PURCHASE AND ASSUMPTION AGREEMENT

Among

FLAG FINANCIAL CORPORATION,

BANKERS’ CAPITAL GROUP, LLC

and

GULFSTREAM FINANCIAL SERVICES, INC

       

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PURCHASE AND ASSUMPTION AGREEMENT

Page

ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
1
 
Section 1.1.
Transferred Assets
1
 
Section 1.2.
Purchase Price
2
 
Section 1.3.
Timing of Payment
2
 
Section 1.4.
Loans Transferred
2
 
Section 1.5.
Records and Data Processing
3
 
Section 1.6.
Taxes and Fees; Proration of Certain Expenses
4
 
Section 1.7.
Option to Purchase Additional Loans
4
 
Section 1.8.
Liabilities
4
 
 
 
 
ARTICLE II
CLOSING AND EFFECTIVE TIME
4
 
Section 2.1.
Effective Time
4
 
Section 2.2.
Closing
4
 
 
 
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BCG
6
 
Section 3.1.
Corporation Organization
6
 
Section 3.2.
No Violation
6
 
Section 3.3.
Corporate Authority
6
 
Section 3.4.
Enforceable Agreement
7
 
Section 3.5.
No Brokers
7
 
Section 3.6.
Personal Property
7
 
Section 3.7.
Loans
7
 
 
 
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GULFSTREAM
8
 
Section 4.1.
Corporation Organization
8
 
Section 4.2.
No Violation
8
 
Section 4.3.
Corporate Authority
8
 
Section 4.4.
Enforceable Agreement
8
 
Section 4.5.
No Brokers
8
 
Section 4.6.
Loans
8
 
 
 
 
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
9
 
Section 5.1.
Corporate Organization
9
 
Section 5.2.
No Violation
9
 
Section 5.3.
Corporate Authority
9
 
Section 5.4.
Enforceable Agreement
9
 
Section 5.5.
No Brokers
10
 
 
 
 
ARTICLE VI
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME
10
 
Section 6.1.
Full Access
10
 
Section 6.2.
Delivery of Magnetic Media Records
10
 
Section 6.3.
Conduct of Business
10
 
Section 6.4.
Further Actions
11
 
Section 6.5.
Public Announcements
11
 
Section 6.6.
Tax Reporting
11
 
Section 6.7.
Management of the Loans
11
 
 
 
 
ARTICLE VII
CONDITIONS TO PURCHASER’S OBLIGATIONS
11
 
Section 7.1.
Representations and Warranties True
11
 
Section 7.2.
Obligations Performed
12
 
 
 
 
ARTICLE VIII
 
12
 
Section 8.1.
Representations and Warranties True
12
 
Section 8.2.
Obligations Performed
12
 
 
 
 
ARTICLE IX
TERMINATION
12
 
Section 9.1.
Methods of Termination
12
 
Section 9.2.
Procedure Upon Termination
13
 
Section 9.3.
Payment of Expenses
13
 
 
 
 
ARTICLE X
MISCELLANEOUS PROVISIONS
14
 
Section 10.1.
Amendment and Modification
14
 
Section 10.2.
Waiver and Extension
14
 
Section 10.3.
Assignment
14
 
Section 10.4.
Addresses for Notices, Etc.
14
 
Section 10.5.
Counterparts
15
 
Section 10.6.
Headings
15
 
Section 10.7.
Governing Law
15
 
Section 10.8.
Sole Agreement
16
 
Section 10.10.
Severability
16
 
Section 10.10.
Parties in Interest
16

       

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PURCHASE AND ASSUMPTION AGREEMENT

THIS AGREEMENT, dated as of November 12, 2002, by and among FLAG FINANCIAL
CORPORATION, a Georgia corporation ("Purchaser"), BANKERS’ CAPITAL GROUP, LLC, a
Georgia limited liability company ("BCG"), and GULFSTREAM FINANCIAL SERVICES,
INC., a Florida corporation ("Gulfstream").
 
WITNESSETH:
 
WHEREAS, BCG and Gulfstream are the owners of certain loans and other assets;
 
WHEREAS, Purchaser desires to acquire from BCG and Gulfstream such loans and
other assets described herein and assume such liabilities upon the terms and
conditions set forth herein.
 
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES

Section 1.1
Transferred Assets
 
 
(a)
As of the Effective Time (as defined in Section 2.1 below) and upon the terms
and conditions set forth herein, BCG and Gulfstream will sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser will purchase from BCG and
Gulfstream, as applicable, all of the following assets identified in this
Agreement and the Exhibits hereto (collectively, the "Assets"):
 
 
 
 
(1)
All right, title and interest of BCG in the furniture, fixtures, leasehold
improvements, equipment and other tangible personal property listed in Exhibit
1.1(a)(1) (the "Personal Property");
 
 
 
 
(2)
All loans owned by BCG and interests therein held by Gulfstream transferred
pursuant to Section 1.4 and listed in Exhibit 1.1(a)(2) (the "Loans");
 
 
 
 
(3)
The exit fees associated with the Loans (the "Exit Fees"); and
 
 
 
 
(4)
Goodwill of BCG.
 
 
 
 
(5)
BCG’s prepaid lease and deposit on property at 3475 Piedmont Road, Suite 550,
Atlanta, Ga, 30305 described in Exhibit 1.1 (a)(5).
 
 
 
(b)
Only assets included in section 1.1 (a) and described further in the related
exhibits are being transferred. BCG and Gulfstream each have assets that will be
retained and are not contemplated in this transaction.

