<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1996.
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
FORSYTH BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 6022 58-2231953
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
425 TRIBBLE GAP ROAD
CUMMING, GEORGIA 30130
(770) 886-9500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DAVID H. DENTON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
245 TRIBBLE GAP ROAD
CUMMING, GEORGIA 30130
(770) 886-9500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES OF ALL COMMUNICATIONS, INCLUDING COPIES OF ALL COMMUNICATIONS
SENT TO AGENT FOR SERVICE, SHOULD BE SENT TO:
DAVID H. DENTON JEFFREY A. ALLRED, ESQ.
FORSYTH BANCSHARES, INC. W. THOMAS CARTER III, ESQ.
425 TRIBBLE GAP ROAD L. SCOTT ASKINS, ESQ.
CUMMING, GEORGIA 30130 ALSTON & BIRD
(770) 886-9500 ONE ATLANTIC CENTER
(770) 781-6303 (FAX) 1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3424
(404) 881-7000
(404) 881-7777 (FAX)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] 333-
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] 333-
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM OFFERING AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE(1) FEE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value...... 800,000 $10.00 $8,000,000 $2,759.00
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL BY ANY SALE OF THESE SECURITIES +
+IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL +
+PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH +
+STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION , 1996
PROSPECTUS
FORSYTH BANCSHARES, INC.
A HOLDING COMPANY FOR
THE CITIZENS BANK OF FORSYTH COUNTY
800,000 SHARES OF COMMON STOCK
-----------
This Prospectus relates to the offer of a minimum of 665,000 and a maximum of
800,000 shares of common stock, no par value (the "Common Stock"), to be issued
by FORSYTH BANCSHARES, INC., a Georgia corporation (the "Company"), which has
been organized to own and control all of the capital stock of THE CITIZENS BANK
OF FORSYTH COUNTY (the "Bank"). The Company's mailing address and telephone
number are currently 425 Tribble Gap Road, Cumming, Georgia 30130, (770) 886-
9500. The organizers of the Company and the bank (the "Organizers") obtained
preliminary approval of the Bank's application for charter as a state-chartered
nonmember bank from the Department of Banking and Finance of the State of
Georgia (the "DBF") on June 5, 1996 and preliminary approval of the Bank's
application for deposit insurance from the Federal Deposit Insurance
Corporation (the "FDIC") on July 3, 1996.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS
OR SAVINGS DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) THE COMPANY(3)
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<S> <C> <C> <C>
Per Share................................. $10 None $10.00
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Total(Minimum)............................ $6,650,000 None $6,650,000
(Maximum)................................. $8,000,000 None $8,000,000
</TABLE>
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(1) The offering price has been arbitrarily established by the Company. See
"Risk Factors--Offering Price."
(2) This offering is expected to be made on behalf of the Company primarily by
its directors and executive officers, to whom no commission or other
compensation will be paid on account of such activity, although they will
be reimbursed for reasonable expenses incurred in the offering. The Company
believes such officers and directors will not be deemed brokers under the
Securities Exchange Act of 1934 (the "Exchange Act") based on reliance on
Rule 3a4-1 of the Exchange Act. See "The Offering."
(3) Before deducting expenses related to this offering and the organization of
the Company, estimated to be approximately $100,000. See "Use of Proceeds--
By the Company."
INVESTMENT IN THESE SECURITIES INVOLVES SIGNIFICANT RISK. AFTER COMPLETION OF
THE OFFERING, BUT PRIOR TO THE COMPANY OBTAINING ALL FINAL REGULATORY APPROVALS
FOR THE BANK TO COMMENCE BANKING OPERATIONS AND RECEIPT OF ITS CHARTER, IT IS
POSSIBLE THAT THE BANK MAY NOT BE ABLE TO COMMENCE BANKING OPERATIONS, AND IN
SUCH EVENT UPON LIQUIDATION OF THE COMPANY SHAREHOLDERS COULD RECEIVE LESS THAN
THEIR ORIGINAL SUBSCRIPTION PRICE. SEE "RISK FACTORS--RETURN OF LESS THAN
SUBSCRIPTION AMOUNT."
Sale of the Common Stock will commence on or about , 1996. This is a
"best efforts" offering by the Company, and it will be terminated by the
Organizers upon the sale of 800,000 shares or December 31, 1996, whichever
occurs first, unless the offering is extended, at the discretion of the
Company, for additional periods ending no later than August 31, 1997. However,
the Organizers reserve the right to terminate the offering at any time after
the sale of the minimum offering of 665,000 shares. Subscriptions are binding
on subscribers and may not be revoked by subscribers without the consent of the
Company until the earlier of the termination of the offering or August 31,
1997.
Prospective investors should carefully review the Prospectus before
subscribing for shares. SUBSCRIBERS MUST WARRANT IN THE SUBSCRIPTION AGREEMENT
THAT THEY HAVE RECEIVED A COPY OF THIS PROSPECTUS. See "The Offering--How to
Subscribe." The Company has established a minimum subscription of 200 shares
and a maximum subscription by any subscriber of 5% of the total number of
shares sold in the offering. However, the Organizers reserve the right to waive
these limits without notifying any subscriber. In addition, the Organizers
reserve the right to purchase up to 100% of the shares of stock being offered
hereunder if necessary to complete the offering.
Proceeds of the offering will be deposited in an escrow account at The
Bankers Bank, Atlanta, Georgia, escrow agent, pending receipt of subscriptions
and subscription proceeds for a minimum of 665,000 shares and satisfaction of
certain other conditions of the offering. Any subscription proceeds accepted
after satisfaction of the conditions set forth above but before termination of
this offering will not be deposited in escrow but will be available for
immediate use by the Company to fund offering and organizational expenses and
for working capital. See "The Offering--Conditions of the Offering and Release
of Funds." If the offering is terminated prior to completion, subscription
payments will be promptly returned by the Company to the subscribers without
interest. The Company will retain any interest earned to repay the expenses
incurred by the Organizers in organizing the Company and the Bank. Any expenses
not repaid with such interest will be paid by the Organizers.
-----------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
REPORTS TO SHAREHOLDERS
The Company is not a reporting company as defined by the Securities and
Exchange Commission (the "Commission"). The Company will furnish its
shareholders with annual reports containing audited financial information for
each fiscal year on or before the date of the annual meeting of shareholders
as required by Rule 80-6-1-.05 of the DBF. The Company's fiscal year ends on
December 31. The Company will also furnish such other reports as it may
determine appropriate or as otherwise may be required by law. Upon the
effective date of the Registration Statement, the Company will be subject to
the reporting requirements of the Securities and Exchange Act of 1934 (the
"Exchange Act"), which include requirements to file annual and quarterly
reports and other information with the Commission. This reporting obligation
will exist for at least one year and will continue for fiscal years
thereafter, except that such reporting obligations may be suspended for any
subsequent fiscal year if at the beginning of such year the Common Stock of
the Company is held of record by less than 300 persons.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act of 1933 (the "Securities Act") with respect to
the Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement. For further information
with respect to the Company and the Common Stock, please see the Registration
Statement and the exhibits thereto. The Registration Statement may be
inspected without charge at, and copies of the Registration Statement may be
obtained at prescribed rates from, the Public Reference Section of the
Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at Seven World Trade Center, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Such filings may also be obtained from the Commission through the Internet at
http://www.sec.gov.
The Company and the Organizers have filed or will file various applications
with the FDIC, the Federal Reserve Bank of Atlanta (the "Federal Reserve") and
the DBF. Prospective investors should rely only on information contained in
this Prospectus and in the Company's related Registration Statement in making
an investment decision. To the extent that other available information not
presented in this Prospectus, including information available from the Company
and information in public files and records maintained by the FDIC, the
Federal Reserve and the DBF, is inconsistent with information presented in
this Prospectus, such other information is superseded by the information
presented in this Prospectus. Projections appearing in the applications were
based on assumptions that the Organizers believed were reasonable, but as to
which no assurances can be made. The Company specifically disaffirms those
projections for purposes of this Prospectus and cautions prospective investors
against placing reliance on them for purposes of making an investment
decision.
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, contained
elsewhere in this Prospectus.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS
ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE
FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
THE COMPANY
Forsyth Bancshares, Inc., a Georgia corporation (the "Company"), was
incorporated primarily to hold all of the capital stock of a state-chartered
nonmember bank organized under the laws of the State of Georgia, The Citizens
Bank of Forsyth County (the "Bank"). The Company may not acquire the capital
stock of the Bank without the prior approval of the Federal Reserve, as
delegate of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and the DBF. The Company filed an application for this
approval on , 1996. The Company initially will engage in no business
other than owning and managing the Bank.
THE BANK
The Organizers (as defined below) filed an application with the DBF on
November 8, 1995, subsequently amended on February 19, 1996, to charter the
Bank as a state nonmember bank. The Organizers obtained preliminary approval of
the Bank's application for charter from the DBF on June 5, 1996. On November 8,
1995, the Organizers also filed an application with the FDIC for insurance by
the FDIC of the deposits of the Bank (such application was forwarded to the
FDIC by the DBF once the DBF accepted the application). The Organizers obtained
preliminary approval of the Bank's application for insurance from the FDIC on
July 3, 1996. The Bank may not conduct any banking business until the DBF
grants final approval of the Bank's application and issues the Bank a charter
and the FDIC grants deposit insurance to the Bank. The issuance of a charter
will depend, among other things, upon compliance with certain legal
requirements that may be imposed by the DBF or the FDIC, including
capitalization of the Bank at not less than $6,500,000. In order to receive
deposit insurance, the Bank must also comply with certain legal requirements
that may be imposed by the FDIC. See "The Offering" and "Use of Proceeds."
Additionally, the Company must obtain the approval of the Federal Reserve to
become a bank holding company before acquiring the capital stock of the Bank.
The Bank will engage in a general commercial and retail banking business,
emphasizing the needs of small- to medium-sized businesses, professional
concerns and individuals, primarily in Cumming, Georgia and the surrounding
area (the "Forsyth County Area"). The Bank will initially consist of a
principal facility located in Cumming, Georgia in Forsyth County. The facility
will primarily serve the central area of Forsyth County. The Bank initially
will not have trust powers. The Bank may in the future offer a full-service
trust department, but it cannot do so without the prior approval of the DBF.
See "Proposed Business." David H. Denton, the President and Chief Executive
Officer of the Company and the Bank, has over 30 years of banking experience,
including former lending responsibilities with three community banks located in
Georgia, two of which were located in the city of Cumming. See "Management."
The Organizers believe that the combined banking experience of the Bank's
President and Chief Executive Office and the extensive business experience and
contacts of the Organizers in the Forsyth County Area should create immediate
business opportunities for the Bank. The Organizers presently are engaged in
completing the tasks necessary to open the Bank by December 1, 1996, although
no assurances can be given that the Bank will open for business or that the
projected opening date can be achieved. The Bank currently has no plans to
establish any branch offices.
3
<PAGE>
The principal executive offices of both the Company and the Bank will be
located at 501 Tri-County Plaza, Highways 9 and 20, Cumming, Georgia 30130.
Pending commencement of operations, the Company's interim address and telephone
number are 425 Tribble Gap Road, Cumming, Georgia 30130, (770) 886-9500.
THE ORGANIZERS
The Organizers of the Company and the Bank are Catherine M. Amos, Jeffrey S.
Bagley, Bill H. Barnett, Danny M. Bennett, Michael P. Bennett, Bryan L. Bettis,
Talmadge W. Bolton, Thomas L. Bower III, Charles R. Castleberry, David H.
Denton, Charles D. Ingram, Herbert A. Lang, Jr., John P. McGruder, James J.
Myers, Danny L. Reid, Charles R. Smith, Wyatt L. Willingham and Jerry M. Wood.
Additional individuals may be added as Organizers, subject to regulatory
approval. All of the Organizers will serve as directors of the Company, and Ms.
Amos and Messrs. Bagley, D. Bennett, M. Bennett, Bolton, Denton, Ingram, Lang,
McGruder, Myers, Reid, Smith and Willingham will serve as directors of the
Bank. See "Management."
The Organizers (together with members of their immediate families) intend to
purchase an aggregate of at least 140,500 shares of the Common Stock to be sold
in this offering at a purchase price of $10.00 per share. The Organizers may
subscribe for up to 100% of the shares in the offering if necessary to help the
Company achieve the minimum subscription level necessary to release
subscription proceeds from escrow, and some Organizers may decide to purchase
additional shares even if the minimum subscription amount has been achieved.
All shares purchased by the Organizers will be purchased for investment and not
with a view to the resale of such shares. Because purchases by the Organizers
may be substantial, investors should not place any reliance on the sale of a
specified minimum offering amount as an indication of the merits of this
offering or that an Organizer's investment decision is shared by unaffiliated
investors. See "The Offering" and "Management."
THE OFFERING
Securities Offered ......... Common Stock of the Company, no par value
Offering Price ............. $10.00 per share
Number of Shares Offered ... Minimum 665,000
Maximum 800,000
Use of Proceeds ............ The Company will use the net proceeds of the
offering to capitalize the Bank at a minimum of
$6,500,000 and a maximum of $7,850,000 through
the purchase of all of the capital stock of the
Bank, subject to regulatory approval; to pay
organizational expenses of the Company and the
expenses of this offering, estimated to be
approximately $100,000; and to provide working
capital. If sufficient proceeds are available,
the Company may choose to capitalize the Bank at
a level in excess of $6,500,000. The Company
plans to retain sums in excess of the minimum
necessary to capitalize the Bank at the Company
and initially invest such monies in United
States government securities or as a deposit at
the Bank.
IF THE CONDITIONS FOR RELEASING SUBSCRIPTION
FUNDS FROM ESCROW ARE MET AND SUCH FUNDS ARE
RELEASED BUT FINAL REGULATORY APPROVAL TO
COMMENCE BANKING OPERATIONS IS NOT OBTAINED FROM
THE DBF, OR THE BANK DOES NOT OPEN FOR ANY OTHER
4
<PAGE>
REASON, IT IS POSSIBLE THAT UPON LIQUIDATION
SUBSCRIBERS COULD BE RETURNED AN AMOUNT LESS
THAN THEIR ORIGINAL INVESTMENT. See "Risk
Factors--Return of Less Than Subscription
Amount." The Bank will use the proceeds received
from the sale of its stock to the Company to pay
organizational and pre-opening expenses of the
Bank; to renovate and furnish a building for the
Company and the Bank's main office; and to
provide working capital to be used for business
purposes, including paying officers' and
employees' salaries and making loans and
investments. See "Use of Proceeds."
Conditions to Offering ..... This offering will be terminated and all
subscription funds (without interest) will be
returned promptly to subscribers unless on or
before December 31, 1996 (or such later date if
the offering is extended by the Company for
additional periods not to extend beyond August
31, 1997): (i) the Company has accepted
subscriptions and payment in full for a minimum
of 665,000 shares; and (ii) the Company has
obtained approval of the Federal Reserve and the
DBF to acquire the capital stock of the Bank and
thereafter to become a bank holding company. It
is the DBF's policy to encourage community
support and make distribution of stock ownership
of de novo banks such as the Bank. In
furtherance of that policy, the DBF will require
as a condition to granting the Bank's charter
that: (i) at least 75% of the Common Stock be
issued to local residents of the Bank's market
area, persons with substantial business
interests in the Bank's market area or others
who may reasonably be expected to use the
services of the Bank; and (ii) the Company will
have a broad, diversified shareholder base. The
Company anticipates that it will meet these
conditions. If these conditions are not met, the
Company will seek regulatory approval from the
DBF for a waiver of these requirements.
Subscription proceeds for shares subscribed for
will be deposited promptly in an escrow account
with The Bankers Bank, Atlanta, Georgia, as
escrow agent (the "Escrow Agent"), under the
terms of an escrow agreement (the "Escrow
Agreement"), pending the satisfaction of the
conditions set forth above or the termination of
the offering. Upon satisfaction of the
conditions set forth above, all subscription
funds held in escrow, including any interest
actually earned thereon, shall be released to
the Company for its immediate use. Any
subscription proceeds accepted after
satisfaction of the conditions set forth above
but before termination of this offering will not
be deposited in escrow but will be available for
immediate use by the Company to fund offering
and organizational expenses and for working
capital. See "The Offering."
Plan of Distribution ....... Offers and sales of the Common Stock will be made
on behalf of the Company primarily by certain of
its officers and directors. The officers and
directors will receive no commissions or other
remuneration in connection with such activities,
but they will be
5
<PAGE>
reimbursed for reasonable expenses incurred in
the offering. Subscriptions are binding on
subscribers and may not be revoked by
subscribers except with the consent of the
Company. The Company may, in its sole
discretion, allocate shares among subscribers in
the event of an over subscription for the
shares. In determining which subscriptions to
accept, in whole or in part, the Company may
take into account any factors it considers
relevant, including the order in which
subscriptions are received, a subscriber's
potential to do business with, or to direct
customers to, the Bank and the Company's desire
to have a broad distribution of stock ownership.
RISK FACTORS
An investment in the shares offered hereby involves certain risks, including,
among others, the possibility of the return of less than the subscription
amount, lack of an operating history, dependence on key employees of the Bank,
significant control of the Company by the Organizers, absence of an existing
market for the Common Stock and lack of assurance that an active trading market
in the Common Stock will develop, competition from a number of other financial
institutions with substantially greater financial and other resources than the
Bank, the highly regulated environment in which the Company and Bank will
operate, the Bank's dependence on economic development in its market area and
no intention to pay dividends in the foreseeable future. See "Risk Factors."
6
<PAGE>
RISK FACTORS
An investment in the shares offered hereby involves certain risks. A
subscription for shares should be made only after careful consideration of the
risk factors set forth below and elsewhere in this Prospectus and should be
undertaken only by persons who can afford an investment involving such risks.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS
OR SAVINGS DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY.
RETURN OF LESS THAN SUBSCRIPTION AMOUNT
The amounts paid by subscribers in this offering will be held in escrow
until: (i) the Company has accepted subscriptions and payment in full for a
minimum of 665,000 shares; and (ii) the Company has obtained approval of the
Federal Reserve and the DBF to acquire the capital stock of the Bank and
thereafter to become a bank holding company. If these conditions are not met
by December 31, 1996, or by such subsequent date, not beyond August 31, 1997,
to which the offering may be extended by the Company, all subscriptions will
be returned promptly in full, without interest. If these conditions are
satisfied, the subscription amounts held in escrow may be paid to the Company
and shares issued to subscribers, and all interest earned on the subscription
proceeds will be retained by the Company. Once the Company has met the
conditions for the offering, the Escrow Agreement will be terminated and any
subscription proceeds accepted after satisfaction of the conditions set forth
above but before termination of this offering will not be deposited in escrow
but will be available for immediate use by the Company to fund offering and
organizational expenses and for working capital. When subscription amounts are
received by the Company, the Company will use a portion of the proceeds to
repay the Organizers the amounts advanced by them for organizational and
offering expenses. The Company will then fund future expenses out of the
subscription amounts received.
If the conditions for releasing subscription funds from escrow are met and
such funds are released but final regulatory approval to commence banking
operations is not obtained from the DBF, or if the Bank does not open for any
other reason, the Company's Board of Directors intends to propose that the
shareholders approve a plan to liquidate the Company. Upon such a liquidation,
the Company would be dissolved and the Company's net assets (generally
consisting of the amounts received in this offering plus any interest earned
thereon, less the amount of all costs and expenses incurred by the Company and
the Bank, including the salaries of employees of the Bank and other pre-
opening expenses) would be distributed to the shareholders. In such event, the
Company will have incurred numerous expenses related to the organization of
the Company and the Bank, and the amount distributed to shareholders may be
substantially less than the subscription amount, and in an extreme case
shareholders may not be returned any amount. See "The Offering--Conditions to
the Offering and Release of Funds."
LACK OF OPERATING HISTORY
The Company and the Bank currently are in the organizational stage, and
neither has any operating history. As a consequence, prospective purchasers of
the shares have limited information on which to base an investment decision.
As a bank holding company, the Company's profitability will depend upon the
Bank's operations. The Bank's proposed operations are subject to the risks
inherent in the establishment of any new business and, specifically, of a new
bank. The Company expects that the Bank will incur substantial initial
expenses and may not be profitable for several years after commencing
business, if ever. Shareholders are likely to experience dilution in the book
value of the Common Stock due to operating losses expected to be incurred
during the initial years of the Bank's operations.
DEPENDENCE ON KEY EMPLOYEE
As a new enterprise, the Company and the Bank will be materially dependent
on the performance of David H. Denton, the President and Chief Executive
Officer of the Bank. The Company has entered into an employment agreement with
Mr. Denton which has an initial term of five years and can be extended by the
Bank at the end
7
<PAGE>
of each year of the term for an additional year, so that the remaining term
shall continue to be five years. The Company maintains a $1 million in key man
life insurance policy on Mr. Denton, with $600,000 payable to the Company and
$400,000 payable to Mr. Denton's family. In addition, Mr. Denton is subject to
non-compete restrictions for a one-year period following the date of
termination. The loss of the services of Mr. Denton or his failure to perform
his management functions in the manner anticipated by the Organizers could
have a material adverse effect on the Company and the Bank. See "Management--
Employment Agreement."
CONCENTRATION OF STOCK OWNERSHIP
The Organizers, most of whom will serve as directors of both the Company and
the Bank, and members of their immediate families, intend to purchase an
aggregate of at least 140,500 shares, equal to approximately 21% of the
minimum number of shares offered hereby and approximately 18% of the maximum
number of shares offered hereby, at a purchase price of $10.00 per share.
Organizers may purchase additional shares in the offering and additional
persons may be named as Organizers, subject to regulatory approval. As a
result of the anticipated stock ownership in the Company by the Organizers,
together with the influence which may be exerted by such persons due to their
positions as directors of the Company and the Bank, the Organizers as a group
will have substantial control of the Company and the Bank following the
offering, including the election of directors and approval of significant
corporate transactions. The Organizers may subscribe for up to 100% of the
shares in this offering if necessary to help the Company achieve the minimum
subscription level necessary to release subscription proceeds from escrow, and
some Organizers may decide to purchase additional shares even if the minimum
subscription amount has been achieved. See "The Offering" and "Management."
All shares purchased by the Organizers will be purchased for investment and
not with a view to the resale of such shares and such purchases will be
counted in determining whether the minimum number of share purchases has been
met. Investors, therefore, should not consider that the sale of the specified
minimum number of shares, or in excess of that minimum, indicates that such
sales have been made to parties with no financial or other interest in the
offering, or who otherwise are applying independent investment discretion.
Because purchases by the Organizers may be substantial, investors should not
place any reliance on the sale of a specified minimum offering amount as an
indication of the merits of this offering or that an Organizer's investment
decision is shared by unaffiliated investors. See "The Offering--General" and
"Management."
ARBITRARY OFFERING PRICE
Because the Company and the Bank are in organization, the offering price of
$10.00 per share was determined by the Organizers without reference to
traditional criteria for determining stock value such as book value or
historical or projected earnings since such criteria are not applicable to
companies with no history of operations. The price per share was set to enable
the Company to raise gross proceeds of between $6,650,000 and $8,000,000 in
this offering through the sale of a reasonable number of shares, and the price
per share is essentially equivalent to the initial book value per share prior
to the payment of the Company's and the Bank's organizational expenses. No
assurance is or can be given that any of the shares could be resold for the
offering price or any other amount.
ABSENCE OF PUBLIC MARKET
There currently is no market for the shares and, although the Company has
filed a registration statement with the Commission to register the issuance of
the Common Stock in the offering under the Securities Act, it is not likely
that any trading market will develop for the shares in the future. There are
no present plans for the Common Stock to be traded on any stock exchange or in
the over-the-counter market. Furthermore, the development of any trading
market for the shares may be adversely affected by purchases of large amounts
of shares in this offering by the Organizers since shares purchased by the
Organizers will generally not be freely tradable. As a result, investors who
may need or wish to dispose of all or part of their shares may be unable to do
so except in private, directly negotiated sales. In addition, sales of
substantial amounts of Common Stock after the offering, by the Organizers or
others, could adversely affect prevailing market prices. See "Description of
Capital Stock--Shares Eligible for Future Sale."
8
<PAGE>
COMPETITION; INTERSTATE BRANCHING
The banking business is highly competitive, and the Bank will encounter
strong competition from other commercial banks, savings and loan associations,
mortgage banking firms, consumer finance companies, credit unions, securities
brokerage firms, insurance companies, money market mutual funds and other
financial institutions operating in the Forsyth County Area and elsewhere. A
number of these competitors are well established in the Forsyth County Area.
Most of them have substantially greater resources and lending capabilities, as
well as a lower cost of funds, than the Bank and may offer certain services,
such as extensive and established branch networks and trust services, that the
Bank either does not expect to provide or will not provide initially. As a
result of these competitive factors, the Bank may have to pay higher rates of
interest to attract deposits. In addition, non-depository institution
competitors are generally not subject to the extensive regulations applicable
to the Company and the Bank. Recent federal legislation permits commercial
banks to establish operations nationwide, further increasing competition from
out-of-state financial institutions. Furthermore, recently enacted Georgia
legislation greatly diminishes the historical legal restrictions on
establishing branch banks across county lines in Georgia, thus creating
further opportunities for other financial institutions to compete with the
Bank. Generally, from July 1, 1996 to July 1, 1998, any bank located in
Georgia may branch into any three additional Georgia counties regardless of
the location of the parent bank. After July 1, 1998, banks may establish
branch banks statewide without limitation. In addition, on-line computer
banking via the Internet or otherwise may also become an increasing source of
competition for community financial institutions such as the Bank. See
"Proposed Business--Competition" and "Supervision and Regulation." Although
the Organizers believe that the Bank will be able to compete effectively with
these institutions in the Bank's proposed markets, no assurances can be given
in this regard.
GOVERNMENT REGULATION
The Company and the Bank will operate in a highly regulated environment and
will be subject to supervision by several governmental regulatory agencies,
including the DBF, the Federal Reserve, the FDIC and the Commission. The
success of the Company and the Bank depends not only on competitive factors
but also on state and federal regulations affecting banks and bank holding
companies. These regulations are primarily intended to protect depositors, not
shareholders. Regulation of the financial institutions industry is undergoing
continued changes, and the ultimate effect of such changes cannot be
predicted. In December 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") was enacted, and its effect is still being
defined as regulations mandated by it are promulgated by the Company's and the
Bank's regulators. FDICIA and the regulations thereunder have increased the
regulatory and supervisory requirements for financial institutions, which has
resulted and will continue to result in increased operating expenses.
Additional statutes affecting financial institutions have been proposed and
may be enacted. Regulations now affecting the Company and the Bank may be
modified at any time, and there is no assurance that such modifications will
not adversely affect the business of the Company and the Bank. See
"Supervision and Regulation."
EFFECT OF ECONOMIC CONDITIONS
The success of the Company and the Bank will depend, to a certain extent,
upon economic and political conditions, local, regional and national, as well
as governmental monetary policies. Conditions such as inflation, recession,
unemployment, high interest rates, short money supply and other factors beyond
the control of the Company and the Bank may adversely affect the Bank's
deposit levels and loan demand and, therefore, the earnings of the Bank and
the Company. Although the Organizers expect favorable economic development in
the Bank's market area, there is no assurance that favorable economic
development will occur or that the Bank's expectation of corresponding growth
will be achieved. See "Proposed Business."
DIVIDEND POLICY
The Company has no plans to pay any cash dividends to its shareholders in
the foreseeable future. Since the Company and the Bank are both start-up
operations and may incur initial losses, both the Company and the Bank intend
to retain any earnings for the period of time management believes necessary to
ensure the success of their
9
<PAGE>
operations. The Company will be dependent upon the Bank for its earnings and
funds to pay dividends on the Common Stock. The payment of dividends by the
Company and the Bank is also subject to legal and regulatory restrictions. Any
payment of dividends by the Company in the future will depend on the Bank's
earnings, capital requirements, financial condition and other factors
considered relevant by the Board of Directors. See "Dividend Policy,"
"Proposed Business" and "Supervision and Regulation."
DILUTION
Although the Company currently does not have any specific plans, after the
offering, the Company may adopt a stock option plan which would permit the
Company to grant options to officers, directors, key employees, advisers and
consultants of the Company and the Bank. Any such plan would be subject to
shareholder approval or ratification, and the Organizers anticipate that the
number of shares issuable pursuant to such a plan would not exceed 20% of the
number of shares of Common Stock outstanding at the time the plan is adopted
(expected to be 133,000 shares if the minimum number of shares are sold in the
offering and 160,000 if the maximum number are sold). If a plan is adopted,
exercise of options under the plan could have a dilutive effect on the
shareholders' interest in the Company's earnings and book value. In addition,
the Company may issue additional shares of Common Stock or preferred stock in
the future. Any such stock offering by its nature could be dilutive to the
holdings of purchasers in this offering.
ANTI-TAKEOVER CONSIDERATIONS
The Company's Articles of Incorporation, Bylaws and the Georgia Business
Corporation Code (the "Corporation Code") contain certain provisions that
could have the effect of making it more difficult for a party to acquire, or
of discouraging a party from attempting to acquire, control of the Company
without approval of the Company's Board of Directors, including: (i) certain
provisions relating to meetings of shareholders; (ii) the ability of the Board
of Directors to issue additional shares of common stock and preferred stock
authorized in the Articles of Incorporation without shareholder approval;
(iii) certain nomination requirements for directors; (iv) the Company's
adoption of the Georgia "Fair Price" statutes; and (v) the Company's adoption
of the Georgia "Business Combination" statute. See "Description of Capital
Stock--Certain Anti-Takeover Provisions."
THE COMPANY AND THE BANK
The Company was incorporated under the laws of the State of Georgia on
February 14, 1996, for the purpose of becoming a bank holding company by
acquiring all of the capital stock of the Bank upon its formation. The Bank is
being organized as a state-chartered nonmember bank under the laws of the
State of Georgia. The Organizers of the Bank filed an application for a
charter for the Bank with the DBF and an application for insurance of the
deposits of the Bank with the FDIC on November 8, 1995 subsequently amended on
February 19, 1996. The Organizers obtained preliminary approval of the Bank's
application for charter from the DBF on June 5, 1996 and preliminary approval
of the Bank's application for deposit insurance from the FDIC on July 3, 1996.
The Company will file applications with the Federal Reserve and the DBF
seeking approval to become a bank holding company by acquiring all of the
capital stock to be issued by the Bank. If and when the Company and the Bank
receive required final regulatory approvals, the Company will use at least
$6,500,000 of the aggregate net proceeds of this offering to purchase all of
the shares of the capital stock of the Bank. See "Use of Proceeds." The
Company initially will engage in no business other than owning and managing
the Bank.
The Bank will engage in a general commercial and retail banking business,
emphasizing the needs of small- to medium-sized businesses, professional
concerns and individuals, primarily in Cumming, Georgia and the surrounding
area. The Bank will initially consist of a principal facility located in the
city of Cumming, Georgia in Forsyth County. See "Proposed Business." David H.
Denton, President and Chief Executive Officer of the Company and the Bank, has
over 30 years of banking experience, including former lending responsibilities
with
10
<PAGE>
three community banks located in Georgia, two of which were located in the
city of Cumming. See "Management." The Organizers currently anticipate that
the Bank will open for business by December 1, 1996, although no assurance can
be given that the Bank can be opened or that the projected opening date can be
met. See "Proposed Business."
The Organizers of the Bank are Catherine M. Amos, Jeffrey S. Bagley, Bill H.
Barnett, Danny M. Bennett, Michael P. Bennett, Bryan L. Bettis, Talmadge W.
Bolton, Thomas L. Bower III, Charles R. Castleberry, David H. Denton, Charles
D. Ingram, Herbert A. Lang, Jr., John P. McGruder, James J. Myers, Danny L.
Reid, Charles R. Smith, Wyatt L. Willingham and Jerry M. Wood. Additional
individuals may be added as Organizers, subject to regulatory approval. All of
the Organizers will serve as directors of the Company, and Ms. Amos and
Messrs. Bagley, D. Bennett, M. Bennett, Bolton, Denton, Ingram, Lang,
McGruder, Myers, Reid, Smith, Willingham will serve as directors of the Bank.
See "Management."
The principal executive offices of both the Company and the Bank will be
located 501 Tri-County Plaza, Highways 9 and 20, Cumming, Georgia 30130, (770)
886-9500. Pending commencement of operations, the Company's interim address
and telephone number are 425 Tribble Gap Road, Cumming, Georgia 30130
(770) 886-9500.
11
<PAGE>
THE OFFERING
GENERAL
The Company is offering for sale a minimum of 665,000 shares and a maximum
of 800,000 shares of its Common Stock at a price of $10.00 per share to raise
gross proceeds of between $6,650,000 and $8,000,000 for the Company. The
minimum purchase for any investor is 200 shares and the maximum purchase for
any investor (together with the investor's affiliates) is 5% of the offering
unless the Company, in its sole discretion, accepts a subscription for a
lesser or greater number of shares. Subscribers should be aware that
beneficial ownership of as little as 5% of the outstanding shares could
obligate the beneficial owner to comply with certain reporting and disclosure
requirements of federal and state banking and securities laws.
