AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
CITIZENS BANCSHARES CORPORATION
AND
FIRST SOUTHERN BANCSHARES, INC.
Execution Copy
10/1/97
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TABLE OF CONTENTS
Page
Preamble ................................................................A-6
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER................................A-6
1.1 Merger......................................................... A-7
1.2 Time and Place of Closing...................................... A-7
1.3 Effective Time................................................. A-7
ARTICLE 2 TERMS OF MERGER................................................ A-7
2.1 Articles of Incorporation...................................... A-7
2.2 Bylaws......................................................... A-7
2.3 Directors and Officers......................................... A-7
2.4 Name........................................................... A-8
2.5 Subsidiary Bank................................................ A-8
ARTICLE 3 MANNER OF CONVERTING SHARES.................................... A-8
3.1 Conversion of Shares........................................... A-8
3.2 Anti-Dilution Provisions....................................... A-9
3.3 Shares Held by FSB or CBC...................................... A-9
3.4 Conversion of Stock Options; Restricted Stock.................. A-9
3.5 Fractional Shares.............................................. A-10
3.6 Dissenting Shareholders........................................ A-10
ARTICLE 4 EXCHANGE OF SHARES............................................. A-10
4.1 Exchange Procedures............................................ A-10
4.2 Rights of Former FSB Shareholders.............................. A-11
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF FSB.......................... A-12
5.1 Organization, Standing, and Power.............................. A-12
5.2 Authority; No Breach By Agreement.............................. A-12
5.3 Capital Stock.................................................. A-13
5.4 FSB Subsidiaries............................................... A-13
5.5 Financial Statements........................................... A-14
5.6 Absence of Undisclosed Liabilities............................. A-14
5.7 Absence of Certain Changes or Events........................... A-14
5.8 Tax Matters.................................................... A-14
5.9 Allowance for Possible Loan Losses............................. A-15
5.10 Assets......................................................... A-15
5.11 Environmental Matters.......................................... A-16
5.12 Compliance with Laws........................................... ▇-▇▇
▇-▇
5.13 Labor Relations................................................ A-17
5.14 Employee Benefit Plans......................................... A-17
5.15 Material Contracts............................................. A-19
5.16 Legal Proceedings.............................................. A-20
5.17 Reports........................................................ A-20
5.18 Statements True and Correct.................................... A-20
5.19 Accounting, Tax and Regulatory Matters......................... A-21
5.20 Charter Provisions............................................. A-21
5.21 Derivatives Contracts.......................................... A-21
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF CBC.......................... A-21
6.1 Organization, Standing, and Power.............................. A-21
6.2 Authority; No Breach By Agreement.............................. A-22
6.3 Capital Stock.................................................. A-22
6.4 CBC Subsidiaries............................................... A-23
6.5 Financial Statements........................................... A-24
6.6 Absence of Undisclosed Liabilities............................. A-24
6.7 Absence of Certain Changes or Events........................... A-24
6.8 Tax Matters.................................................... A-24
6.9 Allowance for Possible Loan Losses............................. A-25
6.10 Assets......................................................... A-25
6.11 Environmental Matters.......................................... A-26
6.12 Compliance with Laws........................................... A-26
6.13 Labor Relations................................................ A-27
6.14 Employee Benefit Plans......................................... A-27
6.15 Material Contracts............................................. A-29
6.16 Legal Proceedings.............................................. A-30
6.17 Reports........................................................ A-30
6.18 Statements True and Correct.................................... A-30
6.19 Accounting, Tax and Regulatory Matters......................... A-31
6.20 Charter Provisions............................................. A-31
6.21 Derivatives Contracts.......................................... A-31
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION....................... A-31
7.1 Affirmative Covenants of FSB................................... A-31
7.2 Negative Covenants of FSB...................................... A-31
7.3 Affirmative Covenants of CBC................................... A-33
7.4 Negative Covenants of CBC...................................... A-34
7.5 Adverse Changes in Condition................................... A-35
7.6 Reports........................................................ A-36
ARTICLE 8 ADDITIONAL AGREEMENTS.......................................... A-36
8.1 Registration Statement; Proxy Statement; Shareholder Approval.. A-36
8.2 Applications................................................... ▇-▇▇
▇-▇
8.3 Filings with State Offices..................................... A-36
8.4 Agreement as to Efforts to Consummate.......................... A-36
8.5 Investigation and Confidentiality.............................. A-37
8.6 Press Releases................................................. A-37
8.7 Acquisition Proposals.......................................... A-38
8.8 Accounting and Tax Treatment................................... A-39
8.9 Agreement of Affiliates........................................ A-39
8.10 Indemnification................................................ A-39
8.11 Certain Modifications.......................................... A-40
8.12 Employee Benefits and Contracts................................ A-40
8.13 Delivery to Exchange Agent..................................... A-40
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.............. A-40
9.1 Conditions to Obligations of Each Party........................ A-40
9.2 Conditions to Obligations of CBC............................... A-42
9.3 Conditions to Obligations of FSB............................... A-43
ARTICLE 10 TERMINATION.................................................... A-44
10.1 Termination.................................................... A-44
10.2 Effect of Termination.......................................... A-45
10.3 Non-Survival of Representations and Covenants.................. A-45
ARTICLE 11 MISCELLANEOUS.................................................. A-46
11.1 Definitions.................................................... A-46
11.2 Expenses....................................................... A-53
11.3 Brokers and Finders............................................ A-54
11.4 Entire Agreement............................................... A-54
11.5 Amendments..................................................... A-54
11.6 Waivers........................................................ A-54
11.7 Assignment..................................................... A-55
11.8 Notices........................................................ A-55
11.9 Governing Law.................................................. A-56
11.10 Counterparts................................................... A-56
11.11 Captions....................................................... A-56
11.12 Enforcement of Agreement....................................... A-56
11.13 Severability................................................... ▇-▇▇
▇-▇
LIST OF EXHIBITS
----------------
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
1. Form of Agreement of Affiliates of FSB. ((S) 8.10).
2. Form of Agreement of Affiliates of CBC ((S) 8.10).
3. Form of Claims/Indemnification Letter ((S) 9.2(d)).
4. Form of Opinion of FSB Counsel ((S) 9.2(f)).
5. Form of Opinion of CBC Counsel ((S) 9.3(e)).
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into
as of October 1, 1997 by and between CITIZENS BANCSHARES CORPORATION, INC.
("CBC") a corporation organized and existing under the laws of the State of
Georgia, with its principal office located in atlanta, georgia, and FIRST
SOUTHERN BANCSHARES, INC. ("FSB"), a corporation organized and existing under
the laws of the State of Georgia, with its principal office located in Lithonia,
Georgia.
PREAMBLE
--------
The Boards of Directors of FSB and CBC are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the merger of FSB with
CBC, with CBC being the surviving corporation of the merger. The transactions
described in this Agreement are subject to the approvals by the shareholders of
FSB, the Board of Governors of the Federal Reserve System, the Georgia
Department of Banking and Finance and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the merger (a) for federal income tax purposes shall qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code and (b) for accounting purposes shall be treated as a "pooling of
interests."
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the 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, FSB will be merged with and into CBC in accordance with the
provisions of Section 14-2-1101 of the GBCC and with the effect provided for in
Section 14-2-1106 of the GBCC (the "Merger"). CBC shall be the Surviving
Corporation resulting from the Merger. The Merger shall be consummated pursuant
to the terms of this Agreement, which has been approved and adopted by the
respective Boards of Directors of FSB and CBC.
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1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 10:00 a.m.
-------------------------
on the date that the Effective Time occurs (or the immediately preceding day if
the Effective Time is earlier than 10:00 a.m.), or at such other time as the
Parties, acting through their chief executive officers, may mutually agree. The
place of Closing shall be at the offices of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP in Atlanta, Georgia, or such other place as may be mutually agreed upon by
the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by this
--------------
Agreement shall become effective on the date and at the time the Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Georgia (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the chief
executive officer of each Party, the Effective Time shall occur on the fifth
business day following the last to occur of (a) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, (b) the date on which the shareholders of CBC approve this Agreement to
the extent such approval is required by applicable Law, (c) the date on which
the shareholders of FSB approve this Agreement to the extent such approval is
required by applicable Law; or such other date as may be mutually agreed upon in
writing by the chief executive officer of each Party.
ARTICLE 2
TERMS OF MERGER
---------------
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of CBC in
-------------------------
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of CBC in effect immediately prior to the Effective
------
Time shall be the Bylaws of the Surviving Corporation until otherwise amended or
repealed.
2.3 DIRECTORS AND OFFICERS.
----------------------
(a) The directors of the Surviving Corporation immediately following the
Effective Time shall consist of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, all of whom shall serve in accordance with the Bylaws of
the Surviving Corporation. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall serve as Chairman and Vice Chairman of the Board,
respectively, of the Surviving Corporation.
(b) The officers of the Surviving Corporation immediately following the
Effective Time shall consist of ▇▇▇▇▇ ▇. ▇▇▇▇▇, who shall serve as
the President and Chief Executive Officer and who shall have the
authority to select his management team, together with such
additional persons as may thereafter be elected, all of whom shall
serve in accordance with the Bylaws of the Surviving Corporation.
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2.4 NAME. At the Effective Time of the Merger, the Surviving Corporation
----
will operate under the name "Citizens Bancshares Corporation."
2.5 SUBSIDIARY BANK.
---------------
(a) As soon as practicable following the Effective Time of the Merger,
the Surviving Corporation intends to merge the Parties' subsidiary
banks, First Southern Bank and Citizens Trust Bank, Citizens Trust
Bank, with the resulting institution (the "Resulting Bank") being
known as "Citizens Trust Bank.
(b) The directors of the Resulting Bank shall consist of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, H. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, C.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇,
all of whom shall serve in accordance with the Bylaws of the
Resulting Bank. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall serve
as Chairman and Vice Chairman of the Board, respectively, of the
Resulting Bank.
(c) The officers of the Resulting Bank shall consist of ▇▇▇▇▇ ▇. ▇▇▇▇▇,
who shall serve as the President and Chief Executive Officer and who
shall have the authority to select his management team, together
with such additional persons as may thereafter be elected, all of
whom shall serve in accordance with the Bylaws of the Resulting
Bank.
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 the holders thereof the shares of the constituent corporations shall be
converted as follows:
(a) Each share of CBC Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of FSB Common Stock (other than Dissenting Shares (defined
at Section 3.6 below) or shares canceled pursuant to Section 3.3
below) shall be converted into 1.508 shares (subject to Section 3.5
hereof) of CBC Common Stock (the "Exchange Ratio"), subject to
adjustment as hereinafter provided.
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3.2 ANTI-DILUTION PROVISIONS. In the event FSB or CBC changes the number
------------------------
of shares of FSB Common Stock or CBC Common Stock, respectively, issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date therefor
(in the case of a stock split or similar recapitalization) shall be prior to the
Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY FSB OR CBC. Each of the shares of FSB Common Stock held
-------------------------
by any FSB Company or by any CBC Company, in each case other than in a fiduciary
capacity or as a result of debts previously contracted, shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.4 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK.