Section 1.2
Purchase Price
 
 
(a)
As consideration for the purchase described herein, including line of business
expertise and various assets and liabilities, Purchaser shall pay BCG and
Gulfstream, at the Closing unless otherwise specified below, a purchase price
(the "Purchase Price") of $2,905,500 in cash, with $2,675,910 to be paid to BCG
and $229,590 to be paid to Gulfstream. Purchaser reserves the right to allocate
the Purchase Price on its books at the Closing based on interest rates as of
that date in view of the financial nature of some of the Assets.
 
 
(b)
In addition, Purchaser shall assume, as of the Effective Date, all of the
duties, obligations and liabilities of BCG relating to the sublease of the
premises located at 3475 Piedmont Road, Suite 550, Atlanta, Georgia, 30305 as
set forth on Exhibit 1.2(b) (the "sub-lease").

Section 1.3
Timing of Payment
 
 
 
Purchaser will pay $1,405,500 of the Purchase Price to BCG and Gulfstream at the
Closing, with BCG receiving $1,175,910 and Gulfstream receiving $229,590.
Purchaser will pay the remaining $1,500,000 of the Purchase Price (the "Earn-Out
Amount") part annually on each of May 31, 2003, May 31, 2004 and May 31, 2005
(each an "Anniversary Date") as described in clause (a) below.
 
 
(a)
The percentage of the Earn-Out Amount to be paid to BCG on each Anniversary Date
will be calculated by dividing (A) calculated annual revenues (average
outstanding balances on the Sundowner Loan and the LaMancha Loan, which are
described in Exhibit 2.2 b(2) , and on new loans made after May 31, 2002, as of
the applicable Anniversary Date, multiplied by an assumed 1.50% spread on such
balances, plus actual fees generated by such loans for the prior fiscal year) by
(B) $2,160,000.
 
 
(b)
If Purchaser is acquired prior to the full payment of the Earn-Out Amount and
the acquiror terminates payments prior to full payment of the Earn-Out Amount,
Purchaser will pay any portion of the Earn-Out Amount that is then due prior to
the closing of that acquisition and will require the prospective acquiror to pay
to BCG 50% of any then remaining unpaid balance of the Earn-Out Amount.

Section 1.4
Loans Transferred
(a)
BCG and Gulfstream will transfer to Purchaser as of the Effective Time, subject
to the terms and conditions of this Agreement, all of BCG’s and Gulfstream’s
respective right, title and interest in (including collateral relating thereto)
the Loans. Such Loans (as well as any security interests and Exit Fees related
thereto) shall be transferred by means of a blanket (collective) assignment and
not individually (except as may be otherwise required by law). Purchaser shall
inform BCG and Gulfstream not less than 30 calendar days prior to the Effective
Time of any case in which individual assignments will be required by law.
 
 
(b)
In connection with the transfer of any Loans requiring notice to the borrower,
Purchaser, BCG and Gulfstream agree to comply with all notice and reporting
requirements of the loan documents or of any law or regulation.
 
 
(c)
All Loans will be transferred without recourse and without any warranties or
representations as to their collectibility or the creditworthiness of any of the
obligors of such Loans.
 
 
(d)
Purchaser will at its expense issue new coupon books for payment of Loans for
which BCG and Gulfstream provide coupon books with instructions to utilize
Purchaser’s coupons and to destroy coupons furnished by BCG and Gulfstream.
 
 
(e)
After the Effective Time, BCG and Gulfstream will forward to Purchaser loan
payments received by BCG and Gulfstream in connection with the Loans.
 
 
(f)
As of the Effective Time, BCG and Gulfstream shall transfer and assign all
files, documents and records related to the Loans to Purchaser, including the
original promissory notes and security agreements, and Purchaser will be
responsible for maintaining and safeguarding all such materials in accordance
with applicable law and sound banking practices.
 
 
(g)
If the balance due on any Loan purchased pursuant to this Section 1.4 has been
reduced by BCG or Gulfstream as a result of a payment by check received prior to
the Effective Time, which item is returned after the Effective Time, the asset
value represented by the Loan transferred shall be correspondingly increased and
an amount in cash equal to such increase shall be paid by Purchaser to BCG or
Gulfstream, as applicable, promptly upon demand.
 
 
(h)
Each of BCG and Gulfstream shall grant to Purchaser as of the Effective Time a
limited power of attorney, in substantially the form attached hereto as
Exhibit 1.4(h) (the "Power of Attorney").

Section 1.5
Records and Data Processing
 
 
(a)
As of the Effective Time, Purchaser shall become responsible for maintaining the
files, documents and records referred to in this Agreement. Purchaser will
preserve and safekeep them as required by applicable law and sound banking
practice for the joint benefit of BCG, Gulfstream and Purchaser. After the
Effective Time, Purchaser will permit BCG, Gulfstream and their respective
representatives, for reasonable cause, at reasonable times and upon reasonable
notice and at BCG’s and/or Gulfstream’s expense, to examine, inspect, copy and
reproduce any such files, documents or records as they deem reasonably
necessary.
 
 
(b)
As of the Effective Time, BCG and Gulfstream will permit Purchaser and its
representatives, for reasonable cause, at reasonable times and upon reasonable
notice and at Purchaser’s expense, to examine, inspect, copy and reproduce
files, documents or records retained by BCG and Gulfstream regarding the Assets
as Purchaser deems reasonably necessary.