The Organizers intend to purchase an aggregate of at least 140,500 shares of
the Common Stock to be sold in this offering. The Organizers may subscribe for
up to 100% of the shares in the offering if necessary to help the Company
achieve the minimum subscription level necessary to release subscription
proceeds from escrow, and some Organizers may decide to purchase additional
shares even if the minimum subscription amount has been achieved. All shares
purchased by the Organizers will be purchased for investment and not with a
view to the resale of such shares and such purchases will be counted in
determining whether the minimum number of share purchases has been met.
Investors, therefore, should not consider that the sale of the specified
minimum number of shares, or in excess of that minimum, indicates that such
sales have been made to parties with no financial or other interest in the
offering, or who otherwise are applying independent investment discretion. See
"Description of Capital Stock of the Company--Shares Eligible for Future
Sale." Because purchases by the Organizers may be substantial, investors
should not place any reliance on the sale of a specified minimum offering
amount as an indication of the merits of this offering or that an Organizer's
investment decision is shared by unaffiliated investors. See "Management."
Subscriptions to purchase shares will be received through 11:59 p.m.,
Cumming, Georgia time, on December 31, 1996, unless all of the shares are
earlier sold or the offering is earlier terminated or extended by the Company.
See "Conditions to the Offering and Release of Funds." The Company reserves
the right to terminate the offering at any time or to extend the expiration
date for additional periods not to extend beyond August 31, 1997. The date the
offering terminates is referred to herein as the "Expiration Date." No written
notice of an extension of the offering period need be given prior to any
extension and any such extension will not alter the binding nature of
subscriptions already accepted by the Company. Once the Company is subject to
the reporting requirements of the Exchange Act, it will file with the
Commission quarterly and annual reports and other information and will make
such documents available to subscribers who request a copy. In addition, the
Company intends to provide quarterly communications to all subscribers which
will include information concerning any extensions of the offering. Extension
of the Expiration Date might cause an increase in the Company's organizational
and pre-opening expenses and in the expenses incurred with this offering.
Following acceptance by the Company, subscriptions will be binding on
subscribers and may not be revoked by subscribers except with the consent of
the Company. In addition, the Company reserves the right to cancel accepted
subscriptions at any time and for any reason until the proceeds of this
offering are released from escrow (as discussed in greater detail in
"Conditions to the Offering and Release of Funds" below), and the Company
reserves the right to reject, in whole or in part and in its sole discretion,
any subscription. The Company may, in its sole discretion, allocate shares
among subscribers in the event of an over subscription for the shares. In
determining which subscriptions to accept, in whole or in part, the Company
may take into account any factors it considers relevant, including the order
in which subscriptions are received, a subscriber's potential to do business
with, or to direct customers to, the Bank, and the Company's desire to have a
broad distribution of stock ownership. If the Company rejects any
subscription, or accepts a subscription but in its discretion subsequently
elects to cancel all or part of such subscription, the Company will refund
promptly the amount remitted that corresponds to $10.00 multiplied by the
number of shares as to which the subscription is rejected or canceled, without
interest. Certificates representing shares duly subscribed and paid for will
be issued by the Company promptly after the offering conditions are satisfied
and escrowed funds are delivered to the Company.
12
<PAGE>
CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS
Subscription proceeds accepted by the Company for the initial 665,000 shares
subscribed for in this offering will be promptly deposited in an escrow
account with the Escrow Agent until the conditions to this offering have been
satisfied or the offering has been terminated. The offering will be
terminated, no shares will be issued, and no subscription proceeds will be
released from escrow to the Company, unless on or before the Expiration Date:
(i) the Company has accepted subscriptions and payment in full for a minimum
of 665,000 shares; and (ii) the Company has obtained approval of the Federal
Reserve and the DBF to acquire the capital stock of the Bank and thereafter to
become a bank holding company. Any subscription proceeds accepted after
satisfaction of the conditions set forth above but before termination of this
offering will not be deposited in pre-opening escrow, but will be available
for immediate use by the Company to fund pre-opening and organizational
expenses and for working capital. It is the DBF's policy to encourage
community support and wide distribution of stock ownership of de novo banks
such as the Bank. In furtherance of that policy, the DBF will require as a
condition to granting the Bank's Charter that: (i) at least 75% of the Common
Stock be issued to local residents of the community, persons with substantial
business interests in the community or others who may reasonably be expected
to utilize the services of the Bank; and (ii) the Company will have a broad,
diversified shareholder base. The Company anticipates that it will meet such
conditions. If such conditions are not met, the Company will seek regulatory
approval from the DBF for a waiver of these requirements.
If the above conditions are not satisfied on or before the Expiration Date
or the offering is otherwise earlier terminated, accepted subscription
agreements will be of no further force or effect and the full amount of all
subscription funds will be returned promptly to subscribers without interest.
The Company will retain any interest earned on such funds to repay the
expenses incurred by the Organizers in organizing the Company and the Bank.
Any expenses not paid with such interest will be paid by the Organizers.
The Escrow Agent has not investigated the desirability or advisability of an
investment in the shares by prospective investors and has not approved,
endorsed or passed upon the merits of an investment in the shares.
Subscription funds held in escrow will be invested in interest-bearing savings
accounts, short-term United States government securities, FDIC-insured bank
deposits or such other investments as the Escrow Agent and the Company shall
agree and, if applicable, that are permissible under Rule 15c2-4 under the
Exchange Act. The Organizers do not intend to invest the subscription proceeds
held in escrow in instruments that would mature after the Expiration Date of
the offering.
If the above conditions are satisfied, the subscription amounts held in
escrow may be paid to the Company and shares issued to subscribers. Once the
Company has met the conditions for the offering, the Escrow Agreement will be
terminated, and any subscription proceeds accepted after satisfaction of the
conditions before termination of this offering will not be deposited in escrow
but will be available for immediate use by the Company to fund organizational
and pre-opening expenses and for working capital. When the subscription funds
are released to the Company, the Company will use a portion of the proceeds to
repay the Organizers the amounts advanced by them for organizational and pre-
opening expenses.
If the conditions for releasing subscription funds from escrow are met and
such funds are released, but final regulatory approval to commence banking
operations is not obtained from the DBF or the Bank does not open for any
other reason, the Board of Directors intends to propose that the shareholders
approve a plan to liquidate the Company. Upon such a liquidation, the Company
would be dissolved and the Company's net assets (generally consisting of the
amounts received in this offering plus any interest earned thereon, less the
amount of all costs and expenses incurred by the Company and the Bank,
including the salaries of employees of the Bank and other pre-opening
expenses) would be distributed to the shareholders. In such event, the Company
will have incurred numerous expenses related to the organization of the
Company and the Bank, and the amount distributed to shareholders may be
substantially less than the subscription amount, and in an extreme case,
shareholders may lose the entire amount of their investment.
13
<PAGE>
PLAN OF DISTRIBUTION
Offers and sales of the Common Stock will be made on behalf of the Company
primarily by certain of its officers and directors. The officers and directors
will receive no Commissions or other remuneration in connection with such
activities, but they will be reimbursed for reasonable expenses incurred in
the offering.
HOW TO SUBSCRIBE
Shares may be subscribed for by delivering the subscription agreement (the
"Subscription Agreement") attached hereto as Exhibit A, completed and
executed, to the Company, on or prior to the Expiration Date. Unless waived by
the Company, a minimum of 200 shares and a maximum of 5% of the shares sold in
the offering may be purchased. Subscribers should retain a copy of the
completed Subscription Agreement for their records. The subscription price is
due and payable when the Subscription Agreement is delivered. Payment must be
made in United States dollars by cash or by check, bank draft or money order
drawn to the order of The Bankers Bank, Atlanta, Georgia, Escrow Account for
Forsyth Bancshares, Inc., in the amount of $10.00 multiplied by the number of
shares subscribed for. No subscriptions may be made prior to the date that the
Registration Statement of which this Prospectus is a part is declared
effective by the Commission.
USE OF PROCEEDS
BY THE COMPANY
Upon satisfaction of all of the conditions discussed in "The Offering--
Conditions to the Offering and Release of Funds," all subscription funds held
in escrow will be released and will become capital of the Company. The gross
proceeds to the Company from the sale of the shares offered hereby will be
between $6,650,000 and $8,000,000. The Company currently plans to use up to
approximately $650,000 of the gross proceeds of the offerings to repay a loan
which the Company obtained through a line of credit with The Bankers Bank,
Atlanta, Georgia. The line of credit bears interest at the prime rate, matures
on August 1, 1997 and is guaranteed by the Organizers. The Company established
the line of credit to pay the organizational and offering expenses of the
Company and the organizational and pre-opening expenses of the Bank. The
organizational and offering expenses of the Company will consist primarily of
legal, accounting, marketing and printing expenses and filing fees, which the
Company anticipates will not exceed $100,000.
After payment of these expenses, the Company will use a minimum of
$6,500,000 and a maximum of $7,850,000 of the gross proceeds to purchase all
of the capital stock of the Bank. The Company will retain the balance of the
proceeds and initially invest such monies in United States government
securities or as a deposit with the Bank. In the long-term, the Company will
use such monies for working capital and other general corporate purposes,
including payment of expenses of the Company and the provision of additional
capital for the Bank, if necessary.
The following table sets forth the anticipated use of proceeds by the
Company based on the sale of the minimum number and maximum number of shares
in this offering.
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
OFFERING(1) OFFERING(2)
----------- -----------
<S> <C> <C>
Gross proceeds from offering.................... $ 6,650,000 $ 8,000,000
Expenses for organization and issuance and
distribution of Common Stock................... (100,000) (100,000)
Investment in capital stock of the Bank......... (6,500,000) (6,500,000)
----------- -----------
Remaining proceeds.............................. 50,000(3) 1,400,000(3)
=========== ===========
</TABLE>
- --------
(1) Assumes that 665,000 shares of Common Stock are sold in this offering.
(2) Assumes that 800,000 shares of Common Stock are sold in this offering.
(3) This amount will be used by the Company for working capital and may be
used to provide additional capital for the Bank, if necessary.
14
<PAGE>
If sufficient proceeds are available, the Company may choose to capitalize
the Bank at a level in excess of $6,500,000. If the Company raises in excess
of the minimum offering, the Company plans to retain the excess sums at the
holding company level and initially invest the sums in United States
government securities or as a deposit at the Bank. If the Company meets the
minimum subscription amount but is unable to obtain final regulatory approval
from the DBF, the FDIC or the Federal Reserve, then it is possible that the
Bank will be unable to commence banking operations and that the amount
returned to subscribers upon liquidation could be substantially less than
their original investment, and in an extreme case, subscribers could loss the
entire amount of their investment.
BY THE BANK
The Bank currently plans to use up to approximately $307,000 of the proceeds
it receives from the sale of its stock to the Company to reimburse the Company
and the Organizers for amounts advanced by the Company and the Organizers to
pay organizational and offering expenses of the Bank. Organizational expenses
of the Bank, estimated at $65,000, include consulting fees, expenses for
market analysis and feasibility studies and legal fees and expenses. Pre-
opening expenses, estimated at $105,000, include officers' and employees'
salaries and benefits (assuming the Bank opens for business on its target date
of December 1, 1996). The Bank expects to spend $67,500, $69,525, $71,611 and
$73,759 for base annual rent for the principal facility in years one through
four, respectively, due under a Sublease Agreement with NationsBank, N.A.
(South), for a total of approximately $282,400. The Bank expects to use
approximately $118,000 for the renovation and initial site preparation of the
facility. In addition, the Bank expects to use approximately $225,000 for
furniture, fixtures and equipment for the Bank's principal facility. The
balance of the proceeds to be received by the Bank and available for use in
the first year will be used for loans to customers, investments and other
general corporate purposes.
The following table depicts the anticipated use of proceeds by the Bank. All
proceeds received by the Bank will be in the form of an investment by the
Company in the Bank's capital stock. The initial amount of the Company's
initial investment will not vary based on the number of shares sold in the
offering.
<TABLE>
<S> <C>
Investment by the Company in the Bank's capital stock......... $6,500,000
Reimbursement to the Company and Organizers for amounts
advanced to the Bank for organizational and pre-opening
expenses of the Bank......................................... (477,000)
Furniture, Fixtures and Equipment............................. (225,000)
Rent, Renovations and Initial Site Preparation................ (400,400)
----------
Remaining Proceeds............................................ $5,397,600(1)
==========
</TABLE>
- --------
(1) The Bank will use the remaining proceeds of the Offering for loans to
customers, investments and other general corporate purposes.
Although the amounts set forth above provide an indication of the proposed
use of funds based on the Organizers' plans and estimates, actual expenses may
vary from the estimates. These estimates were based on assumptions that the
Organizers believed were reasonable, but as to which no assurances can be
given. The Organizers believe that the estimated minimum net proceeds from the
offering, together with funds generated from operations, will satisfy the cash
requirements of the Company and the Bank for their respective first five years
of operations and that neither the Company nor the Bank will need to raise
additional funds for operations during this period, but there can be no
assurance that this will be the case.
The Organizers have obtained a line of credit for the Company in the amount
of $650,000 with The Bankers Bank, Atlanta, Georgia to be used by the Company
for the exclusive purpose of paying expenses incurred in connection with the
organization of the Company and the Bank, this offering and the commencement
of business by the Bank. The unsecured line of credit bears interest at the
prime rate, matures on August 1, 1997 and is guaranteed by the Organizers. Any
amounts required to pay organizational, pre-opening and offering expenses that
exceed the amounts available under these lines of credit will be advanced by
the Organizers. All funds advanced by the Organizers and by the Company will
be repaid from the proceeds of this offering.
15
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1996, and the pro forma consolidated capitalization of the Company and the
Bank, as adjusted to give effect to the sale of the minimum of 665,000 shares
in this offering. The Bank has established December 1, 1996, as the target
date for opening the Bank; accordingly, the "As Adjusted" column reflects
estimated offering expenses of the Company and the Bank through December 1,
1996.
<TABLE>
<CAPTION>
JUNE 30,
SHAREHOLDERS' EQUITY 1996 AS ADJUSTED
-------------------- -------- -----------
<S> <C> <C>
Common Stock, no par value per share; 10,000,000 shares
authorized; five shares issued and outstanding(1);
665,000 shares issued and outstanding as adjusted
(minimum offering)(2)................................... $ 50 $6,550,000
Preferred Stock, no par value per share; 1,000,000 shares
authorized; no shares issued and outstanding............ 0 0
Deficit accumulated during the offering stage(3)......... (913) (105,000)
----- ----------
Total shareholders' equity(4)............................ $(863) $6,445,000
===== ==========
</TABLE>
- --------
(1) James J. Myers, Chairman of the Board of the Company and the Bank was
issued five shares upon organization of the Company which will be redeemed
for $10.00 per share (the price at which they were issued) upon the first
issuance of shares offered hereby.
(2) The expenses of the offering will be charged against this account. These
expenses are estimated to be approximately $100,000, and this amount has
been used in the calculation of the amount shown in the "As Adjusted"
column.
(3) The deficit results from the expensing of pre-opening expenses, estimated
to be approximately $105,000 for both the Company and the Bank, $65,000 of
organizational costs and up to $343,000 of capitalizable property costs
for renovations to the principal facility and for the purchase of
furniture, fixtures and equipment are expected to be incurred by the
Company and the Bank prior to the commencement of operations (assumed to
occur on December 1, 1996). However, no assurances can be given that the
Bank will open by this time or at all, and the amount of offering expenses
and organizational costs could ultimately be greater than currently
estimated. As of June 30, 1996, the Company had incurred approximately
$58,000 of organizational costs. Offering expenses will be charged against
the no par value Common Stock. Organizational expenses will be deferred
and amortized over a five-year period. Furniture, fixtures and equipment
will be capitalized and amortized over the life of the lease or over the
estimated useful life of the asset. The Company will retain any interest
earned on subscription payments held in escrow prior to conclusion of the
offering. Such interest will be used to help offset the deficit
accumulated during the offering stage, but the figures shown above do not
include any estimate of the interest which may be earned.
(4) The shareholders are likely to experience additional dilution due to
operating losses expected to be incurred during the initial years of the
Bank's operations.
16
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for the Company for the period from
inception until June 30, 1996, is derived from the consolidated financial
statements and other data of the Company.
<TABLE>
<CAPTION>
AS OF AND FOR THE
PERIOD ENDED
JUNE 30, 1996
-----------------
<S> <C>
INCOME STATEMENT DATA:
Noninterest expense......................................... $ 913
Net (loss).................................................. (913)
BALANCE SHEET DATA:
Cash........................................................ $ 10,050
Due from organizers......................................... 25,520
Deferred offering expenses.................................. 5,000
Other assets................................................ 5,625
Organizational costs capitalized............................ 57,942
Due to organizers........................................... 105,000
(Deficit) accumulated during development stage.............. (913)
Shareholders' deficit....................................... (863)
WEIGHTED AVERAGE SHARES OUTSTANDING........................... 5
PER SHARE DATA:
Net loss.................................................... $ (183)
Shareholders deficit per share.............................. $ (173)
</TABLE>
DIVIDEND POLICY
The Board of Directors expects initially to follow a policy of retaining any
earnings to provide funds to operate and expand the business. Consequently, it
is unlikely that any cash dividends will be paid in the near future. The
Company's ability to pay any cash dividends to its shareholders in the future
will depend primarily on the Bank's ability to pay dividends to the Company.
In order to pay dividends to the Company, the Bank must comply with the
requirements of all applicable laws and regulations. See "Supervision and
Regulation--The Bank--Dividends" and "Supervision and Regulation--Capital
Regulations." In addition to the availability of funds from the Bank, the
future dividend policy of the Company is subject to the discretion of the
Board of Directors and will depend upon a number of factors, including future
earnings, financial condition, cash needs and general business conditions. If
dividends should be declared in the future, the amount of such dividends
presently cannot be estimated and it cannot be known whether such dividends
would continue for future periods.
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PROPOSED BUSINESS
GENERAL
The Company was incorporated as a Georgia corporation on February 14, 1996,
primarily to own and control all of the capital stock of the Bank. The Company
initially will engage in no business other than owning and managing the Bank.
The Organizers have chosen a holding company structure under which the Company
will acquire all of the capital stock of the Bank because, in the judgment of
the Organizers, the holding company structure provides flexibility that would
not otherwise be available.
The holding company structure can assist the Bank in maintaining its
required capital ratios because, subject to compliance with Federal Reserve
Board debt guidelines, the Company may borrow money and contribute the
proceeds to the Bank as primary capital. Moreover, a holding company may
engage in certain non-banking activities that the Federal Reserve Board has
deemed to be closely related to banking. See "Supervision and Regulation."
Although the Company has no present intention of engaging in any of these
activities, if circumstances should lead the Company's management to believe
that there is a need for these services in the Bank's market area and that
such activities could be profitably conducted, management of the Company would
have the flexibility of commencing these activities upon filing a notice or
application with the Federal Reserve.
The Bank is being organized as a state-chartered nonmember bank under the
laws of the State of Georgia and, subject to final regulatory approval, will
engage in a commercial banking business from its office in the Forsyth County
Area, with deposits insured by the FDIC. The Bank will not be a member of the
Federal Reserve System. The Bank may not commence business until the DBF
issues a charter for the Bank and the FDIC grants deposit insurance to the
Bank. There is no assurance that the Bank will be successful in receiving
final regulatory approval and satisfying any conditions that may be imposed
upon the Bank by the DBF or the FDIC prior to the commencement of its
business.
MARKETING FOCUS
Most of the banks in the Forsyth County Area are now local branches of large
regional banks. Although size gives the larger banks certain advantages in
competing for business from large corporations, including higher lending
limits and the ability to offer services in other areas of Georgia and the
Forsyth County Area, the Organizers believe that there is a void in the
community banking market in the Forsyth County Area and believe that the Bank
can successfully fill this void. As a result, the Company generally will not
attempt to compete for the banking relationships of large corporations, but
will concentrate its efforts on small- to medium-sized businesses and on
individuals.
The Bank plans to advertise aggressively, using all forms of media, as well
as direct mail, to target market segments and will emphasize the Company's
local ownership, community bank nature and ability to provide more
personalized service than its competition. The Organizers, as long-time
residents and business people in the Forsyth County Area, have determined the
credit needs of the area through personal experience and communications with
their business colleagues. The Organizers believe that the proposed community
bank focus of the Bank is likely to succeed in this market. The Organizers
believe that the area will react favorably to the Bank's emphasis on service
to small businesses, professional concerns and individuals. However, no
assurances in this respect can be given.
LOCATION AND SERVICE AREA
The Bank will engage in a general commercial and retail banking business,
emphasizing the needs of small- to medium-sized businesses, professional
concerns and individuals, primarily in Cumming, Georgia and the surrounding
area, including Forsyth County. The principal executive offices of both the
Company and the Bank are located at 501 Tri-County Plaza, Highways 9 and 20,
Cumming, Georgia 30130. Pending commencement of operations, the Company's
interim address and telephone number are 425 Tribble Gap Road, Cumming,
Georgia 30130, (770) 886-9500. See "Facilities."
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The Bank's primary service area will be Forsyth County, Georgia, which is
located in North Georgia. Forsyth County had an estimated population of 52,700
in 1994 and a median projected effective buying income per household of
$49,035 in 1994. Cumming is the only city in the county and may be reached via
major highways including Georgia Highways 9, 20, 141, 306, 369 and 400.
The principal components of the economy of Forsyth County are wholesale and
retail trade, manufacturing, services and construction industries. According
to the Cumming/Forsyth County Chamber of Commerce, the largest employers in
the county include Tyson Foods, Inc., Siemans Industrial Automation and
Scientific Games, Inc. Dozens of manufacturing industries operate in Forsyth
County and industrial and business developments may expand and establish
additional facilities in Forsyth County.
DEPOSITS
The Bank intends to offer a full range of deposit services that are
typically available in most banks and savings and loan associations, including
checking accounts, NOW accounts, savings accounts and other time deposits of
various types, ranging from daily money market accounts to longer-term
certificates of deposit. The transaction accounts and time certificates will
be tailored to the Bank's principal market area at rates competitive to those
offered in the Forsyth County Area. In addition, the Bank intends to offer
certain retirement account services, such as Individual Retirement Accounts
("IRAs"). All deposit accounts will be insured by the FDIC up to the maximum
amount allowed by law (generally, $100,000 per depositor, subject to
aggregation rules). The Bank intends to solicit these accounts from
individuals, businesses, associations, organizations and governmental
authorities.
LENDING ACTIVITIES
General. The Bank intends to emphasize a range of lending services,
including real estate, commercial and consumer loans, to small- to medium-
sized businesses, professional concerns and individuals that are located in or
conduct a substantial portion of their business in the Bank's market area.
Credit Risk. There are certain risks inherent in making all loans. A
principal economic risk inherent in making loans is the creditworthiness of
the borrower. Other risks inherent in making loans include risks with respect
to the period of time over which loans may be repaid, risks resulting from
changes in economic and industry conditions, risks inherent in dealing with
individual borrowers and, in the case of a collateralized loan, risks
resulting from uncertainties as to the future value of the collateral.
Management will maintain an allowance for loan losses based on, among other
things, an evaluation of economic conditions and regular reviews of
delinquencies and loan portfolio quality. Based upon such factors, management
will make various assumptions and judgments about the ultimate collectibility
of the loan portfolio and provide an allowance for potential loan losses based
upon a percentage of the outstanding balances and for specific loans when
their ultimate collectibility is considered questionable. Certain specific
risks with regard to each category of loans are described under the separate
subheading for each type of loan below.
Real Estate Loans. The Organizers expect that one of the primary components
of the Bank's loan portfolio will be loans secured by first or second
mortgages on real estate. These loans will generally consist of commercial
real estate loans, construction and development loans and residential real
estate loans (but will exclude home equity loans, which are classified as
consumer loans). Loan terms generally will be limited to five years or less,
although payments may be structured on a longer amortization basis. Interest
rates may be fixed or adjustable, and will more likely be fixed in the case of
shorter term loans. The Bank will generally charge an origination fee.
Management will attempt to reduce credit risk in the commercial real estate
portfolio by emphasizing loans on owner-occupied office and retail buildings
where the loan-to-value ratio, established by independent appraisals, does not
exceed 80%. In addition, the Bank may require personal guarantees of the
principal owners of the property backed with a review by the Bank of the
personal financial statements of the principal owners. The principal economic
risk associated with each category of anticipated loans, including real estate
loans, is the creditworthiness of the Bank's borrowers. The risks associated
with real estate loans vary
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with many economic factors, including employment levels and fluctuations in
the value of real estate. The Bank will compete for real estate loans with a
number of bank competitors which are well-established in the Forsyth County
Area. Most of these competitors have substantially greater resources and
lending limits than the Bank. As a result, the Bank may have to charge lower
interest rates to attract borrowers. See "--Competition" below. The Bank may
also originate loans for sale into the secondary market. The Bank intends to
limit interest rate risk and credit risk on these loans by locking the
interest rate for each loan with the secondary investor and receiving the
investor's underwriting approval prior to originating the loan.
Commercial Loans. The Bank will make loans for commercial purposes in
various lines of businesses. Commercial loans include both secured and
unsecured loans for working capital (including inventory and receivables),
business expansion (including acquisition of real estate and improvements) and
purchases of equipment and machinery. Equipment loans will typically be made
for a term of five years or less at fixed or variable rates, with the loan
fully amortized over the term and secured by the financed equipment and with a
loan-to-value ratio of 80% or less. Working capital loans will typically have
terms not exceeding one year and will usually be secured by accounts
receivable, inventory or personal guarantees of the principals of the
business. For loans secured by accounts receivable or inventory, principal
will typically be repaid as the assets securing the loan are converted into
cash, and in other cases principal will typically be due at maturity. The
principal economic risk associated with each category of anticipated loans,
including commercial loans, is the creditworthiness of the Bank's borrowers.
The risks associated with commercial loans vary with many economic factors,
including the economy in the Forsyth County Area. The well-established banks
in the Forsyth County Area will make proportionately more loans to medium- to
large-sized businesses than the Bank. Many of the Bank's anticipated
commercial loans will likely be made to small- to medium-sized businesses
which may be less able to withstand competitive, economic and financial
conditions than larger borrowers.
Consumer Loans. The Bank will make a variety of loans to individuals for
personal and household purposes, including secured and unsecured installment
and term loans, home equity loans and lines of credit and revolving lines of
credit such as credit cards. These loans typically will carry balances of less
than $25,000 and, in the case of non-revolving loans, will be amortized over a
period not exceeding 48 months or will be 90-day term loans, in each case
bearing interest at a fixed rate. The revolving loans will typically bear
interest at a fixed rate and require monthly payments of interest and a
portion of the principal balance. The underwriting criteria for home equity
loans and lines of credit will generally be the same as applied by the Bank
when making a first mortgage loan, as described above, and home equity lines
of credit will typically expire 10 years or less after origination. As with
the other categories of loans, the principal economic risk associated with
consumer loans is the creditworthiness of the Bank's borrowers, and the
principal competitors for consumer loans will be the established banks in the
Forsyth County Area.
Loan Approval and Review. The Bank's loan approval policies will provide for
various levels of officer lending authority. When the amount of aggregate
loans to a single borrower exceeds that individual officer's lending
authority, the loan request will be considered and approved by an officer with
a higher lending limit or the officers' loan committee. The Bank will
establish an officers' loan committee that has lending limits, and any loan in
excess of this lending limit will be approved by the loan committee. The Bank
will not make any loans to any director, officer or employee of the Bank
unless the loan is approved by the Bank's Board of Directors, or a committee
thereof, and is made on terms not more favorable to such person than would be
available to a person not affiliated with the Bank.
Lending Limit. Under the Georgia Financial Institutions Code (the "Financial
Institutions Code"), the Bank is limited in the amount it can loan to a single
borrower (including the borrower's related interests) by the amount of the
Bank's statutory capital base. The limit is 15% of the statutory capital base
unless each loan in excess of the 15% is approved by the Bank's Board of
Directors, or a committee thereof, and unless the entire amount of the loan is
secured by good collateral or other ample security. In no event, however, may
the aggregate amount loaned to any borrower exceed 25% of the Bank's statutory
capital base, subject to certain exceptions
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relating to the type and adequacy of the collateral for such loan. These
limits will increase and decrease as the Bank's statutory capital base
increases and decreases. Unless the Bank is able to sell participations in its
loans to other financial institutions, the Bank will not be able to meet all
the lending needs of loan customers requiring aggregate extensions of credit
above these limits.
OTHER BANKING SERVICES
Other anticipated bank services include cash management services, safe
deposit boxes, travelers checks, direct deposits of payroll and social
security checks and automatic drafts for various accounts. The Bank plans to
become associated with a shared network of automated teller machines that may
be used by Bank customers throughout Georgia and other regions. The Bank does
not plan to exercise trust powers during its initial years of operation. The
Bank may in the future offer a full-service trust department, but cannot do so
without the prior approval of the DBF.
COMPETITION
The banking business is highly competitive. The Bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, mortgage banking firms, consumer finance companies, credit
unions, securities brokerage firms, insurance companies, money market mutual
funds and other financial institutions operating in the Forsyth County Area
and elsewhere. As of June 30, 1996, there were six commercial banks, with 14
commercial bank branches, no savings institutions and one credit union
operating in Forsyth County. A number of these competitors are well-
established in the Forsyth County Area. Most of these institutions have
substantially greater resources and lending limits than the Bank and offer
certain services, such as extensive and established branch networks and trust
services, that the Bank either does not expect to provide or will not provide
initially. As a result of these competitive factors, the Bank may have to pay
higher rates of interest to attract deposits. In addition, non-depository
institution competitors are generally not subject to the extensive regulations
applicable to the Company and the Bank. Recent federal legislation permits
commercial banks to establish operations nationwide, further increasing
competition from out-of-state financial institutions. Furthermore, recently
enacted Georgia legislation greatly diminishes the historical legal
restrictions on establishing branch banks across county lines in Georgia, thus
creating further opportunities for other financial institutions to compete
with the Bank. Generally, from July 1, 1996 to July 1, 1998, any bank located
in Georgia may branch into any three additional Georgia counties regardless of
the location of the parent bank. After July 1, 1998, banks may establish
branch banks statewide without limitation. In addition, on-line computer
banking via the Internet or otherwise may also become an increasing source of
competition for community financial institutions such as the Bank. As a result
of these competitive factors, the Bank may have to pay higher rates of
interest to attract deposits. The Organizers believe that the Bank will be
able to compete effectively with these institutions in the Bank's proposed
markets, but no assurances can be given in this regard.
FACILITIES
Principal Executive Offices. Both the Company's and the Bank's principal
offices initially will be located at 425 Tribble Gap Road, Cumming, Georgia
30130. The proposed site of the Bank's principal facility will be located at
501 Tri-County Plaza, Highways 9 and 20, Cumming, Georgia 30130. The Company
will lease the principal facility consisting of approximately 4,500 square
feet under a Sublease Agreement, as amended, with NationsBank, N.A. (South),
the initial term of which expires August 31, 2000. The base annual rent under
the sublease is approximately $67,500, $69,525, $71,611 and $73,759 in years
one through four, respectively. The Sublease Agreement is contingent upon the
receipt of final government regulatory approvals. The Company intends to
complete building renovations and initial site preparation of the facility, at
a cost of approximately $118,000, increasing the facility size to at least
6,000 square feet. Renovations of this facility are expected to begin after
completion of the offering. Furniture, fixtures and equipment for the facility
are expected to cost approximately $225,000. The Company believes that the
facilities will adequately serve the Bank's needs for its first several years
of operation. See "Use of Proceeds--By the Bank."
21
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EMPLOYEES
The Company anticipates that, upon commencement of operations, the Bank will
have approximately 15 full-time employees. The Company will not have any
employees other than its officers, none of whom will initially receive any
remuneration for their services to the Company.
LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company or the Bank or
any of their properties are subject.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of June 30, 1996, the Company had total assets aggregating approximately
$104,137. These assets consisted principally of cash of $10,050, amounts due
from organizers of $25,520, organizational costs of $57,942, deferred offering
expenses of $5,000 and other assets of $5,625. The organizational costs relate
to the organization of the Company and the Bank and will be capitalized and
amortized over a five-year period. The Company's total liabilities at this
date were $105,000 and consisted of amounts due to Organizers. The Company had
a shareholder's deficit of $863 at June 30, 1996.
The Company had a net loss from February 14, 1996 (the Company's inception
date), through June 30, 1996, of $913. This loss resulted from expenses
incurred in connection with activities related to the initial organization of
the Company and the Bank and includes expenses incurred on behalf of the
Company by the Organizers prior to the Company's incorporation date. These
activities included, without limitation, the preparation and filing of an
application with the DBF for a state nonmember bank charter and the
preparation and filing of a registration statement for the offering of the
Common Stock.
