AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1998
REGISTRATION NO. 333-60479
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 3 TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------------
THE SAVANNAH BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
GEORGIA 6712 58-1861820
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification
Number)
25 Bull Street
Savannah, Georgia 31401
(912) 651-8200
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Archie H. Davis
President and Chief Executive Officer
The Savannah Bancorp, Inc.
25 Bull Street
Savannah, Georgia 31401
(912) 651-8200
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Copies To:
David E. Brown, Jr. J. Wiley Ellis Edward J. Harrell
Alston & Bird LLP Ellis, Painter, Ratterree Martin, Snow, Grant
North Building, 11th Floor & Bart, LLP & Napier, LLP
601 Pennsylvania Ave., N.W. Two East Bryan Street 240 Third Street
Washington, DC 20004 Tenth Floor P.O. Box 1606
(202) 756-3345 Savannah, Georgia 31401 Macon, Georgia 31202
(912) 233-9700 (912) 749-1700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| ___________________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ____ |_|
------------------------------
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
===============================================================================
<PAGE>2
THE SAVANNAH BANCORP, INC.
25 Bull Street, Savannah, Georgia 31401 (912) 651-8200
November 6, 1998
Dear Shareholder:
You are cordially invited to attend the Special Meeting of the Shareholders
(the "Special Meeting") of The Savannah Bancorp, Inc. ("Savannah") to be held at
the Hyatt Regency Savannah, 2 West Bay Street, Savannah, Georgia 31401, on
Tuesday, December 15, 1998, at 10:00 a.m., local time, notice of which is
enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve the issuance of shares of Savannah common stock pursuant to
an Amended and Restated Agreement and Plan of Merger, dated as of February 11,
1998 (the "Merger Agreement"), by and between Savannah and Bryan Bancorp of
Georgia, Inc. ("Bryan"), whereby Bryan will merge with and into Savannah (the
"Merger"). Upon consummation of the Merger, each share of Bryan common stock
issued and outstanding at the effective time of the Merger (except for certain
shares held by Savannah or Bryan, or their respective subsidiaries, in each case
other than shares held in a fiduciary capacity or in satisfaction of debts
previously contracted, and excluding shares held by Bryan shareholders who
perfect their dissenters' rights) will be exchanged for 1.85 shares of Savannah
common stock, with cash being paid in lieu of issuing fractional shares.
In addition, you will be asked at the Special Meeting to consider and vote
upon the election of five of the current directors of Bryan to the Savannah
Board of Directors, contingent upon consummation of the Merger, and such other
business as may properly come before the Special Meeting.
Enclosed are the Notice of Meeting, Joint Proxy Statement/Prospectus and
Proxy, Bryan's Annual Report on Form 10-KSB/A for the year ended December 31,
1997, Savannah's Annual Report to Shareholders for the year ended December 31,
1997, and Savannah's Quarterly Report on Form 10-QSB and Bryan's Quarterly
Report on Form 10-QSB/A for the quarter ended June 30, 1998. The Joint Proxy
Statement/Prospectus includes a description of the proposed Merger and election
of directors and provides other specific information concerning the Special
Meeting. Please read these materials carefully and consider thoughtfully the
information set forth in them.
The Merger Agreement has been approved by your Board of Directors and the
issuance of shares of Savannah common stock pursuant to the Merger Agreement is
recommended by the Board to you for approval. Your Board believes that, among
other benefits, the Merger will result in a company with greater financial
strength and increased opportunity and flexibility for profitable expansion and
diversification. Consummation of the Merger is subject to certain conditions,
including approval of the Merger Agreement and the transactions contemplated
therein by Bryan shareholders, approval of the issuance of shares of Savannah
common stock pursuant to the Merger Agreement by Savannah shareholders, and
approval of the Merger by various regulatory agencies.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE "FOR" APPROVAL OF
THE ISSUANCE OF SHARES OF SAVANNAH COMMON STOCK PURSUANT TO THE MERGER AGREEMENT
BY MARKING THE ENCLOSED PROXY CARD "FOR" ITEM 1, AND "FOR" THE ELECTION,
CONTINGENT ON THE MERGER, OF THE FIVE (5) NOMINEES FOR DIRECTOR NAMED ON THE
ENCLOSED PROXY CARD BY MARKING THE ENCLOSED PROXY CARD "FOR" ITEM 2.
If you have any questions about the Merger or the materials enclosed
herewith, please write or call us at: Archie H. Davis, The Savannah Bancorp,
Inc., 25 Bull Street, Savannah, Georgia 31401 (telephone: (912) 651-8200). We
look forward to seeing you at the Special Meeting.
Sincerely,
Archie H. Davis
President and Chief Executive Officer
<PAGE>3
THE SAVANNAH BANCORP, INC.
25 Bull Street, Savannah, Georgia 31401 (912) 651-8200
--------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 10:00 A.M. ON DECEMBER 15, 1998
NOVEMBER 6, 1998
To the Shareholders of The Savannah Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders (the
"Special Meeting") of The Savannah Bancorp, Inc. ("Savannah") will be held at
the Hyatt Regency Savannah, 2 West Bay Street, Savannah, Georgia 31401, on
Tuesday, December 15, 1998, at 10:00 a.m., local time, for the following
purposes:
1. THE MERGER. To consider and vote upon a proposal to approve the issuance
of shares of Savannah common stock pursuant to an Amended and Restated Agreement
and Plan of Merger, dated as of February 11, 1998 (the "Merger Agreement"), by
and between Savannah and Bryan Bancorp of Georgia, Inc., a Georgia corporation
("Bryan"), pursuant to which, among other matters, Bryan will merge (the
"Merger") with and into Savannah. Each share of Bryan common stock will be
converted into the right to receive 1.85 shares of Savannah common stock, as
more fully described in the accompanying Joint Proxy Statement/Prospectus. A
copy of the Merger Agreement is set forth as Appendix A to the accompanying
Joint Proxy Statement/Prospectus.
2. CONTINGENT ELECTION OF DIRECTORS. To consider and vote upon the election
to the Savannah Board of Directors, contingent on consummation of the Merger, of
L. Carlton Gill, Robert T. Thompson, Jr., James W. Royal, James Toby Roberts,
Sr. and E. James Burnsed, each of whom is a current director of Bryan, of whom
Messrs. Gill and Thompson shall serve until the Annual Meeting of Shareholders
in 1999, Messrs. Royal and Roberts shall serve until the Annual Meeting of
Shareholders in 2000, and Mr. Burnsed shall serve until the Annual Meeting of
Shareholders in 2001, in each case until their successors have been elected and
qualified.
3. OTHER BUSINESS. To transact such other business as may come properly
before the Special Meeting.
IF EITHER ITEM 1 OR 2 DOES NOT RECEIVE THE REQUISITE NUMBER OF VOTES FOR
APPROVAL, THE MERGER WILL NOT BE CONSUMMATED AND THE PERSONS ELECTED TO THE
BOARD OF DIRECTORS CONTINGENT ON CONSUMMATION OF THE MERGER WILL NOT TAKE
OFFICE.
Only shareholders of record at the close of business on October 23, 1998,
will be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. To hold a vote on any proposal, a quorum
must be assembled, which is a majority of the votes entitled to be cast by the
holders of the outstanding shares of Savannah common stock. In determining
whether a quorum exists at the Savannah Special Meeting for purposes of all
matters to be voted on, all votes "for" or "against," as well as all
abstentions, will be counted. Approval of the proposal to approve the issuance
of Savannah common stock pursuant to the Merger Agreement requires that the
number of votes cast in favor of that action exceed the number of votes cast
opposing that action in a meeting in which a quorum exists. The vote required
for the election of the nominees for director is a plurality of the votes cast
by the shares entitled to vote in the election, provided that a quorum is
present.
THE BOARD OF DIRECTORS OF SAVANNAH UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR APPROVAL OF THE ISSUANCE OF SHARES OF SAVANNAH COMMON STOCK PURSUANT TO
THE MERGER AGREEMENT BY MARKING THE ENCLOSED PROXY CARD "FOR" ITEM 1, AND FOR
THE ELECTION, CONTINGENT ON CONSUMMATION OF THE MERGER, OF THE FIVE (5) NOMINEES
FOR DIRECTOR NAMED ON THE ENCLOSED PROXY CARD BY MARKING THE ENCLOSED PROXY CARD
"FOR" ITEM 2.
BY ORDER OF THE BOARD OF DIRECTORS
J. Curtis Lewis, III
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED
POSTAGE PAID RETURN ENVELOPE TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT
THE SPECIAL MEETING.
<PAGE>4
BRYAN BANCORP OF GEORGIA, INC.
9971 Ford Avenue, Richmond Hill, Georgia 31324 (912) 756-4444
November 10, 1998
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders
(the "Special Meeting") of Bryan Bancorp of Georgia, Inc. ("Bryan") to be held
at Bryan's main office, 9971 Ford Avenue, Richmond Hill, Georgia 31324, on
Monday, December 14, 1998, at 6:00 p.m., local time, notice of which is
enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Amended and Restated Agreement and Plan of Merger, dated
as of February 11, 1998 (the "Merger Agreement"), by and between Bryan and The
Savannah Bancorp, Inc. ("Savannah"), pursuant to which Bryan will merge with and
into Savannah (the "Merger"). Upon consummation of the Merger, each share of
Bryan common stock issued and outstanding at the effective time of the Merger
(except for certain shares held by Savannah or Bryan, or their respective
subsidiaries, in each case other than shares held in a fiduciary capacity or in
satisfaction of debts previously contracted, and excluding shares held by Bryan
shareholders who perfect their dissenters' rights) will be exchanged for 1.85
shares of Savannah common stock, with cash being paid in lieu of issuing
fractional shares.
Bryan Bank & Trust ("Bryan Bank") will be operated as a subsidiary of
Savannah subsequent to the Merger, and I will continue to serve as President of
Bryan Bank following the consummation of the Merger. In addition, following the
consummation of the Merger, I will serve as Vice Chairman of Savannah, and the
directors of Bryan Bank in office immediately prior to the effective date of the
Merger, except for Charles L. Stafford, shall continue to serve as the directors
of Bryan Bank after the Merger. L. Carlton Gill, Robert T. Thompson, Jr., James
W. Royal, James Toby Roberts, Sr., and E. James Burnsed, each of whom serves as
a current director of Bryan, will be nominated and recommended by Savannah to
serve as a director of Savannah following the Merger.
Enclosed are the Notice of Meeting, Joint Proxy Statement/Prospectus and
Proxy, Bryan's Annual Report on Form 10-KSB for the year ended December 31,
1997, Savannah's Annual Report to Shareholders for the year ended December 31,
1997, and Savannah's Quarterly Report on Form 10-QSB and Bryan's Quarterly
Report on Form 10-QSB/A for the quarter ended June 30, 1998. The Joint Proxy
Statement/Prospectus includes a description of the proposed Merger and provides
other specific information concerning the Special Meeting. The Merger Agreement
and the Merger have been approved by your Board of Directors and are recommended
by the Board to you for approval. All members of the Board of Directors have
agreed to vote all shares of Bryan Common Stock owned by such member in favor of
the Merger Agreement and the Merger.
IT IS IMPORTANT TO UNDERSTAND THAT APPROVAL OF THE MERGER AGREEMENT
REQUIRES THE AFFIRMATIVE VOTE OF 66-2/3 PERCENT (66.67%) OF THE OUTSTANDING
SHARES OF BRYAN COMMON STOCK ENTITLED TO VOTE. CONSEQUENTLY, A FAILURE TO VOTE
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT. IF YOU HAVE
ANY QUESTIONS CONCERNING THE DELIVERY OF THE ENCLOSED PROXY CARD, PLEASE CALL ME
OR MIKE ODOM AT (912) 746-4444.
Accordingly, whether or not you plan to attend the Special Meeting, you are
urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Special 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 MERGER AGREEMENT AND THE MERGER BY MARKING
THE ENCLOSED PROXY CARD "FOR" ITEM 1.
Sincerely,
E. JAMES BURNSED
President
<PAGE>5
BRYAN BANCORP OF GEORGIA, INC.
9971 Ford Avenue, Richmond Hill, Georgia 31324 (912) 756-4444
--------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 6:00 P.M. ON MONDAY,DECEMBER 14, 1998
November 10, 1998
To the Shareholders of Bryan Bancorp of Georgia, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of Bryan Bancorp of Georgia, Inc. ("Bryan") will be held at Bryan's
main office, 9971 Ford Avenue, Richmond Hill, Georgia 31324 on Monday, December
14, 1998, at 6:00 p.m., local time, for the following purpose:
1. MERGER. To consider and vote on an Amended and Restated Agreement and
Plan of Merger, dated as of February 11, 1998 (the "Merger Agreement"), by and
between The Savannah Bancorp, Inc. ("Savannah") and Bryan, pursuant to which (i)
Savannah will acquire all of the issued and outstanding common stock of Bryan
through the merger of Bryan with and into Savannah (the "Merger"), and (ii) each
share of Bryan common stock will be converted into 1.85 shares of Savannah
common stock, as described more fully in the accompanying Joint Proxy
Statement/Prospectus.
2. OTHER BUSINESS. To transact such other business as may properly come
before the Special Meeting, including adjourning the Special Meeting to permit,
if necessary, further solicitation of proxies.
Approval of the Merger Agreement requires the affirmative vote of 66-2/3
percent (66.67%) of the outstanding shares of Bryan common stock entitled to
vote. Only shareholders of record at the close of business on November 10, 1998,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
EACH SHAREHOLDER HAS THE RIGHT TO DISSENT FROM THE MERGER AGREEMENT AND
DEMAND PAYMENT OF THE FAIR VALUE OF HIS SHARES IF THE MERGER IS CONSUMMATED. THE
RIGHT OF ANY SHAREHOLDER TO RECEIVE SUCH PAYMENT IS CONTINGENT UPON STRICT
COMPLIANCE WITH THE REQUIREMENTS OF TITLE 14, CHAPTER 2, ARTICLE 13 OF THE
GEORGIA BUSINESS CORPORATION CODE (THE "GBCC"). THE FULL TEXT OF TITLE 14,
CHAPTER 2, ARTICLE 13 OF THE GBCC SETTING FORTH THE RIGHT TO DISSENT IS SET
FORTH IN APPENDIX D TO THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS. SEE
"THE MERGER - DISSENTERS' RIGHTS" IN THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS.
THE BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF BRYAN COMMON STOCK VOTE
FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER BY MARKING THE ENCLOSED
PROXY CARD "FOR" ITEM 1.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
Bryan an instrument of revocation or a duly executed proxy bearing a later date
or by electing to vote in person at the Special Meeting.
By Order of the Board of Directors.
James W. Royal
Secretary
<PAGE>6
SUBJECT TO COMPLETION, DATED NOVEMBER 4, 1998
PROSPECTUS
THE SAVANNAH BANCORP, INC.
977,740 SHARES OF COMMON STOCK, $1.00 PAR VALUE
-------------------
JOINT PROXY STATEMENT
THE SAVANNAH BANCORP, INC. BRYAN BANCORP OF GEORGIA, INC.
Special Meeting of Shareholders Special Meeting of Shareholders
To be held on December 15, 1998 To be held on December 14, 1998
-----------------------
This Prospectus of The Savannah Bancorp, Inc., a bank holding company
organized and existing under the laws of the State of Georgia ("Savannah"),
relates to up to approximately 977,740 shares of common stock of Savannah, par
value $1.00 per share ("Savannah Common Stock"), which may be issued upon
consummation of the proposed merger of Bryan Bancorp of Georgia, Inc., a bank
holding company organized and existing under the laws of the State of Georgia
("Bryan"), with and into Savannah (the "Merger"), pursuant to the terms of an
Amended and Restated Agreement and Plan of Merger, dated as of February 11, 1998
(the "Merger Agreement"), by and between Savannah and Bryan to the holders of
common stock, par value $1.00 per share, of Bryan ("Bryan Common Stock") and the
holders of outstanding options to purchase shares of Bryan Common Stock.
At the effective time of the Merger (the "Effective Time"), except as
described herein, each issued and outstanding share of Bryan Common Stock will
be converted into and exchanged for 1.85 shares of Savannah Common Stock (the
"Exchange Ratio"). See "THE MERGER--Exchange Ratio." Following the Merger, and
assuming no exercise of dissenters' rights, the current shareholders of Bryan
will own approximately 937,040 shares of Savannah Common Stock, representing
approximately 35% of the Savannah Common Stock that will then be outstanding
(based on the number of shares outstanding as of the Savannah Record Date).
Holders of Bryan Common Stock who intend to dissent will lose their dissenters'
rights if they vote for the Merger. See "THE MERGER--Dissenters' Rights" and
APPENDIX D to this Prospectus.
This Prospectus also serves as a Joint Proxy Statement ("Joint Proxy
Statement/Prospectus") of Bryan and Savannah, and is being furnished to the
shareholders of Bryan in connection with the solicitation of proxies by the
Board of Directors of Bryan for use at its special meeting of shareholders to be
held on Monday, December 14, 1998 (including any adjournment or postponement
thereof, the "Bryan Special Meeting"), and to the shareholders of Savannah by
the Board of Directors of Savannah for use at its special meeting of
shareholders to be held on Tuesday, December 15, 1998 (including any adjournment
or postponement thereof, the "Savannah Special Meeting," and collectively with
the Bryan Special Meeting, the "Meetings"). At the Bryan Special Meeting, the
shareholders of Bryan will consider and vote upon the Merger Agreement and the
transactions contemplated thereby, while at the Savannah Special Meeting, the
shareholders of Savannah will consider and vote upon the issuance of shares of
Savannah Common Stock pursuant to the Merger Agreement and the election,
contingent on consummation of the Merger, of five of the current directors of
Bryan to the Board of Directors of Savannah.
On February 10, 1998, the last day prior to public announcement that
Savannah and Bryan had executed the Merger Agreement, the last reported sale
price per share of Savannah Common Stock on the Nasdaq National Market was
$25.50 (or an equivalent pro forma per share of Bryan Common Stock (based on the
1.85 Exchange Ratio) of $47.18). On October 30, 1998, the last reported sale
price per share of Savannah Common Stock as reported on the Nasdaq National
Market was $21.63 (or an equivalent pro forma per share of Bryan Common Stock of
$40.01).
FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN SAVANNAH
COMMON STOCK, PLEASE REFER TO THE "RISK FACTORS" SECTION OF THIS JOINT PROXY
STATEMENT/PROSPECTUS BEGINNING ON PAGE 16.
-i-
<PAGE>7
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSIT ACCOUNTS
OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is November 6, 1998, and
it is first being mailed or otherwise delivered to Bryan shareholders and
Savannah shareholders on or about November 10, 1998.
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<PAGE>8
AVAILABLE INFORMATION
Savannah and Bryan are subject to the reporting and informational
requirements under Section 13 and Section 15(d), respectively, of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), and, in accordance therewith, are required to file reports,
proxy and information statements, and other information with the Securities and
Exchange Commission (the "Commission"). Copies of such reports, proxy and
information statements, and other information can be obtained, at prescribed
rates, from the Commission by addressing written requests for such copies to the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. In addition, such reports, proxy and information
statements, and other information can be inspected at the public reference
facilities referred to above and at the Commission's regional offices 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
Commission also maintains a Web site that contains reports, proxy and
information statements, and other information regarding reporting companies such
as Savannah and Bryan that file electronically with the Commission. The address
of this Web site is HTTP://WWW.SEC.GOV.
This Joint Proxy Statement/Prospectus constitutes a part of a Registration
Statement on Form S-4 (together with any amendments thereto, the "Registration
Statement"), which has been filed by Savannah with the Commission under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), relating to the securities offered hereby. This Joint
Proxy Statement/Prospectus does not include all of the information contained in
the Registration Statement, certain portions of which have been omitted pursuant
to the rules and regulations of the Commission. Reference is hereby made to the
Registration Statement and to the exhibits thereto for further information with
respect to Savannah and Bryan and the securities to which this Joint Proxy
Statement/Prospectus relates. The Registration Statement may be inspected and
copied, at prescribed rates, at the Commission's public reference facilities at
the addresses set forth above. Statements contained in this Joint Proxy
Statement/Prospectus concerning the provisions of certain documents filed as
exhibits to the Registration Statement are necessarily brief descriptions
thereof, and are not necessarily complete, and each such statement is qualified
in its entirety by reference to the full text of such document.
Certain financial and other information relating to Savannah and Bryan is
contained in the documents indicated below under the caption "DOCUMENTS
INCORPORATED BY REFERENCE."
All information contained in this Joint Proxy Statement/Prospectus or
incorporated herein by reference with respect to Savannah and its subsidiaries
was supplied by Savannah, and all information contained in this Joint Proxy
Statement/Prospectus or incorporated herein by reference with respect to Bryan
and its subsidiaries was supplied by Bryan.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS JOINT PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, THE SECURITIES OFFERED TO WHICH THIS JOINT PROXY
STATEMENT/PROSPECTUS RELATES IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF THE SECURITIES BEING OFFERED PURSUANT TO THIS JOINT PROXY
STATEMENT/PROSPECTUS RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SAVANNAH, BRYAN, ANY
OF THEIR RESPECTIVE SUBSIDIARIES, OR THE INFORMATION SET FORTH HEREIN SINCE THE
DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by Savannah and Bryan with the Commission
(Savannah: Commission File No. 0-18560; Bryan: Commission File No. 33-28514--A)
under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated by
reference in this Joint Proxy Statement/Prospectus:
Savannah documents:
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<PAGE>9
(i) Savannah's Annual Report on Form 10-KSB for the year ended
December 31, 1997;
(ii) Savannah's Quarterly Reports on Form 10-QSB for the quarters ended
March 31, 1998 and June 30, 1998;
(iii) Savannah's Current Reports on Form 8-K dated February 11, 1998,
February 26, 1998, April 24, 1998 and July 22, 1998; and
(iv) the description of Savannah Common Stock set forth in Savannah's
Registration Statement filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose
of updating any such description.
Bryan documents:
(i) Bryan's Annual Report on Form 10-KSB (as ammended on Form
10-KSB/A) for the year ended December 31, 1997;
(ii) Bryan's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1998 and Quarterly Report on Form 10-QSB (as amended on
Form 10-QSB/A) for the quarter ended June 30, 1998; and
(iii) Bryan's Current Report on Form 8-K dated February 11, 1998.
Any statement contained herein, in any amendment or supplement hereto or in
a document incorporated or deemed to be incorporated by reference herein will be
deemed to be modified or superseded for purposes of the Registration Statement
and this Joint Proxy Statement/Prospectus to the extent that a statement
contained herein, in any amendment or supplement hereto or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement, this Joint Proxy
Statement/Prospectus, or any amendment or supplement hereto.
Enclosed with this Joint Proxy Statement/Prospectus are Bryan's Annual
Report on Form 10-KSB/A for the year ended December 31, 1997, Savannah's Annual
Report to Shareholders for the year ended December 31, 1997, and Savannah's
Quarterly Report on Form 10-QSB and Bryan's Quarterly Report on Form 10-QSB/A
for the quarter ended June 30, 1998. The information contained in this Joint
Proxy Statement/Prospectus should be read in conjunction with the foregoing
materials.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE UPON REQUEST FROM THE SAVANNAH BANCORP, INC., 25 BULL STREET,
SAVANNAH, GEORGIA 31401 (TELEPHONE: (912) 651-8200) OR FROM BRYAN BANCORP OF
GEORGIA, INC., 9971 FORD AVENUE, RICHMOND HILL, GEORGIA 31324 (TELEPHONE: (912)
746-4444), AS APPLICABLE. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST FROM A BRYAN SHAREHOLDER SHOULD BE MADE BY DECEMBER 7, 1998 AND ANY
REQUEST FROM A SAVANNAH SHAREHOLDER SHOULD BE MADE BY DECEMBER 8, 1998.
FORWARD LOOKING STATEMENTS
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS AND INCORPORATES BY
REFERENCE CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE RESULTS OF
OPERATIONS AND BUSINESSES OF SAVANNAH AND BRYAN. THESE FORWARD LOOKING
STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. FACTORS THAT MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED OR PROJECTED,
FORECAST, ESTIMATED OR BUDGETED IN SUCH FORWARD LOOKING STATEMENTS INCLUDE,
AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (I) HEIGHTENED COMPETITION, INCLUDING
SPECIFICALLY THE INTENSIFICATION OF PRICE COMPETITION AND THE ENTRY OF NEW
COMPETITORS; (II) ADVERSE STATE AND FEDERAL LEGISLATION AND REGULATION,
INCLUDING INCREASES IN MINIMUM CAPITAL AND RESERVES; (III) FAILURE TO OBTAIN NEW
CUSTOMERS OR RETAIN EXISTING CUSTOMERS; (IV) INABILITY TO CARRY OUT MARKETING
AND SALES PLANS; (V) LOSS OF KEY EXECUTIVES; (VI) CHANGES IN INTEREST RATES
CAUSING, AMONG OTHER THINGS, A REDUCTION OF INVESTMENT INCOME OR A MISMATCH OF
INCOME AND EXPENSE; (VII) GENERAL ECONOMIC AND BUSINESS CONDITIONS WHICH ARE
LESS FAVORABLE THAN EXPECTED; AND (VIII) UNANTICIPATED CHANGES IN INDUSTRY
TRENDS. SEE "RISK FACTORS."
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TABLE OF CONTENTS
SUMMARY.................................................................... 1
The Parties.............................................................. 1
Meetings of Shareholders................................................. 1
The Merger............................................................... 3
Contingent Election of Directors......................................... 8
Risk Factors............................................................. 8
Market Prices and Dividends.............................................. 9
Comparative Per Share Data............................................... 11
Selected Financial Data.................................................. 13
Selected Pro Forma Financial Data........................................ 14
RISK FACTORS............................................................... 16
Limited Market for Shares of Savannah Common Stock....................... 16
Restrictions on Dividends................................................ 16
Possible Costs Associated with the Integration of Bryan.................. 16
Governmental Regulation.................................................. 16
Competition.............................................................. 17
Control by Management.................................................... 17
Anti-takeover Effects of Certain Provisions of Savannah's Articles of
Incorporation, Bylaws and the GBCC....................................... 17
Year 2000 Issues......................................................... 17
MEETINGS OF SHAREHOLDERS................................................... 19
Shareholder Meetings..................................................... 19
Record Dates, Voting Rights, Required Votes, and Revocability of Proxies. 19
Recommendations of the Boards of Directors............................... 21
THE MERGER................................................................. 22
Background of and Reasons for the Merger................................. 22
Opinion of Savannah's Financial Advisor.................................. 30
Opinion of Bryan's Financial Advisor..................................... 31
Exchange Ratio........................................................... 35
Fractional Shares........................................................ 35
Conversion of Stock Options.............................................. 35
Effective Time........................................................... 36
Distribution of Savannah Certificates.................................... 36
Federal Income Tax Consequences.......................................... 37
Management and Operations After the Merger............................... 38
Interests of Certain Persons in the Merger............................... 38
Conditions to Consummation............................................... 42
Regulatory Approvals..................................................... 43
Amendment, Waiver, and Termination....................................... 43
Conduct of Business Pending the Merger................................... 44
Expenses and Fees........................................................ 48
Accounting Treatment..................................................... 49
Resales of Savannah Common Stock......................................... 49
Stock Option Agreements.................................................. 49
Bryan Directors' Agreements.............................................. 51
Dissenters' Rights....................................................... 51
PRO FORMA CONDENSED FINANCIAL DATA......................................... 54
EFFECT OF THE MERGER ON THE RIGHTS OF SHAREHOLDERS......................... 60
Authorized Capital Stock................................................. 60
Amendment of Articles of Incorporation and Bylaws........................ 60
Classified Board of Directors and Absence of Cumulative Voting........... 61
Removal of Directors..................................................... 62
Indemnification.......................................................... 62
Special Meetings of Shareholders......................................... 63
Actions By Shareholders Without a Meeting................................ 63
Mergers, Consolidations and Sales of Assets.............................. 64
Shareholders' Rights to Examine Books and Records........................ 64
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Dividends................................................................ 65
CONTINGENT ELECTION OF DIRECTORS........................................... 66
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 67
Savannah................................................................. 67
Bryan.................................................................... 69
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS................................... 69
EXPERTS.................................................................... 70
LEGAL MATTERS.............................................................. 70
SHAREHOLDER PROPOSALS...................................................... 70
OTHER MATTERS.............................................................. 70
APPENDICES:
APPENDIX A - Amended and Restated Agreement and Plan of Merger by and
between Savannah and Bryan, dated as of February 11, 1998
APPENDIX B - Opinion of T. Stephen Johnson & Associates, Inc.
APPENDIX C - Opinion of Elaine H. Demarest, CPA, P.C.
APPENDIX D - Provisions of the Georgia Business Corporation Code Relating
to Dissenters'Rights
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS JOINT
PROXY STATEMENT/PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
THIS SUMMARY IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF THE MATTERS COVERED
IN THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS SUBJECT TO AND QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN
THIS JOINT PROXY STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES HERETO, AND IN
THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS. THE MERGER AGREEMENT IS SET FORTH IN APPENDIX A TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AND REFERENCE IS MADE THERETO FOR A COMPLETE
DESCRIPTION OF THE TERMS OF THE MERGER. SHAREHOLDERS ARE URGED TO READ CAREFULLY
THE ENTIRE JOINT PROXY STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES. AS USED
IN THIS JOINT PROXY STATEMENT/PROSPECTUS, THE TERMS "SAVANNAH" AND "BRYAN" REFER
TO SUCH CORPORATIONS, RESPECTIVELY, AND WHERE THE CONTEXT REQUIRES, SUCH
CORPORATIONS AND THEIR RESPECTIVE SUBSIDIARIES.
THE PARTIES
SAVANNAH. Savannah is a bank holding company headquartered in Savannah,
Georgia. The Savannah Bank, National Association, Savannah, Georgia ("Savannah
Bank"), Savannah's wholly-owned subsidiary, operates four banking offices in
Chatham County, Georgia, and will open a fifth banking office in the third
quarter of 1998. As of June 30, 1998, Savannah had total consolidated assets of
approximately $169.2 million, total consolidated deposits of approximately
$148.3 million, and total consolidated shareholders' equity of approximately
$15.9 million. Through Savannah Bank, Savannah offers a broad range of banking
and bank-related services.
Savannah was organized under the laws of the State of Georgia in 1989 and
Savannah Bank commenced operations on August 22, 1990. Savannah is a registered
bank holding company under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). Savannah's principal executive offices are located at 25 Bull
Street, Savannah, Georgia 31401 and its telephone number at such address is
(912) 651-8200.
For additional information about Savannah and its business, see "AVAILABLE
INFORMATION," "DOCUMENTS INCORPORATED BY REFERENCE" and "--Selected Financial
Data."
BRYAN. Bryan is a bank holding company headquartered in Richmond Hill,
Georgia, with one banking office in the city of Richmond Hill, Georgia. As of
June 30, 1998, Bryan had total consolidated assets of approximately $71.0
million, total consolidated deposits of approximately $59.5 million, and total
consolidated shareholders' equity of approximately $7.6 million. Through its
wholly-owned banking subsidiary, Bryan Bank & Trust, Richmond Hill, Georgia
("Bryan Bank"), Bryan offers a full range of interest-bearing and non
interest-bearing accounts, including commercial and retail checking accounts,
negotiable order of withdrawal ("NOW") accounts, super NOW accounts, public
funds accounts, money market accounts, individual retirement accounts, regular
interest-bearing savings accounts, certificates of deposit, business accounts,
commercial loans, real estate loans and consumer/installment loans.
Bryan was organized under the laws of the state of Georgia and commenced
operations on March 6, 1989 as a registered bank holding company under the BHC
Act. Bryan's principal executive office is located at 9971 Ford Avenue, Richmond
Hill, Georgia 31324, and its telephone number at such address is (912) 756-4444.
For additional information regarding Bryan and its business, see "AVAILABLE
INFORMATION," "DOCUMENTS INCORPORATED BY REFERENCE" and "--Selected Financial
Data."
MEETINGS OF SHAREHOLDERS
SAVANNAH. This Joint Proxy Statement/Prospectus is being furnished to the
holders of Savannah Common Stock in connection with the solicitation by the
Savannah Board of Directors of proxies for use at the Savannah Special Meeting
at which Savannah shareholders will be asked to vote upon the following
proposals: (1) to approve the issuance of Savannah Common Stock pursuant to the
Merger Agreement; (2) and to elect, contingent on consummation of the Merger,
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<PAGE>13
five of the current directors of Bryan to the Savannah Board of Directors. The
Savannah Special Meeting will be held at the Hyatt Regency Savannah, 2 West Bay
Street, Savannah, Georgia 31401, on Tuesday, December 15, 1998, at 10:00 a.m.,
local time. See "MEETINGS OF SHAREHOLDERS--Shareholder Meetings."
Savannah's Board of Directors has fixed the close of business on October
23, 1998, as the record date (the "Savannah Record Date") for determination of
the shareholders entitled to notice of and to vote at the Savannah Special
Meeting. Only holders of record of shares of Savannah Common Stock on the
Savannah Record Date will be entitled to notice of and to vote at the Savannah
Special Meeting. Each share of Savannah Common Stock is entitled to one vote.
Shareholders who execute proxies retain the right to revoke them at any time
prior to being voted at the Savannah Special Meeting. On the Savannah Record
Date, there were 1,782,598 shares of Savannah Common Stock issued, of which
1,736,798 shares were outstanding (45,800 shares were held in treasury) and were
held by approximately 220 shareholders of record and by approximately 530
additional shareholders through brokerage accounts. See "MEETINGS OF
SHAREHOLDERS--Record Dates, Voting Rights, Required Votes, and Revocability of
Proxies."
To hold a vote on any proposal, a quorum must be assembled, which is a
majority of the votes entitled to be cast by the holders of the outstanding
shares of Savannah Common Stock. In determining whether a quorum exists at the
Savannah Special Meeting for purposes of all matters to be voted on, all votes
"for" or "against," as well as all abstentions, will be counted. Approval of the
proposal to approve the issuance of Savannah Common Stock pursuant to the Merger
Agreement requires that the number of votes cast in favor of that action exceed
the number of votes cast opposing that action in a meeting in which a quorum
exists. The vote required for the election of the nominees for director is a
plurality of the votes cast by the shares entitled to vote in the election,
provided that a quorum is present. IF EITHER PROPOSAL 1 OR 2 ABOVE DOES NOT
RECEIVE THE REQUISITE NUMBER OF VOTES FOR APPROVAL, THE MERGER WILL NOT BE
CONSUMMATED AND THE PERSONS ELECTED TO THE BOARD OF DIRECTORS OF SAVANNAH
CONTINGENT ON CONSUMMATION OF THE MERGER WILL NOT TAKE OFFICE.
As of the Savannah Record Date, all directors and executive officers of
Savannah as a group (14 persons) were entitled to vote 479,266 shares of
Savannah Common Stock, constituting approximately 27.6 percent of the shares of
Savannah Common Stock outstanding at that date, and are anticipated to vote
their shares of Savannah Common Stock in favor of the issuance of Savannah
Common Stock pursuant to the Merger Agreement, and in favor of the election,
contingent on consummation of the Merger, of the five nominees for director
listed on the enclosed proxy card. As of the Savannah Record Date, Bryan and its
affiliates held an aggregate of 825 shares of Savannah Common Stock. See
"MEETINGS OF SHAREHOLDERS--Record Dates, Voting Rights, Required Votes, and
Revocability of Proxies."
BRYAN. This Joint Proxy Statement/Prospectus is being furnished to the
holders of Bryan Common Stock in connection with the solicitation by the Bryan
Board of Directors of proxies for use at the Bryan Special Meeting at which
Bryan shareholders will be asked to vote upon a proposal to approve the Merger
Agreement and the transactions contemplated therein. The Bryan Special Meeting
will be held at the corporate headquarters of Bryan, 9971 Ford Avenue, Richmond
Hill, Georgia 31324, on Monday, December 14, 1998, at 6:00 p.m., local time. See
"MEETINGS OF SHAREHOLDERS--Shareholder Meetings."
Bryan's Board of Directors has fixed the close of business on November 10,
1998, as the record date (the "Bryan Record Date") for determination of the
shareholders entitled to notice of and to vote at the Bryan Special Meeting.
Only holders of record of shares of Bryan Common Stock on the Bryan Record Date
will be entitled to notice of and to vote at the Bryan Special Meeting. Each
share of Bryan Common Stock is entitled to one vote. Shareholders who execute
proxies retain the right to revoke them at any time prior to being voted at the
Bryan Special Meeting. On the Bryan Record Date, there were 532,258 shares of
Bryan Common Stock issued, of which 506,508 shares were outstanding (25,750
shares were held in treasury) and were held by approximately 410 shareholders of
record and by approximately 50 additional shareholders through brokerage
accounts. See "MEETINGS OF SHAREHOLDERS--Record Dates, Voting Rights, Required
Votes, and Revocability of Proxies."
To hold a vote on any proposal, a quorum must be assembled, which is a
majority of the votes entitled to be cast by the holders of the outstanding
shares of Bryan Common Stock. In determining whether a quorum exists at the
Bryan Special Meeting for purposes of all matters to be voted on, all votes
"for" or "against," as well as all abstentions, will be counted. Approval of the
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<PAGE>14
Merger Agreement and the transactions contemplated therein requiresthe
affirmative vote by holders of 66-2/3 percent (approximately 337,672 shares) of
the outstanding shares of Bryan Common Stock entitled to vote at the Bryan
Special Meeting.
As of the Bryan Record Date, all directors and executive officers of Bryan
as a group (12 persons) were entitled to vote 251,381 shares of Bryan Common
Stock, constituting approximately 49.6 percent of the shares of Bryan Common
Stock outstanding at that date. The holders of all such shares have agreed to
vote their shares of Bryan Common Stock in favor of the Merger. As of the Bryan
Record Date, Savannah and its affiliates held no shares of Bryan Common Stock.
See "MEETINGS OF SHAREHOLDERS--Record Dates, Voting Rights, Required Votes, and
Revocability of Proxies."
BRYAN'S SHAREHOLDERS HAVE THE RIGHT TO DISSENT FROM APPROVAL OF THE MERGER
AGREEMENT AND OBTAIN PAYMENT FOR THE FAIR VALUE OF THEIR SHARES OF BRYAN COMMON
STOCK BY FOLLOWING THE PROCEDURES DESCRIBED IN TITLE 14, CHAPTER 2, ARTICLE 13
OF THE GEORGIA BUSINESS CORPORATION CODE ("GBCC"). SEE "THE MERGER--DISSENTERS'
RIGHTS" AND APPENDIX D TO THIS JOINT PROXY STATEMENT/PROSPECTUS.
THE MERGER
GENERAL. The Merger Agreement provides for the acquisition of Bryan by
Savannah pursuant to the Merger of Bryan with and into Savannah. A copy of the
Merger Agreement is set forth in Appendix A to this Joint Proxy
Statement/Prospectus, and the Merger Agreement is incorporated herein by
reference.
BACKGROUND OF AND REASONS FOR THE MERGER. The Savannah Board believes that
the Merger is in the best interests of Savannah and its shareholders, has
unanimously approved the Merger Agreement and unanimously recommends that the
shareholders vote "FOR" approval of the issuance of shares of Savannah Common
Stock pursuant to the Merger Agreement. In deciding to approve the Merger
Agreement and the consummation of the transactions contemplated therein,
including the issuance of shares of Savannah Common Stock pursuant to the Merger
Agreement, the Savannah Board considered a number of factors, including the
financial condition of Bryan, the opinion of T. Stephen Johnson & Associates,
Inc. ("TSJ") as to the fairness, from a financial point of view, to the
shareholders of Savannah of the consideration to be issued to Bryan
shareholders, the earnings and financial condition of Bryan Bank, the
attractiveness of the Bryan market, the compatibility of Bryan's operations and
community bank orientation, the likelihood of the Merger being approved by
regulatory authorities without adverse conditions or delay, and the anticipated
tax-free nature of the Merger. See "THE MERGER--Background of the Merger" and
"--Savannah's Reasons for the Merger and Recommendation of Directors."
The Bryan Board believes that the Merger is in the best interests of Bryan
and its shareholders, has approved the Merger Agreement and recommends that the
shareholders vote "FOR" approval of the Merger Agreement and the consummation of
the transactions contemplated therein. In deciding to approve the Merger
Agreement and the consummation of the transactions contemplated therein, the
Bryan Board considered a number of factors, including, among other matters, the
financial terms of the proposed Merger, the opinion of Elaine H. Demarest, CPA,
P.C. ("EHD") as to the fairness, from a financial point of view, to the
shareholders of Bryan of the consideration to be received by the Bryan
shareholders, the financial condition of Savannah, the percentage ownership of
Bryan shareholders in the resulting company, the projected earnings stream of
the combined company, the desire for Bryan Bank to remain a separate community
bank with operating independence, the anticipated tax-free nature of the Merger,
increased liquidity for shareholders, a comparison of the terms with comparable
transactions, and alternatives to the Merger. See "THE Merger--Background of the
Merger" and "--Bryan's Reasons for the Merger and Recommendation of Directors."
The Boards of Directors of Bryan and Savannah believe that the Merger will
result in a company with expanded opportunities for profitable growth and that
the combined resources and capital of Bryan and Savannah will provide an
enhanced ability to compete in the changing and competitive financial services
industry. See "THE MERGER--Background of the Merger," "--Savannah's Reasons for
the Merger and Recommendation of Directors," and "--Bryan's Reasons for the
Merger and Recommendation of Directors."
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OPINION OF SAVANNAH'S FINANCIAL ADVISOR. Savannah has received the written
opinion of TSJ, dated March 25, 1998, as to the fairness, from a financial point
of view, to the Savannahshareholders of the consideration to be issued to Bryan
shareholders. The full text of TSJ's written opinion, which describes the
procedures followed, assumptions made, limitations on the review taken, and
other matters in connection with rendering such opinion, is set forth in
APPENDIX B to this Joint Proxy Statement/Prospectus and should be read in its
entirety by Savannah shareholders. For additional information regarding the
opinion of TSJ and a discussion of the qualifications of TSJ, the method of its
selection, and certain relationships between TSJ and Savannah, see "THE
MERGER--Opinion of Savannah's Financial Advisor."
OPINION OF BRYAN'S FINANCIAL ADVISOR. Bryan has received the written
opinion of EHD, dated as of April 8, 1998 as to the fairness, from a financial
point of view, to the Bryan shareholders of the consideration to be received by
the Bryan shareholders. The full text of EHD's written opinion, which describes
the procedures followed, assumptions made, limitations on the review taken, and
other matters in connection with rendering such opinion, is set forth in
APPENDIX C to this Joint Proxy Statement/Prospectus and should be read in its
entirety by Bryan shareholders. For additional information regarding the opinion
of EHD and a discussion of the qualifications of EHD, the method of its
selection, and certain relationships between EHD and Bryan, see "THE
MERGER--Opinion of Bryan's Financial Advisor."
EXCHANGE RATIO. At the Effective Time, each share of Bryan Common Stock
then issued and outstanding (excluding shares held by Bryan, Savannah, or their
respective subsidiaries, in each case other than shares held in a fiduciary
capacity or as a result of debts previously contracted, and excluding shares
held by Bryan shareholders who perfect their statutory dissenters' rights) will
be converted into and exchanged for the right to receive 1.85 shares of Savannah
Common Stock.
As of the Bryan Record Date, there were 532,258 shares of Bryan Common
Stock issued, of which 506,508 shares were outstanding and 25,750 shares were
held as treasury stock by Bryan. Based on the number of shares of Bryan Common
Stock outstanding on the Bryan Record Date and the Exchange Ratio of 1.85, it is
anticipated that upon consummation of the Merger, Savannah would issue
approximately 937,040 shares of Savannah Common Stock to holders of Bryan Common
Stock. Accordingly, following consummation of the Merger, Savannah will have
approximately 2,673,838 shares of Savannah Common Stock outstanding, based on
the number of shares of Savannah Common Stock issued and outstanding on the
Savannah Record Date. See "THE MERGER--Exchange Ratio."
FRACTIONAL SHARES. No fractional shares of Savannah Common Stock will be
issued. Rather, cash (without interest) will be paid in lieu of any fractional
share interest to which any Bryan shareholder would be entitled upon
consummation of the Merger, in an amount equal to such fractional part of a
share of Savannah Common Stock multiplied by the market value of one share of
Savannah Common Stock at the Effective Time. The market value of one share of
Savannah Common Stock at the Effective Time will be the last sale price of such
common stock on the Nasdaq National Market (as reported by THE WALL STREET
JOURNAL or, if not reported thereby, any other authoritative source selected by
Savannah) on the last trading day preceding the Effective Time. No Bryan
shareholder who would have been entitled to receive fractional shares of
Savannah Common Stock will be entitled to dividends, voting rights, or any other
rights as a shareholder in respect of any fractional shares. See "THE
MERGER--Fractional Shares."
CONVERSION OF STOCK OPTIONS. At the Effective Time, each option or other
right to purchase Bryan Common Stock pursuant to stock options ("Bryan Rights")
granted by Bryan, which are outstanding at the Effective Time, whether or not
exercisable, will be converted into and become rights with respect to Savannah
Common Stock, and Savannah will assume each Bryan Right, in accordance with the
terms of the stock option agreement by which it is evidenced. See "THE
MERGER--Conversion of Stock Options."
EFFECTIVE TIME. Subject to the conditions to the obligations of the parties
to effect the Merger, the Effective Time will occur on the date and at the time
that the certificate of merger, which is to be executed by Savannah and filed
with the Secretary of State of the State of Georgia relating to the Merger (the
"Certificate of Merger"), becomes effective with the Secretary of State of the
State of Georgia. Unless otherwise agreed upon by Bryan and Savannah, and
subject to the terms and conditions contained in the Merger Agreement, the
parties will use their reasonable efforts to cause the Effective Time to occur
on or before the fifth business day following the last to occur of (i) the
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effective date (including the expiration of any applicable waiting period) of
the last consent required by the Merger Agreement of any regulatory authority
having authority over and approving or exempting the Merger, and (ii) the date
on which the shareholders of Bryan and Savannah approve the Merger Agreement.
See "THE MERGER--Effective Time," "--Conditions to Consummation" and
"--Amendment, Waiver, and Termination."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY SHAREHOLDER AND REGULATORY
APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO THE MERGER
CAN OR WILL BE SATISFIED. BRYAN AND SAVANNAH ANTICIPATE THAT ALL CONDITIONS TO
THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE MERGER CAN BE
CONSUMMATED DURING THE FOURTH QUARTER OF 1998. HOWEVER, DELAYS IN THE
CONSUMMATION OF THE MERGER COULD OCCUR.
DISTRIBUTION OF SAVANNAH CERTIFICATES. Promptly after the Effective Time,
Savannah and Bryan will cause Reliance Trust Company, Atlanta, Georgia,
Savannah's transfer agent, acting as the exchange agent (the "Exchange Agent"),
to mail to each holder of record of a certificate or certificates (collectively,
the "Certificates") which, immediately prior to the Effective Time, represented
outstanding shares of Bryan Common Stock, appropriate transmittal materials and
instructions for use in effecting the surrender and cancellation of the
Certificates in exchange for certificates representing shares of Savannah Common
Stock. Cash will be paid to the holders of Bryan Common Stock in lieu of the
issuance of any fractional shares of Savannah Common Stock.
HOLDERS OF BRYAN COMMON STOCK SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE APPROPRIATE TRANSMITTAL MATERIALS AND INSTRUCTIONS.
In no event will the holder of any surrendered Certificate(s) be entitled
to receive interest on any cash to be issued to such holder, and in no event
will Savannah, or the Exchange Agent be liable to any holder of Bryan Common
Stock for any amounts paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat, or similar law.
FEDERAL INCOME TAX CONSEQUENCES. Bryan and Savannah have received an
opinion of Alston & Bird LLP, counsel to Savannah, to the effect that, among
other things, (i) the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and (ii) the exchange in the Merger of Bryan Common Stock solely for shares of
Savannah Common Stock will not result in gain or loss to the shareholders of
Bryan. For a further discussion of certain of the federal income tax
consequences of the Merger, see "THE MERGER--Federal Income Tax Consequences."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER AND OTHER CIRCUMSTANCES, EACH
HOLDER OF BRYAN COMMON STOCK IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISORS
TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER
(INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS).
MANAGEMENT AND OPERATIONS AFTER THE MERGER. Savannah will be the surviving
corporation resulting from the Merger and Bryan Bank will become a wholly owned
subsidiary of Savannah. The parties intend that Savannah Bank and Bryan Bank
will operate as separate subsidiaries of Savannah after the Effective Time. The
Merger Agreement provides that the directors of Savannah in office immediately
prior to the Effective Time, together with E. James Burnsed, James W. Royal,
James Toby Roberts, Sr., L. Carlton Gill, and Robert T. Thompson, Jr., current
directors of Bryan, will serve as directors of Savannah from and after the
Effective Time in accordance with Savannah's Bylaws. The officers of Savannah in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, will serve as the officers of Savannah,
from and after the Effective Time in accordance with the Bylaws of Savannah;
provided, that E. James Burnsed will be elected Vice Chairman of Savannah. Of
the five directors of Bryan who will serve as directors of Savannah assuming
they are elected by the shareholders of Savannah and the Merger is consummated,
Messrs. Gill and Thompson shall serve until the Annual Meeting of Shareholders
in 1999, Messrs. Royal and Roberts shall serve until the Annual Meeting of
Shareholders in 2000, and Mr. Burnsed shall serve until the Annual Meeting of
Shareholders in 2001, in each case until their successors have been elected and
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qualified. See "THE MERGER - Management and Operations After the Merger" and
"CONTINGENT ELECTION OF DIRECTORS."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Certain members of Savannah's
and Bryan's managements and boards of directors have interests in the Merger in
addition to their interests as shareholders of Savannah and Bryan generally.
These include, among other things, provisions in the Merger Agreement relating
to indemnification, and the eligibility of certain Bryan personnel for certain
Savannah employee benefits. In addition, E. James Burnsed and George Michael
Odom, Jr., current officers of Bryan, are entitled to receive certain benefits
upon the consummation of the Merger pursuant to the terms of certain "change in
control" agreements that those individuals have with Bryan; however, the Merger
Agreement provides that Messrs. Burnsed and Odom will waive any benefits to
which they are entitled under those "change in control" agreements in return for
the execution by Savannah of new employment agreements with those individuals.
The new employment agreements provide for a base salary of $90,000 per year for
Mr. Burnsed and $80,000 per year for Mr. Odom, and both provide for certain
other benefits to be received by Messrs. Burnsed and Odom, including, but not
limited to the following: the assumption by Savannah of certain stock option
agreements; the granting of certain incentive stock options; and the inclusion
of "change in control" provisions in the employment agreements that are
substantially similar to the provisions contained in the prior "change in
control" agreements between Bryan and Messrs. Burnsed and Odom, which could be
triggered upon any future "change in control" of Savannah. See "THE
MERGER-Interests of Certain Persons in the Merger; Employment Agreements," and
"THE MERGER-Interests of Certain Persons in the Merger; Change in Control
agreements." Furthermore, Mr. Charles Stafford, a current director of Bryan,
entered into the following agreements as a result of the Merger negotiations: a
covenant not to compete, pursuant to which Mr. Stafford will receive $5,000 per
month for a period of 40 months (for a total of $200,000); a nonsolicitation and
nondisclosure agreement; a financial disclosure agreement; an affiliate
agreement, and a directors' agreement. See "THE MERGER-Interests of Certain
Persons in the Merger; Stafford Agreements." Additionally, the Merger Agreement
provides that, in the event Savannah removes, or fails to re-elect a director
(other than Charles Stafford) to the board of directors of Bryan Bank during the
24-month period following the closing date of the Merger, Savannah will pay such
director, immediately, an amount equal to the director's fees he or she would
have earned during the remainder of such 24-month period. Currently, Bryan Bank
pays each of its directors $500 per month in director's fees. See "THE
MERGER-Interests of Certain Persons in the Merger." In addition, five of the
current Bryan directors will serve as directors of Savannah, as described above.
As of the Savannah Record Date, the directors and officers of Bryan were
entitled to vote an aggregate of 825 shares of Savannah Common Stock. As of the
Bryan Record Date, the directors and officers of Savannah were not entitled to
vote any shares of Bryan Common Stock. See "THE MERGER--Interests of Certain
Persons in the Merger."
CONDITIONS TO CONSUMMATION. Consummation of the Merger is subject to
various conditions, including receipt of the required approval of the Merger
Agreement by Bryan shareholders, receipt of the required approval of Savannah
shareholders for the issuance of Savannah Common Stock pursuant to the Merger
Agreement, receipt of required regulatory approvals, receipt of an opinion of
counsel as to the tax-free nature of certain aspects of the Merger, receipt of a
letter from the independent accountants of Savannah that the Merger will qualify
for pooling-of-interests accounting treatment, and certain other conditions. In
the event that either the Savannah or the Bryan board of directors elects to
waive the condition relating to the receipt of a pooling letter from Savannah's
independent accountants (relating to the accounting treatment of the Merger),
then the board of directors of the party that so elects to waive such condition
will resolicit the approval of the shareholders of that party. - See "THE
MERGER--Conditions to Consummation.
REGULATORY APPROVALS. The Merger is subject to approval by the Board of
Governors of the Federal Reserve System (the "Federal Reserve") and the Georgia
Department of Banking and Finance (the "GDBF"). Savannah has obtained all
required regulatory approvals for the Merger. See "THE MERGER--Regulatory
Approvals."
AMENDMENT, WAIVER, AND TERMINATION. The Merger Agreement may be terminated
and the Merger abandoned at any time prior to the Effective Time by mutual
consent of Bryan and Savannah, or by either Bryan or Savannah under certain
circumstances, including if the Merger is not consummated by December 31, 1998,
unless the failure to consummate by such time is due to a breach of the Merger
Agreement by the party seeking to so terminate. If for any reason the Merger is
not consummated, Savannah and Bryan will continue to operate as independent bank
holding companies under their respective present management. See "THE
MERGER--Amendment, Waiver, and Termination."
-6-
<PAGE>18
CONDUCT OF BUSINESS PENDING THE MERGER. Each party has agreed in the Merger
Agreement to: (i) operate its business only in the usual, regular and ordinary
course; (ii) preserve intact its business organization and assets and maintain
its rights and franchises; and (iii) take no action that would (a) adversely
affect the ability of any party to the Merger Agreement to obtain any consents
required for the transactions contemplated by the Merger Agreement without the
imposition of certain materially adverse conditions or restrictions as
contemplated by the Merger Agreement, or (b) materially adversely affect the
ability of any party to the Merger Agreement to perform its covenants and
agreements under the Merger Agreement. In addition, each party to the Merger
Agreement has agreed not to take certain actions relating to the operation of
their respective businesses pending consummation of the Merger without the prior
written consent of the other party, except as otherwise permitted by the Merger
Agreement. See "THE MERGER--Conduct of Business Pending the Merger."
EXPENSES AND FEES. The Merger Agreement provides that, except as otherwise
provided in the Merger Agreement, each of Savannah and Bryan will bear and pay
all direct costs and expenses incurred by it or on its behalf in connection with
the transactions contemplated under the Merger Agreement, 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 to the Merger Agreement will bear and
pay one-half of the filing fees payable in connection with the Registration
Statement and the Joint Proxy Statement/Prospectus and printing costs incurred
in connection with the printing of the Registration Statement and this Joint
Proxy Statement/Prospectus. See "THE MERGER--Expenses and Fees."
ACCOUNTING TREATMENT. It is anticipated that the Merger will qualify as a
"pooling-of-interests" transaction for accounting and financial reporting
purposes. See "THE MERGER--Accounting Treatment."
