Employee's termination
from the Bank for any reason, Employee shall be entitled to
health benefits of like kind to those provided by the Bank to its
similarly situated employees.
-3-
<PAGE>
G.
Section 1 of the Amendment (which addresses Section V of the
Agreement) is hereby amended by deleting the existing provision in its entirety
and substituting the following therefor:
If a "Change in Control" (as defined below) occurs during the term of
this Agreement, in addition to any compensation or benefit otherwise owed
to Employee pursuant to this Agreement, Employee shall become entitled to
the benefits described below under the following conditions:
1. If, within six (6) months following any Change in Control,
Employee is terminated from his present position for any reason,
then Employee shall become entitled to a single lump sum payment
in the amount of $409,500.00. Said lump sum payment shall be
payable on the day which is six (6) months from the effective
date of the Change in Control, or, if earlier, on the thirtieth
(30th) day following the date of Employee's termination of
employment.
2. If, within six (6) months from the effective date of a Change in
Control, Employee and the Bank have not entered into a new,
mutually agreeable employment agreement pursuant to paragraph 4
below, then Employee will be deemed to have resigned from
employment with the Bank and shall be entitled to a single lump
sum payment of $409,500.00. Said lump sum payment shall be
payable on the thirtieth (30th) day following six (6) months from
the effective date of a Change in Control.
3. If six (6) months from the effective date of the Change in
Control, Employee chooses to remain in his position with the
Bank, Employee and the Bank will enter into a new, mutually
agreeable employment agreement, such agreement to include
substantially the following terms:
(a) Employee to remain on the Board of Directors of the Bank;
(b) Employee's base salary to increase to $160,000.00 annually;
(c) Employee to receive an option to purchase 20,000 shares of
Premier Bancshares, Inc. common stock; and
(d) the term of such agreement to be three (3) years.
For the purposes of this Section V, the term "Change in Control" shall
refer to the acquisition of 25% or more of the voting securities of the
Bank after any transaction, by any Person, or Persons acting as a group
within the meaning of Section 13(d) of the Securities Exchange Act of 1934,
or to such acquisition of a percentage between 10% and 25% if the Board of
Directors of the Bank or the Georgia Department of Banking and Finance, the
FDIC, or the Federal Reserve Bank have made a determination that such
acquisition constitutes or will constitute control of the Bank. The term
"Person"
-4-
<PAGE>
refers to an individual, corporation, bank, bank holding company,
or other entity. Notwithstanding anything contained herein to the
contrary, a Change in Control shall not be deemed to occur upon the merger
of the Bank with and into Premier Bank.
H.
Section VI of the Agreement is hereby amended by deleting the existing
provision in its entirety and substituting the following therefor:
Employee acknowledges that he has performed services and/or will
perform services hereunder that directly affect the Bank's business
presently conducted (among other areas) within the limits of Gwinnett
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.
1. For the period of Employee's employment with the Bank and for a
period of six (6) months following the termination of such
employment, for whatever reason, including termination following
a Change in Control, Employee covenants and agrees that he shall
not within the limits of Gwinnett County, Georgia, compete with
the Bank by performing banking services that require performance
of duties substantially identical to those performed on behalf of
the Bank 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
the Bank.
2. For the period of Employee's employment with the Bank and for a
period of one (1) year following the termination of such
employment, for whatever reason, including termination following
a Change in Control, Employee covenants and agrees as follows:
(a) Employee shall not, for himself or any other party, solicit,
directly or indirectly, any clients or prospective clients
of the Bank with whom he personally had business contact on
the Bank's behalf at any time during the last twenty-four
(24) months he worked at the Bank to do any business with
another company or business in competition with the Bank;
and
(b) Employee will not employ or attempt to employ or assist in
employing any employee of the Bank for the purpose of having
such employee perform services for any bank or other
business or organization in competition with the business of
the Bank as such exists on the termination date of
Employee's employment hereunder until such employee has
ceased to be employed by the Bank for a period of one (1)
year.