Assuming that the offering is successfully completed, the Company's initial
activities will be devoted to organizing the Bank and opening and commencing
the business of the Bank. These organizational activities will include
completing all required steps for approval from the DBF for a state nonmember
bank charter, furnishing and equipping the proposed facility, hiring qualified
personnel to work at the Bank, conducting public relations activities on
behalf of the Bank, developing prospective business contacts for the Bank and
the Company and taking other actions necessary for a successful bank opening.
Because the Company is in the organizational stage, it has had no operations
from which to generate revenues and, until the Bank opens for business, the
Company's only source of revenues will be interest earned on subscriptions.
Because these revenues will be less than the expenses incurred in connection
with activities related to the initial organization of the Company and the
Bank, the Company will incur a net loss through the date of the opening of the
Bank. In addition, the Company anticipates incurring continuing operating
losses during the Bank's early stages of operations.
A minimum of $6,500,000 of the proceeds of this offering will be used to
capitalize the Bank and the remainder will be used to pay organizational
expenses of the Company and provide working capital, including additional
capital for investment in the Bank, if needed. See "Use of Proceeds." The
Company believes that this amount will be sufficient to fund the activities of
the Bank in its initial stages of operation and that the Bank will generate
sufficient income from operations to fund its activities on an ongoing basis
for at least five years. In addition, the Company believes that income from
the operations of the Bank will be sufficient to fund the activities of the
Company on an ongoing basis for at least five years. However, there can be no
assurance that either the Bank or the Company will achieve any particular
level of profitability. In the event the proceeds of the offering are
insufficient to provide the minimum initial funding needed for the Bank to
begin operations, the Company will have to seek alternative sources of
funding. Management has not identified any such alternatives.
Once the Bank opens, the largest component of the Company's net income will
be its net interest income, which will be the difference between the income
earned on assets and interest paid on deposits and borrowings used to support
such assets. Net interest income is determined by the rates earned on the
Company's interest-earning assets, the rates paid on its interest-bearing
liabilities, the relative amounts of interest-earning assets and interest-
bearing liabilities, and the degree of mismatch and the maturity and repricing
characteristics of its interest-earning assets and interest bearing
liabilities. Because the Bank may initially pay above average rates on
deposits and charge below average rates on loans, the Company's net interest
income may be less during the Bank's initial years of operation than that of
its competitors. However, the Organizers believe that any such rate
concessions will be temporary and, even during the first several years of the
Bank's operations, will not have a significant impact on the Company's
operating results.
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As described above under "Proposed Business--Lending Activities," the Bank
intends to offer primarily real estate, commercial and consumer loans to
small- to medium-sized businesses, professional concerns and individuals in
the Bank's market area. Each of these categories of loans will present
different risks for the Bank which could adversely affect the Company's
operating results in any period. See "Proposed Business--Lending Activities"
for a discussion of these lending risks.
SUPERVISION AND REGULATION
The Company and the Bank are subject to state and federal banking laws and
regulations which impose specific requirements or restrictions on and provide
for general regulatory oversight with respect to virtually all aspects of
operations. These laws and regulations are generally intended to protect
depositors, not shareholders. To the extent that the following summary
describes statutory or regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change
in applicable laws or regulations may have a material effect on the business
and prospects of the Company. Beginning with the enactment of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") and
following with the FDICIA, which was enacted in 1991, numerous additional
regulatory requirements have been placed on the banking industry in the past
five years, and additional changes have been proposed. The banking industry is
also likely to change significantly as a result of the passage of the Riegle-
Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate
Banking Act"). The operations of the Company and the Bank may be affected by
legislative changes and the policies of various regulatory authorities. The
Company is unable to predict the nature or the extent of the effect on its
business and earnings that fiscal or monetary policies, economic control, or
new federal or state legislation may have in the future.
THE COMPANY
Because it will own the outstanding capital stock of the Bank, the Company
will be a bank holding company within the meaning of the Federal Bank Holding
Company Act of 1956 (the "BHCA") and the Financial Institutions Code. The
activities of the Company will also be governed by the Glass-Steagall Act of
1933 (the "Glass-Steagall Act").
The BHCA. Under the BHCA, the Company will be subject to periodic
examination by the Federal Reserve and will be required to file periodic
reports of its operations and such additional information as the Federal
Reserve may require. The Company's and the Bank's activities are limited to
banking, managing or controlling banks; furnishing services to or performing
services for its subsidiaries and engaging in other activities that the
Federal Reserve determines to be so closely related to banking, managing or
controlling banks as to be a proper incident thereto.
Investments, Control and Activities. With certain limited exceptions, the
BHCA requires every bank holding company to obtain the prior approval of the
Federal Reserve before: (i) acquiring substantially all the assets of any
bank; (ii) acquiring direct or indirect ownership or control of any voting
shares of any bank if after such acquisition it would own or control more than
5% of the voting shares of such bank (unless it already owns or controls the
majority of such shares); or (iii) merging or consolidating with another bank
holding company.
In addition, and subject to certain exceptions, the BHCA and the Change in
Bank Control Act, together with regulations thereunder, require Federal
Reserve approval (or, depending on the circumstances, no notice of
disapproval) prior to any person or company acquiring "control" of a bank
holding company, such as the Company. Control is conclusively presumed to
exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to
exist if a person acquires 10% or more, but less than 25%, of any class of
voting securities and either the company has registered securities under
Section 12 of the Exchange Act (which the Company would likely be required to
do with respect to the Common Stock once it has more than 500 shareholders of
record) or no other person will own a greater percentage of that class of
voting securities immediately after the transaction. The regulations provide a
procedure for challenge of the rebuttable control presumption.
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<PAGE>
Under the BHCA, a bank holding company is generally prohibited from engaging
in, or acquiring direct or indirect control of, more than 5% of the voting
shares of any company engaged in nonbanking activities, unless the Federal
Reserve Board, by order or regulation, has found those activities to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. Some of the activities that the Federal Reserve Board has
determined by regulation to be proper incidents to the business of a bank
holding company include making or servicing loans and certain types of leases,
engaging in certain insurance and discount brokerage activities, performing
certain data processing services, acting in certain circumstances as a
fiduciary or investment or financial adviser, owning savings associations and
making investments in certain corporations or projects designed primarily to
promote community welfare.
The Federal Reserve Board will impose certain capital requirements on the
Company under the BHCA, including a minimum leverage ratio and a minimum ratio
of "qualifying" capital to risk-weighted assets. These requirements are
described below under "--Capital Regulations." Subject to its capital
requirements and certain other restrictions, the Company will be able to
borrow money to make a capital contribution to the Bank, and such loans may be
repaid from dividends paid from the Bank to the Company (although the ability
of the Bank to pay dividends will be subject to regulatory restrictions as
described below in "--The Bank--Dividends"). The Company will also be able to
raise capital for contribution to the Bank by issuing securities without
having to receive regulatory approval, subject to compliance with federal and
state securities laws.
Source of Strength. In accordance with Federal Reserve Board policy, the
Company is expected to act as a source of financial strength to the Bank and
to commit resources to support the Bank in circumstances in which the Company
might not otherwise do so. Under the BHCA, the Federal Reserve Board may
require a bank holding company to terminate any activity or relinquish control
of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the
Federal Reserve Board's determination that such activity or control
constitutes a serious risk to the financial soundness or stability of any
subsidiary depository institution of the bank holding company. Further,
federal bank regulatory authorities have additional discretion to require a
bank holding company to divest itself of any bank or nonbank subsidiary if the
agency determines that divestiture may aid the depository institution's
financial condition.
The Financial Institutions Code. All Georgia bank holding companies must
register with the DBF under the Financial Institutions Code. A registered bank
holding company must provide the DBF with information with respect to the
financial condition, operations, management and inter-company relationships of
the holding company and its subsidiaries. The DBF may also require such other
information as is necessary to keep itself informed about whether the
provisions of Georgia law and the regulations and orders issued thereunder by
the DBF have been complied with, and the DBF may make examinations of any bank
holding company and its subsidiaries.
Under the Financial Institutions Code, it is unlawful without the prior
approval of the DBF: (i) for any bank holding company to acquire direct or
indirect ownership or control of more than 5% of the voting shares of the
bank; (ii) for any bank holding company or subsidiary thereof, other than a
bank, to acquire all or substantially all of the assets of a bank; or (iii)
for any bank holding company to merge or consolidate with any other bank
holding company. It is also unlawful for any bank holding company to acquire
direct or indirect ownership or control of more than 5% of the voting shares
of any bank unless such bank has been in existence and continuously operating
or incorporated as a bank for a period of five years or more prior to the date
of application to the DBF for approval of such acquisition. In addition, in
any such acquisition by an existing bank holding company, the initial banking
subsidiary of such bank holding company must have been incorporated for not
less than two years before the holding company can acquire another bank.
The Financial Institutions Code and applicable provisions of federal law
allow interstate banking by permitting bank holding companies to acquire
Georgia banking organizations so long as the Georgia-based banks to be
acquired have been in existence and continuously operated as banks for five
years or more. Georgia bank holding companies are likewise permitted to
acquire banking organizations in other states, subject to similar aging
requirements. Effective June 1, 1977, banks located in every state (other than
Texas) may merge or
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consolidate with Georgia-based banks that satisfy the five-year age
requirement. Following such mergers or consolidations, the resulting bank may
expand in each state where its predecessors were located, subject to the
branching laws of that particular state. Those acquisitions and transactions
are generally subject to federal and Georgia approval as described above. See
"The Bank--Branching."
Glass-Steagall Act. The Company will also be restricted in its activities by
the provisions of the Glass-Steagall Act, which will prohibit the Company from
owning subsidiaries that are engaged principally in the issue, flotation,
underwriting, public sale or distribution of Securities. The interpretation,
scope and application of the provisions of the Glass-Steagall Act currently
are being considered and reviewed by regulators and legislators, and the
interpretation and application of those provisions have been challenged in the
federal courts.
THE BANK
General. Subject to receipt of the necessary approvals of its pending
applications, the Bank will operate as a state-chartered nonmember bank
organized under the laws of the State of Georgia and subject to examination by
the DBF. Deposits in the Bank will be insured by the FDIC up to a maximum
amount (generally $100,000 per depositor, subject to aggregation rules). The
DBF and the FDIC will regulate or monitor virtually all areas of the Bank's
operations, including security devices and procedures, adequacy of
capitalization and loss reserves, loans, investments, borrowings, deposits,
mergers, issuances of securities, payment of dividends, interest rates payable
on deposits, interest rates or fees chargeable on loans, establishment of
branches, corporate reorganizations, maintenance of books and records and
adequacy of staff training to carry on safe lending and deposit gathering
practices. The DBF will require the Bank to maintain certain capital ratios
and will impose limitations on the Bank's aggregate investment in real estate,
bank premises, furniture and fixtures. The Bank will be required by the DBF to
prepare quarterly reports on the Bank's financial condition and to conduct an
annual audit of its financial affairs in compliance with minimum standards and
procedures prescribed by the DBF.
Under FDICIA, all insured institutions must undergo regular on site
examinations by their appropriate banking agency. The cost of examinations of
insured depository institutions and any affiliates may be assessed by the
appropriate agency against each institution or affiliate as it deems necessary
or appropriate. Insured institutions are required to submit annual reports to
the FDIC and the appropriate agency (and state supervisor when applicable).
FDICIA also directs the FDIC to develop with other appropriate agencies a
method for insured depository institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. FDICIA
also requires the federal banking regulatory agencies to prescribe, by
regulation, standards for all insured depository institutions and depository
institution holding companies relating, among other things, to: (i) internal
controls, information systems and audit systems; (ii) loan documentation;
(iii) credit underwriting; (iv) interest rate risk exposure; and (v) asset
quality.
State nonmember banks and their holding companies which have been chartered
or registered or have undergone a change in control within the past two years
or which have been deemed by the DBF or the Federal Reserve Board,
respectively, to be troubled institutions must give the DBF or the Federal
Reserve Board, respectively, 30 days prior notice of the appointment of any
senior executive officer or director. Within the 30-day period, the DBF or the
Federal Reserve Board, as the case may be, may approve or disapprove any such
appointment. The Company and the Bank will meet the criteria which trigger
this additional approval during the first two years after they are registered
or chartered, respectively.
Deposit Insurance. The FDIC establishes rates for the payment of premiums by
federally insured banks and thrifts for deposit insurance. A separate Bank
Insurance Fund ("BIF") and Savings Association Insurance Fund ("SAIF") are
maintained for commercial banks and thrifts, respectively, with insurance
premiums from the industry used to offset losses from insurance payouts when
banks and thrifts fail. Due to the high rate of failures in recent years, the
fees that commercial banks and thrifts pay to BIF and SAIF have increased.
Since 1993, insured depository institutions, such as the Bank, have paid for
deposit insurance under a risk-based premium system. Under this system, until
mid-1995 depositor institutions paid to BIF or SAIF from $0.23 to
26
<PAGE>
$0.31 per $100 of deposits depending on its capital levels and risk profile,
as determined by its primary federal regulator on a semi-annual basis. Once
the BIF reached its legally mandated reserve ratio in mid-1995, the FDIC
substantially lowered premiums for well-capitalized BIF-insured banks. The
current range of premiums for BIF-insured banks ranges from $2,000 per year to
$.31 per $100 of deposits. During its initial months of operations, it is
likely that the Bank's assessment rate will be $2,000 per year. Increases in
deposit insurance premiums will increase the Bank's cost of funds, and there
can be no assurance that deposit insurance premiums will not increase in the
future.
Transactions With Affiliates and Insiders. The Bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which place limits on
the amount of loans or extensions of credit to, or investments in or certain
other transactions with, affiliates and on the amount of advances to third
parties collateralized by the securities or obligations of affiliates. The
aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of a bank's capital and surplus and, as to all affiliates
combined, to 20% of a bank's capital and surplus. Furthermore, within the
foregoing limitations as to amount, each covered transaction must meet
specified collateral requirements. Compliance is also required with certain
provisions designed to avoid the taking of low quality assets.
The Bank is also subject to the provisions of Section 23B of the Federal
Reserve Act which, among other things, prohibit an institution from engaging
in certain transactions with certain affiliates unless the transactions are on
terms substantially the same, or at least as favorable to such institution or
its subsidiaries as those prevailing at the time for comparable transactions
with nonaffiliated companies. The Bank is subject to certain restrictions on
extensions of credit to executive officers, directors, certain principal
shareholders and their related interests. Such extensions of credit: (i) must
be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties; and (ii) must not involve more than the normal risk of
repayment or present other unfavorable features.
Dividends. The principal source of the Company's cash revenues will come
from dividends received from the Bank. Under the Financial Institutions Code,
cash dividends on the Bank's common stock may be declared and paid only out of
its retained earnings, and dividends may not be declared at any time at which
the Bank's paid-in capital and appropriated retained earnings do not, in
combination, equal at least 20% of its capital stock account. In addition, the
DBF's current rules and regulations require prior DBF approval before cash
dividends may be declared and paid if: (i) the Bank's ratio of equity capital
to adjusted total assets is less than 6%; (ii) the aggregate amount of
dividends declared or anticipated to be declared in that calendar year exceeds
50% of the Bank's net profits, after taxes but before dividends, for the
previous calendar year; or (iii) the percentage of the Bank's assets
classified as adverse as to repayment or recovery by the DBF at the most
recent examination of the Bank exceeds 80% of the Bank's equity capital as
reflected at such examination. In addition, the Federal Reserve Board has
stated that bank holding companies should refrain from or limit dividend
increases or reduce or eliminate dividends under circumstances in which the
bank holding company fails to meet minimum capital requirements or in which
its earnings are impaired. Current federal law would prohibit, except under
certain circumstances and with prior regulatory approval, an insured
depository institution, such as the Bank from paying dividends or making any
other capital distribution if, after making the payment or distribution, the
institution would be considered "undercapitalized," as the term is defined in
the applicable regulations.
Branching. The Bank currently has no plans to establish a branch office.
Recently, Georgia legislation greatly diminishes the historical legal
restrictions on establishing branch banks across county lines in Georgia.
Under Georgia law currently in effect, generally, from July 1, 1996 to July 1,
1998, any bank located in Georgia may branch into three additional Georgia
counties regardless of the location of the parent bank. After July 1, 1998,
banks may establish branch banks statewide without limitation. In addition,
the Company, with prior regulatory approval, and following the passage of 24
months from the date of incorporation of the Bank, will be permitted to
acquire interests in and operate banks throughout the state and under current
Georgia law, any bank acquired by the Company could be merged into the Bank
and its offices could then be operated as branches of the Bank. Although the
Bank currently has no definitive plans for opening any branch offices,
depending on profitability and community needs, other branches may be
considered in the future.
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<PAGE>
Community Reinvestment Act. The Community Reinvestment Act requires that, in
connection with examinations of financial institutions within their respective
jurisdictions, the Federal Reserve, the FDIC and the DBF shall evaluate the
record of the financial institutions in meeting the credit needs of their
local communities, including low and moderate income neighborhoods, consistent
with the safe and sound operation of those institutions. These factors are
also considered in evaluating mergers, acquisitions and applications to open a
branch or facility.
Other Regulations. Interest and certain other charges collected or
contracted for by the Bank are subject to state usury laws and certain federal
laws concerning interest rates. The Bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as: (i) the
federal Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers; (ii) the Home Mortgage Disclosure Act of 1975, requiring
financial institutions to provide information to enable the public and public
officials to determine whether a financial institution will be fulfilling its
obligation to help meet the housing needs of the community it serves; (iii)
the Equal Credit Opportunity Act, prohibiting discrimination on the basis of
race, creed or other prohibited factors in extending credit; (iv) the Fair
Credit Reporting Act of 1978, governing the use and provision of information
to credit reporting agencies; (v) the Fair Debt Collection Act, governing the
manner in which consumer debts may be collected by collection agencies; and
(vi) the rules and regulations of the various federal agencies charged with
the responsibility of implementing such federal laws. The deposit operations
of the Bank also are subject to the Right to Financial Privacy Act, which
imposes a duty to maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative subpoenas of financial
records, and the Electronic Funds Transfer Act and Regulation E issued by the
Federal Reserve Board to implement that act, which governs automatic deposits
to and withdrawals from deposit accounts and customers' rights and liabilities
arising from the use of automated teller machines and other electronic banking
services.
CAPITAL REGULATIONS
The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make
regulatory capital requirements more sensitive to differences in risk profiles
among banks and bank holding companies and account for off-balance sheet
items. The guidelines are minimums, and the federal regulators have noted that
banks and bank holding companies contemplating significant expansion programs
should not allow expansion to diminish their capital ratios and should
maintain ratios in excess of the minimums. Neither the Company nor the Bank
has received any notice indicating that either entity will be subject to
higher capital requirements. The current guidelines require all bank holding
companies and federally-regulated banks to maintain a minimum risk-based total
capital ratio equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1
capital includes common shareholders' equity, qualifying perpetual preferred
stock and minority interests in equity accounts of consolidated subsidiaries,
but excludes goodwill and most other intangibles and excludes the allowance
for loan and lease losses. Tier 2 capital includes the excess of any preferred
stock not included in Tier 1 capital, mandatory convertible Securities, hybrid
capital instruments, subordinated debt and intermediate term-preferred stock
and general reserves for loan and lease losses up to 1.25% of risk-weighted
assets.
Under these guidelines, banks' and bank holding companies' assets are given
risk-weights of 0%, 20%, 50% or 100%. In addition, certain off-balance sheet
items are given credit conversion factors to convert them to asset equivalent
amounts to which an appropriate risk-weight will apply. These computations
result in the total risk-weighted assets. Most loans are assigned to the 100%
risk category, except for first mortgage loans fully secured by residential
property and, under certain circumstances, residential construction loans,
both of which carry a 50% rating. Most investment securities are assigned to
the 20% category, except for municipal or state revenue bonds, which have a
50% rating and direct obligations of or obligations guaranteed by the United
States Treasury or United States government agencies, which have a 0% rating.
The federal bank regulatory authorities have also implemented a leverage
ratio, which is equal to Tier 1 capital as a percentage of average total
assets less intangibles, to be used as a supplement to the risk-based
guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which
28
<PAGE>
a bank holding company may leverage its equity capital base. The minimum
required leverage ratio for top-rated institutions is 3%, but most
institutions are required to maintain an additional cushion of at least 100 to
200 basis points.
FDICIA established a new capital-based regulatory scheme designed to promote
early intervention for troubled banks which requires the FDIC to choose the
least expensive resolution of bank failures. The new capital-based regulatory
framework contains five categories of compliance with regulatory capital
requirements, including "well-capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." To qualify as a "well-capitalized" institution, a bank must
have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of no less
than 6% and a total risk-based capital ratio of no less than 10%, and the bank
must not be under any order or directive from the appropriate regulatory
agency to meet and maintain a specific capital level. Initially, the
Organizers expect the Bank to qualify as "well-capitalized."
Under the FDICIA regulations, the applicable agency can treat an institution
as if it were in the next lower category if the agency determines (after
notice and an opportunity for hearing) that the institution is in an unsafe or
unsound condition or is engaging in an unsafe or unsound practice. The degree
of regulatory scrutiny of a financial institution will increase, and the
permissible activities of the institution will decrease, as it moves downward
through the capital categories. Institutions that fall into one of the three
undercapitalized categories may be required to: (i) submit a capital
restoration plan; (ii) raise additional capital; (iii) restrict their growth,
deposit interest rates, and other activities; (iv) improve their management;
(v) eliminate management fees; or (vi) divest themselves of all or a part of
their operations. Bank holding companies controlling financial institutions
can be called upon to boost the institutions' capital and to partially
guarantee the institutions' performance under their capital restoration plans.
These capital guidelines can affect the Company in several ways. After
completion of this offering, the Company's capital levels will initially be
more than adequate. However, rapid growth, poor loan portfolio performance or
poor earnings performance or a combination of these factors, could change the
Company's capital position in a relatively short period of time, making an
additional capital infusion necessary.
FDICIA requires the federal banking regulators to revise the risk-based
capital standards to provide for explicit consideration of interest-rate risk,
concentration of credit risk and the risks of non-traditional activities. It
is uncertain what effect these regulations, when implemented, would have on
the Company and the Bank.
Failure to meet these capital requirements would mean that a bank would be
required to develop and file a plan with its primary federal banking regulator
describing the means and a schedule for achieving the minimum capital
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital
adequacy, such as a branch or merger application, unless the bank could
demonstrate a reasonable plan to meet the capital requirement within a
reasonable period of time.
The DBF will require the Bank to maintain a ratio (the "Primary Capital
Ratio") of total capital (which is essentially Tier 1 capital plus the
allowance for loan losses) to total assets (defined as balance sheet assets
plus the allowance for loan losses) of at least 6%. In addition, the Bank
expects that, in accordance with DBF policy and prior practice, the Bank will
be required to maintain a Primary Capital Ratio of 8% during its first three
years of operation.
ENFORCEMENT POWERS
FIRREA expanded and increased civil and criminal penalties available for use
by the federal regulatory agencies against depository institutions and certain
"institution-affiliated parties" (primarily including management, employees
and agents of a financial institution and independent contractors such as
attorneys, accountants and others, who participate in the conduct of the
financial institution's affairs). These practices can include the failure of
an institution to timely file required reports or the filing of false or
misleading information
29
<PAGE>
or the submission of inaccurate reports. Civil penalties may be as high as
$1,000,000 a day for such violations. Criminal penalties for some financial
institution crimes have been increased to 20 years. In addition, regulators
are provided with greater flexibility to commence enforcement actions against
institutions and institution-affiliated parties. Possible enforcement actions
include the termination of deposit insurance. Furthermore, FIRREA expanded the
appropriate banking agencies' power to issue cease-and-desist orders that may,
among other things, require affirmative action to correct any harm resulting
from a violation or practice, including restitution, reimbursement,
indemnifications or guarantees against loss. A financial institution may also
be ordered to restrict its growth, dispose of certain assets, rescind
agreements or contracts, or take other actions as determined by the ordering
agency to be appropriate.
RECENT LEGISLATIVE DEVELOPMENTS
The Interstate Banking Act was passed by Congress in 1994 and provides for
unrestricted interstate bank mergers, unrestricted interstate acquisition of
banks by bank holding companies, and interstate de novo branching by banks.
The States, however, may opt in or opt out of several of such Act's
provisions. As a result of these laws and proposed legislation, the number of
competitors in the Company's market may increase. However, the Company
believes it can compete effectively in the market and that the legislation
will not have a material adverse impact on the Company or the Bank. From time
to time, various bills are introduced in the United States Congress and the
Georgia legislature with respect to the regulation of financial institutions.
Certain of these proposals, if adopted, could significantly change the
regulation of banks and the financial services industry. The Company cannot
predict whether any of these proposals will be adopted or, if adopted, how
these proposals would affect the Company. See also "The Company--The Financial
Institutions Code" and "--The Bank--Branching."
EFFECT OF GOVERNMENTAL MONETARY POLICIES
The earnings of the Bank will be affected by domestic economic conditions
and the monetary and fiscal policies of the United States government and its
agencies. The Federal Reserve Board's monetary policies have had, and will
likely continue to have, an important impact on the operating results of
commercial banks through its power to implement national monetary policy in
order, among other things, to curb inflation or combat a recession. The
monetary policies of the Federal Reserve Board have major effects upon the
levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation
of the discount rate on borrowings of member banks and the reserve
requirements against member bank deposits. It is not possible to predict the
nature or impact of future changes in monetary and fiscal policies.
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<PAGE>
MANAGEMENT
GENERAL
The following table sets forth the respective names, ages, positions with
the Company and the Bank, and anticipated subscriptions of the Organizers. The
Organizers may elect to purchase more than the shares indicated below.
<TABLE>
<CAPTION>
ANTICIPATED SUBSCRIPTION
---------------------------------
PERCENTAGE PERCENTAGE
POSITION WITH NUMBER OF OF MINIMUM OF MAXIMUM
NAME (AGE) COMPANY/BANK(1) SHARES(2) OFFERING(3) OFFERING(4)
---------- ------------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Catherine M. Amos (44)................ Organizer 8,000 1.2% 1.0%
Jeffrey S. Bagley (34)................ Organizer and Vice
Chairman of the
Board 5,000 0.8% 0.6%
Bill H. Barnett (55).................. Organizer 10,000 1.5% 1.3%
Danny M. Bennett (35)................. Organizer 5,000 0.8% 0.6%
Michael P. Bennett (51)............... Organizer 7,500 1.1% 0.9%
Bryan L. Bettis (34).................. Organizer 5,000 0.8% 0.6%
Talmadge W. Bolton (62)............... Organizer 10,000 1.5% 1.3%
Thomas L. Bower III (44).............. Organizer 10,000 1.5% 1.3%
Charles R. Castleberry (42)........... Organizer 5,000 0.8% 0.6%
David H. Denton (51).................. Organizer,
President, Chief
Executive Officer 5,000 0.8% 0.6%
Charles D. Ingram (53)................ Organizer and
Secretary 5,000 0.8% 0.6%
Herbert A. Lang, Jr. (44)............. Organizer 10,000 1.5% 1.3%
John P. McGruder (54)................. Organizer 10,000 1.5% 1.3%
James J. Myers (46)................... Organizer and
Chairman of the
Board 5,000 0.8% 0.6%
Danny L. Reid (43).................... Organizer 5,000 0.8% 0.6%
Charles R. Smith (67)................. Organizer 25,000 3.8% 3.1%
Wyatt L. Willingham (43).............. Organizer 5,000 0.8% 0.6%
Jerry M. Wood (47).................... Organizer 5,000 0.8% 0.6%
------- ---- ----
TOTAL................................. 140,500 21.6% 17.5%
======= ==== ====
</TABLE>
- --------
(1) The Organizers will also be serving as directors of the Company. The
Organizers who will also be serving as directors of the Bank are Ms. Amos
and Messrs. Bagley, D. Bennett, M. Bennett, Bolton, Denton, Ingram, Lang,
McGruder, Myers, Reid, Smith and Willingham. David H. Denton will serve as
President and Chief Executive Officer of both the Bank and the Company.
(2) All of such purchases will be at a price of $10.00 per share, the same
price at which shares are being offered to the public. No person is
expected to own more than 5% of the shares of the Common Stock immediately
after the offering. However, Organizers may purchase up to 100% of the
shares in the offering if necessary for the Company to achieve the minimum
capital requirement and also may decide to purchase additional shares in
the offering even if the minimum offering is fully subscribed. Any shares
purchased by the Organizers in excess of their original commitment will be
purchased for investment and not with a view to the resale of such shares.
Although each Organizer has agreed with the other Organizers that he will
subscribe for the number of shares indicated above, neither the Organizers
nor any other subscriber will be obligated to purchase shares except
pursuant to a valid subscription agreement executed after receipt of this
Prospectus. This table includes shares which are expected to be
beneficially owned by the Organizers upon completion of the offering.
(3) Assumes that the minimum number of 665,000 shares are sold in this
offering.
(4) Assumes that the maximum number of 800,000 shares are sold in this
offering.
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<PAGE>
Biographical information concerning the Organizers is set forth below. None
of the Organizers are related, except that John P. McGruder's wife is a first
cousin to Catherine M. Amos.
Catherine M. Amos is a native of Forsyth County and is the President of Amos
Properties, Inc. and the Secretary/Treasurer of Amos Plumbing & Electrical
Co., Inc. Ms. Amos is currently the Chairman of Lake Lanier Islands Authority,
as well as a member of several other civic, social and community
organizations.
Jeffrey S. Bagley is a native of Forsyth County, Georgia and is a partner in
the law firm of Boling, Rice, Bettis, Bagley & Martin.
Bill H. Barnett is a native of Forsyth County and is a former member of the
Georgia House of Representatives and the Forsyth County Board of
Commissioners. Mr. Barnett is the President of Bill H. Barnett, Inc., a real
estate investment and development company in Cumming, Georgia.
Danny M. Bennett is a native of Forsyth County, Georgia and is the President
of GeoCorp Development Co., Inc., a land development company in Cumming,
Georgia. Mr. Bennett is also Vice President and a construction engineer for
Georgia North Contracting, Inc.
Michael P. Bennett is a resident of Forsyth County, Georgia and is on the
Board of Directors for Forsyth County Farm Bureau. Mr. Bennett is also the
Chief Financial Officer and Secretary of 5 Bennett Farms, Inc. and served on
the Forsyth County Commission from 1987 to 1994.
Bryan L. Bettis is a native of Forsyth County, Georgia and is the Vice
President of Midway Building Supply, Inc. in Alpharetta, Georgia. Mr. Bettis
is also the President of Bettis Construction, Inc., a residential construction
company, and a member of the South Forsyth Rotary Club.
Talmadge W. Bolton is a native of Forsyth County, Georgia and is the Chief
Executive Officer of Bolton's Truck Parts, Inc. He is a member of Lafayette
Masonic Lodge No. 44 and a board member of Forsyth County Department of Family
& Children Services and Forsyth County Zoning Department.
Thomas L. Bower III has been a resident of Gainesville, Georgia for 21
years. Mr. Bower is the Secretary/Treasurer of Clipper Petroleum, Inc. and a
partner in B&B Associates, a real estate and convenience store partnership.
Mr. Bower also serves on the Board of Directors for the Hall County Humane
Society.
Charles R. Castleberry is a native of Forsyth County and is currently
employed by Progressive Lighting, Inc. Mr. Castleberry is a member of South
Forsyth Rotary Club, a member and past director of the Cumming Chamber of
Commerce and past Chairman of the Board for the Forsyth County Planning and
Development Board.
David H. Denton is a resident of Forsyth County, Georgia and has over 30
years of banking experience in the State of Georgia. Mr. Denton is a graduate
of the University of Georgia and the Graduate School of Banking of the South.
He is a member of the Rotary Club of South Forsyth County, Boy Scouts of
America, Band Boosters of Forsyth Central High School and South Forsyth High
School and an alumni of Leadership Forsyth.
Charles D. Ingram is a native of Forsyth County, Georgia and is co-owner,
Secretary and Treasurer of Ingram-Stafford Ford-Mercury, Inc. He has served on
the advisory board of directors for Wachovia Bank and is a graduate of the
Graduate School of Banking of the South.
Herbert A. Lang, Jr. is a long-time resident of Forsyth County and the owner
of Lang Signs. Mr. Lang is a member of the South Forsyth Rotary Club.
John P. McGruder is a resident of Cumming, Georgia and co-owner of Crestview
Animal Hospital. Mr. McGruder serves as a member of the Forsyth County Humane
Society.
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<PAGE>
James J. Myers is a resident of Cumming, Georgia and is the owner of James
J. Myers, CPA, PC. Mr. Myers serves as a member of South Forsyth Rotary Club,
Cumming Forsyth Optimist Club and Leadership Forsyth County Georgia.