---------------------------------------------
(a) At the Effective Time, all rights with respect to FSB Common Stock
pursuant to stock options ("FSB Options") granted by FSB under the FSB Stock
Plans, which are outstanding at the Effective Time, whether or not exercisable,
shall be converted into and become rights with respect to Surviving Corporation
Common Stock, and the Surviving Corporation shall assume each FSB Option, in
accordance with the terms of the FSB Stock Plan and stock option agreement by
which it is evidenced. From and after the Effective Time, (i) each FSB Option
assumed by the Surviving Corporation may be exercised solely for shares of
Surviving Corporation Common Stock, (ii) the number of shares of Surviving
Corporation Common Stock subject to such FSB Option shall be equal to the number
of shares of FSB Common Stock subject to such FSB Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such FSB Option shall be adjusted by dividing the per
share exercise price under each such FSB Option by the Exchange Ratio and
rounding down to the nearest cent. Notwithstanding the provisions of clause (ii)
of the preceding sentence, the Surviving Corporation shall not be obligated to
issue any fraction of a share of Surviving Corporation Common Stock upon
exercise of a FSB Option, and any fraction of a share of Surviving Corporation
Common Stock that would otherwise be subject to a converted FSB Option shall
represent the right to receive a cash payment equal to the product of such
fraction and the difference between the "Market Value" of one share of Surviving
Corporation Common Stock and the per share exercise price of such Option. The
"Market Value" of one share of Surviving Corporation Common Stock shall be the
last sales price of such common stock on Nasdaq, or such other exchange or
market system on which Surviving Corporation Common Stock is then traded, (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by the Surviving Corporation) on the last trading
day preceding the date of exercise or, if the Surviving Corporation Common Stock
is not then traded on Nasdaq or an exchange, the "Market Value" of one share of
Surviving Corporation Common Stock shall be established by the Board of
Directors of the Surviving Corporation. It is intended that the foregoing
assumption shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 424 of the Internal Revenue Code, as to any
stock option which is an "incentive stock option." FSB and CBC agree to take all
necessary steps to effect the provisions of this Section 3.4.
(b) All restrictions or limitations on transfer with respect to FSB
Common Stock awarded under the FSB Stock Plans or any other plan, program or
arrangement of any FSB
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Company, to the extent that such restrictions or limitations shall not have
already lapsed, and except as otherwise expressly provided in such plan, program
or arrangement, shall remain in full force and effect with respect to shares of
Surviving Corporation Common Stock into which such restricted stock is converted
pursuant to Section 3.1 of this Agreement.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
-----------------
Agreement, each holder of shares of FSB Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Surviving Corporation Common Stock (after taking into account all
certificates delivered by such holder) shall receive in lieu thereof cash
(without interest) in an amount equal to such fractional part of a share of
Surviving Corporation Common Stock multiplied by $9.88. 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 DISSENTING SHAREHOLDERS. Any holder of shares of FSB Common Stock
-----------------------
("Dissenting Shares") who perfects such holder's dissenters' rights of appraisal
in accordance with and as contemplated by Article 13 of the GBCC shall be
entitled to receive the value of such shares in cash as determined pursuant to
such provisions 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 the Surviving
Corporation 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 FSB fails to perfect, or effectively withdraws or loses, such
holder's right to appraisal and of payment for such holder's shares, the
Surviving Corporation shall issue and deliver the consideration to which such
holder of shares of FSB Common Stock is entitled under this Article 3 (without
interest) upon surrender by such holder of the certificate or certificates
representing shares of FSB Common Stock held by such holder.
ARTICLE 4
EXCHANGE OF SHARES
------------------
4.1 EXCHANGE PROCEDURES. Unless the parties otherwise agree, within three
-------------------
business days after the Effective Time, the Surviving Corporation shall cause a
qualified exchange agent (the "Exchange Agent") to mail to the former holders of
FSB Common Stock appropriate transmittal materials which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of FSB Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent. After the Effective Time,
each holder of shares of FSB Common Stock (other than shares to be canceled
pursuant to Section 3.3 of this Agreement or as to which dissenters' rights have
been perfected as provided in Section 3.6 of this Agreement) issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. To the extent required by Section 3.5 of this
Agreement, each holder of shares of FSB Common Stock issued and outstanding at
the Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional share of
Surviving Corporation Common Stock to which such holder may otherwise be
entitled (without interest). The
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Exchange Agent shall not be obligated to deliver the consideration to which any
former holder of FSB Common Stock is entitled as a result of the Merger until
such holder surrenders his or her certificate or certificates representing the
shares of FSB Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of FSB Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, the Surviving Corporation shall not be liable to a
holder of FSB Common Stock for any amounts paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER FSB SHAREHOLDERS. At the Effective Time, the stock
---------------------------------
transfer books of FSB shall be closed as to holders of FSB Common Stock
immediately prior to the Effective Time and no transfer of FSB Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of FSB Common Stock (other than
shares to be canceled pursuant to Section 3.3 or as to which dissenters' rights
have been perfected as provided in Section 3.6 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.5 of this Agreement in exchange
therefor. To the extent permitted by Law, former holders of record of FSB Common
Stock shall be entitled to vote after the Effective Time at any meeting of
Surviving Corporation shareholders the number of whole shares of Surviving
Corporation Common Stock into which their respective shares of FSB Common Stock
are converted, regardless of whether such holders have exchanged their
certificates representing FSB Common Stock for certificates representing
Surviving Corporation Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by the
Surviving Corporation on Surviving Corporation Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares issuable pursuant to this Agreement, but no
dividend or other distribution payable to the holders of record of Surviving
Corporation Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares of FSB Common
Stock issued and outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 of this Agreement.
However, upon surrender of such FSB Common Stock certificate, both Surviving
Corporation Common Stock certificate (together with all such undelivered
dividends or other distributions without interest) and any undelivered dividends
and cash payments to be paid for fractional share interests (without interest)
shall be delivered and paid with respect to each share represented by such
certificate. Any portion of the consideration (including the proceeds of any
investments thereof) which had been made payable to the Exchange Agent pursuant
to Section 4.1 of this Agreement that remain unclaimed by shareholders of FSB
for six months after the Effective Time shall be paid to the Surviving
Corporation. Any shareholders of FSB who have not theretofore complied with
this Article 4 shall thereafter look only to the Surviving Corporation for
payment of their shares of Surviving Corporation Common Stock and unpaid
dividends and distributions on the Surviving Corporation Common Stock
deliverable in respect of each share of FSB Common Stock such shareholder holds
as determined pursuant to this Agreement, in each case, without any interest
thereon.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FSB
-------------------------------------
FSB hereby represents and warrants to CBC as follows:
5.1 ORGANIZATION, STANDING, AND POWER. FSB is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia and is duly registered as a bank holding company under the BHC Act. FSB
has the corporate power and authority to carry on its business as now conducted
and to own, lease and operate its Assets. FSB is duly qualified or licensed to
transact business as a foreign corporation in good standing in the states of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FSB.
5.2 AUTHORITY; NO BREACH BY AGREEMENT .
---------------------------------
(a) FSB 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 FSB, subject to the approval
of this Agreement and the transactions contemplated hereby by the holders of a
majority of the outstanding shares of FSB Common Stock, which is the only
shareholder vote required for approval of this Agreement and consummation of the
Merger by FSB. Subject to such requisite shareholder approval and any approvals
required of Regulatory Authorities, this Agreement represents a legal, valid and
binding obligation of FSB, enforceable against FSB in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by FSB, nor the
consummation by FSB of the transactions contemplated hereby, nor compliance by
FSB with any of the provisions hereof will (i) conflict with or result in a
breach of any provision of FSB's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any FSB Company under, any
Contract or Permit of any FSB Company, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FSB, or (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of this Agreement, violate
any Law or Order applicable to any FSB Company or any of their respective
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, and applicable state corporate and securities Laws, and other
than Consents required from
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Regulatory Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, and other than Consents, filings or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FSB, no notice
to, filing with, or Consent of any public body or authority is necessary for the
consummation by FSB of the Merger and the other transactions contemplated in
this Agreement.
5.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of FSB consists of 10,000,000 shares of
FSB Common Stock, of which 553,603 shares are issued and outstanding as of the
date of this Agreement. All of the issued and outstanding shares of Capital
Stock of FSB 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
FSB has been issued in violation of any preemptive rights of the current or past
shareholders of FSB. FSB has reserved 5,000 shares of FSB Common Stock for
issuance under the FSB Stock Plans, pursuant to which options to purchase not
more than 4,000 shares of FSB Common Stock are outstanding as of the date of
this Agreement and pursuant to which options to purchase not more than 5,000
shares of FSB Common Stock will be outstanding at the Effective Time.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
disclosed in Section 5.3 of the FSB Disclosure Memorandum, there are no shares
---------------------
of capital stock or other equity securities of FSB outstanding and no
outstanding Rights relating to the capital stock of FSB.
5.4 FSB SUBSIDIARIES. FSB has disclosed in Section 5.4 of the FSB
----------------
Disclosure Memorandum all of the FSB Subsidiaries as of the date of this
---------------------
Agreement. Except as disclosed in Section 5.4 of the FSB Disclosure Memorandum,
---------------------
FSB or one of its Subsidiaries owns all of the issued and outstanding shares of
capital stock of each FSB Subsidiary. No equity securities of any FSB
Subsidiary are or may become required to be issued (other than to another FSB
Company) by reason of any Rights, and there are no Contracts by which any FSB
Subsidiary is bound to issue (other than to another FSB Company) additional
shares of its capital stock or Rights, or by which any FSB Company is or may be
bound to transfer any shares of the capital stock of any FSB Subsidiary (other
than to another FSB Company), and there are no Contracts by which any FSB
Company is bound to issue (other than to another FSB Company) additional shares
of its capital stock. There are no Contracts relating to the rights of any FSB
Company to vote or to dispose of any shares of the capital stock of any FSB
Subsidiary. All of the shares of capital stock of each FSB Subsidiary held by a
FSB Company are fully paid and nonassessable under the applicable Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the FSB Company free and clear of any Lien. Each FSB Subsidiary is either a
bank, a trust company, a savings association or a corporation and is duly
organized, validly existing, and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is organized and has the corporate power
and authority necessary for it to own, lease and operate its Assets and to carry
on its business as now conducted. Each FSB 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,
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individually or in the aggregate, a Material Adverse Effect on FSB. Each FSB
Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured to applicable limits by the
Bank Insurance Fund or the Savings Association Insurance Fund, as appropriate.
5.5 FINANCIAL STATEMENTS. FSB has included in Section 5.5 of the FSB
--------------------
Disclosure Memorandum copies of all FSB Financial Statements for the periods
---------------------
ended on or before December 31, 1996 and will deliver to CBC copies of all FSB
Financial Statements prepared subsequent to the date hereof. The FSB Financial
Statements (as of the dates thereof and for the periods covered thereby) (a)
are, or if dated after the date of this Agreement will be, in accordance with
the books and records of the FSB Companies, which are or will be, as the case
may be, complete and correct and which have been or will have been, as the case
may be, maintained in accordance with good business practices, and (b) present
or will present, as the case may be, fairly the consolidated financial position
of the FSB Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the FSB Companies
for the periods indicated, in accordance with GAAP (subject to any exceptions as
to consistency specified therein or as may be indicated in the notes thereto or,
in the case of interim financial statements, to normal recurring year-end
adjustments that are not material in amount or effect).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No FSB Company has any Liabilities
----------------------------------
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FSB except Liabilities which are reflected or otherwise
accrued or reserved against in the consolidated balance sheets of FSB as of
December 31, 1996, included in the FSB Financial Statements or reflected in the
notes thereto. No FSB Company has incurred or paid any Liability since December
31, 1996, except for such Liabilities reflected or otherwise accrued or reserved
against in the FSB Financial Statements, or as may have been incurred or paid in
the ordinary course of business consistent with past business practice and which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FSB.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996, except
------------------------------------
as in Section 5.7 of the FSB Disclosure Memorandum, (a) there have been no
---------------------
events, changes or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FSB, and (b) the
FSB Companies have not taken any action, or failed to take any action, prior to
the date of this Agreement, which action or failure, if taken after the date of
this Agreement, would represent or result in a material breach or violation of
any of the covenants and agreements of FSB provided in Article 7 of this
Agreement.
