<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1996
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
GBC BANCORP, INC.
(Name of Small Business Issuer in Its charter)
6712
(Primary Standard Industrial
Classification Code Number)
318 Pike Street, Suite 475
Lawrenceville, Georgia 30246
(770) 995-0000
GEORGIA (Address, and telephone number 58-2265327
(State or jurisdiction of principal executive offices) (I.R.S. Employer
of incorporation or Identification
organization) Number)
165 Nash Street
Lawrenceville, Georgia 30246
(770) 995-0000
(Address of principal place of business or
intended principal place of business)
------------
Steven S. Dunlevie, Esq.
Womble Carlyle Sandridge & Rice, PLLC
1275 Peachtree Street, Suite 700
Atlanta, Georgia 30309-3574
(404) 872-7000
(Name, address, and
telephone number of
agent for service)
------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------
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. [ ]
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. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Title of Each
Class of Proposed Proposed
Securities to Amount Maximum Offering Maximum Aggregate Amount of
be Registered to be Registered Price Per Unit Offering Price Registration Fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,000,000 $10.00 $10,000,000 $3030
$1.00 par value Shares
- ------------------------------------------------------------------------------------------------------
</TABLE>
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 SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
<PAGE> 2
GBC BANCORP, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER
AND HEADING CAPTION IN PROSPECTUS
----------- ---------------------
<S> <C>
1. Front of the Registration Statement and Outside
Front Cover Page of Prospectus.............................. Cover Page; Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus..... Inside Front Cover Page of Prospectus; Additional
Information; Outside Back Cover Page of
Prospectus
3. Summary Information and Risk Factors........................ Summary Risk Factors
4. Use of Proceeds............................................. Use of Proceeds
5. Determination of Offering Price............................. Risk Factors
6. Dilution.................................................... Not Applicable
7. Selling Security Holders.................................... Not Applicable
8. Plan of Distribution........................................ Terms of the Offering
9. Legal Proceedings........................................... Not Applicable
10. Directors, Executive Officers, Promoters and
Control Persons............................................. Management - Proposed Directors and Officers
11. Security Ownership of Certain Beneficial Owners and
Management.................................................. Management - Proposed Directors and Officers
12. Description of Securities................................... Dividends; Description of Common Stock of the
Company; Certain Provisions of the Company's
Articles of Incorporation and Bylaws
13. Interests of Named Experts and Counsel...................... Not Applicable
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities.................................. Certain Provisions of the Company's Articles of
Incorporation and Bylaws-Indemnification
15. Organization Within Last Five Years......................... Management
16. Description of Business..................................... Summary; Business; Supervision and Regulation
17. Management's Discussion and Analysis or Plan of Operation... Business
18. Description of Property..................................... Business - Facilities
19. Certain Relationships and Related Transactions.............. Management - Certain Transactions
20. Market for Common Equity and Related Stockholder Matters.... Description of Common Stock of the Company
21. Executive Compensation...................................... Management
22. Financial Statements........................................ Financial Statements of GBC Bancorp, Inc.
23. Changes in and Disagreement With Accountants on Accounting
and Financial Disclosure.................................... Not Applicable
</TABLE>
2
<PAGE> 3
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 THERE BE 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.
PRELIMINARY PROSPECTUS, DATED DECEMBER 31, 1996; SUBJECT TO COMPLETION
GBC BANCORP, INC.
A Proposed Bank Holding Company for
GWINNETT BANKING COMPANY (In Organization)
Up to 1,000,000 Shares of Common Stock
(Par Value $1.00 Per Share)
(Minimum Purchase: 500 Shares)
This Prospectus relates to the offering by GBC Bancorp, Inc., a Georgia
corporation (the "Company") of a minimum of 650,000 shares and a maximum of
1,000,000 shares of its common stock, $1.00 par value per share (the "Common
Stock"), at $10.00 per share (the "Offering"). The Company has been organized
to hold, upon receipt of regulatory approvals, all of the common stock of
Gwinnett Banking Company (In Organization) (the "Bank"), Lawrenceville,
Georgia. The organizers of the Company and the Bank intend to subscribe for an
aggregate of at least 110,000 of the shares of Common Stock sold in this
offering (approximately 17% of the minimum and 11% of the maximum number of
shares to be sold). The organizers of the Bank will not be granted options or
warrants in connection with the formation of the Bank; instead, the organizers
will be entitled to purchase shares on the same basis as all other investors.
The Company and the Bank have not conducted active business operations. The
commencement of business operations is contingent upon various regulatory
approvals by state and federal agencies and the sale of a minimum of 650,000
shares of the Common Stock offered hereby. All subscriptions are binding and
irrevocable until the "Expiration Date" as defined herein. In the event (a)
that the Company is unable to sell 650,000 shares of Common Stock, or (b) that
the Company and the Bank do not satisfy, or do not make a determination that
they will satisfy, the conditions included in their respective regulatory
approvals, the organizers of the Company will pay all incurred expenses, and
all escrowed subscription proceeds will be returned to investors without
interest. See "THE OFFERING - Release From Escrow," page 4.