Danny L. Reid is a native of Forsyth County, Georgia and is a co-owner of
Reid & Reid Grading and Pipeline, Inc., a grading contractor and developer.
Charles R. Smith is a resident of Forsyth County and presides as a Judge of
the Municipal Court of Cumming, Georgia. Mr. Smith is a retired former partner
of Smith & Smith, Attorneys and was an organizer, director and former Chairman
of the Board of Peoples Bank of Forsyth County.
Wyatt L. Willingham is a resident of Cumming, Georgia and is the Vice
President and General Manager of North Georgia Fast Foods, Inc. Mr. Willingham
is a member of the Mount Zion Lodge and the Yaarab Temple.
Jerry M. Wood is a long-time resident of Forsyth County and is President of
Jerry Wood Hardware Co., doing business as Wood Ace Hardware in Alpharetta,
Georgia. Mr. Wood is a founding member of the South Forsyth Rotary Club and
has served as Chairman of Finance for the Midway United Methodist Church.
DIRECTOR COMPENSATION
David H. Denton and the Company have entered into an Employment Agreement
pursuant to which Mr. Denton will serve as the President and Chief Executive
Officer of the Company and the Bank. The Employment Agreement provides for a
starting salary of $85,000 per annum, plus medical insurance premiums until
the Bank opens for business. Thereafter, Mr. Denton will be paid a salary of
$98,000 plus his yearly medical insurance premium. Mr. Denton will be eligible
to participate in any management incentive program of the Bank or any long-
term equity incentive program and will be eligible for grants of stock options
and other awards thereunder. Additionally, Mr. Denton will participate in the
Bank's retirement, welfare and other benefit programs and is entitled to
reimbursement for automobile expenses and travel and business expenses. The
Company will maintain a term life insurance policy on Mr. Denton providing for
death benefits in the amount of $600,000 payable to the Organizers and
$400,000 payable to Mr. Denton's family.
The Employment Agreement provides for an initial term of five years and can
be extended by the Bank at the end of each year of the term for an additional
year, so that the remaining term shall continue to be five years. If the
Company terminates Mr. Denton's employment without cause or if Mr. Denton's
employment is terminated due to a sale, merger or dissolution of the Company
or the Bank, the Company will be obligated to continue his salary and bonus
for the first twelve months thereafter plus one-half of his salary for the
second twelve months thereafter. Furthermore, the Company must remove any
restrictions on outstanding incentive awards so that all such awards vest
immediately and the Company must continue to provide his life insurance and
medical benefits until he reaches the age of 65.
In addition, the Employment Agreement provides that following termination of
his employment with the Bank and for a period of twelve months thereafter, Mr.
Denton may not: (i) be employed in the banking business as a director, officer
at the vice president level or higher, or organizer or promoter of, or provide
executive management services to, any financial institution within Forsyth
County; (ii) solicit major customers of the Bank for the purpose of providing
financial services; or (iii) solicit employees of the Bank for employment.
The Organizers do not intend for the Company or the Bank to pay directors'
fees until such time as the Bank is cumulatively profitable. However, the
Company and the Bank reserve the right to pay directors' fees.
COMMITTEES OF THE BOARD
The directors receive no compensation for attending Board meetings or
meetings of committees of the Board. There are currently no committees of the
Company's Board, however, the Bank will have several committees. It is
anticipated that Messrs. Ingram, McGruder, Myers and Willingham will serve as
the Loan
33
<PAGE>
Committee of the Bank, which will oversee loan review activity and will review
and pass on all unsecured credit in excess of $50,000 and secured credit in
excess of $150,000. It is also anticipated that Messrs. Bagley, D. Bennett,
Lang, Myers and Reid will serve as the Investment Committee of the Bank, which
will review and pre-approve all purchases and sales of Securities and
administer asset and liability policies. In addition, it is anticipated that
Ms. Amos and Messrs. Michael P. Bennett, Bolton, Myers and Smith will serve on
as the Audit Committee of the Bank, which will receive all examination and
audit reports and will be responsible for taking corrective action where
necessary and for overseeing compliance with regulatory requirements.
No director or executive officer of the Bank or Company is related to any
other director or executive officer, except that John P. McGruder's wife is a
first cousin to Catherine Amos.
STOCK OPTION PLAN
Although the Company has no specific plans, the Company may adopt a Stock
Option Plan pursuant to which officers, directors, key employees and advisors
of the Company and the Bank may be granted options to purchase shares of the
Company's stock as compensation for past services or as incentive for services
to be rendered. The Plan has not yet been adopted, and if adopted by the Board
of Directors, will be submitted to the shareholders of the Company for
approval or ratification. The Organizers contemplate that the number of shares
of the Company's Common Stock authorized to be issued pursuant to any stock
option plan will not exceed 20% of the shares to be issued by the Company in
this offering (133,000 shares if the minimum number of shares are sold in the
offering and 160,000 if the maximum number are sold). Exercise of any such
options could have a dilutive effect on the shareholders' interest in the
Company's earnings and book value. In the future, it is possible that the
Company could issue additional shares of its Common Stock. Any such stock
offering by its nature could be dilutive to the holdings of purchasers in this
offering.
CERTAIN TRANSACTIONS
The Organizers have set up a partnership, FCO Partners ("FCO"), which
provides the Company with the necessary funds to operate and carry on the
business of organizing the Company and the Bank. The Organizers have
contributed a total of $105,000 to FCO as of June 30, 1996. The advanced funds
are not callable by the Organizers, but are to be repaid from the proceeds of
this Offering. The Company and the Bank expect to have banking and other
transactions in the ordinary course of business with Organizers, directors and
officers of the Company and the Bank and their affiliates, including members
of their families or corporations, partnerships or other organizations in
which such Organizers, officers or directors have a controlling interest, on
substantially the same terms (including price, or interest rates and
collateral) as those prevailing at the time for comparable transactions with
unrelated parties. Such transactions are not expected to involve more than the
normal risk of collectibility nor present other unfavorable features to the
Company and the Bank. Loans to individual directors and officers must also
comply with the Bank's lending policies and statutory lending limits, and
directors with a personal interest in any loan application will be excluded
from the consideration of such loan application. The Company intends for all
of its transactions with Organizers or other affiliates of the Company or the
Bank to be on terms no less favorable to the Company than could be obtained
from an unaffiliated third party and to be approved by a majority of the
Company's disinterested directors.
EXCULPATION AND INDEMNIFICATION
The Articles of Incorporation of the Company contain a provision which
eliminates the liability of a director to the Company or its shareholders for
monetary damages for breach of the duty of care or any other duty as a
director. This provision does not eliminate such liability to the extent the
director engaged in willful misconduct or a knowing violation of criminal law
or of any federal or state securities law, including, without limitation, laws
proscribing insider trading or manipulation of the market for any security.
The Bylaws of the Company require the Company to indemnify any person who
was, is, or is threatened to be made a defendant or respondent in any
threatened, pending or completed action, suit or proceeding, whether
34
<PAGE>
civil, criminal, administrative or investigative, by reason of service by such
person as a director of the Company or the Bank or any other corporation which
he served as such at the request of the Company. Except as noted in the next
paragraph, directors are entitled to be indemnified against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by the
director in connection with the proceeding. Directors are also entitled to
have the Company advance any such expenses prior to final disposition of the
proceeding, upon delivery of a written affirmation by the director of his good
faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to repay the amounts advanced if it is
ultimately determined that the standard of conduct has not been met.
Under the Bylaws, indemnification will be disallowed if it is established
that the director: (i) appropriated, in violation of his duties, any business
opportunity of the Company; (ii) engaged in willful misconduct or a knowing
violation of law; (iii) permitted any unlawful distribution; or (iv) derived
an improper personal benefit.
The Board of Directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors,
subject to all of the accompanying conditions and obligations. The Board of
Directors has extended or intends to extend indemnification rights to all of
its executive officers.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
GENERAL
The authorized capital stock of the Company consists of 10,000,000 shares of
Common Stock, no par value per share, and 1,000,000 shares of preferred stock,
no par value per share (the "Preferred Stock"). The following summary
describes the material terms of the Company's capital stock. Reference is made
to the Articles of Incorporation of the Company, which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part, for a
detailed description of the provisions thereof summarized below.
COMMON STOCK
Holders of shares of the Common Stock are entitled to receive such dividends
as may from time to time be declared by the Board of Directors out of funds
legally available therefor. The Company does not plan to declare any dividends
in the foreseeable future. See "Dividend Policy." Holders of Common Stock are
entitled to one vote per share on all matters on which the holders of Common
Stock are entitled to vote and do not have any cumulative voting rights.
Shareholders have no preemptive, conversion, redemption or sinking fund
rights. In the event of a liquidation, dissolution or winding-up of the
Company, holders of Common Stock are entitled to share equally and ratably in
the assets of the Company, if any, remaining after the payment of all debts
and liabilities of the Company and the liquidation preference of any
outstanding Preferred Stock. The outstanding shares of Common Stock are, and
the shares of Common Stock offered by the Company hereby when issued will be,
fully paid and nonassessable. The rights, preferences and privileges of
holders of Common Stock are subject to any classes or series of Preferred
Stock that the Company may issue in the future.
There currently is no market for the shares and, although the Company has
filed a registration statement with the Commission to register the issuance of
the Common Stock in the offering under the Securities Act, it is not likely
that any trading market will develop for the shares in the future. There are
no present plans for the Common Stock to be traded on any stock exchange or in
the over-the-counter market.
PREFERRED STOCK
The Articles provide that the Board of Directors is authorized, without
further action by the holders of the Common Stock, to provide for the issuance
of shares of Preferred Stock in one or more classes or series and to fix the
designations, powers, preferences and relative, participating, optional and
other rights, qualifications, limitations and restrictions thereof, including
the dividend rate, conversion rights, voting rights, redemption price and
liquidation preference and to fix the number of shares to be included in any
such classes or series. Any
35
<PAGE>
Preferred Stock so issued may rank senior to the Common Stock with respect to
the payment of dividends or amounts upon liquidation, dissolution or winding-
up, or both. In addition, any such shares of Preferred Stock may have class or
series voting rights. Upon completion of this offering, the Company will not
have any shares of Preferred Stock outstanding. Issuances of Preferred Stock,
while providing the Company with flexibility in connection with general
corporate purposes, may, among other things, have an adverse effect on the
rights of holders of Common Stock, and in certain circumstances such issuances
could have the effect of decreasing the market price of the Common Stock. The
Company has no present plan to issue any shares of Preferred Stock.
CERTAIN ANTI-TAKEOVER CONSIDERATIONS
The provisions of the Company's Articles of Incorporation and Bylaws and the
Corporation Code summarized in the following paragraphs may be deemed to have
anti-takeover effects and may delay, defer or prevent a tender offer or
takeover attempt that a shareholder might consider to be in such shareholder's
best interest, including those attempts that might result in a premium over
the market price for the shares held by shareholders, and may make removal of
management more difficult.
Authorized but Unissued Stock. The authorized but unissued shares of Common
Stock will be available for future issuance without shareholder approval.
These additional shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of authorized but
unissued and unreserved Common Stock may enable the Company's Board of
Directors to issue shares to persons friendly to current management, which
could render more difficult or discourage any attempt to obtain control of the
Company by means of a proxy contest, tender offer, merger or otherwise, and
thereby protect the continuity of the Company's management.
Preferred Stock. The Company's Board of Directors will have the ability to
issue up to 1,000,000 shares of Preferred Stock, no par value per share, with
such preferences, limitations and relative rights as they may determine,
without obtaining shareholder approval. Any such shares of Preferred Stock may
have voting rights. The existence of this Preferred Stock may impede the
takeover of the Company without the approval of the Company's Board of
Directors by enabling the Company's Board of Directors to issue shares to
persons friendly to current management, which could render more difficult or
discourage any attempt to gain control of the Company through a proxy contest,
tender offer, merger or otherwise. In addition, the issuance of shares of
Preferred Stock with voting rights may have an adverse effect on the rights of
holders of Common Stock, and in certain circumstances such issuances of
Preferred Stock could decrease the market price of the Common Stock.
Georgia "Fair Price" and "Business Combination" Statutes. Pursuant to
Sections 9.6 and 9.7 of its Bylaws, the Company has elected to adopt Georgia's
"Fair Price" statute as set forth in Sections 14-2-1110 through 14-2-1113 of
the Corporation Code and the "Business Combination" statute as set forth in
Sections 14-2-1131 through 14-2-1133 of the Corporation Code. Subject to
certain exclusions summarized below, the Corporation Code requires that a
"Business Combination" with an "Interested Shareholder" shall be: (i)
unanimously approved by the continuing directors who must constitute at least
three members of the Board of Directors at the time of such approval; or (ii)
recommended by at least two-thirds of the continuing directors and approved by
a majority of the shareholders excluding the Interested Shareholder. In
addition, subject to certain exclusions summarized below, Section 14-2-1132 of
the Corporation Code prohibits any "interested shareholder" from engaging in a
"business combination" with a Georgia corporation for five years following the
date such person became an interested shareholder.
An "interested shareholder" generally includes: any person who is the
beneficial owner of 10% or more of the voting power of the outstanding voting
shares of the corporation or any person who is an affiliate of the corporation
and who was the beneficial owner of 10% or more of the voting power of the
outstanding shares of the corporation at any time within two years before the
date on which such person's status as an interested shareholder is determined,
and the affiliates of such person. Subject to certain exceptions, a "business
combination" includes, among other things: (i) any merger, consolidation,
share exchange or any sale, transfer or other disposition (or series of
related sales or transfers) of assets of the Company having an aggregate book
36
<PAGE>
value of 10% or more of the Company's net assets (measured as of the end of
the most recent fiscal quarter), with an interested shareholder of the Company
or any other corporation which is or, after giving effect to such business
combination, becomes an affiliate of any such interested shareholder; (ii) the
liquidation or dissolution of the Company; (iii) the receipt by an interested
shareholder of any benefit from any loan, advance, guarantee, pledge, tax
credit or other financial benefit from the Company, other than in the ordinary
course of business; and (iv) certain other transactions involving the issuance
or reclassification of securities of the Company which produce the result that
5% or more of the total equity shares of the Company, or of any class or
series thereof, is owned by an interested shareholder. An interested
shareholder may not receive a direct or indirect benefit, except
proportionately as a shareholder, or any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or other tax advantages
provided by the corporation or its subsidiaries, either in anticipation of or
in connection with such business combination or otherwise.
Section 14-2-1132 does not apply to a business combination if: (i) before a
person became an interested shareholder, the board of directors of the
corporation approved either the transaction in which the interested
shareholder became an interested shareholder or the business combination; (ii)
upon consummation of the transaction that resulted in the person becoming an
interested shareholder, the interested shareholder owned at least 90% of the
voting stock of the corporation outstanding at the time the transaction
commenced (other than certain excluded shares); or (iii) following a
transaction in which the person became an interested shareholder, the business
combination is approved by the holders of a majority of the voting stock of
the corporation not owned by the interested shareholder and other excluded
shares.
Certain Nomination Requirements. Pursuant to Section 3.8 of its Bylaws, the
Company has established certain nomination requirements for an individual to
be elected as a director of the Company at any annual or special meeting of
the shareholders. Those requirements include, but are not limited to, the
requirement that the nominating shareholder provide the Company: (i) notice of
any proposed director within certain time frames; (ii) the name and certain
biographical information on the nominee; and (iii) the notice be accompanied
by a sworn or certified statement by the shareholder which indicates that the
nominee has consented to the nomination and that the shareholder believes that
the nominee will stand for election and will serve if elected. The chairman of
any meeting of the shareholders may, for good cause shown and with proper
regard for the orderly conduct of the meeting, waive in whole or in part the
operation of Section 3.8 of the Company's Bylaws. These provisions could
reduce the likelihood that a third party could nominate and elect individuals
to serve on the Company's Board of Directors.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have a minimum of 665,000
and a maximum of 800,000 shares of Common Stock outstanding. The shares sold
in this offering will be freely tradable, without restriction or registration
under the Securities Act, except for shares purchased by "affiliates" of the
Company, which will be subject to resale restrictions under the Securities
Act. An affiliate of the issuer is defined in Rule 144 under the Securities
Act as a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with the
issuer. Rule 405 under the Securities Act defines the term "control" to mean
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the person whether through the
ownership of voting Securities, by contract or otherwise. Directors of the
Company and the Bank will likely be deemed to be affiliates. These Securities
held by affiliates may be sold without registration in accordance with the
provisions of Rule 144 or another exemption from registration.
In general, under Rule 144, an affiliate of the Company or a person holding
restricted shares may sell, within any three-month period, a number of shares
no greater than 1% of the then outstanding shares of the Common Stock or the
average weekly trading volume of the Common Stock during the four calendar
weeks preceding the sale, whichever is greater. Rule 144 also requires that
the Securities must be sold in "brokers' transactions," as defined in the
Securities Act, and the person selling the Securities may not solicit orders
or make any payment in connection with the offer or sale of Securities to any
person other than the broker who executes the order to sell
37
<PAGE>
the Securities. This requirement may make the sale of the Common Stock by
affiliates of the Company pursuant to Rule 144 difficult if no trading market
develops in the Common Stock. Rule 144 also requires persons holding
restricted Securities to hold the shares for at least two years prior to sale.
The Commission has proposed to reduce the two-year holding period of Rule 144
to one year. However, no assurances can be given that such proposal will be
adopted, or will be adopted in the form proposed.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Alston & Bird, Atlanta, Georgia.
EXPERTS
The financial statements of the Company dated June 30, 1996, and for the
period from February 14, 1996 (inception), until June 30, 1996, have been
audited by Evans, Porter, Bryan & Co., independent certified public
accountants, as stated in their report appearing elsewhere herein, and have
been so included in reliance on the report of such firm given upon their
authority as an expert in accounting and auditing.
38
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Accountant's Report.......................................... F-2
Financial Statements:
Balance Sheet as of June 30, 1996...................................... F-3
Statement of Operations for the Period of February 14, 1996 (Inception)
to June 30, 1996...................................................... F-4
Statement of Changes in Shareholders' Equity for the Period of February
14, 1996 (Inception) to June 30, 1996................................. F-5
Statement of Cash Flows for the Period of February 14, 1996 (Inception)
to June 30, 1996...................................................... F-6
Notes to Financial Statements.......................................... F-7-9
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Forsyth Bancshares, Inc.
We have audited the accompanying balance sheet of Forsyth Bancshares, Inc.
(a development stage corporation) as of June 30, 1996, and the related
statements of operations, changes in shareholder's equity and cash flows for
the period from February 14, 1996 (inception) to June 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Forsyth Bancshares, Inc.
as of June 30, 1996 and the results of its operations and its cash flows from
February 14, 1996 (inception) to June 30, 1996 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Forsyth Bancshares, Inc. will continue as a going concern. As discussed in
note 1 to the financial statements, the Company is in the organization stage
and has not commenced operations. Also, as discussed in note 1, the Company's
future operations are dependent on obtaining capital through an initial stock
offering and obtaining the necessary regulatory approvals. These factors and
the expense associated with development of a new banking institution raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are described in note 8. The
financial statements do not include any adjustments relating to the
recoverability of reported asset amounts or the amounts of liabilities that
might result from the outcome of this uncertainty.
Evans, Porter, Bryan & Co.
Atlanta, Georgia
August 10, 1996
F-2
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
JUNE 30, 1996
<TABLE>
<S> <C>
ASSETS
Cash................................................................. $ 10,050
Due from organizers.................................................. 25,520
Organization costs................................................... 57,942
Deferred offering expenses........................................... 5,000
Other assets......................................................... 5,625
--------
$104,137
========
LIABILITIES AND SHAREHOLDER'S EQUITY
Due to organizers.................................................... $105,000
--------
Commitments and Contingencies
Shareholder's equity:
Preferred stock, no par value; 1,000,000 shares authorized; no
shares issued or outstanding...................................... --
Common stock, no par value; 10,000,000 shares authorized; 50 shares
issued and outstanding............................................ 50
Deficit accumulated during the development stage................... (913)
--------
Total shareholder's equity....................................... (863)
--------
$104,137
========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 14, 1996 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<S> <C>
Net loss, consisting of other operating expenses....................... $ 913
=======
Net loss per common share.............................................. $182.60
=======
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
FOR THE PERIOD FROM FEBRUARY 14, 1996 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
DURING THE
PREFERRED COMMON DEVELOPMENT
STOCK STOCK STAGE TOTAL
--------- ------ ----------- -----
<S> <C> <C> <C> <C>
Proceeds from the sale of organizational
shares.................................... $-- 50 -- 50
Net loss................................... -- -- (913) (913)
---- --- ---- ----
Balance, June 30, 1996..................... $-- 50 (913) (863)
==== === ==== ====
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 14, 1996 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss........................................................... $ (913)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Increase in other assets......................................... (5,625)
--------
Net cash provided by used activities........................... (6,538)
--------
Cash flows from investing activities:
Increase in due from organizers.................................. (25,520)
Organization costs................................................. (57,942)
Deferred offering expenses......................................... (5,000)
--------
Net cash used by investing activities.......................... (88,462)
--------
Cash flows from financing activities:
Increase in due to organizers.................................... 105,000
Proceeds from sale of organization shares............................ 50
--------
Net cash provided by financing activities...................... 105,050
--------
Net increase in cash and cash equivalents............................ 10,050
Cash at beginning of period.......................................... --
--------
Cash at end of period................................................ $ 10,050
========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Forsyth Bancshares, Inc. (the "Company") was incorporated for the purpose of
becoming a bank holding company. The Company intends to acquire 100% of the
outstanding common stock of The Citizens Bank of Forsyth County (the "Bank"),
which will operate in the Cumming/Forsyth County area. The organizers of the
Bank have received preliminary regulatory approval to charter the Bank with
the Department of Banking and Finance and the Federal Deposit Insurance
Corporation. Provided that the application is approved timely and necessary
capital is raised, it is expected that the operations will commence on
December 1, 1996. The Company intends to file an application to become a bank
holding company with the Federal Reserve Bank of Atlanta.
Operations through June 30, 1996 relate primarily to expenditures by the
organizers for incorporating and organizing the Company. All expenditures by
the organizers are considered expenditures of the Company.
The Company plans to raise between $6,650,000 and $8,000,000 through an
offering of its common stock at $10 per share. The organizers expect to
subscribe for a minimum of approximately $1,405,000 of the Company's common
stock.
Upon chartering of the Bank and approval of the Company as a bank holding
company, the Company and its Bank subsidiary will assume certain obligations
from the organizers, including the lease obligation on the building and
certain organization costs and offering expenses. Upon the successful
completion of the sale of common stock, the organizers will be reimbursed from
the proceeds from the offering; if the offering is not successful, all of
these expenses will be absorbed by the organizers and will not become an
obligation of the Company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Flows
For purposes of reporting cash flows, cash consists of amounts due from
banks.
Organization Costs
Costs incurred for the organization of the Company and the Bank (consisting
principally of legal, accounting, consulting and incorporation fees) are being
capitalized and will be amortized over five years. Amortization of the
organization costs will begin when banking operations commence.
Deferred Offering Expenses
Costs incurred in connection with the stock offering, consisting of direct,
incremental costs of the offering, are being deferred and will be offset
against the proceeds of the stock sale as a charge to the no par value common
stock.
Pre-Opening Expenses
Costs incurred for overhead and other operating expenses are included in the
current period's operating results.
Net Loss Per Common Share
Net loss per common share is calculated by dividing net loss by the weighted
average number of common shares outstanding during the period.
F-7
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(3) RELATED PARTY TRANSACTIONS
The organizers of the Company have set up a partnership, FCO Partners
("FCO"), which provides the Company with the necessary funds to operate and
carry on the business of organizing the Company and the bank. The organizers
have contributed a total of $105,000 to FCO as of June 30, 1996, which has
been reflected on the balance sheet as a liability of the Company. Additional
funds which have been contributed to FCO that are available for future Company
expenditures amounted to $25,520 as of June 30, 1996, and are reflected as an
asset of the Company. The amounts advanced are not callable by the organizers,
but are to be repaid from the proceeds of the stock offering. The Company will
have no continuing obligation under the contemplated arrangements should the
proceeds from the stock offering be insufficient to consummate formation of
the Company or the Bank or if all regulatory approvals required to commence
operations are not obtained.
(4) LINES OF CREDIT
On August 1, 1996, the Company executed a $650,000 line of credit agreement
with a bank to fund its organization, offering and pre-opening expenses. This
unsecured line of credit matures on August 1, 1997 and accrues interest which
is payable quarterly at the lender's prime interest rate. Each organizer has
guaranteed a pro rata portion of this line of credit.
(5) PREFERRED STOCK
Shares of preferred stock may be issued from time to time in one or more
series as may be established by resolution of the board of directors of the
Company. Each resolution shall include the number of shares issued,
preferences, dividend provisions, special rights and limitations as determined
by the board.
(6) INCOME TAXES
At June 30, 1996, the Company had a net operating loss carryforward for tax
purposes of approximately $900, which will expire in 2011 if not previously
utilized. No income tax expense or benefit was recorded for the period ended
June 30, 1996 due to this loss carry forward.
(7) COMMITMENTS
On February 9, 1996, the Company entered into an operating lease agreement
for a building which will serve as the main office of the Company and the
Bank, contingent upon the receipt of all required regulatory approvals. The
inception of the lease will be the earlier of the occupation of the facility
or receipt of final regulatory approval. The anticipated minimum lease
payments related to this lease are as follows:
<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
Year 1........................................... $67,500
Year 2........................................... 69,525
Year 3........................................... 71,611
Year 4........................................... 73,759
</TABLE>
The lease will be canceled should the Company and the Bank not receive the
required regulatory approvals.
The proposed President has executed an employment agreement with the Company
which provides for an initial term of five years commencing June 28, 1996, and
can be extended by the Company each year so that the remaining term will
continue to be five years. The Company is to maintain a $1,000,000 key man
life insurance policy, with $600,000 payable to the Company and $400,000
payable to the proposed President's family. The agreement further provides for
other perquisits, and subjects the proposed President to certain non-compete
restrictions.
(8) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $913 for the period February 14, 1996
(date of inception) through June 30, 1996. At June 30, 1996, liabilities
exceeded assets by $863.
F-8
<PAGE>
FORSYTH BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
At June 30, 1996, the Company had additional funds of approximately $25,000
available from the organizers partnership, FCO. Subsequent to June 30, 1996,
the company has obtained a line of credit for $650,000. Management believes,
considering funds available from FCO and under the line of credit, the Company
has adequate resources to meet existing obligations and fund current
operations, but obtaining regulatory approvals and commencing banking
operations is dependent on successfully completing the stock offering.
To provide permanent funding for its operation the Company is currently
offering a minimum of 665,000 and a maximum of 800,000 shares of its no par
value common stock at $10 per share in an initial public offering. Costs
related to the organization and registration of the Company's common stock
will be paid from the gross proceeds of the offering. Shares issued which are
outstanding at June 30, 1996 will be redeemed concurrently with the
consummation of the offering. Should subscriptions for the minimum offering
not be obtained, amounts paid by subscribers with their subscriptions will be
returned and the offer withdrawn.
F-9
<PAGE>
FORSYTH BANCSHARES, INC.
TO:
Forsyth Bancshares, Inc.
425 Tribble Gap Road
Cumming, Georgia 30130
(770) 886-9500
Ladies and Gentlemen:
You have informed me that Forsyth Bancshares, Inc., a Georgia corporation
(the "Company"), is offering up to 800,000 shares of its Common Stock, no par
value per share (the "Common Stock"), at a price of $10.00 per share payable
as provided herein and as described in and offered pursuant to the Prospectus
furnished with this Subscription Agreement to the undersigned (the
"Prospectus").
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned hereby tenders this subscription, together with payment in
United States currency by check, bank draft or money order payable to "The
Bankers Bank, Atlanta, Georgia, as Escrow Agent for Forsyth Bancshares,
Inc." the amount indicated below (the "Funds"), representing the payment of
$10.00 per share for the number of shares of Common Stock indicated below.
The total subscription price must be paid at the time the Subscription
Agreement is executed.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that the
Company shall have the right to accept or reject this subscription in whole
or in part, for any reason whatsoever. The Company may reduce the number of
shares for which the undersigned has subscribed, indicating acceptance of
less than all of the shares subscribed on its written form of acceptance.
3. ACKNOWLEDGMENTS. The undersigned hereby acknowledges that he or she
has received a copy of the Prospectus. This Subscription Agreement creates
a legally binding obligation and the undersigned agrees to be bound by the
terms of this Agreement.
4. REVOCATION. The undersigned agrees that once this Subscription
Agreement is tendered to the Company, it may not be withdrawn and that this
Agreement shall survive the death or disability of the undersigned.
BY EXECUTING THIS AGREEMENT, THE SUBSCRIBER IS NOT WAIVING ANY RIGHTS HE OR
SHE MAY HAVE UNDER FEDERAL SECURITIES LAWS, INCLUDING THE SECURITIES ACT OF
1933 AND THE SECURITIES EXCHANGE ACT OF 1934.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-1
<PAGE>
Please indicate in the space provided below the exact name or names and
address in which the stock certificate representing shares subscribed for
hereunder should be registered.
_______________________________ ____________________________________________
Number of Shares Subscribed Name or Names of Subscribers (Please
for (minimum 200 shares) Print)
$ _____________________________ ____________________________________________
Total Subscription Price at Please indicate form of ownership desired
$10.00 per share (funds must be (individual,
enclosed) joint tenants with right of survivorship,
tenants in
common, trust corporation, partnership,
custodian, etc.)
Date: _________________________ _____________________________________ (L.S.)
Signature of Subscriber(s)*
_______________________________ _____________________________________ (L.S.)
Social Security Number or Federal Signature of Subscriber(s)*
Taxpayer Identification Number
Street (Residence) Address:
_______________________________
____________________________________________
_______________________________
____________________________________________
_______________________________
____________________________________________
City, State and Zip Code
When signing as attorney, trustee, administrator or guardian, please give
your full title as such. If a corporation, please sign in full corporate name
by president or other authorized officer. In the case of joint tenants or
tenants in common, each owner must sign.
FEDERAL INCOME TAX BACKUP WITHHOLDING
In order to prevent the application of federal income tax backup
withholding, each subscriber must provide the Escrow Agent with a correct
Taxpayer Identification Number ("TIN"). An individual's social Security number
is his or her TIN. The TIN should be provided in the space provided in the
Substitute Form W-9, which is set forth below.
Under federal income tax law, any person who is required to furnish his or
her correct TIN to another person, and who fails to comply with such
requirements, may be subject to a $50 penalty imposed by the IRS.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of taxes, a refund
may be obtained from the IRS. Certain taxpayers, including all corporations,
are not subject to these backup withholding and reporting requirements.
A-2
<PAGE>
If the shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, "Applied For" should be written
in the space provided for the TIN on the Substitute Form W-9.
SUBSTITUTE FORM W-9
Under penalties of perjury, I certify that: (i) the number shown on this
form is my correct Taxpayer Identification Number (or I am waiting for a
Taxpayer Identification Number to be issued to me), and (ii) I am not subject
to backup withholding because: (a) I am exempt from backup withholding; or (b)
I have not been notified by the Internal Revenue Service ("IRS") that I am
subject to backup withholding as a result of a failure to report all interest
or dividends; or (c) the IRS has notified me that I am no longer subject to
backup withholding.
You must cross out item (ii) above if you have been notified by the IRS that
you are subject to backup withholding because of under reporting interest or
dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from
the IRS that you are not longer subject to backup withholding, do not cross
out item (ii).
Each subscriber should complete this Section.
_____________________________________ _____________________________________
Signature of Subscriber Signature of Subscriber
_____________________________________ _____________________________________
Printed Name Printed Name
_____________________________________ _____________________________________
Social Security or Employer Social Security or Employer
Identification No. Identification No.
TO BE COMPLETED BY THE COMPANY:
Accepted as of , 199 , as to shares.
FORSYTH BANCSHARES, INC.
By: _________________________________
A-3
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH IN-
FORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HERE-
UNDER AT ANY TIME SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THE INFORMATION HEREIN IS CORRECT AT ANY TIME AFTER THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports to Shareholders.......................................... Inside Cover
Additional Information........................................... Inside Cover
Summary.......................................................................3
Risk Factors..................................................................7
The Company and The Bank.....................................................10
The Offering.................................................................12
Use of Proceeds..............................................................14
Capitalization...............................................................16
Selected Financial Data......................................................17
Dividend Policy..............................................................17
Proposed Business............................................................18
Management's Discussion and
Analysis of Financial Condition
and Results of Operations...................................................23
Supervision and Regulation...................................................24
Management...................................................................31
Description of Capital Stock of the
Company.....................................................................35
Legal Matters................................................................38
Experts......................................................................38
Financial Statements...................................................... F-1
Subscription Agreement.................................................... A-1
</TABLE>
---------------
UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECU-
RITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DE-
LIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UN-
SOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
800,000 SHARES
FORSYTH BANCSHARES, INC.