5.8 TAX MATTERS.
-----------
(a) All Tax returns required to be filed by or on behalf of any of the
FSB Companies 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, except to the extent that all such failures to file, taken together, are
not reasonably likely to have a Material Adverse Effect on FSB and all returns
filed are complete and accurate in all material respects to the Knowledge of
FSB. All
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Taxes shown as due on filed 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 Material Adverse Effect on FSB, except as reserved against
in the FSB Financial Statements delivered prior to the date of this Agreement or
as disclosed in Section 5.8(a) of the FSB Disclosure Memorandum. All material
---------------------
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) Except as disclosed in Section 5.8(b) of the FSB Disclosure
----------
Memorandum, none of the FSB Companies has executed an extension or waiver of any
----------
statute of limitations on the assessment or collection of any Tax due that is
currently in effect, and no unpaid tax deficiency has been asserted in writing
against or with respect to any FSB Company, which deficiency is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
FSB.
(c) Adequate provision for any Taxes due or to become due for any of the
FSB Companies for the period or periods through and including the date of the
respective FSB Financial Statements has been made and is reflected on such FSB
Financial Statements.
(d) Deferred Taxes of the FSB Companies have been provided for in
accordance with GAAP.
(e) Each of the FSB Companies is in compliance in all material respects
with, and its records contain all information and documents (including, without
limitation, properly completed IRS Forms W-9) necessary to comply in all
material respects with, all applicable information reporting and Tax withholding
requirements under federal, state and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FSB.
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible loan or
----------------------------------
credit losses (the "Allowance") shown on the consolidated balance sheets of FSB
included in the most recent FSB Financial Statements dated prior to the date of
this Agreement was, and the Allowance shown on the consolidated balance sheets
of FSB included in the FSB Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof, adequate (within
the meaning of GAAP and applicable regulatory requirements or guidelines) to
provide for losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the FSB Companies and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the FSB Companies as of the dates thereof except where the
failure of such Allowance to be so adequate is not reasonably likely to have a
Material Adverse Effect on FSB.
5.10 ASSETS. Except as disclosed in Section 5.10 of the FSB Disclosure
------ ----------
Memorandum or as disclosed or reserved against in the FSB Financial Statements,
----------
the FSB Companies have good and marketable title, free and clear of all Liens,
to all of their respective Assets. All material tangible properties used in the
businesses of the FSB Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
FSB's past practices. All Assets which are material to FSB's business on a
consolidated basis, held under leases or
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subleases by any of the FSB Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
FSB currently maintains insurance in amounts, scope, and coverage as disclosed
in Section 5.10 of the FSB Disclosure Memorandum. FSB has not received written
---------------------
notice from any insurance carrier that (a) such insurance will be cancelled or
that coverage thereunder will be reduced or eliminated, or (b) premium costs
with respect to such policies of insurance will be substantially increased.
Except as disclosed in Section 5.10 of the FSB Disclosure Memorandum, to the
---------------------
Knowledge of FSB, there are presently no claims pending under such policies of
insurance and no notices have been given by FSB under such policies. The Assets
of the FSB Companies include all assets required to operate the business of the
FSB Companies as presently conducted.
5.11 ENVIRONMENTAL MATTERS.
---------------------
(a) Except as disclosed in Section 5.11(a) of the FSB Disclosure
----------
Memorandum, to the Knowledge of FSB, each FSB Company, its Participation
----------
Facilities and its Loan 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 Material Adverse Effect on FSB.
(b) To the Knowledge of FSB, there is no Litigation pending or threatened
before any court, governmental agency or authority or other forum in which any
FSB Company or any of its Loan Properties or Participation Facilities has been
or, with respect to threatened Litigation, may be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material (as defined below) or oil, whether or not
occurring at, on, under or involving a site owned, leased or operated by any FSB
Company or any of its Loan Properties or Participation Facilities, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FSB and to the
Knowledge of FSB, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of FSB, there have been no releases of Hazardous
Material or oil in, on, under or affecting any Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FSB.
5.12 COMPLIANCE WITH LAWS. Each FSB Company has in effect all Permits
--------------------
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FSB, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FSB. Except as disclosed in Section
5.12 of the FSB Disclosure Memorandum, no FSB Company:
---------------------
A-16
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FSB; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any FSB Company is not in compliance with
any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FSB, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FSB, or
(iii) requiring any FSB Company to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
5.13 LABOR RELATIONS. No FSB Company is the subject of any Litigation
---------------
asserting that it or any other FSB Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other FSB Company to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any FSB Company, pending or, to its
Knowledge, threatened, nor, to its Knowledge, is there any activity involving
any FSB Company's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) FSB has disclosed in Section 5.14 of the FSB Disclosure Memorandum
---------------------
and delivered or made available to CBC prior to the execution of this Agreement
copies in each case of all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plans, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, including, without limitation, "employee benefit plans" as that term is
defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by any FSB Company 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 "FSB Benefit
Plans"). Any of the FSB 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 "FSB ERISA Plan."
(b) Except as to those plans disclosed in Section 5.14(b) of the FSB
Disclosure Memorandum as tax-qualified FSB ERISA Plans (the "FSB Qualified
---------------------
Plans"), no FSB Company maintains or previously maintained during the six years
preceding the date of this Agreement a FSB Plan which meets or was intended to
meet the requirements of Code Section 401(a). The Internal Revenue Service has
issued favorable determination letters to the effect that each FSB Qualified
Plan
A-17
qualifies under Code Section 401(a) and that any related trust is exempt
from taxation under Code Section 501(a), and such determination letters remain
in effect and have not been revoked. Copies of the most recent determination
letters and any outstanding requests for a determination letter with respect to
each FSB Qualified Plan have been delivered or made available to CBC. Except as
disclosed in Section 5.14(b) of the FSB Disclosure Memorandum, no FSB Qualified
---------------------
Plan has been amended since the issuance of each respective determination
letter. The FSB Qualified Plans currently comply in form with the requirements
under Code Section 401(a), other than changes required by statutes, regulations
and rulings for which amendments are not yet required. No issue concerning
qualification of the FSB Qualified Plans is pending before or is threatened by
the Internal Revenue Service. The FSB Qualified Plans have been administered
according to their terms (except for those terms which are inconsistent with the
changes required by statutes, regulations, and rulings for which changes are not
yet required to be made, in which case the FSB Qualified Plans have been
administered in accordance with the provisions of those statutes, regulations
and rulings) and in accordance with the requirements of Code Section 401(a). No
FSB Company, any ERISA Affiliate or any fiduciary of any FSB Qualified Plan has
done anything that would adversely affect the qualified status of the FSB
Qualified Plans or the related trusts. Any FSB Qualified Plan which is required
to satisfy Code Section 401(k)(3) and 401(m)(2) has been tested for compliance
with, and has satisfied the requirements of, Code Section 401(k)(3) and
401(m)(2) for each plan year ending prior to the date of this Agreement.
(c) All FSB Benefit Plans are in compliance in all material respects with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FSB. To the
Knowledge of FSB, no FSB Company nor any other party has engaged in a
transaction with respect to any FSB Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any FSB
Company to a tax or penalty imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA in amounts which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FSB.
(d) Neither FSB nor any ERISA Affiliate of FSB maintains or has during
the six years preceding the date of this Agreement maintained an "employee
benefit pension plan," within the meaning of Section 3(2) of ERISA that is or
was subject to Title IV of ERISA.
(e) Neither FSB nor any ERISA Affiliate of FSB has any past, present or
future obligation or liability to contribute to any multi-employer plan, as
defined in Section 3(37) of ERISA.
(f) Except as disclosed in Section 5.14(f) of the FSB Disclosure
----------
Memorandum, (i) no FSB Company has any obligations for retiree health and life
----------
benefits under any of the FSB Benefit Plans and (ii) there are no restrictions
on the rights of such FSB Company to amend or terminate any such Plan without
incurring any Liability thereunder, which Liability is reasonably likely to have
a Material Adverse Effect on FSB, other than for benefits accrued before the
date of such termination or amendment.
(g) Except as disclosed in Section 5.14(g) of the FSB Disclosure
----------
Memorandum, neither the execution and delivery of this Agreement nor the
----------
consummation of the transactions
A-18
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or any employee of any FSB Company from any FSB
Company under any FSB Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any FSB Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(h) The actuarial present values of all accrued deferred compensation
entitlements (including, without limitation, entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any FSB Company 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 reflected on the FSB Financial Statements to the extent required by
and in accordance with GAAP.
(i) FSB and each ERISA Affiliate of FSB has complied in all material
respects with applicable continuation of coverage requirements of Section 1001
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and
ERISA Sections 601 through 608.
(j) Except as disclosed in Section 5.14(j) of the FSB Disclosure
----------
Memorandum, neither FSB nor any ERISA Affiliate of FSB is obligated,
----------
contingently or otherwise, under any agreement to pay any amount which would be
treated as a "parachute payment," as defined in Section 280G(b) of the Internal
Revenue Code (determined without regard to Section 280G(b)(2)(A)(ii) of the
Internal Revenue Code).
(k) Other than routine claims for benefits, there are no actions, audits,
investigations, suits or claims pending, or threatened against any FSB Benefit
Plan, any trust or other funding agency created thereunder, or against any
fiduciary of any FSB Benefit Plan or against the assets of any FSB Benefit Plan.
5.15 MATERIAL CONTRACTS. Except as disclosed in Section 5.15 of the FSB
------------------
Disclosure Memorandum or otherwise reflected in the FSB Financial Statements,
---------------------
none of the FSB Companies, nor any of their respective Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (a) any employment, severance, termination, consulting or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $25,000, excluding "at will" employment arrangements, (b) any Contract
relating to the borrowing of money by any FSB Company or the guarantee by any
FSB Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, Federal Home Loan Bank advances, fully-
secured repurchase agreements, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (c) any
Contracts between or among FSB Companies, and (d) any other Contract (excluding
this Agreement) or amendment thereto that would be required to be filed as an
exhibit to a Form 10-KSB filed by FSB with the SEC as of the date of this
Agreement that has not been filed as an exhibit to FSB's Form 10-KSB for the
fiscal year ended December 31, 1996 and identified to CBC (together with all
Contracts referred to in Sections 5.10 and 5.14(a) of this Agreement, the "FSB
Contracts"). None of the FSB Companies is in Default under any FSB Contract,
other than Defaults which are not reasonably likely to have, individually or
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in the aggregate, a Material Adverse Effect on FSB. Except as to FHLB advances,
all of the indebtedness of any FSB Company for money borrowed is prepayable at
any time by such FSB Company without penalty or premium.
5.16 LEGAL PROCEEDINGS. Except as disclosed in Section 5.16 of the FSB
-----------------
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
---------------------
Knowledge of FSB, 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 FSB Company, or against any Asset, interest, or
right of any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FSB, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any FSB Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FSB.
5.17 REPORTS. Since January 1, 1994, each FSB Company has timely filed all
-------
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with (a) the SEC, including but
not limited to Form 10-KSB, Forms 10-QSB, Forms 8-K, and proxy statements, (b)
the Regulatory Authorities, and (c) any applicable state securities or banking
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on FSB). As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document to FSB's Knowledge did
not, in any material respects, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
5.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument or
---------------------------
other writing furnished or to be furnished by any FSB Company to CBC pursuant to
this Agreement contains or will contain any untrue statement of material fact or
will omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
the information supplied or to be supplied by any FSB Company for inclusion in
the Registration Statement to be filed by CBC 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 FSB Company for inclusion in the Proxy Statement to be mailed to
FSB's shareholders in connection with the FSB Shareholders' Meeting, and any
other documents to be filed by any FSB Company with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of FSB, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the FSB
Shareholders' Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the FSB
Shareholders' Meeting. All documents that any FSB Company
A-20
is responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
5.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No FSB Company or, to the
--------------------------------------
Knowledge of FSB, any Affiliate thereof has taken any action, or agreed to take
any action, or has any Knowledge of any fact or circumstance that is reasonably
likely to (a) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or
treatment as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (b) materially impede or delay receipt of any Consents
of Regulatory Authorities referred to in Section 9.1(b) of this Agreement or
result in the imposition of a condition or restriction of the type referred to
in the second sentence of such Section. To the Knowledge of FSB, there exists
no fact, circumstance, or reason attributable to FSB why the requisite Consents
referred to in Section 9.1(b) of this Agreement cannot be received in a timely
manner without the imposition of any condition or restriction of the type
described in the second sentence of such Section 9.1(b).