RESALES OF SAVANNAH COMMON STOCK. The Savannah Common Stock issued in
connection with the Merger will be freely transferable by the holders of such
shares, except for those holders who may be deemed to be "affiliates" (generally
including directors, certain executive officers, and 10% or more shareholders)
of Bryan or Savannah under applicable federal securities laws. See "THE
MERGER--Resales of Savannah Common Stock."
STOCK OPTION AGREEMENTS. As an inducement and condition to Savannah's
willingness to enter into the Merger Agreement, Bryan (as issuer) entered into a
Stock Option Agreement with Savannah (as grantee), dated as of February 11, 1998
(the "Bryan Stock Option Agreement"), and as an inducement and condition to
Bryan's willingness to enter into the Merger Agreement, Savannah (as issuer)
entered into a Stock Option Agreement with Bryan (as grantee), dated as of
February 11, 1998 (the "Savannah Stock Option Agreement" and, together with the
Bryan Stock Option Agreement, the "Stock Option Agreements"). The Stock Option
Agreements are set forth as exhibits to the Merger Agreement.
Pursuant to the Bryan Stock Option Agreement, Bryan granted to Savannah an
irrevocable option (the "Bryan Option"), exercisable only under certain limited
and specifically defined circumstances, none of which, to the best of Bryan's
and Savannah's knowledge, has occurred as of the date hereof, to purchase up to
100,098 shares of Bryan Common Stock for a purchase price of $47.18 per share,
subject to adjustment in certain circumstances.
Pursuant to the Savannah Stock Option Agreement, Savannah granted to Bryan
an irrevocable option (the "Savannah Option" and, together with the Bryan
Option, the "Options"), exercisable only under certain limited and specifically
defined circumstances, none of which, to the best of Savannah's and Bryan's
knowledge, has occurred as of the date hereof, to purchase up to 340,200 shares
of Savannah Common Stock for a purchase price of $25.50 per share, subject to
adjustment in certain circumstances.
Under certain circumstances, if one of the Options becomes exercisable, the
holder of such Option will have the right to require the issuer of the Option to
repurchase such Option (or the shares purchased pursuant thereto).
The purchase of any shares of Bryan Common Stock or Savannah Common Stock
pursuant to the Options is subject to compliance with applicable law, including
receipt of any necessary approvals under the BHC Act.
-7-
<PAGE>19
The Stock Option Agreements and the Options are intended to increase the
likelihood that the Merger will be consummated on the terms set forth in the
Merger Agreement, and may be expected to discourage offers by third parties to
acquire Bryan or Savannah prior to the Merger.
In the event that either the Bryan shareholders or the Savannah
shareholders fail to approve the Merger Agreement, either Bryan or Savannah may
terminate the Merger Agreement. See "THE MERGER--Amendment, Waiver, and
Termination." If such termination occurs prior to the occurrence of a Purchase
Event or Preliminary Purchase Event (as such terms are defined in the Stock
Option Agreements) under the Stock Option Agreements, the Stock Option
Agreements will automatically terminate at such time. If a Purchase Event occurs
under either or both of the Stock Option Agreements, however, Bryan and/or
Savannah, as applicable, will be entitled to exercise the related Option or
Options in accordance with its or their terms, as applicable. See "THE
MERGER--Stock Option Agreements."
BRYAN DIRECTORS' AGREEMENTS. The current directors of Bryan have entered
into certain agreements (the "Directors' Agreements"), which provide that they
will vote their shares of Bryan Common Stock in favor of the Merger. See "THE
MERGER--Bryan Directors' Agreements."
DISSENTER'S RIGHTS. Each holder of Bryan Common Stock who perfects his
dissenters' rights is entitled to the rights and remedies of a dissenting
shareholder under Title 14, Chapter 2, Article 13 of the GBCC, subject to
compliance with the procedures set forth therein. Among other things, a
dissenting shareholder who has perfected his dissenter's rights is entitled to
receive an amount in cash equal to the "fair value" of such holder's shares. A
copy of Title 14, Chapter 2, Article 13 of the GBCC is set forth in APPENDIX D
of this Joint Proxy Statement/Prospectus and a summary thereof is included under
"THE Merger--Dissenters' Rights." TO PERFECT DISSENTERS' RIGHTS, A SHAREHOLDER
MUST COMPLY WITH TITLE 14, CHAPTER 2, ARTICLE 13 OF THE GBCC WHICH REQUIRES,
AMONG OTHER THINGS, THAT THE SHAREHOLDER MUST DELIVER TO BRYAN, PRIOR TO THE
VOTE OF THE SHAREHOLDERS OF BRYAN AT THE BRYAN SPECIAL MEETING, WRITTEN NOTICE
OF SUCH HOLDER'S INTENTION TO DEMAND PAYMENT FOR HIS SHARES IF THE MERGER IS
EFFECTUATED AND THAT SUCH SHAREHOLDER NOT VOTE SUCH HOLDER'S SHARES IN FAVOR OF
THE MERGER AGREEMENT. ANY BRYAN 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 MERGER AGREEMENT AND THUS
WILL NOT BE ENTITLED TO ASSERT DISSENTERS' RIGHTS. The holders of Savannah
Common Stock are not entitled to such dissenters' rights under the GBCC. See
"THE MERGER--Dissenters' Rights."
CONTINGENT ELECTION OF DIRECTORS
At the Savannah Special Meeting, Savannah shareholders will be asked to
consider and vote upon the election, contingent on consummation of the Merger,
L. Carlton Gill, Robert T. Thompson, Jr., James W. Royal, James Toby Roberts,
Sr. and E. James Burnsed, each of whom serves as a current director of Bryan, to
the Savannah Board of Directors, of whom Messrs. Gill and Thompson, Jr. shall
serve until the Annual Meeting of Shareholders in 1999, Messrs. Royal and
Roberts shall serve until the Annual Meeting of Shareholders in 2000, and Mr.
Burnsed shall serve until the Annual Meeting of Shareholders in 2001, in each
case until their successors have been elected and qualified. See "CONTINGENT
ELECTION OF DIRECTORS."
RISK FACTORS
In considering whether to approve the Merger Agreement and the transactions
contemplated thereby, the shareholders of Bryan should consider the various
risks associated with an investment in Savannah Common Stock. For a discussion
of the risks associated with the Merger and the securities associated therewith,
see "RISK FACTORS."
-8-
<PAGE>20
MARKET PRICES AND DIVIDENDS
Savannah Common Stock is traded in the over-the-counter market and quoted
on the Nasdaq National Market under the symbol "SAVB." The Bryan Common Stock is
not traded in any established market. On February 10, 1998, the last day prior
to public announcement that Savannah and Bryan had executed the Merger
Agreement, the last reported sale price per share of Savannah Common Stock on
the Nasdaq National Market was $25.50, or an equivalent pro forma price per
share of Bryan Common Stock (based on the 1.85 Exchange Ratio) of $47.18. On
October 30, 1998, the latest practicable date prior to the mailing of this Joint
Proxy Statement/Prospectus, the last reported sale price per share of Savannah
Common Stock on the Nasdaq National Market was $21.63, or an equivalent pro
forma price per share of Bryan Common Stock of $40.01. There can be no assurance
as to what the market price of the Savannah Common Stock will be if and when the
Merger is consummated.
The following table sets forth the high and low sale prices per share of
Savannah Common Stock on The SmallCap Market of The Nasdaq Stock Market through
March of 1997, and thereafter on the Nasdaq National Market, and the dividends
paid per share of Savannah Common Stock for the indicated periods. All per share
data have been restated to give effect to a 3-for-2 stock split effected
February 24, 1997.
SALE PRICE PER SHARE DIVIDENDS
OF SAVANNAH DECLARED
COMMON STOCK PER SHARE
------- ------- OF SAVANNAH
1996 HIGH LOW COMMON STOCK
- ---- ------- ------- ------------
First Quarter........................ $14.00 $12.67 $0.02
Second Quarter....................... $14.00 $12.67 $0.02
Third Quarter........................ $13.83 $12.67 $0.02
Fourth Quarter....................... $16.33 $12.67 $0.02
1997
- ----
First Quarter........................ $19.25 $15.00 $0.02
Second Quarter....................... $23.00 $18.63 $0.04
Third Quarter........................ $23.25 $20.00 $0.04
Fourth Quarter....................... $24.00 $21.50 $0.04
1998
- ----
First Quarter ....................... $31.00 $23.94 $0.04
Second Quarter....................... $28.25 $25.50 $0.10
Third Quarter ....................... $27.00 $21.50 $0.10
Fourth Quarter (through October 30, 1998) $22.00 $21.00 $0.10
SAVANNAH SHAREHOLDERS AND BRYAN SHAREHOLDERS SHOULD OBTAIN CURRENT MARKET
QUOTATIONS FOR SAVANNAH COMMON STOCK.
-9-
<PAGE>21
There is no established public trading market for the Bryan Common Stock,
and no reliable information is available as to trades of such shares or the
prices at which such shares have traded. Based upon the limited information
available to it, Bryan believes that the following table sets forth the high and
low prices and the dividends paid per share of Bryan Common Stock for the past
two years.
DIVIDENDS
SALE PRICE PER SHARE DECLARED
COMMON STOCK PER SHARE
------- ------- OF BRYAN
HIGH LOW COMMON STOCK
1996 ------- ------- --------------
- ----
First Quarter...................... $20.00 $18.00 $0.70
Second Quarter..................... N/A* N/A* -
Third Quarter...................... N/A* N/A* -
Fourth Quarter..................... $20.00 $20.00 -
1997
- ----
First Quarter...................... $25.00 $25.00 $0.85
Second Quarter..................... $25.00 $25.00 -
Third Quarter...................... $25.00 $25.00 -
Fourth Quarter..................... $25.00 $25.00 -
1998
- ----
First Quarter...................... $25.00 $25.00 $1.00
Second Quarter..................... N/A* N/A* -
Third Quarter ..................... N/A* N/A* $0.185
Fourth Quarter (through October 30, 1998) N/A* N/A* $0.185
* N/A = No known trading activity.
The holders of Savannah Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Savannah has paid regular quarterly cash dividends on its Common Stock
since 1995. Although Savannah currently intends to continue to pay quarterly
cash dividends on the Savannah Common Stock, the declaration and payment of
dividends in the future will depend upon business conditions, operating results,
capital and reserve requirements, and the Board of Directors' consideration of
other relevant factors. Bryan has agreed, consistent with its recent practices,
not to declare or pay any dividends during the pendency of the Merger, other
than the dividend referred to in the table above. See "THE MERGER--Conduct of
Business Pending the Merger."
Savannah and Bryan are each legal entities separate and distinct from their
respective subsidiaries, and their revenues depend in significant part on the
payment of dividends from their respective subsidiary depository institutions.
National banking associations and Georgia banks such as Savannah Bank and Bryan
Bank, respectively, are subject to certain legal restrictions on the amount of
dividends they are permitted to pay. See "RISK FACTORS - Restrictions on
Dividends."
-10-
<PAGE>22
COMPARATIVE PER SHARE DATA
The following table sets forth certain unaudited comparative per share data
relating to income, cash dividends, and book value on (i) an historical basis
for Savannah and Bryan; (ii) a pro forma combined basis per share of Savannah
Common Stock, giving effect to the Merger; and (iii) an equivalent pro forma
basis per share of Bryan Common Stock, giving effect to the Merger. The Bryan
and Savannah pro forma combined information and the Bryan pro forma Merger
equivalent information give effect to the Merger on a pooling-of-interests
accounting basis and reflects the Exchange Ratio of 1.85 shares of Savannah
Common Stock for each share of Bryan Common Stock. See "THE MERGER--Accounting
Treatment." The pro forma data are presented for informational purposes only and
are not necessarily indicative of the results of operations or combined
financial position that would have resulted had the Merger been consummated at
the dates or during the periods indicated, nor are they 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 Savannah
and Bryan, including the respective notes thereto, and the pro forma financial
information incorporated by reference herein. See "DOCUMENTS INCORPORATED BY
REFERENCE," "--Selected Financial Data," "--Selected Pro Forma Financial Data,"
and "PRO FORMA FINANCIAL INFORMATION."
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS ENDED AS OF AND FOR THE
JUNE 30, YEAR ENDED DECEMBER 31,
1998 1997 1996 1995
------------- ---- ---- ----
<S> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE
Savannah historical (5):
Basic.......................... $ 0.58 $ 1.03 $ 0.89 $ 0.70
Diluted........................ 0.54 0.97 0.85 0.69
Bryan historical:
Basic.......................... 1.23 2.30 2.01 1.77
Diluted........................ 1.20 2.25 1.98 1.75
Savannah and Bryan pro forma combined (1):
Basic.......................... 0.61 1.10 0.96 0.80
Diluted........................ 0.58 1.06 0.93 0.78
Bryan pro forma equivalent (2):
Basic.......................... 1.13 2.04 1.78 1.48
Diluted........................ 1.07 1.96 1.72 1.44
DIVIDENDS DECLARED PER
COMMON SHARE
Savannah historical (5).......... $ 0.14 $ 0.14 $ 0.08 $ 0.07
Bryan historical (6)............. 1.00 0.85 0.70 0.60
Savannah and Bryan pro forma
combined (1)(3)................ 0.14 0.14 0.08 0.07
Bryan pro forma equivalent (4)... 0.26 0.26 0.15 0.13
BOOK VALUE PER COMMON
SHARE (PERIOD END)
Savannah historical.............. $ 9.18 $ 8.76
Bryan historical................. 15.04 14.75
Savannah and Bryan pro forma
combined (1)................... 8.51 8.18
Bryan pro forma equivalent (2)... 15.74 15.13
</TABLE>
(1) Represents the pro forma combined information of Savannah and Bryan as if
the Merger were consummated at the beginning of the period, and were
accounted for as a pooling-of-interests.
(2) Represents the pro forma combined per common share amounts multiplied by
the Exchange Ratio of 1.85 shares of Savannah Common Stock for each share
of Bryan Common Stock.
(3) Represents historical dividends paid by Savannah. Savannah increased its
quarterly dividend to ten cents per share in the second quarter of 1998.
-11-
<PAGE>23
(4) Represents historical dividends declared per share by Savannah multiplied
by the Exchange Ratio of 1.85 shares of Savannah Common Stock for each
share of Bryan Common Stock.
(5) All Savannah historical per share data has been restated to give effect to
a 3-for-2 stock split effected on February 24, 1997.
(6) The June 30, 1998 dividends include Bryan's annual dividend declared
in March 1998.
-12-
<PAGE>24
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Savannah and Bryan and are derived from the respective
consolidated financial statements of Savannah and Bryan. The data should be read
in conjunction with the historical consolidated financial statements, including
the respective notes thereto, and other financial information concerning
Savannah and Bryan incorporated by reference herein. See "AVAILABLE INFORMATION"
and "DOCUMENTS INCORPORATED BY REFERENCE."
SELECTED FINANCIAL DATA OF SAVANNAH (HISTORICAL)
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
The following table sets forth selected historical financial data of
Savannah and should be read in conjunction with Savannah's Annual Report on Form
10-KSB for the year ended December 31, 1997, and Savannah's Quarterly Report on
Form 10-QSB for the quarter ended June 30, 1998, which are incorporated by
reference herein. See "AVAILABLE INFORMATION" and "DOCUMENTS INCORPORATED BY
REFERENCE."
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS
ENDED JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31,
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets..................$169,190 $140,124 $163,659 $137,452 $115,088 $ 90,434 $ 71,834
Loans, net.................... 106,570 96,055 104,541 87,409 74,766 60,320 51,257
Deposits...................... 148,346 122,105 144,464 121,401 99,547 78,378 59,296
Stockholders' equity.......... 15,874 14,042 14,976 13,285 12,163 10,858 10,528
STATEMENT OF INCOME DATA
Net interest income...........$ 3,302 $ 2,746 $ 6,048 $ 5,144 $ 4,519 $ 3,755 $ 2,622
Provision for loan losses..... 100 115 300 195 172 125 257
Noninterest income............ 628 419 953 654 470 201 235
Noninterest expense........... 2,309 1,916 4,016 3,290 2,914 2,407 2,003
Net income.................... 986 812 1,753 1,507 1,204 906 529
PER SHARE DATA (1)
Book value (at period end)....$ 9.18 $ 8.21 $ 8.76 $ 7.81 $ 7.15 $ 6.20 $ 5.90
Net income:
Basic........................ 0.58 0.48 1.03 0.89 0.70 0.51 0.29
Diluted...................... 0.54 0.45 0.97 0.85 0.69 0.51 0.29
Cash dividends................. 0.14 0.06 0.14 0.08 0.07 0.03 -
Total shares outstanding (at
period end).................. 1,730 1,710 1,710 1,701 1,701 1,750 1,783
Weighted average shares
outstanding-basic............ 1,714 1,706 1,708 1,701 1,711 1,762 1,783
Weighted average shares
outstanding-diluted.......... 1,815 1,789 1,802 1,763 1,747 1,762 1,783
RATIO DATA
Return on average assets....... 1.18% 1.18% 1.22% 1.20% 1.18% 1.09% 0.80%
Return on average stockholders'
equity....................... 12.96% 12.04% 12.48% 12.01% 10.53% 8.43% 5.15%
Average equity to average
assets....................... 9.11% 9.83% 9.79% 10.03% 11.20% 12.89% 15.48%
Average loans to average
deposits..................... 71.80% 74.40% 75.39% 73.29% 76.58% 80.39% 84.94%
</TABLE>
(1) All share and per share data has been revised to reflect the effect of a
3-for-2 stock split effected on February 24, 1997.
-13-
<PAGE>25
SELECTED FINANCIAL DATA OF BRYAN (HISTORICAL)
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
The following table sets forth selected historical financial data of Bryan
and should be read in conjunction with Bryan's Annual Report on Form 10-KSB for
the year ended December 31, 1997 and Bryan's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1998, which are incorporated by reference herein. See
"AVAILABLE INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE."
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS
ENDED JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31,
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets..................$ 71,043 $ 61,000 $ 65,513 $ 60,213 $ 51,797 $ 46,618 $ 42,225
Loans, net.................... 51,600 45,344 47,614 41,805 36,451 32,565 25,109
Deposits...................... 59,508 52,757 55,980 52,604 43,497 40,499 37,147
Stockholders' equity.......... 7,620 6,910 7,421 6,771 6,374 5,484 4,656
STATEMENT OF INCOME DATA
Net interest income...........$ 1,739 $ 1,589 $ 3,276 $ 2,912 $ 2,646 $ 2,194 $ 1,681
Provision for loan losses..... 90 90 180 90 85 20 50
Noninterest income............ 468 362 720 548 420 391 340
Noninterest expense........... 1,197 1,018 2,078 1,841 1,608 1,507 1,359
Net income.................... 620 562 1,158 1,021 917 727 406
PER SHARE DATA
Book value (period end).......$ 15.04 $ 13.71 $ 14.75 $ 13.41 $ 12.33 $ 10.61 $ 11.73
Net income:
Basic....................... 1.23 1.11 2.30 2.01 1.77 1.70 1.02
Diluted..................... 1.20 1.08 2.25 1.98 1.75 1.68 .91
Cash dividends................ 1.00 0.85 0.85 0.70 .60 2.50 -
Total shares outstanding (at
period end).................. 507 504 503 505 517 517 397
Weighted average shares
outstanding-basic........... 503 504 504 508 517 427 400
Weighted average shares
outstanding-diluted......... 518 520 516 515 525 434 446
RATIO DATA
Return on average assets...... 1.83% 1.93% 1.88% 1.87% 1.85% 1.67% 1.11%
Return on average stockholders'
equity...................... 16.63% 16.57% 16.56% 15.78% 15.24% 14.73% 9.30%
Average equity to average
assets...................... 11.00% 11.67% 11.37% 11.84% 12.16% 11.37% 11.91%
Average loans to average
deposits.................... 86.65% 86.90% 85.91% 83.80% 86.45% 75.30% 64.87%
</TABLE>
-14-
<PAGE>26
SELECTED PRO FORMA FINANCIAL DATA
The following table sets forth selected pro forma combined financial
information for the years ended December 31, 1997 and 1996 and the six months
ended June 30, 1998, giving effect to the Merger using the pooling-of-interests
method of accounting. See "THE MERGER-Accounting Treatment." The pro forma
information is provided for informational purposes only and is not necessarily
indicative of actual results that would have been achieved had the Merger been
consummated at the beginning of the periods presented or of future results. The
selected pro forma combined financial information is derived from the Unaudited
Pro Forma Combined Financial Information appearing elsewhere herein. This
information should be read in conjunction with the historical financial
statements of Savannah and Bryan, including the respective notes thereto,
incorporated by reference herein. See "AVAILABLE INFORMATION," "DOCUMENTS
INCORPORATED BY REFERENCE," and "PRO FORMA COMBINED FINANCIAL DATA."
SELECTED PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
EARNINGS DATA
Interest income............................. $ 9,336 $ 16,667 $ 14,444
Interest expense............................ 4,296 7,343 6,388
Net interest income......................... 5,040 9,324 8,056
Provision for loan losses................... 190 480 285
Noninterest income.......................... 1,096 1,673 1,202
Noninterest expense......................... 3,506 6,094 5,131
Income taxes................................ 834 1,512 1,314
Net income.................................. 1,606 2,911 2,528
Earnings per share:
Basic.................................... $ 0.61 $ 1.10 $ 0.96
Diluted.................................. $ 0.58 $ 1.06 $ 0.93
AS OF AS OF
JUNE 30, DECEMBER 31,
1998 1997
-------- --------
BALANCE SHEET DATA
Total assets................................ $240,233 $229,172
Federal funds sold.......................... 15,448 13,225
Investment securities....................... 52,503 42,152
Loan, net................................... 156,642 152,155
Deposits.................................... 207,854 200,444
Other borrowings............................ 7,459 4,970
Stockholders' equity........................ 22,694 21,597
</TABLE>
-15-
<PAGE>27
RISK FACTORS
IN CONSIDERING WHETHER TO APPROVE THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, THE SHAREHOLDERS OF BRYAN SHOULD CONSIDER THE FOLLOWING
RISKS ASSOCIATED WITH AN INVESTMENT IN SAVANNAH COMMON STOCK:
LIMITED MARKET FOR SHARES OF SAVANNAH COMMON STOCK
While Savannah Common Stock is listed and traded on the Nasdaq National
Market, the average daily trading volume of Savannah Common Stock has been
historically low. The average daily trading volume of Savannah Common Stock over
the six-month period ending June 30, 1998 was approximately 400 shares, and on
some days during that period the trading volume for shares of Savannah Common
Stock was zero. It is not anticipated that the Merger of Bryan with and into
Savannah will cause any significant change in the average daily trading volumes
for Savannah Common Stock.
RESTRICTIONS ON DIVIDENDS
Although Savannah has regularly paid cash dividends in the past, dividends
will be payable on Savannah Common Stock only when, as and if declared by the
Board of Directors of Savannah out of funds available therefor. Any dividends to
be declared by the Savannah Board of Directors must comply with the GBCC and the
applicable rules and regulations of appropriate regulatory authorities. In
addition, Savannah's only source of income will be dividends and other payments
made to Savannah by Savannah Bank and Bryan Bank, and certain statutory and
regulatory restrictions exist on the payment of dividends by those subsidiaries.
POSSIBLE COSTS ASSOCIATED WITH THE INTEGRATION OF BRYAN
The ability of Savannah, as the surviving corporation, to perform with
financial success is dependent upon the integration of Bryan into Savannah, as
the surviving corporation. The Merger involves the integration of two companies
that have previously operated independently, and no assurance can be given that
Savannah will be able to integrate the operations of Bryan without encountering
unanticipated costs or delays in the integration or experiencing the loss of key
Bryan employees or customers, or that the cost-savings and other benefits
expected from such integration will be realized. The potential benefits of the
integration of Savannah and Bryan include: higher lending limits to individual
customers of Bryan and Savannah, Bryan customers having access to Savannah
banking offices and Automated Teller Machines ("ATMs"), joint advertising and
marketing, combining of certain backoffice operational and accounting functions
and reduction of certain regulatory reporting and audit costs. In connection
with the Merger, Savannah and Bryan expect to incur after-tax merger-related
costs of approximately $800,000, of which approximately $600,000 comprises
advisory, legal, accounting and printing costs associated with the Merger, and
estimated after-tax integration costs of approximately $200,000 relating to data
processing contract termination costs with another data processing vendor on a
contract Bryan entered into in late 1997, as well as severance and other
associated discontinuance costs. These costs will be expensed upon the closing
of the transaction. No significant capital costs are expected.
GOVERNMENTAL REGULATION
Savannah, Bryan, and their respective subsidiaries are currently subject to
extensive governmental regulation. Both Savannah and Bryan, as bank holding
companies, are primarily regulated by the Federal Reserve. Savannah Bank,
Savannah's wholly owned banking subsidiary, is a national banking association
regulated by the Federal Deposit Insurance Corporation (the "FDIC") and the
Office of the Comptroller of the Currency ("OCC"). Bryan Bank, Bryan's wholly
owned banking subsidiary, is a Georgia bank regulated by the FDIC and the GDBF.
As a bank holding company, Savannah is subject to certain minimum capital
requirements administered by the Federal Reserve. Failure to meet minimum
capital requirements can initiate certain mandatory, and possibly additional
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discretionary, actions by the Federal Reserve that, if undertaken, could have a
direct material effect on thefinancial position or results of operations of
Savannah. Savannah anticipates that it will be able to satisfy the minimum
capital requirements.
Bryan Bank and Savannah Bank will continue to be primarily regulated by the
FDIC, GDBF, and the OCC. The Federal and State regulators of these entities will
continue to have the ability, should the situation so require, to place
significant regulatory and operational burdens upon Savannah and its
subsidiaries, which could affect the profitability of those entities.
COMPETITION
Savannah and its subsidiaries will compete directly with financial
institutions which are well established, many of which will have significantly
greater resources and lending limits than Savannah and its subsidiaries. As a
result of those greater resources, the large financial institutions with which
Savannah will compete may be able to provide a broader range of services to
their customers than Savannah, may be able to afford newer and more
sophisticated technology than Savannah, and may be able to provide more funds to
borrowers than Savannah. The long-term success of Savannah will be dependent on
the ability of its subsidiaries to compete successfully with other financial
institutions in their service areas.
CONTROL BY MANAGEMENT
Upon consummation of the Merger, the resulting directors and executive
officers of Savannah will beneficially own approximately 701,791 shares of
Savannah Common Stock, or approximately 24.9 percent of the total pro forma
outstanding shares. In addition, the directors of Bryan Bank who will not become
directors of Savannah will own approximately 234,400 shares of Savannah Common
Stock, or approximately 8.8 percent of the total outstanding shares. It is
therefore anticipated that resulting management of Savannah will have
significant control of Savannah following the consummation of the Merger.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF SAVANNAH'S ARTICLES OF
INCORPORATION, BYLAWS AND THE GBCC
The Board of Directors of Savannah is empowered to issue preferred stock
without shareholder action. The existence of this ability could render more
difficult or discourage an attempt to obtain control of Savannah by means of a
tender offer, merger, proxy contest or otherwise. Savannah's Articles of
Incorporation and By-Laws divide the Board of Directors of Savannah into three
classes, as nearly equal in size as possible, with staggered three-year terms.
One class is elected each year. The classification of the Savannah Board of
Directors could have the effect of making it more difficult for a third party to
acquire control of Savannah. Savannah is also subject to certain provisions of
the GBCC and of the Savannah Articles which relate to business combinations with
interested shareholders. See "EFFECT OF THE MERGER ON THE RIGHTS OF
SHAREHOLDERS."
YEAR 2000 ISSUES
It is possible that Savannah's and Bryan's currently installed computer
systems, software products or other business systems, or those of Savannah's or
Bryan's suppliers or customers, will not always accept input of, store,
manipulate and output dates in the years 1999, 2000 or thereafter without error
or interruption. Savannah and Bryan have conducted reviews of their business
systems, including their computer systems, to attempt to identify ways in which
their systems could be affected by problems in correctly processing date
information. Savannah and Bryan have engaged Year 2000 consultants and have
developed a plan to ensure a smooth transition of the systems, products and
vendors that they rely on into the twenty-first century. Additionally, Savannah
Bank and Bryan Bank are working with their loan customers to monitor potential
credit exposure that might result from a lack of their systems' readiness for
the Year 2000. Savannah's and Bryan's primary software systems are licensed from
an outside vendor. The core customer information system ("CIS"), loan, deposit,
general ledger, automated teller machine ("ATM") and card-based systems are all
maintained and processed by a third party, the largest bank-owned data processor
of banks in the United States. Savannah and Bryan expect to receive commitments
from their major vendors to provide the required systems modifications to ensure
compliance. Management believes those
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commitments will be met in advance of July 1, 1999. Some software programs and
some hardware will need to bemodified or replaced for Year 2000 compliance. To
the extent possible, those changes will be incorporated in the normal
replacement or upgrade of hardware and systems. Management believes it will be
successful in the achievement of its plans and does not believe that the
execution of the plan will have a material adverse effect on future operating
results. The total cost for Year 2000 compliance is estimated to be between
$200,000 and $300,000. However, this includes $150,000 to $200,000 in normal
upgrades and salaries of existing personnel. The incremental Year 2000 expense
is estimated to be between $60,000 and $100,000 for 1998 and 1999 combined.
However, there can be no assurance that Savannah and Bryan will identify all
date-handling problems in their business systems or those of their customers and
suppliers in advance of their occurrence, or that Savannah and Bryan will be
able to successfully remedy problems that are discovered.
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MEETINGS OF SHAREHOLDERS
SHAREHOLDER MEETINGS
SAVANNAH SPECIAL MEETING. This Joint Proxy Statement/Prospectus is being
furnished to the holders of Savannah Common Stock in connection with the
solicitation by the Savannah Board of Directors of proxies for use at the
Savannah Special Meeting, at which Savannah shareholders will be asked to vote
upon the following proposals: to approve the issuance of Savannah Common Stock
pursuant to the Merger Agreement; and to elect, contingent on consummation of
the Merger, five of the current directors of Bryan to the Savannah Board of
Directors. The Savannah Special Meeting will be held at the Hyatt Regency
Savannah, 2 West Bay Street, Savannah, Georgia 31401, on Tuesday, December 15,
1998, at 10:00 a.m., local time.
BRYAN SPECIAL MEETING. This Joint Proxy Statement/Prospectus is being
furnished to the holders of Bryan Common Stock in connection with the
solicitation by the Bryan Board of Directors of proxies for use at the Bryan
Special Meeting, at which Bryan shareholders will be asked to vote upon a
proposal to approve the Merger Agreement and the transactions contemplated
therein. The Bryan Special Meeting will be held at the corporate headquarters of
Bryan, 9971 Ford Avenue, Richmond Hill, Georgia 31324, on Monday, December 14,
1998, at 6:00 p.m., local time.
RECORD DATES, VOTING RIGHTS, REQUIRED VOTES, AND REVOCABILITY OF PROXIES
SAVANNAH. Savannah's Board of Directors has fixed the close of business on
October 23, 1998, as the Savannah Record Date. Only holders of record of shares
of Savannah Common Stock on the Savannah Record Date will be entitled to notice
of and to vote at the Savannah Special Meeting. Each share of Savannah Common
Stock is entitled to one vote. Shareholders who execute proxies retain the right
to revoke them at any time prior to being voted at the Savannah Special Meeting.
On the Savannah Record Date, there were 1,782,598 shares of Savannah Common
Stock issued, of which 1,736,798 shares were outstanding (45,800 shares were
held in treasury) and were held by approximately 220 shareholders of record and
by 530 additional shareholders through brokerage accounts.
To hold a vote on any proposal, a quorum must be assembled, which is a
majority of the votes entitled to be cast by the holders of the outstanding
shares of Savannah Common Stock. In determining whether a quorum exists at the
Savannah Special Meeting for purposes of all matters to be voted on, all votes
"for" or "against," as well as all abstentions, will be counted. Approval of the
proposal to approve the issuance of Savannah Common Stock pursuant to the Merger
Agreement requires that the number of votes cast in favor of the action exceed
the number of votes cast opposing the action in a meeting in which a quorum
exists. The vote required for the election of directors is a plurality of the
votes cast by the shares entitled to vote in the election, provided that a
quorum is present. IF EITHER PROPOSAL DOES NOT RECEIVE THE REQUISITE NUMBER OF
VOTES FOR APPROVAL, THE MERGER WILL NOT BE CONSUMMATED AND THE PERSONS ELECTED
TO THE BOARD OF DIRECTORS OF SAVANNAH CONTINGENT ON CONSUMMATION OF THE MERGER
WILL NOT TAKE OFFICE.
As of the Savannah Record Date, all directors and executive officers of
Savannah as a group (14 persons) were entitled to vote 479,266 shares of
Savannah Common Stock, constituting approximately 27.6 percent of the total
number of shares of Savannah Common Stock outstanding at that date, and are
anticipated to vote their shares of Savannah Common Stock in favor of the
issuance of Savannah Common Stock pursuant to the Merger Agreement. As of the
Savannah Record Date, Bryan and its affiliates held an aggregate of 825 shares
of Savannah Common Stock.
Shares of Savannah Common Stock represented by properly executed proxies,
if such proxies are received in time and not revoked, will be voted in
accordance with the instructions indicated on the proxies. IF NO INSTRUCTIONS
ARE INDICATED, SUCH PROXIES WILL BE VOTED "FOR" APPROVAL OF THE ISSUANCE OF
SHARES OF SAVANNAH COMMON STOCK PURSUANT TO THE MERGER AGREEMENT, "FOR" THE
ELECTION, CONTINGENT ON CONSUMMATION OF THE MERGER, OF THE FIVE NOMINEES FOR
DIRECTOR TO THE SAVANNAH BOARD OF DIRECTORS, AND, IN THE DISCRETION OF THE PROXY
HOLDER, AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY BEFORE THE SAVANNAH
SPECIAL MEETING. If necessary, the proxy holder may vote in favor of a proposal
to adjourn the Savannah Special Meeting in order to permit further
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solicitation of proxies in the event there are not sufficient votes to
approve the foregoing proposals at the time of the Savannah Special Meeting.
However, in such event, no proxy holder will vote any proxies voted "against"
approval of either of the forgoing proposals "for" approval of a proposal to
adjourn the Savannah Special Meeting in order to permit further solicitation of
proxies.
A Savannah shareholder who has given a proxy may revoke it at any time
prior to its exercise at the Savannah Special Meeting by (i) giving written
notice of revocation to the Secretary of Savannah, (ii) properly submitting to
Savannah a duly executed proxy bearing a later date, or (iii) attending the
Savannah Special Meeting and voting in person. All written notices of revocation
and other communications with respect to revocation of proxies should be
addressed as follows: The Savannah Bancorp, Inc., 25 Bull Street, Savannah,
Georgia 31401; Attention: J. Curtis Lewis, III.
The costs associated with the solicitation of proxies for the Savannah
Special Meeting will be borne by Savannah. In addition to the solicitation of
shareholders of record by mail, telephone, facsimile or personal contact,
Savannah will be contacting brokers, dealers, banks, or voting trustees or their
nominees who can be identified as record holders of Savannah Common Stock. Such
holders, after inquiry by Savannah, will provide information concerning
quantities of proxy materials and needed to supply such information to
beneficial owners, and Savannah will reimburse them for the reasonable expense
of mailing proxy materials to such persons.
BRYAN. Bryan's Board of Directors has fixed the close of business on
October 23, 1998, as the Bryan Record Date. Only holders of record of shares of
Bryan Common Stock on the Bryan Record Date will be entitled to notice of and to
vote at the Bryan Special Meeting. Each share of Bryan Common Stock is entitled
to one vote. Shareholders who execute proxies retain the right to revoke them at
any time prior to being voted at the Bryan Special Meeting. On the Bryan Record
Date, there were 532,258 shares of Bryan Common Stock issued, of which 506,508
shares were outstanding (25,750 shares were held in treasury) and were held by
approximately 410 shareholders of record and by approximately 50 additional
shareholders through brokerage accounts.
To hold a vote on any proposal, a quorum must be assembled, which is a
majority of the votes entitled to be cast by the holders of the outstanding
shares of Bryan Common Stock. In determining whether a quorum exists at the
Bryan Special Meeting for purposes of all matters to be voted on, all votes
"for" or "against," as well as all abstentions, will be counted. Approval of the
Merger Agreement and the transactions contemplated therein requires the
affirmative vote by holders of 66-2/3 percent (approximately 337,672 shares) of
the outstanding shares of Bryan Common Stock entitled to vote at the Bryan
Special Meeting. However, in such event, no proxy holder will vote any proxies
voted "against" approval of the merger agreement "for" approval of a proposal to
adjourn the Bryan Special Meeting in order to permit further solicitation of
proxies.
As of the Bryan Record Date, all directors and executive officers of Bryan
as a group (12 persons) were entitled to vote 251,381 shares of Bryan Common
Stock, constituting approximately 49.6 percent of the total number of shares of
Bryan Common Stock outstanding at that date. The holders of all such shares have
agreed to vote their shares of Bryan Common Stock in favor of the Merger. As of
the Bryan Record Date, Savannah and its affiliates held no shares of Bryan
Common Stock.
Shares of Bryan Common Stock represented by properly executed proxies, if
such proxies are received in time and not revoked, will be voted in accordance
with the instructions indicated on the proxies. IF NO INSTRUCTIONS ARE
INDICATED, SUCH PROXIES WILL BE VOTED "FOR" APPROVAL OF THE MERGER AGREEMENT,
AND THUS THE HOLDERS OF THE SHARES OF BRYAN COMMON STOCK REPRESENTED BY SUCH
PROXIES WILL NOT BE ENTITLED TO ASSERT DISSENTERS' RIGHTS (SEE "THE
MERGER--DISSENTERS' RIGHTS"), AND, IN THE DISCRETION OF THE PROXY HOLDER, AS TO
ANY OTHER MATTER WHICH MAY COME PROPERLY BEFORE THE BRYAN SPECIAL MEETING. If
necessary, the proxy holder may vote in favor of a proposal to adjourn the Bryan
Special Meeting in order to permit further solicitation of proxies in the event
there are not sufficient votes to approve the foregoing proposal at the time of
the Bryan Special Meeting.
FAILURE EITHER TO VOTE BY PROXY OR IN PERSON AT THE BRYAN SPECIAL MEETING
WILL HAVE THE EFFECT OF A VOTE CAST AGAINST APPROVAL OF THE MERGER AGREEMENT.
A Bryan shareholder who has given a proxy may revoke it at any time prior
to its exercise at the Bryan Special Meeting by (i) giving written notice of
revocation to the Secretary of Bryan, (ii) properly submitting to Bryan a duly
executed proxy bearing a later date, or (iii) attending the Bryan Special
Meeting and voting in person. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: Bryan Bancorp of Georgia, Inc., 9971 Ford Avenue, Richmond Hill,
Georgia 31324; Attention: James W. Royal.
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RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The Board of Directors of Savannah has unanimously adopted the Merger
Agreement, believes the Merger is in the best interests of Savannah and its
shareholders, and unanimously recommends that shareholders of Savannah vote FOR
approval of the issuance of shares of Savannah Common Stock pursuant to the
Merger Agreement and FOR approval of the election, contingent on the
consummation of the Merger, of the five nominees for director to the Savannah
Board of Directors. See "THE MERGER--Background of and Reasons for the Merger;
Savannah's Reasons for the Merger and Recommendation of Directors." IF EITHER
PROPOSAL ABOVE DOES NOT RECEIVE THE REQUISITE NUMBER OF VOTES FOR APPROVAL, THE
MERGER WILL NOT BE CONSUMMATED AND THE PERSONS ELECTED TO THE BOARD OF DIRECTORS
OF SAVANNAH CONTINGENT ON CONSUMMATION OF THE MERGER WILL NOT TAKE OFFICE.
The Board of Directors of Bryan has adopted the Merger Agreement, believes
the Merger is in the best interests of Bryan and its shareholders, and
recommends that shareholders of Bryan vote FOR adoption of the Merger Agreement
and the consummation of the transactions contemplated therein. See "THE
MERGER--Background of and Reasons for the Merger; Bryan's Reasons for the Merger
and Recommendation of Directors."
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THE MERGER
THE FOLLOWING INFORMATION 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 MERGER AGREEMENT, A COPY OF
WHICH IS ATTACHED AS APPENDIX A TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. ALL SHAREHOLDERS ARE URGED TO READ THE
APPENDICES IN THEIR ENTIRETY.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. On November 13 and 14, 1997, the directors of
Bryan held a strategic planning retreat to develop the long-term objectives of
Bryan. Elaine H. Demarest, CPA, P.C. ("EHD") was first contacted by Bryan
management on October 6, 1997 to assist in the planning process. She prepared
director questionnaires and collected all responses in advance, prepared the
agenda, prepared 10-year financial planning models to demonstrate the financial
impact of various expansion moves, compiled director notebooks and facilitated
the discussions at the November 13 and 14, 1997 meeting. At a Board meeting held
on November 18, 1997, the directors of Bryan adopted a strategic action plan
resulting from the strategic planning retreat. The directors also adopted a
comprehensive marketing plan and a plan for additional investments in customer,
financial and management information systems. The strategic action plan
instructed management to consider a full-service branch in a neighboring town, a
limited service facility in Richmond Hill and a loan production office to be
followed by a full-service branch in Chatham County, Georgia. Additionally, the
Board of Directors instructed management to consider the acquisition of branches
or strategic mergers with banks in other markets.
In December 1997, pursuing the goals adopted by the Board, Bryan management
contacted a similarly-sized financial institution located nearby to discuss its
interest in a possible merger of equals. Bryan engaged EHD to assist the Board
in analysis of the possible transaction and to advise the Board regarding the
requirements to obtain a Nasdaq listing for the Bryan common stock. In December
and early January, Bryan and the possible merger-of-equals partner exchanged
information and EHD prepared analyses and a range of acceptable exchange ratios.
Management of the two companies met to discuss issues related to a possible
merger.
Since formation of their respective companies, E. James Burnsed, President
and Chief Executive Officer of Bryan and Archie H. Davis, President and Chief
Executive Officer of Savannah have had meetings periodically to discuss the
operations of the companies, financial performance, share best practices and
discuss mutual customer relationships in which the respective companies
participate. The potential for a future merger of the companies has been
discussed repeatedly during these meetings. On January 9, 1998, Mr. Burnsed, and
G. Michael Odom, Jr., Executive Vice President of Bryan, had a casual breakfast
meeting with Mr. Davis and J. Wiley Ellis, Chairman of Savannah, during which
the mutual interest of Savannah and Bryan in a possible merger was again
discussed. Mr. Burnsed advised Mr. Davis that, should Savannah have an interest,
that interest should be communicated directly to the Board of Bryan.
On January 13, 1998, Savannah engaged the services of T. Stephen Johnson &
Associates, Inc. ("TSJ") to analyze a Savannah/Bryan merger, and to provide any
other consulting services needed to investigate, negotiate and consummate a
merger with Bryan, including preparation of regulatory applications if a
definitive merger agreement was reached. Representatives of TSJ assisted Robert
B. Briscoe, Chief Financial Officer of Savannah, in preparing various financial
analyses of a possible merger with Bryan. T. Stephen Johnson, President and CEO
of TSJ, met with the Savannah management on January 19, 1998 to discuss the
possible Bryan merger.
On January 20, 1998, the directors of Bryan met with EHD and discussed the
possibility of increasing the liquidity of the Bryan Common Stock through a
listing of the shares on the Nasdaq National Market and to review the status of
the merger discussions with the possible merger-of-equals partner. EHD reported
that Bryan did not at the time meet Nasdaq listing requirements because of the
small number of shares outstanding and the lack of market makers for the Bryan
common stock. The Bryan Board expressed interest in continuing to pursue a
possible Nasdaq listing, but no formal action was taken. EHD also presented an
analysis of a potential merger with a bank about the same size as Bryan. The
Board established a potential acceptable range of ratios for a share exchange.
At the time of this meeting, Savannah had not formally expressed interest
in a merger with Bryan. However, during the discussion regarding the strategic
fit of the possible merger-of-equals partner, Savannah was mentioned by
Directors Thompson and Roberts as another possible merger-of-equals partner
which might meet the strategic objectives.
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On January 21, 1998 at the request of the Bryan Board, EHD communicated a
proposed exchange ratio to the possible merger-of-equals partner. The possible
partner subsequently responded that the proposal was outside an acceptable range
of values and these discussions ended on January 26, 1998.
On January 26, 1998 the directors of Savannah discussed the desirability of
merging with Bryan. At that meeting, TSJ and Mr. Briscoe presented their
financial analysis of the proposed merger at a range of possible exchange
ratios. The Board of Directors of Savannah appointed a special committee (the
"Savannah Merger Committee") comprising of Messrs. Davis, Ellis and director
Russell Carpenter to contact and commence discussions and negotiations with
Bryan. On that same date, at the invitation of Savannah, Messrs. Davis and Ellis
met informally with two of the directors of Bryan, James W. Royal and James Toby
Roberts, Sr., to discuss a possible merger.
On January 29, 1998, the Board of Directors of Bryan met and Messrs. Royal
and Roberts reported the substance of the informal meeting and discussions with
Savannah. The Board of Directors of Bryan appointed a special strategic planning
committee (the "Bryan Merger Committee"), comprising of Messrs. Royal, Roberts
and Burnsed, and authorized the committee to commence discussions and
negotiations with Savannah. The Bryan Board also authorized the engagement of
EHD to act as financial advisor to the Bryan Board in the transaction.
On January 30, 1998, Savannah and Bryan executed a mutual confidentiality
agreement.
EHD had numerous discussions with management and individual members of the
Bryan Merger Committee at the end of January prior to the committee's formal
organization and at a Bryan Merger Committee meeting held on February 2, 1998.
During these discussions and prior to meeting with the Savannah Merger
Committee, EHD reviewed the analysis of the transaction which included pro forma
financial statements for the combined companies and a review of merger
transactions of companies of a comparable size that had recently occurred in
Georgia.
On February 3, 1998, the Bryan Merger Committee, the Savannah Merger
Committee, the executive officers of Bryan and Savannah, and representatives
from EHD and TSJ met to discuss the details of a possible merger. Savannah
presented a draft of a proposed agreement and plan of merger indicating a
proposed exchange ratio of 1.70 shares of Savannah Common Stock for each share
of Bryan Common Stock. EHD and the Bryan Merger Committee suggested that the
exchange ratio should be 2.1 shares of Savannah Common Stock for each share of
Bryan Common Stock. After lengthy discussion and negotiation, the Savannah
Merger Committee increased its proposal to 1.75 shares of Savannah Common Stock
for each share of Bryan Common Stock. The respective Merger Committees made no
agreements except to report the discussions to the full Boards of Directors of
both companies.
On February 5, 1998, the Board of Directors of Bryan met to consider the
merger proposal from Savannah to exchange 1.75 shares of Savannah Common Stock
for each share of Bryan Common Stock. At the meeting the Bryan Board received
the recommendation of its management, its financial advisor and counsel. The
management of Bryan reported that the proposed merger met the goals of the
strategic plan and counsel for Bryan advised that the proposed terms of the
merger were legally sufficient although the proposed agreement and plan of
merger had not been received and reviewed at that time. EHD presented to the
Bryan Board its financial analysis of the proposed transaction. EHD indicated
that the financial statements of both companies had been reviewed as well as a
range of possible exchange ratios. EHD indicated that the proposal by Savannah
was at the lower end of the range of values and suggested that the upper end of
the range of values would be an exchange ratio of two shares of Savannah Common
Stock for each share of Bryan Common Stock.
In the events leading up to and including the February 5, 1998 Bryan Board
meeting, EHD advised the Bryan Merger Committee on Bryan's franchise value in
the current attractive market environment for bank acquisitions in Georgia, and
that pursuing other bids might result in higher absolute dollar offers. However,
Bryan Merger Committee members indicated that Savannah was clearly viewed to be
the best fit as a strategic merger partner due to its strong presence in Chatham
County (Bryan's #1 target market), its established Nasdaq trading history, and
its community banking philosophy. The Bryan Merger Committee indicated no other
potential merger partners provided such an immediate and natural fit to the
strategic planning goals defined by the Bryan Board in its November 1997
planning sessions. Although the Bryan Merger Committee was made aware of the
potential
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benefits of seeking other merger partners, the Committee's informed decision was
to seek to increase the offer from Savannah to an acceptable level. If this
effort failed, it was their choice to pursue their strategic goals as an
independent bank because the bank was a proven performer under its current
structure. Given Bryan's strategic choices, EHD's efforts were directed toward
increasing the Savannah offer, and EHD did not advise the Bryan Board to pursue
other potential merger partners or to remain independent. However, EHD
recommended at the February 5, 1998 meeting that the Bryan Board reject the 1.75
share exchange ratio and negotiate a higher offer from Savannah.
The Bryan Board then rejected Savannah's offer, authorized the Bryan Merger
Committee to continue negotiating and authorized the execution of a letter of
intent if it contemplated an exchange ratio of not less than 1.85 and permitted
Bryan to pay its planned, regular annual cash dividend of $1.00 per share prior
to the merger. Analysis by Bryan management and EHD indicated that the proposed
1.85 exchange ratio was fair from a financial point of view and presented value
to shareholders similar to values received by similar Georgia holding companies
in outright sales. Furthermore, the shareholders of Bryan, by receiving
approximately 35 percent of the resulting company in the merger, would retain a
significant voice in any future transactions representing a transfer of control
of the resulting company. For these reasons, the Bryan Board felt it was in the
best interest of the shareholders not to solicit other merger partners or
otherbidders.
The Board of Savannah met again on February 6, 1998 and, after due
consideration, authorized the Savannah Merger Committee to negotiate the terms
of a merger with Bryan at an exchange ratio of up to 1.85 and to execute a
definitive agreement on those terms. In authorizing further negotiations and
execution of a definitive agreement, the Savannah Board considered the potential
for increased earnings ratios and the strategic value of the merger that would
result from the transaction, as well as Bryan's share of its deposit market.
Savannah's historical return on average assets ("ROA") is approximately 1.20
percent and its return on average equity ("ROE") has been approximately 12-13
percent. Bryan's ROA has been approximately 1.90 percent and its return on
average equity has been between 17 and 18 percent. Combining the two companies
using the pooling- of-interests accounting method, excluding one-time charges
for merger and integration costs, would result in an increased ROA on a pro
forma basis of approximately 1.40 percent and an increased ROE on a pro forma
basis of 15-16 percent for Savannah shareholders. The strategic value of the
merger would include higher lending limits for customers of both banks, the
marketing benefits of adjacent market areas, the joining of compatible
management teams, the ability to better serve Bryan customers who work in
Savannah and the implementation of certain efficiency strategies in the
operations, auditing, compliance and accounting areas.
On February 6, 1998, the Bryan Merger Committee, the Savannah Merger
Committee, EHD and the executive officers of Savannah and Bryan met for further
negotiations. After detailed discussions on the value of each organization and
the combined organization, Savannah offered an exchange ratio of 1.85 shares of
Savannah Common Stock for each share of Bryan Common Stock. The Bryan Merger
Committee accepted the offer, subject to due diligence, negotiation of a
definitive agreement, and the approval of the Bryan Board of Directors.
From February 6th through the 9th, Bryan and Savannah each conducted a due
diligence review of the other company's respective financial condition. The
respective teams reviewed the internal financial records, examination reports,
audited financial statements and also reviewed loans exceeding $100,000, and
each bank's respective investment portfolio. No due diligence concerns were
discovered by either party during their reviews.
On February 10, 1998, the Board of Directors of Bryan met. The Bryan Merger
Committee presented a definitive merger agreement between Bryan and Savannah for
the Bryan Board to approve. The management of Bryan gave an extensive report to
the Directors of the results of the due diligence that was performed. Management
and the Bryan Merger Committee reviewed again with the Bryan Board the analysis
prepared by EHD of (1) the relative exchange ratios for the two companies, (2)
the price of the Savannah Common Stock to be received as a multiple of earnings
and book value, (3) the percentage ownership of Bryan shareholders after the
merger in the resulting company, (4) the pro forma dilutive impact on Bryan
Common Stock earning per share, and (5) the pro forma accretive impact on Bryan
Common Stock book value per share. They advised the Bryan Board that the
exchange ratio was within an acceptable range of values established by EHD and
was in the opinion of EHD, fair from a financial point of view to the Bryan
shareholders. Counsel for the Bryan Board advised the Bryan Board that the
proposed agreement and plan of merger was legally sufficient and was fairly
balanced with respect to the obligations of the parties. The agreement also
embodied the offer and proposal presented by the Bryan Merger Committee. The
Board of Directors of Bryan then approved the definitive agreement, with all
directors voting for
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the agreement except Mr. Charles Stafford, Chairman of the Board of
Directors of Bryan, who did not vote. The agreement was signed by the parties on
February 11, 1998 (the "Original Merger Agreement"). Other potential merger
partners were subsequently notified of Bryan's signing of the original Merger
Agreement and none expressed further interest.
The Original Merger Agreement provided that each of the Bryan directors,
except Charles Stafford, would execute a Directors' Agreement which contained a
covenant not to compete for a period of two years after consummation of the
Merger. Mr. Stafford, from the beginning of the negotiations, advised the Bryan
strategic planning committee and Savannah that he would not execute a covenant
not to compete without compensation. The Original Merger Agreement further
provided that, as a condition to the obligations of Savannah to consummate the
Merger, each affiliate of Bryan would be required to execute an affiliate's
agreement in order to ensure that the transaction would qualify for
pooling-of-interests accounting treatment. Bryan sought to have all affiliates
of Bryan execute the affiliate agreements. Each of the affiliates of Bryan
signed an affiliate agreement, except Mr. Stafford.
When approached about signing a Directors' Agreement without a covenant not
to compete provision, along with an affiliate's agreement, Mr. Stafford advised
the Bryan Board of Directors he would not sign either agreement because of his
concern about the process followed by the Bryan Board in evaluating the Savannah
proposal. Mr. Stafford indicated he was concerned about (1) the failure of the
Bryan Board to pursue other offers, (2) his view that the Bryan Board had
deviated from the strategic plan previously adopted, (3) the lack of information
furnished to the full Bryan Board, (4) insufficient due diligence being
performed before executing the Original Merger Agreement and (5) the rush to
sign the Original Merger Agreement without careful deliberation.
In response, the Bryan Board met on April 8, 1998 to review Mr. Stafford's
concerns about the process. EHD, along with Edward J. Harrell, counsel for
Bryan, met with the Bryan Board. At the Bryan Board meeting EHD reviewed in
detail with the entire Board the material that it had reviewed with the Bryan
Merger Committee. EHD displayed a comparison of recent comparable Georgia
acquisitions of financial institutions: First Liberty Financial Corp.'s
acquisition of Southland Bank Corp.; Regions Financial Corporation's acquisition
of First Community Banking Services; SNB Bancshares, Inc.'s acquisition of
Crossroads Bancshares, Inc.; FLAG Financial Corporation's acquisitions of the
Three Rivers Bancshares, Inc. and Middle Georgia Bancshares, Inc.; PAB
Bancshares, Inc.'s acquisition of Investors Financial Corporation; and Premier
Bancshares, Inc.'s acquisitions of Lanier Bank & Trust and The Bank Holding
Company.
This peer group of financial institutions with average assets of $99
million was selected from announced mergers involving Georgia financial
institutions outside the Atlanta metro area within the last six months. In
comparing the multiples of book value and earnings resulting from the average
consideration paid for similar financial institutions in Georgia (assuming
exercise of all outstanding options to purchase shares of Bryan Common Stock),
an indicated price per share would be $33.18. Based on the trading prices of
Savannah Common Stock at the time, the exchange price in the Merger was
approximately $47.00 per share of each share of Bryan Common Stock. EHD
indicated this price range was far in excess of the average and was at the upper
range of values experienced by similar institutions being acquired in Georgia
over the last six months. EHD further indicated that it was prepared to render
to the Bryan Board a fairness opinion.