A HOLDING COMPANY FOR
THE CITIZENS BANK OF FORSYTH COUNTY
COMMON STOCK
---------------
PROSPECTUS
---------------
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses (other than underwriting Commissions) of the sale of the
shares of Common Stock are as follows:
<TABLE>
<S> <C>
Registration Fee.................................................... $ 2,759
Blue Sky Fees and Expenses.......................................... 250
Printing and Engraving.............................................. 20,000
Legal Fees and Expenses.............................................
-------
Accounting Fees and Expenses........................................ 2,000
-------
Total........................................................... $
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Company contain a conditional provision
which, subject to certain exceptions described below, eliminates the liability
of a director to the Company or its shareholders for monetary damages for
breach of the duty of care or any other duty as a director. This provision
does not eliminate such liability to the extent the director engaged in
willful misconduct or a knowing violation of criminal law or of any federal or
state Securities law, including, without limitation, laws proscribing insider
trading or manipulation of the market for any security.
The Bylaws of the Company require the Company to indemnify any person who
was, is or is threatened to be made a named defendant or respondent in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of service by such person
as a director of the Company or the Bank or any other corporation which he
served as such at the request of the Company. Except as noted in the next
paragraph, directors are entitled to be indemnified against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by the
director in connection with the proceeding. Directors are also entitled to
have the Company advance any such expenses prior to final disposition of the
proceeding, upon delivery of a written affirmation by the director of his good
faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to repay the amounts advanced if it is
ultimately determined that the standard of conduct has not been met.
Under the Bylaws, indemnification will be disallowed if it is established
that the director: (i) appropriated, in violation of his duties, any business
opportunity of the Company; (ii) engaged in willful misconduct or a knowing
violation of law; (iii) permitted any unlawful distribution; or (iv) derived
an improper personal benefit. In addition to the Bylaws of the Company,
Section 14-2-852 of the Corporation Code provides for mandatory
indemnification by the Company "to the extent that a director has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party, or in defense of any claim, issue, or matter therein,
because he is or was a director of the Company." The Corporation Code also
provides that upon application of a director a court may order indemnification
if it determines that the director is entitled to such indemnification under
the applicable legal standard.
The Board of Directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors,
subject to all of the accompanying conditions and obligations. The Board of
Directors has extended or intends to extend indemnification rights to all of
its executive officers.
The Company has the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Company
against any liability asserted against him or incurred by him in any such
capacity, whether or not the Company would have the power to indemnify him
against such liability under the bylaws.
II-1
<PAGE>
ITEM 15. EXHIBITS.
<TABLE>
<C> <S>
3.1. Articles of Incorporation.
3.2. Bylaws.
4.1. Specimen Stock Certificate.*
5.1. Opinion of Alston & Bird, counsel to the Company, as to the legality
of the shares being registered.*
10.1. Sublease Agreement by and among the Company, the Bank and
NationsBank, N.A. (South) dated February 9, 1996.
10.2 First Amendment to Sublease Agreement by and among the Company, the
Bank and NationsBank, N.A. (South) dated February , 1996.
10.3 Second Amendment to Sublease Agreement by and among the Company, the
Bank and NationsBank, N.A. (South) dated May 10, 1996.
10.4. Form of Escrow Agreement to be entered into by and between the
Company and The Bankers Bank, Atlanta, Georgia.
10.5. Employment Agreement by and between the Company and David H. Denton
dated June 28, 1996.
10.6. Line of Credit Note by the Company to The Bankers Bank, Atlanta,
Georgia dated August 1, 1996.
23.1. Consent of Evans, Porter, Bryan & Co.
23.2. Consent of Alston & Bird (included as part of Exhibit 5.1).*
24.1. Power of Attorney (contained on the signature page of this filing).
</TABLE>
- --------
* To be filed by amendment.
ITEM 16. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
(the "Act") may be permitted to directors, officers and controlling persons of
the Company pursuant to the provisions described in Item 14 above or
otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the Securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned Company hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of Securities offered (if the total
dollar value of Securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the
II-2
<PAGE>
form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the Securities offered therein, and
the offering of such Securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CUMMING, STATE OF
GEORGIA, ON AUGUST 27, 1996.
Forsyth Bancshares, Inc.
/s/ David H. Denton
By: _________________________________
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David H. Denton and James J. Myers their true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that the attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURE TITLE DATE
/s/ Catherine M. Amos Director August 27, 1996
- -------------------------------------
CATHERINE M. AMOS
/s/ Jeffrey S. Bagley Director and Vice August 27, 1996
- ------------------------------------- Chairman of the
JEFFREY S. BAGLEY Board
/s/ Bill H. Barnett Director August 27, 1996
- -------------------------------------
BILL H. BARNETT
/s/ Danny M. Bennett Director August 27, 1996
- -------------------------------------
DANNY M. BENNETT
/s/ Michael P. Bennett Director August 27, 1996
- -------------------------------------
MICHAEL P. BENNETT
/s/ Bryan L. Bettis Director August 27, 1996
- -------------------------------------
BRYAN L. BETTIS
/s/ Talmadge W. Bolton Director August 27, 1996
- -------------------------------------
TALMADGE W. BOLTON
II-4
<PAGE>
/s/ Thomas L. Bower III Director August 27, 1996
- -------------------------------------
THOMAS L. BOWER III
/s/ Charles R. Castleberry Director August 27, 1996
- -------------------------------------
CHARLES R. CASTLEBERRY
/s/ David H. Denton President, Chief August 27, 1996
- ------------------------------------- Executive Officer
DAVID H. DENTON and Director
/s/ Charles D. Ingram Director and August 27, 1996
- ------------------------------------- Secretary
CHARLES D. INGRAM
/s/ Herbert A. Lang, Jr. Director August 27, 1996
- -------------------------------------
HERBERT A. LANG, JR.
/s/ John P. McGruder Director August 27, 1996
- -------------------------------------
JOHN P. MCGRUDER
/s/ Vicki D. Melton Chief Financial August 27, 1996
- ------------------------------------- Officer
VICKI D. MELTON
/s/ James J. Myers Director and August 27, 1996
- ------------------------------------- Chairman of the
JAMES J. MYERS Board
/s/ Danny L. Reid Director August 27, 1996
- -------------------------------------
DANNY L. REID
/s/ Charles R. Smith Director August 27, 1996
- -------------------------------------
CHARLES R. SMITH
/s/ Wyatt L. Willingham Director August 27, 1996
- -------------------------------------
WYATT L. WILLINGHAM
/s/ Jerry M. Wood Director August 27, 1996
- -------------------------------------
JERRY M. WOOD
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
3.1. Articles of Incorporation ........................................
3.2. Bylaws ...........................................................
4.1. Specimen Stock Certificate* ......................................
5.1. Opinion of Alston & Bird, counsel to the Company, as to the
legality of the shares being registered* ........................
10.1. Sublease Agreement by and among the Company, the Bank and
NationsBank, N.A. (South) dated February 9, 1996 ................
10.2. First Amendment to Sublease Agreement by and among the Company,
the Bank and NationsBank, N.A. (South), dated February , 1996 ..
10.3. Second Amendment to Sublease Agreement by and among the Company,
the Bank and NationsBank, N.A. (South) dated May 10, 1996 .......
10.4. Form of Escrow Agreement to be entered into by and between the
Company and The Bankers Bank, Atlanta, Georgia ..................
10.5. Employment Agreement by and between the Company and David H.
Denton dated June 28, 1996 ......................................
10.6. Line of Credit Note by the Company to The Bankers Bank, Atlanta,
Georgia dated August 1, 1996 ....................................
23.1. Consent of Evans, Porter, Bryan & Co. ............................
23.2. Consent of Alston & Bird (included as part of Exhibit 5.1)* ......
24.1. Power of Attorney (contained on the signature page of this filing)
.................................................................
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
Secretary of State
Business Information and Services
Suite 315, West Tower
2 Martin Luther King Jr. Dr.
Atlanta, Georgia 30334-1530
CONTROL NUMBER: 9605551
EFFECTIVE DATE: 02/14/1996
COUNTY : FULTON
REFERENCE : 0091
PRINT DATE : 02/15/1996
FORM NUMBER : 0311
NELSON MULLINS RILEY & SCARBOROUGH
L. SCOTT ASKINS, ESQ.
STE 2200, 1201 PEACHTREE ST NE
ATLANTA, GA 30361
CERTIFICATE OF INCORPORATION
I, the Secretary of State and the Corporation Commissioner of the State of
Georgia, do hereby certify under the seal of my office that
FORSYTH BANCSHARES, INC.
has been duly incorporated under the laws of the State of Georgia on the
effective date stated above by the filing of articles of incorporation in the
office of the Secretary of State and by the paying of fees as provided by Title
14 of the Official Code of Georgia Annotated.
WITNESS my hand and official seal in the City of Atlanta and the State of
Georgia on the date set forth above.
/s/ Lewis A. Massey
--------------------
Lewis A. Massey
Secretary of State
[SEAL]
<PAGE>
ARTICLES OF INCORPORATION
OF
FORSYTH BANCSHARES, INC.
ARTICLE ONE
NAME
----
The name of the corporation is Forsyth Bancshares, Inc. (the "Corporation").
ARTICLE TWO
CAPITALIZATION
--------------
The Corporation shall have authority, exercisable by its Board of
Directors, to issue up to 10,000,000 shares of common stock, no par value per
share (the "Common Stock"), and 1,000,000 shares of series of preferred stock,
no par value per share (the "Preferred Stock"), any part or all of such series
of Preferred Stock may be established and designated from time to time by the
Board of Directors, in such series and with such preferences, limitations, and
relative rights as may be determined by the Board of Directors.
ARTICLE THREE
INITIAL REGISTERED OFFICE AND AGENT
-----------------------------------
The street address and county of the initial registered office of the
Corporation shall be at 400 Colony Square, Suite 2200, 1201 Peachtree Street,
N.E., Atlanta, Georgia 30361 (Fulton County). The initial registered agent of
the Corporation at such address shall be L. Scott Askins.
ARTICLE FOUR
INCORPORATOR
------------
The name and address of the incorporator is as follows:
L. Scott Askins, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
ARTICLE FIVE
MAILING ADDRESS OF PRINCIPAL OFFICE
-----------------------------------
The mailing address of the initial principal office of the Corporation is
as follows:
Forsyth Bancshares, Inc.
119 West Courthouse Square
Cumming, Georgia 30130
<PAGE>
ARTICLE SIX
LIMITATION ON DIRECTOR LIABILITY
--------------------------------
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of the duty of
care or any other duty as a director, except that such liability shall not be
eliminated for:
(i) any appropriation, in violation of the director's duties,
of any business opportunity of the Corporation;
(ii) acts or omissions that involve intentional misconduct or a
knowing violation of law;
(iii) liability under Section 14-2-832 (or any successor
provision or redesignation thereof) of the Georgia Business Corporation
Code, as amended (the "Code"); and
(iv) any transaction from which the director received an
improper personal benefit.
If at any time the Code shall have been amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
each director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Code, as so amended, without further action by the
shareholders, unless the provisions of the Code, as amended, require further
action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article Six
shall not adversely affect the elimination or limitation of liability or alleged
liability pursuant hereto of any director of the Corporation for or with respect
to any alleged act or omission of the director occurring prior to such a repeal
or modification.
IN WITNESS WHEREOF, the undersigned executes these Articles of
Incorporation this 14th day of February, 1996.
/s/ L. Scott Askins
-------------------
L. Scott Askins
Incorporator
<PAGE>
BYLAWS
OF
FORSYTH BANCSHARES, INC.
DATED AS OF FEBRUARY 15, 1996
1
<PAGE>
BYLAWS
OF
FORSYTH BANCSHARES, INC.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
Page
ARTICLE ONE OFFICE...................................................... 1
1.1 Registered Office and Agent...................................... 1
1.2 Principal Office................................................. 1
1.3 Other Offices.................................................... 1
ARTICLE TWO SHAREHOLDERS' MEETINGS....................................... 1
2.1 Place of Meetings................................................ 1
2.2 Annual Meetings.................................................. 1
2.3 Special Meetings................................................. 2
2.4 Notice of Meetings............................................... 2
2.5 Waiver of Notice................................................. 2
2.6 Voting Group; Quorum; Vote Required to Act....................... 2
2.7 Voting of Shares................................................. 3
2.8 Proxies.......................................................... 3
2.9 Presiding Officer................................................ 3
2.10 Adjournments..................................................... 3
2.11 Conduct of the Meeting........................................... 4
2.12 Action of Shareholders Without a Meeting......................... 4
2.13 Matters Considered at Annual Meetings............................ 4
ARTICLE THREE BOARD OF DIRECTORS........................................ 5
3.1 General Powers................................................... 5
3.2 Number, Election and Term of Office.............................. 5
3.3 Removal of Directors............................................. 5
3.4 Vacancies........................................................ 5
3.5 Compensation..................................................... 6
3.6 Committees of the Board of Directors............................. 6
3.7 Qualification of Directors....................................... 6
3.8 Certain Nomination Requirements.................................. 6
ARTICLE FOUR MEETINGS OF THE BOARD OF DIRECTORS......................... 7
4.1 Regular Meetings................................................. 7
4.2 Special Meetings................................................. 7
4.3 Place of Meetings................................................ 7
2
<PAGE>
4.4 Notice of Meetings............................................... 7
4.5 Quorum........................................................... 7
4.6 Vote Required for Action......................................... 7
4.7 Participation by Conference Telephone............................ 7
4.8 Action by Directors Without a Meeting............................ 8
4.9 Adjournments..................................................... 8
4.10 Waiver of Notice................................................. 8
ARTICLE FIVE OFFICERS................................................... 8
5.1 Offices.......................................................... 8
5.2 Term............................................................. 8
5.3 Compensation..................................................... 9
5.4 Removal.......................................................... 9
5.5 Chairman of the Board............................................ 9
5.6 President........................................................ 9
5.7 Vice Presidents.................................................. 9
5.8 Secretary........................................................ 9
5.9 Treasurer....................................................... 10
ARTICLE SIX DISTRIBUTIONS AND DIVIDENDS................................ 10
ARTICLE SEVEN SHARES................................................... 10
7.1 Share Certificates.............................................. 10
7.2 Rights of Company with Respect to Registered Owners............. 10
7.3 Transfers of Shares............................................. 11
7.4 Duty of Company to Register Transfer............................ 11
7.5 Lost, Stolen, or Destroyed Certificates......................... 11
7.6 Fixing of Record Date........................................... 11
7.7 Record Date if None Fixed....................................... 11
ARTICLE EIGHT INDEMNIFICATION.......................................... 12
8.1 Indemnification of Directors.................................... 12
8.2 Indemnification of Others....................................... 12
8.3 Other Organizations............................................. 12
8.4 Advances........................................................ 13
8.5 Non-Exclusivity................................................. 13
8.6 Insurance....................................................... 13
8.7 Notice.......................................................... 13
8.8 Security........................................................ 13
8.9 Amendment....................................................... 14
8.10 Agreements...................................................... 14
8.11 Continuing Benefits............................................. 14
8.12 Successors...................................................... 14
8.13 Severability.................................................... 14
3
<PAGE>
8.14 Additional Indemnification...................................... 14
ARTICLE NINE MISCELLANEOUS............................................. 15
9.1 Inspection of Books and Records................................. 15
9.2 Fiscal Year..................................................... 15
9.3 Corporate Seal.................................................. 15
9.4 Annual Statements............................................... 15
9.5 Notice.......................................................... 15
9.6 Election of "Fair Price" Statute................................ 16
9.7 Election of "Business Combination" Statute...................... 16
ARTICLE TEN AMENDMENTS................................................. 16
</TABLE>
4
<PAGE>
BYLAWS
OF
FORSYTH BANCSHARES, INC.
- -------------------------------------------------------------------------------
References in these Bylaws to "Articles of Incorporation" are to the Articles
of Incorporation of Forsyth Bancshares, Inc., a Georgia corporation (the
"Company"), as amended and restated from time to time.
All of these Bylaws are subject to contrary provisions, if any, of the
Articles of Incorporation (including provisions designating the preferences,
limitations, and relative rights of any class or series of shares), the Georgia
Business Corporation Code (the "Code"), and other applicable law, as in effect
on and after the effective date of these Bylaws. References in these Bylaws to
"Sections" shall refer to sections of the Bylaws, unless otherwise indicated.
- ------------------------------------------------------------------------------
ARTICLE ONE
OFFICE
1.1 REGISTERED OFFICE AND AGENT. The Company shall maintain a registered
---------------------------
office and shall have a registered agent whose business office is the same as
the registered office.
1.2 PRINCIPAL OFFICE. The principal office of the Company shall be at the
----------------
place designated in the Company's annual registration with the Georgia Secretary
of State.
1.3 OTHER OFFICES. In addition to its registered office and principal office,
-------------
the Company may have offices at other locations either in or outside the State
of Georgia.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 PLACE OF MEETINGS. Meetings of the Company's shareholders may be held at
-----------------
any location inside or outside the State of Georgia designated by the Board of
Directors or any other person or persons who properly call the meeting, or if
the Board of Directors or such other person or persons do not specify a
location, at the Company's principal office.
2.2 ANNUAL MEETINGS. The Company shall hold an annual meeting of
---------------
shareholders, at a time determined by the Board of Directors, to elect directors
5
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and to transact any business that properly may come before the meeting. The
annual meeting may be combined with any other meeting of shareholders, whether
annual or special.
2.3 SPECIAL MEETINGS. Special meetings of shareholders of one or more classes
----------------
or series of the Company's shares may be called at any time by the Board of
Directors, the Chairman of the Board, or the President, and shall be called by
the Company upon the written request (in compliance with applicable requirements
of the Code) of the holders of shares representing twenty-five percent (25%) or
more of the votes entitled to be cast on each issue proposed to be considered at
the special meeting. The business that may be transacted at any special meeting
of shareholders shall be limited to that proposed in the notice of the special
meeting given in accordance with Section 2.4 (including related or incidental
matters that may be necessary or appropriate to effectuate the proposed
business).
2.4 NOTICE OF MEETINGS. In accordance with Section 9.5 and subject to waiver
------------------
by a shareholder pursuant to Section 2.5, the Company shall give written notice
of the date, time, and place of each annual and special shareholders' meeting no
fewer than 10 days nor more than 60 days before the meeting date to each
shareholder of record entitled to vote at the meeting. The notice of an annual
meeting need not state the purpose of the meeting unless these Bylaws require
otherwise. The notice of a special meeting shall state the purpose for which the
meeting is called. If an annual or special shareholders' meeting is adjourned to
a different date, time, or location, the Company shall give shareholders notice
of the new date, time, or location of the adjourned meeting, unless a quorum of
shareholders was present at the meeting and information regarding the
adjournment was announced before the meeting was adjourned; provided, however,
-------- -------
that if a new record date is or must be fixed in accordance with Section 7.6,
the Company must give notice of the adjourned meeting to all shareholders of
record as of the new record date who are entitled to vote at the adjourned
meeting.
2.5 WAIVER OF NOTICE. A shareholder may waive any notice required by the
----------------
Code, the Articles of Incorporation, or these Bylaws, before or after the date
and time of the matter to which the notice relates, by delivering to the Company
a written waiver of notice signed by the shareholder entitled to the notice. In
addition, a shareholder's attendance at a meeting shall be (a) a waiver of
objection to lack of notice or defective notice of the meeting unless the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting, and (b) a waiver of objection to
consideration of a particular matter at the meeting that is not within the
purpose stated in the meeting notice, unless the shareholder objects to
considering the matter when it is presented. Except as otherwise required by the
Code, neither the purpose of nor the business transacted at the meeting need be
specified in any waiver.
2.6 VOTING GROUP; QUORUM; VOTE REQUIRED TO ACT. (a) Unless otherwise required
------------------------------------------
by the Code or the Articles of Incorporation, all classes or series of the
Company's shares entitled to vote generally on a matter shall for that purpose
be considered a single voting group (a "Voting Group"). If either the Articles
of Incorporation or the Code requires separate voting by two or more Voting
Groups on a matter, action on that matter is taken only when voted upon by each
6
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such Voting Group separately. At all meetings of shareholders, any Voting Group
entitled to vote on a matter may take action on the matter only if a quorum of
that Voting Group exists at the meeting, and if a quorum exists, the Voting
Group may take action on the matter notwithstanding the absence of a quorum of
any other Voting Group that may be entitled to vote separately on the matter.
Unless the Articles of Incorporation, these Bylaws, or the Code provides
otherwise, the presence (in person or by proxy) of shares representing a
majority of votes entitled to be cast on a matter by a Voting Group shall
constitute a quorum of that Voting Group with regard to that matter. Once a
share is present at any meeting other than solely to object to holding the
meeting or transacting business at the meeting, the share shall be deemed
present for quorum purposes for the remainder of the meeting and for any
adjournments of that meeting, unless a new record date for the adjourned meeting
is or must be set pursuant to Section 7.6 of these Bylaws.
(b) Except as provided in Section 3.4, if a quorum exists, action on a matter
by a Voting Group is approved by that Voting Group if the votes cast within the
Voting Group favoring the action exceed the votes cast opposing the action,
unless the Articles of Incorporation, a provision of these Bylaws that has been
adopted pursuant to Section 14-2-1021 of the Code (or any successor provision),
or the Code requires a greater number of affirmative votes.
2.7 VOTING OF SHARES. Unless otherwise required by the Code or the Articles
----------------
of Incorporation, each outstanding share of any class or series having voting
rights shall be entitled to one vote on each matter that is submitted to a vote
of shareholders.
2.8 PROXIES. A shareholder entitled to vote on a matter may vote in person or
-------
by proxy pursuant to an appointment executed in writing by the shareholder or by
his or her attorney-in-fact. An appointment of a proxy shall be valid for 11
months from the date of its execution, unless a longer or shorter period is
expressly stated in the proxy.
2.9 PRESIDING OFFICER. Except as otherwise provided in this Section 2.9, the
-----------------
Chairman of the Board, and in his or her absence or disability the President,
shall preside at every shareholders' meeting (and any adjournment thereof) as
its chairman, if either of them is present and willing to serve. If neither the
Chairman of the Board nor the President is present and willing to serve as
chairman of the meeting, and if the Chairman of the Board has not designated
another person who is present and willing to serve, then a majority of the
Company's directors present at the meeting shall be entitled to designate a
person to serve as chairman. If no director of the Company is present at the
meeting or if a majority of the directors who are present cannot be established,
then a chairman of the meeting shall be selected by a majority vote of (a) the
shares present at the meeting that would be entitled to vote in an election of
directors, or (b) if no such shares are present at the meeting, then the shares
present at the meeting comprising the Voting Group with the largest number of
shares present at the meeting and entitled to vote on a matter properly proposed
to be considered at the meeting. The chairman of the meeting may designate other
persons to assist with the meeting.
7
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2.10 ADJOURNMENTS. At any meeting of shareholders (including an adjourned
-------------
meeting), a majority of shares of any Voting Group present and entitled to vote
at the meeting (whether or not those shares constitute a quorum) may adjourn the
meeting, but only with respect to that Voting Group, to reconvene at a specific
time and place. If more than one Voting Group is present and entitled to vote on
a matter at the meeting, then the meeting may be continued with respect to any
such Voting Group that does not vote to adjourn as provided above, and such
Voting Group may proceed to vote on any matter to which it is otherwise entitled
to do so; provided, however, that if (a) more than one Voting Group is required
-------- -------
to take action on a matter at the meeting and (b) any one of those Voting Groups
votes to adjourn the meeting (in accordance with the preceding sentence), then
the action shall not be deemed to have been taken until the requisite vote of
any adjourned Voting Group is obtained at its reconvened meeting. The only
business that may be transacted at any reconvened meeting is business that could
have been transacted at the meeting that was adjourned, unless further notice of
the adjourned meeting has been given in compliance with the requirements for a
special meeting that specifies the additional purpose or purposes for which the
meeting is called. Nothing contained in this Section 2.10 shall be deemed or
otherwise construed to limit any lawful authority of the chairman of a meeting
to adjourn the meeting.
2.11 CONDUCT OF THE MEETING. At any meeting of shareholders, the chairman of
----------------------
the meeting shall be entitled to establish the rules of order governing the
conduct of business at the meeting.
2.12 ACTION OF SHAREHOLDERS WITHOUT A MEETING. Action required or permitted
----------------------------------------
to be taken at a meeting of shareholders may be taken without a meeting if the
action is taken by all shareholders entitled to vote on the action. The action
must be evidenced by one or more written consents describing the action taken,
signed by all shareholders entitled to take action and delivered to the Company
for inclusion in the minutes or filing with the corporate records.
2.13 MATTERS CONSIDERED AT ANNUAL MEETINGS. Notwithstanding anything to the
-------------------------------------
contrary in these Bylaws, the only business that may be conducted at an annual
meeting of shareholders shall be business brought before the meeting (a) by or
at the direction of the Board of Directors prior to the meeting, (b) by or at
the direction of the Chairman of the Board or the President, or (c) by a
shareholder of the Company who is entitled to vote with respect to the business
and who complies with the notice procedures set forth in this Section 2.13. For
business to be brought properly before an annual meeting by a shareholder, the
shareholder must have given timely notice of the business in writing to the
Secretary of the Company. To be timely, a shareholder's notice must be delivered
or mailed to and received at the principal offices of the Company on or before
the later to occur of (i) 14 days prior to the annual meeting or (ii) 5 days
after notice of the meeting is provided to the shareholders pursuant to Section
2.4 hereof. A shareholder's notice to the Secretary shall set forth a brief
description of each matter of business the shareholder proposes to bring before
the meeting and the reasons for conducting that business at the meeting; the
name, as it appears on the Company's books, and address of the shareholder
proposing the business; the series or class and number of shares of the
8
<PAGE>
Company's capital stock that are beneficially owned by the shareholder; and any
material interest of the shareholder in the proposed business. The chairman of
the meeting shall have the discretion to declare to the meeting that any
business proposed by a shareholder to be considered at the meeting is out of
order and that such business shall not be transacted at the meeting if (i) the
--
chairman concludes that the matter has been proposed in a manner inconsistent
with this Section 2.13 or (ii) the chairman concludes that the subject matter of
the proposed business is inappropriate for consideration by the shareholders at
the meeting.
9
<PAGE>
ARTICLE THREE
BOARD OF DIRECTORS
3.1 GENERAL POWERS. All corporate powers shall be exercised by or under the
--------------
authority of, and the business and affairs of the Company shall be managed by,
the Board of Directors, subject to any limitation set forth in the Articles of
Incorporation, in bylaws approved by the shareholders, or in agreements among
all the shareholders that are otherwise lawful.
3.2 NUMBER, ELECTION AND TERM OF OFFICE. The number of directors of the
-----------------------------------
Company shall be fixed by resolution of the Board of Directors or of the
shareholders from time to time and, until otherwise determined, shall be 18;
provided, however, that no decrease in the number of directors shall have the
- -------- -------
effect of shortening the term of an incumbent director. Except as provided
elsewhere in this Section 3.2 and in Section 3.4, the directors shall be elected
at each annual meeting of shareholders, or at a special meeting of shareholders
called for purposes that include the election of directors, by a plurality of
the votes cast by the shares entitled to vote and present at the meeting. Except
in case of death, resignation, disqualification, or removal, the term of each
director shall expire at the next succeeding annual meeting of shareholders.
Despite the expiration of a director's term, he or she shall continue to serve
until his or her successor, if there is to be any, has been elected and has
qualified.
3.3 REMOVAL OF DIRECTORS. The entire Board of Directors or any individual
--------------------
director may be removed, with or without cause, by the shareholders, provided
that directors elected by a particular Voting Group may be removed only by the
shareholders in that Voting Group. Removal action may be taken only at a
shareholders' meeting for which notice of the removal action has been given. A
removed director's successor, if any, may be elected at the same meeting to
serve the unexpired term.
3.4 VACANCIES. A vacancy occurring in the Board of Directors may be filled
---------
for the unexpired term, unless the shareholders have elected a successor, by the
affirmative vote of a majority of the remaining directors, whether or not the
remaining directors constitute a quorum; provided, however, that if the vacant
-------- -------
office was held by a director elected by a particular Voting Group, only the
holders of shares of that Voting Group or the remaining directors elected by
that Voting Group shall be entitled to fill the vacancy; provided further,
-------- -------
however, that if the vacant office was held by a director elected by a
- -------
particular Voting Group and there is no remaining director elected by that
---
Voting Group, the other remaining directors or director (elected by another
Voting Group or Groups) may fill the vacancy during an interim period before the
shareholders of the vacated director's Voting Group act to fill the vacancy. A
vacancy or vacancies in the Board of Directors may result from the death,
resignation, disqualification, or removal of any director, or from an increase
in the number of directors.
3.5 COMPENSATION. Directors may receive such compensation for their services
------------
as directors as may be fixed by the Board of Directors from time to time. A
10
<PAGE>
director may also serve the Company in one or more capacities other than that of
director and receive compensation for services rendered in those other
capacities.
3.6 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may
------------------------------------
designate from among its members an executive committee or one or more other
standing or ad hoc committees, each consisting of one or more directors, who
serve at the pleasure of the Board of Directors. Subject to the limitations
imposed by the Code, each committee shall have the authority set forth in the
resolution establishing the committee or in any other resolution of the Board of
Directors specifying, enlarging, or limiting the authority of the committee.
3.7 QUALIFICATION OF DIRECTORS. No person elected to serve as a director of
--------------------------
the Company shall assume office and begin serving unless and until duly
qualified to serve, as determined by reference to the Code, the Articles of
Incorporation, and any further eligibility requirements established in these
Bylaws.
3.8 CERTAIN NOMINATION REQUIREMENTS. No person may be nominated for election
-------------------------------
as a director at any annual or special meeting of shareholders unless (a) the
nomination has been or is being made pursuant to a recommendation or approval of
the Board of Directors of the Company or a properly constituted committee of the
Board of Directors previously delegated authority to recommend or approve
nominees for director; (b) the person is nominated by a shareholder of the
Company who is entitled to vote for the election of the nominee at the subject
meeting, and the nominating shareholder has furnished written notice to the
Secretary of the Company, at the Company's principal office, not later than 14
days before the date of the meeting or 5 days after notice is given pursuant to
Section 2.4, whichever is later, and the notice (i) sets forth with respect to
the person to be nominated his or her name, age, business and residence
addresses, principal business or occupation during the past five years, any
affiliation with or material interest in the Company or any transaction
involving the Company, and any affiliation with or material interest in any
person or entity having an interest materially adverse to the Company, and (ii)
is accompanied by the sworn or certified statement of the shareholder that the
nominee has consented to being nominated and that the shareholder believes the
nominee will stand for election and will serve if elected; or (c) (i) the person
is nominated to replace a person previously identified as a proposed nominee (in
accordance with the provisions of subpart (b) of this Section 3.8) who has since
become unable or unwilling to be nominated or to serve if elected, (ii) the
shareholder who furnished such previous identification makes the replacement
nomination and delivers to the Secretary of the Company (at the time of or prior
to making the replacement nomination) an affidavit or other sworn statement
affirming that the shareholder had no reason to believe the original nominee
would be so unable or unwilling, and (iii) such shareholder also furnishes in
writing to the Secretary of the Company (at the time of or prior to making the
replacement nomination) the same type of information about the replacement
nominee as required by subpart (b) of this Section 3.8 to have been furnished
about the original nominee. The chairman of any meeting of shareholders at which
one or more directors are to be elected, for good cause shown and with proper
regard for the orderly conduct of business at the meeting, may waive in whole or
in part the operation of this Section 3.8.
11
<PAGE>
ARTICLE FOUR
MEETINGS OF THE BOARD OF DIRECTORS
4.1 REGULAR MEETINGS. A regular meeting of the Board of Directors shall be
----------------
held in conjunction with each annual meeting of shareholders. In addition, the
Board of Directors may, by prior resolution, hold regular meetings at other
times.
4.2 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
----------------
called by or at the request of the Chairman of the Board, the President, or any
director in office at that time.
4.3 PLACE OF MEETINGS. Directors may hold their meetings at any place in or
-----------------
outside the State of Georgia that the Board of Directors may establish from time
to time.
4.4 NOTICE OF MEETINGS. Directors need not be provided with notice of any
------------------
regular meeting of the Board of Directors. Unless waived in accordance with
Section 4.10, the Company shall give at least two days' notice to each director
of the date, time, and place of each special meeting. Notice of a meeting shall
be deemed to have been given to any director in attendance at any prior meeting
at which the date, time, and place of the subsequent meeting was announced.
4.5 QUORUM. At meetings of the Board of Directors, the greater of (a) a
------
majority of the directors then in office, or (b) one-third of the number of
directors fixed in accordance with these Bylaws shall constitute a quorum for
the transaction of business.