5.20 CHARTER PROVISIONS. Each FSB Company has taken all action so that the
------------------
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement do not and will not result in the
grant of any rights to any Person under the Articles of Incorporation, Bylaws or
other governing instruments of any FSB Company or restrict or impair the ability
of the Surviving Corporation to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any FSB Company that may be acquired or
controlled by it.
5.21 DERIVATIVES CONTRACTS. Except as set forth in Section 5.21 of the FSB
---------------------
Disclosure Memorandum, neither FSB nor any of its Subsidiaries is a party to or
---------------------
has agreed to enter into an 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 (including various combinations
thereof).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CBC
-------------------------------------
CBC hereby represents and warrants to FSB as follows:
6.1 ORGANIZATION, STANDING, AND POWER. CBC is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and is duly registered as a bank holding company under the BHC Act.
CBC has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. CBC is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CBC.
A-21
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) CBC 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 CBC, subject to the approval
of this Agreement and the transactions contemplated hereby by the holders of a
majority of the outstanding Surviving Corporation Common Stock, which is the
only shareholder vote required for approval of this Agreement and consummation
of the Merger by CBC. Subject to such requisite shareholder approval and any
approvals required of Regulatory Authorities, this Agreement represents a legal,
valid and binding obligation of CBC, enforceable against CBC in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought). CBC has reserved for issuance 842,374 shares of Surviving
Corporation Common Stock for consummation of the Merger and for issuance
pursuant to FSB Options.
(b) Neither the execution and delivery of this Agreement by CBC, nor the
consummation by CBC of the transactions contemplated hereby, nor compliance by
CBC with any of the provisions hereof will (i) conflict with or result in a
breach of any provision of CBC's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any CBC Company under, any
Contract or Permit of any CBC Company, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on CBC, or (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of this Agreement, violate
any Law or Order applicable to any CBC Company or any of their respective
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, and 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 Material Adverse Effect on
CBC, no notice to, filing with, or Consent of any public body or authority is
necessary for the consummation by CBC of the Merger and the other transactions
contemplated in this Agreement.
6.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of CBC consists of 5,000,000 shares of
Surviving Corporation Common Stock, of which 1,329,684 shares were issued and
outstanding as of the date of this Agreement. All of the issued and outstanding
shares of Surviving Corporation Common Stock are, and all of the shares of
Surviving Corporation Common Stock to be issued in exchange for shares
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of FSB 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 CBC Common Stock has been, and none of the shares of
Surviving Corporation Common Stock to be issued in exchange for shares of FSB
Common Stock upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of CBC. CBC has reserved
no shares of Surviving Corporation Common Stock for issuance under the CBC Stock
Plans, pursuant to which options to purchase no shares of Surviving Corporation
Common Stock are outstanding as of the date of this Agreement and at the
Effective Time.
(b) Except as set forth in Section 6.3(a) of this Agreement, or as
disclosed in Section 6.3(b) of the CBC Disclosure Memorandum, there are no
---------------------
shares of capital stock or other equity securities of CBC outstanding and no
outstanding Rights relating to the capital stock of CBC.
6.4 CBC SUBSIDIARIES. CBC has disclosed in Section 6.4 of the CBC
----------------
Disclosure Memorandum all of the CBC Subsidiaries as of the date of this
---------------------
Agreement. Except as disclosed in Section 6.4 of the CBC Disclosure Memorandum,
---------------------
CBC or one of its Subsidiaries owns all of the issued and outstanding shares of
capital stock of each CBC Subsidiary. No equity securities of any CBC
Subsidiary are or may become required to be issued (other than to another CBC
Company) by reason of any Rights, and there are no Contracts by which any CBC
Subsidiary is bound to issue (other than to another CBC Company) additional
shares of its capital stock or Rights, or by which any CBC Company is or may be
bound to transfer any shares of the capital stock of any CBC Subsidiary (other
than to another CBC Company), and there are no Contracts by which any CBC
Company is bound to issue (other than to another CBC Company) additional shares
of its capital stock. There are no Contracts relating to the rights of any CBC
Company to vote or to dispose of any shares of the capital stock of any CBC
Subsidiary. All of the shares of capital stock of each CBC Subsidiary held by a
CBC Company are fully paid and nonassessable under the applicable Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the CBC Company free and clear of any Lien. Each CBC Subsidiary is either a
bank, a trust company, a savings association or a corporation and is duly
organized, validly existing, and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is organized and has the corporate power
and authority necessary for it to own, lease and operate its Assets and to carry
on its business as now conducted. Each CBC Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CBC. Each CBC Subsidiary that is a
depository institution is an "insured institution" as defined in the Federal
Deposit Insurance Act and applicable regulations thereunder, and the deposits in
which are insured to applicable limits by the Bank Insurance Fund or the Savings
Association Insurance Fund, as appropriate.
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6.5 FINANCIAL STATEMENTS. CBC has included in Section 6.5 of the CBC
--------------------
Disclosure Memorandum copies of all CBC Financial Statements for the periods
---------------------
ended on or before December 31, 1996 and will deliver to FSB copies of all CBC
Financial Statements prepared subsequent to the date hereof. The CBC Financial
Statements (as of the dates thereof and for the periods covered thereby) (a)
are, or if dated after the date of this Agreement will be, in accordance with
the books and records of the CBC Companies, which are or will be, as the case
may be, complete and correct and which have been or will have been, as the case
may be, maintained in accordance with good business practices, and (b) present
or will present, as the case may be, fairly the consolidated financial position
of the CBC Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the CBC Companies
for the periods indicated, in accordance with GAAP (subject to any exceptions as
to consistency specified therein or as may be indicated in the notes thereto or,
in the case of interim financial statements, to normal recurring year-end
adjustments that are not material in amount or effect).
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No CBC Company has any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CBC, except Liabilities which are
reflected or otherwise accrued or reserved against in the consolidated balance
sheets of CBC as of December 31, 1996, included in the CBC Financial Statements
or reflected in the notes thereto. No CBC Company has incurred or paid any
Liability since December 31, 1996, except for such Liabilities reflected or
otherwise accrued or reserved against in the CBC Financial Statements, or as may
have been incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on CBC.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996, except
------------------------------------
as disclosed or in Section 6.7 of the CBC Disclosure Memorandum, (a) there have
---------------------
been no events, changes or occurrences which have had, or are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on CBC, and
(b) the CBC Companies have not taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if taken after the
date of this Agreement, would represent or result in a material breach or
violation of any of the covenants and agreements of CBC provided in Article 7 of
this Agreement.
6.8 TAX MATTERS.
-----------
(a) All Tax returns required to be filed by or on behalf of any of the
CBC Companies 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, except to the extent that all such failures to file, taken together, are
not reasonably likely to have a Material Adverse Effect on CBC, and all returns
filed are complete and accurate in all material respects to the Knowledge of
CBC. All Taxes shown as due on filed 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 Material Adverse Effect on CBC, except as reserved against
in the CBC Financial Statements delivered prior to the date of this Agreement or
as disclosed
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in Section 6.8(a) of the CBC Disclosure Memorandum. All material Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) Except as disclosed in Section 6.8(b) of the CBC Disclosure
----------
Memorandum none of the CBC Companies has executed an extension or waiver of any
----------
statute of limitations on the assessment or collection of any Tax due that is
currently in effect, and no unpaid tax deficiency has been asserted in writing
against or with respect to any CBC Company, which deficiency is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
CBC.
(c) Adequate provision for any Taxes due or to become due for any of the
CBC Companies for the period or periods through and including the date of the
respective CBC Financial Statements has been made and is reflected on such CBC
Financial Statements.
(d) Deferred Taxes of the CBC Companies have been provided for in
accordance with GAAP.
(e) Each of the CBC Companies is in compliance in all material respects
with, and its records contain all information and documents (including, without
limitation, properly completed IRS Forms W-9) necessary to comply in all
material respects with, all applicable information reporting and Tax withholding
requirements under federal, state and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CBC.
6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The Allowance shown on the
----------------------------------
consolidated balance sheets of CBC included in the most recent CBC Financial
Statements dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of CBC included in the CBC Financial
Statements as of dates subsequent to the execution of this Agreement will be, as
of the dates thereof, adequate (within the meaning of GAAP and applicable
regulatory requirements or guidelines) to provide for losses relating to or
inherent in the loan and lease portfolios (including accrued interest
receivables) of the CBC Companies and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by the CBC
Companies as of the dates thereof except where the failure of such Allowance to
be so adequate is not reasonably likely to have a Material Adverse Effect on
CBC.
6.10 ASSETS. Except as disclosed in Section 6.10 of the CBC Disclosure
------ ----------
Memorandum or as disclosed or reserved against in the CBC Financial Statements,
----------
the CBC Companies have good and marketable title, free and clear of all Liens,
to all of their respective Assets. All tangible properties used in the
businesses of the CBC Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
CBC's past practices. All Assets which are material to CBC's business on a
consolidated basis, held under leases or subleases by any of the CBC Companies,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is
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subject to the discretion of the court before which any proceedings may be
brought), and each such Contract is in full force and effect. The CBC Companies
currently maintain insurance in amounts, scope and coverage as disclosed in
Section 6.10 of the CBC Disclosure Memorandum. None of the CBC Companies has
---------------------
received written notice from any insurance carrier that (a) such insurance will
be cancelled or that coverage thereunder will be reduced or eliminated, or (b)
premium costs with respect to such policies of insurance will be substantially
increased. Except as disclosed in Section 6.10 of the CBC Disclosure Memorandum,
to the Knowledge of CBC, there are presently no occurrences giving rise to a
claim under such policies of insurance and no notices have been given by any CBC
Company under such policies. The Assets of the CBC Companies include all assets
required to operate the business of the CBC Companies as presently conducted.
6.11 ENVIRONMENTAL MATTERS.
---------------------
(a) Except as disclosed in Section 6.11(a) of the CBC Disclosure
----------
Memorandum, to the Knowledge of CBC, each CBC Company, its Participation
----------
Facilities and its Loan 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 Material Adverse Effect on CBC.
(b) To the Knowledge of CBC, there is no Litigation pending or threatened
before any court, governmental agency or authority or other forum in which any
CBC Company or any of its Loan Properties or Participation Facilities has been
or, with respect to threatened Litigation, may be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material (as defined below) or oil, whether or not
occurring at, on, under or involving a site owned, leased or operated by any CBC
Company or any of its Loan Properties or Participation Facilities, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on CBC and to the
Knowledge of CBC, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of CBC, there have been no releases of Hazardous
Material or oil in, on, under or affecting any Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on CBC.
6.12 COMPLIANCE WITH LAWS. Each CBC Company has in effect all Permits
--------------------
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CBC, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CBC. Except as disclosed in Section
6.12 of the CBC Disclosure Memorandum, no CBC Company:
---------------------
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on CBC; and
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(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any CBC Company is not in compliance with
any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on CBC, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on CBC, or
(iii) requiring any CBC Company to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
6.13 LABOR RELATIONS. No CBC Company is the subject of any Litigation
---------------
asserting that it or any other CBC Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other CBC Company to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any CBC Company, pending or, to its
Knowledge, threatened, nor, to its Knowledge, is there any activity involving
any CBC Company's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) CBC has disclosed in Section 6.14 of the CBC Disclosure Memorandum
---------------------
and delivered or made available to FSB prior to the execution of this Agreement
copies in each case of all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plans, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, including, without limitation, "employee benefit plans" as that term is
defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by any CBC Company 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 "CBC Benefit
Plans"). Any of the CBC 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 "CBC ERISA Plan."