-5-
<PAGE>
3. Employee acknowledges that he possesses confidential information
of a special and unique nature and value affecting and relating
to the Bank's business, including, without limitation, the
identity of the customers, deposits, business records, other
trade secrets, and other similar confidential information
relating to the Bank (all the foregoing being hereinafter
collectively referred to as "Confidential Information").
Employee recognizes and acknowledges that all Confidential
Information is the exclusive property of the Bank, constitutes
trade secrets of the Bank, is material and confidential, and
greatly affects the goodwill and the effective and successful
conduct of the business of the Bank. 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 the Bank so long as
it is not known by competitors of the Bank and that the Bank has
taken reasonable steps to keep all such information and trade
secrets confidential. In the event that any such Confidential
Information rises to the level of a trade secret under applicable
law, the duration and protections of this covenant shall equal
the maximum protections afforded by law.
4. Any and all documents, lists, papers, manuals, policies, forms,
computer information, and all other forms of tangible or stored
information (hereinafter "Documents") are the property of the
Bank. Upon termination of Employee's employment with the Bank,
for whatever reason, Employee shall return all Documents to the
Bank. Employee shall retain no copies or abstracts of any of the
Documents.
5. Employee acknowledges and agrees that the Bank would be
irreparably damaged in the event any of the provisions of this
Section are not performed by Employee in accordance with their
specific terms or are otherwise breached. Employee accordingly
agrees that the Bank shall be entitled to injunctive relief to
redress any breaches of this Agreement and to seek specific
performance of the terms and provisions hereof, in addition to
any other remedy to which such party may be entitled at law or in
equity.
If any provision of this Section VI shall be declared invalid or
unenforceable, the remainder of this Section VI will continue in full force
and effect so far as the intent of the parties can be carried out.
Notwithstanding the foregoing, if from any circumstances whatsoever,
fulfillment of any provision of this Section VI, at the time performance of
such provision shall be due, shall involve transcending the limited
validity presently prescribed by any applicable statute or other applicable
law, with regard to obligations of like character, then ipso facto, the
obligation to be fulfilled shall be reduced to the
-6-
<PAGE>
limit of such validity and such obligation shall be fulfilled to the limit
of such validity. The parties acknowledge and agree that the terms of this
Section VI shall survive termination of the Agreement.
Except as provided herein, the provisions of the Agreement and the
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the year and date first written above.
WITNESS: EMPLOYEE:
/s/ Thomas J. Martin
- -------------------------------- --------------------
Thomas J. Martin
WITNESS: CITIZENS BANK OF GWINNETT
By: /s/ Thomas S. Martin
- -------------------------------- --------------------
Name: Thomas J. Martin
Title: Chairman
<PAGE>
EXHIBIT 10.29
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>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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(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.
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<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.
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<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>
EXHIBIT 10.30
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>
EXHIBIT 10.31
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>
EXHIBIT 10.32
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>
EXHIBIT 10.33
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>
Exhibit 11
Statement Re: Computation of Per Share Earnings
Year Ended December 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
Primary
- -------
Weighted average Premier common shares 9,962,351 9,922,370 9,092,994
outstanding during the year
Common shares issuable in connection
with assumed exercise of options
under the treasury stock method 120,086 78,005 43,269
---------- ---------- ----------
Total 10,082,437 10,000,375 9,136,263
========== ========== ==========
Net income 7,005,151 5,553,076 2,913,269
Less preferred dividends 117,525
---------- ---------- ----------
Net income 7,005,151 $5,553,076 $2,795,744
========== ========== ==========
Per share earnings 0.69 0.56 0.31
========== ========== ==========
<PAGE>
EXHIBIT 21.1
Premier Bank
Premier Lending Corporation
The Central and Southern Bank of Georgia
The Central and Southern Bank of North Georgia, F.S.B.
Citizens Bank of Gwinnett
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement 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, and to the reference to
our Firm under the caption "Experts" in the Prospectus.