4.6 VOTE REQUIRED FOR ACTION. If a quorum is present when a vote is taken,
------------------------
the vote of a majority of the directors present at the time of the vote will be
the act of the Board of Directors, unless the vote of a greater number is
required by the Code, the Articles of Incorporation, or these Bylaws. A director
who is present at a meeting of the Board of Directors when corporate action is
taken is deemed to have assented to the action taken unless (a) he or she
objects at the beginning of the meeting (or promptly upon his or her arrival) to
holding the meeting or transacting business at it; (b) his or her dissent or
abstention from the action taken is entered in the minutes of the meeting; or
(c) he or she delivers written notice of dissent or abstention to the presiding
officer of the meeting before its adjournment or to the Company immediately
after adjournment of the meeting. The right of dissent or abstention is not
available to a director who votes in favor of the action taken.
4.7 PARTICIPATION BY CONFERENCE TELEPHONE. Members of the Board of Directors
-------------------------------------
may participate in a meeting of the Board by means of conference telephone or
similar communications equipment through which all persons participating may
hear and speak to each other. Participation in a meeting pursuant to this
Section 4.7 shall constitute presence in person at the meeting.
12
<PAGE>
4.8 ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or permitted
-------------------------------------
to be taken at any meeting of the Board of Directors may be taken without a
meeting if a written consent, describing the action taken, is signed by each
director and delivered to the Company for inclusion in the minutes or filing
with the corporate records. The consent may be executed in counterpart, and
shall have the same force and effect as a unanimous vote of the Board of
Directors at a duly convened meeting.
4.9 ADJOURNMENTS. A meeting of the Board of Directors, whether or not a
------------
quorum is present, may be adjourned by a majority of the directors present to
reconvene at a specific time and place. It shall not be necessary to give notice
to the directors of the reconvened meeting or of the business to be transacted,
other than by announcement at the meeting that was adjourned, unless a quorum
was not present at the meeting that was adjourned, in which case notice shall be
given to directors in the same manner as for a special meeting. At any such
reconvened meeting at which a quorum is present, any business may be transacted
that could have been transacted at the meeting that was adjourned.
4.10 WAIVER OF NOTICE. A director may waive any notice required by the Code,
----------------
the Articles of Incorporation, or these Bylaws before or after the date and time
of the matter to which the notice relates, by a written waiver signed by the
director and delivered to the Company for inclusion in the minutes or filing
with the corporate records. Attendance by a director at a meeting shall
constitute waiver of notice of the meeting, except where a director at the
beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or to transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
ARTICLE FIVE
OFFICERS
5.1 OFFICES. The officers of the Company shall consist of a President, a
-------
Secretary, and a Treasurer, each of whom shall be elected or appointed by the
Board of Directors. The Board of Directors may also elect a Chairman of the
Board from among its members. The Board of Directors from time to time may
create and establish the duties of other offices and may elect or appoint, or
authorize specific senior officers to appoint, the persons who shall hold such
other offices, including one or more Vice Presidents (including Executive Vice
Presidents, Senior Vice Presidents, Assistant Vice Presidents, and the like),
one or more Assistant Secretaries, and one or more Assistant Treasurers. Whether
or not so provided by the Board of Directors, the Chairman of the Board may
appoint one or more Assistant Secretaries and one or more Assistant Treasurers.
Any two or more offices may be held by the same person.
5.2 TERM. Each officer shall serve at the pleasure of the Board of Directors
----
(or, if appointed by a senior officer pursuant to this Article Five, at the
pleasure of the Board of Directors or any senior officer authorized to have
13
<PAGE>
appointed the officer) until his or her death, resignation, or removal, or until
his or her replacement is elected or appointed in accordance with this Article
Five.
5.3 COMPENSATION. The compensation of all officers of the Company shall be
------------
fixed by the Board of Directors or by a committee or officer appointed by the
Board of Directors. Officers may serve without compensation.
5.4 REMOVAL. All officers (regardless of how elected or appointed) may be
-------
removed, with or without cause, by the Board of Directors, and any officer
appointed by another officer may also be removed, with or without cause, by any
senior officer authorized to have appointed the officer to be removed. Removal
will be without prejudice to the contract rights, if any, of the person removed,
but shall be effective notwithstanding any damage claim that may result from
infringement of such contract rights.
5.5 CHAIRMAN OF THE BOARD. The Chairman of the Board (if there be one) shall
---------------------
preside at and serve as chairman of meetings of the shareholders and of the
Board of Directors (unless another person is selected under Section 2.9 to act
as chairman). The Chairman of the Board shall perform other duties and have
other authority as may from time to time be delegated by the Board of Directors.
5.6 PRESIDENT. Unless otherwise provided in these Bylaws or by resolution of
---------
the Board of Directors, the President shall be the chief executive officer of
the Company, shall be charged with the general and active management of the
business of the Company, shall see that all orders and resolutions of the Board
of Directors are carried into effect, shall have the authority to select and
appoint employees and agents of the Company, and shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board. The President shall perform any other
duties and have any other authority as may be delegated from time to time by the
Board of Directors, and shall be subject to the limitations fixed from time to
time by the Board of Directors.
5.7 VICE PRESIDENTS. The Vice President (if there be one) shall, in the
---------------
absence or disability of the President, or at the direction of the President,
perform the duties and exercise the powers of the President, whether the duties
and powers are specified in these Bylaws or otherwise. If the Company has more
than one Vice President, the one designated by the Board of Directors or the
President (in that order of precedence) shall act in the event of the absence or
disability of the President. Vice Presidents shall perform any other duties and
have any other authority as from time to time may be delegated by the Board of
Directors or the President.
5.8 SECRETARY. The Secretary shall be responsible for preparing minutes of
---------
the meetings of shareholders, directors, and committees of directors and for
authenticating records of the Company. The Secretary or any Assistant Secretary
14
<PAGE>
shall have authority to give all notices required by law or these Bylaws. The
Secretary shall be responsible for the custody of the corporate books, records,
contracts, and other documents. The Secretary or any Assistant Secretary may
affix the corporate seal to any lawfully executed documents requiring it, may
attest to the signature of any officer of the Company, and shall sign any
instrument that requires the Secretary's signature. The Secretary or any
Assistant Secretary shall perform any other duties and have any other authority
as from time to time may be delegated by the Board of Directors or the
President.
5.9 TREASURER. Unless otherwise provided by the Board of Directors, the
---------
Treasurer shall be responsible for the custody of all funds and securities
belonging to the Company and for the receipt, deposit, or disbursement of these
funds and securities under the direction of the Board of Directors. The
Treasurer shall cause full and true accounts of all receipts and disbursements
to be maintained and shall make reports of these receipts and disbursements to
the Board of Directors and President upon request. The Treasurer or Assistant
Treasurer shall perform any other duties and have any other authority as from
time to time may be delegated by the Board of Directors or the President.
ARTICLE SIX
DISTRIBUTIONS AND DIVIDENDS
Unless the Articles of Incorporation provide otherwise, the Board of
Directors, from time to time in its discretion, may authorize or declare
distributions or share dividends in accordance with the Code.
ARTICLE SEVEN
SHARES
7.1 SHARE CERTIFICATES. The interest of each shareholder in the Company shall
------------------
be evidenced by a certificate or certificates representing shares of the
Company, which shall be in such form as the Board of Directors from time to time
may adopt in accordance with the Code. Share certificates shall be in registered
form and shall indicate the date of issue, the name of the Company, that the
Company is organized under the laws of the State of Georgia, the name of the
shareholder, and the number and class of shares and designation of the series,
if any, represented by the certificate. Each certificate shall be signed by the
President or a Vice President (or in lieu thereof, by the Chairman of the Board
or Chief Executive Officer, if there be one) and may be signed by the Secretary
or an Assistant Secretary; provided, however, that where the certificate is
-------- -------
signed (either manually or by facsimile) by a transfer agent, or registered by a
registrar, the signatures of those officers may be facsimiles.
7.2 RIGHTS OF COMPANY WITH RESPECT TO REGISTERED OWNERS. Prior to due
---------------------------------------------------
presentation for transfer of registration of its shares, the Company may treat
the registered owner of the shares (or the beneficial owner of the shares to the
extent of any rights granted by a nominee certificate on file with the Company
pursuant to any procedure that may be established by the Company in accordance
15
<PAGE>
with the Code) as the person exclusively entitled to vote the shares, to receive
any dividend or other distribution with respect to the shares, and for all other
purposes; and the Company shall not be bound to recognize any equitable or other
claim to or interest in the shares on the part of any other person, whether or
not it has express or other notice of such a claim or interest, except as
otherwise provided by law.
7.3 TRANSFERS OF SHARES. Transfers of shares shall be made upon the books of
-------------------
the Company kept by the Company or by the transfer agent designated to transfer
the shares, only upon direction of the person named in the certificate or by an
attorney lawfully constituted in writing. Before a new certificate is issued,
the old certificate shall be surrendered for cancellation or, in the case of a
certificate alleged to have been lost, stolen, or destroyed, the provisions of
Section 7.5 of these Bylaws shall have been complied with.
7.4 DUTY OF COMPANY TO REGISTER TRANSFER. Notwithstanding any of the
------------------------------------
provisions of Section 7.3 of these Bylaws, the Company is under a duty to
register the transfer of its shares only if: (a) the share certificate is
endorsed by the appropriate person or persons; (b) reasonable assurance is given
that each required endorsement is genuine and effective; (c) the Company has no
duty to inquire into adverse claims or has discharged any such duty; (d) any
applicable law relating to the collection of taxes has been complied with; (e)
the transfer is in fact rightful or is to a bona fide purchaser; and (f) the
transfer is in compliance with applicable provisions of any transfer
restrictions of which the Company shall have notice.
7.5 LOST, STOLEN, OR DESTROYED CERTIFICATES. Any person claiming a share
---------------------------------------
certificate to be lost, stolen, or destroyed shall make an affidavit or
affirmation of this claim in such a manner as the Company may require and shall,
if the Company requires, give the Company a bond of indemnity in form and
amount, and with one or more sureties satisfactory to the Company, as the
Company may require, whereupon an appropriate new certificate may be issued in
lieu of the one alleged to have been lost, stolen or destroyed.
7.6 FIXING OF RECORD DATE. For the purpose of determining shareholders (a)
---------------------
entitled to notice of or to vote at any meeting of shareholders or, if
necessary, any adjournment thereof, (b) entitled to receive payment of any
distribution or dividend, or (c) for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. The record date may not
be more than 70 days (and, in the case of a notice to shareholders of a
shareholders' meeting, not less than 10 days) prior to the date on which the
particular action, requiring the determination of shareholders, is to be taken.
A separate record date may be established for each Voting Group entitled to vote
separately on a matter at a meeting. A determination of shareholders of record
entitled to notice of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting, unless the Board of Directors shall fix a new record
date for the reconvened meeting, which it must do if the meeting is adjourned to
a date more than 120 days after the date fixed for the original meeting.
7.7 RECORD DATE IF NONE FIXED. If no record date is fixed as provided in
-------------------------
Section 7.6, then the record date for any determination of shareholders that may
16
<PAGE>
be proper or required by law shall be, as appropriate, the date on which notice
of a shareholders' meeting is mailed, the date on which the Board of Directors
adopts a resolution declaring a dividend or authorizing a distribution, or the
date on which any other action is taken that requires a determination of
shareholders.
ARTICLE EIGHT
INDEMNIFICATION
8.1 INDEMNIFICATION OF DIRECTORS. The Company shall indemnify and hold
----------------------------
harmless any director of the Company (an "Indemnified Person") who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, whether formal or informal, including any action or suit by or
in the right of the Company (for purposes of this Article Eight, collectively, a
"Proceeding") because he or she is or was a director, officer, employee, or
agent of the Company, against any judgment, settlement, penalty, fine, or
reasonable expenses (including, but not limited to, attorneys' fees and
disbursements, court costs, and expert witness fees) incurred with respect to
the Proceeding (for purposes of this Article Eight, a "Liability"), provided,
however, that no indemnification shall be made for: (a) any appropriation by a
director, in violation of the director's duties, of any business opportunity of
the corporation; (b) any acts or omissions of a director that involve
intentional misconduct or a knowing violation of law; (c) the types of liability
set forth in Code Section 14-2-832; or (d) any transaction from which the
director received an improper personal benefit.
8.2 INDEMNIFICATION OF OTHERS. The Board of Directors shall have the power to
-------------------------
cause the Company to provide to officers, employees, and agents of the Company
all or any part of the right to indemnification permitted for such persons by
appropriate provisions of the Code. Persons to be indemnified may be identified
by position or name, and the right of indemnification may be different for each
of the persons identified. Each officer, employee, or agent of the Company so
identified shall be an "Indemnified Person" for purposes of the provisions of
this Article Eight.
8.3 OTHER ORGANIZATIONS. The Company shall provide to each director, and the
-------------------
Board of Directors shall have the power to cause the Company to provide to any
officer, employee, or agent, of the Company who is or was serving at the
Company's request as a director, officer, partner, trustee, employee, or agent
of another corporation, partnership, joint venture, trust, employee benefit
plan, or other enterprise all or any part of the right to indemnification and
other rights of the type provided under Sections 8.1, 8.2, 8.4, and 8.10 of this
Article Eight (subject to the conditions, limitations, and obligations specified
in those Sections) permitted for such persons by appropriate provisions of the
Code. Persons to be indemnified may be identified by position or name, and the
right of indemnification may be different for each of the persons identified.
Each person so identified shall be an "Indemnified Person" for purposes of the
provisions of this Article Eight.
17
<PAGE>
8.4 ADVANCES. Expenses (including, but not limited to, attorneys' fees and
--------
disbursements, court costs, and expert witness fees) incurred by an Indemnified
Person in defending any Proceeding of the kind described in Sections 8.1 or 8.3,
as to an Indemnified Person who is a director of the Company, or in Sections 8.2
or 8.3, as to other Indemnified Persons, if the Board of Directors has specified
that advancement of expenses be made available to any such Indemnified Person,
shall be paid by the Company in advance of the final disposition of such
Proceeding as set forth herein. The Company shall promptly pay the amount of
such expenses to the Indemnified Person, but in no event later than 10 days
following the Indemnified Person's delivery to the Company of a written request
for an advance pursuant to this Section 8.4, together with a reasonable
accounting of such expenses; provided, however, that the Indemnified Person
shall furnish the Company a written affirmation of his or her good faith belief
that he or she has met the applicable standard of conduct and a written
undertaking and agreement to repay to the Company any advances made pursuant to
this Section 8.4 if it shall be determined that the Indemnified Person is not
entitled to be indemnified by the Company for such amounts. The Company may make
the advances contemplated by this Section 8.4 regardless of the Indemnified
Person's financial ability to make repayment. Any advances and undertakings to
repay pursuant to this Section 8.4 may be unsecured and interest-free.
8.5 NON-EXCLUSIVITY. Subject to any applicable limitation imposed by the Code
---------------
or the Articles of Incorporation, the indemnification and advancement of
expenses provided by or granted pursuant to this Article Eight shall not be
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any provision of the Articles of
Incorporation, or any Bylaw, resolution, or agreement specifically or in general
terms approved or ratified by the affirmative vote of holders of a majority of
the shares entitled to be voted thereon.
8.6 INSURANCE. The Company shall have the power to purchase and maintain
---------
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the Company, or who, while serving in such a capacity, is also or
was also serving at the request of the Company as a director, officer, trustee,
partner, employee, or agent of any corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise, against any Liability that
may be asserted against or incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Company would have
the power to indemnify him or her against such liability under the provisions of
this Article Eight.
8.7 NOTICE. If the Company indemnifies or advances expenses to a director
------
under any of Sections 14-2-851 through 14-2-854 of the Code in connection with a
Proceeding by or in the right of the Company, the Company shall, to the extent
required by Section 14-2-1621 or any other applicable provision of the Code,
report the indemnification or advance in writing to the shareholders with or
before the notice of the next shareholders' meeting.
18
<PAGE>
8.8 SECURITY. The Company may designate certain of its assets as collateral,
--------
provide self-insurance, establish one or more indemnification trusts, or
otherwise secure or facilitate its ability to meet its obligations under this
Article Eight, or under any indemnification agreement or plan of indemnification
adopted and entered into in accordance with the provisions of this Article
Eight, as the Board of Directors deems appropriate.
8.9 AMENDMENT. Any amendment to this Article Eight that limits or otherwise
---------
adversely affects the right of indemnification, advancement of expenses, or
other rights of any Indemnified Person hereunder shall, as to such Indemnified
Person, apply only to Proceedings based on actions, events, or omissions
(collectively, "Post Amendment Events") occurring after such amendment and after
delivery of notice of such amendment to the Indemnified Person so affected. Any
Indemnified Person shall, as to any Proceeding based on actions, events, or
omissions occurring prior to the date of receipt of such notice, be entitled to
the right of indemnification, advancement of expenses, and other rights under
this Article Eight to the same extent as if such provisions had continued as
part of the Bylaws of the Company without such amendment. This Section 8.9
cannot be altered, amended, or repealed in a manner effective as to any
Indemnified Person (except as to Post Amendment Events) without the prior
written consent of such Indemnified Person.
8.10 AGREEMENTS. The provisions of this Article Eight shall be deemed to
----------
constitute an agreement between the Company and each Indemnified Person
hereunder. In addition to the rights provided in this Article Eight, the Company
shall have the power, upon authorization by the Board of Directors, to enter
into an agreement or agreements providing to any Indemnified Person
indemnification rights substantially similar to those provided in this Article
Eight.
8.11 CONTINUING BENEFITS. The rights of indemnification and advancement of
-------------------
expenses permitted or authorized by this Article Eight shall, unless otherwise
provided when such rights are granted or conferred, continue as to a person who
has ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such person.
8.12 SUCCESSORS. For purposes of this Article Eight, the term "Company" shall
----------
include any corporation, joint venture, trust, partnership, or unincorporated
business association that is the successor to all or substantially all of the
business or assets of this Company, as a result of merger, consolidation, sale,
liquidation, or otherwise, and any such successor shall be liable to the persons
indemnified under this Article Eight on the same terms and conditions and to the
same extent as this Company.
8.13 SEVERABILITY. Each of the Sections of this Article Eight, and each of the
------------
clauses set forth herein, shall be deemed separate and independent, and should
any part of any such Section or clause be declared invalid or unenforceable by
any court of competent jurisdiction, such invalidity or unenforceability shall
in no way render invalid or unenforceable any other part thereof or any separate
19
<PAGE>
Section or clause of this Article Eight that is not declared invalid or
unenforceable.
8.14 ADDITIONAL INDEMNIFICATION. In addition to the specific indemnification
--------------------------
rights set forth herein, the Company shall indemnify each of its directors and
such of its officers as have been designated by the Board of Directors to the
full extent permitted by action of the Board of Directors without shareholder
approval under the Code or other laws of the State of Georgia as in effect from
time to time.
ARTICLE NINE
MISCELLANEOUS
9.1 INSPECTION OF BOOKS AND RECORDS. The Board of Directors shall have the
-------------------------------
power to determine which accounts, books, and records of the Company shall be
available for shareholders to inspect or copy, except for those books and
records required by the Code to be made available upon compliance by a
shareholder with applicable requirements, and shall have the power to fix
reasonable rules and regulations (including confidentiality restrictions and
procedures) not in conflict with applicable law for the inspection and copying
of accounts, books, and records that by law or by determination of the Board of
Directors are made available. Unless required by the Code or otherwise provided
by the Board of Directors, a shareholder of the Company holding less than two
percent of the total shares of the Company then outstanding shall have no right
to inspect the books and records of the Company.
9.2 FISCAL YEAR. The Board of Directors is authorized to fix the fiscal year
-----------
of the Company and to change the fiscal year from time to time as it deems
appropriate.
9.3 CORPORATE SEAL. The corporate seal will be in such form as the Board of
--------------
Directors may from time to time determine. The Board of Directors may authorize
the use of one or more facsimile forms of the corporate seal. The corporate seal
need not be used unless its use is required by law, by these Bylaws, or by the
Articles of Incorporation.
9.4 ANNUAL STATEMENTS. Not later than four months after the close of each
-----------------
fiscal year, and in any case prior to the next annual meeting of shareholders,
the Company shall prepare (a) a balance sheet showing in reasonable detail the
financial condition of the Company as of the close of its fiscal year, and (b) a
profit and loss statement showing the results of its operations during its
fiscal year. Upon receipt of written request, the Company promptly shall mail to
any shareholder of record a copy of the most recent such balance sheet and
profit and loss statement, in such form and with such information as the Code
may require.
9.5 NOTICE. (a) Whenever these Bylaws require notice to be given to any
------
shareholder or to any director, the notice may be given by mail, in person, by
courier delivery, by telephone, or by telecopier, telegraph, or similar
20
<PAGE>
electronic means. Whenever notice is given to a shareholder or director by mail,
the notice shall be sent by depositing the notice in a post office or letter box
in a postage-prepaid, sealed envelope addressed to the shareholder or director
at his or her address as it appears on the books of the Company. Any such
written notice given by mail shall be effective: (i) if given to shareholders,
at the time the same is deposited in the United States mail; and (ii) in all
other cases, at the earliest of (x) when received or when delivered, properly
addressed, to the addressee's last known principal place of business or
residence, (y) five days after its deposit in the mail, as evidenced by the
postmark, if mailed with first-class postage prepaid and correctly addressed, or
(z) on the date shown on the return receipt, if sent by registered or certified
mail, return receipt requested, and the receipt is signed by or on behalf of the
addressee. Whenever notice is given to a shareholder or director by any means
other than mail, the notice shall be deemed given when received.
(b) In calculating time periods for notice, when a period of time measured in
days, weeks, months, years, or other measurement of time is prescribed for the
exercise of any privilege or the discharge of any duty, the first day shall not
be counted but the last day shall be counted.
9.6 ELECTION OF "FAIR PRICE STATUTE". The provisions of Sections 14-2-1110
--------------------------------
through 14-2-1113 of the Code, as they may be amended from time to time, shall
apply to the Company, to the extent permitted.
9.7 ELECTION OF "BUSINESS COMBINATION" STATUTE. The provisions of Section 14-
------------------------------------------
2-1131 through 14-2-1133 of the Code, as they may be amended from time to time,
shall apply to the Company, to the extent permitted.
ARTICLE TEN
AMENDMENTS
Except as otherwise provided under the Code, the Board of Directors shall have
the power to alter, amend, or repeal these Bylaws or adopt new Bylaws. Any
Bylaws adopted by the Board of Directors may be altered, amended, or repealed,
and new Bylaws adopted, by the shareholders. The shareholders may prescribe in
adopting any Bylaw or Bylaws that the Bylaw or Bylaws so adopted shall not be
altered, amended, or repealed by the Board of Directors.
Dated: February 15, 1996
21
<PAGE>
EXHIBIT 10.1
SUBLEASE AGREEMENT
SUBLEASE AGREEMENT ("Sublease") made and entered into this 9th day of
February, 1996, by and between NATIONSBANK, N.A. (SOUTH), a national banking
association ("Sublessor") and FORSYTH BANK SHARES, INC., a Georgia corporation,
holding company of THE CITIZENS BANK OF FORSYTH COUNTY ("Sublessee").
W I T N E S S E T H:
WHEREAS, BASOT ASSOCIATES LIMITED PARTNERSHIP ("Lessor"), and BANK SOUTH,
N.A., a national banking association ("Bank South"), entered into that certain
Lease Agreement, dated December 15, 1984 ("Lease"), for the lease by Lessor to
Lessee of certain space more particularly defined in the Lease as the Premises
("Premises"), which Premises are located in the Building (as defined below);
WHEREAS, Sublessor desires to sublease to Sublessee and Sublessee desires
to sublease from Sublessor all of the Premises, as hereinafter set forth;
WHEREAS, Sublessor is the successor by operation of law to Bank South; and
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. SUBLEASED PREMISES. Sublessor hereby sublets to Sublessee, and
------------------
Sublessee hereby hires and takes from the Sublessor that certain space
("Subleased Premises"), shown on Exhibit "A" attached hereto and made a part
-----------
hereof, and consisting of 4,500 (FOUR THOUSAND FIVE HUNDRED) rentable square
feet, in a free standing building with a drive through in Tri-County Plaza
Shopping Center located at 501 Highway 9 and 20, Cumming, Georgia (the
"Building").
2. TERM OF SUBLEASE. The term of this Sublease shall commence on the
----------------
earlier of (i) the date Sublessee occupies the Subleased Premises for the
purpose of conducting business therefore or (ii) the date on which Sublessee
obtains Government Approval (as defined in Section 19 below), and shall end on
the 31st day of August, 2000 (the "Expiration Date") (or until such term shall
sooner cease or expire as hereinafter provided).
3. EXTENSION OPTIONS. Sublessor grants to Sublessee three (3) options to
-----------------
extend the term of the Sublease upon and subject to the following terms and
conditions:
<PAGE>
(a) The period of extension for the first option shall be five (5)
years and four months, commencing on the day after the Expiration Date and
ending on December 31, 2005 (such option being hereinafter referred to as the
"First Extension Option" and its period hereinafter referred to as the "First
Extension Period"), and the period of the extension for the second option shall
be four (4) years, commencing on the day after the end of the First Extension
Period and ending on December 31, 2009 (such option being hereinafter referred
to as the "Second Extension Option" and its period hereinafter referred to as
the "Second Extension Period") and the period of extension for the third option
shall be five (5) years, commencing on the day after the end of the Second
Extension Period and ending on the December 31, 2014 (such option being
hereinafter referred to as the "Third Extension Period" and its period
hereinafter referred to as the 'Third Extension Period") (the First Extension
Option, the Second Extension Option and the Third Extension Option are sometimes
hereinafter referred to, collectively, as the "Extension Options" and
individually, as an "Extension Option"; and the First Extension Period, Second
Extension Period and Third Extension Period are sometimes hereinafter referred
to, collectively, as the "Extension Periods" and, individually, as an "Extension
Period").
(b) Sublessee must exercise the First Extension Option by written
notice to Sublessor given at least three hundred ninety (390) days before the
Expiration Date. Sublessee must exercise the Second Extension Option by written
notice given at least three hundred ninety (390) days before the end of the
First Extension Period. Sublessee must exercise the Third Extension Option by
written notice given three hundred ninety (390) days before the end of the
Second Extension Period. If Sublessee fails to give timely notice of its
exercise of the First Extension Option, all three of the Extension Options shall
lapse unexercised. If Sublessee fails to give timely notice of its exercise of
the Second Extension Option, the Second and Third Extension Options shall lapse
unexercised. If Sublessee fails to give timely notice of its exercise of the
Third Extension Option, the Third Extension Option shall lapse unexercised.
(c) Each Extension Option shall be applicable to the entire Subleased
Premises, as the same may have been expanded from time to time pursuant to the
terms of this Sublease.
(d) The terms and conditions of this Sublease, as it may have been
amended from time to time, shall remain in full force and effect during any
Extension Period, except that (i) the Rent for each Extension Period shall be
adjusted at the commencement of such Extension Period to the then "Prevailing
Market Rate" (as hereinafter defined) and (ii) Sublessee shall have one less
Extension Option than it had prior to the commencement of such Extension Period.
(e) At least thirty (30) days before the commencement of each
Extension Period, Sublessor and Sublessee agree to enter into an amendment to
this Sublease to document the exercise of the subject Extension Option.
(f) "Prevailing Market Rate" shall mean the then prevailing market
rate for base rental for leases comparable to this Sublease for "second
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<PAGE>
generation" space comparable to the Subleased Premises and the Building, taking
into account such factors offered to third party tenants for comparable space as
rent or other concessions, any improvement allowances above base building
condition, and the value of the tenant improvement already in place in the
Subleased Premises and at such comparable locations at the commencement of the
Extension Period, moving allowances and the creditworthiness of the tenant. The
Prevailing Market Rate shall be determined between Sublessor and Sublessee by
mutual agreement; however, if Sublessor and Sublessee cannot agree, the
Prevailing Market Rate shall be established in the manner specified in
subsection (g) below in this Section 3, provided, however, Sublessor and
Sublessee acknowledge and agree that any additional square footage added to the
Subleased Premises as a result of the addition of any mezzanine level as
described in Sublessee's Work shall not be taken into account in determining any
increase in Rent to reflect Prevailing Market Rate.
(g) If Sublessor and Sublessee have not reached an agreement as to the
Prevailing Market Rate within thirty (30) days after Sublessee has exercised any
Extension Option, Sublessor shall advise Sublessee in writing, of its
determination of the Prevailing Market Rate, on a per square foot basis, as of
the beginning of the applicable Extension Period. Within thirty (30) days after
receipt of Sublessor's determination of the Prevailing Market Rate, Sublessee
shall advise Sublessor, in writing, whether or not Sublessee accepts or rejects
the Prevailing Market Rate specified by Sublessor. Failure to accept or reject
the Prevailing Market Rate specified by Sublessor shall be deemed acceptance by
Sublessee. If Sublessee rejects the Prevailing Market Rate determined by
Sublessor, Sublessee shall specify in such notice its selection of a real estate
appraiser who shall act on Sublessee's behalf in determining the Prevailing
Market Rate. Within twenty (20) days after the Sublessor's receipt of
Sublessee's selection of a real estate appraiser, Sublessor, by written notice
to Sublessee, shall designate a real estate appraiser, who shall act on
Sublessor's behalf in the determination of the Prevailing Market Rate. Within
twenty (20) days of the selection of Sublessor's appraiser, the two appraisers
shall render a joint written determination of the Prevailing Market Rate. If
the two appraisers are unable to agree upon a joint written determination within
said twenty (20) day period, each appraiser shall render his or her own written
determination and the two appraisers shall select a third appraiser within such
twenty (20) day period. Within twenty (20) days after the appointment of the
third appraiser, the third appraiser shall select one of the determinations of
the two appraisers originally selected, without modification or qualification.
-------------------------------------
All appraisers selected in accordance with this subsection shall have at least
five (5) years prior experience in the metropolitan Atlanta commercial leasing
market and shall be members of the American Institute of Real Estate Appraisers
or a similar professional organization. If either Sublessor or Sublessee fails
or refuses to select an appraiser, the other appraiser shall alone determine the
Prevailing Market Rate. Sublessor and Sublessee agree that they shall be bound
by the determination of Prevailing Market Rate pursuant to this subsection 3(g)
for the applicable Extension Period. Sublessor shall bear the fees and expenses
of its appraisers; Sublessee shall bear the fees and expenses of its appraisers;
and Sublessor and Sublessee shall share equally the fees and expenses of the
third appraiser, if any.
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<PAGE>
(h) Notwithstanding anything in this Section 3 to the contrary,
Sublessee shall have no right to exercise any of the Extension Options under
this Section 3, nor shall Sublessor have any obligation to enter into a sublease
for any of the Extension Periods with Sublessee, at any time during which any of
(i) Sublessee is in default, or an event of default exists with respect to
Sublessee, under this Sublease, which default or event of default remains
uncured following the expiration of the cure period, if any, expressly
applicable thereto pursuant to the terms of this Sublease, or (ii) this Sublease
is not in full force and effect; or (iii) Sublessor has exercised its purchase
option under the Lease; or (iv) any option to extend the Lease which would be
required to extend the term of this Sublease is not exercised for any reason.
4. THE LEASE.
---------
(a) Sublessee acknowledges that it has reviewed and is familiar with
all of the terms, covenants and conditions of the Lease, a copy of which is
attached hereto as Exhibit "B" and made part hereto. All of the terms,
covenants and conditions of the Lease, as applicable to the Subleased Premises
are incorporated herein and made a part hereof as if set forth herein at length,
except that "Lessor" shall be deemed to mean Sublessor and "Lessee" shall be
deemed to mean Sublessee; provided, however, that none of the provisions of
Section 3.5, Section 3.6 or Section 3.7 of the Lease shall apply to Sublessee.
Lessee assumes and agrees, except as otherwise provided herein, to perform,
observe and comply with all of the terms, covenants and conditions on the
Lessee's part to be performed, observed and complied with under the Lease as the
same may or shall relate to the occupancy of the Subleased Premises.
(b) This Sublease is expressly made subject and subordinate to all of
the terms and covenants of the Lease. Any termination of the Lease or
Sublessor's right to the possession of the Premises shall result in a
termination of this Sublease unless Lessor elects to continue this Sublease in
effect as a direct lease between Lessor and Sublessee.
5. OCCUPANCY.
---------
(a) Sublessee shall use and occupy the Subleased Premises solely for
executive and general offices and otherwise in compliance with all of the terms
of the Lease.