(b) Except as to those plans disclosed in Section 6.14(b) of the CBC
Disclosure Memorandum as tax-qualified CBC ERISA Plans (the "CBC Qualified
---------------------
Plans"), no CBC Company maintains or previously maintained during the six years
preceding the date of this Agreement an CBC Plan which meets or was intended to
meet the requirements of Code Section 401(a). The Internal Revenue Service has
issued favorable determination letters to the effect that each CBC Qualified
Plan qualifies under Code Section 401(a) and that any related trust is exempt
from taxation under Code Section 501(a), and such determination letters remain
in effect and have not been revoked. Copies of the most recent determination
letters and any outstanding requests for a determination letter with
A-27
respect to each CBC Qualified Plan have been delivered or made available to FSB.
Except as disclosed in Section 6.14(b) of the CBC Disclosure Memorandum, no CBC
Qualified Plan has been amended since the issuance of each respective
determination letter. The CBC Qualified Plans currently comply in form with the
requirements under Code Section 401(a), other than changes required by statutes,
regulations and rulings for which amendments are not yet required. No issue
concerning qualification of the CBC Qualified Plans is pending before or is
threatened by the Internal Revenue Service. The CBC Qualified Plans have been
administered according to their terms (except for those terms which are
inconsistent with the changes required by statutes, regulations, and rulings for
which changes are not yet required to be made, in which case the CBC Qualified
Plans have been administered in accordance with the provisions of those
statutes, regulations and rulings) and in accordance with the requirements of
Code Section 401(a). No CBC Company, any ERISA Affiliate or any fiduciary of any
CBC Qualified Plan has done anything that would adversely affect the qualified
status of the CBC Qualified Plans or the related trusts. Any CBC Qualified Plan
which is required to satisfy Code Section 401(k)(3) and 401(m)(2) has been
tested for compliance with, and has satisfied the requirements of, Code Section
401(k)(3) and 401(m)(2) for each plan year ending prior to the date of this
Agreement.
(c) All CBC Benefit Plans are in compliance in all material respects with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on CBC. To the
Knowledge of CBC, no CBC Company nor any other party has engaged in a
transaction with respect to any CBC Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any CBC
Company to a tax or penalty imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA in amounts which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on CBC.
(d) Neither CBC nor any ERISA Affiliate of CBC maintains or has during
the six years preceding the date of this Agreement maintained an "employee
benefit pension plan," within the meaning of Section 3(2) of ERISA that is or
was subject to Title IV of ERISA.
(e) Neither CBC nor any ERISA Affiliate of CBC has any past, present or
future obligation or liability to contribute to any multi-employer plan, as
defined in Section 3(37) of ERISA.
(f) Except as disclosed in Section 6.14(f) of the CBC Disclosure
Memorandum, (i) no CBC Company has any obligations for retiree health and life
benefits under any of the CBC Benefit Plans and (ii) there are no restrictions
on the rights of such CBC Company to amend or terminate any such Plan without
incurring any Liability thereunder, which Liability is reasonably likely to have
a Material Adverse Effect on CBC, other than for benefits accrued before the
date of such termination or amendment.
(g) Except as disclosed in Section 6.14(g) of the CBC Disclosure
----------
Memorandum, neither the execution and delivery of this Agreement nor the
----------
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any employee of
any CBC Company from any CBC Company under any CBC Benefit Plan or otherwise,
A-28
(ii) increase any benefits otherwise payable under any CBC Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
(h) The actuarial present values of all accrued deferred compensation
entitlements (including, without limitation, entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any CBC Company 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 reflected on the CBC Financial Statements to the extent required by
and in accordance with GAAP.
(i) CBC and each ERISA Affiliate of CBC has complied in all material
respects with applicable continuation of coverage requirements of Section 1001
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and
ERISA Sections 601 through 608.
(j) Except as disclosed in Section 6.14(j) of the CBC Disclosure
----------
Memorandum, neither CBC nor any ERISA Affiliate of CBC is obligated,
----------
contingently or otherwise, under any agreement to pay any amount which would be
treated as a "parachute payment," as defined in Section 280G(b) of the Internal
Revenue Code (determined without regard to Section 280G(b)(2)(A)(ii) of the
Internal Revenue Code).
(k) Other than routine claims for benefits, there are no actions, audits,
investigations, suits or claims pending, or threatened against any CBC Benefit
Plan, any trust or other funding agency created thereunder, or against any
fiduciary of any CBC Benefit Plan or against the assets of any CBC Benefit Plan.
6.15 MATERIAL CONTRACTS. Except as disclosed in Section 6.15 of the CBC
------------------
Disclosure Memorandum or otherwise reflected in the CBC Financial Statements,
---------------------
none of the CBC Companies, nor any of their respective Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (a) any employment, severance, termination, consulting or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $25,000, excluding "at will" employment arrangements, (b) any Contract
relating to the borrowing of money by any CBC Company or the guarantee by any
CBC Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, Federal Home Loan Bank advances, fully-
secured repurchase agreements, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (c) any
Contracts between or among CBC Companies, and (d) any other Contract (excluding
this Agreement) or amendment thereto that would be required to be filed as an
exhibit to a Form 10-KSB filed by CBC with the SEC as of the date of this
Agreement that has not been filed as an exhibit to CBC's Form 10-KSB for the
fiscal year ended December 31, 1996, and identified to FSB (together with all
Contracts referred to in Sections 6.10 and 6.14(a) of this Agreement, the "CBC
Contracts"). None of the CBC Companies is in Default under any CBC Contract,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on CBC. Except as to FHLB advances,
all of the indebtedness of any CBC Company for money borrowed is prepayable at
any time by such CBC Company without penalty or premium.
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6.16 LEGAL PROCEEDINGS. Except as disclosed in Section 6.16 of the CBC
-----------------
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
---------------------
Knowledge of CBC, 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 CBC Company, or against any Asset, interest, or
right of any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CBC, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any CBC Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on CBC.
6.17 REPORTS. Except as disclosed in Section 6.17 of the CBC Disclosure
------- ----------
Memorandum, since January 1, 1994, each CBC Company has timely filed all reports
----------
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with (a) the SEC, including but not
limited to Forms 10-KSB, Forms 10-QSB, Forms 8-K, and proxy statements, (b)
other Regulatory Authorities, and (c) any applicable state securities or banking
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on CBC). As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document to CBC's Knowledge did
not, in any material respects, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
6.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument or
---------------------------
other writing furnished or to be furnished by any CBC Company to FSB pursuant to
this Agreement contains or will contain any untrue statement of material fact or
will omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
the information supplied or to be supplied by any CBC Company for inclusion in
the Registration Statement to be filed by CBC 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 CBC Company for inclusion in the Proxy Statement to be mailed to
FSB's shareholders in connection with the FSB Shareholders' Meeting, and any
other documents to be filed by any CBC Company with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of FSB, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the FSB
Shareholders' Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the FSB
Shareholders' Meeting. All documents that any CBC Company is responsible for
filing with any Regulatory Authority in connection with the transactions
A-30
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
6.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No CBC Company or, to the
--------------------------------------
Knowledge of CBC, any Affiliate thereof has taken any action, or agreed to take
any action, or has any Knowledge of any fact or circumstance that is reasonably
likely to (a) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or
treatment as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (b) materially impede or delay receipt of any Consents
of Regulatory Authorities referred to in Section 9.1(b) of this Agreement or
result in the imposition of a condition or restriction of the type referred to
in the second sentence of such Section. To the Knowledge of CBC, there exists
no fact, circumstance, or reason attributable to CBC why the requisite Consents
referred to in Section 9.1(b) of this Agreement cannot be received in a timely
manner without the imposition of any condition or restriction of the type
described in the second sentence of such Section 9.1(b).
6.20 CHARTER PROVISIONS. Each CBC Company has taken all action so that the
------------------
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement do not and will not result in the
grant of any rights to any Person under the Articles of Incorporation, Bylaws or
other governing instruments of any CBC Company or restrict or impair the ability
of the Surviving Corporation to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any CBC Company that may be acquired or
controlled by it.
6.21 DERIVATIVES CONTRACTS. Except as set forth in Section 6.21 of the CBC
---------------------
Disclosure Memorandum, neither CBC nor any of its Subsidiaries is a party to or
---------------------
has agreed to enter into an 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 (including various combinations
thereof).
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
7.1 AFFIRMATIVE COVENANTS OF FSB. Unless the prior written consent of CBC
----------------------------
shall have been obtained, and except as otherwise contemplated herein, FSB
shall, and shall cause each of its Subsidiaries, from the date of this Agreement
until the Effective Time or termination of this Agreement: (a) to operate its
business in the usual, regular and ordinary course; (b) to preserve intact its
business organization and Assets and maintain its rights and franchises; (c) to
use its reasonable efforts to cause its representations and warranties to be
correct at all times; and (d) to take no action which would (i) adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentence of Section 9.1(b) or 9.1(c) of this Agreement
or (ii) adversely affect in any material respect the ability of either Party to
perform its covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF FSB. Except as contemplated hereby, from the
-------------------------
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, FSB
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covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer of CBC, which consent
shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any FSB Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a FSB Company to another FSB Company)
in excess of an aggregate of $25,000 (for the FSB Companies on a consolidated
basis) except in the ordinary course of the business of FSB Companies consistent
with past practices (which shall include, for FSB, advances against its line of
credit consistent with past practices, and for any of its Subsidiaries, creation
of deposit liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any FSB Company of any Lien or permit any such Lien
to exist (other than in connection with deposits, repurchase agreements, bankers
acceptances, Federal Home Loan Bank advances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of the date
hereof that are disclosed in the FSB 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 FSB Company, or declare or pay any dividend or make any
other distribution in respect of FSB's Common Stock; provided, however, that FSB
may (to the extent legally and contractually permitted to do so) continue to pay
its regular annual cash dividend of up to $.05 per share; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as disclosed in Section 7.2(d) of the FSB
Disclosure Memorandum, issue, sell, pledge, encumber, authorize the issuance of
---------------------
or enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of or otherwise permit to become outstanding, any additional shares of
FSB Common Stock or any other capital stock of any FSB Company, or any stock
appreciation rights, or any option, warrant, conversion, or other right to
acquire any such stock, or any security convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of any FSB
Company or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of FSB Stock or sell, lease, mortgage or otherwise
dispose of or otherwise encumber (i) any shares of capital stock of any FSB
Subsidiary (unless any such shares of stock are sold or otherwise transferred to
another FSB Company) 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; or
A-32
(f) acquire direct or indirect control over, or invest in equity
securities of, any Person, other than in connection with (i) foreclosures in the
ordinary course of business, or (ii) acquisitions of control by a FSB Subsidiary
in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any FSB Company (including such discretionary increases as may be
contemplated by existing employment agreements), except in accordance with past
practice or previously approved by the Board of Directors of FSB, in each case
as disclosed in Section 7.2(g) of the FSB 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 FSB Disclosure Memorandum; enter into or
---------------------
amend any severance agreements with officers of any FSB Company; grant any
increase in fees or other increases in compensation or other benefits to
directors of any FSB Company; or voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits; or
(h) except as disclosed in Section 7.2(h) of the FSB Disclosure
----------
Memorandum, enter into or amend any employment Contract between any FSB Company
----------
and any Person (unless such amendment is required by Law) that the FSB Company
does not have the unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the Effective
Time; or
(i) adopt any new employee benefit plan of any FSB Company or make any
material change in or to any existing employee benefit plans of any FSB Company
other than any such change that is required by Law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax qualified status of any
such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in Tax Laws or regulatory accounting requirements or GAAP; or
(k) settle any Litigation involving any Liability of any FSB Company for
money damages in excess of $25,000 or material restrictions upon the operations
of any FSB Company; or
(l) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.