Section 1.6
Taxes and Fees; Proration of Certain Expenses
 
 
 
Purchaser shall be responsible for the payment of all fees and taxes related to
this transaction, except that Purchaser shall not be responsible for, or have
any liability with respect to, BCG’s or Gulfstream’s legal fees and expenses or
for taxes on any income to BCG or Gulfstream arising out of this transaction.
Expenses related to the Assets shall be prorated between the parties as of May
31, 2002. To the extent any such item has been prepaid by BCG or Gulfstream for
a period extending beyond May 31, 2002, there shall be a proportionate monetary
adjustment in favor of the prepaying party.

Section 1.7
Option to Purchase Participation Interests
 
 
 
Purchaser shall have the right to purchase the following interests from BCG and
Gulfstream within 60 days after the Closing Date at a purchase price equal to
the outstanding principal and accrued interest on such interests:
 
 
 
John & Carol King, loan dated August 11, 2000 in the original amount of
$19,000,000.
 
 
 
 
Section 1.8
Liabilities
 
 
 
On and after the Effective Time, Purchaser will assume and discharge BCG’s
duties and obligations under the sub-lease. Purchaser shall obtain all consents
required for it to assume BCG’s duties and obligations under the sub-lease.

Section 2.1
Effective Time
 
 
 
The purchase of assets and assumption of liabilities provided for in this
Agreement shall occur at a closing (the "Closing") to be held at the offices of
Powell, Goldstein, Frazer & Murphy LLP in Atlanta, Georgia, on November 12,
2002, or at such other place, time or date on which the parties shall mutually
agree. The effective time (the "Effective Time") shall be 5:00 p.m., local time,
on the day on which the Closing occurs.

Section 2.2
Closing
 
 
 
(a)
 
All actions taken and documents delivered at the Closing shall be deemed to have
been taken and executed simultaneously, and no action shall be deemed taken nor
any document delivered until all have been taken and delivered.
 
 
 
(b)
 
At the Closing, subject to all the terms and conditions of this Agreement, each
of BCG and Gulfstream shall deliver to Purchaser or, in the case of subsections
(b)(2) and (3), make reasonably available to Purchaser:
 
 
 
 
(1)
A Bill of Sale, in substantially the form attached hereto as Exhibit 2.2(b)(1)
(the "Bill of Sale"), transferring to Purchaser all of such party’s interest in
the Assets;
 
 
 
 
(2)
Such party’s files and records related to the Loans and Exit Fees, including the
original promissory notes, security agreements and other loan documents;
 
 
 
(3)
Such of the other Assets as shall be capable of physical delivery;
 
 
 
(4)
A certificate of a proper officer of such party, dated as of the date of
Closing, certifying to the fulfillment of all conditions that are the obligation
of BCG and that all of the representations and warranties of BCG set forth in
this Agreement remain true and correct in all material respects as of Effective
Time;
 
 
 
(5)
A certified copy of a resolution of the Board of Directors, manager(s) or
member(s) of such party, or a duly authorized committee thereof, approving the
sale of the Assets contemplated hereby;
 
 
 
(6)
Such certificates and other documents as Purchaser and its counsel may
reasonably require to evidence the receipt by such party of all necessary
corporate and regulatory authorizations and approvals for the consummation of
the transactions provided for in this Agreement; and
 
 
 
(7)
The Power of Attorney.
 
 
(c)
 
At the Closing, subject to all the terms and conditions of this Agreement,
Purchaser shall deliver to BCG and Gulfstream:
 
 
 
(1)
A certificate and receipt acknowledging the delivery and receipt of possession
of the Assets referred to in this Agreement;
 
 
 
(2)
$229,590 in immediately available funds to Gulfstream;
 
 
 
(3)
$1,175,910 in immediately available funds to BCG;
 
 
 
(4)
A certificate of a proper officer of Purchaser, dated as of the date of Closing,
certifying to the fulfillment of all conditions that are the obligation of
Purchaser and that all of the representations and warranties of Purchaser set
forth in this Agreement remain true and correct in all material respects as of
the Effective Time;
 
 
 
(5)
A certified copy of a resolution of the Board of Directors, or its Executive
Committee, of Purchaser approving the purchase of the assets and the assumption
of the liabilities contemplated hereby;
 
 
 
(6)
Such certificates and other documents as BCG and its counsel may reasonably
require to evidence the receipt by Purchaser of all necessary corporate and
regulatory authorizations and approvals for the consummation of the transactions
provided for in this Agreement; and
 
 
 
(7)
Such consents and other documents evidencing the requisite consents of landlords
to the assumption by Purchaser of BCG’s obligations under the Sub-lease.
 
 
(d)
 
All instruments, agreements and certificates described in this Section 2.2 shall
be in form and substance reasonably satisfactory to the parties’ respective
legal counsel.

Section 3.3
Corporate Authority
 
 
 
The execution and delivery of this Agreement, and the consummation of the
transactions contemplated herein, have been duly authorized by the manager(s)
(or a duly authorized committee thereof) or, if required under BCG’s articles of
organization or operating agreement, members. No further corporate authorization
is necessary for BCG to consummate the transactions contemplated hereunder.
 
 
Section 3.4
Enforceable Agreement
 
 
 
This Agreement has been duly authorized, executed and delivered by BCG and is
the legal, valid and binding agreement of BCG, enforceable in accordance with
its terms.
 
 
Section 3.5
No Brokers
 
 
 
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by BCG and Purchaser, and there has been no
participation or intervention by any other person, firm or corporation employed
or engaged by or on behalf of BCG in such a manner as to give rise to any valid
claim, by any person, firm or corporation, against BCG or Purchaser for a
brokerage commission, finder’s fee or like commission.