MAULDIN & JENKINS, LLC
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
February 4, 1998
<PAGE>
EXHIBIT 23.3
------------
BRICKER & MELTON, P.A.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the incorporation by reference of our report dated February
7, 1997, relating to the financial statements of Lanier Bank & Trust Company, in
the Registration Statement on Form S-4 and Proxy Statement/Prospectus, and to
the reference to our firm therein under the caption "Experts."
/s/ Bricker & Melton, P.A.
-----------------------------
Duluth, Georgia
February 4, 1998
<PAGE>
EXHIBIT 23.4
------------
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
CONSENT OF ALEX SHESHUNOFF & CO INVESTMENT BANKING
In connection with the proposed merger of Lanier Bank & Trust Company, Cumming,
Georgia with and into Premier Bancshares, Inc., Atlanta, Georgia, the
undersigned acting as an independent financial analyst to the common
shareholders of Lanier Bank & Trust Company, hereby consent to their reference
to our firm in the proxy statement and to the inclusion of our fairness opinion
as an exhibit to the proxy statement.
February 4, 1998
ALEX SHESHUNOFF & CO. INVESTMENT
BANKING
AUSTIN, TEXAS
By: /s/ Gerard A. Feil
--------------------------------
Gerard A. Feil
Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,419
<INT-BEARING-DEPOSITS> 2,797
<FED-FUNDS-SOLD> 51,397
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 151,055
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 425,042
<ALLOWANCE> 7,603
<TOTAL-ASSETS> 677,273
<DEPOSITS> 577,212
<SHORT-TERM> 31,291
<LIABILITIES-OTHER> 7,091
<LONG-TERM> 4,182
0
0
<COMMON> 10,079
<OTHER-SE> 48,539
<TOTAL-LIABILITIES-AND-EQUITY> 677,273
<INTEREST-LOAN> 39,659
<INTEREST-INVEST> 9,104
<INTEREST-OTHER> 2,508
<INTEREST-TOTAL> 51,271
<INTEREST-DEPOSIT> 22,567
<INTEREST-EXPENSE> 2,776
<INTEREST-INCOME-NET> 25,928
<LOAN-LOSSES> (115)
<SECURITIES-GAINS> 147
<EXPENSE-OTHER> 30,788
<INCOME-PRETAX> 9,211
<INCOME-PRE-EXTRAORDINARY> 9,211
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,005
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
<YIELD-ACTUAL> 4.55
<LOANS-NON> 1,532
<LOANS-PAST> 83
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,776
<CHARGE-OFFS> 603
<RECOVERIES> 1,545
<ALLOWANCE-CLOSE> 7,603
<ALLOWANCE-DOMESTIC> 7,603
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 7,603
</TABLE>
<PAGE>
EXHIBIT 99.1
LANIER BANK & TRUST 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 A. Lee
Wilhelm and John E. Aderhold and either of them with full power of substitution,
as proxies of the undersigned to represent the undersigned and to vote all
shares of LANIER BANK & TRUST COMPANY ("Lanier") common stock which the
undersigned would be entitled to vote if personally present at the Special
Meeting of Shareholders of Lanier, to be held at the main office of Lanier, 214
Dahlonega Road, Cumming, Georgia 30040, at 5:00 o'clock p.m. local time, on
March 25, 1998 and at any adjournment thereof.
PROPOSAL
Proposal to: approve the Agreement and Plan of Reorganization entered into with
Premier Bancshares, Inc. ("Premier") on December 16, 1997, as amended on January
22, 1998 (the "Agreement") and the related Plan of Merger entered into with
Premier Bank on December 16, 1997, as amended on January 22, 1998 (the "Plan"),
pursuant to which Lanier will merge with and into Premier Bank, a wholly owned
Georgia banking subsidiary of Premier (the "Merger"). Upon consummation of the
Merger, each share of Lanier common stock issued and outstanding (except for
shares held by Lanier shareholders who perfect their dissenters' rights of
appraisal) will be converted into and exchanged for the right to receive 1.980
shares of Premier common stock. Holders of Lanier stock options will receive
options to purchase Premier common stock in exchange for their Lanier stock
options.
[ ] 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). 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.