Management of Bryan reported to the Bryan Board that a primary element of
Bryan's strategic plan was to expand a branch network into Chatham County in
view of the projected reduction in the asset and income growth rates of Bryan
Bank. It was determined that this very expensive process could be accomplished
without capital investment through the Merger with Savannah. Development of a
liquid, efficient market for the Bryan Common Stock, another goal, could also be
addressed through the Merger.
Mr. Stafford then expressed to the Bryan Board the following concerns about
the process in approving the Merger:
1. The Merger was not consistent with the strategic plan adopted by the
Bryan Board in November 1997. He indicated it was his understanding that the
Bryan Board had elected to remain independent while pursuing opportunities to
expand into new regions.
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2. The Bryan Board failed to pursue other potential merger partners
(including First Banking Company of Southeast Georgia) that had expressed an
interest in pursuing merger discussions with Bryan in the weeks and months
immediately preceding the approval of the Merger.
3. The Bryan Board proceeded too rapidly in approving the Merger without
carefully studying it and other potential options available.
4. The due diligence review of Savannah performed by Bryan was not thorough
enough, nor were the results of such review adequately discussed in detail with
the full Bryan Board.
The Bryan Board then discussed the Original Merger Agreement at length and
revisited all aspects of the transaction including the terms, the legal effect
of the Original Merger Agreement, other proposals and how the transaction fit
into Bryan's strategic plan.
The Bryan Board voted on a resolution to recommend to the shareholders that
the Original Merger Agreement be adopted and approved by the shareholders and
that the shareholders vote FOR approval of the Original Merger Agreement. This
resolution was passed by all directors present, except Mr. Stafford, who voted
against the resolution. In addition, Mr. Stafford again indicated to the Bryan
Board that he would not sign a Directors' Agreement or an affiliate agreement.
On April 13, 1998, Bryan formally notified Savannah that it could not meet
the condition contained in the Original Merger Agreement requiring that all
affiliates of Bryan execute an affiliate agreement. At that time, Bryan and
Savannah began to discuss various issues in light of the increasing likelihood
that the Merger would not be consummated within the time initially anticipated,
including the fact that beginning on September 30, 1998, either party could
unilaterally terminate the Original Merger Agreement. Savannah and Bryan agreed
that the Original Merger Agreement should be amended and restated to provide,
among other things, that (i) the date as of which the parties would have been
entitled to terminate the Original Merger Agreement would be extended to
December 31, 1998, and (ii) Bryan would be permitted to pay quarterly dividends
after June 30, 1998 at the rate of Savannah's quarterly dividends times the
Exchange Ratio.
Thereafter Mr. Stafford offered (and subsequently withdrew his offer) to
sell his Bryan Common Stock to anyone arranged by the Bryan Board at a price of
$60.00 per share, approximately 28% higher than the proposal offered to the
Bryan shareholders by Savannah. Savannah and Bryan then entered into extensive
negotiations with Mr. Stafford which resulted in Mr. Stafford agreeing to a
non-solicitation and non-disclosure agreement, a covenant not to compete, a
financial disclosure agreement, and an affiliate agreement. See "--Interests of
Certain Persons in the Merger; STAFFORD AGREEMENTS." In addition, after
considering the additional effort made by the Bryan Board to revisit the process
and to further analyze the Original Merger Agreement, and the proposed
amendments thereto, and in light of the receipt of the fairness opinion from
EHD, Mr. Stafford executed a Directors' Agreement agreeing to vote his shares
for the Merger. See "--Bryan Directors' Agreements."
On July 28, 1998, the Bryan Board of Directors met and voted in favor of a
resolution approving the proposed amendments to the Original Merger Agreement,
and recommending to Bryan shareholders that they vote FOR approval of the
amended and restated Merger Agreement.
SAVANNAH'S REASONS FOR THE MERGER AND RECOMMENDATION OF DIRECTORS. In
approving the Merger Agreement and the Merger, the Savannah Board considered a
number of factors concerning the benefits of the Merger. Without assigning any
relative or specific weights to the factors, the Savannah Board of Directors
considered the following material factors:
(a) the information presented to the Savannah Board by the management of
Savannah concerning the business, operations, earnings, asset quality, and
financial condition of Bryan, including the composition of the earning assets of
Bryan;
(b) the financial terms of the Merger, including the relationship of the
value of the consideration issuable in the Merger to the market value, tangible
book value, and earnings per share of Bryan Common Stock;
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<PAGE>38
(c) the ability of the operations of Bryan after the Effective Time to
contribute to the earnings of Savannah;
(d) the attractiveness of the Bryan franchise, the market position of
Bryan, the compatibility of the franchise of Bryan with the operations of
Savannah and the ability of Bryan and Savannah to make larger loans and to
consolidate their respective positions in the greater Savannah market;
(e) the compatibility of the community bank orientation of the operations
of Bryan to that of Savannah;
(f) TSJ's review comparison of Bryan to selected peer banks and of premiums
paid in other merger transactions, and the advice rendered by TSJ as to the
fairness, from a financial point of view, to the shareholders of Savannah of the
consideration to be issued to the Bryan shareholders;
(g) the nonfinancial terms of the Merger, including the anticipated
treatment of the Merger as a tax-free exchange of Bryan Common Stock for
Savannah Common Stock for federal income tax purposes; and
(h) the likelihood of the Merger being approved by applicable regulatory
authorities without adverse conditions or delay.
Each member of Savannah's Board individually considered the foregoing and
other factors, but the Savannah Board did not collectively assign any specific
or relative weights to the factors considered and did not make any determination
with respect to any individual factor. Savannah's Board collectively and
unanimously determined, in light of the factors each member considered
appropriate, that the Merger is in the best interests of Savannah and its
shareholders.
SAVANNAH'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SAVANNAH
SHAREHOLDERS VOTE FOR APPROVAL OF THE ISSUANCE OF SHARES OF SAVANNAH COMMON
STOCK PURSUANT TO THE MERGER AGREEMENT.
In connection with the presentation by TSJ to the Savannah Board of
Directors, the management of Savannah provided to TSJ and to Bryan and EHD
certain operating and financial information relating to Savannah's business,
including certain projected financial results for Savannah and for the combined
company by the management of Savannah (the "Savannah Projections"). The Savannah
Projections for Savannah on a stand alone basis were based upon Savannah's
strategic plan, and did not take into account any of the potential effects of
the Merger, and reflected estimates of annual diluted earnings per share of
$1.11, $1.28, $1.51 $1.70 and $1.93 and estimates of average book value per
share of $9.02, $9.84, $10.54, $11.67 and $12.91 for 1998, 1999, 2000, 2001 and
2002, respectively. The Savannah Projections for the combined company reflected
Savannh management's independent assessment of Bryan's anticipated contribution
and anticipated synergies and reflected estimated accretion to projected
Savannah earnings per share of 13%, 10%, 6%, 6%, and 3%, and anticapted dilution
of book value per share of 5%, 4%, 2%, 2%, and 2% for 1998, 1999, 2000, 2001,
and 2002, respectively. Merger costs have been reflected only in the book value
and not in the earnings per share amounts.
SAVANNAH DOES NOT, AS A MATTER OF COURSE, PUBLICLY DISCLOSE FORWARD-LOOKING
INFORMATION, SUCH AS THE SAVANNAH PROJECTIONS, AS TO FUTURE REVENUES, EARNINGS
OR OTHER FINANCIAL INFORMATION. THE SAVANNAH PROJECTIONS WERE NOT PREPARED WITH
A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE
COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS. THE SAVANNAH PROJECTIONS ARE INCLUDED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO TSJ AND TO
BRYAN AND ITS FINANCIAL ADVISOR. WHILE PRESENTED WITH NUMERICAL SPECIFICITY,
THESE PROJECTIONS WERE BASED UPON A VARIETY OF ASSUMPTIONS RELATING TO THE
BUSINESS OF SAVANNAH, ALL OF WHICH ARE SUBJECT TO MATERIAL RISKS AND
UNCERTAINTIES. ALTHOUGH THE SAVANNAH PROJECTIONS AND THE ASSUMPTIONS UPON WHICH
THEY WERE BASED WERE CONSIDERED REASONABLE BY SAVANNAH AT THE TIME THEY WERE
PREPARED, THE SAVANNAH PROJECTIONS ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES AND
CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF SAVANNAH. ACCORDINGLY,
THERE CAN BE NO ASSURANCE THAT THE SAVANNAH PROJECTIONS WILL BE REALIZED, AND
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. THE INCLUSION OF THE
SAVANNAH PROJECTIONS IN THIS JOINT PROXY STATEMENT/PROSPECTUS SHOULD NOT BE
REGARDED AS AN
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<PAGE>39
INDICATION THAT SAVANNAH, BRYAN OR ANY OTHER PARTY WHO RECEIVED ANY SUCH
INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS. NONE OF
SAVANNAH, BRYAN OR ANY OTHER PARTY INTENDS TO UPDATE OR OTHERWISE PUBLICLY
REVISE THE SAVANNAH PROJECTIONS EVEN IF EXPERIENCE OR FUTURE CHANGES MAKE IT
CLEAR THAT THE SAVANNAH PROJECTIONS WILL NOT BE REALIZED. The Private Securities
Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking
statements to encourage companies to provide prospective information about
themselves without fear of litigation so long as those statements are identified
as forward-looking and are accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those projected in the statement. Accordingly, Savannah
identifies in the sections entitled "FORWARD LOOKING STATEMENTS" and "RISK
FACTORS" important factors which could cause Savannah's and Bryan's actual
results to differ materially from any such results which might be projected,
forecast, estimated or budgeted by Savannah in forward-looking statements,
including the Savannah Projections. The list of such factors in the sections
entitled "FORWARD LOOKING STATEMENTS" and "RISK FACTORS" pursuant to the Private
Securities Litigation Reform Act of 1995 should not be construed as exclusive.
BRYAN'S REASONS FOR THE MERGER AND RECOMMENDATION OF DIRECTORS. The Bryan
Board of Directors, with the assistance of outside legal and financial advisors,
evaluated the financial, legal and market considerations bearing on the decision
to recommend the Merger. In reaching its conclusion that the Merger Agreement is
in the best interest of Bryan and its shareholders, the Bryan Board of Directors
carefully considered the following material factors:
(a) the Savannah Common Stock is listed on the Nasdaq National Market and
trades at a substantially higher price than recent trades of Bryan Common Stock,
although the Savannah Common Stock is relatively thinly traded as compared to
larger financial institutions;
(b) the consideration being paid to the Bryan shareholders is consistent
with prices being paid in mergers involving similar financial institutions in
Georgia based upon an extensive analysis of merger transactions involving
similar banks over the past two years;
(c) the percentage ownership of the Bryan shareholders of the resulting
company and the number of Bryan directors to be elected to the Savannah Board
will be sufficient to ensure that Bryan shareholders will have a significant
voice in the management of Savannah and in decisions regarding any future change
in control of Savannah, although the Bryan directors will comprise only 5 of 17
Board positions;
(d) the information presented to the Bryan Directors by the management of
Bryan concerning the business, operations, earnings, asset quality, and
financial condition of Savannah, including the composition of the earning assets
of Savannah;
(e) the market coverage developed by Savannah in the Chatham County market
through its network of branches, its developing Trust Department, its strong
Mortgage Loan Department and the significant growth in earnings that this
network is projected to provide;
(f) the realization that the earnings and return on equity growth rates of
Bryan may be slowed as the company begins to establish a branch network in
Chatham County, a significant capital investment for which Savannah provides an
alternative, and as new, more formidable competition enters the Bryan market;
(g) the projected book value accretion, the strong combined equity position
and the earnings stream of the combined company after the Merger due to the
operating efficiencies and synergies provided by the combined company even
though the proforma dividend is lower for Bryan shareholders;
(h) the desire of Savannah for Bryan Bank to remain a separate community
bank with operating independence to serve the growing banking needs of the
Richmond Hill community;
(i) the nonfinancial terms of the Merger, including the anticipated
treatment of the Merger as a tax-free exchange of Bryan Common Stock for
Savannah Common Stock for federal income tax purposes;
(j) the attractiveness of the franchise and market position of the
resulting company, the compatibility of the franchises of Savannah and Bryan,
the ability of the resulting company to make larger loans, the
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<PAGE>40
ability of Savannah and Bryan to consolidate their respective positions in the
greater Savannah market, and the presence of an opportunity for Bryan Bank to
continue to operate as a free-standing bank to serve the needs of the local
community; and
(k) the advice rendered by EHD as to the fairness, from a financial point
of view of the Exchange Ratio to the holders of Bryan Common Stock, the
recommendation of Bryan's management in favor of the transaction, and the report
of the outside auditors of Bryan relating to the results of the due diligence
process.
While each member of the Bryan Board individually considered the foregoing
and other factors, the Bryan Board did not collectively assign any specific or
relative weights to the factors considered and did not make any determination
with respect to any individual factor. The Bryan Board collectively made its
determination with respect to the Merger based on the conclusion reached by its
members, in light of the factors that each of them consider as appropriate, that
the Merger is in the best interests of the Bryan shareholders.
The terms of the Merger, including the purchase price, were the result of
arm's-length negotiations between representatives of Bryan and representatives
of Savannah. Based upon its consideration of the foregoing factors, the Board of
Directors of Bryan approved the Merger Agreement and the Merger as being in the
best interests of Bryan and its shareholders.
THE BRYAN BOARD OF DIRECTORS RECOMMENDS THAT THE MERGER AGREEMENT AND THE
MERGER BE ADOPTED AND APPROVED BY ALL SHAREHOLDERS OF BRYAN. ALL DIRECTORS VOTED
FOR THIS RECOMMENDATION EXCEPT DIRECTOR CHARLES STAFFORD, WHO VOTED AGAINST THE
RECOMMENDATION.
In connection with the presentation by EHD to the Bryan Board of Directors,
the management of Bryan provided to EHD certain operating and
financial information relating to Bryan's business, including certain projected
financial results prepared by the management of Bryan (the "Bryan Projections").
The Bryan Projections did not take into account any of the potential effects of
the Merger. The Bryan Projections were based upon varying assumptions as to
Bryan's growth strategy and reflected estimated annual earning per share of
$2.60, $2.69, $3.02, $3.36, and $3.59 and estimated year-end book values of
$16.00, $17.78, $19.87, $22.16, and $24.58 for the years 1998, 1999, 2000, 2001
and 2002.
BRYAN DOES NOT, AS A MATTER OF COURSE, PUBLICLY DISCLOSE FORWARD-LOOKING
INFORMATION, SUCH AS THE BRYAN PROJECTIONS, AS TO FUTURE REVENUES, EARNINGS OR
OTHER FINANCIAL INFORMATION. THE BRYAN PROJECTIONS WERE NOT PREPARED WITH A VIEW
TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION
OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS. THE BRYAN PROJECTIONS ARE INCLUDED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO EHD AND TO
SAVANNAH AND ITS FINANCIAL ADVISOR. WHILE PRESENTED WITH NUMERICAL SPECIFICITY,
THESE PROJECTIONS WERE BASED UPON A VARIETY OF ASSUMPTIONS RELATING TO THE
BUSINESS OF BRYAN, ALL OF WHICH ARE SUBJECT TO MATERIAL RISKS AND UNCERTAINTIES.
ALTHOUGH THE BRYAN PROJECTIONS AND THE ASSUMPTIONS UPON WHICH THEY WERE BASED
WERE CONSIDERED REASONABLE BY BRYAN AT THE TIME THEY WERE PREPARED, THE BRYAN
PROJECTIONS ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF
WHICH ARE BEYOND THE CONTROL OF BRYAN. ACCORDINGLY, THERE CAN BE NO ASSURANCE
THAT THE BRYAN PROJECTIONS WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY
MATERIALLY FROM THOSE SHOWN. THE INCLUSION OF THE BRYAN PROJECTIONS IN THIS
JOINT PROXY STATEMENT/PROSPECTUS SHOULD NOT BE REGARDED AS AN INDICATION THAT
BRYAN, SAVANNAH OR ANY OTHER PARTY WHO RECEIVED ANY SUCH INFORMATION CONSIDERS
IT AN ACCURATE PREDICTION OF FUTURE EVENTS. NONE OF BRYAN, SAVANNAH OR ANY OTHER
PARTY INTENDS TO UPDATE OR OTHERWISE PUBLICLY REVISE THE BRYAN PROJECTIONS EVEN
IF EXPERIENCE OR FUTURE CHANGES MAKE IT CLEAR THAT THE BRYAN PROJECTIONS WILL
NOT BE REALIZED. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves without fear of litigation so long as
those statements are identified as forward-looking and are accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the statement.
Accordingly, Bryan identifies in the sections entitled "FORWARD LOOKING
STATEMENTS" and "RISK FACTORS" important factors which could cause Bryan's
actual results to differ materially from any such results which might be
projected, forecast, estimated or budgeted by Bryan in forward-looking
statements, including the Bryan Projections. The list of such factors in the
sections entitled "FORWARD LOOKING STATEMENTS" and "RISK FACTORS" pursuant to
the Private Securities Litigation Reform Act of 1995 should not be construed as
exclusive.
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<PAGE>41
OPINION OF SAVANNAH'S FINANCIAL ADVISOR
TSJ is an investment banking and financial services firm located in
Atlanta, Georgia. As part of its investment banking business, TSJ engages in the
review of the fairness of bank merger transactions from a financial perspective
and in the valuation of banks and other businesses and their securities in
connection with mergers, acquisitions and other transactions. Neither TSJ nor
any of its affiliates has a material financial interest in Savannah or Bryan.
TSJ was selected to advise Savannah's Board of Directors based upon its
familiarity with Savannah, Bryan, the regional community banking industry and
its knowledge of the banking industry as a whole.
TSJ was engaged by Savannah to act as an advisor to the Savannah Board of
Directors during the negotiations with Bryan, to provide regulatory consulting
services, and to render the TSJ Fairness Opinion (as defined below), for which a
fee of $15,000 has been paid and an additional fee of $170,000 will be paid upon
consummation of the Merger. These fees include the costs associated with
rendering these services.
TSJ has rendered its opinion, dated March 25, 1998 (the "TSJ Fairness
Opinion"), to the Board of Directors of Savannah that the consideration to be
paid the holders of Bryan Common Stock under the Merger Agreement is fair to the
Savannah shareholders from a financial point of view. A copy of the TSJ Fairness
Opinion is attached as Appendix B to this Joint Proxy Statement/Prospectus and
should be read in its entirety. The summary of the TSJ Fairness Opinion set
forth herein is qualified in its entirety by reference to the text of the TSJ
Fairness Opinion.
In arriving at its opinion, TSJ reviewed and analyzed audited and unaudited
financial information through December 31, 1997, regarding Savannah and Bryan
and reviewed the Merger Agreement, affiliate and Directors' Agreements,
financial analyses performed during the merger discussions and negotiations,
current trading information and various management reports and projections. TSJ
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria that it deemed
relevant. In connection with its review, TSJ did not independently verify the
foregoing information and relied on such information as being complete and
accurate in all material respects. Financial forecasts prepared by Savannah and
Bryan management and submitted to TSJ were based on assumptions believed by TSJ
to be reasonable and to reflect currently available information, but TSJ did not
independently verify such information. TSJ did not make an independent
evaluation or appraisal of the assets of Savannah or Bryan.
In connection with rendering the TSJ Fairness Opinion, TSJ performed a
variety of financial analyses, including those summarized below. The summary set
forth below does not purport to be a complete description of the analyses
performed by TSJ in this regard. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, notwithstanding the separate factors
summarized below, TSJ believes that its analyses must be considered as a whole
and that selecting portions of its analyses and the factors considered by it,
without considering all analyses and factors, could create an incomplete view of
the evaluation process underlying its opinion. In performing its analyses, TSJ
made numerous assumptions with respect to industry performance, business and
economic conditions and other matters, many of which are beyond Savannah's or
Bryan's control. The analyses performed by TSJ 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 reflect the process by which or the prices at which businesses
actually may be sold or the prices at which any securities may trade at the
present time or at any time in the future.
TSJ performed analyses to determine the effect of the Merger on the
Savannah Common Stock. These analyses included a review of the current trading
price of Savannah Common Stock on the Nasdaq National Market, comparing it with
the trading prices of several other Georgia holding companies in terms of the
current price to projected 1998 earnings ratio. This information was then used
to calculate a range of non-dilutive exchange ratios based on various
consolidation savings. It was determined that Savannah could offer an Exchange
Ratio of 1.85 shares of Savannah Common Stock for each share of Bryan Common
Stock and not dilute projected 1998 earnings per share, excluding merger costs.
Additionally, TSJ reviewed management projections that earnings per share will
be enhanced for each of the next four years considering minimal merger synergy
revenues and savings.
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The December 31, 1997 book value of Bryan was $13.75 per share of Bryan
Commons Stock, adjusted for a $1.00 per share cash dividend paid in April 1998.
Applying the 1.85 to 1 Exchange Ratio to this book value would result in a Bryan
book value of $7.43 per share Bryan-equivalent share of Savannah Common Stock
issued in the merger. This compares to a December 31, 1997 book value of $8.76
per share of Savannah Common Stock. After the Merger, the resulting company
would report a proforma book value as of December 31, 1997 of $8.29 per share of
Savannah Common Stock, a $.47 reduction per Savannah share. This 5.4 percent
reduction in book value should have little or no effect on the trading value of
shares of Savannah Common Stock.
Based on these analyses and others and assuming the accuracy and
completeness of all the information, reports and data provided, TSJ has been
able to conclude that the consideration to be paid to the Bryan shareholders
under the Merger Agreement is fair to the shareholders of Savannah from a
financial point of view.
OPINION OF BRYAN'S FINANCIAL ADVISOR
Bryan retained EHD to act as its financial advisor in connection with the
potential merger with Savannah. EHD has rendered an opinion to Bryan's Board of
Directors as to the fairness of the consideration to be received by Bryan's
shareholders pursuant to the Merger, from a financial point of view.
EHD, as part of its practice in providing management advisory services to
financial institutions, has been regularly engaged since 1984 as a financial
advisor to either buyer or seller in connection with mergers and acquisitions,
competitive biddings and valuations for various purposes. EHD was selected to
advise Bryan's Board of Directors based upon its knowledge of Bryan, Savannah,
the community banking industry in Georgia, and its extensive background in the
general banking industry. EHD will be compensated for its services. Neither EHD
nor any of its officers or affiliates has a material financial interest in Bryan
or Savannah.
The full text of the written opinion of EHD, which sets forth the
assumptions made, matters considered and limitations on the review undertaken,
is attached hereto as Appendix C and is incorporated herein by reference. Bryan
shareholders are urged to read this opinion carefully in its entirety. EHD's
opinion is directed only to the fairness to the Bryan shareholders, from a
financial point of view, of the consideration to be received and does not
address any other aspect of the Merger or related transactions and does not
constitute a recommendation to any shareholder as to how such shareholder should
vote at the Bryan Special Meeting. The summary of the opinion of EHD set forth
in this Joint Proxy Statement/Prospectus is qualified in its entirety by
reference to the full text of such opinion.
The consideration to be received by Bryan shareholders in the Merger was
determined by Bryan and Savannah in their negotiations. No limitations were
imposed by the Board of Directors or management of Bryan upon EHD with respect
to the investigations made or the procedures followed by EHD in rendering its
opinion.
In arriving at its opinion, EHD reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of Bryan and certain senior officers and other representatives and
advisors of Savannah concerning the businesses, operations and prospects of
Bryan and Savannah. EHD examined certain publicly available business and
financial information relating to Bryan and Savannah as well as Savannah's
five-year strategic plan and other data for Bryan and Savannah, which were
provided to EHD by or otherwise discussed with the respective management teams
of Bryan and Savannah, including information relating to certain strategic
implications and operational benefits anticipated from the Merger. EHD reviewed
the financial terms of the Merger as set forth in the Merger Agreement in
relation to, among other things: current and historical market prices and
trading volumes of Bryan Common Stock and Savannah Common Stock; the historical
and projected earnings and operating data of Bryan and Savannah; and the
capitalization and financial condition of Bryan and Savannah. EHD considered, to
the extent publicly available, the financial terms of certain other similar
transactions recently effected which EHD considered relevant in evaluating the
Merger and analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose businesses EHD
considered relevant in evaluating those of Bryan and Savannah. EHD also
considered the relative contributions of Bryan and Savannah to the combined
company. In addition to the foregoing, EHD conducted such other analyses and
examinations and considered such other financial, economic and market criteria
as EHD deemed appropriate to arrive at its opinion. EHD noted that its opinion
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was necessarily based upon information available, and financial, stock market
and other conditions and circumstances existing and disclosed, to EHD as of the
date of its opinion.
In conducting its review and analysis and in arriving at its opinion, EHD
assumed and relied upon, without independent verification, the accuracy and
completeness of all of the financial and other information provided to EHD or
publicly available and assumed and relied upon the representations and
warranties of Bryan and Savannah contained in the Merger Agreement. EHD also
relied upon the managements of Bryan and Savannah as to the reasonableness and
achievability of the financial and operating projections and the assumptions and
bases therefore provided to EHD, and it assumed that such projections reflect
the best currently available estimates and judgments of such respective
managements of Bryan and Savannah and that such projections and forecasts will
be realized in the amounts and time periods currently estimated by the
managements of Bryan and Savannah. EHD assumed, with the consent of the Board of
Directors of Bryan, that the Merger will be accounted for as a pooling of
interests in accordance with generally accepted accounting principles and as a
tax-free reorganization for federal income tax purposes.
EHD conducted no physical inspection or appraisal of any of the assets,
properties or facilities of either Bryan or Savannah, nor was it furnished with
any such evaluation or appraisal. EHD also assumed that the conditions to the
Merger would be consummated on a timely basis in the manner contemplated in the
Merger Agreement. EHD was not asked to consider, and its opinion does not
address the relative merits of the Merger as compared to any alternative
business strategies that might exist for Bryan or the effect of any other
transaction in which Bryan might engage. The opinion rendered by EHD was based
upon analyses of the foregoing factors in light of its assessment of general
economic, financial and market conditions as they exist and could be evaluated
by EHD as of the date of the opinion. No opinion was rendered as to the price or
trading range at which shares of Savannah Common Stock will trade following the
date of the opinion, or the price or trading range at which Savannah's Common
Stock will trade upon completion of the Merger.
In connection with rendering its opinion, EHD performed a variety of
financial analyses. The preparation of a fairness opinion of this nature
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular
circumstances, and, therefore, is not readily susceptible to partial analysis or
summary description. EHD believes that its analyses must be considered together
as a whole and that selecting portions of such analyses and the facts considered
therein, without considering all other factors and analyses, could create an
incomplete view of the analyses and the process underlying EHD's opinion. In its
analyses, EHD made numerous assumptions with respect to industry performance,
business and economic conditions, and other matters, many of which are beyond
the control of Bryan and Savannah and which may not be realized. Any estimates
contained in EHD's analyses are not necessarily predictive of future results or
values, which may be significantly more or less favorable than such estimates.
Estimates of values of companies do not purport to be appraisals or necessarily
reflect the prices at which such companies or their securities may actually be
sold.
VALUATION METHODOLOGIES. The following is a summary of the principal
analyses performed by EHD in connection with its opinion.
SUMMARY TRANSACTION ANALYSIS. EHD reviewed the terms of the proposed
transaction, including the Exchange Ratio and the aggregate transaction value.
EHD reviewed the implied value of the consideration offered based upon the
$25.75 per share closing price of Savannah's Common Stock on April 8, 1998,
which indicates an implied value of $47.64 per share of Bryan Common Stock.
Since Bryan Common Stock is not traded on any organized exchange and has no
established market, a comparison can be made only to the limited trading
activity known to Bryan management. The sales price per share of Bryan Common
Stock traded during 1997 and the first quarter of 1998 has been $25.00 according
to limited information available to Bryan management. The implied value of
$47.64 per share represents an 91% premium over Bryan trades during 1997 and the
first quarter of 1998. Assuming 506,508 total outstanding shares of Bryan Common
Stock, this indicates an aggregate transaction value of approximately $24.1
million. EHD calculated that, as of December 31, 1997, the aggregate transaction
value represented 36.8% of the total assets of Bryan, 3.25 times Bryan's stated
book value, and 20.84 times Bryan's earnings for the trailing twelve months
ended December 31, 1997.
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CONTRIBUTION ANALYSIS. EHD reviewed certain historical financial and
operating information for Bryan, Savannah and the pro forma combined entity
resulting from the Merger based on financial data reported by Bryan and
Savannah. Financial data provided to EHD as of December 31, 1997 was audited.
EHD analyzed the relative balance sheet contribution of Bryan and Savannah for
certain data to the combined company on a pro forma basis as of December 31,
1997. This analysis indicated that Bryan would have contributed 28.6% to
combined total assets, 31.3% to combined loans (net of allowances for losses),
27.9% to combined deposits and 34.4% to combined stockholders' equity. EHD also
analyzed the relative income statement contributions of Bryan and Savannah for
certain data to the combined company on a pro forma basis. This analysis
indicated that, for the latest twelve months ended December 31, 1997, Bryan
would have contributed 35.1% to combined net interest income and 39.8% to
combined net income. At the Exchange Ratio of one share of Bryan Common Stock
for 1.85 shares of Savannah Common Stock, the holders of outstanding Bryan
Common Stock would own approximately 35.2% of Savannah's post-Merger basic
shares outstanding, and 34.0% of Savannah Common Stock on a fully diluted basis
as if both entities exercised all outstanding stock options at December 31,
1997, allowing for the conversion of Bryan Rights into rights with respect to
Savannah Common Stock.
COMPARABLE COMPANY ANALYSIS FOR BRYAN. EHD reviewed and compared certain
financial information for Bryan to corresponding financial information for
similar companies in Georgia. Peers were determined to be profitable one-bank
holding companies in Georgia, not publicly traded, with consolidated assets
between $50 and $100 million as of December 31, 1997, with the bank subsidiary
at least five years old, with investments in the subsidiary bank between $5 and
$8 million and with no nonbank subsidiaries. These parameters produced a peer
sample of 43 other bank holding companies. The peer companies had a mean asset
size of $74 million and a median asset size of $72 million, compared to Bryan's
$66 million in assets at December 31, 1997. Bryan had a return on average assets
("ROA") of 1.88% for the year ended December 31, 1997, compared to a mean ROA of
1.28% and a median ROA of 1.31% for the peer companies. Bryan had a return on
average equity ("ROE") of 16.56% compared to a 12.98% mean ROE and a 12.39%
median ROE for the peer group. This indicates that Bryan's financial performance
was above the average of similar companies. Discussions with management indicate
that Bryan's rates of return are expected to lessen somewhat in the future due
to the need to develop a branch network and the probable addition of new
competitors in the Bryan County market area in the future.
A similar peer group was determined for Bryan Bank, the wholly owned
subsidiary of Bryan. Bryan Bank's peers were determined to be Georgia banks with
total assets between $50 and $100 million with no branches and between 5 and 10
years old. Non-traditional or special purpose banks were excluded. Of the 10
peer banks in the sample, total assets indicated a mean of $72 million and a
median of $69 million, compared to $65 million for Bryan Bank. Bryan Bank's ROA
was 1.91% for 1997 versus a 1.18% mean and 1.17% median for the peers. Bryan
Bank's ROE was 17.92% versus a 12.03% mean and 12.83% median for the peers.
Bryan Bank's net interest rate margin averaged 5.81% during 1997, compared to a
4.93% mean and a 5.12% median for the peers. Bryan Bank's nonperforming assets
to total assets was .48% at December 31, 1997, versus a .76% mean and a .37%
median for the peers. Bryan Bank compared favorably to most key ratios analyzed
for the peer group.
COMPARABLE COMPANY ANALYSIS FOR SAVANNAH. EHD compared selected balance
sheet data, asset quality, capitalization and profitability measures and market
statistics using financial data for the twelve months ended December 31, 1997
and market data as of July 23, 1998 for Savannah to a group of selected Georgia
bank holding companies which EHD deemed to be relevant.
The group of selected Georgia banking companies included: Summit Bank
Corporation, Atlanta; Golden Isles Financial Holdings, Brunswick; Habersham
Bancorp, Cornelia; First Sterling Banks, Inc., Kennesaw; SNB Bancshares, Inc.,
Macon; Southwest Georgia Financial Corp., Moultrie; First Banking Co. of SE GA,
Statesboro; Merit Holding Corporation, Tucker and PAB Bankshares, Inc., Valdosta
(collectively, the "Savannah Peers"). The total assets for the group at December
31, 1997 amounted to $240 million at the mean and $214 million at the median,
compared to $164 million for Savannah. The analysis indicated that Savannah's
ROA for the year 1997 was 1.22% compared to a 1.36% mean ROA and a 1.35% median
ROA for the peer group. Savannah's ROE was 12.48% versus a 13.54% mean ROE and a
14.33% median ROE for the group. Savannah's net interest rate margin for 1997
was 4.52% compared to a 5.26% mean and a 5.22% median for the group. Savannah's
1997 dividend payout ratio was 13.59% versus a 20.95% mean payout and a 20.53%
median payout for the group. This indicates that Savannah's financial
performance fell slightly below the selected peers.
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STOCK TRADING ANALYSIS. Since Bryan's stock is not liquidly traded, no
stock trading comparisons were attempted to other banking companies with a more
established trading market, and EHD placed no weight on the market price of
Bryan Common Stock.
EHD reviewed and analyzed the price performance and the historical trading
volume for Savannah's Common Stock for the period from April 1997 to March 1998.
A comparison of Savannah's Common Stock performance for the last twelve months
versus the S&P 500 Index indicates that Savannah has generally outperformed the
S&P Index for the period. EHD also compared the recent price performance of the
Savannah Common Stock to the nine Savannah Peers. The ratio of closing stock
prices at April 8, 1998 to trailing 12 months earnings per share for the peer
banks ranged from multiples of 16.7 to 31.5, compared to 26.5 for Savannah.
These stock prices as a multiple of book value ranged from 1.5 to 4.2, compared
to 2.9 for Savannah. EHD deemed the trading volume of Savannah Common Stock to
be generally light, averaging less than 400 traded shares per day over the most
recent quarter measured. However, EHD concluded that Savannah's listing on the
Nasdaq National Market provides a more liquid market than is currently available
to Bryan shareholders.
COMPARABLE TRANSACTION ANALYSIS. EHD performed an analysis of premiums paid
in acquisitions of banking organizations with comparable characteristics to the
Merger. Savannah has not executed any mergers prior to its proposed Merger with
Bryan. There are therefore no Savannah comparable transactions. Two sets of
comparable transactions were analyzed as follows. The first set of comparable
transactions reflects a comparison of the Bryan/Savannah Merger to 100%
acquisitions occurring in 1997 in the state of Georgia. During 1997, EHD noted
thirteen 100% acquisition transactions of banks and S&L companies in Georgia,
which yielded mean premiums of 2.16 times the sellers' book value, and 19.83
times the sellers' last twelve months trailing earnings. This compares to
pending multiples for Bryan's proposed merger of 3.25 times book value and 20.84
times trailing earnings if measured based on Bryan financial data through
December 31, 1997.
EHD also compared the Merger to certain financial information relating to
eight selected pending or recently completed Georgia bank mergers. The
comparable transactions were (acquiror/acquiree): First Liberty Financial Corp.
/ Southland Bank Corp.; Regions Financial / First Community Banking Services;
SNB Bancshares, Inc. / Crossroads Bancshares, Inc.; Flag Financial Corp. / Three
Rivers Bancshares; PAB Bankshares, Inc. / Investors Financial Corp.; Premier
Bancshares, Inc. / Lanier Bank & Trust; Premier Bancshares, Inc. / The Bank
Holding Company; and Flag Financial / Middle Georgia Bankshares, Inc. EHD
considered, among other factors, the earnings, capital, asset size and quality
of assets of the acquired companies. EHD compared the transaction prices to
stated book values, earnings, assets and deposits. The eight recent comparable
transactions had an average price to tangible book value of 2.57 times, a price
to earnings multiple of 19.58 times, a price to total assets multiple of 23.99,
and a price to total deposits multiple of 27.55. The consideration to be paid to
Bryan, based on Savannah's closing stock price of $25.75 as of April 8, 1998,
would result in a price to book value of 3.25 times, a price to earnings
multiple of 20.84 times, a price to assets multiple of 36.83, and a price to
total deposits multiple of 43.10.
No company or transaction used in EHD's analyses is identical to Bryan or
the proposed Merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of Bryan 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 mean or median) is not
in itself a meaningful method of using comparable transaction data or comparable
company data.
DISCOUNTED CASH FLOW ANALYSIS. EHD calculated the present value of Bryan
assuming that Bryan remained an independent bank. For purposes of this analysis,
EHD utilized certain projections of Bryan's future earnings and dividends. EHD
assumed that the Bryan Common Stock would be sold at the end of five years at
250% of projected book value. This value was then discounted to present value
using discount rates from 15% to 19%. These rates were selected as an estimate
of probable rates that investors in securities such as Bryan Common Stock would
expect in view of the potential appreciation and risks in the stock. Based on
these assumptions, EHD calculated that the present value of Bryan as an
independent bank ranged from $14.9 million to $18.3 million. The aggregate
consideration of the proposed Merger would provide a value of $24.1 million,
which is above the high end of this present value range. The present value
analysis was included because it is a widely used valuation method, but EHD
noted that the results of this method are dependent on the numerous assumptions
that must be made, including earnings assumptions, dividend payout policies,
terminal values and appropriate discount rates.
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Pursuant to an engagement letter between Bryan and EHD, Bryan agreed to the
payment of a fee for EHD's services related to EHD's fairness opinion, and to
indemnify and hold harmless EHD and its officers and employees against certain
liabilities in connection with its services, except for liabilities resulting
from the negligence of EHD. Total fees paid to EHD for its role as financial
advisor to Bryan and for its fairness opinion total approximately $45,000.
EXCHANGE RATIO
At the Effective Time, each share of Bryan Common Stock then issued and
outstanding (excluding shares held by Bryan, Savannah, or their respective
subsidiaries, in each case other than shares held in a fiduciary capacity or as
a result of debts previously contracted, and excluding shares held by Bryan
shareholders who perfect their statutory dissenters' rights) will be converted
into and exchanged for the right to receive 1.85 shares of Savannah Common
Stock.
As of the Bryan Record Date, there were 532,258 shares of Bryan Common
Stock issued, of which 506,508 shares were outstanding and 25,750 shares were
held in treasury. Based on the number of shares of Bryan Common Stock
outstanding on the Bryan Record Date and the Exchange Ratio of 1.85, it is
anticipated that upon consummation of the Merger, Savannah would issue
approximately 937,040 shares of Savannah Common Stock to holders of Bryan Common
Stock. Accordingly, following consummation of the Merger, Savannah will have
approximately 2,673,838 shares of Savannah Common Stock outstanding, based on
the number of shares of Savannah Common Stock issued and outstanding on the
Savannah Record Date.
FRACTIONAL SHARES
No fractional shares of Savannah Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any Bryan shareholder would be entitled upon consummation of the Merger,
in an amount equal to such fractional part of a share of Savannah Common Stock
multiplied by the market value of one share of Savannah Common Stock at the
Effective Time. The market value of one share of Savannah Common Stock at the
Effective Time will be the last sale price of such common stock on The Nasdaq
National Market (as reported by THE WALL STREET JOURNAL or, if not reported
thereby, any other authoritative source selected by Savannah) on the last
trading day preceding the Effective Time. No Bryan shareholder who would have
been entitled to receive fractional shares of Savannah Common Stock will be
entitled to dividends, voting rights, or any other rights as a shareholder in
respect of any fractional shares.
CONVERSION OF STOCK OPTIONS
The Merger Agreement provides that, at the Effective Time, the Bryan
Rights, which are outstanding at the Effective Time, whether or not exercisable,
will be converted into and become rights with respect to Savannah Common Stock,
and Savannah will assume each Bryan Right, in accordance with the terms of the
stock option agreement by which it is evidenced, except that from and after the
Effective Time:
(i) Savannah and its compensation committee will be substituted for Bryan
and the committee of Bryan's Board of Directors (including, if
applicable, the entire Board of Directors of Bryan) administering such
Bryan Rights;
(ii) each Bryan Right assumed by Savannah may be exercised solely for shares
of Savannah Common Stock (or cash, if so provided under the terms of
such Bryan Right);
(iii) the number of shares of Savannah Common Stock subject to such Bryan
Right will be equal to the number of shares of Bryan Common Stock
subject to such Bryan Right immediately prior to the Effective Time
multiplied by the Exchange Ratio; and
(iv) the per share exercise price under each such Bryan Right will be
adjusted by dividing the per share exercise price under each such Bryan
Right by the Exchange Ratio and rounding up to the nearest cent.
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The Merger Agreement also provides that, notwithstanding the provisions of
clause (iii) of the preceding sentence, Savannah will not be obligated to issue
any fraction of a share of Savannah Common Stock upon the exercise of any Bryan
Rights and any fraction of a share of Savannah Common Stock that otherwise would
be subject to a converted Bryan Right will represent the right to receive a cash
payment upon exercise of such converted Bryan Right equal to the product of such
fraction and the difference between the market value of one share of Savannah
Common Stock at the time of exercise of such Bryan Right and the per share
exercise price of such Bryan Right. The market value of one share of Savannah
Common Stock at the time of exercise of a Bryan Right will be the last sale
price of such common stock on the Nasdaq National Market (as reported by THE
WALL STREET JOURNAL or, if not reported thereby, any other authoritative source
selected by Savannah) on the last trading day preceding the date of exercise.
EFFECTIVE TIME
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Time will occur on the date and at the time that the
Certificate of Merger is declared effective with the Secretary of State of the
State of Georgia. Unless otherwise agreed upon in writing by Bryan and Savannah,
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
Time to occur on or before the fifth business day following the last to occur of
(i) 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 (ii) the date on which the
shareholders of Bryan and Savannah approve the Merger Agreement.
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. Bryan and Savannah anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the fourth quarter of 1998. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Bryan or Savannah generally may terminate
the Merger Agreement if the Merger is not consummated by December 31, 1998,
unless the failure to consummate by that date is the result of a breach of the
Merger Agreement by the party seeking termination. See "--Conditions to
Consummation of the Merger" and "--Amendment, Waiver, and Termination."
DISTRIBUTION OF SAVANNAH CERTIFICATES
Promptly after the Effective Time, Savannah will cause the Exchange Agent
to mail to each holder of record of Certificates which, immediately prior to the
Effective Time, represented outstanding shares of Bryan Common Stock,
appropriate transmittal materials and instructions for use in effecting the
surrender and cancellation of the Certificates in exchange for certificates
representing shares of Savannah Common Stock.
HOLDERS OF BRYAN COMMON STOCK SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE APPROPRIATE TRANSMITTAL MATERIALS AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of Certificates for Bryan Common
Stock, together with the properly completed transmittal materials, there will be
issued and mailed to each holder of Bryan Common Stock (other than shares as to
which holders have perfected dissenters' rights) surrendering such items a
certificate or certificates representing the number of shares of Savannah Common
Stock to which such holder is entitled, if any, and a check for the amount to be
paid in lieu of any fractional share (without interest), together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon).
After the Effective Time, to the extent permitted by law, holders of Bryan
Common Stock of record as of the Effective Time will be entitled to vote at any
meeting of Savannah shareholders the number of whole shares of Savannah Common
Stock into which their shares of Bryan Common Stock have been converted,
regardless of whether such shareholders have surrendered their Bryan Common
Stock Certificates. Whenever a dividend or other distribution is declared by
Savannah on Savannah Common Stock, the record date for which is at or after the
Effective Time, the declaration will include dividends or other distributions on
all shares issuable pursuant to the Merger Agreement, but no dividend or other
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distribution payable after the Effective Time with respect to Savannah Common
Stock will be paid to the holder of any unsurrendered Bryan Common Stock
Certificate until the holder duly surrenders such certificate. Upon surrender of
such Bryan Common Stock Certificate, however, both the Savannah Common Stock
certificate, together with all undelivered dividends or other distributions
(without interest) and any undelivered cash payments to be paid in lieu of
fractional shares (without interest), will be delivered and paid with respect to
each share represented by such certificate. In no event will the holder of any
surrendered Bryan Common Stock Certificate(s) be entitled to receive interest on
any cash to be issued to such holder, and in no event will Savannah or the
Exchange Agent be liable to any holder of Bryan Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat, or similar law.
After the Effective Time, no transfers of shares of Bryan Common Stock on
Bryan's stock transfer books will be recognized. If Certificates representing
shares of Bryan Common Stock are presented for transfer after the Effective
Time, they will be canceled and exchanged for the shares of Savannah Common
Stock and a check for the amount due in lieu of fractional shares, if any,
deliverable in respect thereof.
After the Effective Time, holders of Bryan Certificates will have no rights
with respect to the shares of Bryan Common Stock formerly represented thereby
other than the right to surrender such Certificates and receive in exchange
therefor the shares of Savannah Common Stock, if any, to which such holders are
entitled, as described above, or the right to perfect their dissenters' rights.
If any certificate for Savannah Common Stock is to be issued in a name
other than that in which the Bryan Certificate surrendered for exchange is
issued, the Bryan Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer, and the person requesting such exchange
will affix any requisite stock transfer tax stamps to the certificates
surrendered, will provide funds for their purchase, or will establish to the
exchange agent's satisfaction that such taxes are not payable.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO HOLDERS OF BRYAN COMMON STOCK. THE DISCUSSION MAY
NOT APPLY TO SPECIAL SITUATIONS, SUCH AS BRYAN SHAREHOLDERS, IF ANY, WHO HOLD
BRYAN COMMON STOCK OTHER THAN AS A CAPITAL ASSET, WHO RECEIVED BRYAN COMMON
STOCK UPON THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION,
WHO HOLD BRYAN COMMON STOCK AS PART OF A "STRADDLE" OR "CONVERSION TRANSACTION,"
OR WHO ARE INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL INSTITUTIONS OR
FOREIGN PERSONS, AND DOES NOT DISCUSS ANY ASPECTS OF STATE, LOCAL, OR FOREIGN
TAXATION. THIS DISCUSSION IS BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS
NOW IN EFFECT AND ON PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE
(POSSIBLY WITH RETROACTIVE EFFECT) BY LEGISLATION, ADMINISTRATIVE ACTION, OR
JUDICIAL DECISION.
No ruling has been or will be requested from the Internal Revenue Service
on any matter relating to the tax consequences of the Merger. Instead,
consummation of the Merger is conditioned upon receipt by Savannah and Bryan of
an opinion from Alston & Bird LLP, special counsel to Savannah, concerning the
material federal income tax consequences of the Merger. Based upon the
assumption that the Merger is consummated in accordance with the Merger
Agreement and upon the factual representations made by Savannah and Bryan, it is
such firm's opinion that:
(a) The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and Bryan and Savannah will each be a party to the
reorganization within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by holders of Bryan Common Stock
upon the exchange in the Merger of all of their Bryan Common Stock solely for
shares of Savannah Common Stock (except with respect to any cash received in
lieu of a fractional share interest in Savannah Common Stock).
(c) The aggregate tax basis of the Savannah Common Stock received by the
Bryan shareholders in the Merger will, in each instance, be the same as the
aggregate tax basis of the Bryan Common Stock surrendered in exchange therefor,
less the basis of any fractional share of Savannah Common Stock settled by cash
payment.
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(d) The holding period of the Savannah Common Stock received by the Bryan
shareholders in the Merger will, in each instance, include the holding period of
the Bryan Common Stock surrendered in exchange therefor, provided that such
Bryan Common Stock is held as a capital asset at the Effective Time.
(e) The payment of cash to Bryan shareholders in lieu of fractional share
interests of Savannah Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the exchange
and then were redeemed by Savannah. These cash payments will be treated as
having been received as distributions in full payment in exchange for the stock
redeemed, as provided in Section 302(a) of the Code.
(f) Where solely cash is received by a Bryan shareholder in exchange for
Bryan Common Stock pursuant to the exercise of dissenters' rights, such cash
will be treated as having been received in redemption of such holder's Bryan
Common Stock, subject to the provisions and limitations of Section 302 of the
Code.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN, OR OTHER TAX
CONSEQUENCES OF THE MERGER. BRYAN STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX REPORTING REQUIREMENTS AND TAX CONSEQUENCES
UNDER STATE, LOCAL, OR FOREIGN LAW.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Savannah will be the surviving corporation resulting from the Merger and
Bryan Bank will become a wholly owned subsidiary of Savannah. The Merger
Agreement provides that the directors of Savannah in office immediately prior to
the Effective Time, together with E. James Burnsed, James W. Royal, James Toby
Roberts, Sr., L. Carlton Gill and Robert T. Thompson, Jr., each of whom serves
as a current director of Bryan, will serve as a director of Savannah from and
after the Effective Time in accordance with Savannah's Bylaws. The officers of
Savannah in office immediately prior to the Effective Time, together with such
additional persons as may thereafter be elected, will serve as the officers of
Savannah from and after the Effective Time in accordance with the Bylaws of
Savannah; provided, that E. James Burnsed will be elected Vice Chairman of
Savannah. Of the five directors of Bryan who will serve as directors of
Savannah, assuming they are elected by the shareholders of Savannah and the
merger is consummated, Messrs. Gill and Thompson shall serve until the Annual
Meeting of Shareholders in 1999, Messrs. Royal and Roberts shall serve until the
Annual Meeting of Shareholders in 2000, and Mr. Burnsed shall serve until the
Annual Meeting of Shareholders in 2001, in each case until their successors have
been elected and qualified. See "CONTINGENT ELECTION OF DIRECTORS."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Savannah will be the surviving corporation resulting from the Merger.
Following consummation of the Merger, Bryan Bank and Savannah Bank will continue
as banking subsidiaries of Savannah. The officers of Savannah in office
immediately prior to the Effective Time shall continue to serve as officers of
Savannah after the Effective Time. Subsequent to the consummation of the
Merger,E. James Burnsed, James W. Royal, James Toby Roberts, Sr., L. Carlton
Gill, and Robert T. Thompson, Jr., current directors of Bryan, will become
members of the Savannah Board of Directors. E. James Burnsed, current President
and Chief Executive Officer of Bryan Bank, will become Vice Chairman of the
Board of Directors of Savannah. Archie H. Davis will become a member of the
Bryan Bank Board of Directors. In addition, the Merger Agreement provides that,
in the event Savannah removes, or fails to re-elect a director (other than
Charles Stafford) to the board of Bryan Bank during the 24 month period
following the closing date of the Merger, Savannah will pay such director,
immediately, an amount equal to the director's fees he or she would have earned
during the remainder of such 24 month period. Currently, Bryan Bank pays each of
its directors $500 per month in director's fees.For information concerning the
current directors and management of Savannah, see "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT--Savannah." As of the Savannah Record Date, the
directors and officers of Bryan were entitled to vote an aggregate of 825 shares
of Savannah Common Stock. As of the Bryan Record Date, the directors and
officers of Savannah were not entitled to vote any shares of Bryan Common Stock.
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INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The Merger Agreement provides
that, for a period of six years after the Effective Time, Savannah will
indemnify and hold harmless the present and former directors, officers,
employees, and agents of the Bryan companies against all liabilities arising out
of actions or omissions arising out of the indemnified party's service as a
director, officer, employee or agent of Bryan, or at Bryan's request, of another
corporation, partnership, joint venture, trust or other enterprise occurring at
or prior to the Effective Time (including transactions contemplated by the
Merger Agreement) to the full extent permitted under Georgia law and by Bryan's
Articles of Incorporation or By-Laws as in effect on the date of the Merger
Agreement, including provisions related to advances of expenses incurred in the
defense of any litigation regardless of whether any Savannah company is insured
against such matter. In any case in which approval by Savannah is required to
effectuate any indemnification, Savannah will direct, at the election of the
indemnified party, that the determination of any such approval shall be made by
independent counsel mutually agreed upon between Savannah and the indemnified
party.
DIRECTOR AND OFFICER INSURANCE. The Merger Agreement provides that Savannah
shall use reasonable efforts (with the cooperation of Bryan prior to the
Effective Time) to maintain in effect for three years after the Effective Time
Bryan's existing directors' and officers' liability insurance policy (provided
that Savannah may substitute therefor (i) policies of at least the same coverage
and amounts containing terms and conditions which are no less advantageous or
(ii) with the consent of Bryan given prior to the Effective Time, any other
policy) with respect to claims arising from facts or events which occurred prior
to the Effective Time and covering persons who are currently covered by such
insurance. However, Savannah is not obligated to make aggregate premium payments
for such three-year period in respect of such policy (or coverage replacing such
policy) which exceed, for the portion related to Bryan's directors and officers,
150% of the annual premium payments on Bryan's current policy in effect as of
the date of the Merger Agreement. If the amount of the premiums necessary to
maintain or procure such insurance coverage exceeds this amount, Savannah will
use reasonable efforts to maintain the most advantageous policies of directors'
and officers' liability insurance obtainable for a premium equal to this amount.
EMPLOYMENT AGREEMENTS. Savannah and Bryan Bank shall enter into an
employment agreement with E. James Burnsed (the "Burnsed Agreement") as of the
Effective Time. The terms of the Burnsed Agreement are substantially similar to
the terms in Savannah's other employment agreements with executive officers. The
Burnsed Agreement has a one-year term but may terminate at the earliest of the
following: one year from the date of theBurnsed Agreement; the mutual agreement
of the parties; the death or disability of Burnsed or Burnsed's voluntary
retirement; or immediately upon written notice by Savannah and Bryan Bank of
termination for cause.
The Burnsed Agreement provides for a base salary of $90,000; the assumption
by Savannah of Burnsed's stock option agreement granting Burnsed stock options
to purchase 12,000 shares of Bryan Common Stock (at a price of $10.66 per share
for 4,000 shares, $11.75 per share for 4,000 shares, and $10.65 per share for
4,000 shares); the grant of incentive options to purchase 10,000 shares of
Savannah Common Stock at market price on the same terms and conditions as other
Savannah executives; executive life insurance; and other compensation, including
cash incentives payable under the same terms and conditions as were payable
under Bryan Bank's Officer Cash Incentive Plan in effect at the time of
execution of the Merger Agreement, and the right to participate in all current
and future employee benefit, retirement, and compensation plans generally
available to employees of Savannah Bank, consistent with his salary and
positions with Savannah and Bryan Bank.
The Burnsed Agreement provides for Mr. Burnsed's termination for cause,
including: (i) conviction of or pleading guilty to any acts of fraud,
misappropriation, embezzlement, or any felony; (ii) commission of acts or
conduct materially damaging to the business of Savannah or Bryan Bank; and (iii)
Mr. Burnsed's failure, without reasonable cause, to devote his full business
time and best efforts to the business of Bryan Bank. The Burnsed Agreement
contains a change in control provision under which Savannah and Bryan Bank agree
to assume the obligations of Bryan under the Change in Control Agreement with
Burnsed dated May 22, 1996 (the "Burnsed Control Agreement.") However, Burnsed,
by executing the Burnsed Agreement, waives any rights under the Burnsed Control
Agreement to payments resulting from the Merger and agrees to accept the
benefits of the Burnsed Agreement in full payment in lieu of rights under the
Burnsed Control Agreement, except in the event of a "change in control" of
Savannah as defined therein.
Savannah and Bryan Bank have also entered into an employment agreement with
George Michael Odom, Jr. (the "Odom Agreement") as of the Effective Time. The
terms of the Odom Agreement are substantially similar to the terms in Savannah's
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other employment agreements with executive officers. The Odom Agreement has a
one-year term but may terminate at the earliest of the following: one year from
the date of the Odom Agreement; the mutual agreement of the parties; the death
or disability of Odom or Odom's voluntary retirement; or immediately upon
written notice by Savannah and Bryan Bank of termination for cause.