7.3 AFFIRMATIVE COVENANTS OF CBC. Unless the prior written consent of FSB
----------------------------
shall have been obtained, and except as otherwise contemplated herein, CBC
shall, and shall cause each of its Subsidiaries, from the date of this Agreement
until the Effective Time or termination of this Agreement: (a) to operate its
business in the usual, regular and ordinary course; (b) to preserve intact its
business organization and Assets and maintain its rights and franchises; (c) to
use its reasonable efforts to cause its representations and warranties to be
correct at all times; (d) to take no action which would (i) adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentence of Section 9.1(b) or 9.1(c) of this Agreement
or (ii) adversely affect in any
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material respect the ability of either Party to perform its covenants and
agreements under this Agreement.
7.4 NEGATIVE COVENANTS OF CBC. From the date of this Agreement until the
-------------------------
earlier of the Effective Time or the termination of this Agreement, CBC
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer of FSB, which consent
shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any CBC Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a CBC Company to another CBC Company)
in excess of an aggregate of $75,000 (for the CBC Companies on a consolidated
basis) except in the ordinary course of the business of CBC Companies consistent
with past practices (which shall include, for any of its Subsidiaries, creation
of deposit liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any CBC Company of any Lien or permit any such Lien
to exist (other than in connection with deposits, repurchase agreements, bankers
acceptances, Federal Home Loan Bank advances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of the date
hereof that are disclosed in the CBC 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 CBC Company, or declare or pay any dividend or make any
other distribution in respect of CBC's Common Stock; provided, however, that CBC
may (to the extent legally and contractually permitted to do so) continue to pay
its regular annual cash dividend of up to $.10 per share; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as disclosed in Section 7.4(d) of the CBC
Disclosure Memorandum, issue, sell, pledge, encumber, authorize the issuance of
or enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of or otherwise permit to become outstanding, any additional shares of
Surviving Corporation Common Stock or any other capital stock of any CBC
Company, or any stock appreciation rights, or any option, warrant, conversion,
or other right to acquire any such stock, or any security convertible into any
such stock; or
(e) adjust, split, combine or reclassify any capital stock of any CBC
Company or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of CBC Capital Stock or sell, lease, mortgage or
otherwise dispose of or otherwise encumber (i) any shares of capital stock of
any CBC Subsidiary (unless any such shares of stock are sold or otherwise
A-34
transferred to another CBC Company) 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; or
(f) acquire direct or indirect control over, or invest in equity
securities of, any Person, other than in connection with (i) foreclosures in the
ordinary course of business, or (ii) acquisitions of control by an CBC
Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any CBC Company (including such discretionary increases as may be
contemplated by existing employment agreements), except in accordance with past
practice or previously approved by the Board of Directors of CBC, in each case
as disclosed in Section 7.4(g) of the CBC Disclosure Memorandum or as required
---------------------
by Law; pay any severance or termination pay or any bonus other than pursuant to
written policies or written Contracts in effect on the date of this Agreement
and disclosed in Section 7.4(g) of the CBC Disclosure Memorandum; enter into or
---------------------
amend any severance agreements with officers of any CBC Company; grant any
increase in fees or other increases in compensation or other benefits to
directors of any CBC Company; or voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits; or
(h) enter into or amend any employment Contract between any CBC Company
and any Person (unless such amendment is required by Law) that the CBC Company
does not have the unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the Effective
Time; or
(i) adopt any new employee benefit plan of any CBC Company or make any
material change in or to any existing employee benefit plans of any CBC Company
other than any such change that is required by Law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax qualified status of any
such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in Tax Laws or regulatory accounting requirements or GAAP; or
(k) settle any Litigation involving any Liability of any CBC Company for
money damages in excess of $75,000 or material restrictions upon the operations
of any CBC Company; or
(l) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.
7.5 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
----------------------------
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (a) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (b) is reasonably likely to cause
or constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
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7.6 REPORTS. Each Party and its Subsidiaries shall file all reports
-------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all non-confidential portions of such reports promptly after the same are filed.
ARTICLE 8
ADDITIONAL AGREEMENTS
---------------------
8.1 REGISTRATION STATEMENT; SHAREHOLDER APPROVAL.
--------------------------------------------
(a) As soon as practicable after execution of this Agreement, the
Parties shall cause the Registration Statement to be filed with the SEC, and
shall use their reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of Surviving Corporation Common Stock upon consummation of the
Merger. Each Party shall furnish all information concerning it and the holders
of its capital stock as may be reasonably requested in connection with such
action.
(b) FSB 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 FSB deems appropriate.
(c) In connection with the FSB Shareholders' Meeting, (i) the Board of
Directors of FSB shall recommend (subject to compliance with the fiduciary
duties of the members of the Board of Directors as advised by counsel) to its
shareholders the approval of this Agreement and (ii) the Board of Directors and
officers of FSB shall use their reasonable efforts to obtain such shareholders'
approval (subject to compliance with their fiduciary duties as advised by
counsel).
8.2 APPLICATIONS. The Parties shall promptly prepare and file any
------------
applications, including without limitation, those with the Board of Governors of
the Federal Reserve System and the Georgia Department of Banking and Finance,
seeking the requisite Consents necessary to consummate the transactions
contemplated by this Agreement.
8.3 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
--------------------------
conditions of this Agreement, the Parties shall execute and file the Certificate
of Merger with the Secretary of State of the State of Georgia in connection with
the Closing.
8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. No Party shall take, or cause
-------------------------------------
to be taken, any action which may reasonably be foreseen as delaying or
otherwise adversely impacting consummation of the Merger. No CBC Company nor
FSB Company shall take any action which would cause the Merger not to be treated
as a pooling of interests. Subject to the terms and conditions of this
Agreement, each Party agrees to use, and to cause its Subsidiaries to use, its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws, as promptly as practicable so as to permit
A-36
consummation of the Merger at the earliest possible date and to otherwise enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other Party hereto to that end (it being understood that any amendments
to the Registration Statement filed by CBC in connection with the Surviving
Corporation Common Stock to be issued in the Merger shall not violate this
covenant), including, without limitation, using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement. Each Party shall use, and shall
cause each of its Subsidiaries to use, its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.5 INVESTIGATION AND CONFIDENTIALITY.
---------------------------------
(a) Prior to the Effective Time, each Party will keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations, and
financial positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return all documents and copies thereof and all work papers containing
confidential information received from the other Party, except for one copy of
any materials prepared by that Party or any attorney for or other representative
of that Party based upon such confidential information.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.
8.6 PRESS RELEASES. Prior to the Effective Time, FSB and CBC shall agree
--------------
with each other as to the form and substance of any press release or other
public disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, however, that nothing in this Section 8.6 shall
be deemed to prohibit any Party from making any disclosure which its counsel
deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
A-37
8.7 ACQUISITION PROPOSALS.
---------------------
(a) Except with respect to this Agreement and the transactions
contemplated hereby, no FSB Company nor CBC Company nor any director, employee,
investment banker, attorney, accountant or other representative thereof
(collectively, "Representatives") retained by any FSB Company or CBC Company, as
the case may be, shall directly or indirectly solicit any Acquisition Proposal
by any Person. Except to the extent necessary to comply with the fiduciary
duties of a Party's Board of Directors as advised by counsel, no FSB Company nor
CBC Company nor 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 its
legal obligations as advised by counsel. Each Party shall promptly notify the
other orally and in writing in the event that it receives any inquiry or
proposal relating to any such transaction.
(b) Except as set forth herein, neither FSB nor CBC shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to the other
Party, the approval or recommendation of its Board of Directors of this
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (iii) enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, if in the
opinion of the Board of Directors of FSB or CBC, as applicable, after
consultation with counsel, failure to do so would be inconsistent with its
fiduciary duties to its shareholders under applicable law, then the Board of
Directors of FSB or CBC, as applicable, may (subject to the terms of this
section (b)) withdraw or modify its approval or recommendation of this Agreement
or the Merger, approve or recommend an Acquisition Proposal, or enter into an
agreement with respect to an Acquisition Proposal, in each case at any time
after the second business day following the receipt of written notice (a "Notice
of Acquisition Proposal") by CBC or FSB, as applicable, advising it that the
other Party has received an Acquisition Proposal, specifying the material terms
and conditions of such proposal and identifying the Person making such proposal;
provided that neither Party shall enter into an agreement with respect to an
Acquisition Proposal unless it shall have furnished the other Party with written
notice no later than 12:00 noon Georgia time one (1) day in advance of any date
that it intends to enter into such agreement.
(c) In addition to the obligations set forth in section (b) above, each
Party shall immediately advise the other Party orally and in writing of any
request for information or of any Acquisition Proposal, or any inquiry with
respect to or which could lead to an Acquisition Proposal, the material terms
and conditions of such request, Acquisition Proposal or inquiry, and the
identity of the Person making a request, Acquisition Proposal or inquiry. FSB or
CBC, as the case may be, shall keep the other Party fully informed of the status
and details (including amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry.
(d) Nothing contained in this Section 8.7 shall prohibit FSB or CBC, as
the case may be, from making any disclosure to its shareholders if, in the
opinion of its Board of Directors, after consultation with counsel, failure to
so disclose would be inconsistent with federal securities laws or its fiduciary
duties to its shareholders under applicable law; provided that the applicable
Party does
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not, except as permitted by section (b) above, withdraw or modify, or propose to
withdraw or modify, its position with respect to the Merger or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal.
8.8 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.
8.9 AGREEMENT OF AFFILIATES. FSB has disclosed in Section 8.9 of the FSB
-----------------------
Disclosure Memorandum all Persons whom it reasonably believes is an "affiliate"
---------------------
of FSB for purposes of Rule 145 under the 1933 Act, and CBC has disclosed in
Section 8.9 of the CBC Disclosure Memorandum all Persons whom it reasonably
---------------------
believes to be an "affiliate" of CBC for purposes of Rule 145 under the 1933
Act. Each of CBC and FSB shall use its reasonable efforts to cause each such
Person to deliver to CBC and FSB, not later than thirty (30) days after the date
of this Agreement, a written agreement, substantially in the form of Exhibit 1
---------
as to Affiliates of FSB, and substantially in the form of Exhibit 2 as to
---------
Affiliates of CBC, providing that such Person will not sell, pledge, transfer or
otherwise dispose of the shares of FSB Common Stock and/or CBC Common Stock, as
applicable, held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer or otherwise dispose of the
shares of Surviving Corporation Common Stock to be held upon consummation of the
Merger except in compliance with applicable provisions of the 1933 Act and the
rules and regulations thereunder. The Surviving Corporation shall be entitled
to place restrictive legends upon certificates for shares of Surviving
Corporation Common Stock issued to Affiliates of FSB pursuant to this Agreement
to enforce the provisions of this Section 8.9. CBC shall not be required to
maintain the effectiveness of the Registration Statement under the 1933 Act for
the purposes of resale of Surviving Corporation Common Stock by such Affiliates.
8.10 INDEMNIFICATION.
---------------
(a) The Surviving Corporation shall indemnify, defend, and hold harmless
the present and former directors, officers, employees, and agents of the FSB
Companies (each, an "Indemnified Party") against all Liabilities arising out of
actions or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the full extent permitted under
Georgia Law and by FSB's Articles of Incorporation and Bylaws as in effect on
the date hereof, including provisions relating to advances of expenses incurred
in the defense of any Litigation. Without limiting the foregoing, in any case in
which approval by CBC is required to effect any indemnification, the Surviving
Corporation shall direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel mutually
agreed upon between CBC and the Indemnified Party.
(b) If the Surviving Corporation or any of its successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall transfer
all or substantially all of its assets to any Person,
A-39
then and in each case, proper provision shall be made so that the successors and
assigns of CBC shall assume the obligations set forth in this Section 8.10.