Section 3.6
Personal Property
 
 
BCG owns, and will convey to Purchaser at the Closing, all of BCG’s right, title
and interest to all of the Personal Property free and clear of any claims,
mortgages, liens, security interests, pledges or encumbrances of any kind,
except as may otherwise be set forth in this Agreement. The Personal Property
will be, at the time of the Closing, in substantially the same operating
condition and repair as on the date hereof subject to ordinary wear and tear.
 
 
The Personal Property to be purchased by Purchaser is sold AS IS, WHERE IS, with
no warranties or representations whatsoever, except as may be expressly
represented or warranted in this Section 3.6.

Section 3.7
Loans
 
 
BCG makes the following representations and warranties with respect to each Loan
owned by BCG that is to be transferred to Purchaser hereunder to BCG’s
knowledge: the Loan is a valid obligation according to its tenor without any
offsets and defenses thereto; BCG has an undivided 82% interest in each loan,
subject to the participation interests previously disclosed to the Purchaser;
the Loan is not pledged or encumbered; the Loan was made in compliance with all
applicable laws and regulations that would materially and adversely affect the
collectibility of the Loan; the principal balance of the Loan and accrued
interest as shown on BCG’s books and records are true and correct as of the last
date shown thereon; all purported signatures on and executions of any document
in connection with such Loan are genuine; all documentation regarding a loan has
been actually signed or executed by all necessary parties; and BCG has custody
of the original documents related to each Loan and shall transfer such documents
to Purchaser at the Closing.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GULFSTREAM

Gulfstream hereby represents and warrants to Purchaser as follows, which
representations and warranties shall survive the Effective Time for a period of
24 months:
 
 
Section 4.1
Corporation Organization
 
 
Gulfstream is a corporation duly organized, validly existing and in good
standing under the laws of Florida. Gulfstream has the corporate power and
authority to own its properties, to carry on its business as currently conducted
and to effect the transactions contemplated herein.
 
 
Section 4.2
No Violation
 
 
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein, will violate or conflict with (a)
Gulfstream’s charter or bylaws; (b) any material provision of any material
agreement or any other material restriction of any kind to which Gulfstream is a
party or by which Gulfstream is bound; (c) any material statute, law, decree,
regulation or order of any governmental authority; or (d) any material provision
which will result in a default under, or which cause the acceleration of the
maturity of, any material obligation or loan to which Gulfstream is a party.

Section 4.3
Corporate Authority
 
 
 
The execution and delivery of this Agreement, and the consummation of the
transactions contemplated herein, have been duly authorized by the board of
directors (or a duly authorized committee thereof) or, if required under
Gulfstream’s charter or bylaws, shareholders. No further corporate authorization
is necessary for Gulfstream to consummate the transactions contemplated
hereunder.
 
 
Section 4.4
Enforceable Agreement
 
 
 
This Agreement has been duly authorized, executed and delivered by Gulfstream
and is the legal, valid and binding agreement of Gulfstream, enforceable in
accordance with its terms.

Section 4.5
No Brokers
 
 
 
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by Gulfstream and Purchaser, and there has been no
participation or intervention by any other person, firm or corporation employed
or engaged by or on behalf of Gulfstream in such a manner as to give rise to any
valid claim, by any person, firm or corporation, against Gulfstream or Purchaser
for a brokerage commission, finder’s fee or like commission.
 
 
Section 4.6
Loans
 
 
 
Gulfstream makes the following representations and warranties with respect to
each Loan owned by Gulfstream that is to be transferred to Purchaser hereunder
to Gulfstream’s knowledge: the Loan is a valid obligation according to its tenor
without any offsets and defenses thereto; Gulfstream has an undivided 18%
interest in each loan, subject to the participation interests previously
disclosed to the Purchaser; the Loan is not pledged or encumbered; the Loan was
made in compliance with all applicable laws and regulations that would
materially and adversely affect the collectibility of the Loan; the principal
balance of the Loan and accrued interest as shown on Gulfstream’s books and
records are true and correct as of the last date shown thereon; all purported
signatures on and executions of any document in connection with such Loan are
genuine; and all documentation regarding a loan has been actually signed or
executed by all necessary parties.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to BCG and Gulfstream as follows, which
representations and warranties shall survive the Effective Time for a period of
24 months:
 
 
 
 
Section 5.1
Corporate Organization
 
 
 
Purchaser is a corporation, duly organized, validly existing, and in good
standing under the laws of the State of Georgia. Purchaser has the corporate
power and authority to own the properties being acquired, to assume the
liabilities being transferred and to effect the transactions contemplated
herein.

Section 5.2
No Violation
 
 
 
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein, will violate or conflict with (a) the
Articles of Incorporation or Bylaws of Purchaser; (b) any material provision of
any material agreement or any other material restriction of any kind to which
Purchaser is a party or by which Purchaser is bound; (c) any material statute,
law, decree, regulation or order of any governmental authority; or (d) any
material provision which will result in a default under, or cause the
acceleration of the maturity of, any material obligation or loan to which
Purchaser is a party.
 
 
Section 5.3
Corporate Authority
 
 
 
The execution and delivery of this Agreement, and the consummation of the
transactions contemplated herein, have been duly authorized by the Purchaser’s
Board of Directors (or Executive Committee thereof). No further corporate
authorization on the part of Purchaser is necessary to consummate the
transactions contemplated hereunder. Messrs. Evans, Doughty , Anderson and
Wiley, as directors of Purchaser, abstained from any vote at the meeting
approving this Agreement due to their conflicting interests as members and
managers of BCG.
 