The Odom Agreement provides for a base salary of $80,000; the assumption by
Savannah of Odom's stock option agreements pursuant to Bryan's 1997 Incentive
Stock Option Plan, dated August 12, 1996, which grant Odom stock options to
purchase 5,000 shares of Bryan Common Stock at a price of $19.00 per share and
the option, dated February 10, 1998, to purchase 2,500 shares at a price of
$47.17 per share; executive life insurance; and other compensation, including
cash incentives payable under the same terms and conditions as were payable
under Bryan Bank's Officer Cash Incentive Plan in effect at the time of
execution of the Merger Agreement, and the right to participate in all current
and future employee benefit, retirement, and compensation plans generally
available to employees of Savannah Bank, consistent with his salary and position
with Bryan Bank.
The Odom Agreement provides for Mr. Odom's termination for cause,
including: (i) conviction of or pleading guilty to any acts of fraud,
misappropriation, embezzlement, or any felony; (ii) commission of acts or
conduct materially damaging to the business of Savannah or Bryan Bank; and (iii)
Mr. Odom's failure, without reasonable cause, to devote his full business time
and best efforts to the business of Bryan Bank. The Odom Agreement contains a
change in control provision under which Savannah and Bryan Bank agree to assume
the obligations of Bryan under the Change in Control Agreement with Odom dated
May 22, 1996 (the "Odom Control Agreement.") However, Odom, by executing the
Odom Agreement, waives any rights under the Odom Control Agreement to
payments resulting from the Merger and agrees to accept the benefits of the
Odom Agreement in full payment in lieu of rights under the Odom Agreement,
except in the event of a "change in control" of Savannah.
CHANGE IN CONTROL AGREEMENTS. The Burnsed Control Agreement and the Odom
Control Agreement (the "Control Agreements") allow Burnsed and Odom (the "Bryan
Officers") each to retain his salary, bonus, and benefits if a "change in
control," as defined in the Burnsed and Odom Control Agreements, occurs and that
Bryan Officer is terminated (either by Bryan, other than for "Cause" as defined
in the Control Agreements, or by reason of the Bryan Officer's disability,
retirement, or death, or termination by the principal pursuant to involuntary
termination) within three years following the change in control.
A "change in control" under the Control Agreements includes (i) the
acquisition of 25% of Savannah or Bryan Bank's voting power by any person within
any twelve month period; (ii) the change in Directors such that the Directors
remaining at the end of any two year period who were also Directors at the
beginning of the period no longer constitute a majority of the Board of
Directors, unless the election of each new Director was approved in advance by a
vote of at least a majority of the Directors then still in office who were
directors at the beginning of the period; (iii) the consummation of a merger,
consolidation, or business combination (other than one in which Savannah or
Bryan Bank would continue to represent at least 60% of the outstanding common
stock of Savannah or Bryan Bank); (iv) the consummation of a plan of complete
liquidation of Savannah or Bryan Bank or an agreement for the sale or
disposition of all or substantially all of Savannah's or Bryan Bank's assets; or
(v) the occurrence of any other event or circumstance which the Board of
Directors determines to affect control of Savannah or Bryan Bank and adopts a
resolution that such event or circumstance constitutes a Change in Control for
the purposes of the Control Agreement. "Cause" under the Control Agreements
includes (i) any fraud, dishonesty, felony, or gross malfeasance of duty on the
part of the Bryan Officer which directly results in material injury to Savannah
or to Bryan Bank; or (ii) any conduct by the Bryan Officer that is grossly
inappropriate and demonstrably likely to lead to the material injury of Savannah
or Bryan Bank, as determined by the Board of Directors acting reasonably and in
good faith (except where the Board does not deliver to the Bryan Officer notice
detailing such conduct and allowing a reasonable period of time, but at least 30
days, in which to remedy such action).
The Burnsed Control Agreement and the Odom Control Agreement contain
substantially the same terms and conditions, except that the Burnsed Control
Agreement reduces the percentage of benefits and bonuses payable to Burnsed by
twenty percent each year for the years 2001 to 2005, in the event that Burnsed
is still employed at that time, until the year 2005, at which time no benefits
or bonuses will be payable to Burnsed as a result of termination pursuant to a
change in control. There are no provisions for such reductions in the Odom
Control Agreement.
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Archie H. Davis, R. Stephen Stramm, and Robert B. Briscoe, all executive
officers of Savannah Bank (the "Savannah Officers"), have entered into Change in
Control Agreements with Savannah under substantially the same terms and
conditions (the "Change in Control Agreements"). Each Change in Control
Agreement allows the Executive Officer to terminate his employment within one
year following the date of a "change in control," as defined in the Change in
Control Agreements, and to continue to receive compensation for a one-year
period if the executive officer is terminated "without cause," as defined in the
Change in Control Agreements, or if the executive officer's rate of compensation
is involuntarily reduced, within one year following a change in control. A
"change in control" includes (i) the sale of all, or a substantial portion of,
the assets of the Savannah, (ii) a merger or other reorganization whereby the
Savannah is not the surviving entity, or (iii) a change in control of Savannah
as defined or determined by the OCC and whether by acquisition of stock or
assets of Savannah. "Without cause" is defined as termination for any reason
other than: (a) conviction of, or being found guilty of, pleading guilty to,
pleading nolo contendere to, or taking first offender treatment to a felony or
any crime involving moral turpitude; or (b) engaging in any misappropriation,
embezzlement, or other intentional fraud upon Savannah. Upon any such
termination by an executive officer or termination without cause by Savannah
following a change in control, that executive officer's base salary, will
continue for one year.
OFFICER STOCK OPTIONS. Bryan has granted stock options to certain of its
officers under the Bryan Stock Option Plan (the "Bryan Option Plan") with
respect to an aggregate of 19,500 shares of Bryan Common Stock. Options granted
include incentive stock options and nonqualified stock options which vest
immediately upon grant or in not more than ten years from the date of grant
unless accelerated in accordance with the Bryan Option Plan or individual option
agreement, including upon a change in control (as defined in the Bryan Option
Plan).
Such stock options will be assumed by Savannah in the Merger in accordance
with the terms of the stock option agreement by which it is evidenced, except
that from and after the Effective Time, (i) Savannah and its Compensation
Committee shall be substituted for Bryan and the Committee of Bryan's Board of
Directors administering such options; (ii) each option assumed by Savannah may
be exercised solely for shares of Savannah Common Stock (or cash if so provided
under the terms of the option); (iii) the number of shares of Savannah Common
Stock subject to such options shall be equal to the number of shares of Bryan
Common Stock subject to the options immediately prior to the Effective Time
multiplied by the Exchange Ratio; and (iv) the per share exercise price under
each such option shall be adjusted by dividing the per share exercise price
under each option by the Exchange Ratio and rounding up to the nearest cent.
Each option which is an "incentive stock option" shall be adjusted as
required by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension, or
renewal of the option within the meaning of Section 424(h) of the Internal
Revenue Code.
See "--Conversion of Stock Options."
OTHER MATTERS RELATING TO BRYAN EMPLOYEE BENEFIT PLANS. The Merger
Agreement also provides that, after the Effective Time, Savannah will provide
generally to officers and employees of the Bryan companies benefits under
employee benefit and welfare plans (other than stock option or other plans
involving the potential issuance of Savannah Common Stock), on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by Savannah to its similarly situated officers and employees.
For purposes of participation, vesting, and (except in the case of Savannah
retirement plans) benefit accrual under Savannah's employee benefit plans, the
service of the employees of the Bryan companies prior to the Effective Time
shall be treated as service with a Savannah company participating in such
employee benefit plans.
The Merger Agreement further provides that Savannah also shall honor and
shall cause its subsidiaries to honor in accordance with their terms all
employment, severance, consulting, and other compensation Contracts disclosed to
Savannah between any Bryan company and any current or former director, officer,
or employee thereof, and all provisions for vested benefits or other amounts
earned or accrued through the Effective Time under the Bryan benefit plans.
STAFFORD AGREEMENTS. On July 21, 1998, Mr. Charles Stafford signed an
affiliate agreement, the terms of which were substantially similar to the terms
of the affiliate agreements that were signed by the other Bryan directors and
affiliates. Mr. Stafford also signed a Directors' Agreement to vote his shares
of Bryan Common Stock in favor of the Merger. See "--Bryan Directors'
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Agreements." In addition, Mr. Stafford entered into a Covenant not to Compete
(the "Stafford Noncompete"), whereby Mr. Stafford agreed that, for a period of
40 months following the consummation of the Merger, he would not, without the
prior written consent of Bryan, directly or indirectly, serve as a consultant
to, serve as a management official of, or be or become a greater than 5%
shareholder of any financial institution having its headquarters or principal
office in Bryan County, Georgia, or having, during the first 12 months of its
affiliation with Mr. Stafford, its largest deposit office in Bryan County,
Georgia. In consideration for Mr. Stafford's entering into the Stafford
Noncompete, he will receive payments totaling $200,000, payable in 40 monthly
installments of $5,000 each. In connection with the Stafford Noncompete, Mr.
Stafford also entered into a Nonsolicitation and Nondisclosure Agreement, which
generally provides that Mr. Stafford may not, for a period of 40 months
following the consummation of the Merger, (i) cause or solicit any employee of
Bryan Bank to leave the employ of Bryan Bank, or (ii) disclose certain
confidential business information relating to Bryan and Bryan Bank. Mr. Stafford
also entered into a Financial Disclosure Agreement with Savannah, which provides
that (i) Savannah will provide all publicly released information, including
press releases, and quarterly earnings reports, and notice filing of all
Commission filings to Mr. Stafford on a priority basis, (ii) Savannah will add
Mr. Stafford to its priority fax list for press releases and will provide notice
of Commission filings within twenty-four hours of filing, and (iii) Savannah's
consolidated quarterly highlights (which will include information relating to
the following ratios for the current and prior periods: loan-to-deposit ratio,
efficiency ratio, return on average equity, return on average assets and
allowance for loan losses to total loans) will be publicly available by the
third Monday following each calendar quarter, except the fourth quarter when it
will be available on the fourth Monday in January.
CONDITIONS TO CONSUMMATION
Consummation of the Merger is subject to various conditions, including the
following:
o receipt of the approval of the Merger Agreement by the shareholders of
Bryan as required by any law or by the provisions of any governing
instruments of Bryan;
o receipt of the approval of the issuance of shares of Savannah Common
Stock pursuant to the Merger Agreement by the shareholders of Savannah
Common Stock as required by the Savannah Articles of Incorporation, the
GBCC and rules of the Nasdaq National Market;
o receipt of certain regulatory approvals required for consummation of the
Merger (see "--Regulatory Approvals");
o receipt of all consents required for consummation of the Merger or for
the preventing of any default under any contract or permit which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a material adverse effect;
o the absence of any law or order or any action taken by any court,
governmental, or regulatory authority prohibiting, restricting, or
making illegal the consummation of the transactions contemplated by the
Merger Agreement;
o the Registration Statement being declared effective and all necessary
Commission and state approvals relating to the issuance or trading of
the shares of Savannah Common Stock issuable pursuant to the Merger will
have been received;
o approval of the shares of Savannah Common Stock issuable pursuant to the
Merger for listing on the Nasdaq National Market;
o receipt by Savannah and Bryan of a letter from Arthur Andersen LLP to
the effect the Merger will qualify for pooling-of-interests accounting
treatment;
o receipt of an opinion of Alston & Bird LLP as to the qualification of
the Merger as a tax-free reorganization (see "--Federal Income Tax
Consequences");
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o the accuracy, as of the date of the Merger Agreement and as of the
Effective Time, of the representations and warranties of Bryan and
Savannah as set forth in the Merger Agreement;
o the performance of all agreements and the compliance with all covenants
of Bryan and Savannah as set forth in the Merger Agreement; and
o satisfaction of certain other conditions, including the receipt of
certain agreements of the affiliates of Bryan relating to restrictions
of the transfers of the Savannah Common Stock to be obtained by those
individuals, the receipt of various certificates from the officers of
Bryan and Savannah and the execution by Savannah of employment
agreements with E. James Burnsed and George Michael Odom, Jr.
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. In the event that either the Savannah or the Bryan board of
directors elects to waive the condition relating to the receipt of a pooling
letter from Savannah's independent accountants (relating to the accounting
treatment of the Merger), then the board of directors of the party that so
elects to waive such condition will resolicit the approval of the shareholders
of that party. In the event the Merger is not effected on or before December 31,
1998, the Merger Agreement may be terminated and the Merger abandoned by either
Bryan or Savannah. See "--Amendment, Waiver, and Termination."
REGULATORY APPROVALS
As noted above, the Merger required the approval of the Federal Reserve and
the GDBF. On September 16, 1998, the GDBF issued its final order approving the
Merger. The GDBF's approval is due to expire on September 16, 1999, unless the
Merger is either consummated before that date or the GDBF extends its approval.
It is currently anticipated that the Merger will be consummated before September
16, 1999. In addition, on September 23, 1998, the Federal Reserve issued its
approval, which is due to expire on December 23, 1998. It is possible that the
Merger may not be consummated before the Federal Reserves approval expires.
Savannah intends to seek an extension from the Federal Reserve of its approval
if it becomes apparent that the Merger will not be consummated before December
23, 1998. There can be no assurance that the Federal Reserve will grant such an
extension or as to the timing of any such extension.
AMENDMENT, WAIVER, AND TERMINATION
To the extent permitted by applicable law, Bryan and Savannah may amend the
Merger Agreement by written agreement at any time before or after approval of
the Merger Agreement by Bryan and the approval of the issuance of Savannah
Common Stock pursuant to the Merger Agreement by the Savannah shareholders;
provided, however, that after any such approval by the holders of Bryan Common
Stock, no amendment will be made that, pursuant to the GBCC, requires further
approval by such shareholders without the further approval of such shareholders.
After approval by the holders of Savannah Common Stock, the provisions of the
Merger Agreement relating to the manner or basis in which shares of Bryan Common
Stock will be exchanged for shares of Savannah Common Stock will not be amended
after the Meetings in a manner adverse to the holders of Savannah Common Stock
without any requisite approval of the holders of the issued and outstanding
shares of Savannah Common Stock entitled to vote thereon. In addition, prior to
or at the Effective Time, either Bryan or Savannah, or both, acting through
their respective Board of Directors, chief executive officer or other authorized
officers may waive any default in the performance of any term of the Merger
Agreement by the other party, may waive or extend the time for the compliance or
fulfillment by the other party of any and all of its obligations under the
Merger Agreement, and may waive any of the conditions precedent to the
obligations of such party under the Merger Agreement, except any condition that,
if not satisfied, would result in the violation of any applicable law or
governmental regulation. No such waiver will be effective unless written and
unless signed by a duly authorized officer of Bryan or Savannah, as the case may
be.
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time
(i) by the mutual consent of Bryan and Savannah; or,
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(ii) by either party
(a) provided that the terminating party is not then in material breach
of any representation, warranty, covenant, or other agreement
contained in the Merger Agreement, in the event of any material breach
of any representation or warranty of the other party contained in the
Merger Agreement which cannot be or has not been cured within 30 days
after giving written notice to the breaching party of such inaccuracy
and which breach is reasonably likely, in the opinion of the
non-breaching party, to have, individually or in the aggregate, a
Bryan Material Adverse Effect or Savannah Material Adverse Effect (as
defined in the Merger Agreement), as applicable, on the breaching
party,
(b) provided that the terminating party is not then in material
breach of any representation, warranty, covenant, or other agreement
contained in the Merger Agreement, in the event of a material breach
by the other party of any covenant or agreement contained in the
Merger Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach,
(c) provided that the terminating party is not then in material
breach of any representation, warranty, covenant, or other agreement
contained in the Merger Agreement, if (1) any approval of any
regulatory authority required for consummation of the Merger and the
other transactions contemplated by the Merger Agreement has been
denied by final nonappealable action, or if any action taken by such
authority is not appealed within the time limit for appeal or (2) the
shareholders of Bryan or Savannah fail to vote their approval of the
matters submitted for the approval by such shareholders at the
Meetings,
(d) if the Merger is not consummated by December 31, 1998, provided
that the failure to consummate is not due to the breach by the party
electing to terminate, or
(e) provided that the terminating party is not then in material
breach of any representation, warranty, covenant, or other agreement
contained in the Merger Agreement, 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 December 31, 1998.
If the Merger is terminated as described above, the Merger Agreement will
become void and have no effect, except that certain provisions of the Merger
Agreement, including those relating to the obligations to maintain the
confidentiality of certain information obtained, will survive. In addition,
termination of the Merger Agreement will not relieve any breaching party from
liability for any uncured willful breach of a representation, warranty,
covenant, or agreement giving rise to such termination. Furthermore, termination
of the Merger Agreement may not relieve either party of their obligations under
the Stock Option Agreements. See "--Stock Option Agreements."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Bryan and Savannah have agreed that
unless the prior written consent of the other party has been obtained, and
except as otherwise expressly contemplated in the Merger Agreement, each of
Bryan and Savannah will, and will cause its respective subsidiaries to (i)
operate its business only in the usual, regular, and ordinary course, (ii)
preserve intact its business organization and assets and maintain its rights and
franchises, and (iii) take no action which would (a) materially adversely affect
the ability of any party to obtain any consents required for the transactions
contemplated by the Merger Agreement without the imposition of a condition or
restriction of the type referred to in the last sentences of Section 9.1(b) or
9.1(c) of the Merger Agreement, or (b) materially adversely affect the ability
of any party to perform its covenants and agreements under the Merger Agreement.
In addition, Bryan has agreed that, from the date of the Merger Agreement
until the earlier of the Effective Time or the termination of the Merger
Agreement, unless the prior written consent of Savannah will have been obtained,
and except as otherwise expressly contemplated by the Merger Agreement, Bryan
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:
o amend the Articles of Incorporation, Bylaws or other governing
instruments of any Bryan entity;
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o incur any additional debt obligation or other obligation for
borrowed money (other than indebtednes of a Bryan entity to another
Bryan entity) in excess of an aggregate of $50,000 (for the Bryan
entities on a consolidated basis) except in the ordinary course of the
business of the Bryan subsidiaries consistent with past practices
(which will include, for Bryan subsidiaries that are depository
institutions, 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 Bryan entity of any lien or permit any such lien
to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "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 of the Merger Agreement that were previously
disclosed to Savannah by Bryan);
o 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 Bryan entity, or declare or pay any
dividend or make any other distribution in respect of Bryan's capital
stock, provided that Bryan may (to the extent legally and contractually
permitted to do so), but will not be obligated to, declare and pay a
regular annual cash dividend on the shares of Bryan Common Stock in
accordance with past practice as previously disclosed to Savannah by
Bryan, but not in excess of $1.00 per share of Bryan Common Stock, and
further provided that, after June 30, 1998, Bryan may declare and pay
quarterly cash dividends in amounts equal to the quarterly cash dividend
amounts declared and paid by Savannah to Savannah shareholders times
the Exchange Ratio of 1.85, on the record dates and payment dates
declared by Savannah;
o except for the Merger Agreement, or pursuant to the Bryan Stock Option
Agreement, or pursuant to the exercise of stock options outstanding as
of the date thereof and pursuant to the terms thereof in existence on
the date thereof, or as previously disclosed to Savannah by Bryan,
issue, sell, pledge, encumber, authorize the issuance of, enter into
any contract to issue, sell, pledge, encumber, or authorize the issuance
of, or otherwise permit to become outstanding, any additional shares of
Bryan Common Stock or any other capital stock of any Bryan entity, or
any stock appreciation rights, or any option, warrant, or other equity
right;
o adjust, split, combine or reclassify any shares of Bryan Common Stock or
issue or authorize the issuance of any other securities in respect of or
in substitution for shares of Bryan Common Stock, or sell, lease,
mortgage or otherwise dispose of or otherwise encumber (i) any shares of
capital stock of any Bryan subsidiary (unless any such shares of stock
are sold or otherwise transferred to another Bryan entity) or (ii) any
asset having a book value in excess of $25,000 other than in the
ordinary course of business for reasonable and adequate consideration;
o except for purchases of U.S. Treasury securities, U.S. Government agency
securities or obligations of the State of Georgia, or any subdivisions
thereof, which have maturities of seven years or less, purchase any
securities or make any material investment, either by purchase of stock
of securities, contributions to capital, asset transfers, or purchase
of any assets, in any entity other than a wholly owned Bryan subsidiary,
or otherwise acquire direct or indirect control over any entity, other
than in connection with (i) internal reorganizations or consolidations
involving existing subsidiaries, (ii) foreclosures in the ordinary
course of business, (iii) acquisitions of control by a depository
institution subsidiary in its fiduciary capacity, or (iv) the creation
of new wholly owned subsidiaries organized to conduct or continue
activities otherwise permitted by the Merger Agreement;
o grant any increase in compensation or benefits to the employees or
officers of any Bryan entity, except in accordance with past practice
previously disclosed to Savannah by Bryan 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 the Merger
Agreement and previously disclosed to Savannah by Bryan; enter into or
amend any severance agreements with officers of any Bryan entity; grant
any material increase in fees or other increases in compensation or
other benefits to directors of any Bryan entity except in accordance
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with past practice previously disclosed to Savannah by Bryan; or
voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits or other equity rights;
o enter into or amend any employment contract between any Bryan entity and
any person (unless such amendment is required by law) that the Bryan
entity 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 of the Merger;
o adopt any new employee benefit plan of any Bryan entity or terminate or
withdraw from, or make any material change in or to, any existing
employee benefit plans of any Bryan entity 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
make any distributions from such employee benefit plans, except as
required by law, the terms of such plans or consistent with past
practice;
o 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;
o commence any litigation other than in accordance with past practice or
settle any litigation involving any liability of any Bryan entity for
material money damages or restrictions upon the operations of any Bryan
entity; or
o except in the ordinary course of business, enter into, modify, amend or
terminate any material contract (including any loan contract with an
unpaid balance exceeding $25,000) or waive, release, compromise or
assign any material rights or claims.
The Merger Agreement also provides that from the date of the Merger
Agreement until the earlier of the Effective Time or the termination of the
Merger Agreement, unless the prior written consent of Bryan will have been
obtained, and except as otherwise expressly contemplated by the Merger
Agreement, Savannah 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:
o amend the Articles of Incorporation or Bylaws of Savannah in any manner
adverse to the holders of Bryan Common Stock;
o incur any additional debt obligation or other obligation for borrowed
money (other than indebtedness of a Savannah entity to another Savannah
entity) in excess of an aggregate of $100,000 (for the Savannah entities
on a consolidated basis) except in the ordinary course of the business
of Savannah subsidiaries consistent with past practices (which will
include, for Savannah subsidiaries that are depository institutions,
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
Savannah entity of any lien or permit any such lien to exist (other than
in connection with deposits, repurchase agreements, bankers acceptances,
"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 of the Merger Agreement
that were previously disclosed to Bryan by Savannah);
o 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 Savannah entity, or declare or pay
any dividend or make any other distribution in respect of Savannah's
capital stock, provided that Savannah may (to the extent legally and
contractually permitted to do so), but shall not be obligated to,
declare and pay regular quarterly cash dividends on the shares of
Savannah Common Stock in accordance with past practice previously
disclosed to Bryan, but not in excess of $0.12 per share of Savannah
Common Stock;
o except for the Merger Agreement, or pursuant to the Savannah Stock
Option Agreement, or pursuant to the exercise of stock options
outstanding as of the date thereof and pursuant to the terms thereof in
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existence on the date thereof, or as previously disclosed to Bryan by
Savannah, issue, sell, pledge, encumber, authorize the issuance of,
enter into any contract to issue, sell, pledge, encumber, or authorize
the issuance of, or otherwise permit to become outstanding, any
additional shares of Savannah Common Stock or any other capital stock of
any Savannah entity, or any stock appreciation rights, or any option,
warrant, conversion, or other equity right;
o adjust, split, combine or reclassify any shares of Savannah Common Stock
or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of Savannah Common Stock or
sell, lease, mortgage or otherwise dispose of or otherwise encumber any
shares of capital stock of any Savannah subsidiary (unless any such
shares of stock are sold or otherwise transferred to another Savannah
entity) or any asset having a book value in excess of $25,000 other than
in the ordinary course of business for reasonable and adequate
consideration;
o except for purchases of U.S. Treasury securities, U.S. Government agency
securities or obligations of the State of Georgia, or any subdivisions
thereof, which have maturities of seven years or less, purchase any
securities or make any material investment, either by purchase of stock
of securities, contributions to capital, asset transfers, or purchase of
any assets, in any entity other than a wholly owned Savannah subsidiary,
or otherwise acquire direct or indirect control over any entity, other
than in connection with (i) internal reorganizations or consolidations
involving existing subsidiaries, (ii) foreclosures in the ordinary
course of business, (iii) acquisitions of control by a depository
institution subsidiary in its fiduciary capacity, or (iv) the creation
of new wholly owned subsidiaries organized to conduct or continue
activities otherwise permitted by the Merger Agreement;
o grant any increase in compensation or benefits to the employees or
officers of any Savannah entity, except in accordance with past practice
as previously disclosed to Bryan by Savannah 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 the
Merger Agreement and previously disclosed to Bryan by Savannah or the
provisions of any applicable program or plan adopted by its Board of
Directors prior to the date of the Merger Agreement; enter into or amend
any severance agreements with officers of any Savannah entity; grant any
material increase in fees or other increases in compensation or other
benefits to directors of any Savannah entity except in accordance with
past practice previously disclosed to Bryan by Savannah; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits or other equity rights;
o enter into or amend any employment contract between any Savannah entity
and any person (unless such amendment is required by law) that the
Savannah entity 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;
o adopt any new employee benefit plan of any Savannah entity or terminate
or withdraw from, or make any material change in or to, any existing
employee benefit plans of any Savannah entity 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
make any distributions from such employee benefit plans except as
required by law, the terms of such plans, or consistent with past
practice;
o 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 applicable tax laws or regulatory accounting requirements
or GAAP;
o commence any litigation other than in accordance with past practice or
settle any litigation involving any liability of any Savannah entity for
material money damages or restrictions upon the operations of any
Savannah entity; or
o except in the ordinary course of business, enter into, modify, amend or
terminate any material contract (including any loan contract with an
unpaid balance exceeding $25,000) or waive, release, compromise or
assign any material rights or claims.
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EXPENSES AND FEES
The Merger Agreement provides that, except as otherwise provided in the
Merger Agreement, each of Savannah and Bryan will bear and pay all direct costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated under the Merger Agreement, 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 to the Merger Agreement will bear and pay one-half of the
filing fees payable in connection with the Registration Statement and the Joint
Proxy Statement/Prospectus and printing costs incurred in connection with the
printing of the Registration Statement and the Joint Proxy Statement/Prospectus.
Notwithstanding the foregoing, the Merger Agreement provides that:
(i) if the Merger Agreement is terminated by either party (provided
that the terminating party is not then in material breach of any of its
representations, warranties, covenants, or other agreements contained
within the Merger Agreement): because of a material breach by the other
party of its representations and warranties contained within the Merger
Agreement that cannot or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach and which
breach is reasonably likely, in the opinion of the nonbreaching party, to
result in, individually or in the aggregate, a material adverse effect on
the breaching party; in the event of a material breach by either party of
any covenant or agreement contained in the Merger Agreement which cannot
be or has not been cured within 30 days after the giving of written notice
to the breaching party of such breach; because the shareholders of the
other party fail to vote their approval of the Merger (that is, the
failure by the shareholders of Bryan to approve the Merger Agreement and
the transactions contemplated thereby at the Bryan Special Meeting, or the
failure by the shareholders of Savannah to approve the issuance of shares
of Savannah Common Stock pursuant to the Merger Agreementat the Savannah
Special Meeting, as the case may be); or in the event that any of the
conditions precedent to the obligations of either party to consummate
the Merger cannot be satisfied or fulfilled by December 31, 1998
(but only on the basis of the failure of such party to satisfy
specified conditions set forth in the Merger Agreement), or
(ii) if the Merger is not consummated as a result of the failure of
the other party to satisfy specified conditions set forth in the Merger
Agreement,
then the non-terminating party will promptly pay to the terminating party all
the out-of-pocket costs and expenses of the terminating party, including costs
of counsel, investment bankers, actuaries and accountants up to but not
exceeding an additional $100,000, excluding percentage based fees payable to a
consultant or broker retained by the terminating party.
Furthermore, the Merger Agreement provides that, if, after the date of the
execution of the Merger Agreement and within twelve (12) months following
(i) any termination of the Merger Agreement by either party (provided
that such party is not then in material breach of any of its
representations, warranties, covenants, or other agreements contained
within the Merger Agreement): because of a material breach by the other
party of its representations and warranties contained within the Merger
Agreement that cannot or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach and which
breach is reasonably likely, in the opinion of the non-breaching party, to
have, individually or in the aggregate, a material adverse effect on the
breaching party; in the event of a material breach by the other party of
any covenant or agreement contained in the Merger Agreement which cannot
be or has not been cured within 30 days after the giving of written notice
to the breaching party of such breach; or in the event that any of the
conditions precedent to the obligations of the other party to consummate
the Merger cannot be satisfied or fulfilled by December 31, 1998 (but only
on the basis of the failure of such party to satisfy specified conditions
set forth in the Merger Agreement), or any termination by either party to
the Merger Agreement due to the failure of the other party's shareholders
to approve the Merger Agreement and the transactions contemplated thereby
or the issuance of shares of Savannah Common Stock pursuant to the Merger
Agreement, as the case may be, or
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(ii) a failure to consummate the Merger by reason of any failure of
the other party to satisfy specified conditions set forth in the Merger
Agreement,
and any third-party acquires, merges with, combines with, purchases a
significant amount of the assets of, or engages in any other business
combination with, or purchases any equity securities involving an acquisition of
20% or more of the voting stock of the non-terminating party, or enters into any
binding agreement to do any of the foregoing (collectively, a "Business
Combination"), such third-party that is a party to the Business Combination will
pay to the terminating party, prior to the earlier of consummation of the
Business Combination or execution of anyletter of intent or definitive agreement
with the non-terminating party relating to such Business Combination, an amount
in cash equal to the sum of (x) the direct costs and expenses or portion thereof
incurred by or on behalf of the terminating party in connection with the
transactions contemplated by the Merger Agreement, plus (y) 5% of the aggregate
fair market value of the consideration received by the shareholders of the
non-terminating party in such Business Combination, less (z) any amounts
previously paid by the non-terminating party to the terminating party.
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 Bryan will be carried forward and
recorded on the financial statements of Savannah 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 Bryan Common Stock
must be exchanged for Savannah Common Stock with substantially similar terms.
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 Time.
For information concerning certain conditions to be imposed on the exchange
of Bryan Common Stock for Savannah Common Stock in the Merger by affiliates of
Bryan and certain restrictions to be imposed on the transferability of the
Savannah 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 Savannah Common Stock."
RESALES OF SAVANNAH COMMON STOCK
The shares of Savannah Common Stock issued in connection with the Merger
will be freely transferable under the Securities Act, except for shares issued
to any shareholder who may be deemed to be an "affiliate" (generally including,
without limitation, directors, certain executive officers, and beneficial owners
of 10% or more of any class of capital stock) of Bryan for purposes of Rule 145
under the Securities Act as of the date of the Annual Meeting or for purposes of
applicable interpretations regarding pooling-of-interests accounting treatment.
Such affiliates may not sell, transfer or otherwise dispose of their interests
in, or reduce their risk relative to, any shares of Savannah Common Stock
acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act or other applicable exemption
from the registration requirements of the Securities Act and until such time as
financial results covering at least 30 days of combined operations of Savannah
and Bryan after the consummation of the Merger have been published. Savannah may
place restrictive legends on certificates representing Savannah Common Stock
issued to all persons who are deemed to be "affiliates" of Bryan under Rule 145.
In addition, Bryan has agreed to use its reasonable efforts to cause each person
or entity that is an "affiliate" to enter into a written agreement in
substantially the form attached to the Merger Agreement relating to such
restrictions on sale or other transfer. Such agreements by Bryan affiliates are
conditions to the obligation of Savannah to close the Merger. This Joint Proxy
Statement/Prospectus does not cover resales of Savannah Common Stock received by
any person who may be deemed to be an affiliate of Bryan.
STOCK OPTION AGREEMENTS
As an inducement and condition to Savannah's willingness to enter into the
Merger Agreement, Bryan entered into the Bryan Stock Option Agreement with
Savannah, and as an inducement and condition to Bryan's willingness to enter
into the Merger Agreement, Savannah entered into the Savannah Stock Option
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Agreement with Bryan. Pursuant to the Stock Option Agreements, Bryan granted the
Bryan Option to Savannah and Savannah granted the Savannah Option to Bryan. The
purchase of any shares of Bryan Common Stock or Savannah Common Stock pursuant
to the Options is subject to compliance with applicable law, including receipt
of any necessary approvals under the BHC Act.
For purposes of the following summary of the material provisions of the
Stock Option Agreements, the term (i) "Issuer" means Savannah with respect to
the Savannah Stock Option Agreement and Bryan with respect to the Bryan Option
Agreement, and (ii) "Grantee" means Bryan with respect to the Savannah Stock
Option Agreement and Savannah with respect to the Bryan Stock Option Agreement.
If Grantee is not in material breach of the related Stock Option Agreement
or the Merger Agreement and if no injunction or other court order against
delivery of shares covered by the related Option is in effect, Grantee may
exercise the Option, in whole or in part, at any time and from time to time
following the happening of certain events (each a "Purchase Event"), including:
(i) without Grantee's prior written consent, Issuer taking certain
actions (each an "Acquisition Transaction"), including authorizing,
recommending, proposing, or entering into an agreement with any third
party to effect (a) a merger, consolidation or similar transaction
involving Issuer or any of its subsidiaries (other than transactions
solely between Issuer's subsidiaries), (b) the sale, lease, exchange or
other disposition of 25% or more of the consolidated assets of Issuer and
its subsidiaries, or (c) the issuance, sale or other disposition of 25% or
more of the voting power of Issuer or any of its subsidiaries, in each
case except as otherwise permitted by the Merger Agreement or the related
Stock Option Agreement; or
(ii) any third party acquiring or having the right to acquire
beneficial ownership of 25% or more of the then-outstanding shares of
Issuer Common Stock.
Notwithstanding the foregoing, the related Option will terminate upon the
earliest to occur of certain events, including:
(i) the Effective Time;
(ii) termination of the Merger Agreement prior to the occurrence of
a Purchase Event or a Preliminary Purchase Event (as defined below) (other
than a termination by Grantee under certain circumstances (each a "Default
Termination"));
(iii) 12 months after a Default Termination (PROVIDED, that if,
within 12 months after such termination of the Merger Agreement, a
Purchase Event or a Preliminary Purchase Event occurs, then
notwithstanding anything to the contrary contained in the related Stock
Option Agreement, the related Option will terminate 12 months after the
first occurrence of such an event); and
(iv) 12 months after any termination of the Merger Agreement (other
than a Default Termination) following the occurrence of a Purchase Event
or a Preliminary Purchase Event.
The term "Preliminary Purchase Event" means the occurrence of certain
events, including:
(i) the commencement by any third party of a tender offer or the
filing of a registration statement under the Securities Act by a third
party with respect to an exchange offer to purchase 25% or more of the
outstanding shares of Issuer Common Stock; or
(ii) the failure of the shareholders of Issuer to approve the Merger
Agreement, the failure of Issuer to hold a meeting of shareholders at
which the shareholders of Issuer would have voted on the approval of the
Merger Agreement (or Issuer's cancellation of such a meeting of
shareholders) prior to termination of the Merger Agreement, or the
withdrawal or modification by the Issuer's Board of Directors in a manner
adverse to Grantee of the recommendation of Issuer's Board of Directors
with respect to the Merger Agreement, in each case after a third party
has:
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(a) made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction;
(b) commenced a tender offer or filed a registration statement under
the Securities Act with respect to an exchange offer; or
(c) filed an application or given a notice under certain federal
statutes relating to the regulation of banks and other financial
institutions seeking the consent to an Acquisition Transaction from any
federal or state governmental or regulatory authority or agency.
Upon the occurrence of certain events set forth in the related Stock Option
Agreement, at the election of Grantee the related Option (or shares issued
pursuant to the exercise thereof) must be repurchased by Issuer (the
"Repurchase") or converted into, or exchanged for, an option of another
corporation or Issuer (the "Substitute Option"). In addition, the related Stock
Option Agreement grants certain registration rights ("Registration Rights") to
Grantee with respect to the shares represented by the related Option. The terms
of such Repurchase, Substitute Option and Registration Rights, are set forth in
the Stock Option Agreements.
The Stock Option Agreements and the Options are intended to increase the
likelihood that the Merger will be consummated according to the terms set forth
in the Merger Agreement, and may be expected to discourage offers by third
parties to acquire Bryan or Savannah prior to the Merger.
To the knowledge of Bryan and Savannah, no event giving rise to exercise of
either of the Options has occurred as of the date of this Joint Proxy
Statement/Prospectus.
Copies of the Stock Option Agreements are set forth as exhibits to the
Merger Agreement, and reference is made thereto for the complete terms of the
Stock Option Agreements and the Options. The foregoing discussion is qualified
in its entirety by reference to the Stock Option Agreements.
BRYAN DIRECTORS' AGREEMENTS
The current directors of Bryan have entered into the Directors' Agreements,
which provide that they will vote their shares of Bryan Common Stock in favor of
the Merger. The Directors' Agreements also provide that such directors of Bryan
will not approve or ratify any agreement pursuant to which their shares of Bryan
Common Stock would be transferred to any other party as a result of a
consolidation, merger, reorganization, or acquisition.
Each Bryan director, other than Mr. Stafford, also agreed in the Directors'
Agreement that, for a period of two years after the Merger, the director would
not directly or indirectly serve as a consultant to, or "management official"
of, or be or become a 2% or greater shareholder of, any financial institution
having an office in Bryan County, Georgia or Chatham County, Georgia.
DISSENTERS' RIGHTS
If the Merger Agreement and the transactions contemplated thereby are
consummated, any shareholder of Bryan who properly dissents from the Merger in
connection with the Bryan Special Meeting may be entitled to receive in cash the
fair value of such shareholder's shares of Bryan Common Stock determined
immediately prior to the Merger, excluding any appreciation or depreciation in
anticipation of the Merger. FAILURE TO COMPLY WITH THE PROCEDURES PRESCRIBED BY
APPLICABLE LAW WILL RESULT IN THE LOSS OF DISSENTERS' RIGHTS.
Any shareholder of Bryan entitled to vote on the Merger Agreement has the
right to receive payment of the fair value of his or her shares of Bryan Common
Stock upon compliance with the applicable provisions of the GBCC. A record
shareholder may assert dissenters' rights as to fewer than all of the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial 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 Section
14-2-1303 of the GBCC are determined as if the shares as to which he dissents
and his other shares were registered in the names of different shareholders. Any
Bryan shareholder intending to enforce the right to dissent (i) may not vote in
favor of the Merger Agreement, and (ii) must file a written notice of intent to
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demand payment for his or her shares (the "Objection Notice") with Bryan Bancorp
of Georgia, Inc., 9971 Ford Avenue, Richmond Hill, Georgia 31324 (telephone:
(912) 756-4444, Attention: Corporate Secretary), before the vote on the proposal
to approve the Merger Agreement and the transactions contemplated thereby is
taken at the meeting. The Objection Notice must state that the shareholder
intends to demand payment for his or her shares of Bryan Common Stock if the
Merger is effected. A VOTE AGAINST APPROVAL OF THE MERGER AGREEMENT, IN AND OF
ITSELF, WILL NOT CONSTITUTE AN OBJECTION NOTICE SATISFYING THE REQUIREMENTS OF
THE GBCC.
If the Merger Agreement is approved by Bryan's shareholders at the Bryan
Special Meeting, each shareholder who has properly filed an Objection Notice and
who has not voted in favor of the Merger Agreement will be notified by Bryan of
such approval within ten days of the Bryan Special Meeting ("Dissenters'
Notice"). Such Dissenters' Notice will contain the following information: (i)
where the payment demand must be sent and where and when the certificates
representing the Bryan Common Stock must be deposited; (ii) the extent to which
the transfer of uncertificated shares will be restricted after the payment
demand is received; (iii) the 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 Dissenters' Notice is delivered); and (iv) a copy of Title 14, Chapter 2,
Article 13 of the GBCC (relating to dissenters' rights).
Following the receipt of such Dissenters' Notice, any shareholder electing
to dissent must demand payment of the fair value of such shares and deposit the
certificates representing the Bryan Common Stock in accordance with the terms
of, and by the date set out in the Dissenters' Notice. Such shareholder will
retain all other rights of a shareholder until those rights are canceled or
modified by the consummation of the Merger. A RECORD SHAREHOLDER WHO DOES NOT
DEMAND PAYMENT OR DEPOSIT SUCH HOLDER'S SHARE CERTIFICATES WHERE REQUIRED, EACH
BY THE DATE SET IN THE DISSENTERS' NOTICE, IS NOT ENTITLED TO PAYMENT FOR SUCH
HOLDER'S SHARES UNDER TITLE 14, CHAPTER 2, ARTICLE 13 OF THE GBCC.
Except as described below, within ten days of the later of the date the
proposed corporate action is taken or the date of receipt of a payment demand,
Bryan must by written notice offer to each shareholder who has properly filed a
payment demand, and who has deposited his or her certificates representing the
Bryan Common Stock, to pay an amount Bryan estimates to be a fair value for the
shareholder's shares, plus accrued interest from the Effective Time. Such offer
of payment must be accompanied by (i) certain of Bryan's recent financial
statements, (ii) a statement of Bryan's estimate of the fair value of the shares
involved, (iii) an explanation of how the interest was calculated, (iv) a
statement of the dissenter's right to demand payment under Section 14-2-1327 of
the GBCC, and (v) a copy of Title 14, Chapter 2, Article 13 of the GBCC. Any
shareholder who accepts such offer by written notice to Bryan within 30 days of
the offer, or who is deemed to have accepted such offer due to his or her
failure to respond to such offer within 30 days, will receive payment for the
dissenting Shareholder's shares within 60 days of such offer to pay or
consummation of the Merger, whichever is later. If the Merger is not consummated
within 60 days following the date set for demanding payment and depositing share
certificates, Bryan must return the deposited certificates and release the
transfer restrictions imposed on uncertified shares. If Bryan then consummates
the Merger, it must send a new Dissenters' Notice and repeat the payment demand
procedure.
In the event that Bryan fails to make any payment offer within ten days of
the later of the date the proposed corporate action is taken or the date of
receipt of a payment demand, Bryan must provide certain information to the
shareholder (the financial statements and other information required to
accompany Bryan's payment offer) within ten days after receipt of a written
demand from such dissenting shareholder for such information. Additionally, such
dissenting shareholder may, at any time within the three years following the
consummation of the Merger, notify Bryan of his own estimate of the fair value
of his shares and the interest due thereon, and demand payment of such amounts.
If (i) a dissenting shareholder is dissatisfied with an offer for payment made
by Bryan within the time period set forth above, or (ii) Bryan, having failed to
effect the Merger, does not return the deposited certificates of release the
transfer restrictions imposed on uncertificated shares within 60 days after the
date set for demanding payment, such dissenting shareholder may notify Bryan in
writing of his own estimate of the fair value of his shares and the interest due
thereon, and demand payment of such amounts. A DISSENTING SHAREHOLDER WAIVES
SUCH HOLDER'S RIGHT TO DEMAND PAYMENT UNDER SECTION 14-2-1327 OF THE GBCC UNLESS
SUCH HOLDER NOTIFIES BRYAN OF SUCH HOLDER'S DEMAND IN WRITING WITHIN 30 DAYS
AFTER BRYAN MAKES OR OFFERS PAYMENT FOR SUCH HOLDER'S SHARES.
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If such a demand for payment from any dissenting shareholder remains unsettled,
within 60 days following the receipt by Bryan of such demand for payment, Bryan
must institute proceedings in the superior court of the county where Bryan's
registered office is located (the "Court") requesting a nonjury equitable
determination of the fair value of such dissenting shareholder's shares and the
accrued interest owed to such dissenting shareholder. If Bryan fails to file
such action within the 60 day time period, Bryan must pay each dissenting
shareholder whose demand remains unsettled the amount demanded by such
dissenting shareholder. Bryan is required to make all dissenting shareholders
whose demands remain unsettled parties to the proceeding and to serve a copy of
the petition upon each such dissenting shareholder. The court may, in its
discretion, appoint an appraiser to receive evidence and recommend a decision on
the question of fair value. Each dissenting shareholder made a party to the
proceeding will be entitled to judgment for the amount which the court finds to
be the fair value of his or her shares, plus interest to the date of judgment.
The Court will determine and assess the costs and expenses of such
proceeding (including reasonable compensation for and the expenses of the
appraiser, but excluding fees and expenses of counsel and experts) against
Bryan, except that the Court may assess such costs and expenses as it deems
appropriate against any or all of the dissenting shareholders if it finds that
their demand for additional payment was arbitrary, vexatious or otherwise not in
good faith. The Court may award fees and expenses of counsel and experts in
amounts the Court finds equitable: (i) against Bryan if Bryan did not
substantially comply with the requirements of the corporation as set out in
Title 14, Chapter 2, Article 13, Part 2 of the GBCC; (ii) against either Bryan
or the dissenting shareholder(s), if the Court finds that either parties'
actions were arbitrary, vexatious or otherwise not in good faith; or (iii) if
the court finds that the services of attorneys for any dissenting shareholder
were of substantial benefit to other dissenting shareholders similarly situated,
and that the fees for those services should not be assessed against Bryan, the
court may award those attorneys reasonable fees out of the amounts awarded the
dissenting shareholders who were benefited. NO ACTION BY ANY DISSENTING
SHAREHOLDER TO ENFORCE DISSENTERS' RIGHTS MAY 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 BRYAN IN COMPLIANCE
WITH THE DISSENTERS' NOTICE AND PAYMENT OFFER REQUIREMENTS OF SECTIONS 14-2-1320
AND 14-2-1322 OF THE GBCC.
THE FOREGOING SUMMARY OF THE APPLICABLE PROVISIONS OF TITLE 14, CHAPTER 2,
ARTICLE 13 OF THE GBCC IS NOT INTENDED TO BE A COMPLETE STATEMENT OF SUCH
PROVISIONS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH SECTIONS,
WHICH ARE INCLUDED AS APPENDIX D HEREOF. THE PROVISIONS OF THE STATUTES ARE
TECHNICAL IN NATURE AND COMPLEX. IT IS SUGGESTED THAT ANY BRYAN SHAREHOLDER WHO
DESIRES TO EXERCISE THE RIGHT TO OBJECT TO THE MERGER AGREEMENT CONSULT COUNSEL.
FAILURE TO COMPLY WITH THE PROVISIONS OF THE STATUTE MAY DEFEAT A SHAREHOLDER'S
RIGHT TO DISSENT. NO FURTHER NOTICE OF THE EVENTS GIVING RISE TO DISSENTERS'
RIGHTS OR ANY STEPS ASSOCIATED THEREWITH WILL BE FURNISHED TO BRYAN
SHAREHOLDERS, EXCEPT AS INDICATED ABOVE OR OTHERWISE REQUIRED BY LAW.
Any dissenting Bryan shareholder who perfects such holder's right to be
paid the value of such holder's shares will recognize taxable gain or loss upon
receipt of cash for such shares for federal income tax purposes. See "--Federal
Income Tax Consequences."
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PRO FORMA CONDENSED FINANCIAL DATA
(UNAUDITED)
The following unaudited Pro Forma Condensed Combined Balance Sheet as of
June 30, 1998, combines the historical consolidated balance sheets of Savannah
and Bryan as if the Merger had been effective on June 30, 1998, after giving
effect to certain adjustments described in the attached Notes to Unaudited Pro
Forma Condensed Financial Information.
The unaudited Pro Forma Condensed Combined Statements of Income for the six
months ended June 30, 1998, and for the years ended December 31, 1997 and 1996,
present the combined results of operations of Savannah and Bryan as if the
Merger had been effective at the beginning of each period, after giving effect
to certain adjustments described in the attached Notes to Unaudited Pro Forma
Condensed Financial Data.
The unaudited Pro Forma Combined Financial Data and accompanying notes
reflect the application of the pooling-of-interests method of accounting for the
Merger. Under this method of accounting, the recorded assets, liabilities,
shareholders' equity, income and expenses of Savannah and Bryan are combined and
reflected at their historical amounts.
The pro forma earnings, which do not reflect any direct costs or potential
savings which may result from the Merger or the transaction and other costs
associated with effecting the Merger, are not necessarily indicative of the
results of future operations.
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<PAGE>66
<TABLE>
<CAPTION>
THE SAVANNAH BANCORP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1998
(In thousands)
(Unaudited)
PRO FORMA PRO
ADJUSTMENTS FORMA
SAVANNAH BRYAN DEBIT/CREDIT COMBINED
-------- -------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks........... $ 6,100 $ 2,602 $ 8,702
Federal funds sold................ 12,508 2,940 15,448
Securities available for sale,
at fair value..................... 40,615 8,025 48,640
Securities held to maturity....... - 3,863 3,863
Loans............................. 106,570 52,186 158,756
Less allowance for loan losses.... (1,528) (586) (2,114)
-------- -------- ------------- --------
Net loans.................... 105,042 51,600 - 156,642
Premises and equipment, net....... 2,893 1,198 4,091
Other assets...................... 2,032 815 2,847
-------- -------- ------------- --------
TOTAL ASSETS................. $169,190 $ 71,043 - $240,233
======== ======== ============= ========
LIABILITIES
Deposits:
Non interest-bearing.............. $ 19,865 $ 10,243 $ 30,108
Interest-bearing.................. 128,481 49,265 177,746
-------- -------- ------------- --------
Total deposits............... 148,346 59,508 - 207,854
Federal funds purchased and securities
sold under repurchase agreements.. 3,827 - 3,827
Federal Home Loan Bank advances... - 3,532 3,532
Other borrowings.................. - 100 100
Other liabilities................. 1,143 283 (2) 800 2,226
-------- -------- ------------- --------
TOTAL LIABILITIES............ 153,316 63,423 800 217,539
-------- -------- ------------- --------
SHAREHOLDERS' EQUITY
Common Stock...................... $ 1,783 $ 532 $ 407 $ 2,722
Contributed capital............... 8,924 5,052 (928) 13,048
Retained earnings................. 5,394 2,558 (2) (800) 7,152
Treasury stock ................... (379) (521) (3) 521 (379)
Unrealized gains (losses) on
securities available for sale,
net of tax...................... 152 (1) 151
-------- -------- ------------- --------
Total shareholders' equity.. 15,874 7,620 (800) 22,694
-------- -------- ------------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY......... $169,190 $ 71,043 - $240,233
======== ======== ============= ========
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
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<PAGE>67
<TABLE>
<CAPTION>
THE SAVANNAH BANCORP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(In thousands, except per share data)
(Unaudited)
PRO FORMA PRO FORMA
SAVANNAH BRYAN ADJUSTMENTS COMBINED
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income.................. $ 6,339 $ 2,997 $ 9,336
Interest expense................. 3,037 1,259 4,296
-------- --------- ---------- ---------
Net interest income.............. 3,302 1,738 5,040
Provision for loan losses........ 100 90 190
-------- --------- ---------- ---------
Net interest income after
provision for loan losses...... 3,202 1,648 4,850
-------- --------- ---------- ---------
Other income:
Service charges on deposit
accounts.................... 212 155 367
Mortgage origination fees..... 265 123 388
Other income.................. 151 133 284
-------- --------- ---------- ---------
Total other operating revenue. 628 411 1,039
Gains on sales of assets...... - 57 57
-------- --------- ---------- ---------
Total other income......... 628 468 1,096
-------- --------- ---------- ---------
Other expense:
Salaries and employee benefits 1,286 688 1,974
Occupancy and equipment expense 361 156 517
Other operating expenses...... 662 353 1,015
-------- --------- ---------- ---------
Total other expense........ 2,309 1,197 3,506
-------- --------- ---------- ---------
Income before provision for
income taxes..................... 1,521 919 2,440
Provision for income taxes....... 535 299 834
-------- --------- ---------- ---------
Net income....................... $ 986 $ 620 $ 1,606
======== ========= ========== =========
Earnings per share
Basic........................ $ 0.58 $ 1.23 $ 0.61
======== ========= ========== =========
Diluted...................... $ 0.54 $ 1.20 $ 0.58
======== ========= ========== =========
Weighted average shares outstanding
Basic........................ 1,714 503 428 2,645
======== ========= ========== =========
Diluted...................... 1,815 518 440 2,773
======== ========= ========== =========
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
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<PAGE>68
<TABLE>
<CAPTION>
THE SAVANNAH BANCORP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands, except per share data)
(Unaudited)
PRO FORMA PRO FORMA
SAVANNAH BRYAN ADJUSTMENTS COMBINED
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income.................. $11,132 $ 5,535 $ 16,667
Interest expense................. 5,084 2,259 7,343
-------- --------- ---------- ---------
Net interest income.............. 6,048 3,276 9,324
Provision for loan losses........ 300 180 480
-------- --------- ---------- ---------
Net interest income after
provision for loan losses...... 5,748 3,096 8,844
-------- --------- ---------- ---------
Other income:
Service charges on deposit
accounts.................... 404 345 749
Mortgage origination fees..... 356 123 479
Other income.................. 191 250 441
-------- --------- ---------- ---------
Total other operating revenue. 951 718 1,669
Gains on sales of securities.. 2 2 4
-------- --------- ---------- ---------
Total other income......... 953 720 1,673
-------- --------- ---------- ---------
Other expense:
Salaries and employee benefits... 2,192 1,213 3,405
Occupancy and equipment expense.. 652 314 966
Other operating expenses...... 1,172 551 1,723
-------- --------- ---------- ---------
Total other expense........ 4,016 2,078 6,094
-------- --------- ---------- ---------
Income before provision for income 2,685 1,738 4,423
taxes............................
Provision for income taxes....... 932 580 1,512
-------- --------- ---------- ---------
Net income....................... $ 1,753 $ 1,158 $ 2,911
======== ========= ========== =========
Earnings per share
Basic........................ $ 1.03 $ 2.30 $ 1.10
======== ========= ========== =========
Diluted...................... $ 0.97 $ 2.25 $ 1.06
======== ========= ========== =========
Weighted average shares outstanding
Basic........................ 1,708 504 428 2,640
======== ========= ========== =========
Diluted...................... 1,802 516 439 2,757
======== ========= ========== =========
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
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<PAGE>69
<TABLE>
<CAPTION>
THE SAVANNAH BANCORP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share data)
(Unaudited)
PRO FORMA PRO FORMA
SAVANNAH BRYAN ADJUSTMENTS COMBINED
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income.................. $ 9,617 $ 4,827 $14,444
Interest expense................. 4,473 1,915 6,388
-------- --------- ---------- ---------
Net interest income.............. 5,144 2,912 8,056
Provision for loan losses........ 195 90 285
-------- --------- ---------- ---------
Net interest income after
provision for loan losses...... 4,949 2,822 7,771
-------- --------- ---------- ---------
Other income:
Service charges on deposit 373 369 742
accounts....................