(b) Except as set forth herein, Sublessee covenants that it will
occupy the Subleased Premises in accordance with the terms of the Lease and will
not suffer to be done or omit to do any act which may result in a violation of
or a default under any of the terms and conditions of the Lease, or render
Sublessor liable for any charge or expense. Sublessee further covenants and
agrees to indemnify Sublessor against and hold Sublessor harmless from any loss
or liability arising out of, by reason of, or resulting from, Sublessee's
failure to perform or observe any of the terms and conditions of the Lease
pertaining to the Subleased Premises. Any other provision in this Sublease to
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<PAGE>
the contrary notwithstanding, Sublessee shall pay to Sublessor as additional
rent any and all sums which Sublessor may be required to pay to its Lessor
arising out of, by reason of, or resulting from Sublessee's failure to perform
or observe one or more of the terms and conditions of the Lease pertaining to
the Subleased Premises.
(c) Sublessee agrees that Sublessor shall not be required to perform
any of the covenants and obligations of Lessor under the Lease or provide
Sublessee any services or constrict any improvements in the Subleased Premises,
Sublessee hereby agreeing to accept the Subleased Premises "as-is" except for
certain improvements referenced in Paragraph 8 and described on Exhibit "C" of
this Sublease. Insofar as any of the covenants and obligations of Sublessor
hereunder are required to be performed under the Lease by Lessor thereunder,
Sublessee acknowledges that Sublessor shall be entitled to look to Lessor for
such performance. Sublessor shall take such action as Sublessor determines is
reasonably appropriate under the circumstances, to secure such performance upon
Sublessee's written request therefore. If Sublessor determines that it will not
take any further action to enforce any specific obligations of Lessor but
Sublessee believes further enforcement action is necessary with respect to the
Subleased Premises, Sublessee will take all action reasonably necessary to
enforce Lessor's obligations; provided (i) Sublessee reimburses Sublessor for
all reasonable expenses (including reasonable attorneys' fees and court costs)
incurred by Sublessor in connection with such further enforcement actions; (ii)
no default is caused as a result of such action; (iii) Sublessee indemnifies
Sublessor for any damages, claims or expenses incurred by Sublessor as a result
of such proceedings.
(d) If any event described in Section 5.1(a) of the Lease shall occur
in respect of Sublessee, Sublessee's property or the Subleased Premises, or if
Sublessee shall default in the payment of Rent or Additional Rent hereunder or
in the performance or observance of any of the terms, covenants and conditions
of this Sublease or of the Lease on the part of Sublessee to be performed or
observed, Sublessor shall be entitled to the rights and remedies herein provided
or reserved by Lessor in the Lease.
6. ANNUAL RENT. Sublessee shall pay to Sublessor annual rent ("Rent") in
-----------
equal monthly installments in those amounts and for the period set forth
opposite such amounts as set forth on Exhibit D attached hereto and incorporated
herein by this reference. Rent shall be due on or before the first day of each
calendar month during the term of this Lease without notice, or except as may be
specifically permitted herein or in the Lease, offset or demand, with the first
month's rent paid at the time this Sublease is executed.
7. LATE PAYMENTS. From and after 10 days after Sublessee's receipt of
-------------
the due notice of any payment of Rent or Additional Rent, or any other payments
hereunder, interest shall accrued thereon, until paid in full, at the rate of
12% per annum.
8. SUBLESSEE'S IMPROVEMENTS. (a) Upon complete execution of the
------------------------
Sublease, Sublessor acknowledges that Sublessee intends to modify and construct
-5-
<PAGE>
additional interior improvements to the Subleased Premises in accordance with
Exhibit "C" attached hereto ("Sublessee's Work"). In this regard, by execution
- -----------
hereof, Sublessor hereby expressly consents to the construction and completion
of the Sublessee's Work by Sublessee upon commencement of the Subleased Term,
subject to Sublessee's obtaining the prior consent of Lessor to Sublessee's
Work. The validity of this Sublease shall not be affected, nor shall Rent or
Additional Rent abate during any period of construction of the Sublessee's Work.
Alterations, decorations, installations, additions or improvements in or to the
Subleased Premises shall be made at Sublessee's sole cost and expense and shall
be subject to all of the terms and conditions of the Lease, including, without
limitation, the provisions of Section 3.4 of the Lease.
(b) In addition to those items set forth on Exhibit C attached hereto,
---------
Sublessee's Work shall include the following:
(i) Signage - Subject to the review and approval of Lessor,
-------
Sublessee shall have the right to erect an appropriate sign substantially
similar in size, design and appearance to the signage of other tenants of the
Building advertising in Sublessee's business on the portion of the exterior of
the Building designated by Lessor for placement of Sublessee's sign. The cost of
the installation and all other costs and expenses associated with said sign
shall be borne by Sublessee at its sole cost and expense. The size, design,
appearance and location of Sublessee's signage shall require Lessor's approval
prior to installation. Such sign shall comply with all applicable signage
criteria established by Lessor from time to time and all requirements of
appropriate governmental authorities, and all necessary permits or licenses for
such signage shall be obtained by Sublessee at its sole cost and expense.
Sublessee shall maintain its sign in good condition and repair at all times and
shall save Lessor and Sublessor harmless from injury to person or property
arising from the erection, use and maintenance of said sign. Upon vacating the
Subleased Premises, Sublessee shall remove its sign and repair all damage to the
Building caused by the installation, maintenance or removal of said sign, and,
if Sublessee fails to do so, Lessor or Sublessor may remove such sign and repair
any damage resulting therefrom at Sublessee's expense.
(ii) Exterior Paint - Sublessee shall have the right to paint the
--------------
exterior of the Building at Sublessee's sole cost and expense, provided,
however, the color and materials used by Sublessee to complete any painting
shall be subject to the prior approval of Lessor.
(iii) Safe Deposit Boxes - Sublessee shall have
------------------
the right to install safe deposit boxes within the Subleased Premises at its
sole cost and expense. Upon vacating the Subleased Premises, Sublessee shall,
at its option, remove said safe deposit boxes and repair all damage to the
Building caused by the installation, maintenance or removal of said safe deposit
boxes, and, if Sublessee fails to do so, Lessor or Sublessor may remove said
safe deposit boxes and repair any damage resulting therefrom at Sublessee's
expense.
-6-
<PAGE>
(iv) ATM Facility - Sublessor and Sublessee hereby expressly
------------
acknowledge and agree that the Subleased Premises leased pursuant to this
Sublease include the portion of the Building described on Exhibit A hereto as
---------
the "ATM Facility", in which Sublessee shall have the right, during the term of
this Sublease and any extensions hereof, to install and maintain an Automated
Teller Machine Facility. Upon vacating the Subleased Premises, Sublessee shall
remove said ATM Facility and repair all damage to the Building caused by the
installation, maintenance or removal of said ATM Facility, and, if Sublessee
fails to do so, Lessor or Sublessor may remove said ATM Facility and repair any
damage resulting therefrom at Sublessee's expense. Sublessee may, at its cost
and with Sublessor's and Landlord's prior approval, install a drive up ATM
Facility within proximity to the drive-thru window under the same limitations as
set forth herein.
9. RENTAL ADJUSTMENT. Sublessee shall, for each calendar year during the
-----------------
term of this Sublease pay to Sublessor as Additional Rent, the full amount of
any real property taxes or common area maintenance expenses associated with the
Subleased Premises within thirty (30) days after receiving a bill for any such
Additional Rent from Sublessor.
Sublessee shall be responsible for and shall pay in a timely manner all
charges for consumption of utility charges furnished to the Subleased Premises
during the term of this Sublease.
10. SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon the
----------------
execution of this agreement the sum of FIVE THOUSAND SIX HUNDRED TWENTY-FIVE and
N0/100 ($5,625.00) Dollars as a security for the faithful performance and
observance by Sublessee of the terms, provisions and conditions of this
Sublease, including, but not limited to, the payment of rent and additional
rent. Sublessor may use, apply or retain the whole or any part of the security
so deposited to the extent required for the payment of any rent and additional
rent or any so deposited to the extent required for the payment of any rent and
additional rent or any other sum as to which Sublessee is in default or for any
sum which Sublessor may expend or may be required to expend by reason of
Sublessee's default in respect of any of the terms, covenants and conditions of
the Sublease, including, but not limited to, any damages or deficiency in the
reletting of the premises, whether such damages or deficiency shall have accrued
before or after summary proceedings or other re-entry by Sublessor or Lessor.
If Sublessee shall fully and faithfully comply with all of the terms,
provisions, covenants and conditions of this Sublease, the security shall be
returned to Sublessee after the date fixed at the end of this Sublease and after
delivery of the entire possession of the Subleased Premises to the Sublessor.
Sublessee further covenants that it will not assign or encumber or attempt to
assign or encumber the monies deposited herein as security and that neither
Sublessor nor Sublessor's legal representatives, successors or assigns shall be
bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
11. EMINENT DOMAIN AND CASUALTY.
---------------------------
-7-
<PAGE>
(a) If the whole or any part of the Building or the Premises shall be
taken or condemned in any manner by any competent authority or for any public or
quasi public use, or damaged or destroyed by casualty and the Lessor under the
Lease or Sublessor as Tenant thereunder, shall terminate the Lease as provided
in the Lease, in any such event, the term of this Sublease shall cease and
terminate as of the date of vesting of title or such termination, as the case
may be.
(b) Sublessee agrees to carry those policies of insurance required
under the Lease with respect to the Subleased Premises, which policy or policies
shall name Lessor and Sublessor as an additional insured or loss payee, as
applicable, which policy or policies shall be issued by a company which is
reasonably acceptable to Lessor and Sublessor and licensed to do business in the
state of Georgia and such policy or policies shall provide that said insurance
shall not and may not be cancelled unless thirty (30) days prior written notice
shall have been given to Lessor and Sublessor. Said policy or policies, or
certificates thereof, shall be delivered to Lessor and Sublessor by Sublessee
upon commencement of the term of this Sublease and upon each renewal of said
insurance.
12. NO ASSIGNMENT OR SUBLETTING. Sublessee, for itself, its successors
---------------------------
and assigns, expressly covenants that it shall not assign, mortgage or encumber
this Sublease, nor sublet, nor suffer or permit the Subleased Premises or any
part thereof to be used by others, without the prior written consent of
Sublessor and Lessor in each instance, which consent may be granted or withheld
by Sublessor in its sole, unfettered discretion.
13. QUIET ENJOYMENT. Sublessor covenants and agrees with Sublessee that
---------------
upon Sublessee's paying the rent and additional rent and observing and
performing all of the terms, covenants and conditions on Sublessee's part to be
observed and performed, Sublessee may peaceably and quietly enjoy the Subleased
Premises, subject, nevertheless, to the terms and conditions of this Sublease,
to the Lease and to all and mortgages, security deeds, ground leases or other
superior interests mentioned in the Lease.
14. "SUBLESSOR". The term "Sublessor" as used in this Sublease means only
---------
the Tenant under the Lease at the time in question, so that if the Lease shall
be assigned and assumed, such assignor shall be thereupon released and
discharged from all covenants, conditions and agreements of Sublessor hereunder
after the date of such assignment and assumption, but such covenants and
agreements shall be binding upon each successor assignee until thereafter
assigned.
15. INDEMNITY. Each party hereto does hereby indemnify the other, and
---------
agrees to hold the other harmless, of and from any claim, damage, liability cost
or expense, including reasonable attorneys' fees, which either may suffer or
incur by reason of the failure of the other to perform, observe and comply with
any of the terms, covenants and conditions of this Sublease or the Lease, as
they may effect the Subleased Premises. Sublessee further indemnities Sublessor
to the same extent Sublessor is obligated to indemnify Lessor under the Lease,
but with respect to the Subleased Premises and Sublessee's use thereof only.
Sublessee shall also carry insurance of the types and amounts required by the
-8-
<PAGE>
Lease at all times during the Sublease Term and shall provide reasonable
evidence thereof to Sublessor and Lessor.
16. BROKERAGE. Sublessor and Sublessee hereby covenant and agree to one
---------
another that no brokerage fees or commissions are due with respect to or in
conjunction with this Sublease, except for Grubb & Ellis, which has represented
Sublessor and which is to be paid a real estate commission pursuant to a
separate agreement with Sublessor. Sublessor and Sublessee hereby indemnify one
another, and hold one another harmless, from and against all loss, cost, damage
or expense, including, but not limited to, attorneys' fees and court costs
incurred by a party hereto as a result of any claims for brokerage fees or
commissions due which are made by, through or under the other party thereto.
17. CONSENT OF LESSOR UNDER LEASE. This Sublease is executed subject to
-----------------------------
such right as the Lessor under the Lease may have to withhold consent in the
manner and to the extent described the Lease. Promptly upon execution hereof,
Sublessor will submit this Sublease to Lessor for consent (and will also request
consent for the alterations and improvements described in Exhibit "C") and will
------------
use all reasonable efforts to obtain such consent as soon as reasonably
possible.
18. NOTICES. Any and all notices which are or may be required to be given
-------
pursuant to the terms of this Sublease or the Lease shall be sent by registered
or certified mail, return receipt requested, to the parties hereto at their
respective addresses hereinabove set forth or to such other addresses as either
party shall give notice of in like manner; with a copy if to Sublessor:
NationsBank, N.A. (South), 715 Peachtree Street, Tenth Floor, Atlanta, Georgia
30308; and if to Sublessee at The Citizens Bank of Forsyth County, 119 West
Courthouse Square, Cumming, Georgia 30130, Attn: James J. Meyers.
19. CONTROLLER OF CURRENCY APPROVAL. Notwithstanding anything to the
-------------------------------
contrary set forth herein, the effectiveness of this Sublease, and the
obligations of the parties hereto, including, without limitation, the obligation
of Sublessor to deliver the Subleased Premises to Sublessee, shall be subject to
and conditioned upon the approval of this Sublease and the Subleased Premises by
the Georgia Department of Banking and Finance or other governmental regulatory
agency ("Governmental Approval") whose approval of this Sublease is required,
within ninety (90) days of the date of this Sublease, (the "Approval Period").
If Government Approval is not obtained within the Approval Period, then, at its
option, Sublessor may be entitled to terminate this Lease without further
obligation. Evidence of Government Approval in form and content reasonably
satisfactory to Sublessor shall be submitted by Sublessee to Sublessor
immediately upon Sublessee obtaining such approval.
20. BINDING EFFECT. The covenants, conditions and agreements contained
--------------
herein shall be binding upon and inure to the benefit of Sublessor and Sublessee
and their respective heirs, distributes, executors, administrators, successors
and assigns, as permitted hereby.
-9-
<PAGE>
21. GOVERNING LAW. This Sublease is entered into in the State of Georgia,
-------------
and its validity and interpretation shall be construed in accordance with the
laws of that state.
22. CONSENTS BY LESSOR. All prior consents or approvals required by the
------------------
terms of this Sublease to be obtained from Lessor by Sublessee shall inure to
the benefit of Sublessee.
23. PURCHASE OPTION. Sublessor grants to Sublessee an option to purchase
---------------
the Premises pursuant to the provisions of Section 3.6 of the Lease ("Purchase
Option") upon and subject to the following terms and conditions:
(a) Sublessee shall provide Sublessor with notice of its intent to
exercise the Purchase Option by written notice to Sublessor given at least three
hundred (300) days prior to the Expiration Date;
(b) The Closing shall be held at such location as shall be determined
by Sublessor on or before the Expiration Date;
(c) The purchase price for the Subleased Premises shall be at a price
equal to that determined in accordance with the provisions of Section 3.6 of the
Lease;
(d) In the event of any conflict concerning the Purchase Option
between the terms of Section 3.6 of the Lease and the provisions of this
paragraph 23, the provisions of Section 3.6 of the Lease shall control;
(e) Notwithstanding anything in this Section 23 to the contrary,
Sublessee shall have no right to exercise the Purchase Option under this Section
23, nor shall Sublessor have any obligation to honor such option, at any time
during which either (i) Sublessee is in default, or an event of default exists
with respect to Sublessee under this Sublease, which default or event of default
remains uncured following the expiration of the cure period, if any, expressly
applicable thereto pursuant to the terms of this Sublease, or (ii) this Sublease
is not in full force and effect, or (iii) at the time Sublessee exercises the
Purchase Option, Sublessor no longer holds either fee simple title or leasehold
title pursuant to the Lease of the Subleased Premises; and
(f) Notwithstanding the existence of any other purchase option rights
granted to Sublessor under the Lease, Sublessee's option to purchase the
Subleased Premises shall be limited solely to that specifically set forth in
this Section 23.
-10-
<PAGE>
IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease to be
executed by their duly authorized partners or officers.
SUBLESSOR:
NATIONSBANK, N.A. (SOUTH), a national
banking association
By: /s/ Daniel J. Goerke
--------------------
Its: Vice President
---------------
SUBLESSEE
FORSYTH BANK SHARES, INC., a Georgia corporation, the
holding corporation of THE CITIZENS BANK OF FORSYTH
COUNTY,
By: /s/ James J. Myers
------------------
Its: Chairman
-------------
[CORPORATE SEAL]
-11-
<PAGE>
EXHIBIT 10.2
FIRST AMENDMENT TO SUBLEASE AGREEMENT
THIS FIRST AMENDMENT TO SUBLEASE AGREEMENT (hereinafter referred to as this
"First Amendment") is entered into this ___ day of February, 1996, by and
between NATIONSBANK, N.A. (SOUTH), a national banking association (hereinafter
referred to as "Sublessor"), and FORSYTH BANK SHARES, INC., a Georgia
corporation, holding company of The Citizens Bank of Forsyth County (hereinafter
referred to as "Sublessee").
W I T N E S S E T H:
--------------------
WHEREAS, Sublessee and Sublessor entered into that certain Lease Agreement,
dated February ____, 1996 (hereinafter referred to as the "Lease"), pursuant to
which Sublessee leased from Sublessor certain space consisting of 4,500 rentable
square feet located in a free standing, building with a drive through in Tri-
County Plaza Shopping Center located at 501 Highway 9 and 20, Cumming, Georgia
(hereinafter referred to as the "Building"), which premises are more
particularly described in the Lease (hereinafter referred to as the "Subleased
'Premises"); and
WHEREAS, Sublessor and Sublessee desire to modify certain provisions of the
Sublease in accordance with the terms of this First Amendment;
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Sublessor and
Sublessee agree to amend the Sublease as follows:
1. Defined Terms. Capitalized terms used herein, unless otherwise
-------
defined herein. shall have the meanings ascribed thereto in the Sublease.
2. Amendment to Section 8 of the Sublease. The Sublease is hereby
--------------------------------------
amended by inserting at the end of Section 8 (a) thereof the following:
Sublessee acknowledges and agrees that, at the option of Sublessor or
Lessor, and upon the request of either such party, Sublessee shall be
obligated upon the termination of the term of this Sublease to remove at
its sole cost and expense any and all improvements made to the Subleased
Premises pursuant to Sublessee's Work and to repair all damage to the
Building caused by the installation of said improvements, and, if Sublessee
fails to do so, Lessor or Sublessor may remove said improvements and repair
any damage resulting therefrom at Sublessee's expense.
<PAGE>
3. No Further Amendments; Ratification. Except as expressly amended herein,
-----------------------------------
all terms and conditions of the Sublease remain unamended in full force and
effect and are ratified and confirmed by Sublessor and Sublessee. In the event
of any conflict between the terms and conditions of this First Amendment and any
of the terms and conditions of the Sublease, the terms and conditions of this
First Amendment shall control.
IN WITNESS WHEREOF, the parties have executed this First Amendment on the day
and year first above set forth, with the intent that the parties hereto and
their successors and permitted assigns will be bound hereby.
SUBLESSOR:
----------
NATIONSBANK, N.A. (SOUTH)
By:
---------------------------
Title:
------------------------
SUBLESSEE:
----------
FORSYTH BANK SHARES, INC., a Georgia corporation,
the holding corporation of THE CITIZENS BANK OF
FORSYTH COUNTY
By: /s/ James J. Myers
---------------------------------------------
Title: Chairman
----------------------------------------
[CORPORATE SEAL]
-2-
<PAGE>
EXHIBIT 10.3
SECOND AMENDMENT TO SUBLEASE AGREEMENT
THIS SECOND AMENDMENT TO SUBLEASE AGREEMENT (hereinafter referred to as
this "Second Amendment") is entered into this 10th day of May, 1996, by and
between NATIONSBANK, N.A. (SOUTH), a national banking association (hereinafter
referred to as "Sublessor"), and FORSYTH BANK SHARES, INC., a Georgia
corporation, holding company of The Citizens Bank of Forsyth County (hereinafter
referred to as "Sublease").
WITNESSETH:
WHEREAS, Sublessee and Sublessor entered into that certain Lease Agreement,
dated February 9, 1996 as amended by that certain First Amendment to Sublease
Amendment dated as of February ____, 1996 (hereinafter referred to as the
"Lease"), pursuant to which Sublessee leased from Sublessor certain space
consisting of 4,500 rentable square feet located in a free standing building
with a drive through in Tri-County Plaza Shopping Center located at 501 Highway
9 and 20, Cumming, Georgia (hereinafter referred to as the "Building"), which
premises are more particularly described in the Lease (hereinafter referred to
as the "Subleased Premises"), and
WHEREAS, Sublessor and Sublessee desire to further modify, certain
provisions of the Sublease in accordance with the terms of this Second
Amendment;
NOW, THEREFORE. for and in consideration of the mutual covenants and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Sublessor and
Sublessee agree to amend the Sublease as follows:
1. Defined Terms. Capitalized terms used herein, unless otherwise defined
-------------
herein, shall have the meanings ascribed thereto in the Sublease.
2. Amendment to Section 19 of the Sublease. Section 19 of the Sublease is
---------------------------------------
hereby deleted in its entirety and the following is substituted in lieu
thereof
"19. Comptroller of Currency Approval. Notwithstanding anything to
--------------------------------
the contrary set forth herein, the effectiveness of this Sublease, and
the obligations of the parties hereto, including, without limitation,
the obligation of Sublessor to deliver the Subleased Premises to
Sublessee, shall be subject to and conditioned upon the approval of
this Sublease and the Subleased Premises by the Georgia Department of
Banking and Finance or other governmental regulatory agency
("Governmental Approval") whose approval of this Sublease is required,
within one hundred eighty (180) days of the date of this Sublease,
(the "Approval Period"). If Government Approval is not obtained
within the Approval Period, then, at its option, Sublessor may be
entitled to terminate this Lease without further obligation. Evidence
of Government Approval in form and content reasonably satisfactory to
Sublessor shall be submitted by Sublessee to Sublessor immediately
upon Sublessee obtaining such approval."
3. No Further Amendments; Ratification. Except as expressly amended
--------------------------------
herein, all terms and conditions of the Sublease remain unamended in full
force and effect and are ratified and confirmed by Sublessor and Sublessee.
In the event of any conflict between the terms and conditions of this
<PAGE>
Second Amendment and any of the terms and conditions of the Sublease, the
terms and conditions of this Second Amendment shall control.
IN WITNESS WHEREOF, the parties have executed this Second Amendment on the
day and year first above set forth, with the intent that the parties hereto and
their successors and permitted assigns will be bound hereby.
SUBLESSOR:
----------
NATIONSBANK N.A. (SOUTH)
By:/s/ George M. Snow
--------------------
Title: Vice President
-----------------
SUBLESSEE:
----------
FORSYTH BANK SHARES, INC., a Georgia corporation,
the holding company of THE CITIZENS BANK OF
FORSYTH COUNTY
By:/s/ James J. Myers
--------------------
Title: Chairman
-----------------
-2-
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of June 28, 1996, is
made by and between FORSYTH BANCSHARES, INC., a Georgia corporation (the
"Employer" or the "Company") which is the proposed bank holding company for The
Citizens Bank of Forsyth County (Proposed), a proposed state nonmember bank (the
"Bank"), and DAVID H. DENTON, an individual resident of Georgia (the
"Executive").
The Employer is in the process of organizing the Bank, and the Executive
has agreed to serve as President and Chief Executive Officer of the Bank and the
Company. Upon organization of the Bank, the Employer and the Executive
contemplate that this Agreement will be assigned by the Employer to the Bank and
that the Bank will assume the duties of the Company hereunder (except pursuant
to Section 3). Following such assignment, the term "Employer" as used herein
from time to time shall refer to the Bank.
The Employer recognizes that the Executive's contribution to the growth and
success of the Bank during its organization and initial years of operations will
be a significant factor in the success of the Bank. The Employer desires to
provide for the employment of the Executive in a manner which will reinforce and
encourage the dedication of the Executives to the Bank and promote the best
interests of the Bank and its shareholders. The Executive is willing to serve
the Employer (and, after assignment of this Agreement, the Bank) on the terms
and conditions herein provided. Certain terms used in this Agreement are
defined in Section 17 hereof.
In consideration of the foregoing, the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Employer shall employ the Executive, and the
----------
Executive, and the Executive shall serve the Employer, as President and chief
Executive Officer of the Bank and the Company upon the terms and conditions set
forth herein. The Executive shall have such authority and responsibilities
consistent with his position as are set forth in the Company's or the Bank's
Bylaws or assigned by the Company's or the Bank's Board of Directors (the
"Board") from time to time. The Executive shall devote his full business time,
attention, skill and efforts to the performance of his duties hereunder, except
during periods of illness or periods of vacation and leaves of absence
consistent with Bank policy. The Executive may devote reasonable periods to
service as a director or advisor to other organizations, to charitable and
community activities and to managing his personal investments, provided that
--------
such activities do no materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or adverse to, the
interests of the Company or the Bank.
2. Term. Unless earlier terminated as provided herein, the Executive's
----
employment under this Agreement shall commence on the date hereof and be for a
<PAGE>
period (the "Term") of five years. At the end of each year of the Term, upon
adoption of a resolution by the Board of Directors of the Bank (with the
Executive abstaining) reflecting a determination by the Board that the Executive
has satisfactorily performed his duties hereunder through such date, the Term
shall be extended for an additional year so that the remaining term shall
continue to be five years; provided that the Executive may at any time, by
--------
written notice to the Bank, fix the Term to a finite term of five years
commencing with the later of the date hereof or the date of the latest such
resolution. Notwithstanding the foregoing, the Term of employment hereunder
will end on the date that the Executive attains the retirement age, if any,
specified in the Bylaws of the Bank for directors of the Bank.
3. Compensation and Benefits.
-------------------------
(a) Prior to the opening of the Bank for business and assignment of
this Agreement to the Bank, the Employer shall pay the Executive a salary of
$85,000 per annum, plus his medical insurance premium yearly. Thereafter, the
Employer shall pay the Executive a salary of $98,000 plus his yearly medical
insurance premium and retirement benefits. The Board (or an appropriate
committee of the Board) shall review the Executive's salary at least annually
and may increase the Executive's base salary if it determines in its sole
discretion that an increase is appropriate, however, there will be no salary
increase until the bank becomes cumulatively profitable.
(b) In the event a stock option plan is implemented, the Executive
shall participate in the Bank's long-term equity incentive program and be
eligible for the grant of stock options, restricted stock and other awards
thereunder or under any similar plan adopted by the Company.
(c) The Executive shall participate in all retirement, welfare and
other benefit plans or programs of the Employer now or hereafter applicable
generally to employees of the Employer or to a class of employees that includes
senior executives of the Employer; provided that during any period during the
--------
Term that the Executive is subject to a Disability, and during the 180-day
period of physical or mental infirmity leading up to the Executive's Disability,
the amount of the Executive's compensation provided under this Section 3 shall
be reduced by the sum of the amounts, if any, paid to the Executive for the same
period under any disability benefit or pension plan of the Employer or any of
its subsidiaries.
(d) The Employer shall provide the Executive with a term life
insurance policy providing for death benefits totaling $600,000 payable to the
Employer and $400,000 payable to the Executive's family, and the Executive shall
cooperate with the Employer in the securing and maintenance of such policy.
(e) Beginning upon the opening of the Bank for business, the Company
shall provide the Executive with an automobile owned or leased by the Company of
a make and model appropriate to the Executive's status.
-2-
<PAGE>
(f) The Employer shall reimburse the Executive for reasonable travel
and other expenses related to the Executive's duties which are incurred and
accounted for in accordance with the normal practices of the Employer.
(g) The Executive shall be entitled to three weeks of paid vacation
during each year of his employment hereunder, which he shall be entitled to take
at such time or times as in the reasonable judgment of the Employer shall not
materially interfere with the conduct of his duties under this Agreement.
4. Termination.
-----------
(a) The Executive's employment under this Agreement may be terminated
prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) by the Employer due to the Disability of the Executive upon
delivery of a Notice of Termination to the Executive;
(iii) by the Employer for Cause upon delivery of a Notice of
Termination to the Executive;
(iv) by the Executive for Good Reason upon deliver of a Notice of
Termination to the Employer within a 90-day period beginning on the
30th day after the occurrence of a Change in Control or within a 90-
day period beginning on the one year anniversary of the occurrence of
a Change in Control;
(v) by the Employer if its efforts to organize the Bank is
abandoned; and
(vi) by the Executive effective upon the 30th day after delivery of
a Notice of Termination.
(b) If the Executive's employment with the Employer is terminated during
the Term (i) by reason of the Executive's death or (ii) by the Employer for
Disability or Cause, the Employer shall pay to the Executive (or, in the case of
his death, the Executive's estate) within 15 days after the Termination Date a
lump sum cash payment equal to the Accrued Compensation.
(c) If the Executive's employment with the Employer is terminated by the
Employer in violation of this Agreement or by the Executive for Good Reason, in
addition to other rights and remedies available in law or equity, the Executive
shall be entitled to the following:
-3-
<PAGE>
(i) the Employer shall pay the Executive in cash within 15 days of
the Termination Date an amount equal to all Accrued Compensation;
(ii) the Employer shall pay to the Executive in cash at the end of
each of the 12 consecutive months following the Termination Date an
amount equal to one-twelfth of the Base Amount;
(iii) for the period from the Termination Date through the date
that the Executive attains the age of 65 (the "Continuation Period"),
the Employer shall at its expense continue on behalf of the Executive
and his dependents and beneficiaries the life insurance, disability,
medical, dental and hospitalization benefits provided (x) to the
Executive at any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly situated
executives who continue in the employ of the Employer during the
Continuation Period. The coverage and benefits (including deductibles
and costs) provided in this Section 4(c)(iii) during the Continuation
Period shall be no less favorable to the Executive and his dependents
and beneficiaries that the most favorable of such coverages and
benefits during any of the periods referred to in clauses (x) and (y)
above. The Employer's obligations hereunder with respect to the
foregoing benefits shall be limited to the extent that the Executive
obtains any such benefits pursuant to a subsequent employer's benefit
plans, in which case the Employer may reduce the coverage of any
benefits it is required to provide the Executive hereunder as long as
the aggregate coverages and benefits of the combined benefit plans is
no less favorable to the Executive than the coverages and benefits
required to be provided hereunder. This subsection (iii) shall not be
interpreted so as to limit any benefits to which the Executive or his
dependents or beneficiaries may be entitled under any of the
Employer's employee benefit plans, programs or practices following the
Executive's termination of employment, including, without limitation,
retiree medical and life insurance benefits; and
(iv) the restrictions on any outstanding incentive awards
(including restricted stock) granted to the executive under the
Company's or the Bank's long-term equity incentive program or any
other incentive plan or arrangement shall lapse and become 100%
vested, all stock options and stock appreciation rights granted to the
Executive shall become immediately exerciseable and shall become 100%
vested, and all performance units granted to the Executive shall
become 100% vested.
(d) If the Executive's employment with the Employer is terminated by the
Employer pursuant to Section 4(a)(v) hereof, the Executive shall be entitled to
the following:
-4-
<PAGE>
(i) the Employer shall pay the Executive in cash within 15 days of
the Termination Date an amount equal to all Accrued Compensation; and
(ii) the Employer shall pay to the Executive in cash at the end of
each of the six consecutive months following the Termination Date an
amount equal to one-twelfth of the Base Amount.
(e) If the Executive's employment with the Employer is terminated by the
Executive pursuant to Section 4(a)(vi) hereof, the Employer shall pay the
Executive in cash within 15 days of the Termination Date an amount equal to all
Accrued Compensation.
(f) The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to the Executive in any subsequent employment except as
provided in Section 4(c)(iii).
(g) In the event that any payment or benefit (within the meaning of
Section 280(b)(2) of the Code) to the Executive or for his benefit paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise in connection with, or arising out of, his employment with the
Employer or a change in ownership or effective control of the Employer or of a
substantial portion of its assets (a "Payment" or "Payments"), would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise tax"), then the Executive will be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties, other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(h) The severance pay and benefits provided for in this Section 4 shall
be in lieu of nay other severance or termination pay to which the Executive may
be entitled under any Employer severance or termination plan, program, practice
or arrangement. The Executive's entitlement to any other compensation or
benefits shall be determined in accordance with the Employer's employee benefit
plans and other applicable programs, policies and practices then in effect.