 
Section 5.4
Enforceable Agreement
 
 
 
This Agreement has been duly authorized, executed and delivered by Purchaser and
is the legal, valid and binding agreement of Purchaser enforceable in accordance
with its terms.
 
 
Section 5.5
No Brokers
 
 
 
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by BCG, Gulfstream and Purchaser, and there has been
no participation or intervention by any other person, firm or corporation
employed or engaged by or on behalf of Purchaser in such a manner as to give
rise to any valid claim, by any person, firm or corporation, against BCG,
Gulfstream or Purchaser for a brokerage commission, finder’s fee or like
commission.

Section 6.1
Full Access
 
 
Each of BCG and Gulfstream shall afford to the officers and authorized
representatives of Purchaser, upon prior notice and subject to their normal
security requirements, reasonable access to the properties, books and records,
including any and all vendor contracts, pertaining to the Assets in order that
Purchaser may have full opportunity to make reasonable investigations, at
reasonable times without interfering with BCG’s or Gulfstream’s normal business
and operations. Nothing in this Section 6.1 shall require BCG or Gulfstream to
breach any obligation of confidentiality or to reveal any proprietary
information, trade secrets or marketing or strategic plans. Records, including
credit information, relating to the Loans will be made available for review by
Purchaser upon execution of this Agreement. It is understood that certain of
BCG’s and Gulfstream’s records may be available only in the form of photocopies,
film copies or other non-original and non-paper media.

Section 6.2
Delivery of Magnetic Media Records
 
 
 
Each of BCG and Gulfstream shall prepare at its expense and make available to
Purchaser at its data processing center magnetic media records in BCG’s or
Gulfstream’s field format not later than 30 calendar days after the execution of
this Agreement and further shall make available to Purchaser such records
updated as of the Closing Date, which records shall contain the information
related to the items described in subsection 2.2(b)(2) above. Such updated
records shall be made available at such time after Closing as agreed to by the
parties. At their option, BCG and Gulfstream may provide such reports in paper
format instead of magnetic media format.
 
 
Section 6.3
Conduct of Business
 
 
 
From the date hereof until the Effective Time, each of BCG and Gulfstream
covenants that it will:

(a)
In the case of BCG, maintain the Personal Property in its current condition,
ordinary wear and tear excepted, maintain casualty and hazard insurance on all
of such property at the same levels as maintained as of the date hereof and
timely make all payments due under the Sub-lease;
 
 
(b)
Use its reasonable, good faith efforts to avoid any act that would have a
material adverse effect upon the value of the Loans or the other Assets;
 
 
(c)
Maintain its books of account and records concerning the Loans and other Assets
in the ordinary and usual manner; or
 
 
(d)
Not take any action which would cause any representation or warranty made herein
to be untrue at the date of Closing.

Section 6.4
Further Actions
 
 
 
The parties hereto shall execute and deliver such instruments and take such
other actions as the other party may reasonably require in order to carry out
the intent of this Agreement.
 
 
Section 6.5
Public Announcements
 
 
 
BCG, Gulfstream and Purchaser agree that, from the date hereof, neither shall
make any public announcement or public comment regarding this Agreement or the
transactions contemplated herein without first consulting with the other parties
hereto and reaching an agreement upon the substance and timing of such
announcement or comment.
 
 
Section 6.6
Tax Reporting
 
 
 
BCG and Gulfstream shall comply with all tax reporting obligations in connection
with transferred Assets on or before May 31, 2002, and Purchaser shall comply
with all tax reporting obligations with respect to the transferred Assets after
May 31, 2002.
 
 
Section 6.7
Management of the Loans
 
 
 
Beginning as of June 1, 2002 and continuing through the Closing, Purchaser shall
service and manage the Loans and shall be entitled to receive a fee as
compensation for its management of the Loans. This fee shall be payable monthly
and shall be equal to the accrued net interest income plus fees generated by the
Loans outstanding during the preceding month. Purchaser will provide BCG and
Gulfstream with a calculation of the fee each month.
 
 

The obligation of Purchaser to complete the transactions contemplated in this
Agreement are conditioned upon fulfillment, on or before the Closing, of each of
the following conditions:
 
 
Section 7.1
Representations and Warranties True
 
 
 
The representations and warranties made by BCG and Gulfstream in this Agreement
shall be true in all material respects on and as of the Effective Time as though
such representations and warranties were made at and as of such time, except for
any changes permitted by the terms hereof or consented to by Purchaser.

Section 7.2
Obligations Performed
 
 
 
Each of BCG and Gulfstream shall (a) deliver or make available to Purchaser
those items required by Section 2.2 hereof, and (b) perform and comply in all
material respects with all obligations, conditions and agreements required by
this Agreement to be performed or complied with by it prior to or on the
Effective Time.

The obligations of BCG and Gulfstream to complete the transactions contemplated
in this Agreement are conditioned upon fulfillment, on or before the Closing, of
each of the following conditions:
 
 
Section 8.1
Representations and Warranties True
 
 
The representations and warranties made by Purchaser in this Agreement shall be
true in all material respects at and as of the Effective Time as though such
representations and warranties were made at and as of such time, except for any
changes permitted by the terms hereof or consented to by BCG and Gulfstream.
 
 
Section 8.2
Obligations Performed
 
 
Purchaser shall (a) deliver to BCG and Gulfstream those items required by
Section 2.2 hereof, and (b) perform and comply in all material respects with all
obligations, conditions and agreements required by this Agreement to be
performed or complied with by it prior to or on the Effective Time.