Mortgage origination fees..... 200 11 211
Other income.................. 81 168 249
-------- --------- ---------- ---------
Total other operating revenue. 654 548 1,202
Gains (losses) on sales of
securities.................. - - -
-------- --------- ---------- ---------
Total other income......... 654 548 1,202
-------- --------- ---------- ---------
Other expense:
Salaries and employee benefits... 1,719 1,003 2,722
Occupancy and equipment expense.. 534 324 858
Other operating expenses...... 1,037 514 1,551
-------- --------- ---------- ---------
Total other expense........ 3,290 1,841 5,131
-------- --------- ---------- ---------
Income before provision for
income taxes.................. 2,313 1,529 3,842
Provision for income taxes....... 806 508 1,314
-------- --------- ---------- ---------
Net income....................... $ 1,507 $ 1,021 $ 2,528
======== ========= ========== =========
Earnings per share
Basic........................ $ 0.89 $ 2.01 $ 0.96
======== ========= ========== =========
Diluted...................... $ 0.85 $ 1.98 $ 0.93
======== ========= ========== =========
Weighted average shares outstanding
Basic........................ 1,701 508 432 2,621
======== ========= ========== =========
Diluted...................... 1,763 515 438 2,716
======== ========= ========== =========
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
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NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL DATA
NOTE 1 -- BASIS OF PRESENTATION
Savannah and Bryan entered into the Merger Agreement as of February 11,
1998. The Merger Agreement calls for a tax-free exchange of 1.85 shares of
Savannah Common Stock for each share of Bryan Common Stock.
The unaudited Pro Forma Condensed Financial Data has been prepared assuming
that the Merger will be accounted for under the pooling-of-interests method and
is based on the historical consolidated financial statements of Savannah and
Bryan.
The pro forma adjustments represent management's best estimate based on
available information at this time. Actual adjustments will differ from those
reflected in the unaudited Pro Forma Condensed Financial Data.
The unaudited Pro Forma Condensed Financial Data should be read in
conjunction with the historical consolidated financial statements and the
related notes thereto of each of Savannah and Bryan incorporated by reference
herein.
NOTE 2 -- MERGER AND INTEGRATION COSTS
In connection with the Merger, Savannah and Bryan expects to incur
after-tax merger-related costs of approximately $800,000 of which approximately
$600,000 comprises advisory, legal, accounting and printing costs associated
with the Merger, and estimated after-tax integration costs of approximately
$200,000 relating to data processing contract termination costs with another
data processing vendor on a contract Bryan entered into in late 1997, as well as
severance and other associated discontinuance costs. These costs will be
expensed upon closing of the transaction. No significant capital costs are
expected.
NOTE 3 -- SHAREHOLDERS' EQUITY
In conjunction with the Merger, Savannah will exchange 1.85 shares of
Savannah Common Stock for each outstanding share of Bryan Common Stock. Bryan
had 506,508 shares of Bryan Common Stock outstanding as of June 30, 1998. In
addition, Bryan has 25,750 shares held in treasury which will be retired.
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<PAGE>71
EFFECT OF THE MERGER ON THE RIGHTS OF SHAREHOLDERS
AS A RESULT OF THE MERGER, HOLDERS OF BRYAN COMMON STOCK WILL BE EXCHANGING
THEIR SHARES OF A GEORGIA CORPORATION GOVERNED BY THE GBCC AND BRYAN'S ARTICLES
OF INCORPORATION (THE "BRYAN ARTICLES"), AND BYLAWS, FOR SHARES OF SAVANNAH
COMMON STOCK, A GEORGIA CORPORATION GOVERNED BY THE GBCC AND SAVANNAH'S ARTICLES
OF INCORPORATION (THE "SAVANNAH ARTICLES"), AND BYLAWS. CERTAIN SIGNIFICANT
DIFFERENCES EXIST BETWEEN THE RIGHTS OF BRYAN SHAREHOLDERS AND THOSE OF SAVANNAH
SHAREHOLDERS. THE DIFFERENCES DEEMED MATERIAL BY BRYAN AND SAVANNAH ARE
SUMMARIZED BELOW. THE FOLLOWING DISCUSSION IS NECESSARILY GENERAL; IT IS NOT
INTENDED TO BE A COMPLETE STATEMENT OF ALL THE DIFFERENCES AFFECTING THE RIGHTS
OF SHAREHOLDERS, AND THEIR RESPECTIVE ENTITIES, AND IT IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE GBCC AS WELL AS TO SAVANNAH'S ARTICLES AND BYLAWS
AND BRYAN'S ARTICLES AND BYLAWS.
AUTHORIZED CAPITAL STOCK
SAVANNAH. The Savannah Articles authorize the issuance of an aggregate of
20,000,00 shares of Savannah Common Stock, par value $1.00 per share, of which
1,782,598 shares were issued, 1,736,798 shares were outstanding, and 45,800
shares were held in treasury as of the Savannah Record Date. The Savannah
Articles also authorize the issuance, in one or more series, of up to 10,000,000
shares of preferred stock ("Savannah Preferred Stock").
Shares of Savannah Common Stock have unlimited voting rights and are
entitled to receive the net assets of Savannah upon the dissolution of the
corporation. The Savannah Bylaws provide that each share of Savannah Common
Stock is entitled to one vote per share for all purposes.
Savannah's Board of Directors may authorize the issuance of authorized but
unissued shares of Savannah Common Stock without further action by Savannah's
shareholders. Savannah's shareholders do not have the pre-emptive right to
purchase or subscribe to any unissued authorized shares of Savannah Common Stock
or Savannah Preferred Stock or any option or warrant for the purchase thereof.
The authority to issue additional shares of Savannah Common Stock provides
Savannah with the flexibility necessary to meet its future needs without the
delay resulting from seeking shareholder approval. The authorized but unissued
shares of Savannah Common Stock will be issuable from time to time for any
corporate purpose, including, without limitation, stock splits, stock dividends,
employee benefit and compensation plans, acquisitions, and public or private
sales for cash as a means of raising capital. Such shares could be used to
dilute the stock ownership of persons seeking to obtain control of Savannah. In
addition, the sale of a substantial number of shares of Savannah Common Stock to
persons who have an understanding with Savannah concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Savannah
Common Stock (or the right to receive Savannah Common Stock) to Savannah
shareholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Savannah.
BRYAN. Bryan's authorized capital stock consists of 10,000,000 shares of
Bryan Common Stock, par value $1.00 per share, of which 532,258 shares were
issued, 506,508 shares were outstanding, and 25,750 shares were held in treasury
as of the Bryan Record Date. Each share of Bryan Common Stock is entitled to one
vote per share for all purposes. Bryan's shareholders do not have the preemptive
right to purchase or subscribe to any unissued authorized shares of Bryan Common
Stock or any option or warrant for the purchase thereof. In addition, the Board
of Directors of Bryan has the ability to increase or decrease the number of
issued and outstanding shares of Bryan Common Stock without the approval of the
shareholders, within the maximum number of shares authorized by the Bryan
Articles and the minimum capitalization requirements of the Bryan Articles or
the GBCC.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
SAVANNAH. With several specific exceptions, the Savannah Articles and
Bylaws are generally silent with respect to amendment of the Savannah Articles,
and thus, the GBCC otherwise dictates the requirements for making such an
amendment. The GBCC generally provides that other than in the case of certain
routine amendments which may be made by a corporation's board of directors
without shareholder action (such as changing the corporate name), and other
amendments which the GBCC specifically allows without shareholder action, the
corporation's
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<PAGE>72
board of directors must recommend any amendment of the Savannah Articles to the
shareholders (unless the board elects to make no such recommendation because of
a conflict of interest or other special circumstances, and the board
communicates the reasons for its election to the shareholders) and the
affirmative vote of a majority of the votes entitled to be cast on the amendment
by each voting group entitled to vote on the amendment (unless the GBCC, the
articles of incorporation, or the board require a greater vote or a vote by
voting groups) is required to amend a corporation's articles of incorporation.
The Savannah Articles provide that the provisions regarding the approval
required for certain business combinations may only be changed by the
affirmative vote of at least 75% of the outstanding voting shares of the
corporation and the affirmative vote of the holders of at least 75% of the
outstanding voting shares of the corporation other than those of which are
interested shareholders is the beneficial owner. The Savannah Articles also
provide that the provisions regarding the applicability of Article II, Parts 2
and 3 of the GBCC to Savannah may only be repealed by both the affirmative vote
of at least two-thirds of the continuing directors and a majority of the votes
entitled to be cast by voting shares of Savannah, in addition to any other vote
required by the Savannah Articles .
The Savannah Bylaws generally provide that the Bylaws may be altered or
amended by the Savannah Board of Directors at any annual or special meeting of
the shareholders or by the Savannah Board of Directors at any regular or special
meeting of the Savannah Board of Directors.
BRYAN. The Bryan Articles and Bylaws also are generally silent with respect
to the amendment of the Bryan Articles, and thus, the GBCC dictates the
requirements for making such amendments. The same provisions of the GBCC
regarding amendment of the Savannah Articles discussed above also apply to the
amendment of the Bryan Articles.
In general, Bryan's Bylaws may be altered or amended by the shareholders or
the Bryan Board of Directors at any regular or special meeting of the Bryan
Board of Directors; however, if such action is to be taken at a meeting of the
shareholders, notice of the general nature of the proposed change in the Bryan
Bylaws is to be given in the notice of the meeting. Action taken by the
shareholders with respect to the Bryan Bylaws must be taken by an affirmative
vote of a majority of all shares entitled to elect directors, and action by the
Bryan Board of Directors with respect to the Bryan Bylaws must be taken by an
affirmative vote of a majority of all directors then holding office. In
addition, the Bryan Bylaws require that there must be approval by the holders of
at least two-thirds of the outstanding shares of Bryan Common Stock of any sale
or merger of Bryan.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
SAVANNAH. Savannah's Bylaws generally provide that the number of directors
constituting the Savannah Board of Directors shall be between five and 15
members; however, Savannah's Board of Directors has approved, contingent on
consummation of the Merger, an amendment to the Savannah Bylaws increasing the
maximum number of directors from 15 to 18. The Savannah Board of Directors is
classified. The Savannah Articles provide that Savannah's Board of Directors is
divided into three classes, with each class to be as nearly equal in number as
possible. The directors in each class serve three-year terms of office. The
effect of Savannah having a classified Board of Directors is that only
approximately one-third of the members of the Savannah Board of Directors are
elected each year, which effectively requires two annual meetings for Savannah's
shareholders to change a majority of the members of the Savannah Board of
Directors. The Savannah Bylaws provide that in the event of a vacancy on the
Savannah Board of Directors, including any vacancy created by reason of an
increase in the number of directors, such vacancy may be filled by vote of a
majority of the remaining directors, though less than a quorum, for a term
corresponding to the unexpired term of his or her predecessor in office.
Savannah shareholders do not have cumulative voting rights with respect to the
election of directors. All elections for directors are decided by a majority of
the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present.
BRYAN. Like the Savannah Board of Directors, the Bryan Board is also
classified. Although the Bryan Bylaws provide for ten directors, the number of
directors may be increased or decreased by the Bryan Board of Directors or the
Bryan shareholders from time to time by amendment to the Bryan Bylaws. The Bryan
Articles provide that the numbers of directors shall not be less than three.
Directors are elected by the affirmative vote of a majority of the shares
represented at the annual meeting of Bryan shareholders.
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<PAGE>73
REMOVAL OF DIRECTORS
SAVANNAH. Under the Savannah Articles, any one or more directors of
Savannah may be removed from office, with or without cause. Such removal must be
effected by the affirmative vote of the holders of at least 75% of the
outstanding shares of Savannah, and the affirmative vote of the holders of at
least 75% of the outstanding voting shares of Savannah other than those of which
an interested shareholder, as defined in the Savannah Articles, is a beneficial
owner.
BRYAN. The Bryan Articles provide, that any director may be removed from
office, but only for cause, by the affirmative vote at a meeting called for that
purpose, of at least two-thirds in interest of the holders of voting stock of
Bryan issued and outstanding.
The Savannah Articles provide less restrictive requirements for the removal
of Savannah directors than do the Bryan Articles and Bylaws with respect to
Bryan directors. The effect of these differences in the parties' governing
documents is that the directors of Savannah are afforded less protection against
their removal by the vote of the Savannah shareholders than are the directors of
Bryan.
INDEMNIFICATION
SAVANNAH. The Savannah Articles generally provide that any director will be
indemnified against liability to Savannah or its shareholders for monetary
damages for breach of the duty of care as a director or officer; provided,
however, that Savannah will not indemnify any director for any liability or
expenses incurred by such director (i) for any appropriation, in violation of
his duties, of any business opportunity of Savannah; (ii) for any acts or
omissions which involve intentional misconduct or a knowing violation of law;
(iii) for the types of liability set forth in Section 14-2-832 of the GBCC; or
(iv) for any transaction from which the director derives an improper personal
benefit. The Savannah Articles further provide that, notwithstanding the
foregoing, the liability of a director or officer shall be eliminated or limited
to the fullest extent permitted by the GBCC. Savannah's Bylaws provide that
expenses incurred by any persons who are, were, or are threatened to be made a
party to any threatened, pending, or completed action, suit or proceeding,
whether formal or informal, by reason of the fact that he is or was a director,
officer, employee or agent of Savannah, or was serving at the request of
Savannah as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, may be paid by Savannah
in advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if it is ultimately
determined he is not entitled to be indemnified by Savannah.
BRYAN. The Bryan Articles provide that no Bryan directors shall be
personally liable to Bryan or its stockholders for monetary damages for breach
of care or other duty as a director. However, this provision does not eliminate
or limit the liability of a director (i) for appropriation, in violation of his
duties, of any business opportunity of Bryan, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
(iii) for the type of liability set forth in Section 14-2-154 of the GBCC (or
any successor provisions), or (iv) for any transaction from which the director
derived an improper personal benefit. The Articles provide that, in the event of
modification of the GBCC, the liability of each director is to be eliminated or
limited to the fullest extent permitted by the GBCC as amended.
The Bryan Bylaws provide for the indemnification of directors, officers,
employees, or agents of Bryan for any action or proceeding, whether by Bryan or
by persons other than Bryan, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith, provided such person acted in a manner which he reasonably believed
to be in the best interests of the corporation, and, with respect to criminal
actions by persons other than Bryan, he had no reasonable cause to believe his
conduct was unlawful. However, in actions by Bryan, the Bylaws provide that no
indemnification shall be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to Bryan, unless the
court in which such action or suit was brought determines that such person is
fairly and reasonably entitled to indemnity for such expenses. Such
indemnification must be made only as authorized by Bryan upon a determination
that such
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<PAGE>74
indemnification is proper in the circumstances because such person has met the
applicable standard of conduct delineated above.
The Bryan Bylaws also provide that any officer, director, employee, or
agent who successfully defends a suit or proceeding shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith. The indemnification provisions state that they are
non-exclusive of any other rights to which the person seeking indemnification or
advancement of expenses hereunder may be entitled under the Bryan Bylaws or any
resolution or agreement that would come before the shareholders. The Bryan
Bylaws also allow for the purchase of insurance by Bryan against any liability
of such person arising from his duties in such position, and the survival of
such indemnification to that person's heirs, executors, and administrators. The
Bylaws also mandate the notification of Bryan shareholders of any
indemnification paid to any such persons.
SPECIAL MEETINGS OF SHAREHOLDERS
SAVANNAH. Savannah's Bylaws provide that such meetings may be called at any
time by the President, or, by any holder or holders of at least 25% of all
issued and outstanding capital stock of Savannah upon written request to the
President.
BRYAN. Bryan's Bylaws provide that such meetings may be called at any time
by the President or the Chairman of the Board, or, by any holder or holders of
at least 25% of all issued and outstanding capital stock of Bryan upon written
request to the President.
ACTIONS BY SHAREHOLDERS WITHOUT A MEETING
SAVANNAH. The Savannah Bylaws provide that any action that may be taken at
a meeting of the shareholders of Savannah may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by all of the
shareholders entitled to vote with respect to the subject matter thereof and any
further requirements of law pertaining to such consents have been complied with.
BRYAN. The Bryan Bylaws provide that any action that may be taken at a
meeting of Bryan shareholders may be taken without a meeting if written consent,
setting forth the action so taken, shall be signed by all the shareholders
entitled to vote with respect to the subject matter thereof. However, no consent
is effective as approval of a plan or merger or plan of consolidation pursuant
to the GBCC unless (1) prior to the execution of the consent, the shareholders
have been given (i) a clear and concise statement that if the plan of merger or
consolidation is effected, any dissenting shareholders are entitled to be paid
the fair value of their shares upon prior written objection to the plan and
compliance with the GBCC regarding the rights of dissenting shareholders, (ii) a
copy of the plan of merger or consolidation or any outline of the material
features of the plan, and (iii) a copy of the most recent annual balance sheet
and annual profit and loss statement of each of the merging or consolidating
corporations and of each other's corporate securities which are to be delivered
pursuant to the plan of merger or consolidation; or (2) the written consent
itself conspicuously and specifically states that waiver of the right to receive
such information is expressly made.
MERGERS, CONSOLIDATIONS AND SALES OF ASSETS
SAVANNAH. The Savannah Articles generally require the unanimous approval of
the "continuing directors" of Savannah (as defined in the Savannah Articles) for
"business combinations" with an "interested shareholder" (generally, the
beneficial owner of 10% of the outstanding voting stock of Savannah), provided
that the continuing directors constitute at least three members of the board of
directors at the time of such approval or that such business combinations must
be recommended by at least two-thirds of the continuing directors and approved
by a majority of the votes entitled to be cast by holders of voting shares,
other than voting shares beneficially owned by the interested shareholder who
is, or whose affiliate is, a party to the business combination. However such
vote shall not be required under the Savannah Articles if: (A) the aggregate
amount of the cash, and the fair market value of consideration other than cash,
to be received by holders of any class or series of common or preferred shares
is equal to the highest of (i) the highest per share price paid by the
interested shareholder for any shares of the same class or series acquired by it
in the greater of (a) the previous two years or (b) the transaction in which it
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<PAGE>75
became an interested shareholder, (ii) the fair market value per share of such
class or series on the higher of the announcement and determination dates, or
(iii) the highest preferential amount per share to which the holders of
preferred shares are entitled in the event of liquidation, dissolution, or
winding up of Savannah; (B) the consideration to be received by holders of any
class or series of outstanding shares is to be in cash or in the same form as
the interested shareholder has previously paid for shares of any class or series
of shares; (C) after the interested shareholder has become an interested
shareholder and prior to the consummation of such business combination there
shall have been (unless approved by a majority of the continuing directors): (a)
no failure to declare and pay at the regular date therefor any full periodic
dividends on any outstanding preferred shares of Savannah, (b) no reduction in
the annual rate of dividends paid on any class of common shares, except as
necessary to reflect any subdivision of the shares, (c) any increases in the
annual rate of dividends as are necessary to reflect any reclassification,
including any reverse share split, recapitalization, reorganization, or any
similar transaction which has the effect of reducing the number of outstanding
shares, and (d) no increase in the interested shareholder's percentage ownership
of any class or series of Savannah shares by more than 1% in any 12-month
period; (D) the interested shareholder has not received, since becoming an
interested shareholder, the benefit of any loans, advances, guarantees, pledges,
or other financial assistance or any tax credits or other tax advantages
provided by Savannah or its subsidiaries.
The provisions governing the approval required for business combinations
also shall not apply if, during the three-year period immediately preceding the
consummation of the business combination, the interested shareholder has not at
any time during such period ceased to be an interested shareholder or increased
its percentage ownership of any class or series of common or preferred shares of
Savannah by more than 1% in any 12-month period.
The Savannah Articles also generally provide that Savannah shall not engage
in any business combinations with any interested shareholder for a period of
five years following the date that such shareholder became an interested
director, unless the business combination or interested shareholder transaction
was approved by the Savannah Board of Directors or the interested shareholder
was, prior to the transaction, or became, as a result of the transaction, the
beneficial owner of at least 90% of the outstanding voting shares of Savannah.
The provisions of the Savannah Articles relating to business combinations
are designed as anti-takeover measures, and for the protection of the minority
shareholders of Savannah against some of the inequities which arise in certain
hostile takeover attempts. Bryan's Articles and Bylaws do not contain such
provisions.
BRYAN. In general, transactions effectuating a plan of merger or share
exchange, or a sale of assets other than in the regular course of business are
governed by the Bryan Bylaws. The Bryan Bylaws provide that approval of such
transactions requires that the Board of Directors of Bryan recommend the
transaction to the shareholders and that the shareholders entitled to vote must
approve the plan by a two-thirds vote.
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
SAVANNAH. The Savannah Bylaws provide that any person who is the holder of
record of, or is authorized in writing by the holders of record of, more than 2%
of the outstanding shares of any class or series of Savannah shall have the
right to inspect excerpts from minutes of any meeting of the Board of Directors,
records of any action of a committee thereof while acting in place of the Board
of Directors on behalf of Savannah, minutes of any meeting of shareholders, and
records of action taken by the shareholders or Board of Directors without a
meeting, accounting records of Savannah, and the record of shareholders, and to
make copies therefrom. The GBCC provides that a shareholder is entitled to
inspect and copy certain books and records (such as the corporation's articles
of incorporation or bylaws) upon written demand at least five days before the
date on which he wishes to inspect such records. A shareholder is entitled to
inspect certain other documents (such as minutes of the meetings of the board of
directors, accounting records and the record of shareholders of the corporation)
provided that such inspection must occur at reasonable times, and any such
demand for inspection will only be permitted if the following conditions are
met: (i) the demand for inspection is made in good faith, or made for a proper
purpose (a purpose reasonably relevant to such person's legitimate interest as a
shareholder); (ii) the shareholder describes with particularity his or her
purpose for the inspection and the documents which he wishes to inspect; (iii)
the records requested for inspection by the shareholder are directly connected
with his or her stated purpose; and (iv) the records are to be used solely for
the shareholder's stated purpose.
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<PAGE>76
BRYAN. Bryan's Articles and Bylaws are silent with respect to the
inspection of books and records by shareholders, and thus the GBCC controls the
proceedings through which Bryan shareholders may inspect corporate records.
DIVIDENDS
SAVANNAH. Dividends upon the Savannah Common Stock may be paid in cash,
property, or shares of Savannah's capital stock. Section 14-2-640 of the GBCC
provides, generally, that no distribution, including dividends, may be made by a
corporation if, after giving the distribution effect: (i) the corporation would
not be able to pay its debts as they become due in the usual course of business;
or (ii) the corporation's total assets would be less than the sum of its total
liabilities plus any amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
In addition, the Savannah Articles provide that dividends may only be paid
on the common stock or on any series or class of stock entitled to participate
as to dividends, out of any asset legally available for the payment of
dividends, when there shall have been paid or declared to the holders of the
outstanding shares of any class of stock having preference over the common stock
as to the payment of dividends, the full amount of dividends and of sinking fund
or retirement fund or other retirement payments, to which such holders are
respectively entitled.
BRYAN. The Bryan Bylaws are generally silent regarding the declaration and
payment of dividends; thus, the declaration and payment of dividends by Bryan
are governed by the GBCC. Under the GBCC, dividends may be declared only to the
extent that such dividends are declared and paid from Bryan's unreserved and
unrestricted earned surplus, or out of the unreserved and unrestricted net
earnings of the current fiscal year, computed to the date of declaration of the
dividend, or the preceding fiscal year. Dividends may also be declared by the
Bryan Board of Directors and paid in the shares of Bryan out of any treasury
shares which have been reacquired out of the capital funds of the corporation.
In addition, dividends may be declared by the Bryan Board of Directors and paid
in the authorized but unissued shares of the corporation out of the retained
earnings of Bryan, provided that such shares may not be issued at less than par
value, and that, at the time such a dividend is paid, certain adjustments
provided for in the Bryan Bylaws are made with regard to Bryan's retained
earnings and capital stock.
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<PAGE>77
CONTINGENT ELECTION OF DIRECTORS
Pursuant to the Merger Agreement, Savannah has agreed to nominate five of
the current directors of Bryan (the "Bryan Director Nominees") for election to
the Savannah Board of Directors, contingent on consummation of the Merger. At
the Savannah Special Meeting, Savannah shareholders will be asked to consider
and vote upon the election, contingent on consummation of the Merger, of the
Bryan Director Nominees, of whom Messrs. Gill and Thompson, Jr. shall serve
until the Annual Meeting of Shareholders in 1999, Messrs. Royal and Roberts
shall serve until the Annual Meeting of Shareholders in 2000, and Mr. Burnsed
shall serve until the Annual Meeting of Shareholders in 2001, in each case until
their successors have been elected and qualified. Certain information about the
Bryan Director Nominees is listed below.
NAME POSITION WITH BRYAN
- --------------------------- --------------------------------------------------
E. James Burnsed Director, President and Chief Executive Officer
L. Carlton Gill Director
James Toby Roberts, Sr. Director
James W. Royal Director, Secretary
Robert T. Thompson, Jr. Director
Each of the above persons has been a director of Bryan since March 1989.
E. James Burnsed, age 58, has served as President and Chief Executive
Officer of Bryan since March 1989 and of Bryan Bank since April 1989. From 1958
to 1989, Mr. Burnsed served in various capacities with First Union Bank of
Savannah (formerly Savannah Bank and Trust Company), including most recently,
Regional Consumer Banking Manager.
L. Carlton Gill, age 57, has been employed by S. A. Allen, Inc. as a
procurement forester since 1964.
James Toby Roberts, Sr., age 53, has been the owner-manager of Roberts
Trucks Center, Savannah, Georgia since 1969.
James W. Royal, age 49, has served as Secretary of Bryan since March 1994.
In addition, he has been President of Royal Brothers, Inc., engaged in the
retail hardware business in the Richmond Hill area under the name of Royal True
Value and Village True Value Hardware Stores, since 1980.
Robert T. Thompson, Jr., age 57, has been employed by CSX Incorporated, a
railroad company, since 1962. In addition, from 1989 to 1990, he served as the
owner of The Hub, a men's clothing store, and from 1985 to 1989, he served as
the general manager for Superior Sanitation Service, Inc.
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<PAGE>78
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SAVANNAH
The following table sets forth certain information as of September 30,
1998, with respect to ownership of the outstanding Savannah Common Stock by (i)
all persons known to Savannah to own beneficially more than 5% of the
outstanding shares of Savannah Common Stock, (ii) each director and "Named
Executive Officer" of Savannah, and (iii) all executive officers and directors
of Savannah as a group, and the pro forma ownership of Savannah Common Stock of
those persons, giving effect to the Merger.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT PRO FORMA PRO FORMA
NAME AND ADDRESS BENEFICIAL OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP (1) CLASS(2) OWNERSHIP OF CLASS
- ------------------- -------------- -------- ---------- --------
<S> <C> <C> <C> <C>
Russell W. Carpenter 16,500 0.95% 16,500 0.62%
Archie H. Davis 102,473 (3) 5.72% 102,473 3.76%
P.O. Box 188
Savannah, Georgia 31402
Robert H. Demere, Jr. 30,509 (4) 1.76% 30,509 1.14%
Julius Edel 34,995 (5) 2.01% 34,995 1.31%
J. Wiley Ellis 23,265 (6) 1.34% 23,265 0.87%
Robert W. Groves III 20,625 1.18% 20,625 0.77%
Jack M. Jones 17,425 (7) 1.00% 17,425 0.65%
Aaron M. Levy 21,450 (8) 1.23% 21,450 0.80%
J. Curtis Lewis III 39,165 (9) 2.25% 39,165 1.46%
M. Lane Morrison 25,575 (10) 1.47% 25,575 0.96%
Jack W. Shearouse 32,725 1.88% 32,725 1.22%
Penelope S. Wirth 28,875 1.66% 28,875 1.08%
R. Stephen Stramm 31,377 (11) 1.78% 31,377 1.16%
All directors and executive
officers as a group (14
persons) 445,566 24.00% 445,566 15.95%
</TABLE>
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<PAGE>79
(1) Information relating to beneficial ownership by directors is based upon
information furnished by each director using "beneficial ownership"
concepts set forth in rules promulgated by the Commission under Section
13(d) of the Exchange
Act. If not footnoted, the shares are owned with voting and dispositive
rights.
(2) The percent of class is calculated on the assumption that a person's
options have been exercised and that the total number of issued and
outstanding shares of Savannah have been increased correspondingly.
(3) Includes 53,625 of exerciseable option shares. Of the remaining shares
beneficially owned by Mr. Davis, 24,750 are owned individually, 16,410
are in his IRA, 5,250 are owned by children, 1,305 are owned by his wife
and 1,133 shares are in his 401(k) balance.
(4) Of the 30,509 shares beneficially owned by Mr. Demere, 23,255 are owned
individually, 1,650 shares are in his IRA, and 5,604 shares are owned by
his children.
(5) Of the 34,995 shares beneficially owned by Mr. Edel, 25,425 are owned
individually, and 9,570 shares are in his IRA.
(6) Of the 23,265 shares beneficially owned by Mr. Ellis, 6,765 are owned
individually, 12,375 shares are in his IRA, and 4,125 are owned in trust
for his wife.
(7) Of the 17,425 shares beneficially owned by Mr. Jones, 13,300 shares are in
his IRA, and 4,125 shares represent exerciseable option shares.
(8) Of the 21,450 shares beneficially owned by Mr. Levy, 4,125 are owned
individually, 12,375 shares are in his company, 825 shares are owned by
his wife and 4,125 shares represent exerciseable option shares.
(9) Of the 39,165 shares beneficially owned by Mr. Lewis, 20,460 are owned
individually, 9,750 shares are in his IRA and money purchase retirement
plan, 4,830 are owned by his children and 4,125 shares represent
exerciseable option shares.
(10) Of the 25,575 shares beneficially owned by Mr. Morrison, 10,725 are owned
individually, 4,125 shares are in his IRA, 6,600 share in a income trust
for his benefit and 4,125 shares represent exerciseable option shares.
(11) Includes 24,750 incentive stock options. Of the remaining shares
beneficially owned by Mr. Stramm, 15 are owned individually, 4,455 are in
his IRA and 2,157 shares are in his 401(k) plan balance.
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<PAGE>80
BRYAN
The following table sets forth certain information as of September 30,
1998, with respect to ownership of the outstanding Bryan Common Stock by the
Bryan Director Nominees, and the pro forma ownership of Savannah Common Stock to
be held by such persons following the Merger.
<TABLE>
<CAPTION>
BRYAN COMMON STOCK SAVANNAH COMMON STOCK
-------------------------- -----------------------
PRO FORMA
AMOUNT AND SHARES OF PRO FORMA
NATURE OF PERCENT SAVANNAH SAVANNAH
NAME AND ADDRESS BENEFICIAL OF BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNERSHIP (1) CLASS(2) OWNED OF CLASS
- ------------------- -------------- -------- ---------- ---------
<S> <C> <C> <C> <C>
E. James Burnsed 33,599 (2) 6.48% (3) 62,983 2.34%
173 Davis Road
Richmond Hill, Georgia
31324
L. Carlton Gill 35,735 (4) 7.06% 66,110 2.47%
P.O. Box 59
Richmond Hill, Georgia
31324
James Toby Roberts, Sr. 26,062 (5) 5.15% 48,215 1.80%
415 Whitehall Lane
Richmond Hill, Georgia
31324
James W. Royal 21,263 (6) 4.20% 39,337 1.47%
P.O. Box 1096
Richmond Hill, Georgia
31324
Robert T. Thompson, Jr. 21,395 (7) 4.22% 39,581 1.48%
2369 Fort McAllister Rd.
Richmond Hill, Georgia
31324
- -------------------------
</TABLE>
(1) Information relating to beneficial ownership by Bryan director nominees is
based upon information furnished by each nominee using "beneficial
ownership" concepts set forth in rules promulgated by the Commission under
Section 13(d) of the Exchange Act.
(2) Includes 12,000 shares subject to presently exercisable stock options
granted in connection with Mr. Burnsed's Employment Agreement. Of the
remaining shares beneficially owned by Mr. Burnsed, 11,256 shares are
owned individually, 5,653 shares are in his IRA, 200 shares are owned by
his wife individually, and 490 shares are in his wife's IRA. Mr. Burnsed
also owns 825 shares of Savannah Common Stock.
(3) Mr. Burnsed's percent of class is calculated on the assumption that he has
exercised the 12,000 options owned by him, and that the total number of
issued and outstanding shares of Bryan has been correspondingly increased.
(4) Of the 35,735 shares beneficially owned by Mr. Gill, 22,265 shares are
owned jointly with his wife, 1,070 shares are in his IRA, 1,200 shares are
in his wife's IRA, and 10,600 shares are owned by the Estate of Louis C.
Gill, of which he is the Executor, and 600 shares are owned by his
children.
(5) Of the 26,062 shares beneficially owned by Mr. Roberts, 20,487 shares are
owned individually, 2,975 shares are in his IRA, 600 shares are owned by
his wife, and 2,000 shares are owned by his children.
(6) Of the 21,263 shares beneficially owned by Mr. Royal, 19,263 shares are
owned individually, 1,800 shares are in his IRA, and 200 shares are owned
jointly with his children.
(7) Of the 21,395 shares beneficially owned by Mr. Thompson, Jr., 18,009
shares are owned individually, 1,079 shares are in his IRA, 1,807 shares
are in his wife's IRA, and 500 shares are owned by his children.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
A representative of Arthur Andersen LLP is expected to attend the Savannah
Special Meeting and will be given the opportunity to make a statement on behalf
of the firm if he so desires. A representative of Arthur Andersen LLP is also
expected to respond to appropriate questions from shareholders.
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<PAGE>81
EXPERTS
The 1996 and 1997 consolidated financial statements of The Savannah
Bancorp, Inc. incorporated by reference in this Joint Proxy Statement/Prospectus
and elsewhere in this registration statement have been audited by Arthur
Andersen LLP, independent certified public accountants, as indicated in their
reports with respect thereto and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
The 1995 consolidated financial statements of The Savannah Bancorp, Inc.
incorporated by reference in this Joint Proxy Statement/Prospectus and elsewhere
in this registration statement have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Bryan, incorporated by reference
in this registration statement, have been audited by Moore Stephens Tiller LLC
(formerly Tiller, Stewart & Company, LLC), independent certified public
accountants, for the periods indicated in their report thereon which is included
in Bryan's Annual Report on Form 10-KSB for the year ended December 31, 1997.
The financial statements audited by Moore Stephens Tiller LLC have been
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
LEGAL MATTERS
The legality of the shares of Savannah Common Stock to be issued in the
Merger is being passed upon for Savannah by Ellis, Painter, Ratterree & Bart,
LLP, Savannah, Georgia. Alston & Bird LLP, Atlanta, Georgia, will opine as to
certain federal income tax consequences of the Merger. See "THE MERGER--Federal
Income Tax Consequences."
SHAREHOLDER PROPOSALS
Proposals of shareholders of Savannah intended to be presented at the 1999
Annual Meeting of Shareholders must be received by Savannah at its principal
executive offices on or before February 15, 1999, in order to be included in
Savannah's Proxy Statement and form of proxy relating to the 1999 Annual Meeting
of Shareholders. Only proper proposals which are timely received will be
included in such Proxy Statement and proxy. Proposals should be directed to The
Savannah Bancorp, Inc., 25 Bull Street, Savannah, Georgia 31401, Attention: J.
Curtis Lewis, III, Secretary.
OTHER MATTERS
Management of Savannah does not know of any matters to be brought before
the Savannah Special Meeting other than those described above. If any other
matters properly come before the Savannah Special Meeting, the persons
designated as proxies will vote on such matters in accordance with their best
judgment. Management of Bryan does not know of any matters to be brought before
the Bryan Special Meeting other than those described above. If any other matters
properly come before the Bryan Special Meeting, the persons designated as
proxies will vote on such matters in accordance with their best judgment.
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<PAGE>82
APPENDIX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE SAVANNAH BANCORP, INC.
AND
BRYAN BANCORP OF GEORGIA, INC.
DATED AS OF FEBRUARY 11, 1998
A-1
<PAGE>83
TABLE OF CONTENTS
PAGE
Parties ........................................................ A-6
Preamble........................................................ A-6
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER.................... A-6
1.1 Merger........................................ A-6
1.2 Time and Place of Closing..................... A-6
1.3 Effective Time................................ A-7
1.4 Execution of Stock Option Agreements.......... A-7
ARTICLE 2 - TERMS OF MERGER..................................... A-7
2.1 Charter....................................... A-7
2.2 Bylaws........................................ A-7
2.3 Directors and Officers........................ A-7
ARTICLE 3 - MANNER OF CONVERTING SHARES......................... A-7
3.1 Conversion of Shares.......................... A-7
3.2 Anti-Dilution Provisions...................... A-8
3.3 Shares Held by Bryan or Savannah.............. A-8
3.4 Dissenting Shareholders....................... A-8
3.5 Fractional Shares............................. A-8
3.6 Conversion of Stock Options................... A-9
ARTICLE 4 - EXCHANGE OF SHARES.................................. A-9
4.1 Exchange Procedures........................... A-10
4.2 Rights of Former Bryan Shareholders........... A-10
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BRYAN............. A-10
5.1 Organization, Standing, and Power............. A-10
5.2 Authority of Bryan; No Breach By Agreement.... A-10
5.3 Capital Stock................................. A-11
5.4 Bryan Subsidiaries............................ A-11
5.5 SEC Filings; Financial Statements............. A-12
5.6 Absence of Undisclosed Liabilities............ A-12
5.7 Absence of Certain Changes or Events.......... A-12
5.8 Tax Matters................................... A-12
5.9 Allowance for Possible Loan Losses............ A-13
5.10 Assets........................................ A-14
5.11 Intellectual Property......................... A-14
5.12 Environmental Matters......................... A-14
5.13 Compliance with Laws.......................... A-15
5.14 Labor Relations............................... A-15
5.15 Employee Benefit Plans........................ A-16
A-2
<PAGE>84
5.16 Material Contracts............................ A-17
5.17 Legal Proceedings............................. A-17
5.18 Reports....................................... A-18
5.19 Statements True and Correct................... A-18
5.20 Accounting, Tax and Regulatory Matters........ A-18
5.21 State Takeover Laws........................... A-18
5.22 Charter Provisions............................ A-18
5.23 Directors' Agreements......................... A-18
5.24 Board Recommendation.......................... A-18
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF SAVANNAH.......... A-19
6.1 Organization, Standing, and Power............. A-19
6.2 Authority; No Breach By Agreement............. A-19
6.3 Capital Stock................................. A-20
6.4 Savannah Subsidiaries......................... A-20
6.5 SEC Filings; Financial Statements............. A-20
6.6 Absence of Undisclosed Liabilities............ A-21
6.7 Absence of Certain Changes or Events.......... A-21
6.8 Tax Matters................................... A-21
6.9 Allowance for Possible Loan Losses............ A-22
6.10 Assets........................................ A-22
6.11 Intellectual Property......................... A-23
6.12 Environmental Matters......................... A-23
6.13 Compliance With Laws.......................... A-24
6.14 Labor Relations............................... A-24
6.15 Employee Benefit Plans........................ A-24
6.16 Material Contracts............................ A-26
6.17 Legal Proceedings............................. A-26
6.18 Reports....................................... A-26
6.19 Statements True and Correct................... A-27
6.20 Accounting, Tax and Regulatory Matters........ A-27
6.21 State Takeover Laws........................... A-27
6.22 Charter Provisions............................ A-27
6.23 Board Recommendation.......................... A-27
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION............ A-27
7.1 Affirmative Covenants of Each Party........... A-27
7.2 Negative Covenants of Bryan................... A-28
7.3 Negative Covenants of Savannah................ A-29
A-3
<PAGE>85
7.4 Adverse Changes in Condition.................. A-31
7.5 Reports....................................... A-31
ARTICLE 8 - ADDITIONAL AGREEMENTS............................... A-31
8.1 Registration Statement; Proxy Statement;
Shareholder Approval.......................... A-31
8.2 Exchange Listing.............................. A-32
8.3 Applications.................................. A-34
8.4 Filings with State Offices.................... A-32
8.5 Agreement as to Efforts to Consummate......... A-32
8.6 Investigation and Confidentiality............. A-32
8.7 Press Releases................................ A-32
8.8 Certain Actions............................... A-33
8.9 Accounting and Tax Treatment.................. A-33
8.10 State Takeover Laws........................... A-33
8.11 Charter Provisions............................ A-33
8.12 Agreements of Affiliates...................... A-33
8.13 Employee Benefits and Contracts............... A-33
8.14 Indemnification............................... A-34
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE... A-35
9.1 Conditions to Obligations of Each Party....... A-35
9.2 Conditions to Obligations of Savannah......... A-36
9.3 Conditions to Obligations of Bryan............ A-37
ARTICLE 10 - TERMINATION........................................ A-37
10.1 Termination................................... A-37
10.2 Effect of Termination......................... A-38
10.3 Non-Survival of Representations and Covenants. A-38
ARTICLE 11 - MISCELLANEOUS...................................... A-39
11.1 Definitions................................... A-39
11.2 Expenses...................................... A-45
11.3 Brokers and Finders........................... A-47
11.4 Entire Agreement.............................. A-47
11.5 Amendments.................................... A-47
11.6 Waivers....................................... A-47
11.7 Assignment.................................... A-47
11.8 Notices....................................... A-47
11.9 Governing Law................................. A-48
11.10 Counterparts.................................. A-48
11.11 Captions; Articles and Sections............... A-48
A-4
<PAGE>86
11.12 Interpretations............................... A-48
11.13 Enforcement of Agreement...................... A-49
11.14 Severability.................................. A-49
Signatures...................................................... A-49
LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
1. Form of Bryan Stock Option Agreement. (Section 1.4).
2. Form of Savannah Stock Option Agreement. (Section 1.4).
3. Form of Directors' Agreement. (Section 5.23)
4. Form of agreement of affiliates of Bryan.
(Sections 8.12, 9.2(d)).
5. Form of Employment Agreements with E. James Burnsed and
George Michael Odom, Jr.
A-5
<PAGE>87
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"Agreement") is dated as of February 11, 1998, by and between The Savannah
Bancorp, Inc. ("Savannah"), a Georgia corporation; and Bryan Bancorp of Georgia,
Inc. ("Bryan"), a Georgia corporation.
PREAMBLE
The respective Boards of Directors of Bryan and Savannah are of
the opinion that the transactions described herein are in the best interests of
the parties to this Agreement and their respective shareholders. This Agreement
provides for the merger of Bryan with and into Savannah. At the effective time
of such merger, the outstanding shares of the capital stock of Bryan shall be
converted into the right to receive shares of the common stock of Savannah
(except as provided herein). As a result, shareholders of Bryan shall become
shareholders of Savannah and Savannah shall continue to conduct the business and
operations of Bryan. The transactions described in this Agreement are subject to
the approvals of the shareholders of Bryan, the shareholders of Savannah, the
Board of Governors of the Federal Reserve System, Department of Banking and
Finance of the State of Georgia, and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement 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 for accounting purposes shall qualify for treatment as a pooling of
interests.
Immediately after the execution and delivery of this Agreement,
as a condition and inducement to Savannah's willingness to enter into this
Agreement, Bryan and Savannah are entering into a stock option agreement
pursuant to which Bryan is granting to Savannah an option to purchase shares of
Bryan Common Stock. Immediately after the execution and delivery of this
Agreement, as a condition and inducement to Bryan's willingness to enter into
this Agreement, Savannah and Bryan are entering into a stock option agreement
pursuant to which Savannah is granting to Bryan an option to purchase shares of
Savannah Common Stock.
Certain terms used in this Agreement are defined in Section 11.1
of this Agreement.
On February 11, 1998 the parties hereto signed the original
Agreement and Plan of Merger, and such parties desire to amend and restate such
Agreement as of such date. This Amended and Restated Agreement and Plan of
Merger is being executed on July 28, 1998 as of February 11, 1998;
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, Bryan shall be merged with and into Savannah
in accordance with the provisions of Section 14-2-1101 of the GBCC and with the
effect provided in Sections 14-2-1106 and 14-2-1107 of the GBCC (the "Merger").
Savannah shall be the Surviving Corporation resulting from the Merger and shall
continue to be governed by the Laws of the State of Georgia. 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 Bryan and Savannah.
1.2 TIME AND PLACE OF CLOSING. The closing of the transactions contemplated
hereby (the "Closing") will take place at 9:00 A.M. on the date that the
Effective Time occurs (or the immediately preceding day if the Effective Time is
earlier than 9:00 A.M.), or at such other time as the Parties, acting through
their authorized officers, may mutually agree. The Closing shall be held at such
location as may be mutually agreed upon by the Parties.
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1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the 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 authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur on or before the fifth
business day following the last to occur of (i) 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 (ii) the date on which the shareholders of Bryan and Savannah
approve this Agreement to the extent such approval is required by applicable
Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENTS. Simultaneously with
the execution of thisAgreement by the Parties and as a condition thereto, Bryan
is executing and delivering to Savannah a stock option agreement (the "Bryan
Stock Option Agreement"), in substantially the form of Exhibit 1 hereto,
pursuant to which Bryan is granting to Savannah an option to purchase shares of
Bryan Common Stock, and Savannah is executing and delivering to Bryan a stock
option agreement (the "Savannah Stock Option Agreement"), in substantially the
form of Exhibit 2 hereto, pursuant to which Savannah is granting to Bryan an
option to purchase shares of Savannah Common Stock.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles ofIncorporation of Savannah in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until duly amended or repealed.
2.2 BYLAWS. The Bylaws of Savannah ineffect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
duly amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Savannah in office
immediately prior to the Effective Time, together with E. James Burnsed and four
other directors of Bryan selected by the Bryan Board of Directors prior to the
Effective Time, shall serve as the initial directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Savannah 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 Corporation from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation; provided, that E. James Burnsed shall be elected Vice Chairman of
the Surviving Corporation. Of the five directors of Bryan who shall serve as
directors of the Surviving Corporation, two shall serve until the Annual Meeting
of Shareholders in 1999, two shall serve until the Annual Meeting of
Shareholders in 2000, and one shall serve until the Annual Meeting of
Shareholders in 2001.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of Savannah, Bryan, or the shareholders of either of the foregoing,
the shares of the constituent corporations shall be converted as follows:
(a) Each share of capital stock of Savannah issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of Bryan Common Stock (excluding shares
held by any Bryan Entity or any Savannah Entity, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, and excluding
shares held by shareholders who perfect their statutory dissenters' rights as
provided in Section 3.4) issued and outstanding immediately prior to the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive 1.85 shares of Savannah Common Stock (the
"Exchange Ratio").
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3.2 ANTI-DILUTION PROVISIONS. In the event Savannah changes the
number of shares of Savannah Common Stock 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 thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted (to the nearest one-thousandth of a share).
3.3 SHARES HELD BY Bryan OR Savannah. Each of the shares of
Bryan Common Stock held by any Bryan Entity or by any Savannah Entity, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. Any holder of shares of Bryan
Common Stock who perfects his dissenters' rights in accordance with and as
contemplated by Article 13, Part 2 of Title 14 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 GBCC and surrendered to Bryan 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 Bryan fails to
perfect, or effectively withdraws or loses, his right to appraisal and of
payment for his shares, Savannah shall issue and deliver the consideration to
which such holder of shares of Bryan Common Stock is entitled under this Article
3 (without interest) upon surrender by such holder of the certificate or
certificates representing shares of Bryan Common Stock held by him. If and to
the extent required by applicable Law, Bryan will establish (or cause to be
established) an escrow account with an amount sufficient to satisfy the maximum
aggregate payment that may be required to be paid to dissenting shareholders.
Upon satisfaction of all claims of dissenting shareholders, the remaining
escrowed amount, reduced by payment of the fees and expenses of the escrow
agent, will be returned to the Surviving Corporation.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, each holder of shares of Bryan Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of Savannah 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 Savannah
Common Stock multiplied by the market value of one share of Savannah Common
Stock at the Effective Time. The market value of one share of Savannah Common
Stock at the Effective Time shall be the last sale price of such common stock on
the Nasdaq National Market (as reported by THE WALL STREET JOURNAL or, if not
reported thereby, any other authoritative source selected by Savannah) 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 shareholder in respect of
any fractional shares.
3.6 CONVERSION OF STOCK OPTIONS.
(a) At the Effective Time, each option or other Equity Right to purchase
shares of Bryan Common Stock pursuant to stock options ("Bryan Options") granted
by Bryan, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to Savannah
Common Stock, and Savannah shall assume each Bryan Option, in accordance with
the terms of the stock option agreement by which it is evidenced, except that
from and after the Effective Time, (i) Savannah and its Compensation Committee
shall be substituted for Bryan and the Committee of Bryan's Board of Directors
(including, if applicable, the entire Board of Directors of Bryan) administering
such Bryan Options, (ii) each Bryan Option assumed by Savannah may be exercised
solely for shares of Savannah Common Stock (or cash, if so provided under the
terms of such Bryan Option), (iii) the number of shares of Savannah Common Stock
subject to such Bryan Option shall be equal to the number of shares of Bryan
Common Stock subject to such Bryan Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, and (iv) the per share exercise price
under each such Bryan Option shall be adjusted by dividing the per share
exercise price under each such Bryan Option by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the provisions of clause (iii) of the
preceding sentence, Savannah shall not be obligated to issue any fraction of a
share of Savannah Common Stock upon exercise of Bryan Options and any fraction
of a share of Savannah Common Stock that otherwise would be subject to a
converted Bryan Option shall represent the right to receive a cash payment upon
exercise of such converted Bryan Option equal to the product of
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such fraction and the difference between the market value of one share of
Savannah Common Stock at the time of exercise of such Option and the per share
exercise price of such Option. The market value of one share of Savannah Common
Stock at the time of exercise of an Option shall be the last sale price of such
common stock on the Nasdaq National Market (as reported by THE WALL STREET
JOURNAL or, if not reported thereby, any other authoritative source selected by
Savannah) on the last trading day preceding the date of exercise. In addition,
notwithstanding the provisions of clauses (iii) and (iv) of the first sentence
of this Section 3.6, each Bryan Option which is an "incentive stock option"
shall be adjusted as required by Section 424 of the Internal Revenue Code, and
the regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. Each of Bryan and Savannah agrees to take all necessary
steps to effectuate the foregoing provisions of this Section 3.6, including
using its reasonable efforts to obtain from each holder of a Bryan Option any
Consent or Contract that may be deemed necessary or advisable in order to effect
the transactions contemplated by this Section 3.6. Anything in this Agreement to
the contrary notwithstanding, Savannah shall have the right, in its sole
discretion, not to deliver the consideration provided in this Section 3.6 to a
former holder of a Bryan Option who has not delivered such Consent or Contract.
(b) As soon as practicable after the Effective Time,
Savannah shall deliver to each holder of a Bryan Option an appropriate notice
setting forth such holder's rights pursuant thereto and the grants subject to
such Bryan Option shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 3.6(a) after giving effect to
the Merger). At or prior to the Effective Time, Savannah shall take all
corporate action necessary to reserve for issuance sufficient shares of Savannah
Common Stock for delivery upon exercise of Bryan Options assumed by it in
accordance with this Section 3.6.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Savannah and
Bryan shall cause Reliance Trust Company, Savannah's transfer agent, acting as
the exchange agent (the "Exchange Agent"), to mail to each holder of record of a
certificate or certificates which represented shares of Bryan Common Stock
immediately prior to the Effective Time (the "Certificates") appropriate
transmittal materials and instructions (which shall specify that delivery shall
be effected, and risk of loss and title to such Certificates shall pass, only
upon proper delivery of such Certificates to the Exchange Agent). The
Certificate or Certificates of Bryan Common Stock so delivered shall be duly
endorsed as the Exchange Agent may require. In the event of a transfer of
ownership of shares of Bryan Common Stock represented by Certificates that are
not registered in the transfer records of Bryan, the consideration provided in
Section 3.1 may be issued to a transferee if the Certificates representing such
shares are delivered to the Exchange Agent, accompanied by all documents
required to evidence such transfer and by evidence satisfactory to the Exchange
Agent that any applicable stock transfer taxes have been paid. If any
Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of
(i) an affidavit of that fact from the holder claiming such Certificate to be
lost, mislaid, stolen or destroyed, (ii) such bond, security or indemnity as
Savannah and the Exchange Agent may reasonably require and (iii) any other
documents necessary to evidence and effect the bona fide exchange thereof, the
Exchange Agent shall issue to such holder the consideration into which the
shares represented by such lost, stolen, mislaid or destroyed Certificate shall
have been converted. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. After the Effective Time, each holder of shares of Bryan Common
Stock (other than shares to be canceled pursuant to Section 3.3 or as to which
statutory dissenters' rights have been perfected as provided in Section 3.4)
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, together with all undelivered dividends or distributions in
respect of such shares (without interest thereon) pursuant to Section 4.2. To
the extent required by Section 3.5, each holder of shares of Bryan Common Stock
issued and outstanding at the Effective Time also shall receive, upon surrender
of the Certificate or Certificates, cash in lieu of any fractional share of
Savannah Common Stock to which such holder may be otherwise entitled (without
interest). Savannah shall not be obligated to deliver the consideration to which
any former holder of Bryan Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's Certificate or Certificates for
exchange as provided in this Section 4.1. Any other provision of this Agreement
notwithstanding, neither Savannah nor the Exchange Agent shall be liable to a
holder of Bryan Common Stock for any amounts paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
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4.2 RIGHTS OF FORMER BRYAN SHAREHOLDERS. At the Effective Time,
the stock transfer books of Bryan shall be closed as to holders of Bryan Common
Stock immediately prior to the Effective Time and no transfer of Bryan 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, each
Certificate theretofore representing shares of Bryan Common Stock (other than
shares to be canceled pursuant to Sections 3.3 and 3.4) 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 in exchange therefor, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which
have been declared or made by Bryan in respect of such shares of Bryan Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. To the extent permitted by Law, former shareholders of
record of Bryan shall be entitled to vote after the Effective Time at any
meeting of Savannah shareholders the number of whole shares of Savannah Common
Stock into which their respective shares of Bryan Common Stock are converted,
regardless of whether such holders have exchanged their Certificates for
certificates representing Savannah Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by Savannah on the Savannah 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 Savannah Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of Savannah Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any Certificate until such holder surrenders
such Certificate for exchange as provided in Section 4.1. However, upon
surrender of such Certificate, both the Savannah Common Stock certificate
(together with all such undelivered dividends or other distributions without
interest) and any undelivered dividends and cash payments payable hereunder
(without interest) shall be delivered and paid with respect to each share
represented by such Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BRYAN
Bryan hereby represents and warrants to Savannah as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Bryan is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
Bryan 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 Bryan Material
Adverse Effect. The minute book and other organizational documents for Bryan
have been made available to Savannah for its review and, except as disclosed in
Section 5.1 of the Bryan Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors and shareholders thereof.
5.2 AUTHORITY OF BRYAN: NO BREACH BY AGREEMENT.
(a) Bryan 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 Bryan,
subject to the approval of this Agreement by the holders of two-thirds of the
outstanding shares of Bryan Common Stock, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by Bryan.
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of Bryan, enforceable against Bryan in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, 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).
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(b) Neither the execution and delivery of this Agreement
by Bryan, nor the consummation by Bryan of the transactions contemplated hereby,
nor compliance by Bryan with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Bryan's Articles of Incorporation
or Bylaws or the certificate or articles of incorporation or bylaws of any Bryan
Subsidiary or any resolution adopted by the board of directors or the
shareholders of any Bryan Entity, or (ii) except as disclosed in Section 5.2 of
the Bryan Disclosure Memorandum, 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 Bryan Entity under, any Contract or Permit of any Bryan Entity,
where such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Bryan Material Adverse
Effect, or, (iii) subject to receipt of the requisite Consents referred to in
Section 9.1(b), constitute or result in a Default under, or require any Consent
pursuant to, any Law or Order applicable to any Bryan Entity or any of their
respective material Assets (including any Savannah Entity or any Bryan Entity
becoming subject to or liable for the payment of any Tax or any of the Assets
owned by any Savannah Entity or any Bryan Entity being reassessed or revalued by
any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, 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 Bryan
Material Adverse Effect, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by Bryan of the Merger and
the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Bryan consists of
10,000,000 shares of Bryan Common Stock, of which 528,258 shares are issued,
503,008 shares are outstanding and 25,250 shares are held in treasury as of the
date of this Agreement. All of the issued and outstanding shares of capital
stock of Bryan 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 Bryan has been issued in violation of any preemptive rights of the
current or past shareholders of Bryan.