5. Trade Secrets; Confidential Business Information. The Executive shall
------------------------------------------------
not, at any time, either during the Term of his employment or after the
Termination Date, use or disclose any Trade Secrets or Confidential Business
-5-
<PAGE>
Information of the Employer, except in fulfillment of his duties as the
Executive during his employment, for so long as the pertinent information or
data remain Trade Secrets or Confidential Business Information, whether or not
the Trade Secrets or Confidential Information are in written or tangible form.
6. Non-Competition and Non-solicitation Covenants. The Executive shall not,
----------------------------------------------
during the Term and for a period of one year thereafter, either for himself or
on behalf of any other person, directly or indirectly, without the prior consent
of the Employer, (i) serve as a director, officer at the Vice President level or
higher or organizer or promoter of, or provide executive management services to,
any financial institution located within Forsyth County, (ii) solicit any Major
Customer for the purpose of providing banking services to such Major Customer,
or (iii) solicit any employee of the Employer for employment by any other party.
For purposes of this Section, a "Major Customer" shall mean any customer of the
Employer that Employee has contacted, negotiated with, or performed any services
on behalf of, during the Term or the preceding two years of the Term, which ever
is shorter, and that has maintained or purchased for the Employer at any time
during such period deposits, mutual funds or other investments in excess of
$20,000.
7. Successors; Binding Agreement.
-----------------------------
(a) This Agreement shall be binding upon and shall inure to the benefit
of the Employer, its Successors and Assigns and the Employer shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Employer would be required to
perform it if no such succession or assignment had taken place.
(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
8. Fees and Expenses. The Employer shall pay all legal fees and related
-----------------
expenses (including the costs of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (a) the Executive's termination of
employment (including all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment) and (b) the Executive seeking
to obtain or enforce any right or benefit provided by this Agreement; but only
if the circumstances set forth in clauses (a) and (b) occurred on or after a
Change in Control.
9. Notice. For purposes of this Agreement, notices and all other
------
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
-6-
<PAGE>
to the other, provided that all notices to the Employer shall be directed to the
--------
attention of the Board with a copy to the Secretary of the Employer. All
notices and communications shall be deemed to have been received on the date of
delivery thereof, except that notice of change of address shall be effective
only upon receipt.
10. Settlement of Claims. The Employer's obligation to make the payments
--------------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Employer may have against the Executive or others. The Employer may,
however, withhold from any benefits payable under this Agreement all federal,
state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
11. Modification and Waiver. No provisions of this Agreement may be
-----------------------
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and the Employer. No waiver by
any party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
12. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Georgia without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in Forsyth County in the State of Georgia.
13. Severability. The parties agree that the provisions of this Agreement
------------
are severable and the invalidity or unenforceability of any provision in while
or part shall not affect the validity or enforceability of any enforceable part
of such provision or any other provisions hereof.
14. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
15. Headings. The headings of Sections herein are included solely for
--------
convenience of reference shall not control the meaning or interpretation of any
of the provisions of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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<PAGE>
17. Definitions. For purposes of this Agreement, the following terms shall
-----------
have the following meanings:
(a) "Accrued Compensation" shall mean an amount which includes all
amounts earned or accrued through the Termination Date, but not paid as of the
Termination Date including (i) Base salary and any vacation time earned but not
used, and (ii) reimbursement for reasonable and necessary expenses incurred by
the Executive on behalf of the Employer during the period ending on the
Termination Date.
(b) "Base Amount" shall mean the greater of the Executive's annual base
salary (i) at the rate in effect on the termination Date or (ii) at the highest
rate in effect at any time during the 90-day period prior to the Change in
Control, and shall include all amounts of his base salary that are deferred
under the qualified and nonqualified employee benefit plans of the Employer or
any other agreement or arrangement.
(c) The termination of the Executive's employment shall be for "Cause"
if it is a result of:
(i) any act that (A) constitutes, on the part of the Executive,
fraud, dishonesty, gross malfeasance of duty, or conduct grossly
inappropriate to the Executive's office and (B) is demonstrably likely
to lead to material gain to or personal enrichment of the Executive;
or
(ii) the conviction (from which no appeal may be or is timely
taken) of the Executive of a felony; or
(iii) the suspension or removal of the Executive by federal or
state banking regulatory authorities acting under lawful authority
pursuant to provisions of federal or state law or regulation which may
be in effect from time to time;
provided, however, that in the case of clause (i) above, such conduct shall not
- -------- -------
constitute Cause unless (A) there shall have been delivered to the Executive a
written notice setting forth with specificity the reasons that the Board
believes the Executive's conduct constitutes the criteria set forth in clause
(i), (B) the Executive shall have been provided the opportunity to be heard in
person by the Board (with the assistance of the Executive's counsel if the
Executive so desires) and (C) after such hearing, the termination is evidenced
by a resolution adopted in good faith by two-thirds of the members of the Board
(other than the Executive).
(d) A "Change in Control" shall mean the occurrence during the Term of
any of the following events:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Bank (the "Voting Securities") by any
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<PAGE>
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934 (the "1934 Act"))
immediately after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or
more of the combined voting power of the Company's then outstanding
Voting Securities; provided, however, that in determining whether a
-------- -------
Change in Control has occurred, Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (1) an employee
benefit plan (or a trust forming a part thereof) maintained by (x) the
Company or (y) any corporation or other Person of which a majority of
its voting power or its equity securities or equity interest is owned
directly or indirectly by the Company (a "Subsidiary"), (2) the
Company or any Subsidiary or (3) any Person in connection with a "Non-
Control Transaction" (as hereinafter defined).
(ii) The individuals who, as of the date of this Agreement, are
members of the Board of either the Company or the Bank (the "Incumbent
Board") cease for any reason to constitute at least two-thirds of the
Board; provided, however, that if the election, or nomination for
-------- -------
election by the Company's or Bank's shareholders, of any new director
was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Agreement, be considered
as a member of the Incumbent Board; provided, further, however, that
-------- ------- -------
no individual shall be considered a member of the Incumbent Board if
such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Context") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) Approval by shareholders of the Company or the Bank of:
(A) A merger, consolidation or reorganization involving the
Bank, unless
(1) the shareholders of the Company or the Bank, as
the case may be, immediately before such merger,
consolidation or reorganization, own, directly
or indirectly, immediately following such
merger, consolidation or reorganization, at
least two-thirds of the combined voting power of
-9-
<PAGE>
the outstanding voting securities of the
corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization and
(2) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for such
merger, consolidation or reorganization
constitute at least two-thirds of the members of
the board of directors of the Surviving
Corporation.
(A transaction described in clauses (1) and (2) shall
herein be referred to as a "Non-Control
Transaction.")
(B) A complete liquidation or dissolution of the
Company or the Bank; or
(C) an agreement for the sale or other disposition
of all or substantially all of the assets of the
Company or the Bank to any Person (other than a
transfer to a Subsidiary).
(iv) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior to a
Change in Control and the Executive reasonably demonstrates that such
termination (A) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a Change
in Control and who effectuates a Change in Control (a "Third Party")
or (B) otherwise occurred in connection with, or in anticipation or, a
Change in Control which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such
termination of the Executive's employment.
(e) "Confidential Business Information" shall mean any nonpublic
information of a competitively sensitive or personal nature, other than Trade
Secrets, acquired by the Executive, directly or indirectly, in connection with
the Executive's employment (including his employment with the Employer prior to
the date of this Agreement), including (without limitation) oral and written
-10-
<PAGE>
information concerning the Employer relating to financial position and results
of operations (revenues, margins, assets, net income, etc.), annual and long-
range business plans, marketing plans and methods, account invoices, oral or
written customer information and personnel information). Confidential Business
Information also includes information recorded in manuals, memoranda,
projections, minutes, plans, computer programs and records, whether or not
legended or otherwise identified by the Employer as Confidential Business
Information, as well as information which is the subject of meetings and
discussions and not so recorded; provided, however, that Confidential Business
-------- -------
Information shall not include information that is generally available to the
public, other than as a result of disclosure, directly or indirectly, by the
Executive, or was available to the Executive on a nonconfidential basis prior to
its disclosure to the Executive.
(f) "Disability" shall mean a physical or mental infirmity which
impairs the Executive's ability to substantially perform his duties with the
Employer for a period of 180 consecutive days, as determined by an independent
physician selected with the approval of both the Employer and the Executive.
(g) "Good Reason" shall mean the occurrence after a Change in Control
of any of the events or conditions described in subsections (i) through (viii)
hereof:
(i) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, represents an adverse change from his
status, title, position or responsibilities as in effect at any time
within 90 days preceding the date of a Change in Control or at any time
thereafter; the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable judgment, are
inconsistent with his status, title, position or responsibilities as in
effect at any time within 90 days preceding the date of a Change in
Control or at any time thereafter; any removal of the Executive from or
failure to reappoint or reelect him to any of such offices or
positions, except in connection with the termination of his employment
for Disability or Cause, as a result of his death, or by the Executive
other than for Good Reason, or any other change in condition or
circumstances that in the Executive's reasonable judgment makes it
materially more difficult for the Executive to carry out the duties and
responsibilities of his office than existed at any time within 90 days
preceding the date of Change in Control or at any time thereafter;
(ii) a reduction in the Executive's base salary or any failure to
pay the Executive any compensation or benefits to which he is entitled
within five days of the date due;
(iii)the Employer's requiring the Executive to be based at any
place outside a 30-mile radius from the executive offices occupied by
-11-
<PAGE>
the Executive immediately prior to the Change in Control, except for
reasonably required travel on the Employer's business which is not
materially greater than such travel requirements prior to the Change in
Control;
(iv) the failure by the Employer to (A) continue in effect (without
reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan in which the Executive was
participating at any time within 90 days preceding the date of a Change
in Control or at any time thereafter, unless such plan is replaced with
a plan that provides substantially equivalent compensation or benefits
to the Executive or (B) provide the Executive with compensation and
benefits, in the aggregate, at least equal (in terms of benefit levels
and/or reward opportunities) to those provided for under each other
employee benefit plan, program and practice in which the Executive was
participating at any time within 90 days preceding the date of a Change
in Control or at any time thereafter;
(v) the insolvency or the filing (by any party, including the
Employer) of a petition for bankruptcy of the Employer, which petition
is not dismissed within 60 days;
(vi) any material breach by the Employer of any material provision
of this Agreement;
(vii)any purported termination of the Executive's employment
for Cause by the Employer which does not comply with the terms of this
Agreement; or
(viii)the failure of the Employer to obtain an agreement,
satisfactory to the Executive, from any Successors and Assigns to
assume and agree to perform this Agreement, as contemplated in Section
6 hereof.
Any event or condition described in clause (i) through (viii) above which occurs
prior to a Change in Control but which the Executive reasonably demonstrates (A)
was at the request of a Third Party or (B) otherwise arose in connection with,
or in anticipation of, a Change in Control which actually occurs, shall
constitute Good Reason for purposes of this Agreement, notwithstanding that it
occurred prior to the Change in Control. The Executive's right to terminate his
employment for Good Reason shall not be affected by his incapacity due to
physical or mental illness.
(h) "Notice of Termination" shall mean a written notice of termination
from the Employer or the Executive which specifies an effective date of
termination, indicates the specific termination provision in this Agreement
-12-
<PAGE>
relied upon, and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(i) "Opening Date" shall mean the date the Bank commences
operations.
(j) "Successors and Assigns" shall mean the Bank or a corporation or
other entity acquiring all or substantially all the assets and business of the
Bank (including this Agreement), whether by operation of law or otherwise.
(k) "Termination Date" shall mean, in the case of the Executive's
death, his date of death, and in all other cases, the death specified in the
Notice of Termination.
(l) "Trade Secrets" shall mean any information, including but not
limited to, technical or nontechnical data, a formula, a pattern, a compilation,
a program, a device, a method, a technique, a drawing, a process, financial
data, financial plans, product plans, information on customers or a list of
actual or potential customers or suppliers, which: (i) derives economic value,
actual or potential, fro not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and
its seal to be affixed hereunto by its officers thereunto duly authorized, and
the Executive has signed and sealed this Agreement, effective as of the date
first above written.
ATTEST: FORSYTH BANCSHARES, INC.
By: /s/ Judy Andrews By: /s/ James J. Myers
---------------- ------------------
Name: James J. Myers
Title: Chairman
EXECUTIVE
/s/ David H. Denton
-------------------
David H. Denton
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<PAGE>
EXHIBIT 10.5
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective as of
the ____ day of __________, 1996, by and between Forsyth Bancshares, Inc., a
Georgia corporation (the "Company"), and The Bankers Bank (the "Escrow Agent").
W I T N E S S E T H:
--------------------
WHEREAS, the Company proposes to offer and sell (the "Offering") up to 800,000
shares of Common Stock, no par value per share (the "Shares"), to investors at
$10.00 per Share pursuant to a registered public offering; and
WHEREAS, the Company desires to establish an escrow for funds forwarded by
subscribers for Shares, and the Escrow Agent is willing to serve as Escrow Agent
upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. DEPOSIT WITH ESCROW AGENT.
-------------------------
(a) The Escrow Agent agrees that it will from time to time accept, in its
capacity as escrow agent, subscription funds for the Shares (the "Escrowed
Funds") received by it from subscribers or from the Company when it has received
checks from subscribers. All checks shall be made payable to the Escrow Agent.
If any check does not clear normal banking channels in due course, the Escrow
Agent will promptly notify the Company. Any check which does not clear normal
banking channels and is returned by the drawer's bank to Escrow Agent will be
promptly turned over to the Company along with all other subscription documents
relating to such check. Any check received that is made payable to a party
other than the Escrow Agent shall be returned to the Company for return to the
proper party. The company in its sole and absolute discretion may reject any
subscription for shares for any reason and upon such rejection it shall notify
and instruct the Escrow Agent in writing to return the Escrowed Funds by check
made payable to the subscriber. If the Company rejects or cancels any
subscription for any reason the Company will retain any interest earned on the
Escrowed Funds to help defray organizational costs.
(b) Subscription agreements for the Shares shall be reviewed for accuracy by
the Company and, immediately thereafter, the Company shall deliver to the Escrow
Agent the following information: (1) the name and address of the subscriber;
(ii) the number of Shares subscribed for by such subscriber; (iii) the
subscription price paid by such subscriber; (iv) the subscriber's tax
identification number certified by such subscriber; and (v) a copy of the
subscription agreement.
<PAGE>
2. INVESTMENT OF ESCROWED FUNDS. Upon collection of each check by the
----------------------------
Escrow Agent, the Escrow Agent shall invest the funds in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit Insurance
Corporation or another agency of the United States government, short-term
securities issued or fully guaranteed by the United States government, federal
funds, or such other investments as the Escrow Agent and the Company shall
agree. The Company shall provide the Escrow Agent with instructions from time
to time concerning in which of the specific investment instruments described
above the Escrowed Funds shall be invested, and the Escrow Agent shall adhere to
such instructions. Unless and until otherwise instructed by the Company, the
Escrow Agent shall by means of a "Sweep" or other automatic investment program
invest the Escrowed Funds in blocks of $10,000 in federal funds. Interest and
other earnings shall start accruing on such funds as soon as such funds would be
deemed to be available for access under applicable banking laws and pursuant to
the Escrow Agent's own banking policies.
3. DISTRIBUTION OF ESCROWED FUNDS. The Escrow Agent shall distribute the
------------------------------
Escrowed Funds in the amounts, at the times, and upon the conditions hereinafter
set forth in this Agreement.
(a) If at any time on or prior to the expiration date of the offering as
described in the prospectus relating to the offering, (the "Closing Date"), (i)
the Escrow Agent has certified to the Company in writing that the Escrow Agent
has received at least $5,500,000.00 in Escrowed Funds, and (ii) the Escrow Agent
has received a certificate from the President or the Chairman of the Board of
the Company that all other conditions to the release of funds as described in
the Company's Registration Statement filed with the Securities and Exchange
Commission pertaining to the public offering have been met, then the Escrow
Agent shall deliver the Escrowed Funds to the company to the extent such
Escrowed Funds are collected funds. If any portion of the Escrowed Funds are
not collected funds, then the Escrow Agent shall notify the Company of such
facts and shall distribute such funds to the Company only after such funds
become collected funds. For purposes of this Agreement, "collected funds" shall
mean all funds received by the Escrow Agent which have cleared normal banking
channels. In all events, the Escrow Agent shall deliver not less than
$5,500,000.00 in collected funds to the Company, except as provided in
Paragraphs 3(b) and 3(c) hereof
(b) In lieu of collected funds, the organizers of the Company may pay for
subscriptions by assigning to the Company any portion of any obligation of the
Company to repay any advances made by such organizers to the Company to fund
organizational or other expenses and delivering such assignment to the Escrow
Agent to be held hereunder.
(c) If the Escrowed Funds do not, on or prior to the Closing Date, become
deliverable to the Company based on failure to meet the conditions described in
Paragraph 3(a), or if the Company terminates the offering at any time prior to
the Closing Date and delivers written notice to the Escrow Agent of such
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<PAGE>
termination (the "Termination Notice"), the Escrow Agent shall return the
Escrowed Funds which are collected funds as directed in writing by the Company
to the respective subscribers in amounts equal to the subscription amount
theretofore paid by each of them. All uncleared checks representing Escrowed
Funds which are not collected funds as of the Initial Closing Date shall be
collected by the Escrow Agent, and together with all related subscription
documents thereof shall be delivered to the Company by the Escrow Agent, unless
the Escrow Agent is otherwise specifically directed in writing by the Company.
4. DISTRIBUTION OF INTEREST. Any interest earned on the Escrowed Funds
------------------------
shall be retained by the Company.
5. FEE OF ESCROW AGENT. The Company shall pay the Escrow Agent a fee of
-------------------
$1,500.00 for its services hereunder. In addition, the escrow account will
accrue a service charge of $15.00 per month. All of these fees are payable
upon the release of the Escrowed Funds, and the Escrow Agent is hereby
authorized to deduct such fees from the Escrowed Funds prior to any release
thereof pursuant to Section 3 hereof
6. LIABILITY OF ESCROW AGENT.
-------------------------
(a) In performing any of its duties under the Agreement, or upon the claimed
failure to perform its duties hereunder, the Escrow Agent shall not be liable to
anyone for any damages, losses or expenses which it may incur as a result of the
Escrow Agent so acting, or failing to act; provided, however, the Escrow Agent
shall be liable for damages arising out of its willful default or misconduct or
its gross negligence under this Agreement. Accordingly, the Escrow Agent shall
not incur any such liability with respect to (i) any action taken or omitted to
be taken in good faith upon advice of its counsel or counsel for the Company
which is given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder ; or (ii) any action taken or
omitted to be taken in reliance upon any document, including any written notice
or instructions provided for this Escrow Agreement, not only as to its due
execution and to the validity and effectiveness of its provisions but also as to
the truth and accuracy of any information contained therein, if the Escrow Agent
shall in good faith believe such document to be genuine, to have been signed or
presented by a proper person or persons, and to conform with the provisions of
this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow Agent
against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and counsel
fees and disbursements which may be imposed by the Escrow Agent or incurred by
it in connection with its acceptance of this appointment as Escrow Agent
hereunder or the performance of its duties hereunder, including, without
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter thereof, except, that if the Escrow Agent shall be found guilty
of willful misconduct or gross negligence under this agreement, then, in that
event, the Escrow agent shall bear all such losses, claims, damages and
expenses.
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<PAGE>
(c) If a dispute ensues between any of the parties hereto which, in the
opinion of the Escrow Agent, is sufficient to justify its doing so, the Escrow
Agent shall retain legal counsel of its choice as it reasonably may deem
necessary to advise it concerning its obligations hereunder and to represent it
in any litigation to which it may be a part by reason of this Agreement. The
Escrow Agent shall be entitled to tender into the registry or custody of any
court of competent Jurisdiction all money or property in its hands under the
terms of this Agreement, and to file such legal proceedings as it deems
appropriate, and shall thereupon by discharged from all further duties under
this Agreement. Any such legal action may be brought in any such court as the
Escrow Agent shall determine to have jurisdiction thereof In connection with
such dispute, the Company shall indemnify the Escrow Agent against its court
costs and reasonable attorney's fees incurred.
(d) The Escrow Agent may resign at any time upon giving thirty (3) days
written notice to the Company. If a successor escrow agent is not appointed by
Company within thirty (3) days after notice of resignation, the Escrow Agent may
petition any court of competent jurisdiction to name a successor escrow agent
and the Escrow Agent herein shall be fully relieved of all liability under this
Agreement to any and all parties upon the transfer of the Escrowed Funds and all
related documentation thereto, including appropriate information to assist the
successor escrow agent with the reporting of earnings of the Escrowed Funds to
the appropriate state and federal agencies in accordance with the applicable
state and federal income tax laws, to the successor escrow agent designated by
the Company appointed by the court.
7. APPOINTMENT OF SUCCESSOR. The Company may, upon the delivery of thirty
------------------------
(30) days written notice appointing a successor escrow agent to the Escrow
Agent, terminate the services of the Escrow Agent hereunder. In the event of
such termination, the Escrow Agent shall immediately deliver to the successor
escrow agent selected by the Company, all documentation and Escrowed Funds
including interest earnings thereon in its possession, less any fees and
expenses due to the Escrow Agent or required to be paid by the Escrow Agent to a
third party pursuant to this Agreement.
8. NOTICE. All notices, requests, demands and other communications or
-------
deliveries required or permitted to be given hereunder shall be in writing and
shall be deemed to have been duly given three days after having been deposited
for mailing if sent by registered mail, or certified mail return receipt
requested, or delivery by courier, to the respective addresses set forth below:
IF TO THE SUBSCRIBERS FOR SHARES: To their respective addresses as specified
in their Subscription Agreements.
THE COMPANY:
Forsyth Banchares, Inc.
119 West Courthouse Square
Cumming, Georgia 30130
-4-
<PAGE>
Attention: David H. Denton, President
WITH A COPY TO:
Alston Bird
One Atlantic Center
1201 W. Peachtree
Atlanta, Georgia 30309-3424
Attention: Jeff Allred
THE ESCROW AGENT: The Bankers Bank
3715 Northside Parkway
300 Northcreek, Suite 800
Atlanta, Georgia 30327
Attention: Mr. William R. Burkett
Senior Vice President
9. REPRESENTATIONS OF THE COMPANY. The Company hereby acknowledges that the
------------------------------
status of the Escrow Agent with respect to the offering of the Shares is that of
agent only for the limited purposes herein set forth, and hereby agrees it will
not represent or imply that the Escrow Agent, by serving as the Escrow Agent
hereunder or otherwise, has investigated the desirability or advisability in an
investment in the Shares, or has approved, endorsed or passed upon the merits of
the Shares, nor shall the Company use the name of the Escrow Agent in any manner
whatsoever in connection with the offer or sale of the Shares, other than by
acknowledgment that it has agreed to serve as Escrow Agent for the limited
purposes herein set forth.
10. GENERAL.
--------
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement sets forth the entire agreement and understanding of the
parties with regard to this escrow transaction and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof.
(d) This Agreement may be amended, modified, superseded or canceled, and any
of the terms or conditions hereof may be waived, only by a written instrument
executed by each party hereto or, in the case of a waiver, by the party waiving
compliance. The failure of any part at any time or times to require performance
of any provision hereof shall in no manner affect the right at a later time to
enforce the same. No waiver in any one or more instances by any part of any
condition, or of the breach of any term contained in this Agreement, whether by
conduct or otherwise, shall be deemed to be, or construed as, a further or
continuing waiver of any such condition of breach, or a waiver of any other
condition or of the breach of any other terms of this Agreement.
-5-
<PAGE>
(e) 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.
(f) This Agreement shall inure to the benefit of the parties hereto and their
respective administrators, successors and assigns. The Escrow Agent shall be
bound only by the terms of this Escrow Agreement and shall not be bound by or
incur any liability with respect to any other agreement or understanding between
the parties except as herein expressly provided. The Escrow Agent shall not
have any duties hereunder except those specifically set forth herein.
(g) No interest in any part to this Agreement shall be assignable in the
absence of a written agreement by and between all the parties to this Agreement,
executed with the same formalities as this original Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as the date
first written above.
COMPANY: ESCROW AGENT:
FORSYTH BANCSHARES, INC. THE BANKERS BANK
By: By:
--------------------- ----------------------
David H. Denton William R. Burkett
President Senior Vice President
-6-
<PAGE>
EXHIBIT 10.6
<TABLE>
<CAPTION>
<S> <C> <C>
Forsyth Bancshares, Inc. THE BANKERS BANK Loan Number
425 Tribble Gap Road 3715 NORTHSIDE PARKWAY NW -------------------
Cumming, GA 30130 300 NORTH CREEK, SUITE 800 Date August 1, 1996
Atlanta, Georgia 30327 -------------------------
Maturity Date August 1, 1997
-----------------
Loan Amount $650,000.00
-------------------
Renewal Of
--------------------
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS
"I" includes each borrower "You" means the lender, its
above, jointly and successors and assigns.
severally
- ---------------------------------------------------------------------------------------
</TABLE>
For value received, I promise to pay to you, or your order, at your address
listed above the PRINCIPAL sum of Six Hundred and Fifty Thousand Dollars
-----------------------------------------------
and no/100 Dollars $ 650,000.00
- ------------------- --------------------------------------------------
[ ] Single Advance: I will receive all of this principal sum on
---------------
No additional advances are contemplated under the note.
[X] Multiple Advance: The principal sum shown above is the maximum amount of
principal I can borrow under this note. On I will receive the
--------------
amount of $ and future principal advances are contemplated.
-----------------
conditions: The conditions for future advances are financial information
-------------------------
has been provided as requested by Lender and Borrower is not in default on
----------------------------------------------------------------------------
this loan or any other obligation to another Lender.
----------------------------------------------------
[ ] Open End Credit: You and I agree that I may borrow up to the maximum
principal sum more than one time. This feature is subject to all other
conditions and expires on .
----------------------
[ ] Closed End Credit: You and I agree that I may borrow (subject to all
other conditions) up to the maximum principal sum only one time.
INTEREST: I agree to pay interest on the outstanding principal balance from
August 4, 1996 at the rate of 8.25 % per year until the index
--------------------- -------- -----------
rate changes as indicated below. .
--------------------------------------
[X] Variable Rate: This rate may then change as stated below.
[X] Index Rate: The future rate will be at the following index
----------
rate: Prime Rate as published in the Money Rates section of the Wall
----------------------------------------------------------------
Street Journal. If more than one rate exists, then the higher rate
---------------------------------------------------------------------
will prevail.
---------------------------------------------------------------------
[ ] No Index: The future rate will not be subject to any internal or
external index, it will be entirely in your control.
[X] Frequency and Timing: The rate on this note may change as often as
daily.
----------------------------------------------------------------------
A change in the interest rate will take effect on the effective date
------------------------
of change in the above index rate.
----------------------------------------------------------------------
[ ] Limitations: During the term of this loan, the applicable annual
interest rate will not be more than % or less than %.
-------- --------
The rate may not change more than % each .
-------- ------------------
Effect of Variable Rate: A change in the interest rate will have the
following effect on the payments:
[ ] The amount of each scheduled payment will change.
[ ] The amount of the final payment will change.
[X] The amount of each interest payment will change.
---------------------------------------------------------------------
ACCRUAL METHOD: Interest will be calculated on a 360 day base.
---------------
POST MATURITY RATE: I agree to pay interest on the unpaid balance of the note
owing after maturity, and until paid in full, as stated below:
[ ] on the same fixed or variable rate basis in effect before maturity (as
indicated above).
[X] at a rate equal to the index rate above plus 3%.
----------------------------------------------------
[X] LATE CHARGE: If a payment is made more than 15 days after it is due, I
-------
agree to pay a late charge of $100.00
--------------------------------------------
--------------------------------------------------------------------------
[ ] ADDITIONAL CHARGES: In addition to interest, I agree to pay the following
charges which [ ] are [ ] are not included in the principal amount
above:
--------------------------------------------------------------------------
PAYMENTS: I agree to pay the rate as follows:
[X] Interest: I agree to pay accrued interest quarterly beginning November 1,
---------------------------------
1996 and each quarter thereafter until maturity of August 1, 1996.
--------------------------------------------------------------------------
[ ] Principal: I agree to pay the principal due at maturity of August 1, 1997.
---------------------------------
[ ] Installments: I agree to pay the note in payments. The first payment
-------
will be in the amount of $ and will be due .
------------ -------------------
A payment of $ will be due
---------------------- ------------------------
thereafter. The final payment of the entire
------------------------------
unpaid balance of principal and interest will be due .
--------------------
PURPOSE: The purpose of this loan is organizational expenses.
-----------------------------------------
ADDITIONAL TERMS: Updated personal financial statements of the guarantors to be
--------------------------------------------------------------
provided upon request.
- --------------------------------------------------------------------------------
SECURITY INTEREST: I give you a security interest in all of the Property
described below that I now own and that I may own in the future (including,
but not limited to, all parts, accessories to the Property), wherever the
Property is or may be located, and all proceeds and produced from the
Property.
[ ] Inventory: All inventory which I hold for ultimate sale or lease, or
which has been or will be supposed under contracts of service, or which
are raw materials, work in process, or materials used or consumed in my
business.
[ ] Equipment: All equipment including, but not limited to, all machinery,
vehicles, furniture, fixtures, manufacturing equipment, farm machinery
and equipment, shop equipment, office and recordkeeping equipment, and
parts and tools. All equipment described in a list of schedule which I
give to you will also be included in the secured property, but such a
list is not necessary for a valid security interest in my equipment.
[ ] Farm Products: All farm products including, but not limited to:
(a) all poultry and livestock and their young, along with their
products, produce and replacements;
(b) all crops, annual or perennial, and all products of the crops, and
(c) all feed, seed, fertilizer, medicines, and other supplies used or
produced in my farming operations.
[ ] Accounts, Instruments, Documents, Chattel Paper and Other Rights to
Payment: all rights, I have now and that I may have in the future to the
payment of money including but not limited to:
(a) payment for goods and other property sold or leased or for services
rendered, whether or not I have earned such payment by performance;
and
(b) rights to payment arising out of all out of all present and future
debt instruments, chattel paper and loans and obligations
receivable.
The above include any rights and interests (including all liens and
security interests) which I may have by law or agreement against any
account debtor or obligor of mine.
[ ] General Intangibles: All general intangibles including, but not limited
to, tax refunds, applications for patents, patents, copyrights,
trademarks, trade secrets, good will, trade names, customer lists,
permits and franchises, and the right to use my name.
[ ] Government Payments and Programs: All payments, accounts, general
intangibles, or other benefits (including, but not limited to, payments
in kind, deficiency payments, letters of entitlements, warehouse
receipts, storage payments, emergency assistance payments, diversion
payments, and conservation reserve payments) in which I now have and in
the future may have any rights of interest and which area under or as a
result of any preexisting current or future Federal or state governments
program (including, but not limited to, as programs administered by the
Commodity Credit Corporation and the ASCS).
[X] The secured property includes, but is not limited by, the following:
This loan is secured by the personal guarantees of the following:
Catherine M. Amos, Jeffrey S. Bagley, Bill H. Barnett, Danny M. Bennett,
Michael P. Bennett, Bryan F. Bettis, Talmadge W. Bolton, Thomas L. Bower
III, Charles R. Castleberry, Charles D. Ingram, Herbert A. Lang, Jr.,
John P. McGruder, James J. Myers, Danny L. Reid, Charles R. Smith, Wyatt
L. Willingham, and Jerry M. Wood.
The Property will be used for a [ ] purpose.
[ ] personal [X] business ------------------------
[ ] agricultural SIGNATURES AND SEALS: IN WITNESS
If this agreement covers timber to be WHEREOF, I HAVE SIGNED MY NAME AND
cut, minerals (including oil and gas), AFFIXED MY SEAL ON THIS 1st DAY OF
fixtures or crops growing or to be -------
grown, the description of the real August, 1996. BY DOING SO I AGREE TO
estate is: -------------
THE TERMS OF THIS NOTE INCLUDING THOSE
- ------------------------------------- ON PAGE 2). I HAVE RECEIVED A COPY ON
- ------------------------------------- TODAY'S DATE.
- ------------------------------------- Forsyth Bancshares, Inc.
[ ] If checked, file this agreement
on the real estate records. X (SEAL)
Record owner (if not me) -------------------------------
------------- James O. Meyers, Chairman
X (SEAL)
SIGNATURE FOR LENDER -------------------------------
Charles D. Ingram, Secretary
- ------------------------------------
UNIVERSAL NOTE AND SECURITY X (SEAL)
AGREEMENT -------------------------------
David H. Denton, President
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated August 10, 1996, accompanying the financial
statements of Forsyth Bancshares, Inc. contained in the Form S-1 Registration
Statement and Prospectus. We consent to the use of the aforementioned report in
the Registration Statement and Prospectus, and to the use of our name as it
appears under the caption "Experts".
/s/ Evans, Porter, Bryan & Co.
------------------------------
EVANS, PORTER, BRYAN & CO.
Atlanta, Georgia
August 27, 1996