ARTICLE IX
TERMINATION

Section 9.1
Methods of Termination
 
 
 
This Agreement may be terminated in any of the following ways:
 
 
(a)
at any time on or prior to the Effective Time by the mutual consent in writing
of the parties;
 
 
(b)
by Purchaser in writing if the conditions set forth in Article VII of this
Agreement shall not have been met by BCG or Gulfstream or waived in writing by
Purchaser within 30 calendar days following the date of this Agreement;
 
 
(c)
by BCG or Gulfstream in writing if the conditions set forth in Article VIII of
this Agreement shall not have been met by Purchaser or waived in writing by BCG
or Gulfstream, as applicable, within 30 calendar days following the date of this
Agreement;
 
 
(d)
any time prior to the Effective Time, by Purchaser, on the one hand, or by BCG
or Gulfstream, on the other hand, in writing if the other shall have been in
breach of any representation and warranty in any material respect (as if such
representation and warranty had been made on and as of the date hereof and on
the date of the notice of breach referred to below), or in breach of any
covenant, undertaking or obligation contained herein, and such breach has not
been cured by the earlier of 30 calendar days after the giving of notice to the
breaching party of such breach or the Effective Time; or
 
 
(e)
by any party on or after December 31, 2002 at 5:00 p.m.

Section 9.2
Procedure Upon Termination
 
 
 
In the event of termination pursuant to Section 9.1 hereof, and except as
otherwise stated therein, written notice thereof shall be given to the other
parties, and this Agreement shall terminate immediately upon receipt of such
notice unless an extension is consented to by the party having the right to
terminate.
 
 
 
If this Agreement is terminated as provided herein,
 
 
(a)
each party will return all documents, work papers and other materials of the
other parties, including photocopies or other duplications thereof, relating to
this transaction, whether obtained before or after the execution hereof, to the
party furnishing the same; and
 
 
(b)
all information received by any party hereto with respect to the business of any
other party (other than information which is a matter of public knowledge or
which has heretofore been published in any publication for public distribution
or filed as public information with any governmental authority ) shall not at
any time be used for any business purpose by such party or disclosed by such
party to third persons.
 
 
Section 9.3
Payment of Expenses
 
 
 
Agreement, in addition to such damages as may be recoverable under the terms of
this Agreement or in law or equity, a non-breaching party shall be entitled to
recover from the breaching party upon demand, itemization and documentation, its
reasonable outside legal, accounting, consulting and other out-of-pocket
expenses.

ARTICLE X
MISCELLANEOUS PROVISIONS

Section 10.1
Amendment and Modification
 
 
 
The parties hereto, by mutual consent of their duly authorized officers, may
amend, modify and supplement this Agreement in such manner as may be agreed upon
by them in writing.
 
 
Section 10.2
Waiver and Extension
 
 
 
Any party, by written instrument signed by a duly authorized officer, may extend
the time for the performance of any of the obligations or other acts of any
other party and may waive (a) any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or (b)
compliance with any of the undertakings, obligations, covenants or other acts
contained herein.
 
 
Section 10.3
Assignment
 
 
 
This Agreement and all of the provisions hereof shall be binding, upon, and
shall inure to the benefit of, the parties hereto and their permitted assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the others.
 
 

Section 10.4
Addresses for Notices, Etc.
 
 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
 
 
 
 
 
All notices, requests, demands, consents and other communications provided for
hereunder and under the related documents shall be in writing and mailed (by
registered or certified mail, return receipt requested), telegraphed, telexed,
telecopied or personally delivered (with receipt thereof acknowledged) to the
applicable party at the address indicated below:
 
 
 
 
 
 
If to BCG:
 
Bankers’ Capital Group, LLC
 
 
 
9050 Old Southwick Pass
 
 
 
Alpharetta, Georgia 30022
 
 
 
Attention: Stephen W. Doughty
 
 
 
Fax: (404) 760-7710
 
 
 
 
 
 
with a copy to:
 
Thomas O. Powell, Esq.
 
 
 
Troutman Sanders LLP
 
 
 
600 Peachtree Street, Suite 5200
 
 
 
Atlanta, Georgia 30308-2216
 
 
 
Fax: (404) 962-6658

       
 
If to Gulfstream:
 
Gulfstream Financial Services, Inc.
 
 
 
11873 Spring Road, Suite 10
 
 
 
Conifer, Colorado [zip]
 
 
 
Attention: David Hennessy
 
 
 
Fax: 303-838-1350
 
 
 
 
 
with a copy to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fax:
 
 
 
 
 
If to Purchaser:
 
FLAG Financial Corporation
 
 
 
3475 Piedmont Road, Suite 550
 
 
 
Atlanta, Georgia 30305
 
 
 
Attention: President
 
 
 
Fax: (404) 760-7710
 
 
 
 
 
with a copy to:
 
 
 
 
 
Powell, Goldstein, Frazer & Murphy LLP
 
 
 
191 Peachtree Street, N.E., 16th Floor
 
 
 
Atlanta, Georgia 30303
 
 
 
Fax: (404)572-6999
 
 
 
 
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section.
 
 
Section 10.5
Counterparts
 
 
 
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
 
 
Section 10.6
Headings
 
 
 
The headings of the Sections and Articles of this Agreement are inserted for
convenience only and shall not constitute a part thereof.
 
 
Section 10.7
Governing Law
 
 
 
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Georgia.