(b) Except as set forth in Section 5.3(a), or as
provided in the Bryan Stock Option Agreement, or as disclosed in Section 5.3(b)
of the Bryan Disclosure Memorandum, there are no shares of capital stock or
other equity securities of Bryan outstanding and no outstanding Equity Rights
relating to the capital stock of Bryan.
5.4 BRYAN SUBSIDIARIES. Bryan has disclosed in Section 5.4 of the Bryan
Disclosure Memorandum all of the Bryan Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which in
which the character of its Assets or the nature or conduct of its business
requires it to be qualified and/or licensed to transact business, and the number
of shares owned and percentage ownership interest represented by such share
ownership) and all of the Bryan Subsidiaries that are general or limited
partnerships, limited liability companies, or other non-corporate entities
(identifying the Law under which such entity is organized, each jurisdiction in
which the character of its Assets or the nature or conduct of its business
requires it to be qualified and/or licensed to transact business, and the amount
and nature of the ownership interest therein). Except as disclosed in Section
5.4 of the Bryan Disclosure Memorandum, Bryan or one of its wholly owned
Subsidiaries owns all of the issued and outstanding shares of capital stock (or
other equity interests) of each Bryan Subsidiary. No capital stock (or other
equity interest) of any Bryan Subsidiary is or may become required to be issued
(other than to another Bryan Entity) by reason of any Equity Rights, and there
are no Contracts by which any Bryan Subsidiary is bound to issue (other than to
another Bryan Entity) additional shares of its capital stock (or other equity
interests) or Equity Rights or by which any Bryan Entity is or may be bound to
transfer any shares of the capital stock (or other equity interests) of any
Bryan Subsidiary (other than to another Bryan Entity). There are no Contracts
relating to the rights of any Bryan Entity to vote or to dispose of any shares
of the capital stock (or other equity interests) of any Bryan Subsidiary. All of
the shares of capital stock (or other equity interests) of each Bryan Subsidiary
held by a Bryan Entity are fully paid and (except pursuant to 12 USC Section 55
in the case of national banks and comparable, applicable state Law, if any, in
the case of state depository institutions) nonassessable and are owned by the
Bryan Entity free and clear of any Lien. Except as disclosed in Section 5.4 of
the Bryan Disclosure Memorandum, each
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Bryan Subsidiary is either a bank or a corporation, and each such Subsidiary is
duly organized, validly existing, and (as to corporations) in good standing
under the Laws of the jurisdiction in which it is 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 Bryan
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 Bryan Material
Adverse Effect. Each Bryan Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.
5.5 FINANCIAL STATEMENTS.
(a) Bryan has timely filed and made available to
Savannah all SEC Documents required to be filed by Bryan since December 31, 1994
(the "Bryan SEC Reports"). The Bryan SEC Reports (i) at the time filed, complied
in all material respects with the applicable requirements of the Securities Laws
and other applicable Laws 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 Bryan SEC Reports or
necessary in order to make the statements in such Bryan SEC Reports, in light of
the circumstances under which they were made, not misleading. No Bryan
Subsidiary is required to file any SEC Documents.
(b) Each of the Bryan Financial Statements (including,
in each case, any related notes) contained in the Bryan SEC Reports, including
any Bryan SEC Reports filed after the date of this Agreement until the Effective
Time, complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was 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 interim statements, as permitted by Form 10-Q of
the SEC), and fairly presented in all material respects the consolidated
financial position of Bryan and its Subsidiaries as at the respective dates and
the consolidated results of 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.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Bryan Entity has any Liabilities
of a nature required to be reflected on a balance sheet prepared in accordance
with GAAP that are reasonably likely to have, individually or in the aggregate,
a Bryan Material Adverse Effect, except Liabilities which are accrued or
reserved against in the consolidated balance sheets of Bryan as of December 31,
1997, included in the Bryan Financial Statements delivered prior to the date of
this Agreement or reflected in the notes thereto. No Bryan Entity has incurred
or paid any Liability since December 31, 1997, except for such Liabilities
incurred or paid (i) 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 Bryan Material Adverse Effect or (ii) in connection with the
transactions contemplated by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1997, except as disclosed in the Bryan Financial Statements delivered prior
to the date of this Agreement or as disclosed in Section 5.7 of the Bryan
Disclosure Memorandum, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Bryan Material Adverse Effect, and (ii) the Bryan Entities 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 Bryan provided in Article 7.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on
behalf of any of the Bryan Entities have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1996, 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 Bryan Material Adverse Effect, and all Tax Returns filed are complete
and accurate in all material respects. All Taxes shown on filed Tax Returns have
been paid. 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 Bryan Material Adverse Effect,
except as reserved against in the Bryan Financial Statements delivered prior to
the date of this Agreement or as disclosed in Section 5.8 of the Bryan
Disclosure Memorandum. Bryan's federal income Tax Returns have not been audited
by the IRS.
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All Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid. There are no Liens with
respect to Taxes upon any of the Assets of the Bryan Entities, except for any
such Liens which are not reasonably likely to have a Bryan Material Adverse
Effect.
(b) None of the Bryan Entities has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due
for any of the Bryan Entities for the period or periods through and including
the date of the respective Bryan Financial Statements that has been made and is
reflected on such Bryan Financial Statements is sufficient to cover all such
Taxes.
(d) Deferred Taxes of the Bryan Entities have been
provided for in accordance with GAAP.
(e) Except for a Tax Allocation Agreement between Bryan
and Bryan Bank & Trust, none of the Bryan Entities is a party to any Tax
allocation or sharing agreement and none of the Bryan Entities has been a member
of an affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was Bryan) or has any Liability for
Taxes of any Person (other than Bryan and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
Law) as a transferee or successor or by Contract or otherwise.
(f)each of the Bryan Entities is in compliance with,
and its records contain all information and documents (including 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 Bryan Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the Bryan
Disclosure Memorandum, none of the Bryan Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined
in Internal Revenue Code Section 382(g), of the Bryan Entities that occurred
during or after any Taxable Period in which the Bryan Entities incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1996.
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. In the opinion of
management of Bryan, the allowance for possible loan or credit losses (the
"Allowance") shown on the consolidated balance sheets of Bryan included in the
most recent Bryan Financial Statements dated prior to the date of this Agreement
was, and the Allowance shown on the consolidated balance sheets of Bryan
included in the Bryan 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 all known or reasonably anticipated losses relating to or inherent
in the loan and lease portfolios (including accrued interest receivables) of the
Bryan Entities and other extensions of credit (including letters of credit and
commitments to make loans or extend credit) by the Bryan Entities as of the
dates thereof, except where the failure of such Allowance to be so adequate is
not reasonably likely to have a Bryan Material Adverse Effect.
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5.10 ASSETS.
(a) Except as disclosed in Section 5.10 of the Bryan
Disclosure Memorandum or as disclosed or reserved against in the Bryan Financial
Statements delivered prior to the date of this Agreement, the Bryan Entities
have good and marketable title, free and clear of all Liens, to all of their
respective Assets, except for any such Liens or other defects of title which are
not reasonably likely to have a Bryan Material Adverse Effect. All tangible
properties used in the businesses of the Bryan Entities are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with Bryan's past practices.
(b) All Assets which are material to Bryan's business
on a consolidated basis, held under leases or subleases by any of the Bryan
Entities, 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.
(c) The Bryan Entities currently maintain insurance
similar in amounts, scope, and coverage to that maintained by other peer banking
organizations. None of the Bryan Entities has received notice from any insurance
carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no claims for amounts exceeding in any individual case $10,000 pending under
such policies of insurance and no notices of claims in excess of such amounts
have been given by any Bryan Entity under such policies.
(d) The Assets of the Bryan Entities include all Assets
required to operate the business of the Bryan Entities as presently conducted.
5.11 INTELLECTUAL PROPERTY. Each Bryan Entity owns or has a
license to use all of the Intellectual Property used by such Bryan Entity in the
course of its business. Each Bryan Entity is the owner of or has a license to
any Intellectual Property sold or licensed to a third party by such Bryan Entity
in connection with such Bryan Entity's business operations, and such Bryan
Entity has the right to convey by sale or license any Intellectual Property so
conveyed. No Bryan Entity is in Default under any of its Intellectual Property
licenses. No proceedings have been instituted, or are pending or to the
Knowledge of Bryan threatened, which challenge the rights of any Bryan Entity
with respect to Intellectual Property used, sold or licensed by such Bryan
Entity in the course of its business, nor has any person claimed or alleged any
rights to such Intellectual Property. The conduct of the business of the Bryan
Entities does not infringe any Intellectual Property of any other person. Except
as disclosed in Section 5.11 of the Bryan Disclosure Memorandum, no Bryan Entity
is obligated to pay any recurring royalties to any Person with respect to any
such Intellectual Property. Except as disclosed in Section 5.11 of the Bryan
Disclosure Memorandum, no officer, director or employee of any Bryan Entity is
party to any Contract which restricts or prohibits such officer, director or
employee from engaging in activities competitive with any Person, including any
Bryan Entity.
5.12 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Bryan, each Bryan Entity, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Bryan Material
Adverse Effect.
(b) To the Knowledge of Bryan, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which any Bryan Entity or any of its Operating Properties or
Participation Facilities (or Bryan in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any Bryan Entity or
any of its Operating Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Bryan Material Adverse Effect, nor is there
any reasonable basis for any Litigation of a type described in this sentence,
except such as is not reasonably likely to have, individually or in the
aggregate, a Bryan Material Adverse Effect.
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(c) During the period of (i) any Bryan Entity's
ownership or operation of any of their respective current properties, (ii) any
Bryan Entity's participation in the management of any Participation Facility, or
(iii) any Bryan Entity's holding of a security interest in a Operating Property,
there have been no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, adjacent to, or affecting (or potentially affecting)
such properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Bryan Material Adverse Effect. Prior to the period of (i)
any Bryan Entity's ownership or operation of any of their respective current
properties, (ii) any Bryan Entity's participation in the management of any
Participation Facility, or (iii) any Bryan Entity's holding of a security
interest in a Operating Property, to the Knowledge of Bryan, there were no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Bryan Material Adverse Effect.
5.13 COMPLIANCE WITH LAWS. Bryan is duly registered as a bank
holding company under the BHC Act. Each Bryan Entity has in effect all Permits
necessary for it to own, lease, or operate its material 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 Bryan
Material Adverse Effect, 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 Bryan Material Adverse Effect. Except as
disclosed in Section 5.13 of the Bryan Disclosure Memorandum, none of the Bryan
Entities:
(a) is in Default under any of the provisions of its
Articles of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Bryan Material Adverse Effect; or
(c) since January 1, 1993, 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 Bryan Entity 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
Bryan Material Adverse Effect, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Bryan Material Adverse Effect, or (iii) requiring any Bryan Entity
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.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Savannah.
5.14 LABOR RELATIONS. No Bryan Entity is the subject of any
Litigation asserting that it or any other Bryan Entity 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 Bryan Entity to
bargain with any labor organization as to wages or conditions of employment, nor
is any Bryan Entity party to any collective bargaining agreement, nor is there
any strike or other labor dispute involving any Bryan Entity, pending or
threatened, or to the Knowledge of Bryan, is there any activity involving any
Bryan Entity's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
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5.15 EMPLOYEE BENEFIT PLANS.
(a) Bryan has disclosed in Section 5.15 of the Bryan
Disclosure Memorandum, and has delivered or made available to Savannah 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 plan, 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 "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 Bryan Entity or ERISA 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 "Bryan Benefit
Plans"). Any of the Bryan 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 "Bryan ERISA Plan." Each Bryan 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 "Bryan Pension Plan." No Bryan Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All Bryan 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 Bryan Material Adverse Effect. Each Bryan
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 Bryan is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No Bryan Entity
has engaged in a transaction with respect to any Bryan Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any Bryan Entity to a Tax 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 Bryan Material Adverse
Effect.
(c) No Bryan Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of any Bryan Pension Plan, (ii) no
change in the actuarial assumptions with respect to any Bryan Pension Plan, and
(iii) no increase in benefits under any Bryan Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Bryan Material Adverse Effect or materially
adversely affect the funding status of any such plan. Neither any Bryan Pension
Plan nor any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any Bryan Entity, or the
single-employer plan of any entity which is considered one employer with Bryan
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, which is reasonably likely to
have a Bryan Material Adverse Effect. No Bryan Entity has provided, or is
required to provide, security to a Bryan Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Internal
Revenue Code.
(d) Within the six-year period preceding the Effective
Time, no Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any Bryan Entity with respect to any ongoing, frozen,
or terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Bryan Material Adverse
Effect. No Bryan Entity has incurred any withdrawal Liability with respect to a
multiemployer plan under Subtitle B of Title IV of ERISA (regardless of whether
based on contributions of an ERISA Affiliate), which Liability is reasonably
likely to have a Bryan Material Adverse Effect. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Bryan Pension Plan or by any ERISA Affiliate within the 12-month period ending
on the date hereof.
(e) Except as disclosed in Section 5.15 of the Bryan
Disclosure Memorandum, no Bryan Entity has any Liability for retiree health and
life benefits under any of the Bryan Benefit Plans and there are no restrictions
on the rights of such Bryan Entity to amend or terminate any such retiree health
or benefit Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Bryan Material Adverse Effect.
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(f) Except as disclosed in Section 5.15 of the Bryan
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 severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Bryan Entity from
any Bryan Entity under any Bryan Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Bryan Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, where such
payment, increase, or acceleration is reasonably likely to have, individually or
in the aggregate, a Bryan Material Adverse Effect.
(g) The actuarial present values of all accrued
deferred compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Bryan Entity and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Bryan Financial Statements to the extent
required by and in accordance with GAAP.
5.16 MATERIAL CONTRACTS. Except as disclosed in Section 5.16 of
the Bryan Disclosure Memorandum or otherwise reflected in the Bryan Financial
Statements, none of the Bryan Entities, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract, (ii) any Contract relating to the borrowing of money by
any Bryan Entity or the guarantee by any Bryan Entity of any such obligation
(other than Contracts evidencing deposit liabilities, purchases of federal
funds, fully-secured repurchase agreements, and Federal Home Loan Bank advances
of depository institution Subsidiaries, trade payables and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (iii) any
Contract which prohibits or restricts any Bryan Entity from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among Bryan
Entities, (v) any Contract involving Intellectual Property (other than Contracts
entered into in the ordinary course with customers and "shrink-wrap" software
licenses), (vi) any Contract relating to the provision of data processing,
network communication, or other technical services to or by any Bryan Entity,
(vii) any Contract relating to the purchase or sale of any goods or services
(other than Contracts entered into in the ordinary course of business and
involving payments under any individual Contract not in excess of $25,000),
(viii) any exchange-traded or over-the-counter swap, forward, future, option,
cap, floor, or collar financial Contract, or any other interest rate or foreign
currency protection Contract not included on its balance sheet which is a
financial derivative Contract, and (ix) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Form 10-KSB filed by Bryan
with the SEC as of the date of this Agreement that has not been filed as an
exhibit to Bryan's Form 10-K filed for the fiscal year ended December 31, 1996,
or in an SEC Document and identified to Savannah (together with all Contracts
referred to in Sections 5.10 and 5.15(a), the "Bryan Contracts"). With respect
to each Bryan Contract and except as disclosed in Section 5.16 of the Bryan
Disclosure Memorandum: (i) the Contract is in full force and effect; (ii) no
Bryan Entity is in Default thereunder, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Bryan Material
Adverse Effect; (iii) no Bryan Entity has repudiated or waived any material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of Bryan, in Default in any respect, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Bryan
Material Adverse Effect, or has repudiated or waived any material provision
thereunder. All of the indebtedness of any Bryan Entity for money borrowed is
prepayable at any time by such Bryan Entity without penalty or premium.
5.17 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Bryan, 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 Bryan Entity, or against any
director, employee or employee benefit plan of any Bryan Entity, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Bryan Material Adverse Effect, nor are there
any Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any Bryan Entity, that are reasonably likely to
have, individually or in the aggregate, a Bryan Material Adverse Effect. Section
5.17 of the Bryan Disclosure Memorandum contains a summary of all Litigation as
of the date of this Agreement to which any Bryan Entity is a party and which
names a Bryan Entity as a defendant or cross-defendant or for which any Bryan
Entity has any potential Liability.
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5.18 REPORTS. SinceJanuary 1, 1993, or the date of organization
if later, each Bryan Entity 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 Regulatory 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 Bryan Material Adverse Effect). 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 did not, in all 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.
5.19 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any Bryan Entity or any Affiliate thereof for
inclusion in the Registration Statement to be filed by Savannah 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 Bryan Entity or any Affiliate thereof for inclusion in
the Joint Proxy Statement to be mailed to each Party's shareholders in
connection with the Shareholders' Meetings, and any other documents to be filed
by a Bryan Entity 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 Joint Proxy
Statement, when first mailed to the shareholders of Bryan and Savannah, 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 Joint Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meetings, 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
Shareholders' Meetings. All documents that any Bryan Entity 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.
5.205.20"sec_TargetAccounting5.20sec_TargetAccounting ACCOUNTING,
TAX AND REGULATORY MATTERS. No Bryan Entity or any Affiliate thereof has taken
or agreed to take any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the Merger from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) or result in the imposition of a condition or restriction of the
type referred to in the last sentence of such Section.
5.21 STATE TAKEOVER LAWS. Each Bryan Entity has taken all
necessary action to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including Sections 14-2-1111
and 14-2-1132 of the GBCC.
5.22 CHARTER PROVISIONS. Each Bryan Entity has taken all action
so that the entering into of this Agreement and the Bryan Stock Option Agreement
and the consummation of the Merger and the other transactions contemplated
hereby and thereby, including the acquisition of shares pursuant to, or other
exercise of rights under, the Bryan Stock Option 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 Bryan Entity or
restrict or impair the ability of Savannah or any of its Subsidiaries to vote,
or otherwise to exercise the rights of a shareholder with respect to, shares of
any Bryan Entity that may be directly or indirectly acquired or controlled by
them.
5.23 DIRECTORS' AGREEMENTS. Each of the directors of Bryan
(except Charles Stafford) has executed and delivered to Savannah an agreement in
substantially the form of Exhibit 3 (the "Bryan Directors' Agreements"). In the
event Savannah removes, or fails to re-elect a director (other than Charles
Stafford) to the board of Bryan Bank during the 24 month period following the
Closing Date, Savannah will pay such director, immediately, an amount equal to
the directors fees he or she would have earned during the remainder of such 24
month period.
5.24 BOARD RECOMMENDATION. The Board of Directors of Bryan, at
a meeting duly called and held, has by unanimous vote of the directors present
(who constituted all of the directors then in office) (i) determined that this
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Agreement and the transactions contemplated hereby, including the Merger, and
the Bryan Stock Option Agreement and the Bryan Directors' Agreements and the
transactions contemplated thereby, taken together, are fair to and in the best
interests of the shareholders and (ii) resolved to recommend that the holders of
the shares of Bryan Common Stock approve this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SAVANNAH
Savannah hereby represents and warrants to Bryan as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Savannah is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Georgia, and has the corporate power and authority to carry
on its business as now conducted and to own, lease and operate its material
Assets. Savannah 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 Savannah Material
Adverse Effect. The minute book and other organizational documents for Savannah
have been made available to Bryan for its review and, except as disclosed in
Section 6.1 of the Savannah Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors and shareholders thereof.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Savannah 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 Savannah,
subject to the receipt of the requisite approvals of Savannah's shareholders
referenced in Section 9.1(a). Subject to such requisite shareholder approval,
this Agreement represents a legal, valid, and binding obligation of Savannah,
enforceable against Savannah in accordance with its terms (except in all cases
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, 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 Savannah, nor the consummation by Savannah of the transactions
contemplated hereby, nor compliance by Savannah with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of
Savannah's Articles of Incorporation or Bylaws or the certificate or articles of
incorporation or bylaws of any Savannah Subsidiary or any resolution adopted by
the board of directors or the shareholders of any Savannah Entity, or (ii)
except as disclosed in Section 6.2 of the Savannah Disclosure Memorandum,
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 Savannah Entity under,
any Contract or Permit of any Savannah Entity, where such Default or Lien, or
any failure to obtain such Consent, is reasonably likely to have, individually
or in the aggregate, a Savannah Material Adverse Effect, or, (iii) subject to
receipt of the requisite Consents referred to in Section 9.1(b), constitute or
result in a Default under, or require any Consent pursuant to, any Law or Order
applicable to any Savannah Entity or any of their respective material Assets
(including any Savannah Entity or any Bryan Entity becoming subject to or liable
for the payment of any Tax or any of the Assets owned by any Savannah Entity or
any Bryan Entity being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the Nasdaq National Market, 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 Savannah Material Adverse Effect, no notice
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to, filing with, or Consent of, any public body or authority is necessary for
the consummation by Savannah of the Merger and the other transactions
contemplated in this Agreement.
6.3 CAPITAL STOCK.
(a) The authorized capital stock of Savannah consists
of (i) 20,000,000 shares of Savannah Common Stock, of which 1,782,598 shares are
issued, 1,730,173 shares are outstanding and 52,425 shares are held in treasury
as of the date of this Agreement, and (ii) 10,000,000 shares of preferred stock,
none of which are issued and outstanding. All of the issued and outstanding
shares of Savannah Common Stock are, and all of the shares of Savannah Common
Stock to be issued in exchange for shares of Bryan Common Stock upon
consummation of the Merger, when issued in accordance with the terms of this
Agreement, will be, duly and validly issued and outstanding and fully paid and
nonassessable under the GBCC. None of the outstanding shares of Savannah Common
Stock has been, and none of the shares of Savannah Common Stock to be issued in
exchange for shares of Bryan Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
shareholders of Savannah.
(b) Except as set forth in Section 6.3(a), or as
provided in the Savannah Stock Option Agreement, or as disclosed in Section 6.3
of the Savannah Disclosure Memorandum, there are no shares of capital stock or
other equity securities of Savannah outstanding and no outstanding Equity Rights
relating to the capital stock of Savannah.
6.4 SUBSIDIARIES. Savannah has disclosed in Section 6.4 of the
Savannah Disclosure Memorandum all of the Savannah Subsidiaries as of the date
of this Agreement that are corporations (identifying its jurisdiction of
incorporation, each jurisdiction in which the character of its Assets or the
nature or conduct of its business requires it to be qualified and/or licensed to
transact business, and the number of shares owned and percentage ownership
interest represented by such share ownership) and all of the Savannah
Subsidiaries that are general or limited partnerships, limited liability
companies, or other non-corporate entities (identifying the Law under which such
entity is organized, each jurisdiction in which the character of its Assets or
the nature or conduct of its business requires it to be qualified and/or
licensed to transact business, and the amount and nature of the ownership
interest therein). Except as disclosed in Section 6.4 of the Savannah Disclosure
Memorandum, Savannah or one of its wholly owned Subsidiaries owns all of the
issued and outstanding shares of capital stock (or other equity interests) of
each Savannah Subsidiary. No capital stock (or other equity interest) of any
Savannah Subsidiary are or may become required to be issued (other than to
another Savannah Entity) by reason of any Equity Rights, and there are no
Contracts by which any Savannah Subsidiary is bound to issue (other than to
another Savannah Entity) additional shares of its capital stock (or other equity
interests) or Equity Rights or by which any Savannah Entity is or may be bound
to transfer any shares of the capital stock (or other equity interests) of any
Savannah Subsidiary (other than to another Savannah Entity). There are no
Contracts relating to the rights of any Savannah Entity to vote or to dispose of
any shares of the capital stock (or other equity interests) of any Savannah
Subsidiary. All of the shares of capital stock (or other equity interests) of
each Savannah Subsidiary held by a Savannah Entity are fully paid and (except
pursuant to 12 USC Section 55 in the case of national banks and comparable,
applicable state Law, if any, in the case of state depository institutions)
nonassessable and are owned by the Savannah Entity free and clear of any Lien.
Except as disclosed in Section 6.4 of the Savannah Disclosure Memorandum, each
Savannah Subsidiary is either a bank or a corporation, and each such Subsidiary
is duly organized, validly existing, and (as to corporations) in good standing
under the Laws of the jurisdiction in which it is 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 Savannah
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 Savannah Material
Adverse Effect. Each Savannah Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
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(a) Savannah has timely filed and made available to
Bryan all SEC Documents required to be filed by Savannah since December 31, 1994
(the "Savannah SEC Reports"). The Savannah SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws 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
Savannah SEC Reports or necessary in order to make the statements in such
Savannah SEC Reports, in light of the circumstances under which they were made,
not misleading. No Savannah Subsidiary is required to file any SEC Documents.
(b) Each of the Savannah Financial Statements (including,
in each case, any related notes) contained in the Savannah SEC Reports,
including any Savannah SEC Reports filed after the date of this Agreement until
the Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
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 interim statements, as permitted by Form
10-Q of the SEC), and fairly presented in all material respects the consolidated
financial position of Savannah and its Subsidiaries as at the respective dates
and the consolidated results of 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 Savannah Entity has
any Liabilities of a nature required to be reflected on a balance sheet prepared
in accordance with GAAP that are reasonably likely to have, individually or in
the aggregate, a Savannah Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Savannah as of
December 31, 1997, included in the Savannah Financial Statements delivered prior
to the date of this Agreement or reflected in the notes thereto. No Savannah
Entity has incurred or paid any Liability since December 31, 1997, except for
such Liabilities incurred or paid (i) 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 Savannah Material Adverse Effect or
(ii) in connection with the transactions contemplated by this Agreement.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997, except as
disclosed in the Savannah Financial Statements delivered prior to the date of
this Agreement or as disclosed in Section 6.7 of the Savannah Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Savannah Material Adverse Effect, and (ii) the Savannah Entities 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 Savannah provided in Article 7.
6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on
behalf of any of the Savannah Entities have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1996, 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 Savannah Material Adverse Effect, and all Tax Returns filed are
complete and accurate in all material respects. All Taxes shown on filed Tax
Returns have been paid. 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 Savannah
Material Adverse Effect, except as reserved against in the Savannah Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 6.8 of the Savannah Disclosure Memorandum. Savannah's federal income Tax
Returns have not been audited by the IRS. All Taxes and other Liabilities due
with respect to completed and settled examinations or concluded Litigation have
been paid. There are no Liens with respect to Taxes upon any of the Assets of
the Savannah Entities, except for any such Liens which are not reasonably likely
to have a Savannah Material Adverse Effect.
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(b) None of the Savannah Entities has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due
for any of the Savannah Entities for the period or periods through and including
the date of the respective Savannah Financial Statements that has been made and
is reflected on such Savannah Financial Statements is sufficient to cover all
such Taxes.
(d) Deferred Taxes of the Savannah Entities have been
provided for in accordance with GAAP.
(e) None of the Savannah Entities is a party to any Tax
allocation or sharing agreement and none of the Savannah Entities has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Savannah) or has any
Liability for Taxes of any Person (other than Savannah and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law) as a transferee or successor or by Contract or otherwise.
(f) Each of the Savannah Entities is in compliance
with, and its records contain all information and documents (including 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 Savannah Material Adverse Effect.
(g) Except as disclosed in Section 6.8 of the Savannah
Disclosure Memorandum, none of the Savannah Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Savannah Entities that occurred
during or after any Taxable Period in which the Savannah Entities incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1996.
6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. In the opinion of
management of Savannah, the Allowance shown on the consolidated balance sheets
of Savannah included in the most recent Savannah Financial Statements dated
prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of Savannah included in the Savannah 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 all known or reasonably
anticipated losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the Savannah Entities and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the Savannah Entities as of the dates thereof, except where
the failure of such Allowance to be so adequate is not reasonably likely to have
a Savannah Material Adverse Effect.
6.10 ASSETS.
(a) Except as disclosed in Section 6.10 of the Savannah
Disclosure Memorandum or as disclosed or reserved against in the Savannah
Financial Statements delivered prior to the date of this Agreement, the Savannah
Entities have good and marketable title, free and clear of all Liens, to all of
their respective Assets, except for any such Liens or other defects of title
which are not reasonably likely to have a Savannah Material Adverse Effect. All
tangible properties used in the businesses of the Savannah Entities are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Savannah's past practices.
(b) All Assets which are material to Savannah's business
on a consolidated basis, held under leases or subleases by any of the Savannah
Entities, 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
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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.
(c) The Savannah Entities currently maintain insurance
similar in amounts, scope and coverage to that maintained by other peer banking
organizations. None of the Savannah Entities has received notice from any
insurance carrier that (i)any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There are
presently no claims pending under such policies of insurance for amounts
exceeding in any individual case $20,000 pending under such policies of
insurance and no notices of claims in excess of such amounts have been given by
any Savannah Entity under such policies.
(d) The Assets of the Savannah Entities include all assets
required to operate the business of the Savannah Entities as presently
conducted.
6.11 INTELLECTUAL PROPERTY. Each Savannah Entity owns or has a
license to use all of the Intellectual Property used by such Savannah Entity in
the course of its business. Each Savannah Entity is the owner of or has a
license to any Intellectual Property sold or licensed to a third party by such
Savannah Entity in connection with such Savannah Entity's business operations,
and such Savannah Entity has the right to convey by sale or license any
Intellectual Property so conveyed. No Savannah Entity is in Default under any of
its Intellectual Property licenses. No proceedings have been instituted, or are
pending or to the Knowledge of Savannah threatened, which challenge the rights
of any Savannah Entity with respect to Intellectual Property used, sold or
licensed by such Savannah Entity in the course of its business, nor has any
person claimed or alleged any rights to such Intellectual Property. The conduct
of the business of the Savannah Entities does not infringe any Intellectual
Property of any other person. Except as disclosed in Section 6.11 of the
Savannah Disclosure Memorandum, no Savannah Entity is obligated to pay any
recurring royalties to any Person with respect to any such Intellectual
Property. Except as disclosed in Section 6.11 of the Savannah Disclosure
Memorandum, no officer, director or employee of any Savannah Entity is party to
any Contract which restricts or prohibits such officer, director or employee
from engaging in activities competitive with any Person, including any Savannah
Entity.
6.12 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Savannah, each Savannah Entity,
its Participation Facilities, and its Operating Properties are, and have been,
in compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Savannah Material
Adverse Effect.
(b) To the Knowledge of Savannah, there is no
Litigation pending or threatened before any court, governmental agency, or
authority or other forum in which any Savannah Entity or any of its Operating
Properties or Participation Facilities (or Savannah in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged noncompliance (including
by any predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any Savannah Entity
or any of its Operating Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect, nor is
there any reasonable basis for any Litigation of a type described in this
sentence, except such as is not reasonably likely to have, individually or in
the aggregate, a Savannah Material Adverse Effect.
(c) During the period of (i) any Savannah Entity's
ownership or operation of any of their respective current properties, (ii) any
Savannah Entity's participation in the management of any Participation Facility,
or (iii) any Savannah Entity's holding of a security interest in a Operating
Property, there have been no releases, discharges, spillages, or disposals of
Hazardous Material in, on, under, adjacent to, or affecting (or potentially
affecting) such properties, except such as are not reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect. Prior to
the period of (i) any Savannah Entity's ownership or operation of any of their
respective current properties, (ii) any Savannah Entity's participation in the
management of any Participation Facility, or (iii) any Savannah Entity's holding
of a security interest in a Operating Property, to the Knowledge of Savannah,
there were no releases, discharges, spillages, or disposals of Hazardous
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Material in, on, under, or affecting any such property, Participation Facility
or Operating Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect.
6.13 COMPLIANCE WITH LAWS. Savannah is duly registered as a
bank holding company under the BHC Act. Each Savannah Entity has in effect all
Permits necessary for it to own, lease or operate its material 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
Savannah Material Adverse Effect, 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 Savannah Material Adverse Effect. Except as
disclosed in Section 6.13 of the Savannah Disclosure Memorandum, none of the
Savannah Entities:
(a) is in Default under any of the provisions of its
Articles of Incorporation or Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for Defaults which
are not reasonably likely to have, individually or in the aggregate, a Savannah
Material Adverse Effect; or
(c) since January 1, 1993, 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 Savannah Entity 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
Savannah Material Adverse Effect, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Savannah Material Adverse Effect, or (iii) requiring any Savannah
Entity 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.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to Bryan.
6.14 LABOR RELATIONS. No Savannah Entity is the subject of any Litigation
asserting that it or any other Savannah Entity 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 Savannah Entity to bargain with
any labor organization as to wages or conditions of employment, nor is any
Savannah Entity party to any collective bargaining agreement, nor is there any
strike or other labor dispute involving any Savannah Entity, pending or
threatened, or to the Knowledge of Savannah, is there any activity involving any
Savannah Entity's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.15 EMPLOYEE BENEFIT PLANS.
(a) Savannah has disclosed in Section 6.15 of the
Savannah Disclosure Memorandum, and has delivered or made available to Bryan
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 plan, 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 "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 Savannah Entity or
ERISA 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 "Savannah Benefit Plans"). Any of the Savannah 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 "Savannah ERISA Plan." Each Savannah ERISA
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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 "Savannah Pension Plan." No
Savannah Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(b) All Savannah 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 Savannah Material Adverse Effect. Each
Savannah 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 Savannah is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. No Savannah
Entity has engaged in a transaction with respect to any Savannah Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any Savannah Entity to a Tax 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 Savannah
Material Adverse Effect.
(c) No Savannah Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of a Savannah Pension Plan, (ii) no
change in the actuarial assumptions with respect to any Savannah Pension Plan,
and (iii) no increase in benefits under any Savannah Pension Plan as a result of
plan amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect or
materially adversely affect the funding status of any such plan. Neither any
Savannah Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any Savannah
Entity, or the single-employer plan of any ERISA Affiliate has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA, which is reasonably likely to have a Savannah
Material Adverse Effect. No Savannah Entity has provided, or is required to
provide, security to a Savannah Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective
Time, no Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any Savannah Entity with respect to any ongoing,
frozen or terminated single-employer plan or the single-employer plan of any
ERISA Affiliate, which Liability is reasonably likely to have a Savannah
Material Adverse Effect. No Savannah Entity has incurred any withdrawal
Liability with respect to a multiemployer plan under Subtitle B of Title IV of
ERISA (regardless of whether based on contributions of an ERISA Affiliate),
which Liability is reasonably likely to have a Savannah Material Adverse Effect.
No notice of a "reportable event," within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has been
required to be filed for any Savannah Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 6.15 of the Savannah
Disclosure Memorandum, no Savannah Entity has any Liability for retiree health
and life benefits under any of the Savannah Benefit Plans and there are no
restrictions on the rights of such Savannah Entity to amend or terminate any
such retiree health or benefit Plan without incurring any Liability thereunder,
which Liability is reasonably likely to have a Savannah Material Adverse Effect.
(f) Except as disclosed in Section 6.15 of the Savannah
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 severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Savannah Entity
from any Savannah Entity under any Savannah Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Savannah Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a Savannah Material Adverse Effect.
(g) The actuarial present values of all accrued
deferred compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Savannah Entity and their respective beneficiaries,
other than entitlements
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accrued pursuant to funded retirement plans subject to the provisions of Section
412 of the Internal Revenue Code or Section 302 of ERISA, have been fully
reflected on the Savannah Financial Statements to the extent required by and in
accordance with GAAP.
6.16 MATERIAL CONTRACTS. Except as disclosed in Section 6.16 of
the Savannah Disclosure Memorandum or otherwise reflected in the Savannah
Financial Statements, none of the Savannah Entities, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting
or retirement Contract, (ii) any Contract relating to the borrowing of money by
any Savannah Entity or the guarantee by any Savannah Entity of any such
obligation (other than Contracts evidencing deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, and Federal Home Loan Bank
advances of depository institution Subsidiaries, trade payables and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
or (iii) any Contract which prohibits or restricts any Savannah Entity from
engaging in any business activities in any geographic area, line of business or
otherwise in competition with any other Person, (iv) any Contract between or
among Savannah Entities, (v) any Contract involving Intellectual Property (other
than Contracts entered into in the ordinary course with customers and
"shrink-wrap" software licenses), (vi) any Contract relating to the provision of
data processing, network communication, or other technical services to or by any
Savannah Entity, (vii) any Contract relating to the purchase or sale of any
goods or services (other than Contracts entered into in the ordinary course of
business and involving payments under any individual Contract not in excess of
$25,000), (viii) any exchange-traded or over-the-counter swap, forward, future,
option, cap, floor, or collar financial Contract, or any other interest rate or
foreign currency protection Contract not included on its balance sheet which is
a financial derivative Contract, and (ix) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a Form 10-K filed by
Savannah with the SEC as of the date of this Agreement that has not been filed
as an exhibit to Savannah's Form 10-KSB filed for the fiscal year ended December
31, 1996, or in an SEC Document and identified to Bryan (together with all
Contracts referred to in Sections 6.10 and 6.15(a), the "Savannah Contracts").
With respect to each Savannah Contract and except as disclosed in Section 6.16
of the Savannah Disclosure Memorandum: (i) the Contract is in full force and
effect; (ii) no Savannah Entity is in Default thereunder, other than Defaults
which are not reasonably likely to have, individually or in the aggregate, a
Savannah Material Adverse Effect; (iii) no Savannah Entity has repudiated or
waived any material provision of any such Contract; and (iv) no other party to
any such Contract is, to the Knowledge of Savannah, in Default in any respect,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Savannah Material Adverse Effect, or has repudiated or waived
any material provision thereunder. All of the indebtedness of any Savannah
Entity for money borrowed is prepayable at any time by such Savannah Entity
without penalty or premium.
6.17 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Savannah, 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 Savannah Entity,
or against any director, employee or employee benefit plan of any Savannah
Entity, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Savannah Material
Adverse Effect, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Savannah
Entity, that are reasonably likely to have, individually or in the aggregate, a
Savannah Material Adverse Effect. Section 6.17 of the Savannah Disclosure
Memorandum contains a summary of all Litigation as of the date of this Agreement
to which any Savannah Entity is a party and which names a Savannah Entity as a
defendant or cross-defendant or for which any Savannah Entity has any potential
Liability.
6.18 REPORTS. Since January 1, 1993, or the date of
organization if later, each Savannah Entity 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 Regulatory 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 Savannah Material
Adverse Effect). 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 did not, in all 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.
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6.19 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any Savannah Entity or any Affiliate thereof for
inclusion in the Registration Statement to be filed by Savannah 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 Savannah Entity or any Affiliate thereof for inclusion
in the Joint Proxy Statement to be mailed to each Party's shareholders in
connection with the Shareholders' Meetings, and any other documents to be filed
by any Savannah Entity 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
Joint Proxy Statement, when first mailed to the shareholders of Bryan and
Savannah, 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 Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meetings, 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 Shareholders' Meetings. All documents that any Savannah Entity 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.
6.20 ACCOUNTING, TAX AND REGULATORY MATTERS. No Savannah
Entity or any Affiliate thereof has taken or agreed to take any action or has
any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the Merger from qualifying for pooling-of-interests accounting treatment
or as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, or (ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) or result in the imposition
of a condition or restriction of the type referred to in the last sentence of
such Section.
6.21 STATE TAKEOVER LAWS. Each Savannah Entity has taken all
necessary action to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including Sections 14-2-1111
and 14-2-1132 of the GBCC.
6.22 CHARTER PROVISIONS. Each Savannah Entity has taken all
action so that the entering into of this Agreement and the Savannah Stock Option
Agreement and the consummation of the Merger and the other transactions
contemplated hereby and thereby, including the acquisition of shares pursuant
to, or other exercise of rights under, the Savannah Stock Option 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 Savannah
Entity or restrict or impair the ability of Bryan or any Bryan shareholder to
vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of Savannah Common Stock that may be directly or indirectly acquired or
controlled by them.
6.23 BOARD RECOMMENDATION. The Board of Directors of Savannah,
at a meeting duly called and held, has by unanimous vote of the directors
present (who constituted all of the directors then in office) (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, and the Savannah Stock Option Agreement and the transactions
contemplated thereby, taken together, are fair to and in the best interests of
the shareholders and (ii) resolved to recommend that the holders of the shares
of Savannah Common Stock approve this Agreement.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF EACH PARTY. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of the other Party shall have been
obtained, and except as otherwise expressly contemplated herein, each Party
shall and shall cause each of its Subsidiaries to (a) operate its business only
in the usual, regular, and ordinary course, (b) preserve intact its business
organization and Assets and maintain its rights and franchises, and (c) take no
action which would (i) materially adversely affect the ability of either Party
to obtain any Consents required for the transactions contemplated hereby without
imposition of a
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condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c), or (ii) materially adversely affect the ability of
either Party to perform its covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF Bryan. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of Savannah shall have been
obtained, which consent shall not be unreasonably withheld, and except as
otherwise expressly contemplated herein, Bryan 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:
(a) amend the Articles of Incorporation, Bylaws or
other governing instruments of any Bryan Entity, or
(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a Bryan Entity to
another Bryan Entity) in excess of an aggregate of $50,000 (for the Bryan
Entities on a consolidated basis) except in the ordinary course of the business
of Bryan Subsidiaries consistent with past practices (which shall include, for
Bryan Subsidiaries that are depository institutions, 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 Bryan Entity of any Lien or permit any such Lien to exist
(other than in connection with deposits, repurchase agreements, bankers
acceptances, "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
Bryan 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 Bryan Entity, or declare or pay any
dividend or make any other distribution in respect of Bryan's capital stock;
provided, that Bryan may (to the extent legally and contractually permitted to
do so), but shall not be obligated to, declare and pay a regular annual cash
dividend on the shares of Bryan Common Stock in accordance with past practice
disclosed in Section 7.2(c) of the Bryan Disclosure Memorandum, but not in
excess of $1.00 per share of Bryan Common Stock, and further provided that,
after June 30, 1998, Bryan may declare and pay quarterly cash dividends in
amounts equal to the quarterly cash dividend amounts declared and paid by
Savannah to Savannah shareholders times the Exchange Ratio of 1.85, on the
record dates and payment dates declared by Savannah; or
(d) except for this Agreement, or pursuant to the Bryan
Stock Option 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 Bryan Disclosure Memorandum,
issue, sell, pledge, encumber, authorize the issuance of, enter into any
Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of Bryan Common
Stock or any other capital stock of any Bryan Entity, or any stock appreciation
rights, or any option, warrant, or other Equity Right; or
(e) adjust, split, combine or reclassify any shares of
Bryan Common Stock or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Bryan Common Stock, or sell, lease,
mortgage or otherwise dispose of or otherwise encumber (x) any shares of capital
stock of any Bryan Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another Bryan Entity) or (y) any Asset having a book
value in excess of $25,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities,
U.S. Government agency securities or obligations of the State of Georgia, or any
subdivisions thereof, which have maturities of seven years or less, purchase any
securities or make any material investment, either by purchase of stock of
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Bryan Subsidiary, or otherwise
acquire direct or indirect control over any Person, other than in connection
with (i) internal reorganizations or consolidations involving existing
Subsidiaries, (ii) foreclosures in the ordinary course of business, (iii)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity, or (iv) the creation of new wholly owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
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(g) grant any increase in compensation or benefits to
the employees or officers of any Bryan Entity, except in accordance with past
practice disclosed in Section 7.2(g) of the Bryan 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 Bryan Disclosure Memorandum;
and enter into or amend any severance agreements with officers of any Bryan
Entity; grant any material increase in fees or other increases in compensation
or other benefits to directors of any Bryan Entity except in accordance with
past practice disclosed in Section 7.2(g) of the Bryan Disclosure Memorandum; or
voluntarily accelerate the vesting of any stock options or other stock-based
compensation or employee benefits or other Equity Rights; or
(h) enter into or amend any employment Contract between
any Bryan Entity and any Person (unless such amendment is required by Law) that
the Bryan Entity 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 Bryan
Entity or terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any Bryan Entity 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 make any
distributions from such employee benefit plans, except as required by Law, the
terms of such plans or consistent with past practice; 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, or settle any Litigation involving any Liability of any
Bryan Entity for material money damages or restrictions upon the operations of
any Bryan Entity; or
(l) except in the ordinary course of business, enter
into, modify, amend or terminate any material Contract (including any loan
Contract with an unpaid balance exceeding $25,000) or waive, release, compromise
or assign any material rights or claims.
7.3 NEGATIVE COVENANTS OF SAVANNAH. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of Bryan shall have been obtained,
which consent shall not be unreasonably withheld, and except as otherwise
expressly contemplated herein, Savannah 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:
(a) amend the Articles of Incorporation or Bylaws of
Savannah, in each case, in any manner adverse to the holders of Bryan Common
Stock, or
(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a Savannah Entity to
another Savannah Entity) in excess of an aggregate of $100,000 (for the Savannah
Entities on a consolidated basis) except in the ordinary course of the business
of Savannah Subsidiaries consistent with past practices (which shall include,
for Savannah Subsidiaries that are depository institutions, 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 Savannah Entity of any Lien or permit any such Lien to exist
(other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business, the satisfaction of legal requirements in the
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exercise of trust powers, and Liens in effect as of the date hereof that are
disclosed in the Savannah 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 Savannah Entity, or declare or pay any
dividend or make any other distribution in respect of Savannah's capital stock,
provided that Savannah may (to the extent legally and contractually permitted to
do so), but shall not be obligated to, declare and pay regular quarterly cash
dividends on the shares of Savannah Common Stock in accordance with past
practice disclosed in Section 7.3(c) of the Savannah Disclosure Memorandum, but
not in excess of $0.12 per share of Savannah Common Stock; or
(d) except for this Agreement, or pursuant to the
Savannah Stock Option 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 7.3(d) of the Savannah Disclosure
Memorandum, issue, sell, pledge, encumber, authorize the issuance of, enter into
any Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of Savannah Common
Stock or any other capital stock of any Savannah Entity, or any stock
appreciation rights, or any option, warrant, conversion, or other Equity Right;
or
(e) adjust, split, combine or reclassify any shares of
Savannah Common Stock or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of Savannah Common Stock or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any shares of
capital stock of any Savannah Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another Savannah Entity) or any Asset having a
book value in excess of $25,000 other than in the ordinary course of business
for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities,
U.S. Government agency securities or obligations of the State of Georgia, or any
subdivisions thereof, which have maturities of seven years or less, purchase any
securities or make any material investment, either by purchase of stock of
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Savannah Subsidiary, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) internal reorganizations or consolidations involving
existing Subsidiaries, (ii) foreclosures in the ordinary course of business,
(iii) acquisitions of control by a depository institution Subsidiary in its
fiduciary capacity, or (iv) the creation of new wholly owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or benefits to
the employees or officers of any Savannah Entity, except in accordance with past
practice disclosed in Section 7.3(g) of the Savannah 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 7.3(g) of the Savannah Disclosure Memorandum
or the provisions of any applicable program or plan adopted by its Board of
Directors prior to the date of this Agreement; enter into or amend any severance
agreements with officers of any Savannah Entity; grant any material increase in
fees or other increases in compensation or other benefits to directors of any
Savannah Entity except in accordance with past practice disclosed in Section
7.3(g) of the Savannah Disclosure Memorandum; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits or other Equity Rights; or
(h) enter into or amend any employment Contract
between any Savannah Entity and any Person (unless such amendment is required by
Law) that the Savannah Entity 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;
(i) adopt any new employee benefit plan of any Savannah
Entity or terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any Savannah Entity 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 make any
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distributions from such employee benefit plans except as required by Law, the
terms of such plans, or consistent with past practice; 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 applicable Tax Laws or regulatory
accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance
with past practice, or settle any Litigation involving any Liability of any
Savannah Entity for material money damages or restrictions upon the operations
of any Savannah Entity; or
(l) except in the ordinary course of business, enter
into, modify, amend or terminate any material Contract (including any loan
Contract with an unpaid balance exceeding $25,000) or waive, release, compromise
or assign any material rights or claims.
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 (i) is reasonably likely to have, individually or in the
aggregate, a Bryan Material Adverse Effect or a Savannah Material Adverse
Effect, as applicable, or (ii) would 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. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the entity
filing such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
As soon as reasonably practicable after execution of this Agreement, Savannah
shall prepare and file the Registration Statement with the SEC, and shall use
its reasonable efforts to cause the Registration Statement to become effective
under the 1933 Act and take any action required to be taken under the applicable
state Blue Sky or securities Laws in connection with the issuance of the shares
of Savannah Common Stock upon consummation of the Merger. Bryan shall cooperate
in the preparation and filing of the Registration Statement and shall furnish
all information concerning it and the holders of its capital stock as Savannah
may reasonably request in connection with such action. Bryan shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. Savannah shall call a Shareholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of the issuance of
shares of Savannah Common Stock pursuant to the Merger and such other related
matters as it deems appropriate. In connection with the Shareholders' Meetings,
(i) Bryan and Savannah shall prepare and file with the SEC a Joint Proxy
Statement and mail such Joint Proxy Statement to their respective shareholders,
(ii) the Parties shall furnish to each other all information concerning them
that they may reasonably request in connection with such Joint Proxy Statement,
(iii) the Board of Directors of Bryan and Savannah shall recommend to their
respective shareholders the approval of the matters submitted for approval, and
(iv) the
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Board of Directors and officers of Bryan and Savannah shall use their reasonable
efforts to obtain such shareholders' approval. Savannah and Bryan shall make all
necessary filings with respect to the Merger under the Securities Laws.
8.28 EXCHANGE LISTING. Savannah shall use its reasonable
efforts to list, prior to the Effective Time, on the Nasdaq National Market the
shares of Savannah Common Stock to be issued to the holders of Bryan Common
Stock pursuant to the Merger, and Savannah shall give all notices and make all
filings with the Nasdaq National Market required in connection with the
transactions contemplated herein.
8.3 APPLICATIONS. Savannah shall prepare and file, and Bryan
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. The
Parties shall deliver to each other copies of all filings, correspondence and
orders to and from all Regulatory Authorities in connection with the
transactions contemplated hereby.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to
the conditions of this Agreement, Savannah shall execute and file the
Certificate of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the term
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 to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement or the respective Stock
Option Agreements. Each Party shall use, and shall cause each of its
Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall 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) In addition to the Parties' respective obligations
under the Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein 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 or certify the destruction of
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 discovered through the course of its
investigation and which represents, or is reasonably likely to represent, either
a material breach of any representation, warranty, covenant or agreement of the
other Party or which has had or is reasonably likely to have a Bryan Material
Adverse Effect or a Savannah Material Adverse Effect, as applicable.
8.7 PRESS RELEASES. Prior to the Effective Time, Bryan and
Savannah shall consult 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, that nothing in this Section
8.7 shall be deemed to prohibit any Party from making any disclosure which its
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counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and
the transactions contemplated hereby, neither Party nor any Affiliate thereof
nor any Representatives thereof retained by either Party shall directly or
indirectly solicit any Acquisition Proposal by any Person. Neither Party nor any
Affiliate or Representative thereof shall furnish any non-public information
that it is not legally obligated to furnish, negotiate with respect to, or enter
into any Contract with respect to, any Acquisition Proposal, but a Party 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
obligations under Section 14 of the 1934 Act. Each Party shall promptly advise
the other Party following the receipt of any Acquisition Proposal and the
details thereof, and advise the other Party of any developments with respect to
such Acquisition Proposal promptly upon the occurrence thereof.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties
undertakes and agrees to use its reasonable efforts to cause the Merger, and to
take no action which would cause the Merger not, to qualify for treatment as a
pooling of interests for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
8.10 STATE TAKEOVER LAWS. Each Bryan Entity shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
Takeover Law, including Sections 14-2-1111 and 14-2-1132 of the GBCC.
8.11 CHARTER PROVISIONS. Each Bryan Entity shall take all
necessary action to ensure that the entering into of this Agreement and the
Bryan Stock Option Agreement and the consummation of the Merger and the other
transactions contemplated hereby 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 Bryan Entity or restrict or impair the ability of
Savannah or any of its Subsidiaries to vote, or otherwise to exercise the rights
of a shareholder with respect to, shares of any Bryan Entity that may be
directly or indirectly acquired or controlled by them.
8.12 AGREEMENT OF AFFILIATES. Bryan has disclosed in Section
8.12 of the Bryan Disclosure Memorandum all Persons whom it reasonably believes
is an "affiliate" of Bryan for purposes of Rule 145 under the 1933 Act. Bryan
shall use its reasonable efforts to cause each such Person to deliver to
Savannah not later than 30 days after the date of this Agreement, a written
agreement, substantially in the form of Exhibit 44"ex_affil_agr4ex_affil_agr,
providing that such Person will not sell, pledge, transfer, or otherwise dispose
of the shares of Bryan 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 Savannah Common Stock to be received by such
Person upon consummation of the Merger except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder and, if the
Merger is accounted for by the pooling-of-interests method of accounting, until
such time as financial results covering at least 30 days of combined operations
of Savannah and Bryan have been published within the meaning of Section 201.01
of the SEC's Codification of Financial Reporting Policies. If the Merger is
accounted for using the pooling-of-interests method of accounting, shares of
Savannah Common Stock issued to such affiliates of Bryan in exchange for shares
of Bryan Common Stock shall not be transferable until such time as financial
results covering at least 30 days of combined operations of Savannah and Bryan
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies, regardless of whether each such
affiliate has provided the written agreement referred to in this Section 8.12
(and Savannah shall be entitled to place restrictive legends upon certificates
for shares of Savannah Common Stock issued to affiliates of Bryan pursuant to
this Agreement to enforce the provisions of this Section 8.12). Savannah shall
not be required to maintain the effectiveness of the Registration Statement
under the 1933 Act for the purposes of resale of Savannah Common Stock by such
affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, Savannah shall provide generally to officers and employees of the Bryan
Entities employee benefits under employee benefit and welfare plans (other than
stock option or other plans involving the potential issuance of Savannah Common
Stock), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the Savannah Entities to their similarly
situated officers and employees. For purposes of participation, vesting and
(except in the case of Savannah retirement plans) benefit accrual under
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Savannah's employee benefit plans, the service of the employees of the Bryan
Entities prior to the Effective Time shall be treated as service with a Savannah
Entity participating in such employee benefit plans. Savannah also shall, and
shall cause its Subsidiaries to, honor in accordance with their terms all
employment, severance, consulting and other compensation Contracts disclosed in
Section 8.13 of the Bryan Disclosure Memorandum between any Bryan Entity and any
current or former director, officer, or employee thereof, and all provisions for
vested benefits or other vested amounts earned or accrued through the Effective
Time under the Bryan Benefit Plans.
8.14 INDEMNIFICATION.
(a) For a period of six years after the Effective Time,
Savannah shall indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the Bryan Entities (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
arising out of the Indemnified Party's service or services as directors,
officers, employees or agents of Bryan or, at Bryan's request, of another
corporation, partnership, joint venture, trust or other enterprise occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under Georgia Law and by Bryan's
Articles of Incorporation and Bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
Litigation and whether or not any Savannah Entity is insured against any such
matter. Without limiting the foregoing, in any case in which approval by the
Surviving Corporation is required to effectuate any indemnification, the
Surviving Corporation shall direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon between Savannah and the Indemnified Party.