INVESTMENT IN THESE SECURITIES INVOLVES A SUBSTANTIAL
DEGREE OF RISK. SEE "RISK FACTORS" - Pages 2 to 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE 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 SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
<TABLE>
<CAPTION>
===========================================================================
Price to Underwriting Discounts Proceeds to
Public(1) and Commissions (2) Company(3)
===========================================================================
<S> <C> <C> <C>
Per Share.............. $ 10.00 -0- $ 10.00
Total Minimum(4)....... $ 6,500,000 -0- $ 6,500,000
Total Maximum(5)....... $10,000,000 -0- $10,000,000
- ---------------------------------------------------------------------------
</TABLE>
- ---------------------
(1) The Offering price has been arbitrarily established by the Company. See
"RISK FACTORS - Offering Price Arbitrarily Determined."
(2) Offers and sales of the Common Stock will be made on behalf of the Company
on a best efforts basis by its officers and directors, who will receive no
commissions or other remuneration in connection with such activities, but
they will be reimbursed for their reasonable expenses incurred in the
Offering. In reliance on Rule 3a4-1 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Company believes such officers
and directors will not be deemed to be brokers and/or dealers under the
Exchange Act.
(3) Before deducting Offering, organizational and pre-opening operating
expenses of the Company and the Bank. Such expenses are estimated to be
approximately $353,748.
(4) Subscription proceeds will be deposited promptly in an escrow account with
Columbus Bank and Trust Company, Columbus, Georgia, pending receipt of
subscriptions for not less than 650,000 shares and completion of certain
other matters on or before * , 1997 the
expiration date of the Offering (unless the Offering is terminated sooner
or extended). Subscription funds will be released from escrow (a) upon the
receipt of $6,500,000 of subscription proceeds, and (b) upon a
determination by the organizers that the remaining conditions set forth in
the preliminary approvals issued by the applicable regulatory agencies will
be satisfied. See "THE OFFERING - Terms of the Offering." The Company
will return to each subscriber, without interest, the amount of any
proceeds received in full with respect to subscriptions that are not
accepted.
(5) The Company reserves the right to issue up to 1,000,000 shares at $10.00
per share. See "THE OFFERING - Terms of the Offering."
The date of this Prospectus is December 31, 1996.
- -------------------------
* The blanks will be completed when the Company's Registration Statement on
Form SB-2 is declared effective by the SEC.
<PAGE> 4
REPORTS TO SHAREHOLDERS
The Company is not a reporting company as defined by the Securities and
Exchange Commission ("SEC"). 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 Georgia Department of Banking and Finance ("Department of
Banking"). The Company's fiscal year ends on December 31. Additionally, the
Company will also furnish such other reports as it may determine to be
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 Exchange Act of 1934
(the "Exchange Act"), which include requirements to file annual reports on Form
10-K and quarterly reports on Form 10-Q with the SEC. 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 three hundred persons.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended, 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, reference is made to the Registration Statement
and the exhibits thereto. The Registration Statement may be examined at, and
copies of the Registration Statement may be obtained at prescribed rates from
the Public Reference Section of the SEC, Room 1024, 450 Fifth Street, N.W.,
Washington, DC 20549. The SEC maintains a Web site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the SEC. The address of such site is
(http://www.sec.gov).
The Company and the organizers have filed various applications with the
Federal Deposit Insurance Corporation, the Federal Reserve Bank of Atlanta and
the Department of Banking. 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 Federal Deposit Insurance Corporation, the Federal
Reserve Bank of Atlanta and the Department of Banking, is inconsistent with
information presented in this Prospectus or provides additional information,
such other information is superseded by the information presented in this
Prospectus and should not be relied on. Projections appearing in the
applications are based on assumptions that the organizers believe are
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.
ii
<PAGE> 5
SUMMARY
The following Summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
THE COMPANY
The Company was incorporated under the laws of the State of Georgia on
August 21, 1996 primarily to serve as the holding company for a state bank and
trust company. The Company has filed applications with the Federal Reserve
Bank of Atlanta (the "Federal Reserve") and the Georgia Department of Banking
and Finance (the "Department of Banking") for prior approval to become a bank
holding company by using the proceeds of this Offering to acquire all of the
capital stock of the Bank. The organizers anticipate receiving such approvals
during the first quarter of 1997. Such approvals will require the Company to
sell at least 650,000 shares of its Common Stock, but are not expected to
contain other conditions. See "RISK FACTORS - Regulatory Approvals Required."
Following acquisition of the Bank, the initial business of the Company will be
conducted through the Bank. See "BUSINESS OF THE COMPANY AND THE BANK."