Section 10.8
Sole Agreement
 
 
 
This Agreement and the exhibits and attachments hereto represent the sole
agreement between the parties hereto respecting the transactions contemplated
hereby and all prior or contemporaneous written or oral proposals, agreements in
principle, representations, warranties and understandings between the parties
with respect to such matters are superseded hereby and merged herein.
 
 
Section 10.9
Severability
 
 
 
If any provision of this Agreement is invalid or unenforceable, the balance of
this Agreement shall remain in effect.
 
 
Section 10.10
Parties in Interest
 
 
 
Nothing in this Agreement, express or implied, is intended or shall be construed
to confer upon or give to any person (other than the parties hereto, their
successors and permitted assigns) any rights or remedies under or by reason of
this Agreement, or any term, provision, condition, undertaking, warranty,
representation, indemnity, covenant or agreement contained herein.

[Signatures Follow]

 

       

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officers as of the date first written above.

ATTEST:                    
FLAG FINANCIAL CORPORATION

 
 
 
 
By:     /s/ Lisa G. Lane    
By: /s/ J. Daniel Speight, Jr.
Name: Lisa G. Lane
Name: J. Daniel Speight, Jr.
Title: SVP, Assistant Secretary
Title: President/CEO
 
 
ATTEST:                    
BANKERS’ CAPITAL GROUP, LLC
 
 
 
 
 
 
 
 
By: /s/ Lisa G. Lane    
By: /s/ Stephen W. Doughty
Name: Lisa G. Lane
Name: Stephen W. Doughty
Title: SVP, Assistant Secretary
Title:                
 
 
 
 
 
 
 
 
ATTEST:
GULFSTREAM FINANCIAL SERVICES, INC.
 
 
 
 
By: /s/ Margaret Calandra
By: /s/ David Hennessy
Name: Margaret Calandra
Name: David Hennessy
Title: Assistant Secretary
Title: President

PURCHASE AND ASSUMPTION AGREEMENT
Among
FLAG FINANCIAL CORPORATION,
BANKERS’ CAPITAL GROUP, LLC
and
GULFSTREAM FINANCIAL SERVICES, INC.

EXHIBIT LIST

Exhibit No .
Description
 
 
1.1(a)(1)
Personal Property
1.1(a)(5)
Excluded Assets
1.2(b)
Sub-lease
1.4(h)
Power of Attorney
2.2(b)(1)
Form of Bill of Sale
2.2(b)(2)
Description of Sundowner and LaMancha Loans

     

--------------------------------------------------------------------------------

EXHIBIT 1.1(a)(1)

PURCHASE AND ASSUMPTION AGREEMENT
Among
FLAG FINANCIAL CORPORATION,
BANKERS’ CAPITAL GROUP, LLC
and
GULFSTREAM FINANCIAL SERVICES, INC.

PERSONAL PROPERTY

 
Asset
Number
 
 
Description
 
Acquired
  Value  
Current
Accumulated
Depreciation
 
Net Book
   Value   
 
 
 
 
 

miscellaneous computer equipment including but not limited to 1 file server, 1
backup server, 1 email server, 1 MS exchange 2000 server, 5 desktop computers, 1
laptop computer, 1 laser printer, software, cables, and accessories. 
  57,396.24    9,566.04 47,830.20

miscellaneous office furniture including but not limited to 6 equipped cubicles,
13 file cabinets, 18 herman miller chairs, 4 bernhard guilder chairs, 6 Aeron
chairs, 4 equipped offices, 2 conference tables, 2 color t/v’s, refrigerator,
microwave, dishwasher, and other various office furniture listed in attachment
1.1 a.1.a    40,000.00    4,000.00 36,000.00

     

--------------------------------------------------------------------------------

EXHIBIT 1.1(a) 5

PURCHASE AND ASSUMPTION AGREEMENT
Among
FLAG FINANCIAL CORPORATION,
BANKERS’ CAPITAL GROUP, LLC
and
GULFSTREAM FINANCIAL SERVICES, INC.

PREPAID LEASE

1.  Sublease agreement by and between Bankers’ Capital Group, LLC (subtenant)
and Pell Rudman Trust Company, N.A (sublandlord) and EOP-Buckhead, LLC
(landlord) dated December 20, 2001. Lease agreement covers 3,287 square feet at
3475 Peidmont Road, Suite 550, Atlanta, Ga. 30305. Term of sublease agreement
commenced December 20, 2001 and expires February 28, 2005.
2.  Original prepaid lease includes one year’s base rent in the amount of
$77,836.51 and a security deposit in the amount of $6,883.50. Amounts remaining
at May 31, 2002 include six months covered under the payment of one year’s base
rent amounting to $38,918.25, and the security deposit in the amount of
$6,883.50 for a total of $ 45,801.75.

 
     

--------------------------------------------------------------------------------

 

EXHIBIT 1.2(b)

PURCHASE AND ASSUMPTION AGREEMENT
AMONG
FLAG FINANCIAL CORPORATION,
BANKERS’ CAPITAL GROUP, LLC
and
GULFSTREAM FINANCIAL SERVICES, INC.

SUB-LEASE

3.
 
     

--------------------------------------------------------------------------------

 

EXHIBIT 1.4(h)

PURCHASE AND ASSUMPTION AGREEMENT
Among
FLAG FINANCIAL CORPORATION,
BANKERS’ CAPITAL GROUP, LLC
and
GULFSTREAM FINANCIAL SERVICES, INC.

POWER OF ATTORNEY

THIS POWER OF ATTORNEY is dated this 12 day of November 2002, by Bankers’
Capital Group, LLC, a Georgia limited liability company, organized under the
laws of Georgia ("Grantor"), to be effective as of 9:00 a.m./p.m. on November
12, 2002.