(b) Savannah shall use its reasonable efforts (and
Bryan shall cooperate prior to the Effective Time in these efforts) to maintain
in effect for a period of three years after the Effective Time Bryan's existing
directors' and officers' liability insurance policy (provided that Savannah may
substitute therefor (i) policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less advantageous or
(ii) with the consent of Bryan given prior to the Effective Time, any other
policy) with respect to claims arising from facts or events which occurred prior
to the Effective Time and covering persons who are currently covered by such
insurance; provided, that the Surviving Corporation shall not be obligated to
make aggregate premium payments for such three-year period in respect of such
policy (or coverage replacing such policy) which exceed, for the portion related
to Bryan's directors and officers, 150% of the annual premium payments on
Bryan's current policy in effect as of the date of this Agreement (the "Maximum
Amount"). If the amount of the premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, Savannah shall use its reasonable
efforts to maintain the most advantageous policies of directors' and officers'
liability insurance obtainable for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.14, upon learning of any
such Liability or Litigation, shall promptly notify Savannah thereof. In the
event of any such Litigation (whether arising before or after the Effective
Time), (i) the Surviving Corporation shall have the right to assume the defense
thereof and the Surviving Corporation 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 the Surviving Corporation elects not to assume such
defense or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, that the Surviving
Corporation shall be obligated pursuant to this paragraph (c) 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) the Surviving Corporation shall not be liable for any settlement effected
without its prior written consent; and provided further that the Surviving
Corporation 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.
(d) If the Surviving Corporation or any successors or
assigns shall consolidate with or merge into any other Person and shall not be
the continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in each
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
8.14.
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(e) The provisions of this Section 8.14 are intended to
be for the benefit of and shall be enforceable by, each Indemnified Party and
their respective heirs and representatives.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.19 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:
(a) SHAREHOLDER APPROVAL. The shareholders of Bryan
shall have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law,
by the provisions of any governing instruments, or by the rules of the Nasdaq
National Market. The shareholders of Savannah shall have approved the issuance
of shares of Savannah Common Stock pursuant to the Merger, as and to the extent
required by Law, by the provisions of any governing instruments, or by the rules
of the Nasdaq National Market, and shall have approved the election of the five
current directors of Bryan to the Savannah Board of Directors as contemplated by
Section 2.3.
(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 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 that, had such condition or requirement been known, such Party
would not, in its reasonable judgment, have entered into this Agreement.
(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)) 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 Bryan
Material Adverse Effect or a Savannah Material Adverse Effect, as applicable. 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 that, had such condition or
requirement been known, such Party would not, in its reasonable judgment, have
entered into this Agreement.
(d) LEGAL PROCEEDINGS. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits, restricts
or makes illegal consummation of the transactions contemplated by this
Agreement.
(e) 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 Savannah Common Stock issuable pursuant to the
Merger shall have been received.
(f) EXCHANGE LISTING. The shares of Savannah Common
Stock issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq National Market.
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(g) POOLING LETTERS. Each of the Parties shall have
received letters, dated as of the date of filing of the Registration Statement
with the SEC and as of the Effective Time, addressed to Savannah, in form and
substance reasonably acceptable to Savannah, from Arthur Andersen LLP to the
effect that the Merger will qualify for pooling-of-interests accounting
treatment. Each of the Parties also shall have received letters, dated as of the
date of filing of the Registration Statement with the SEC and as of the
Effective Time, addressed to Savannah, in form and substance reasonably
acceptable to Savannah, from Tiller, Stewart & Company, LLC to the effect that
such firm is not aware of any matters relating to Bryan and its Subsidiaries
which would preclude the Merger from qualifying for pooling-of-interests
accounting treatment.
(h) TAX MATTERS. Each Party shall have received a
written opinion of counsel from Alston & Bird LLP, in form reasonably
satisfactory to such Parties (the "Tax Opinion"), to the effect that (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 Bryan Common Stock
for Savannah Common Stock will not give rise to gain or loss to the shareholders
of Bryan with respect to such exchange (except to the extent of any cash
received), and (iii) none of Bryan or Savannah will recognize gain or loss as a
consequence of the Merger (except for amounts resulting from any required change
in accounting methods and any income and deferred gain recognized pursuant to
Treasury regulations issued under Section 1502 of the Internal Revenue Code). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Bryan and Savannah reasonably satisfactory in
form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF SAVANNAH. The obligations of
Savannah 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 Savannah pursuant to Section 11.6(a):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of
this Section 9.2(a), the accuracy of the representations and warranties of Bryan
set forth 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 set
forth in Section 5.3 shall be true and correct (except for inaccuracies which
are de minimus in amount). The representations and warranties set forth in
Sections 5.21, and 5.22 shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
Bryan set forth in this Agreement (including the representations and warranties
set forth in Sections 5.3, 5.21, and 5.22) such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a Bryan Material Adverse
Effect; provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "material" or "Material
Adverse Effect" or to the "Knowledge" of any Person shall be deemed not to
include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of Bryan 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. Bryan shall have delivered to
Savannah (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 set forth in Section 9.1 as relates to Bryan and in
Section 9.2(a) and 9.2(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by Bryan'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 Savannah
and its counsel shall request.
(d) AFFILIATES AGREEMENTS. Savannah shall have received
from each affiliate of Bryan the affiliates letter referred to in Section 8.12,
to the extent necessary to assure in the reasonable judgment of Savannah that
the transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
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9.3 CONDITIONS TO OBLIGATIONS OF BRYAN. The obligations of
Bryan 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 Bryan pursuant to Section 11.6(b):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of
this Section 9.3(a), the accuracy of the representations and warranties of
Savannah set forth 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
Savannah set forth in Section 6.3 shall be true and correct (except for
inaccuracies which are de minimus in amount). The representations and warranties
of Savannah set forth in Section 6.20 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Savannah set forth in this Agreement (including the
representations and warranties set forth in Sections 6.3 and 6.20) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have, a
Savannah Material Adverse Effect; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of Savannah 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.
(d) CERTIFICATES. Savannah shall have delivered to
Bryan (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 set forth in Section 9.1 as relates to Savannah and in
Section 9.3(a) and 9.3(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by Savannah'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 Bryan and
its counsel shall request.
(d) EMPLOYMENT AGREEMENTS. Savannah has executed
employment agreements with E. James Burnsed and George Michael Odom, Jr. in the
form attached hereto as Exhibit 5.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Bryan and Savannah or both, this Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of Savannah and Bryan; or
(b) By either Party (provided that the terminating
Party is not then in material breach of any representation, warranty, covenant,
or other 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 30 days after the giving
of written notice to the breaching Party of such breach and which breach is
reasonably likely, in the opinion of the non-breaching Party, to have,
individually or in the aggregate, a Bryan Material Adverse Effect or a Savannah
Material Adverse Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating
Party is not then in material breach of any representation, warranty, 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
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Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating
Party is not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event (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) the shareholders of Bryan or
Savannah fail to vote their approval of the matters relating to this Agreement
and the transactions contemplated hereby at the Shareholders' Meetings where
such matters were presented to such shareholders for approval and voted upon; or
(e) By either Party in the event that the Merger shall
not have been consummated by December 31, 1998, 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 either Party (provided that the terminating
Party is not then in material breach of any representation, warranty, 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
cannot be satisfied or fulfilled by the date specified in Section 10.1(e).
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.6(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c) or
10.1(f) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination. The Stock Option Agreements shall be governed by its own
terms as to its termination.
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 this Section 10.3 and
Articles 1, 2, 3, 4 and 11 and Sections 8.12, 8.13 and 8.14.
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ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the
capitalized terms set forth below 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" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination involving
the acquisition of such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial portion
of the assets of, such Party 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 any such
capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated herein
by reference.
"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.
"BRYAN COMMON STOCK" shall mean the $1.00 par value common stock
of Bryan.
"BRYAN DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Bryan Bancorp of Georgia, Inc. Disclosure Memorandum" delivered
prior to the date of this Agreement to Savannah describing in reasonable
detail the matters contained therein and, with respect to each disclosure
made therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of
any other Section not specifically referenced with respect thereto.
"BRYAN ENTITIES" shall mean, collectively, Bryan and all Bryan
Subsidiaries.
"BRYAN FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Bryan 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 each of the three fiscal years ended December 31, 1996, 1995 and 1994,
as filed by Bryan in SEC Documents, (ii) the consolidated balance sheets
(including related notes and schedules, if any) of Bryan as of December 31, 1997
and 1996, and the related statements of income, changes in shareholders' equity,
and cash flows (including related notes and schedules, if any) for each of the
three fiscal years ended December 31, 1997, 1996 and 1995, as delivered by Bryan
to Savannah prior to execution of this Agreement, and (iii) the consolidated
balance sheets of Bryan (including related notes and schedules, if any) and
related statements of income, changes in shareholders' equity, and cash
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flows (including related notes and schedules, if any) included in SEC
Documents (including financial statements covering the periods in clause
(ii) above) filed with respect to periods ended subsequent to September
30, 1997.
"BRYAN MATERIAL ADVERSE EFFECT" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of Bryan and its Subsidiaries, taken as
a whole, or (ii) the ability of Bryan to perform its obligations under
this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect"
shall not be deemed to include the impact of (a) changes in banking and
similar Laws of general applicability or interpretations thereof by courts
or governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting principles generally applicable to
banks and their holding companies, (c) actions and omissions of Bryan (or
any of its Subsidiaries) taken with the prior informed written Consent of
Savannah in contemplation of the transactions contemplated hereby, and (d)
the direct effects of compliance with this Agreement on the operating
performance of Bryan, including expenses incurred by Bryan in consummating
the transactions contemplated by this Agreement.
"BRYAN SUBSIDIARIES" shall mean the Subsidiaries of Bryan, which
shall include the Bryan Subsidiaries described in Section 5.4 and any
corporation, bank, savings association, or other organization acquired as
a Subsidiary of Bryan in the future and held as a Subsidiary by Bryan at
the Effective Time.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger to
be executed by Savannah and filed with the Secretary of State of the State
of Georgia relating to the Merger as contemplated by Section 1.1.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement, dated January 30, 1998, between Bryan and
Savannah.
"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.
"DATE OF THIS AGREEMENT" and words of similar import (such as
"date hereof") shall mean February 11, 1998.
"DEFAULT" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) 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, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 ET
SEQ. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
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otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"EQUITY 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 Equity
Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXHIBITS" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"INTELLECTUAL PROPERTY" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software (including any
source or object codes therefor or documentation relating thereto), trade
secrets, franchises, know-how, inventions, and other intellectual property
rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"JOINT PROXY STATEMENT" shall mean the proxy statement used by
Bryan and Savannah to solicit the approval of their respective
shareholders of the transactions contemplated by this Agreement, which
shall include the prospectus of Savannah relating to the issuance of the
Savannah Common Stock to holders of Bryan Common Stock.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean
the personal knowledge after due inquiry of the chairman, president, chief
financial officer, chief accounting officer, chief operating officer,
chief credit officer, general counsel, any assistant or deputy general
counsel, or any senior, executive or other vice president of such Person
and the knowledge of any such persons obtained or which would have been
obtained from a reasonable investigation.
"LAW" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or
statute applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including 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, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
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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 of, 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 other Liens
incurred in the ordinary course of the banking business, and (iii) Liens
which do not materially impair the use of or title to the Assets subject
to such Lien.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other examination
or investigation, hearing, administrative or other proceeding relating to
or affecting a Party, its business, its Assets (including 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.
"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.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of
the Nasdaq Stock Market, Inc.
"OPERATING PROPERTY" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security interest or other interest
(including an interest in a fiduciary capacity), and, where required by
the context, includes the owner or operator of such property, but only
with respect to such property.
"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 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 Bryan or Savannah, and "PARTIES" shall
mean both Bryan and Savannah.
"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, 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.
"REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Savannah under the 1933 Act with respect to the shares of Savannah Common
Stock to be issued to the shareholders of Bryan in connection with the
transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC, the
Nasdaq National Market the Federal Trade Commission, the United States
Department of Justice, the Board of the Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Department of Banking and Finance of the State
of Georgia, and all other federal, state, county, local or other
governmental or regulatory agencies, authorities (including
self-regulatory authorities), instrumentalities, commissions, boards or
bodies having jurisdiction over the Parties and their respective
Subsidiaries.
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"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative engaged
by a Person.
"SAVANNAH COMMON STOCK" shall mean the $1.00 par value common
stock of Savannah.
"SAVANNAH DISCLOSURE MEMORANDUM" shall mean the written
information entitled "The Savannah Bancorp, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to Bryan describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information disclosed
with respect to one Section shall not be deemed to be disclosed for
purposes of any other Section not specifically referenced with respect
thereto.
"SAVANNAH ENTITIES" shall mean, collectively, Savannah and all
Savannah Subsidiaries.
"SAVANNAH FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Savannah
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 each of the three fiscal years ended December
31, 1996, 1995 and 1994, as filed by Savannah in SEC Documents, (ii) the
consolidated balance sheets (including related notes and schedules, if
any) of Savannah as of December 31, 1997 and 1996, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for each of the three
fiscal years ended December 31, 1997, 1996 and 1995, as delivered by
Savannah to Bryan prior to execution of this Agreement, and (iii) the
consolidated balance sheets of Savannah (including related notes and
schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents (including financial
statements covering the periods in clause (ii) above) filed with respect
to periods ended subsequent to September 30, 1997.
"SAVANNAH MATERIAL ADVERSE EFFECT" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of Savannah and its Subsidiaries, taken
as a whole, or (ii) the ability of Savannah to perform its obligations
under this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect"
shall not be deemed to include the impact of (a) changes in banking and
similar Laws of general applicability or interpretations thereof by courts
or governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting principles generally applicable to
banks and their holding companies, (c) actions and omissions of Savannah
(or any of its Subsidiaries) taken with the prior informed written Consent
of Bryan in contemplation of the transactions contemplated hereby, and (d)
the direct effects of
compliance with this Agreement on the operating performance of Savannah,
including expenses incurred by Savannah in consummating the transactions
contemplated by this Agreement.
"SAVANNAH SUBSIDIARIES" shall mean the Subsidiaries of Savannah,
which shall include the Savannah Subsidiaries described in Section 6.4 and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of Savannah in the future and held as a Subsidiary by
Savannah at the Effective Time.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed, or
required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETINGS" shall mean the respective meetings of
the shareholders of Bryan and Savannah to be held pursuant to Section 8.1,
including any adjournment or adjournments thereof.
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"SUBSIDIARIES" shall mean all those corporations, associations,
or other business entities of which the entity in question either (i) 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, there shall not be included any such
entity the equity securities of which are owned or controlled in a
fiduciary capacity), (ii) in the case of partnerships, serves as a general
partner, (iii) in the case of a limited liability company, serves as a
managing member, or (iv) otherwise has the ability to elect a majority of
the directors, trustees or managing members thereof.
"SURVIVING CORPORATION" shall mean Savannah as the surviving
corporation resulting from the Merger.
"TAX RETURN" shall mean any report, return, information return,
or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined
or unitary group that includes a Party or its Subsidiaries.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment, sales,
use, transfer, license, payroll, franchise, severance, stamp, occupation,
windfall profits, environmental, federal highway use, commercial rent,
customs duties, capital stock, paid-up capital, profits, withholding,
Social Security, single business and unemployment, disability, real
property, personal property, registration, ad valorem, value added,
alternative or add-on minimum, estimated, or other tax or governmental fee
of any kind whatsoever, imposes or required to be withheld by the United
States or any state, county, local or foreign government or subdivision or
agency thereof, including any interest, penalties, and additions imposed
thereon or with respect thereto.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
Allowance Section 5.9
Bryan Benefit Plans Section 5.15
Bryan Contracts Section 5.16
Bryan ERISA Plan Section 5.15
Bryan Options Section 3.6
Bryan Pension Plan Section 5.15
Bryan SEC Reports Section 5.5(a)
Bryan Stock Option Agreement Section 1.4
Closing Section 1.2
Directors' Agreements Section 5.23
Effective Time Section 1.3
ERISA Affiliate Section 5.15(b)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Maximum Amount Section 8.14
Merger Section 1.1
Savannah Benefit Plans Section 6.15
Savannah Contracts Section 6.16
Savannah ERISA Plan Section 6.15
Savannah Pension Plan Section 6.15
Savannah SEC Reports Section 6.5(a)
Savannah Stock Option Agreement Section 1.4
Takeover Laws Section 5.21
Tax Opinion Section 9.1(h)
(c) 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."
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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
one-half of the filing fees payable in connection with the Registration
Statement and the Joint Proxy Statement and printing costs incurred in
connection with the printing of the Registration Statement and the Joint Proxy
Statement.
(b) Notwithstanding the foregoing,
(i) if this Agreement is terminated by Savannah pursuant
to any of Sections 10.1(b), 10.1(c), 10.1(d)(ii) (as relates to approval
of Bryan's shareholders) or 10.1(f) (but only on the basis of the failure
of Bryan to satisfy any of the conditions enumerated in Section 9.2), or
(ii) if the Merger is not consummated as a result of the
failure of Bryan to satisfy any of the conditions set forth in Section
9.2, then Bryan shall promptly pay Savannah all the out-of-pocket costs
and expenses of Savannah, including costs of counsel, investment bankers,
actuaries and accountants up to but not exceeding an additional $100,000,
excluding percentage based fees payable to a consultant or broker retained
by Savannah.
(c) Notwithstanding the foregoing,
(i) if this Agreement is terminated by Bryan pursuant to
either of Sections 10.1(b), 10.1(c), 10.1(d)(ii) (as relates to approval
of Savannah's shareholders), or 10.1(f) (but only on the basis of the
failure of Savannah to satisfy any of the conditions enumerated in Section
9.3), or
(ii) if the Merger is not consummated as a result of the
failure of Savannah to satisfy any of the conditions set forth in Section
9.3,
then Savannah shall promptly pay Bryan all the out-of-pocket costs and expenses
of Bryan, including costs of counsel, investment bankers, actuaries and
accountants up to but not exceeding an additional $100,000, excluding percentage
based fees payable to a consultant or broker retained by Bryan.
(d) In addition to the foregoing, if, after the date of
this Agreement and within twelve (12) months following
(i) any termination of this Agreement
(1) by Savannah pursuant to Sections 10.1(b),
10.1(c), 10.1(f) (but only on the basis of the failure of Bryan to
satisfy any of the conditions enumerated in Section 9.2), or
(2) by either Party pursuant to Section 10.1(d)(ii)
(with respect to approval of the shareholders of Bryan), or
(ii) failure to consummate the Merger by reason of any
failure of Bryan to satisfy the conditions enumerated in Section 9.2 or in
Section 9.1(a) (as such section relates to approval by the shareholders of
Bryan),
any third-party shall acquire, merge with, combine with, purchase a significant
amount of Assets of, or engage in any other business combination with, or
purchase any equity securities involving an acquisition of 20% or more of the
voting stock of, Bryan, or enter into any binding agreement to do any of the
foregoing (collectively, a "Business Combination"), such third-party that is a
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party to the Business Combination shall pay to Savannah, prior to the earlier of
consummation of the Business Combination or execution of any letter of intent or
definitive agreement with Bryan relating to such Business Combination, an amount
in cash equal to the sum of
(x) the direct costs and expenses or portion thereof
referred to in subsection (a) above incurred by or on behalf of Savannah
in connection with the transactions contemplated by this Agreement, plus
(y) 5% of the aggregate fair market value of the
consideration received by the shareholders of Bryan in such Business
Combination, less
(z) any amounts previously paid by Bryan to Savannah
pursuant to subsection (b) of this Section 11.2,
which sum represents additional compensation for Savannah's loss as the result
of the transactions contemplated by this Agreement not being consummated. In the
event such third-party shall refuse to pay such amounts within ten days of
demand therefor by Savannah, the amounts shall be an obligation of Bryan and
shall be paid by Bryan promptly upon notice to Bryan by Savannah.
(e) In addition to the foregoing, if, after the date of
this
Agreement and within twelve (12) months following
(i) any termination of this Agreement
(1) by Bryan pursuant to Sections 10.1(b), 10.1(c),
10.1(f) (but only on the basis of the failure of Savannah to satisfy
any of the conditions enumerated in Section 9.3), or
(2) by either Party pursuant to Section 10.1(d)(ii)
(with respect to approval of the shareholders of Savannah), or
(ii) failure to consummate the Merger by reason of any
failure of Savannah to satisfy the conditions enumerated in Section 9.3 or
in Section 9.1(a) (as such section relates to approval by the shareholders
of Savannah),
any third-party shall acquire, merge with, combine with, purchase a significant
amount of Assets of, or engage in any other business combination with, or
purchase any equity securities involving an acquisition of 20% or more of the
voting stock of, Savannah, or enter into any binding agreement to do any of the
foregoing (collectively, a "Business Combination"), such third-party that is a
party to the Business Combination shall pay to Bryan, prior to the earlier of
consummation of the Business Combination or execution of any letter of intent or
definitive agreement with Savannah relating to such Business Combination, an
amount in cash equal to the sum of
(x) the direct costs and expenses or portion thereof
referred to in subsection (a) above incurred by or on behalf of Bryan in
connection with the transactions contemplated by this Agreement, plus
(y) 5% of the aggregate fair market value of the
consideration received by the shareholders of Savannah in such Business
Combination, less
(z) any amounts previously paid by Savannah to Bryan
pursuant to subsection (c) of this Section 11.2,
which sum represents additional compensation for Bryan's loss as the result of
the transactions contemplated by this Agreement not being consummated. In the
event such third-party shall refuse to pay such amounts within ten days of
demand therefor by Bryan, the amounts shall be an obligation of Savannah and
shall be paid by Savannah promptly upon notice to Savannah by Bryan.
(f) The Parties acknowledge that the loss to either Party
resulting from breach of this Agreement by the other Party or other failure of
the Merger to be consummated is not susceptible of ready measurement and,
therefore, that the payments provided in this Section 11.2 are intended by the
Parties to constitute liquidated damages for any breach by a Party of the terms
of this Agreement, and not a penalty.
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11.3 BROKERS AND FINDERS. Except for T. Stephen Johnson &
Associates, Inc. as to Savannah, 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. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
Bryan or by Savannah, each of Bryan and Savannah, 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 (except, as to Section
8.6(b), for the Confidentiality Agreement). 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 8.14.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of each of the Parties, whether before or after shareholder approval of
this Agreement has been obtained; provided, that after any such approval by the
holders of Bryan Common Stock, there shall be made no amendment that pursuant to
Section 14-2-1106 of the GBCC requires further approval by such shareholders
without the further approval of such shareholders; and further provided, that
after any such approval by the holders of Savannah Common Stock, the provisions
of this Agreement relating to the manner or basis in which shares of Bryan
Common Stock will be exchanged for shares of Savannah Common Stock
shall not be amended after the Savannah Shareholders' Meeting in a manner
adverse to the holders of Savannah Common Stock without any requisite approval
of the holders of the issued and outstanding shares of Savannah Common Stock
entitled to vote thereon.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Savannah, 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 Bryan, to waive or extend the time for the compliance
or fulfillment by Bryan of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
Savannah 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 Savannah.
(b) Prior to or at the Effective Time, Bryan, 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 Savannah, to waive or extend the time for the
compliance or fulfillment by Savannah of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Bryan 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 Bryan.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
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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 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:
Bryan: Bryan Bancorp of Georgia, Inc.
9971 Ford Avenue
Richmond Hill, Georgia 31324
Telecopy Number: (912) 756-4617
Attention: E. James Burnsed
With a copy to: Martin, Snow, Grant & Napier, LLP
240 Third Street
P.O. Box 1606
Macon, Georgia 31202
Telecopy Number: (912) 743-4204
Attention: Edward J. Harrell
Savannah: The Savannah Bancorp, Inc.
25 Bull Street
Savannah, Georgia 31401
Telecopy Number: (912) 651-4141
Attention: Archie H. Davis,
President and Chief Executive Officer
With copies to: Ellis, Painter, Ratterree & Bart, LLP
Two East Bryan Street
Tenth Floor
Savannah, Georgia 31401
Telecopy Number: (912) 233-2281
Attention: J. Wiley Ellis
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-4777
Attention: David E. Brown, Jr.
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.
11.10 COUNTERPARTS. This Agreement may be executed in two 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. Unless otherwise
indicated, all references to particular Articles or Sections shall mean and
refer to the referenced Articles and Sections of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The parties acknowledge and agree
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that this Agreement has been reviewed, negotiated, and accepted by all parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
11.13 ENFORCEMENT. 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.
11.14 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.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf by its duly authorized officers as of the day and
year first above written.
The Savannah Bancorp, Inc.
By: /s/ ARCHIE H. DAVIS
------------------------------
President and Chief Executive Officer
Bryan Bancorp of Georgia, Inc.
By: /s/ E. JAMES BURNSED
-------------------------------
President and Chief Executive Officer
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EXHIBIT 1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of February 11, 1998, by and between Bryan Bancorp of Georgia, Inc., a
Georgia corporation ("Issuer"), and The Savannah Bancorp, Inc., a Georgia
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Merger, dated as of February 11, 1998 (the "Merger Agreement"),
providing for, among other things, the merger of Issuer with and into Grantee,
with Grantee as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 100,098 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $1.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to the product of 1.85 and the
closing price per share of the common stock of Grantee on February 11, 1998, as
reported on Nasdaq.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its agreements or
covenants contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the Option, in whole
or in part, at any time and from time to time following the occurrence of a
Purchase Event; provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Merger Agreement in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Merger Agreement by Grantee pursuant to Section
10.1(b) (but only if such termination was a result of a willful breach by
Issuer) or Section 10.1(c) thereof or by Grantee and Issuer pursuant to Section
10.1(a) thereof if Grantee shall at that time have been entitled to terminate
the Merger Agreement pursuant to Section 10.1(b) (but only if such termination
was a result of a willful breach by Issuer) or Section 10.1(c) thereof (each a
"Default Termination")), (C) 12 months after a Default Termination (provided,
that if, within 12 months after such termination of the Merger Agreement, a
Purchase Event or a Preliminary Purchase Event shall occur, then notwithstanding
anything to the contrary contained herein (including clause (D) of this
sentence), this Option shall terminate 12 months after the first occurrence of
such an event), and (D) 12 months after any termination of the Merger Agreement
(other than a Default Termination) following the occurrence of a Purchase Event
or a Preliminary Purchase Event; provided further, that any purchase of shares
upon exercise of the Option shall be subject to compliance with applicable law.
The term "Holder" shall mean the holder or holders of the Option from time to
time, and which initially is the Grantee. The rights set forth in Section 8
shall terminate when the right to exercise the Option terminates (other than as
a result of a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
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(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to effect an Acquisition
Transaction (as defined below). As used herein, the term Acquisition Transaction
shall mean (A) a merger, consolidation or similar transaction involving Issuer
or any of its Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.1 of the Merger
Agreement, the disposition, by sale, lease, exchange or otherwise, of Assets of
Issuer or any of its Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the issuance, sale or
other disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its Subsidiaries (any of the foregoing, an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of its Subsidiaries of
Grantee is a member, shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 25% or more of the then-outstanding
shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the Securities
Act with respect to, a tender offer or exchange offer to purchase any shares of
Issuer Common Stock such that, upon consummation of such offer, such person
would own or control 25% or more of the then-outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have been held
or shall have been canceled prior to termination of the Merger Agreement, or
Issuer's Board of Directors shall have withdrawn or modified in a manner adverse
to Grantee the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or any
Subsidiary of Grantee) shall have (A) made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction, (B) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or regulation (including
a notice filed under the HSR Act) seeking the Consent to an Acquisition
Transaction from any federal or state governmental or regulatory authority or
agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior Consent of any governmental or regulatory agency or authority is required
in connection with such purchase, Issuer shall cooperate with Holder in the
filing of the required notice or application for such Consent and the obtaining
of such Consent and the Closing shall occur immediately following receipt of
such Consents (and expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to
the contrary, in no event shall:
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(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $2,000,000 and, if it otherwise would exceed
such amount, Holder, at its sole election, shall either (A) reduce the number of
shares of Issuer Common Stock subject to the Option, (B) deliver to Issuer for
cancellation without consideration Option Shares previously purchased by Holder,
(C) pay cash to Issuer, or (D) any combination of the foregoing, so that
Holder's actually realized Total Profit (together with the Total Profit realized
by all other Holders) shall not exceed $2,000,000 after taking into account the
foregoing actions; and
(ii) the Option be exercised for a number of shares of Issuer
Common Stock as would, as of the date of exercise, result in Holder's (taking
into account all other Holders) Notional Total Profit (as defined below) of more
than $2,000,000; provided, that nothing in this clause (ii) shall restrict any
exercise of the Option permitted hereby on any subsequent date.
As used in this Agreement, the term "Total Profit" shall mean the
aggregate sum (prior to the payment of taxes) of the following: (i) the amount
received by Holder pursuant to Issuer's repurchase of the Option (or any portion
thereof) pursuant to Section 8; (ii) (x) the amount received by Holder pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with
respect to any number of shares of Issuer Common Stock as to which Holder may
propose to exercise the Option shall be the Total Profit determined as of the
date of such proposed exercise, assuming that the Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Option Shares held by Holder and its affiliates as of such date, were sold
for cash at the closing sale price per share of Issuer Common Stock as quoted on
the Nasdaq National Market (or, if Issuer Common Stock is not then quoted on the
Nasdaq National Market, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are traded
as reported by a recognized source chosen by Holder) as of the close of business
on the preceding trading day (less customary brokerage commissions).
The provisions of this Section 3(e) shall apply to any Substitute
Option (as defined below).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY __, 1998. A COPY
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OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due exercise of
the Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid, and nonassessable, and
shall be delivered free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Issuer.
6. Representations and Warrants of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Laws.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Holder would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described in the first
sentence of this Section 7(a)), the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
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(b) In the event that Issuer shall enter into an agreement:
(i) to consolidate with or merge into any person, other than Grantee or one of
its Subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger; (ii) to permit any person, other than Grantee or
one of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its Assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Holder, of either (x) the
Acquiring Corporation (as defined below), (y) any person that controls the
Acquiring Corporation, or (z) in the case of a merger described in clause (ii),
the Issuer (in each case, such person being referred to as the "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Holder. The Substitute Option Issuer shall
also enter into an agreement with each Holder of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (y) Issuer in a merger in which Issuer is the continuing or surviving
person, and (z) the transferee of all or any substantial part of the Issuer's
assets (or the Assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
having the greatest voting rights to be issued by the Substitute Option Issuer
upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
per share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee or any Subsidiary of
Grantee), (y) the price per share of the Issuer Common Stock to be paid by any
person (other than Grantee or any Subsidiary of Grantee) pursuant to an
agreement with Issuer, and (z) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer Common
Stock is not quoted on the Nasdaq National Market, the highest bid price per
share on any day as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) within the six-month period immediately preceding the
agreement; provided, that in the event of a sale of less than all of Issuer's
assets, the Assigned Value shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by Holder
(or by a majority in interest of the Holders if there shall be more than one
Holder (a "Holder Majority")), divided by the number of shares of the Issuer
Common Stock outstanding at the time of such sale. In the event that an exchange
offer is made for the Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the value of
the securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized investment
banking firm mutually selected by Holder and Issuer (or if applicable, Acquiring
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Corporation), provided that if a mutual selection cannot be made as to such
investment banking firm, it shall be selected by Holder. (If there shall be more
than one Holder, any such selection shall be made by a Holder Majority.)
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merger person, as Holder may
elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Holder (or a Holder Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and 10 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to Section 3(e) and the last sentence of Section
3(a), at the request of Holder at any time commencing upon the first occurrence
of a Purchase Event and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder the Option and all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired by Holder pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in the
case of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Holder for each share of Issuer
Common Stock with respect to which the Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the number
of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
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and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for Consent and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
Consent). If any governmental or regulatory agency or authority disapproves of
any part of Issuer's proposed repurchase pursuant to this Section 8, Issuer
shall promptly give notice of such fact to Holder. If any governmental or
regulatory agency or authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been repurchased. Holder
shall notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than all of
Issuer's Assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by an independent nationally recognized investment banking
firm selected by Holder and reasonably acceptable to Issuer (which determination
shall be conclusive for all purposes of this Agreement), divided by the number
of shares of the Issuer Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
9. Registration Rights.
(a) Following termination of the Merger Agreement, Issuer
shall, subject to the conditions of subparagraph (c) below, if requested by any
Holder, including Grantee and any permitted transferee ("Selling Holder"), as
expeditiously as possible prepare and file a registration statement under the
Securities Laws if necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Selling Holder upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Holder in such request, including, without limitation, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and Issuer shall use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock under the Securities Laws
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registrations of resales;
provided, further, that such election pursuant to clause (i) may only be made
two times. If some but not all the shares of Issuer Common Stock, with respect
to which Issuer shall have received requests for registration pursuant to this
subparagraph (b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Selling Holders and any
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other person (other than Issuer or any person exercising demand registration
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subparagraph (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer shall
in good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subparagraph (a) above:
(i) prior to the earliest of (a) termination of the Merger
Agreement pursuant to Section 10.1 thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 9.1(a) of the Merger Agreement, and (c)
a Purchase Event or a Preliminary Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option Shares
then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings, and take
all steps, under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares, provided,
that Issuer shall not be required to consent to general jurisdiction or qualify
to do business in any state where it is not otherwise required to so consent to
such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and xpenses (including the fees and expenses
of counsel), accounting expenses, legal expenses including the reasonable fees
and expenses of one counsel to the Selling Holders, printing expenses, expenses
of underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares, fees and
disbursements of counsel to the Selling Holders and any other expenses incurred
by such Selling Holders in connection with any such registration shall be borne
by such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby indemnifies the Selling Holders, and each underwriter
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thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission,
or alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Holder, or by such underwriter, as the case may be,
for all such expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subparagraph (e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party shall
be entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party falls to assume the defense
of such action with counsel' satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subparagraph
(e) is unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein, then
the indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party to
be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, all selling shareholders and the underwriters from
the offering of the securities and also the relative fault of Issuer, all
selling shareholders and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, that in no case shall
any Selling Holder be responsible, in the aggregate, for any amount in excess of
the net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
In connection with any registration pursuant to
subparagraph (a) or (b) above, Issuer and each Selling Holder (other than
Grantee) shall enter into an agreement containing the indemnification provisions
of this subparagraph (e).
(f) Issuer shall comply with all reporting requirements and
will do all such other things as may be necessary to permit the expeditious sale
at any time of any Option Shares by Holder in accordance with and to the extent
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permitted by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rules 144 and 144A. Issuer shall at its expense
provide Holder with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Laws, or required pursuant to any state securities laws or the rules
of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the Nasdaq National Market or any other securities exchange or
any automated quotations system maintained by a self-regulatory organization and
will use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 10, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This Agreement,
together with the Merger Agreement and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any person other than the parties hereto
(other than any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to Section 12(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or a federal or state governmental or regulatory
agency or authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that the Option
does not permit Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to allow
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Georgia without regard to
any applicable conflicts of law rules.
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(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement(or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: BRYAN BANCORP OF GEORGIA, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
ATTEST: THE SAVANNAH BANCORP, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
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EXHIBIT 2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of February 11, 1998, by and between The Savannah Bancorp, Inc., a Georgia
corporation ("Issuer"), and Bryan Bancorp of Georgia, Inc., a Georgia
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Merger, dated as of February 11, 1998 (the "Merger Agreement"),
providing for, among other things, the merger of Grantee with and into Issuer,
with Issuer as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 340,200 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $1.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to the closing price per share
of the common stock of Grantee on February 11, 1998, as reported on Nasdaq.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its agreements or
covenants contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the Option, in whole
or in part, at any time and from time to time following the occurrence of a
Purchase Event; provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Merger Agreement in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Merger Agreement by Grantee pursuant to Section
10.1(b) (but only if such termination was a result of a willful breach by
Issuer) or Section 10.1 (c) thereof or by Grantee and Issuer pursuant
to Section 10.1(a) thereof if Grantee shall at that time have been entitled to
terminate the Merger Agreement pursuant to Section 10.1(b) (but only if such
termination was a result of a willful breach by Issuer) or Section 10.1(c)
thereof (each a "Default Termination")), (C) 12 months after a Default
Termination (provided, that if, within 12 months after such termination of the
Merger Agreement, a Purchase Event or a Preliminary Purchase Event shall occur,
then notwithstanding anything to the contrary contained herein (including clause
(D) of this sentence), this Option shall terminate 12 months after the first
occurrence of such an event), and (D) 12 months after any termination of the
Merger Agreement (other than a Default Termination) following the occurrence of
a Purchase Event or a Preliminary Purchase Event; provided further, that any
purchase of shares upon exercise of the Option shall be subject to compliance
with applicable law. The term "Holder" shall mean the holder or holders of the
Option from time to time, and which initially is the Grantee. The rights set
forth in Section 8 shall terminate when the right to exercise the Option
terminates (other than as a result of a complete exercise of the Option) as set
forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
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(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to effect an Acquisition
Transaction (as defined below). As used herein, the term Acquisition Transaction
shall mean (A) a merger, consolidation or similar transaction involving Issuer
or any of its Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.1 of the Merger
Agreement, the disposition, by sale, lease, exchange or otherwise, of Assets of
Issuer or any of its Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the issuance, sale or
other disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its Subsidiaries (any of the foregoing, an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of its Subsidiaries of
Grantee is a member, shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 25% or more of the then-outstanding
shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any Subsidiary of Grantee) shall have
commenced (as such term is defined in Rule 14d-2 under the Exchange Act), or
shall have filed a registration statement under the Securities Act with respect
to, a tender offer or exchange offer to purchase any shares of Issuer Common
Stock such that, upon consummation of such offer, such person would own or
control 25% or more of the then-outstanding shares of Issuer Common Stock (such
an offer being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have been held
or shall have been canceled prior to termination of the Merger Agreement, or
Issuer's Board of Directors shall have withdrawn or modified in a manner adverse
to Grantee the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or any
Subsidiary of Grantee) shall have (A) made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction, (B) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or regulation (including
a notice filed under the HSR Act) seeking the Consent to an Acquisition
Transaction from any federal or state governmental or regulatory authority or
agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior Consent of any governmental or regulatory agency or authority is required
in connection with such purchase, Issuer shall cooperate with Holder in the
filing of the required notice or application for such Consent and the obtaining
of such Consent and the Closing shall occur immediately following receipt of
such Consents (and expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to
the contrary, in no event shall:
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(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $2,000,000 and, if it otherwise would exceed
such amount, Holder, at its sole election, shall either (A) reduce the number of
shares of Issuer Common Stock subject to the Option, (B) deliver to Issuer for
cancellation without consideration Option Shares previously purchased by Holder,
(C) pay cash to Issuer, or (D) any combination of the foregoing, so that
Holder's actually realized Total Profit (together with the Total Profit realized
by all other Holders) shall not exceed $2,000,000 after taking into account the
foregoing actions; and
(ii) the Option be exercised for a number of shares of Issuer Common Stock
as would, as of the date of exercise, result in Holder's (taking into account
all other Holders) Notional Total Profit (as defined below) of more than
$2,000,000; provided, that nothing in this lause (ii) shall restrict any
exercise of the Option permitted hereby on any subsequent date.
As used in this Agreement, the term "Total Profit" shall mean the
aggregate sum (prior to the payment of taxes) of the following: (i) the amount
received by Holder pursuant to Issuer's repurchase of the Option (or any portion
thereof) pursuant to Section 8; (ii) (x) the amount received by Holder pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with
respect to any number of shares of Issuer Common Stock as to which Holder may
propose to exercise the Option shall be the Total Profit determined as of the
date of such proposed exercise, assuming that the Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Option Shares held by Holder and its affiliates as of such date, were sold
for cash at the closing sale price per share of Issuer Common Stock as quoted on
the Nasdaq National Market (or, if Issuer Common Stock is not then quoted on the
Nasdaq National Market, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are traded
as reported by a recognized source chosen by Holder) as of the close of business
on the preceding trading day (less customary brokerage commissions).
The provisions of this Section 3(e) shall apply to any Substitute
Option (as defined below).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY __, 1998. A COPY
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OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
5. Representations and Warranties o Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due exercise of
the Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid, and nonassessable, and
shall be delivered free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Issuer.
6. Representations and Warrants of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Laws.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a)), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option.
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(b) In the event that Issuer shall enter into an agreement:
(i) to consolidate with or merge into any person, other than Grantee or one of
its Subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger; (ii) to permit any person, other than Grantee or
one of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its Assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Holder, of either (x) the
Acquiring Corporation (as defined below), (y) any person that controls the
Acquiring Corporation, or (z) in the case of a merger described in clause (ii),
the Issuer (in each case, such person being referred to as the "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Holder. The Substitute Option Issuer shall
also enter into an agreement with each Holder of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (y) Issuer in a merger in which Issuer is the continuing or surviving
person, and (z) the transferee of all or any substantial part of the Issuer's
assets (or the Assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
having the greatest voting rights to be issued by the Substitute Option Issuer
upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
per share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee or any Subsidiary of
Grantee), (y) the price per share of the Issuer Common Stock to be paid by any
person (other than Grantee or any Subsidiary of Grantee) pursuant to an
agreement with Issuer, and (z) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer Common
Stock is not quoted on the Nasdaq National Market, the highest bid price per
share on any day as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) within the six-month period immediately preceding the
agreement; provided, that in the event of a sale of less than all of Issuer's
assets, the Assigned Value shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by Holder
(or by a majority in interest of the Holders if there shall be more than one
Holder (a "Holder Majority")), divided by the number of shares of the Issuer
Common Stock outstanding at the time of such sale. In the event that an exchange
offer is made for the Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the value of
the securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized investment
banking firm mutually selected by Holder and Issuer (or if applicable, Acquiring
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Corporation), provided that if a mutual selection cannot be made as to such
investment banking firm, it shall be selected by Holder. (If there shall be more
than one Holder, any such selection shall be made by a Holder Majority.)
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merger person, as Holder may
elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Holder (or a Holder Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and 10 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to Section 3(e) and the last sentence of Section
3(a), at the request of Holder at any time commencing upon the first occurrence
of a Purchase Event and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder the Option and all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired by Holder pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in the
case of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Holder for each share of Issuer
Common Stock with respect to which the Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the number
of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
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and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for Consent and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
Consent). If any governmental or regulatory agency or authority disapproves of
any part of Issuer's proposed repurchase pursuant to this Section 8, Issuer
shall promptly give notice of such fact to Holder. If any governmental or
regulatory agency or authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been repurchased. Holder
shall notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
(c) For purposes of this Agreement , the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than all of
Issuer's Assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by an independent nationally recognized investment banking
firm selected by Holder and reasonably acceptable to Issuer (which determination
shall be conclusive for all purposes of this Agreement), divided by the number
of shares of the Issuer Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
9. Registration Rights.
(a) Following termination of the Merger Agreement, Issuer
shall, subject to the conditions of subparagraph (c) below, if requested by any
Holder, including Grantee and any permitted transferee ("Selling Holder"), as
expeditiously as possible prepare and file a registration statement under the
Securities Laws if necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Selling Holder upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Holder in such request, including, without limitation, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and Issuer shall use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock under the Securities Laws
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registrations of resales;
provided, further, that such election pursuant to clause (i) may only be made
two times. If some but not all the shares of Issuer Common Stock, with respect
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to which Issuer shall have received requests for registration pursuant to this
subparagraph (b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Selling Holders and any
other person (other than Issuer or any person exercising demand registration
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subparagraph (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer shall
in good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subparagraph (a) above:
(i) prior to the earliest of (a) termination of the Merger
Agreement pursuant to Section 10.1 thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 9.1(a) of the Merger Agreement, and (c)
a Purchase Event or a Preliminary Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option Shares
then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings, and take
all steps, under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares, provided,
that Issuer shall not be required to consent to general jurisdiction or qualify
to do business in any state where it is not otherwise required to so consent to
such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and xpenses (including the fees and expenses
of counsel), accounting expenses, legal expenses including the reasonable fees
and expenses of one counsel to the Selling Holders, printing expenses, expenses
of underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares, fees and
disbursements of counsel to the Selling Holders and any other expenses incurred
by such Selling Holders in connection with any such registration shall be borne
by such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
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within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission,
or alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Holder, or by such underwriter, as the case may be,
for all such expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subparagraph (e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party shall
be entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying arty either
agrees to pay the same, (ii) the indemnifying party falls to assume the defense
of such action with counsel' satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subparagraph
(e) is unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein, then
the indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party to
be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, all selling shareholders and the underwriters from
the offering of the securities and also the relative fault of Issuer, all
selling shareholders and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, that in no case shall
any Selling Holder be responsible, in the aggregate, for any amount in excess of
the net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
In connection with any registration pursuant to
subparagraph (a) or (b) above, Issuer and each Selling Holder (other than
Grantee) shall enter into an agreement containing the indemnification provisions
of this subparagraph (e).
(f) Issuer shall comply with all reporting requirements and
will do all such other things as may be necessary to permit the expeditious sale
at any time of any Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to time,
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including, without limitation, Rules 144 and 144A. Issuer shall at its expense
provide Holder with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Laws, or required pursuant to any state securities laws or the rules
of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized for
quotation or trading or listing on the Nasdaq National Market or any other
securities exchange or any automated quotations system maintained by a
self-regulatory organization, Issuer, upon the request of Holder, will promptly
file an application, if required, to authorize for quotation or trading or
listing the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the Nasdaq National Market or any other
securities exchange or any automated quotations system maintained by a
self-regulatory organization and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 10, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary;
Severability. This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between Grantee and
Issuer (a) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof and (b) is not intended to confer upon any person
other than the parties hereto (other than any transferees of the Option Shares
or any permitted transferee of this Agreement pursuant to Section 12(h)) any
rights or remedies hereunder. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or a federal or
state governmental or regulatory agency or authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Holder to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided in Sections 3 and 8 (as adjusted pursuant to Section
7), it is the express intention of Issuer to allow Holder to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Georgia without regard to
any applicable conflicts of law rules.
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(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement(or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: THE SAVANNAH BANCORP, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
ATTEST: BRYAN BANCORP OF GEORGIA, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
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EXHIBIT 3
DIRECTOR'S AGREEMENT
THIS DIRECTOR'S AGREEMENT ("Agreement") is made and entered
into as of the 11th day of February, 1998, by and between the undersigned,
______________, a resident of __________, Georgia, and The Savannah Bancorp,
Inc., a corporation organized and existing under the laws of the State of
Georgia ("Savannah").
On even date herewith, Savannah and Bryan Bancorp of Georgia,
Inc., a corporation organized and existing under the laws of the State of
Georgia ("Bryan"), have entered into an Agreement and Plan of Merger (the
"Merger Agreement"). The Merger Agreement generally provides for the merger of
Bryan with and into Savannah ("Merger"), and the conversion of the issued and
outstanding shares of the $1.00 par value common stock of Bryan ("Bryan Common
Stock") into shares of the $1.00 par value common stock of Savannah. The
transactions contemplated by the Merger Agreement are subject to the affirmative
vote of the shareholders of Bryan, the affirmative vote of the shareholders of
Savannah, the receipt of certain regulatory approvals and the satisfaction of
other conditions.
The undersigned is a member of the Board of Directors of Bryan
and is the owner of _________ shares of Bryan Common Stock and has rights by
option or otherwise to acquire _________ additional shares of Bryan Common Stock
("Shares"). In order to induce Savannah to enter into the Merger Agreement, the
undersigned is entering into this Agreement with Savannah to set forth certain
terms and conditions governing the actions to be taken by the undersigned with
respect to the Shares until consummation of the Merger.
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and the mutual promises and covenants
contained herein, the parties agree as follows:
1. Without the prior written consent of Savannah, the
undersigned shall not transfer, sell, assign, convey or encumber any of the
Shares during the term of this Agreement except to Savannah pursuant to the
terms of the Merger Agreement. Without limiting the generality of the foregoing,
the undersigned shall not grant to any party any option or right to purchase the
Shares or any interest therein. Further, except with respect to the Merger, the
undersigned shall not approve or ratify any agreement or contract pursuant to
which the Shares would be transferred to any other party as a result of a
consolidation, merger, reorganization or acquisition.
2. The undersigned intends to, and will, vote all of the
Shares beneficially owned by him (and with respect to which he has sole voting
power) in favor of the Merger. The undersigned will also recommend that the
shareholders of Bryan approve the Merger when the same is presented to the
shareholders for consideration in properly prepared proxy materials, subject
only to the undersigned's legal obligations (if any) as a director of Bryan, and
will use his or her best efforts to effect consummation of the Merger and the
other transactions contemplated by the Merger Agreement . Further, the
undersigned intends to, and will, surrender the certificate or certificates
representing his or her Shares which are beneficially owned by him (and with
respect to which he has sole dispositive power) to Savannah upon consummation of
the Merger as described in the Merger Agreement.
3. The undersigned covenants and agrees with Savannah that for
a period of two years after the effective time of the Merger, the undersigned
shall not, without the prior written consent of Savannah, directly or indirectly
serve as a consultant to, serve as a management official of, or be or become a
major shareholder of any financial institution having an office in Bryan County,
Georgia or Chatham County, Georgia. It is expressly understood that the
covenants contained in this paragraph 4 do not apply to (i) "management
official" positions which the undersigned holds with financial institutions
other than Bryan and its subsidiary as of the date of this Agreement, (ii)
securities holdings which cause the undersigned to be deemed a major shareholder
of a financial institution, other than Bryan and its subsidiary, as of the date
of this Agreement, or (iii) advisory relationships with a financial institution
which the undersigned has as of the date of this Agreement or may have after the
date hereof solely in the capacity as legal counsel. For the purposes of the
covenants contained in this paragraph 4, the following terms shall have the
following respective meanings:
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(a) The term "management official" shall refer to service of
any type which gives the undersigned the authority to participate, directly or
indirectly, in policy-making functions of the financial institution. This
includes, but is not limited to, service as an organizer, officer, director, or
advisory director of the financial institution. It is expressly understood that
the undersigned may be deemed a management official of the financial
institution, whether or not he holds any official, elected, or appointed
position with such financial institution.
(b) The term "financial institution" shall refer to any bank
or savings association which engages in the business of accepting deposits or
which owns or controls a company which engages in the business of accepting
deposits.
(c) The term "major shareholder" shall refer to the beneficial
ownership of 2% or more of any class of voting securities of such company or the
ownership of 2% of the total equity interest in such company, however
denominated.
In the case of an undersigned who is as of the date of this Agreement an officer
or director of Bryan, the provisions of this paragraph 3 shall be of no further
force and effect if the undersigned is not offered employment as an officer or
director of Savannah or any of its subsidiaries at the effective time of the
Merger or, if the undersigned is so employed, the undersigned's employment is
involuntarily terminated by Savannah after the effective time of the Merger
other than for cause.
4. The undersigned acknowledges and agrees that Savannah could
not be made whole by monetary damages in the event of any default by the
undersigned of the terms and conditions set forth in this Agreement. It is
accordingly agreed and understood that Savannah in addition to any other remedy
which it may have at law or in equity, shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and specifically to enforce
the terms and provisions hereof in any action instituted in any court of the
United States or in any state having appropriate jurisdiction.
5. 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.
6. Except with respect to the covenants contained in paragraph
3, which shall be governed by the terms set forth therein and shall be effective
only upon consummation of the Merger, the covenants and obligations set forth in
this Agreement shall expire and be of no further force and effect on the later
of September 30, 1998, or the date upon which the Board of Directors of Bryan
shall have the right to terminate the Merger Agreement and the transactions
contemplated thereby if the Merger is not consummated by such date.
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IN WITNESS WHEREOF, this Agreement has been duly executed
under seal and delivered by the undersigned as of the day and year first above
written.
As to the Undersigned, signed in the presence of:
________________________ _______________________________(SEAL)
Name:__________________________
(Please print or type)
ATTEST: THE SAVANNAH BANCORP, INC.
By:______________________ By:_____________________________________
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
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EXHIBIT 4
AFFILIATE AGREEMENT
The Savannah Bancorp, Inc.
25 Bull Street
Savannah, Georgia 31401
Attention: Archie H. Davis
President and Chief Executive Officer
Gentlemen:
The undersigned is a shareholder of Bryan Bancorp of Georgia, Inc.
("Bryan"), a corporation organized and existing under the laws of the State of
Georgia, and will become a shareholder of The Savannah Bancorp, Inc.
("Savannah"), a corporation organized and existing under the laws of the State
of Georgia, pursuant to the transactions described in the Agreement and Plan of
Merger, dated as of February 11, 1998 (the "Agreement"), by and between Savannah
and Bryan. Under the terms of the Agreement, Bryan will be merged into and with
Savannah (the "Merger"), and the shares of the $1.00 par value common stock of
Bryan ("Bryan Common Stock") will be converted into and exchanged for shares of
the $1.00 par value common stock of Savannah ("Savannah Common Stock"). This
Affiliate Agreement represents an agreement between the undersigned and Savannah
regarding certain rights and obligations of the undersigned in connection with
the shares of Savannah 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 Savannah hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
Bryan he 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 he will be such an "affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that he
will not sell, transfer, or otherwise dispose of his interests in, or reduce his
risk relative to, any of the shares of Savannah Common Stock into which his
shares of Bryan Common Stock are converted upon consummation of the Merger until
such time as Savannah 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 Savannah and Bryan.
Savannah agrees that it will publish such results within 45 days after the end
of the first fiscal quarter of Savannah containing the required period of
post-Merger combined operations and that it will notify the undersigned promptly
following such publication.
3. Covenants and Warranties of Undersigned.The undersigned represents,
warrants and agrees that:
(a) The Savannah Common Stock received by the undersigned as a result
of the Merger will be taken for his own account and not for others, directly or
indirectly, in whole or in part.
(b) Savannah has informed the undersigned that any distribution by the
undersigned of Savannah Common Stock has not been registered under the 1933 Act
and that shares of Savannah 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 Savannah is under no obligation to
file a registration statement with the SEC covering the disposition of the
undersigned's shares of Savannah Common Stock or to take any other action
necessary to make compliance with an exemption from such registration available.
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(c) The undersigned will, and will cause each of the other parties
whose shares are deemed to be beneficially owned by the undersigned pursuant to
Section 8 hereof to, have all shares of Bryan Common Stock beneficially owned by
the undersigned registered in the name of the undersigned or such parties, as
applicable, prior to the effective date of the Merger and not in the name of any
bank, broker-dealer, nominee or clearinghouse.
(d) During the 30 days immediately preceding the Effective Time of the
Merger, the undersigned will not sell, transfer, or otherwise dispose of his
interests in, or reduce his risk relative to, any of the shares of Bryan Common
Stock beneficially owned by the undersigned as of the record date for
determination of shareholders entitled to vote at the Shareholders' Meeting of
Bryan held to approve the Merger.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of Savannah Common
Stock received by the undersigned pursuant to the Merger will be given to
Savannah'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 Savannah Bancorp, Inc. ("Savannah") 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 (1) covered by an
effective registration statement under the Securities Act of 1933, as amended,
(2) in accordance with (i) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of Savannah) or (ii) Rule 144 (in the case of
shares issued to an individual who is an affiliate of Savannah) of the Rules and
Regulations of such Act, or (3) in accordance with a legal opinion satisfactory
to counsel for Savannah 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 Savannah
securities issued subsequent to the original issuance of the Savannah Common
Stock pursuant to the Merger as a result of any transfer of such shares or any
stock dividend, stock split, or other recapitalization as long as the Savannah
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. Upon
the request of the undersigned, Savannah shall cause the certificates
representing the shares of Savannah Common Stock issued to the undersigned in
connection with the Merger to be reissued free of any legend relating to
restrictions on transfer by virtue of ASR 130 and 135 as soon as practicable
after the requirements of ASR 130 and 135 have been met. In addition, if the
provisions of Rules 144 and 145 are amended to eliminate restrictions applicable
to the Savannah Common Stock received by the undersigned pursuant to the Merger,
or at the expiration of the restrictive period set forth in Rule 145(d),
Savannah, upon the request of the undersigned, will cause the certificates
representing the shares of Savannah 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 Savannah 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 ability to sell, transfer, or otherwise dispose
of the shares of Savannah Common Stock received by the undersigned, to the
extent he believes necessary, with his counsel or counsel for Bryan.