(c) The provisions of this Section 8.10 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party, his or her heirs
and representatives.
8.11 CERTAIN MODIFICATIONS. CBC and FSB shall consult with respect to
---------------------
their loan, litigation, and real estate valuation policies and practices
(including loan classifications and levels of reserves) and shall make such
modifications or changes to its policies and practices, if any, prior to the
Effective Time, as may be mutually agreed upon. CBC and FSB also shall consult
with respect to the character, amount, and timing of restructuring and Merger-
related expense charges to be taken by each of the Parties in connection with
the transactions contemplated by this Agreement and shall take charges in
accordance with GAAP, prior to the Effective Time, as may be mutually agreed
upon by the Parties. Neither Parties' representations, warranties, and
covenants contained in this Agreement shall be deemed to be inaccurate or
breached in any respect as a consequence of any modifications or charges
undertaken solely on account of this Section 8.11.
8.12 EMPLOYEE BENEFITS AND CONTRACTS. CBC and FSB shall consult with each
-------------------------------
other to develop mutually agreeable employee benefit programs for officers and
employees of the Surviving Corporation which will be implemented as soon as
practicable following the Effective Time. The Surviving Corporation and its
Subsidiaries also shall honor in accordance with their terms all employment,
severance, consulting and other compensation Contracts disclosed in Section 8.12
of the FSB Disclosure Memorandum between any FSB Company and any current or
---------------------
former director, officer, or employee thereof and all provisions for vested
benefits accrued through the Effective Time under the FSB Benefit Plans. As
soon as reasonably practicable following the Effective Time, the Surviving
Corporation shall register under the 1933 Act and any applicable state
securities laws, the shares of Surviving Corporation Common Stock issuable
pursuant to FSB Options.
8.13 DELIVERY TO EXCHANGE AGENT. The Surviving Corporation shall have
--------------------------
delivered to the Exchange Agent a sufficient number of shares of Surviving
Corporation Common Stock to make the payment contemplated by Section 3.1 hereof,
and sufficient cash to make the payment contemplated by Section 3.5 hereof.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
---------------------------------------
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(A) SHAREHOLDER APPROVAL. The shareholders of FSB shall have approved
--------------------
this Agreement, and the consummation of the transactions contemplated hereby,
including the Merger, as and to the extent required by Law, or by the provisions
of any governing instruments.
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(B) REGULATORY APPROVALS. All Consents of, filings and registrations
--------------------
with, and notifications to all Regulatory Authorities required for consummation
of the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including, without limitation, requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of the Board of Directors of either Party would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement as to render inadvisable the consummation of the Merger.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained any and all
----------------------
Consents required for consummation of the Merger (other than those referred to
in Section 9.1(b) of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent so obtained which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of either
party would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(D) 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 Surviving Corporation Common Stock issuable pursuant to the Merger
shall have been received.
(F) TAX MATTERS. FSB and CBC shall have received a written opinion of
-----------
counsel from ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, in form reasonably satisfactory to
them (the "Tax Opinion"), to the effect that for federal income tax purposes (i)
the Merger is a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of FSB Common Stock for
Surviving Corporation Common Stock will not give rise to gain or loss to the
shareholders of FSB with respect to such exchange (except to the extent of any
cash received), (iii) the adjusted tax basis of whole shares of Surviving
Corporation Common Stock received by shareholders of FSB who exchange shares of
FSB Common Stock in the Merger will be the same as the adjusted tax basis of the
shares of FSB Common Stock exchanged therefor (reduced by any amount allocable
to a fractional share interest for which cash is received), (iv) the holding
period of the shares of Surviving Corporation Common Stock received in the
Merger will include the period during which the shares of FSB Common Stock
exchanged therefor were held, provided such shares
A-41
of Surviving Corporation Common Stock were held as capital assets at the
Effective Time, (v) the payment of cash to a FSB shareholder in lieu of a
fractional share interest in Surviving Corporation Common Stock will be treated
as if the fractional share had been distributed as part of the exchange and then
redeemed by the Surviving Corporation, and (vi) neither FSB nor CBC will
recognize gain or loss as a consequence of the Merger (except for income and
deferred gain recognized pursuant to Treasury regulations issued under Section
1502 of the Internal Revenue Code). In rendering such Tax Opinion, counsel shall
be entitled to rely upon representations of officers of FSB and CBC reasonably
satisfactory in form and substance to such counsel.
(G) EMPLOYMENT AGREEMENT MATTERS. The Employment Agreement currently in
----------------------------
effect by and among FSB, First Southern Bank and ▇▇▇▇▇ ▇. ▇▇▇▇▇, President and
Chief Executive Officer of FSB, shall be terminated by written agreement among
FSB, First Southern Bank and ▇▇. ▇▇▇▇▇, and the Parties shall have entered into
a new mutually satisfactory employment agreement with ▇▇. ▇▇▇▇▇.
(H) POOLING LETTER. The Parties shall have received a letter from ▇▇▇▇▇▇
--------------
▇▇▇▇▇▇ ▇▇▇▇▇, LLP, dated as of the Effective Time, to the effect that the Merger
will be accounted for as a pooling-of-interests under GAAP if consummated in
accordance with this Agreement.
9.2 CONDITIONS TO OBLIGATIONS OF CBC. The obligations of CBC 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 CBC pursuant to Section 11.6(a) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section 9.2(a),
------------------------------
the accuracy of the representations and warranties of FSB set forth or referred
to in this Agreement shall be assessed as of the date of this Agreement and as
of immediately prior to the Effective Time with the same effect as though all
such representations and warranties had been made on and as of immediately prior
to 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 FSB set forth in Section 5.3 of this Agreement
shall be true and correct (except for inaccuracies which are de minimus in
amount or effect). The representations and warranties of FSB set forth in
Sections 5.19 and 5.20 of this Agreement shall be true and correct in all
material respects. There shall not exist inaccuracies in the representations and
warranties of FSB set forth in this Agreement (excluding the representations and
warranties set forth in Sections 5.3, 5.19 and 5.20) such that the aggregate
effect of such inaccuracies would have, or is reasonably likely to have, a
Material Adverse Effect on FSB; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of FSB 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.
A-42
(C) CERTIFICATES. FSB shall have delivered to CBC (i) a certificate,
------------
dated as of the Effective Time and signed on its behalf by its chief executive
officer and its chief financial officer, to the effect that the conditions of
its obligations set forth in Sections 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by FSB's
Board of Directors evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as CBC and its counsel shall request.
(D) CLAIMS/INDEMNIFICATION LETTERS. Each of the directors and officers
------------------------------
of FSB shall have executed and delivered to CBC letters in substantially the
form of Exhibit 3.
---------
(E) AFFILIATE AGREEMENTS. CBC shall have received from each affiliate of
--------------------
FSB the affiliate letter referred to in Section 8.10 hereof.
(F) OPINION OF COUNSEL. CBC shall have received an opinion of ▇▇▇▇▇▇,
------------------
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to FSB, dated as of the Effective Time,
in form reasonably satisfactory to CBC, as to the matters set forth in
Exhibit 4.
---------
9.3 CONDITIONS TO OBLIGATIONS OF FSB. The obligations of FSB 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 FSB pursuant to Section 11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section 9.3(a),
------------------------------
the accuracy of the representations and warranties of CBC set forth or referred
to in this Agreement shall be assessed as of the date of this Agreement and as
of immediately prior to the Effective Time with the same effect as though all
such representations and warranties had been made on and as of immediately prior
to 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 CBC set forth in Section 6.3 of this Agreement
shall be true and correct (except for inaccuracies which are de minimus in
amount or effect). The representations and warranties of CBC set forth in
Section 6.19 and 6.20 of this Agreement shall be true and correct in all
material respects. There shall not exist inaccuracies in the representations and
warranties set forth in this Agreement (excluding the representations and
warranties set forth in Sections 6.3, 6.19 and 6.20) such that the aggregate
effect of such inaccuracies would have, or is reasonably likely to have a
Material Adverse Effect on CBC; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by reference to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of CBC 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.
A-43
(C) CERTIFICATES. CBC shall have delivered to FSB (i) a certificate,
------------
dated as of the Effective Time and signed on its behalf by its chief executive
officer and its chief financial officer, to the effect that the conditions of
its obligations set forth in Section 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by CBC's
Board of Directors evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as FSB and its counsel shall request.
(D) AFFILIATE AGREEMENTS. FSB shall have received from each affiliate of
--------------------
CBC the affiliate letter referred to in Section 8.10 hereof.
(F) OPINION OF COUNSEL. FSB shall have received an opinion ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, counsel to CBC, dated as of the Effective Time, in form
reasonably satisfactory to FSB, as to the matters set forth in 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 FSB,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Board of Directors of CBC and the Board of
Directors of FSB; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of FSB and Section 9.3(a) in the case of
CBC or in material breach of any covenant or other agreement contained in this
Agreement) in the event of an inaccuracy or any representation or warranty
contained in this Agreement which cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the ability
to refuse to consummate the Merger under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of CBC and Section 9.3(a) of this
Agreement in the case of FSB; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of FSB and Section 9.3(a) in the case of
CBC or in material breach of any covenant or other agreement contained in this
Agreement) in the event of a material breach by the other Party of any covenant
or agreement contained in this Agreement which cannot be or has not been cured
within thirty (30) days after the giving of written notice to the breaching
Party of such breach; or
A-44
(d) By the Board of Directors of either Party in the event (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of FSB and Section 9.3(a) in the
case of CBC or in material breach of any covenant or other agreement contained
in this Agreement) (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated hereby shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
or (ii) if the shareholders of FSB fail to vote their approval of this Agreement
and the transactions contemplated hereby as required by the GBCC, at the
Shareholders' Meeting where the transactions were presented to such shareholders
for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated on or before March 31, 1998, but only if
the failure to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of FSB and Section 9.3(a) in the case of
CBC or in material breach of any covenant or agreement contained in this
Agreement) in the event that any of the conditions precedent to the obligations
of such Party to consummate the Merger (other than as contemplated by Section
10.1(d) of this Agreement) cannot be satisfied or fulfilled by the date
specified in Section 10.1(e) of this Agreement; or
(g) By the Board of Directors of FSB or CBC, as the case may be, in
connection with such Party's entering into a definitive agreement in accordance
with Section 8.8(b), provided that it has compiled with all provisions thereof,
including the notice provisions therein.
10.2 EFFECT OF TERMINATION. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that the provisions of
this Section 10.2 and Article 11 and 8.6(b) of this Agreement shall survive any
such termination and abandonment, and a termination pursuant to Sections
10.1(b), 10.1(c), or 10.1(f) of this Agreement 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.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
---------------------------------------------
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except for this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.10 and 8.11 of this Agreement.
A-45
ARTICLE 11
MISCELLANEOUS
-------------
11.1 DEFINITIONS. 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 (other than the
Merger), acquisition of all of the stock or Assets of, or other business
combination involving 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 any person who is an affiliate for
purposes of Rule 145 under the 1933 Act and for purposes of qualifying the
Merger for pooling of interests accounting treatment.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"ALLOWANCE" shall have the meaning provided in Section 5.9 of this
Agreement.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CBC PLANS" shall have the meaning set forth in Section 6.14 of this
Agreement.
"CBC CAPITAL STOCK" shall mean, collectively, the CBC Common Stock and
any other class or series of capital stock of CBC.
"CBC COMMON STOCK" shall mean the $1 par value of common stock of CBC.
"CBC COMPANIES" shall mean, collectively, CBC and all CBC
Subsidiaries.
A-46
"CBC DISCLOSURE MEMORANDUM" shall mean the written information
---------------------
entitled "CBC Disclosure Memorandum" delivered on or prior to the date of
---------------------
this Agreement to FSB describing in reasonable detail the matters contained
therein.