WITNESSETH:

WHEREAS, Bankers’ Capital Group, LLC, Gulfstream Financial Services, Inc. and
FLAG Financial Corporation ("FLAG") have entered into a Purchase and Assumption
Agreement dated as of November 12, 2002 (the "Agreement"), which provides for
the sale to FLAG of certain assets and assumption of certain liabilities; and

WHEREAS, in a Bill of Sale to FLAG dated November 12, 2002 (the "Bill of Sale"),
Grantor has agreed, from time to time, at the request of FLAG to execute,
acknowledge and deliver any and all instruments, documents, endorsements,
assignments, information, materials and other papers that may be reasonably
required to (i) transfer to FLAG certain Assets (as defined in the Bill of Sale)
being acquired by FLAG pursuant to the Agreement, including loans and the
collateral therefor to the extent of Grantor’s interest in such collateral and
files and records relating to such loans, (ii) enable FLAG to bill, collect,
service and administer the loans transferred thereby and (iii) give full force
and effect to the intent and purpose of the Bill of Sale.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Grantor hereby irrevocably appoints and authorizes the President
or any Vice President, or the Secretary or any Assistant Secretary, of FLAG as
its attorney-in-fact solely for the purpose of endorsing and recording, pursuant
to the Bill of Sale, certificates of title for vehicles and similar documents,
provided , such power of attorney is not intended to and does not convey to FLAG
any right to endorse or record any documents of title relating to collateral
other than collateral transferred pursuant to the Bill of Sale as described in
the preceding paragraph.
 
     

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, BCG has caused this Power of Attorney to be duly executed by
its duly authorized officer as of the day and year first above written.

WITNESSES:                                            

/s/ Dennis J. Zember,         By: /s/ Steven W. Doughty
Name: Stephen W. Doughty
Title: Member

     

--------------------------------------------------------------------------------

EXHIBIT 2.2(b)(1)

PURCHASE AND ASSUMPTION AGREEMENT
Among
FLAG FINANCIAL CORPORATION,
BANKERS’ CAPITAL GROUP, LLC
and
GULFSTREAM FINANCIAL SERVICES, INC.

BILL OF SALE

THIS BILL OF SALE is dated this 12 day of November 2002, by Bankers’ Capital
Group, LLC, a limited liability company organized under the laws of Georgia
("Seller").

WITNESSETH:

WHEREAS, Bankers’ Capital Group, LLC, Gulfstream Financial Services, Inc. and
FLAG Financial Corporation, a corporation organized under the laws of the State
of Georgia ("Purchaser"), have entered into a Purchase and Assumption Agreement
dated as of November 12, 2002 (the "Agreement"), which provides for the sale to
Purchaser of certain assets and assume certain liabilities of Seller, all as set
forth in the Agreement;

NOW, THEREFORE, Seller, for good and valuable consideration, receipt of which is
hereby acknowledged, does hereby grant, bargain, sell, assign, set over, convey
and transfer to Purchaser all of its right, title and interest in and to the
following assets (the "Assets"):

(a)
All furniture, fixtures, equipment and other tangible personal property owned by
Seller and listed in Exhibit 1.1(a)(1) of the Agreement and attached hereto;
 
 
(b)
Seller’s interest in the loans maintained, serviced and listed in Seller’s
general ledger as listed on Exhibit 1.1(a)(2)) of the Agreement and attached
hereto (the "Loans");
 
 
(c)
Seller’s interest in the Exit Fees relating to the Loans, as described in
Section 1.1(a)(3) of the Agreement; and
 
 
(d)
All of Seller’s files and records related to the Loans and other Assets.

Seller, for itself and its successors and assigns, does hereby covenant and
agree to and with Purchaser and its successors and assigns that it (i) is seized
of, and has the right to convey to Purchaser, such title to the Assets as is
provided in the Agreement, (ii) will warrant and defend said title to the Assets
in the manner provided in the Agreement, and (iii) shall, from time to time, at
the request of Purchaser, execute, acknowledge and deliver to Purchaser any and
all further instruments, documents, endorsements, assignments, information,
materials and other papers that may be reasonably required to transfer the
Assets to Purchaser, to enable Purchaser to bill, collect, service and
administer the Loans and to give full force and effect to the full intent and
purposes of this Bill of Sale.

IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be duly executed by
its duly authorized officers and its corporate seal to be affixed hereto, all as
of the day and year first above written.

By: /s/ Stephen W. Doughty            
Name: Stephen W. Doughty            
Title: Member                        

ATTEST:

By: /s/ Dennis J. Zember
Name: Dennis J. Zember
Title: Member                    

       

--------------------------------------------------------------------------------

 

EXHIBIT 2.2(b)(2)

PURCHASE AND ASSUMPTIONAGREEMENT
Among
FLAG FINANCIAL CORPORATION,
BANKERS’ CAPITAL GROUP, LLC
and
GULFSTREAM FINANCIAL SERVICES, INC.

DESCRIPTION OF SUNDOWNER AND LAMANCHA LOANS

Loan customer
Orig. Date
Borrower
Orig. Amount
Rate
Terms
Collateral
Sundowner
4/2/2002
 
$1,790,681.00
8.00%
48 mnts
two RV/mobile home parks in Mesa, AR
La Mancha
4/2/2002
 
$5,200,000.00
7.50%
24 mnts/ 20n yr amort
LaMancha resort in Plam Springs, CA and Dirk Winter guaranty