6. Filing of Reports by Savannah. Savannah agrees, for a period of
three 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 Savannah Common Stock issued to the undersigned pursuant to the
Merger.
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7. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of Savannah Common Stock received by him 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 Savannah Common Stock together with such additional
information as the transfer agent may reasonably request. If Savannah's counsel
concludes that such proposed sale or transfer complies with the requirements of
Rule 145(d), Savannah shall cause such counsel to provide such opinions as may
be necessary to Savannah'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 all shares of the capital stock of Bryan and
Savannah that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws, which the undersigned agrees may include,
without limitation, shares owned or held in the name of (i) the undersigned's
spouse, (ii) any relative of the undersigned or of the undersigned's spouse who
has the same home as the undersigned, (iii) 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 (iv) any corporation or other
organization in which the undersigned, the undersigned's spouse and any such
relative collectively own 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 Savannah or becomes a director or
officer of Savannah upon consummation of the Merger, among other things, any
sale of Savannah 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 Savannah 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/Georgia.
This Affiliate Agreement is executed as of the ____ day of February,
1998.
Very truly yours,
- ---------------------------
Signature
- ---------------------------
Print Name
- ---------------------------
- ---------------------------
- ---------------------------
Address
[add below the signatures of all registered owners
of shares deemed beneficially owned by the affiliate]
- ---------------------------
Name:
- ---------------------------
Name:
- ---------------------------
Name:
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AGREED TO AND ACCEPTED as of
February __, 1998
THE SAVANNAH BANCORP, INC.
By:_________________________
"Executive"
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
____________________, 1998, by and between BRYAN BANK & TRUST, a Georgia state
Bank (the "Bank") and SAVANNAH BANCORP, INC. ("Savannah") (Bank and Savannah
collectively referred to as "Employers"), and E. JAMES BURNSED, a resident of
the State of Georgia (the "Executive").
WHEREAS, Savannah, a Georgia corporation, has acquired all of the equity
interest of Bank by means of a merger (the "Merger") pursuant to an Agreement
and Plan of Merger between Savannah and Bryan Bancorp, Inc. dated as of February
___, 1998 (the "Merger Agreement");
WHEREAS, the Executive was the President and Chief Executive Officer of the
Bank and desires to continue as the President of the Bank and Vice Chairman of
the Board of Directors of Savannah;
WHEREAS, the Employers desire that the Executive serve in such
capacities; and
WHEREAS, the Employers and the Executive, in conjunction with and pursuant
to the terms of the Merger Agreement, desire to set forth in writing the terms
and conditions of the Executive's Employment.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Employment and Duties.
(a)The Employers hereby agree to employ the Executive and Executive agrees
to serve as the President of the Bank and Vice Chairman of the Board of Savannah
and to act in accordance with the terms and conditions set forth herein. During
the term of this Agreement, the Executive agrees that he will serve the Bank
faithfully and to the best of his ability and that he will devote his full
business time, attention and skills to the operation of the business of the
Employers, subject to reasonable absences for vacation and illness, and that he
will perform such duties, functions and responsibilities in connection with such
position and consistent with the foregoing as are from time to time delegated to
the Executive by the Boards of Directors of the Employers (the "Boards") or the
CEO of Savannah; provided, however, that the foregoing shall not be deemed to
restrict the Executive from devoting a reasonable amount of time and attention
to the management of his personal affairs and investments, so long as such
activities do not interfere with the responsible performance of the Executive's
duties hereunder. The Executive shall provide the Boards and the CEO of Savannah
with periodic reports on, and keep it informed on a current basis concerning,
the business and affairs of the Bank.
(b)The Bank shall provide the Executive with a private office, secretarial
and administrative assistance, office equipment, supplies and other facilities
and services suitable to the Executive's position to be located at 9971 Ford
Avenue, Richmond Hill, Georgia or at a comparable location within Bryan County,
Georgia.
2.Term. The term ("Term") of this Agreement shall commence on the date
hereof and shall continue until the first anniversary of the date hereof unless
earlier terminated pursuant to Section 4 hereof.
3.Compensation. In consideration of the services to be rendered by the
Executive to the Employers hereunder, the Employers hereby agree to pay or
otherwise provide the Executive the following compensation and benefits, it
being understood that the Bank shall have the right to deduct therefrom all
taxes which may be required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the Term):
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(a)Salary. The Executive shall receive an annual salary of ("Salary") from
the Bank of $90,000.00 to be paid in equal installments in accordance with the
Bank's salary payment practices in effect from time to time for executives of
the Bank. The Bank may consider and declare from time to time increases in the
Salary.
(b)Compensation Pursuant to Plans. During the Term, the Executive shall be
included as a participant in all present and future employee benefit, retirement
and compensation plans generally available to employees of the Bank, consistent
with his Salary and his position with the Employers.
(c)Expenses. The Executive shall be entitled to receive reimbursement for
all reasonable expenses incurred by him in connection with the fulfillment of
his duties hereunder. Upon receipt of appropriate vouchers therefor, provided
that the Executive has complied with all reasonable policies and procedures
relating to the reimbursement of such expenses as shall, from time to time, be
established by the Bank.
(d)Vacation and Perquisites. For so long as the Executive is employed by
the Bank hereunder, the Executive shall be entitled to such paid vacation, sick
leave and such perquisites as are provided to other executive officers of
Savannah's banking subsidiaries.
(e)Change in Control Agreement. Employers, by executing this Agreement,
assume the obligations of Bryan Bancorp of Georgia, Inc. under the Change in
Control Agreement with Executive dated May 22, 1996 ("Agreement"). Executive, by
executing this Agreement, agrees to waive any rights under the Agreement to
payments resulting from the merger between Savannah and Bryan Bancorp of
Georgia, Inc. and agrees to accept the benefits of this Agreement in full
payment in lieu of rights under the Agreement, except in the event of a Change
in Control of Savannah.
(f)Stock Options. To the extent not exercised, Savannah agrees to assume
the Stock Option Agreement granting options to purchase 16,000 shares of Bryan
Bancorp stock to E. James Burnsed at a price of $9.93 per share for 4,000
shares, $10.66 per share for 4,000 shares, $11.75 per share for 4,000 shares,
and $10.65 per share for 4,000 shares, pursuant to the terms of the Merger
Agreement between Savannah and Bryan Bancorp of Georgia, Inc. Savannah further
agrees to grant to Executive pursuant to the Savannah Incentive Stock Option
Plan options to purchase 10,000 shares of Savannah stock at market price on the
same terms and conditions as other Savannah executives.
(g)Life Insurance. Employers agrees to provide for Executive life
insurance in addition to life insurance provided in the benefit package
described in paragraph (b) above necessary to increase the total life insurance
provided by Employers to total $575,000; provided however, the additional
premium to increase theinsurance above that otherwise provided in the standard
employee benefit package shall not exceed $2,000.
(h)Automobile. Executive, during his employment, shall have the use of the
vehicle now in his possession and all expenses relating to the operation of the
vehicle until December 31, 2000 and thereafter shall have the same automobile
privileges as other executives of Savannah's banking subsidiaries and on
December 31, 2000, Executive shall have the right to purchase the vehicle now in
his possession at the depreciated book value that the vehicle is shown on the
books of Bryan Bank & Trust on said date.
(i)Cash Incentive Plan. Savannah agrees for the term of this Agreement and
for any extended term of this Agreement to provide Executive with a cash
incentive payable under the same terms and conditions as were payable under
Bryan Bank & Trust Officer's Cash Incentive Plan in effect at the time of
execution of the definitive agreement.
4. Termination.
(a)This Agreement shall terminate on the earliest to occur of the first
anniversary of the date hereof or the occurrence of any of the following events:
(i) the mutual agreement of the Employees and the Executive; (ii) the death or
Disability (as hereinafter defined) of the Executive or Executive's voluntary
retirement; or (iii) immediate upon either of Employers giving written notice to
the Executive of termination for Cause (as defined herein).
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(b)The Bank may terminate the Executive's employment under this Agreement
at any time for Cause. The termination shall be evidenced by written notice to
the Executive, which shall specify the cause for termination. "Cause" shall
exist if: (i) the Executive is convicted of (from which no appeal may be taken),
or pleads guilty to, any act of fraud, misappropriation or embezzlement, or any
felony; (ii) in the reasonable determination of the Boards of Employers, the
Executive has engaged in conduct or activity materially damaging to the business
of the Employers (it being understood however, that unintentional physical
damage to any property of the Employers by the Executive shall not be a ground
for such a determination by the Board); or (iii) the Executive has failed,
without reasonable cause, to devote his full business time and best efforts to
the business of the Bank as provided in Section 1(a) hereof and, after written
notice from the Bank of such failure, the Executive at any time thereafter again
so fails.
(c)The Executive may terminate his employment under this Agreement at any
time for Good Reason. For purposes of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of duties or responsibilities which are
materially inconsistent with the responsibilities of an executive officer
holding the office of the Executive; (ii) a material breach by the Bank of any
of the material provisions of this Agreement; (iii) reduction of Executive's
salary or benefits; or (iv) Employers requiring the Executive to be based at any
place outside a fifty mile radius from Richmond Hill, Georgia, except for
reasonably required travel on the Employers' business.
(d)In the event that the Executive's employment hereunder is terminated
during the initial term or any extended term of this Agreement by Executive for
reason of Good Cause or by the Employers other than for Cause, the Executive
shall be entitled to receive the Salary, health insurance benefits, and life
insurance benefits provided under this Agreement for a period of one year after
the date of such termination. For purposes of this Agreement, "Disability" shall
mean the absence of the Executive from the Executive's duties hereunder on a
full-time basis for 120 consecutive business days (or such shorter period as
will suffice for the Executive to qualify for full disability benefits under the
applicable disability insurance policy or policies of the Employers) as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Employers or its insurers and
reasonably acceptable to the Executive or the Executive's legal representative.
5. Representations and Warranties.
(a)The Executive represents and warrants to the Employers that: (i) he has
the full power and authority to execute, deliver and perform this Agreement and
that he has taken all actions necessary to secure all approvals required in
connection herewith; (ii) this Agreement has been duly authorized, executed and
delivered by him and constitutes his valid and binding agreement, enforceable
against him in accordance with its terms; and (iii) the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, any
material mortgage, lien, leases, agreement, instrument, order, arbitration
award, judgment or decree to which he is a party or by which he or any of his
assets are bound.
(b)the Employers hereby represent and warrant to the Executive that: (i)
this Agreement has been duly authorized, executed and delivered by it and
constitutes the valid and binding agreement of it, enforceable against it in
accordance with its terms; (ii) it has the full power and authority to execute,
deliver and perform this Agreement and has taken all necessary action to secure
all approvals required in connection herewith; and (iii) the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, its
charter or bylaws or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is a party or by which
it or any of its assets are bound.
6.Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and deemed to have been given when delivered
in person or when dispatched by telegram or electronic facsimile transfer
(confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addresses
specified below.
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If to the Executive:E. James Burnsed
Bryan Bank & Trust
9971 Ford Avenue
Richmond Hill, GA 31224
Facsimile No.: (912) 756-4617
If to the EmployersSavannah Bancorp, Inc.
25 Bull Street
Savannah, GA 31401
Facsimile No.: (912) 651-4141
Attention: President
or to such other address or fax number as either party may from time to time
designate in writing to the other.
7.Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or rescission of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by both parties hereto.
8.Governing Law. This Agreement and the rights and duties of the parties
hereunder shall be governed by, construed under and enforced in accordance with
the laws of the State of Georgia.
9.Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns. The rights, duties and obligations under this
Agreement are assignable by the Employers to a successor of all or substantially
all of the business or assets of the Employers. The rights, duties and
obligations of the Executive under this Agreement shall not be assignable.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
delivered, and the Executive has executed and delivered this Agreement, all as
of the day and year first above written.
SAVANNAH BANCORP, INC.
BY:________________________________
Its:_____________________________
BRYAN BANK & TRUST
BY:________________________________
Its:_____________________________
"Employers"
_____________________________(SEAL)
E. JAMES BURNSED
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
____________________, 1998, by and between BRYAN BANK & TRUST, a Georgia state
Bank (the "Bank") and SAVANNAH BANCORP, INC. ("Savannah) (Bank and Savannah
collectively referred to as "Employers"), and GEORGE MICHAEL ODOM, JR., a
resident of the State of Georgia (the "Executive").
WHEREAS, Savannah, a Georgia corporation, has acquired all of the equity
interest of Bank by means of a merger (the "Merger") pursuant to an Agreement
and Plan of Merger between Savannah and Bryan Bancorp, Inc. dated as of February
___, 1998 (the "Merger Agreement");
WHEREAS, the Executive was the Executive Vice President of the Bank and
desires to continue as the Executive Vice President of the Bank;
WHEREAS, the Employers desire that the Executive serve in such
capacities; and
WHEREAS, the Employers and the Executive, in conjunction with and pursuant
to the terms of the Merger Agreement, desire to set forth in writing the terms
and conditions of the Executive's Employment.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Employment and Duties.
(a)The Employers hereby agree to employ the Executive and Executive agrees
to serve as the Executive Vice President of the Bank and to act in accordance
with the terms and conditions set forth herein. During the term of this
Agreement, the Executive agrees that he will serve the Bank faithfully and to
the best of his ability and that he will devote his full business time,
attention and skills to the operation of the business of the Employers, subject
to reasonable absences for vacation and illness, and that he will perform such
duties, functions and responsibilities in connection with such position and
consistent with the foregoing as are from time to time delegated to the
Executive by the Boards of Directors of the Employers (the "Boards") or the CEO
of the Bank; provided, however, that the foregoing shall not be deemed to
restrict the Executive from devoting a reasonable amount of time and attention
to the management of his personal affairs and investments, so long as such
activities do not interfere with the responsible performance of the Executive's
duties hereunder. The Executive shall provide the Boards and the CEO of the Bank
with periodic reports on, and keep it informed on a current basis concerning,
the business and affairs of the Bank.
(b)The Bank shall provide the Executive with a private office, secretarial
and administrative assistance, office equipment, supplies and other facilities
and services suitable to the Executive's position to be located at 9971 Ford
Avenue, Richmond Hill, Georgia or at a comparable location within Bryan County,
Georgia.
2.Term. The term ("Term") of this Agreement shall commence on the date
hereof and shall continue until the first anniversary of the date hereof unless
earlier terminated pursuant to Section 4 hereof.
3.Compensation. In consideration of the services to be rendered by the
Executive to the Employers hereunder, the Employers hereby agree to pay or
otherwise provide the Executive the following compensation and benefits, it
being understood that the Bank shall have the right to deduct therefrom all
taxes which may be required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the Term):
(a)Salary. The Executive shall receive an annual salary of ("Salary") from
the Bank of $80,000.00 to be paid in equal installments in accordance with the
Bank's salary payment practices in effect from time to time for executives of
the Bank. The Bank may consider and declare from time to time increases in the
Salary.
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(b)Compensation Pursuant to Plans. During the Term, the Executive shall be
included as a participant in all present and future employee benefit, and
retirement plans generally available to employees of the Bank, consistent with
his Salary and his position with the Employers.
(c)Expenses. The Executive shall be entitled to receive reimbursement for
all reasonable expenses incurred by him in connection with the fulfillment of
his duties hereunder. Upon receipt of appropriate vouchers therefor, provided
that the Executive has complied with all reasonable policies and procedures
relating to the reimbursement of such expenses as shall, from time to time, be
established by the Bank.
(d)Vacation and Perquisites. For so long as the Executive is employed by
the Bank hereunder, the Executive shall be entitled to such paid vacation, sick
leave and such perquisites as are provided to other executive officers of
Savannah's banking subsidiaries.
(e)Change in Control Agreement. Employers, by executing this Agreement,
assume the obligations of Bryan Bancorp of Georgia, Inc. under the Change in
Control Agreement with Executive dated May 22, 1996 ("Agreement"). Executive, by
executing this Agreement, agrees to waive any rights under the Agreement to
payments resulting from the merger between Savannah and Bryan Bancorp of
Georgia, Inc. and agrees to accept the benefits of this Agreement in full
payment in lieu of rights under the Agreement, except in the event of a Change
in Control of Savannah.
(f)Stock Options. Savannah agrees to assume the Stock Option Agreement
granting options to purchase 5,000 shares of Bryan Bancorp stock to George
Michael Odom, Jr. at a price of $19.00 a share under the 1997 Incentive Stock
Option Plan of Bryan Bancorp of Georgia, Inc., pursuant to the terms of the
Merger Agreement between Savannah and Bryan Bancorp of Georgia, Inc. Savannah
further agrees to assume the Stock Option Agreement pursuant to the Bryan
Bancorp of Georgia, Inc. 1997 Incentive Stock Option Plan dated February 10,
1998 granting to Executive the option to purchase 2,500 shares at a price of
$47.17 per share.
(g)Life Insurance. Employers agrees to provide for Executive life
insurance in addition to life insurance provided in the benefit package
described in paragraph (b) above necessary to increase the total life insurance
provided by Employers to total $450,000; provided however, the additional
premium to increase the insurance above that otherwise provided in the standard
employee benefit package shall not exceed $1,500.
(h)Automobile. Executive, during his employment, shall have the use of the
Ford Explorer vehicle now in his possession and all expenses relating to the
operation of the vehicle until December 31, 2000 and thereafter shall have the
same automobile privileges as other executives of Savannah's banking
subsidiaries and on December 31, 2000, Executive shall have the right to
purchase the Ford Explorer at the depreciated book value that the vehicle is
shown on the books of Bryan Bank & Trust on said date.
(i)Cash Incentive Plan. Savannah agrees for the term of this Agreement and
for any extended term of this Agreement to provide Executive with a cash
incentive payable under the same terms and conditions as were payable under
Bryan Bank & Trust Officer's Cash Incentive Plan in effect at the time of
execution of the definitive agreement.
4. Termination.
(a)This Agreement shall terminate on the earliest to occur of the first
anniversary of the date hereof or the occurrence of any of the following events:
(i) the mutual agreement of the Employees and the Executive; (ii) the death or
Disability (as hereinafter defined) of the Executive or Executive's voluntary
retirement; or (iii) immediate upon either of Employers giving written notice to
the Executive of termination for Cause (as defined herein).
(b)The Bank may terminate the Executive's employment under this Agreement
at any time for Cause. The termination shall be evidenced by written notice to
the Executive, which shall specify the cause for termination. "Cause" shall
exist if: (i) the Executive is convicted of (from which no appeal may be taken),
or pleads guilty to, any act of fraud, misappropriation or embezzlement, or any
felony; (ii) in the reasonable determination of the Boards of Employers, the
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Executive has engaged in conduct or activity materially damaging to the business
of the Employers (it being understood however, that unintentional physical
damage to any property of the Employers by the Executive shall not be a ground
for such a determination by the Board); or (iii) the Executive has failed,
without reasonable cause, to devote his full business time and best efforts to
the business of the Bank as provided in Section 1(a) hereof and, after written
notice from the Bank of such failure, the Executive at any time thereafter again
so fails.
(c)The Executive may terminate his employment under this Agreement at any
time for Good Reason. For purposes of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of duties or responsibilities which are
materially inconsistent with the responsibilities of an executive officer
holding the office of the Executive; (ii) a material breach by the Bank of any
of the material provisions of this Agreement; (iii) reduction of Executive's
salary or benefits; or (iv) Employers requiring the Executive to be based at any
place outside a fifty mile radius from Richmond Hill, Georgia, except for
reasonably required travel on the Employers' business.
(d)In the event that the Executive's employment hereunder is terminated
during the initial term or any extended term of this Agreement by Executive for
reason of Good Cause or by the Employers other than for Cause, the Executive
shall be entitled to receive the Salary, health insurance benefits, and life
insurance benefits provided under this Agreement for a period of one year after
the date of such termination. For purposes of this Agreement, "Disability" shall
mean the absence of the Executive from the Executive's duties hereunder on a
full-time basis for 120 consecutive business days (or such shorter period as
will suffice for the Executive to qualify for full disability benefits under the
applicable disability insurance policy or policies of the Employers) as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Employers or its insurers and
reasonably acceptable to the Executive or the Executive's legal representative.
5. Representations and Warranties.
(a)The Executive represents and warrants to the Employers that: (i) he has
the full power and authority to execute, deliver and perform this Agreement and
that he has taken all actions necessary to secure all approvals required in
connection herewith; (ii) this Agreement has been duly authorized, executed and
delivered by him and constitutes his valid and binding agreement, enforceable
against him in accordance with its terms; and (iii) the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, any
material mortgage, lien, leases, agreement, instrument, order, arbitration
award, judgment or decree to which he is a party or by which he or any of his
assets are bound.
(b)the Employers hereby represent and warrant to the Executive that: (i)
this Agreement has been duly authorized, executed and delivered by it and
constitutes the valid and binding agreement of it, enforceable against it in
accordance with its terms; (ii) it has the full power and authority to execute,
deliver and perform this Agreement and has taken all necessary action to secure
all approvals required in connection herewith; and (iii) the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, its
charter or bylaws or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is a party or by which
it or any of its assets are bound.
6.Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and deemed to have been given when delivered
in person or when dispatched by telegram or electronic facsimile transfer
(confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addresses
specified below.
If to the Executive:George Michael Odom, Jr.
Bryan Bank & Trust
9971 Ford Avenue
Richmond Hill, GA 31224
Facsimile No.: (912) 756-4617
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If to the EmployersSavannah Bancorp, Inc.
25 Bull Street
Savannah, GA 31401
Facsimile No.: (912) 651-4141
Attention: President
or to such other address or fax number as either party may from time to time
designate in writing to the other.
7.Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or rescission of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by both parties hereto.
8.Governing Law. This Agreement and the rights and duties of the parties
hereunder shall be governed by, construed under and enforced in accordance with
the laws of the State of Georgia.
9.Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns. The rights, duties and obligations under this
Agreement are assignable by the Employers to a successor of all or substantially
all of the business or assets of the Employers. The rights, duties and
obligations of the Executive under this Agreement shall not be assignable.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
delivered, and the Executive has executed and delivered this Agreement, all as
of the day and year first above written.
SAVANNAH BANCORP, INC.
BY:________________________________
Its:_____________________________
BRYAN BANK & TRUST
BY:________________________________
Its:_____________________________
"Employers"
_____________________________(SEAL)
GEORGE MICHAEL ODOM, JR.
"Executive"
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APPENDIX B
OPINION OF T. STEPHEN JOHNSON & ASSOCIATES, INC.
(TSJ&A LETTERHEAD)
March 25, 1998
Board of Directors
The Savannah Bancorp, Inc.
25 Bull Street
Savannah, Georgia 31401
Dear Directors:
T. Stephen Johnson & Associates, Inc., Roswell, Georgia ("TSJ&A") has been asked
to render an opinion to the shareholders of The Savannah Bancorp, Inc.,
Savannah, Georgia ("Savannah"), as to the fairness from a financial point of
view, of the consideration to be provided to the shareholders of Bryan Bancorp
of Georgia, Inc., Richmond Hill, Georgia ("Bryan") in connection with the
proposed merger of Bryan with and into Savannah, pursuant to an Agreement and
Plan of Merger (the "Merger Agreement") dated as of February 11, 1998 (the
"Merger"). The Merger Agreement calls for each outstanding share of Bryan's
common stock to be converted into 1.85 shares of Savannah Common Stock.
TSJ&A is an investment banking and consulting firm that specializes in the
valuation of closely-held corporations and provides fairness opinions as part of
its practice. Because of its prior experience in the appraisal of Southeastern
financial institutions involved in mergers, it has developed an expertise in
fairness opinions related to the securities of Southeastern financial
institutions.
TSJ&A was engaged by Savannah in January, 1998 to serve as financial advisor, to
assist with merger discussions and negotiations and to provide a fairness
opinion.
In performing its analysis, TSJ&A relied upon and assumed without independent
verification, the accuracy and completeness of all information provided to it.
TSJ&A did not perform any independent appraisal or evaluation of the assets of
Savannah or of Bryan or any of its subsidiaries. As such, TSJ&A does not express
an opinion as to the fair market value of Savannah. The opinion of financial
fairness expressed herein is necessarily based on market, economic and other
relevant considerations as they exist and can be evaluated as of March 25, 1998.
In arriving at its opinion, TSJ&A reviewed and analyzed audited and unaudited
financial information through December 31, 1997, regarding Savannah and Bryan
and reviewed the Merger Agreement, financial analyses performed during the
merger discussions and negotiations, current trading information, various
management reports and projections and general market information.
These analyses included a review of the current trading price of Savannah Common
Stock on the Nasdaq National Market, comparing it with the trading prices of
several other Georgia holding companies in terms of the current price to
projected 1998 earnings ratio. This information was then used to calculate a
range of non-dilutive exchange ratios based on various consolidation savings. It
was determined that Savannah could offer an exchange ratio of 1.85 shares to one
and not dilute projected 1998 earnings per share excluding merger costs.
Additionally, TSJ reviewed management projections that earnings per share will
be enhanced for each of the next four years, considering minimal merger synergy
revenues and savings.
Bryan currently has 503,008 shares outstanding. Bryan has declared and will pay
a one-dollar per share cash dividend prior to comsummation. The December 31,
1997 book value of Bryan, adjusted for the dividend is $13.75. Applying the 1.85
to 1 exchange ratio to this book value would result in a book value of $7.43 per
share. This compares to a December 31, 1997 book value of $8.76 per share of
Savannah. After the Merger the resulting company would report a book value of
$8.29 per share, a $.47 reduction per Savannah share. This 5.7 percent reduction
in book value should have little or no effect on the trading value of Savannah
shares.
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As of the date of this letter, Savannah had 1,709,548 shares outstanding and
will issue 930,565 shares as part of the Merger for a total of 2,640,113 shares
outstanding. Savannah has traded an average of approximately 343 shares per day
over the last year equaling .02 percent of the shares outstanding. It is TSJ&A's
opinion that the increased number of shares outstanding will result in more
shares being traded and could add liquidity for current shareholders.
Therefore, in consideration of the above, it is the opinion of TSJ&A that, based
on the structure of the Merger and the analyses that have been performed, the
consideration to be provided to the shareholders of Bryan is fair to the
shareholders of Savannah from a financial point of view.
Sincerely,
/s/ T. Stephen Johnson & Associates, Inc.
T. STEPHEN JOHNSON & ASSOCIATES, INC.
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APPENDIX C
OPINION OF ELAINE H. DEMAREST, CPA, P.C.
(EHD LETTERHEAD)
April 8, 1998
Board of Directors
Bryan Bancorp of Georgia, Inc.
P. O. Box 1299
Richmond Hill, Georgia 31324
Dear Board Members:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of Bryan Bancorp of Georgia, Inc. ("Bryan") of the
consideration to be received in connection with its proposed merger with The
Savannah Bancorp, Inc. ("Savannah") (the "Merger") pursuant to and in accordance
with the terms of that certain Agreement and Plan of Merger (the "Agreement")
entered into by and between Bryan and Savannah. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the
Agreement.
You have advised us that, pursuant to the Agreement, each share of Bryan's
Common Stock issued and outstanding at the Effective Time shall be converted
into 1.85 shares of Savannah Common Stock, subject to adjustments as set forth
in the Agreement.
Elaine H. Demarest, CPA, P.C. ("EHD"), as part of its practice in providing
management advisory services to financial institutions, has been regularly
engaged since 1984 as a financial advisor to either buyer or seller in
connection with mergers and acquisitions, competitive biddings and valuations
for various purposes. We have been retained by the Board of Directors of Bryan
for the purpose of, and will receive a fee for, rendering this opinion. We have
not advised any party in connection with the Merger other than Bryan and we make
no recommendation to the shareholders of Bryan.
In connection with our opinion, we have (1) reviewed the Agreement; (2) held
discussions with various members of management and representatives of Bryan and
Savannah concerning each company's historical and current operations; (3)
reviewed historical consolidated financial and operating data that was publicly
available or furnished to us by Bryan and Savannah; (4) reviewed internal
financial analyses, financial and operating forecasts, reports and other
information prepared by officers and representatives of Bryan; (5) reviewed
certain publicly available information with respect to certain other companies
that we believe to be comparable to Bryan and Savannah and the trading markets
for such other companies' securities; (6) reviewed certain publicly available
information concerning the terms of certain other transactions that we deemed
relevant to our inquiry; (7) considered the relative contributions of Bryan and
Savannah to the combined company; and (8) conducted such other financial
studies, analyses and investigations as we deemed appropriate for the purpose of
this opinion.
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and have assumed and relied
upon the representations and warranties of Bryan and Savannah contained in the
Agreement. We have not been engaged to, and have not independently attempted to,
verify any of such information. We have also relied upon the managements of
Bryan and Savannah as to the reasonableness and achievability of the financial
and operating projections and the assumptions and bases therefore provided to us
and we have assumed that such projections reflect the best currently available
estimates and judgments of such respective managements of Bryan and Savannah and
that such projections and forecasts will be realized in the amounts and time
periods currently estimated by the managements of Bryan and Savannah. We have
not been engaged to assess the achievability of such projections or the
assumptions on which they were based and express no view as to such projections
or assumptions.
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We have not conducted a physical inspection or appraisal of any of the assets,
properties or facilities of either Bryan or Savannah, nor have we been furnished
with any such evaluation or appraisal. We were not asked to consider, and this
opinion does not address, the relative merits of the Merger as compared to any
alternative business strategies that might exist for Bryan or the effect of any
other transaction in which Bryan might engage. We have assumed that the
conditions to the Merger would be consummated on a timely basis in the manner
contemplated in the Agreement. We have also assumed, with the consent of the
Board of Directors of Bryan, that the Merger will be accounted for as a pooling
of interests in accordance with generally accepted accounting principles and as
a tax-free reorganization for federal income tax purposes.
Our opinion is based upon analyses of the foregoing factors in light of our
assessment of general economic, financial and market conditions as they exist
and can be evaluated by us as of the date hereof. We express no opinion as to
the price or trading range at which shares of Savannah Common Stock will trade
following the date hereof, or the price or trading range at which Savannah's
Common Stock will trade upon completion of the Merger.
EHD has previously provided other fee-compensated management advisory services
to Bryan and its wholly-owned subsidiary, Bryan Bank & Trust, including service
as financial advisor on this Merger, strategic planning, compensation programs
and branching feasibility. Neither EHD nor the firm's principal owner or their
related interests own Common Stock in either Bryan or Savannah.
It is understood that this opinion may be included in its entirety in any
communication by Bryan or the Bryan Board of Directors to the shareholders of
Bryan. The opinion may not, however, be summarized, excerpted from or otherwise
publicly referred to without our prior written consent. EHD has granted its
consent to the inclusion of the form of our letter to the Board of Directors of
Bryan Bancorp of Georgia, Inc., included as Appendix C in the Joint Proxy
Statement/Prospectus and to references to the letter and our firm in the
Registration Statement on Form S-4 of The Savannah Bancorp, Inc. dated November
3, 1998.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that, as of the date hereof, the
consideration to be received in the proposed Merger is fair, from a financial
point of view, to Bryan's shareholders.
Yours very truly,
/s/ Elaine H. Demarest, CPA, P.C.
ELAINE H. DEMAREST, CPA, P.C.
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APPENDIX D
EXCERPTS FROM THE GEORGIA BUSINESS CORPORATION CODE
RELATING TO DISSENTING SHAREHOLDERS
TITLE 14, CHAPTER 2, ARTICLE 13
DISSENTERS' RIGHTS
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. DEFINITIONS.
As used in this article, the term:
(1)"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.
(2)"Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3)"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.
(4)"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.
(5)"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.
(6)"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.
(7)"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.
(8)"Shareholder" means the record shareholder or the beneficial
shareholder.
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:
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(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;
(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 procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate 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 will 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
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(2)The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
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 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
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 dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation will notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322 no later than ten days after the corporate action was taken.
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.
14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation will
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:
(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;
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(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.
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 canceled 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.
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 canceled
or modified by the taking of the proposed corporate action.
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 will 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:
(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 will be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later.
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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 will return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed actin, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
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 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 will 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
14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation will 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 will pay each dissenter whose demand remains unsettled the
amount demanded.
(b) The corporation will commence the proceeding, which will 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 will commence
the proceeding in the county in this
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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 will make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which will
have the effect of an action quasi in rem against their shares. The corporation
will 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 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.
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section
14-2-1330 will 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 will 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.
14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights will be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Savannah Articles generally provide that any director or officer will be
indemnified against liability for monetary damages for breach of the duty of
care or other duty as a director or officer, to the fullest extent authorized by
the GBCC, except: (i) for any appropriation, in violation of his duties, of any
business opportunity of Savannah; (ii) for any acts or omissions which involve
intentional misconduct or a knowing violation of law; (iii) for the types of
liability set forth in Section 14-2-832 of the GBCC; or (iv) for any transaction
from which the director derives an improper personal benefit. Savannah's
Articles and Bylaws provide for the advancement of expenses to its directors at
the outset of a proceeding, upon the receipt from such director of the written
affirmation and repayment promise required by Section 14-2-856 of the GBCC. The
GBCC's provisions for indemnification are summarized below.
Section 14-2-851 of the GBCC empowers a corporation to indemnify any person
who was or is a party to any proceeding by reason of the fact that he is or was
a director of the corporation or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, or agent of
another domestic or foreign corporation, partnership, joint venture, trust,
employee benefit plan, or other entity against liability incurred in connection
with such proceeding, if he: (i) conducted himself in good faith; and (ii)
reasonably believed (a) in the case of conduct in his official capacity, that
such conduct was in the best interests of the corporation, (b) in all other
cases, that such conduct was at least not opposed to the best interests of the
corporation (for example, this Section states that a director's conduct with
respect to an employee benefit plan for a purpose he believed in good faith to
be in the interests of the participants in and beneficiaries of the plan is
conduct that satisfies this requirement), and (c) in the case of any criminal
proceeding, that he had no reasonable cause to believe his conduct was unlawful.
This Section further provides that the termination of proceeding by judgment,
order, settlement, or conviction or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did not meet the
standards of conduct described above. This Section also provides that a
corporation is not permitted to indemnify any director of the corporation under
this Section in connection with a proceeding by or in the right of the
corporation (except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the standards of
conduct as outlined in this Section), nor may a corporation indemnify a director
under this Section in connection with any proceeding with respect to conduct for
which he or she was adjudged liable on the basis that improper personal benefit
was received by him (whether or not the conduct involved action in his official
capacity).
Section 14-2-852 requires a corporation to indemnify a director against
reasonable expenses incurred by the director in connection with any proceeding
to which he was a party because he was a director of the corporation where the
director is wholly successful, on the merits or otherwise, in the defense of
such proceeding.
Section 14-2-853 empowers a corporation to advance funds to a director,
before the final disposition of a proceeding to which he was a party because he
was a director of the corporation, in order to pay for or reimburse the
reasonable expenses incurred by the director if the director delivers to the
corporation a written affirmation to the corporation of his belief that he has
satisfied the relevant standard of conduct described in Section 14-2-851 (or
that the proceeding involves conduct for which a director's liability has been
eliminated under the corporation's articles of incorporation), and a written
undertaking by the director to repay any funds so advanced (which must be an
unlimited general obligation of the director, but which need not be secured, and
which may be accepted by the corporation without reference to the financial
ability of the director to repay the advancement) if it is ultimately determined
that the director is not entitled to indemnification under the provisions of the
GBCC. This Section further provides that any advancement of expenses pursuant to
this Section must be authorized (i) by the Board of Directors: (a) when there
are two or more disinterested directors, by a majority vote of all the
disinterested directors (a majority of whom will constitute a quorum for such
purposes) or by a majority of the members of a committee consisting of two or
more disinterested directors who are appointed by such a vote; or (b) if there
are fewer than two disinterested directors, by majority vote of a quorum of the
Board of Directors, in which authorization the directors
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<PAGE>181
who do not qualify as disinterested directors may take part; or (ii) by the
shareholders of the corporation, but no shares owned by a director who does not
qualify as a disinterested director may be voted on the authorization.
Section 14-2-854 provides that a director who is a party to a proceeding by
virtue of the fact that he is a director may apply to the court conducting the
proceeding or another court of competent jurisdiction for indemnification or the
advancement of expenses. Once a court receives such an application, and after
the court gives any notice which it deems necessary, the court considering the
application must order indemnification or advance for expenses (i) if the court
determines that the director is entitled to such indemnification, or (ii) if the
court determines that, taking into account all of the relevant circumstances, it
is fair and reasonable to indemnify the director or to advance expenses to the
director, even if the director failed to satisfy the standards of conduct set
forth in Section 14-2-851, failed to comply with the requirements of Section
14-2-853, or was adjudged liable in any proceeding by or in right of the
corporation or any proceeding initiated on the basis that improper personal
benefit was received by the director (provided that, if the director is adjudged
so liable, the indemnification must be limited to the reasonable expenses
incurred by the director in connection with such proceeding). In addition, this
Section states that, if the court determines that the director is entitled to
indemnification or advance for expenses, the court may also direct the
corporation to pay the director's reasonable expenses incurred in connection
with obtaining such court-ordered indemnification or advance for expenses.
Section 14-2-855 states that a corporation may not indemnify a director
under Section 14-2-851 unless such indemnification is authorized thereunder and
a determination is made that the indemnification of the director in a particular
proceeding is permissible due to the fact that the director has satisfied the
relevant standard of conduct set forth in Section 14-2-851. Such a determination
must be made: (i) if there are two or more disinterested directors, by the board
of directors by a majority vote of all such disinterested directors (a majority
of whom constitutes a quorum for such purposes) or by a majority of the members
of a committee of two or more disinterested directors appointed by such a vote;
(ii) by special legal counsel selected in the manner described in (i) above, or,
if there are fewer than two disinterested directors, selected by the board of
directors (including the directors who are not considered disinterested
directors); or (iii) by the shareholders of the corporation, but no shares owned
by a director who does not qualify as a disinterested director may be voted on
the determination. The authorization of indemnification and evaluation as to the
reasonableness of the expenses involved with such indemnification must be
obtained in the same manner as the determination that indemnification is
permissible (as described above), except that, if there are fewer than two
disinterested directors, or the determination as to the permissibility of the
indemnification is made by special legal counsel, then the authorization of such
indemnification and the evaluation as to the reasonableness of the expenses
involved must be made by the board of directors (in which authorization and
evaluation directors who do not qualify as disinterested directors may
participate).
Section 14-2-856 provides for shareholder approved indemnification. This
Section states that, if authorized by the corporation's articles of
incorporation or a bylaw, contract, or resolution approved or ratified by the
shareholders by a majority of the votes entitled to be cast, a corporation will
be permitted to indemnify a director made a party to a proceeding (including a
proceeding brought by or in right of the corporation), without regard to the
other limitations on indemnification contained within Title 14, Chapter 2,
Article 8, Part 5 of the GBCC, but any director, who at the time does not
qualify as a disinterested director with respect to an existing or threatened
proceeding that would be covered by such authorization, will not be permitted to
vote the shares owned or voted under the control of such director with respect
to such authorization. However, this Section further states that no corporation
may indemnify a director under this Section for any liability incurred in a
proceeding in which the director is adjudged liable to the corporation (or is
subjected to injunctive relief in favor of the corporation): (i) for any
appropriation, in violation of his duties, of any business opportunity of the
corporation; (ii) for any acts or omissions involving intentional misconduct or
a knowing violation of law; (iii) for the types of liability set forth in
Section 14-2-832 of the GBCC (relating to unlawful distributions); or (iv) for
any transaction from which he received an improper personal benefit. Where
approved or authorized in the manner described above, a corporation may advance
or reimburse expenses incurred by the director in advance of final disposition
of the proceeding only if the director delivers a written affirmation to the
corporation which indicates his good faith belief that his conduct does not fall
within any of the four categories of conduct listed above, and a written
undertaking by the director (executed personally or on his behalf) to repay any
advances made to him by the corporation if it is ultimately determined that the
director is not entitled to indemnification under this Section.
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<PAGE>182
Section 14-2-857 provides that a corporation may indemnify and advance
expenses to an officer of the corporation who is made a party to a proceeding by
virtue of his status as an officer of the corporation. A corporation's officers
may be indemnified to the same extent as the corporation's directors (as
discussed above), and any officer who is not also a director (or who was made a
party to a proceeding solely due to an act or omission committed in his role as
an officer) may be indemnified to any further extent as provided in the articles
of incorporation, the bylaws, a resolution of the board of directors, or
contract except for liability arising out of conduct which constitutes: (i) an
appropriation, in violation of his duties as an officer, of any business
opportunity of the corporation; (ii) any acts or omissions which involve
intentional misconduct or a knowing violation of law; (iii) the types of
liability set forth in Section 14-2-832; or (iv) the receipt of an improper
personal benefit. In addition, this Section provides that a corporation may
indemnify and advance expenses to its employees or agents (who are not also
directors) to the extent provided in the corporation's articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract (so long as such indemnification or advancement of expenses is
consistent with public policy).
Section 14-2-858 provides that the corporation is empowered to purchase and
maintain insurance on behalf of any person who is a director, officer, employee,
or agent of the corporation or who, while a director, officer, employee or agent
of the corporation serves at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another domestic or foreign
corporation, partnership, joint venture, trust, employee benefit plan, or other
entity against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such, whether or not the corporation
would have the power to indemnify him or advance expenses against such liability
under the provisions of Title 14, Chapter 2, Article 8, Part 5 of the GBCC.
The Registrant maintains an insurance policy insuring the Registrant and
directors and officers of the Registrant against certain liabilities, including
liabilities under the Securities Act of 1933.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
2 -- Amended and Restated Agreement and Plan of Merger, dated as of
February 11, 1998, by and between Savannah and Bryan (included in
APPENDIX A to the Joint Proxy Statement/Prospectus and
incorporated by reference herein)
4.1 -- Articles of Incorporation of Savannah (incorporated herein by
reference from Exhibit 2.1 of the registrant's Registration
Statement, Registration No.
33-33405)
4.2 -- Bylaws of Savannah, as amended (incorporated herein by
reference from Exhibit 3.2 of the registrant's Registration
Statement, Registration No. 33-33405)
5* -- Opinion of Ellis, Painter, Ratterree & Bart, LLP (including
consent)
8 -- Opinion of Alston & Bird LLP regarding federal income tax
matters (including consent)
10.1 -- Lease for Savannah Bank Site and Assumption of Lease
(incorporated herein by reference from Exhibit 10.1 of the
registrant's Registration Statement, Registration No. 33-33405)
10.2 -- Change in Control Agreement with Archie H. Davis dated
February 20, 1996 (incorporated by reference from Exhibit 10.2 to
the registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
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<PAGE>183
10.3 -- Change in Control Agreement with R. Stephen Stramm dated
February 20, 1996 (incorporated by reference from Exhibit 10.3 to
the registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
10.4 -- Change in Control Agreement with Robert B. Briscoe dated
February 20, 1996 (incorporated by reference from Exhibit 10.4 to
the registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
10.5 -- Form of Organizers' Stock Option Agreement (incorporated
herein by reference from Exhibit 10.5 of the registrant's
Registration Statement, Registration No.
33-33405)
10.6 -- Lease for Mall Boulevard Office dated February 14, 1992
(incorporated herein by reference from Exhibit 10.6 of the
registrant's Registration Statement, Registration No. 33-33405)
10.7 -- The Savannah Bancorp, Inc. Incentive Stock Option Plan
(incorporated by reference from Exhibit 10.7 to the registrant's
Annual Report on Form 10-KSB for the year ended December 31,
1997)
10.8 -- Amendment No. 1 to The Savannah Bancorp, Inc. Incentive Stock
Option Plan (incorporated by reference from Exhibit 10.8 to the
registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
11 -- Statement re Computation of Per Share Earnings (incorporated
herein by reference from Exhibit 11 to the registrant's Annual
Report on Form 10-KSB for the year ended December 31, 1997)
21 -- Subsidiaries of the Registrant (incorporated herein by
reference from Exhibit 21 of the registrant's Annual Report on
Form 10-KSB for the year ended December 31, 1997)
23.1* -- Consent of Moore Stephens Tiller LLC (formerly Tiller, Stewart
& Company, LLC)
23.2* -- Consent of Arthur Andersen LLP
23.3* -- Consent of PricewaterhouseCoopers LLP
23.4* -- Consent of Ellis, Ratterree, Painter & Bart, LLP (included in
Exhibit 5)
23.5 -- Consent of Alston & Bird LLP (included in Exhibit 8)
23.6* -- Consent of E. James Burnsed
23.7* -- Consent of James W. Royal
23.8* -- Consent of James Toby Roberts, Sr.
23.9* -- Consent of L. Carlton Gill
23.10* -- Consent of Robert T. Thompson, Jr.
23.11* -- Consent of T. Stephen Johnson & Associates, Inc.
23.12* -- Consent of Elaine H. Demarest, CPA, P.C.
24* -- Powers of Attorney
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<PAGE>184
99.1 -- Form of Proxy of Savannah
99.2 -- Form of Proxy of Bryan
* Previously filed
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time will be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(c) 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 Registrant's Articles of Incorporation or Bylaws,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question 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.
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<PAGE>185
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 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.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-6
<PAGE>186
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 Savannah, State of
Georgia, on November 6, 1998.
THE SAVANNAH BANCORP, INC.
By: /S/ ARCHIE H. DAVIS
Archie H. Davis
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on November 6, 1998.
SIGNATURE TITLE
/S/ ARCHIE H. DAVIS President, Chief Executive Officer and Director
Archie H. Davis (principal executive officer)
/S/ ROBERT B. BRISCOE Chief Financial Officer
Robert B. Briscoe (principal financial and accounting officer)
/S/ J. WILEY ELLIS Chairman of the Board, Director
J. Wiley Ellis
* Director
Russell W. Carpenter
* Director
Robert H. Demere, Jr.
Julius Edel Director
II-7
<PAGE>187
* Director
Robert W. Groves, III
* Director
Jack M. Jones
* Director
Aaron M. Levy
* Director
J. Curtis Lewis, III
* Director
M. Lane Morrison
* Director
Jack W. Shearouse
* Director
Penelope S. Wirth
*By
/S/ ARCHIE H. DAVIS
Archie H. Davis,
Attorney-in-fact
/S/ J. WILEY ELLIS
J. Wiley Ellis,
Attorney-in-fact
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<PAGE>188
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
2 -- Amended and Restated Agreement and Plan of Merger, dated as of
February 11, 1998, by and between Savannah and Bryan (included in
APPENDIX A to the Joint Proxy Statement/Prospectus and
incorporated by reference herein)
4.1 -- Articles of Incorporation of Savannah (incorporated herein by
reference from Exhibit 2.1 of the registrant's Registration
Statement, Registration No.
33-33405)
4.2 -- Bylaws of Savannah, as amended (incorporated herein by
reference from Exhibit 3.2 of the registrant's Registration
Statement, Registration No. 33-33405)
5* -- Opinion of Ellis, Painter, Ratterree & Bart, LLP (including
consent)
8 -- Opinion of Alston & Bird LLP regarding federal income tax
matters (including consent)
10.1 -- Lease for Savannah Bank Site and Assumption of Lease
(incorporated herein by reference from Exhibit 10.1 of the
registrant's Registration Statement, Registration No. 33-33405)
10.2 -- Change in Control Agreement with Archie H. Davis dated
February 20, 1996 (incorporated by reference from Exhibit 10.2 to
the registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
10.3 -- Change in Control Agreement with R. Stephen Stramm dated
February 20, 1996 (incorporated by reference from Exhibit 10.3 to
the registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
10.4 -- Change in Control Agreement with Robert B. Briscoe dated
February 20, 1996 (incorporated by reference from Exhibit 10.4 to
the registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
10.5 -- Form of Organizers' Stock Option Agreement (incorporated
herein by reference from Exhibit 10.5 of the registrant's
Registration Statement, Registration No.
33-33405)
10.6 -- Lease for Mall Boulevard Office dated February 14, 1992
(incorporated herein by reference from Exhibit 10.6 of the
registrant's Registration Statement, Registration No. 33-33405)
10.7 -- The Savannah Bancorp, Inc. Incentive Stock Option Plan
(incorporated by reference from Exhibit 10.7 to the registrant's
Annual Report on Form 10-KSB for the year ended December 31,
1997)
10.8 -- Amendment No. 1 to The Savannah Bancorp, Inc. Incentive Stock
Option Plan (incorporated by reference from Exhibit 10.8 to the
registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997)
11 -- Statement re Computation of Per Share Earnings (incorporated
herein by reference from Exhibit 11 to the registrant's Annual
Report on Form 10-KSB for the year ended December 31, 1997)
21 -- Subsidiaries of the Registrant (incorporated herein by
reference from Exhibit 21 of the registrant's Annual Report on
Form 10-KSB for the year ended December 31, 1997)
23.1* -- Consent of Moore Stephens Tiller LLC (formerly Tiller, Stewart
& Company, LLC)
<PAGE>189
23.2* -- Consent of Arthur Andersen LLP
23.3* -- Consent of PricewaterhouseCoopers LLP
23.4* -- Consent of Ellis, Ratterree, Painter & Bart, LLP (included
in Exhibit 5)
23.5 -- Consent of Alston & Bird LLP (included in Exhibit 8)
23.6* -- Consent of E. James Burnsed
23.7* -- Consent of James W. Royal
23.8* -- Consent of James Toby Roberts, Sr.
23.9* -- Consent of L. Carlton Gill
23.10* -- Consent of Robert T. Thompson, Jr.
23.11* -- Consent of T. Stephen Johnson & Associates, Inc.
23.12* -- Consent of Elaine H. Demarest, CPA, P.C.
24* -- Powers of Attorney
99.1 -- Form of Proxy of Savannah
99.2 -- Form of Proxy of Bryan
*Previously filed
EXHIBIT 8
EXHIBIT 23.5
OPINION OF ALSTON & BIRD LLP REGARDING FEDERAL INCOME TAX MATTERS
July 29, 1998
The Savannah Bancorp, Inc.
25 Bull Street
Savannah, Georgia 31401
Bryan Bancorp of Georgia, Inc.
9971 Ford Avenue
Richmond Hill, Georgia 31324
Ladies and Gentlemen:
We have acted as counsel to The Savannah Bancorp, Inc., a corporation
organized under the laws of the State of Georgia ("Savannah"), in connection
with the proposed merger (the "Merger") of Bryan Bancorp of Georgia, Inc., a
corporation organized under the laws of the State of Georgia ("Bryan"), with and
into Savannah, pursuant to the Amended and Restated Agreement and Plan of Merger
(the "Agreement"), dated as of February 11, 1998, by and between Savannah and
Bryan.
For purposes of the opinion set forth below, we have relied, with the
consent of Bryan and the consent of Savannah, upon the accuracy and completeness
of representations made to us (which representations we have neither
investigated nor verified) contained in certificates dated July 29, 1998, from
the management of Savannah and Bryan and have assumed that such representations
will be complete and accurate as of the effective date of the Merger. We have
also relied upon the accuracy of the Registration Statement on Form S-4 filed by
Savannah (the "Registration Statement") and the Joint Proxy Statement/Prospectus
included therein (together, the "Proxy Statement"). We have also assumed that
the transactions contemplated by the Agreement will be consummated in accordance
therewith and as described in the Proxy Statement.
On the basis of the foregoing, and our consideration of such other matters
of fact and law as we have deemed appropriate, it is our opinion that, under
presently applicable federal income tax law, the statements made in items (a)
through (f) set forth under the heading "Certain Federal Income Tax
Consequences" contained in the Proxy Statement are accurate and we incorporate
such statements herein by reference.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this opinion in the Registration
Statement. In giving this consent, we do not hereby admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
ALSTON & BIRD LLP
By: /s/ Terence J. Greene
A Partner
EXHIBIT 99.1
PROXY
THE SAVANNAH BANCORP, INC.
SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints Archie H. Davis and J.
Wiley Ellis, or either of them, as proxies, each with full power of
substitution, to vote the number of shares of common stock of The Savannah
Bancorp, Inc., a Georgia corporation ("Savannah") which the undersigned would be
entitled to vote if personally present at the Special Meeting of Savannah
Shareholders to be held at the Hyatt Regency Savannah, 2 West Bay Street,
Savannah, Georgia 31401, on Tuesday, December 15, 1998, at 10:00 a.m., local
time, and at any adjournment or postponement thereof (the "Special Meeting")
upon the proposals described in the Joint Proxy Statement/Prospectus and the
Notice of Special Meeting of Shareholders, both dated November 6, 1998.
1. MERGER. To approve, ratify, confirm and adopt the issuance of shares of
Savannah common stock to the holders of Bryan common stock pursuant to the
Amended and Restated Agreement and Plan of Merger, dated as of
February 11, 1998 (the "Merger Agreement"), by and between Savannah and
Bryan Bancorp of Georgia, Inc., a Georgia corporation("Bryan"), pursuant
to which (i) Bryan will merge (the "Merger") with and into Savannah;
(ii) each share of the $1.00 par value common stock of Bryan ("Bryan
Common Stock") issued and outstanding at the effective time of the Merger
will be exchanged for 1.85 shares of $1.00 par value common stock of
Savannah ("Savannah Common Stock"), all as more fully described in the
Joint Proxy Statement/Prospectus dated November 6, 1998.
FOR |_| AGAINST |_| ABSTAIN |_|
2. CONTINGENT ELECTION ___ FOR all nominees for ___ WITHHOLD AUTHORITY
OF DIRECTORS director listed (to vote for all
below (except as nominees listed)
marked to the
contrary below)
To serve until the 1999 annual L. Carlton Gill
meeting: Robert T. Thompson, Jr.
To serve until the 2000 annual James W. Royal
meeting: James Toby Roberts, Sr.
To serve until the 2001 annual E. James Burnsed
meeting:
3. OTHER BUSINESS. In the discretion of the proxies on such other matters as
may properly come before the Special Meeting or any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 ABOVE.
Please sign this proxy exactly as your name appears below. When shares are held
jointly, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: ____________________, 1998
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE SAVANNAH BANCORP, INC.,
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
EXHIBIT 99.2
PROXY
BRYAN BANCORP OF GEORGIA, INC.
SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints E. James Burnsed and
James W. Royal, or either of them, as proxies, each with full power of
substitution, to vote the number of shares of common stock of Bryan Bancorp
of Georgia, Inc., a Georgia corporation ("Bryan") which the undersigned
would be entitled to vote if personally present at the Special Meeting of
Bryan Shareholders to be held at the corporate headquarters of Bryan, 9971
Ford Avenue, Richmond Hill, Georgia, on Monday, December 14, 1998, at 6:00
p.m., local time, and at any adjournment or postponement thereof (the
"Special Meeting") upon the proposals described in the Joint Proxy
Statement/Prospectus and the Notice of Special Meeting of Shareholders,
both dated November 6, 1998.
1. MERGER. To approve, ratify, confirm and adopt the Amended and Restated
Agreement and Plan of Merger, dated as of February 11, 1998 (the
"Merger Agreement"), by and between The Savannah Bancorp, Inc., a Georgia
corporation ("Savannah") and Bryan pursuant to which (i) Bryan will merge
(the "Merger") with and into Savannah, and (ii) each share of the $1.00
par value common stock of Bryan ("Bryan Common Stock") issued and
outstanding at the effective time of the Merger will be exchanged for 1.85
shares of $1.00 par value common stock of Savannah ("Savannah Common
Stock"), all as more fully described in the Joint Proxy
Statement/Prospectus dated November 6, 1998.
FOR |_| AGAINST |_| ABSTAIN |_|
2. OTHER BUSINESS. In the discretion of the proxies on such other matters as
may properly come before the meeting or any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign this proxy exactly as your name appears below. When shares are held
jointly, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: ____________________, 1998
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BRYAN BANCORP OF GEORGIA,
INC., AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
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