"CBC FINANCIAL STATEMENTS" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of CBC 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 years ended December 31, 1996,
1995 and 1994, as filed by CBC in SEC Documents and (b) the consolidated
balance sheets (including related notes and schedules, if any) of CBC and
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to quarterly periods ended subsequent to
December 31, 1996.
"CBC STOCK PLANS" shall mean the existing stock option and other
stock-based compensation plans and agreements of CBC disclosed in Section
6.14 of the CBC Disclosure Memorandum.
---------------------
"CBC SUBSIDIARIES" shall mean the direct and indirect Subsidiaries of
CBC. "CLOSING" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of
any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets or business.
"DEFAULT" shall mean (a) any breach or violation of or default under
any Contract, Order or Permit, (b) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order or Permit, or
(c) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order or Permit.
"EFFECTIVE TIME" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
A-47
"ENVIRONMENTAL LAWS" shall mean all Laws pertaining to pollution or
protection of the environment and which are administered, interpreted or
enforced by the United States Environmental Protection Agency and state and
local agencies with primary jurisdiction over pollution or protection of
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall refer to a relationship between entities such
that the entities would, now or at any time in the past, constitute a
"single employer" within the meaning of Section 414 of the Code.
"ERISA PLAN" shall have the meaning provided in Section 5.14 of this
Agreement.
"EXCHANGE RATIO" shall have the meaning provided in Section 3.1(b) of
this Agreement.
"EXHIBITS" 1 through 6, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.
"FSB BENEFIT PLANS" shall have the meaning set forth in Section 5.14
of this Agreement.
"FSB COMMON STOCK" shall mean the $5 par value common stock of FSB.
"FSB COMPANIES" shall mean, collectively, FSB and all FSB
Subsidiaries.
"FSB DISCLOSURE MEMORANDUM" shall mean the written information
---------------------
entitled "FSB Disclosure Memorandum" delivered on or prior to the date of
---------------------
this Agreement to CBC describing in reasonable detail the matters contained
therein.
"FSB FINANCIAL STATEMENTS" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of FSB 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 years ended December 31, 1996,
1995 and 1994 and (b) the consolidated balance sheets (including related
notes and schedules, if any) of FSB and related statements of income,
changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) with respect to quarterly periods ended subsequent
to December 31, 1996.
"FSB OPTIONS" shall have the meaning set forth in Section 3.4 of this
Agreement.
A-48
"FSB STOCK PLANS" shall mean the existing stock option and other
stock-based compensation plans and agreements of FSB disclosed in Section
5.14 of the FSB Disclosure Memorandum.
---------------------
"FSB SUBSIDIARIES" shall mean the direct and indirect subsidiaries of
FSB.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC shall mean the Georgia Business Corporation Act.
"GEORGIA CERTIFICATE OF MERGER" shall mean the Certificate of Merger
to be filed with the Secretary of State of the State of Georgia relating to
the Merger as contemplated by Section 1.1 of this Agreement.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or toxic
or hazardous substance, pollutant, chemical or waste within the meaning of
the Comprehensive Environment Response, Compensation, and Liability Act, 42
U.S.C. (S) 9601 et seq., or any similar federal, state or local Law (and
specifically shall include asbestos requiring abatement, removal or
encapsulation pursuant to the requirements of governmental authorities,
polychlorinated biphenyls, and petroleum and petroleum products).
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to FSB or CBC, as the case may be,
shall mean the actual knowledge of the Chairman, President, Chief Financial
Officer, Chief Accounting Officer, Chief Credit Officer, General Counsel,
any Assistant or Deputy General Counsel, or any Senior or Executive Vice
President of such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities or business, including, without limitation, those
promulgated, interpreted or enforced by any of the Regulatory Authorities.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection
or deposit in the ordinary course of business) of any type, whether
accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any
A-49
adverse right or interest, charge, or claim of any nature whatsoever of on,
or with respect to any property or property interest, other than (a) Liens
for current property Taxes not yet due and payable and (b) for depository
institution Subsidiaries of a Party, pledges to secure deposits and other
Liens incurred in the ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including, without limitation, Contracts
related to it), or the transactions contemplated by this Agreement, but
shall not include regular, periodic examinations of depository institutions
and their Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner
or operator of such property, but only with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change or
occurrence which has a material adverse impact on (a) the financial
position, business, or results of operations of such Party and its
Subsidiaries, taken as a whole, or (b) the ability of such Party to perform
its obligations under this Agreement or to consummate the Merger or the
other transactions contemplated by this Agreement, provided that "material
adverse impact" shall not be deemed to include the impact of (i) changes in
banking and similar Laws of general applicability or interpretations
thereof by courts or governmental authorities, (ii) changes in GAAP or
regulatory accounting principles generally applicable to banks and their
holding companies, (iii) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, (iv) the Merger and
compliance with the provisions of this Agreement on the operating
performance of the Parties or (v) changes in economic or other conditions
affecting the banking industry in general.
"MERGER" shall mean the merger of FSB with and into CBC referred to in
Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers,
Inc., including the Nasdaq.
"NASDAQ" shall mean the National Market System of the Nasdaq Stock
Market.
A-50
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management (including any property or facility held in a joint venture)
and, where required by the context, said term means the owner or operator
of such facility or property, but only with respect to such facility or
property.
"PARTY" shall mean either FSB or CBC, and "Parties" shall mean both
FSB and CBC.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, Liabilities, or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by FSB to
solicit the approval of its shareholders of the transactions contemplated
by this Agreement which shall be included in the prospectus of CBC relating
to shares of Surviving Corporation Common Stock to be issued to the
shareholders of FSB.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, filed with the SEC under the 1933 Act with
respect to the shares of Surviving Corporation Common Stock to be issued to
the shareholders of FSB in connection with the transactions contemplated by
this Agreement and which shall include the Proxy Statements.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of Thrift Supervision
(including its predecessor, the Federal Home Loan Bank Board), the Office
of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, all state regulatory agencies having jurisdiction over the
Parties and their respective Subsidiaries, the NASD and the SEC.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
A-51
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
FSB to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks, associations,
partnerships or other entities or ventures of which the entity in question
owns or controls 50% or more of the outstanding equity securities or the
ownership interest, as the case may be, either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, however, there shall not be included any such entity
acquired through foreclosure or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity.
"SURVIVING CORPORATION" shall mean CBC as the surviving corporation
resulting from the Merger.
"SURVIVING CORPORATION COMMON STOCK" shall mean the CBC Common Stock
outstanding upon consummation of the Merger, including that to be issued to
shareholders of FSB.
"SURVIVING CORPORATION COMPANIES" shall mean, collectively, the
Surviving Corporation and all Surviving Corporation Subsidiaries.
"TAX" OR "TAXES" shall mean any federal, state, county, local or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy and other taxes,
assessments, charges, fares or impositions, including interest, penalties
and additions imposed thereon or with respect thereto.
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."
A-52
11.2 EXPENSES.
---------
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants and
counsel, except that each of the Parties shall bear and pay (i) one-half of the
filing fees payable in connection with the Registration Statement and the
applications filed with other Regulatory Authorities, and (ii) one-half of the
costs incurred in connection with the printing or copying of the Registration
Statement and the Proxy Statement.
(b) Notwithstanding the foregoing:
(i) if this Agreement is terminated by CBC pursuant to any of
Sections 10.1(b), 10.1(c) or 10.1(f) (but only on the basis
of the failure of FSB 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 FSB to satisfy any of the conditions set forth in
Section 9.2, or
(iii) if this Agreement is terminated by CBC pursuant to Section
10.1(d)(ii) (but only after receipt by FSB of an
Acquisition Proposal), or
(iv) if this Agreement is terminated by CBC pursuant to Section
10.1(g) of this Agreement,
then FSB shall promptly pay to CBC $250,000 plus all the out-of-pocket costs and
expenses of CBC incurred in connection with the transactions contemplated by
this Agreement, including its enforcement, including costs of counsel,
consultants, investment bankers, actuaries and accountants, up to but not
exceeding $250,000.
(c) Notwithstanding the foregoing:
(i) if this Agreement is terminated by FSB pursuant to any of
Sections 10.1(b), 10.1(c) or 10.1(f) (but only on the basis
of the failure of CBC 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 CBC to satisfy any of the conditions set forth in
Section 9.3), or
(iii) if this Agreement is terminated by FSB pursuant to Section
10.1(g) of this Agreement,
then CBC shall promptly pay to FSB $250,000 plus all the out-of-pocket costs and
expenses of FSB incurred in connection with the transactions contemplated by
this Agreement, including costs of
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counsel, consultants, investment bankers, actuaries and accountants, up to but
not exceeding $250,000.
(d) The Parties agree and acknowledge that they have agreed upon
Sections 11.2(b) and (c) above to liquidate the amount of damages they estimate
each Party would suffer in the event of termination of this Agreement in the
circumstances described. Each Party acknowledges that such damages cannot be
estimated exactly, that each Party intends that the foregoing provisions provide
for damages rather than a penalty inserted for the purpose of deterring a Party
from breaching the Agreement and penalizing such Party in the event of such
breach, and that the foregoing amount is agreed upon in good faith as a
reasonable estimate at this time of the damages that each Party would suffer in
the event of termination of the Agreement in the circumstances described.
11.3 BROKERS AND FINDERS. Except as set forth in Section 11.3 of the CBC
-------------------
or FSB Disclosure Memorandum, 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
FSB or CBC, each of FSB and CBC, as the case may be, agrees to indemnify and
hold the other Party harmless of and from any Liability in respect of any such
claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
----------------
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Section 8.9 and Section 8.10 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
----------
amended by a subsequent writing signed by each of the Parties upon the approval
of the Board of Directors of each of the Parties; provided, however, that after
any such approval by the holders of FSB Common Stock or Surviving Corporation
Common Stock, there shall be made no amendment that pursuant to the GBCC
requires further approval by such shareholders without the further approval of
such shareholders.
11.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, CBC, 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
FSB, to waive or extend the time for the compliance or fulfillment by FSB of any
and all of its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of CBC under this Agreement, except any
condition
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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 CBC.
(b) Prior to or at the Effective Time, FSB, 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
CBC, to waive or extend the time for the compliance or fulfillment by CBC of any
and all of its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of FSB 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 FSB.
(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 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:
CBC: Citizens Bancshares Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice Chairman
With a copy (which shall not constitute notice) to:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
Suite 3100, Promenade II, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
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FSB: First Southern Bancshares, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President and CEO
With a copy (which shall not constitute notice) to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Sixteenth Floor, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws, except to the extent that the federal laws of the
United States may apply to the Merger.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for reference
--------
purposes only and are not part of this Agreement.
11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.13 SEVERABILITY. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: CITIZENS BANCSHARES CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇.▇. ▇▇▇▇▇▇▇
-------------------- ----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary Chairman
[CORPORATE SEAL]
ATTEST: FIRST SOUTHERN BANCSHARES, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------- ----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary Chairman
[CORPORATE SEAL]
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The undersigned, a director of First Southern Bancshares, Inc. ("FSB"), hereby
agrees (subject to fiduciary duties) to support and to personally vote his or
her shares of FSB Common Stock (and those over which he or she has voting power)
in favor of, the Agreement and Plan of Merger dated as of October 1, 1997 to
which this signature page is attached, and the transactions contemplated
thereby.
-----------------------------------
(Signature)
-----------------------------------
(Print Name)
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The undersigned, a director of Citizens Bancshares Corporation ("CBC"), hereby
agrees (subject to fiduciary duties) to support and to personally vote his or
her shares of CBC Common Stock (and those over which he or she has voting power)
in favor of, the Agreement and Plan of Merger dated as of October 1, 1997 to
which this signature page is attached, and the transactions contemplated
thereby.
-----------------------------------
(Signature)
-----------------------------------
(Print Name)
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