THE BANK
The Bank is in the process of being organized as a state-chartered bank
and trust company under Georgia law. It has filed an application with the
Department of Banking for this purpose and with the Federal Deposit Insurance
Corporation (the "FDIC") for deposit insurance. The Bank's application with
the Department of Banking was approved on January ____, 1997 and the FDIC
application is still pending. The Bank will not be authorized to conduct its
banking business until it receives a permit to begin business from the
Department of Banking. The issuance of the permit to begin business will
depend, among other things, upon the Bank's receiving $6,000,000 in capital
from the Company and upon compliance with certain standard conditions that have
been imposed by the FDIC and the Department of Banking which are generally
designed to familiarize the Bank with certain applicable operating requirements
(e.g., no directors' fees are payable until the Bank earns a cumulative profit)
and to prepare the Bank to commence business operations (e.g., the adoption of
loan, investment and other policies to govern the Bank's operations). The Bank
expects to satisfy all conditions for organizing the Bank and to open for
business during the first quarter of 1997, or as soon thereafter as
practicable. See "RISK FACTORS -- Regulatory Approvals Required" and "USE OF
PROCEEDS." The Bank intends to engage in a general commercial banking
business, emphasizing the banking needs of individuals and small to
medium-sized businesses in its primary service area. See "BUSINESS OF THE
COMPANY AND THE BANK."
The philosophy of the management of the Bank with respect to its initial
operations will be to emphasize prompt and responsive personal service to the
residents of Gwinnett County in order to attract customers and acquire market
share now controlled by other financial institutions in the Bank's market area.
The organizers believe that the Bank offers the residents of Gwinnett County
and the surrounding areas the opportunity to have an ownership interest in a
community bank, while also receiving the benefits associated with a locally
owned and managed community bank. Through ownership in the Company, the
residents of the community will have a greater role in the development of the
Bank.
The offices of the Company and the Bank will be located at 165 Nash
Street, Lawrenceville, Georgia 30246. The current principal executive office
of the Company and the Bank is located at 318 Pike Street, Suite 475,
Lawrenceville, Georgia 30246, and their telephone number at that address is
(770) 995-0000.
<TABLE>
<S> <C>
THE OFFERING
Securities ................ Common Stock, $1.00 par value, of the Company
Offering Price ............ $10.00 per share
Number of Shares Offered .. Minimum: 650,000
Maximum: 1,000,000
Use of Proceeds ........... To purchase 100% of the Common Stock of the Bank;
the remaining proceeds will be applied to working
capital and used to repay outstanding amounts
under a line of credit from the Gwinnett Banking
Company Joint Venture (the "Joint Venture")
borrowed to pay certain organizational expenses of
the Company and certain expenses of this Offering.
</TABLE>
The Bank will use the proceeds of the sale of its common stock to the
Company to repay outstanding amounts under a line of credit from the Joint
Venture borrowed to pay certain organizational and pre-opening expenses of the
Bank, including paying officers' and employees' salaries; and, following the
commencement of business, to provide working capital to be used for business
purposes, including making loans and other investments. See "USE OF PROCEEDS."
RISK FACTORS
Investment in the Common Stock involves a significant degree of risk. See
"RISK FACTORS."
1
<PAGE> 6
RISK FACTORS
Investment in the shares of the Common Stock offered hereby involves a
significant degree of risk. The shares of Common Stock should be purchased by
investors who can afford the loss of their entire investment. In addition to
considering factors set forth elsewhere in this Prospectus, persons interested
in purchasing shares of the Common Stock should carefully consider the
following risks before making a decision to subscribe.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
REGULATORY APPROVALS REQUIRED
The Company must receive the approval of the Federal Reserve and the
Department of Banking before it can become the holding company of the Bank.
Applications for such approvals have been filed with such agencies and are
pending. The organizers anticipate receiving such approvals during the first
quarter of 1997. Such approvals will require the Company to sell at least
650,000 shares of its Common Stock but are not expected to contain other
conditions.
The Bank's application to organize a new state bank and for federal
deposit insurance was filed with the Department of Banking and the FDIC on
October 9, 1996. The Department of Banking issued its approval on January
____, 1997 and the FDIC approval is pending. Both approvals are subject to the
condition that at least $6,000,000 be invested in the Bank by the Company, as
well as a number of other standard conditions which are regularly imposed by
the Department of Banking and the FDIC which are generally designed to
familiarize the Bank with certain applicable operating requirements (e.g., no
directors' fees are payable until the Bank earns a cumulative profit) and to
prepare the Bank to commence business operations (e.g., the adoption of loan,
investment and other policies to govern the Bank's operations).
NO OPERATING HISTORY
The Bank, which will be the sole subsidiary of the Company, is in
organization and has no operating history on which to base any estimate of its
future prospects. The Company's initial profitability will depend entirely
upon the Bank's operations. The Bank's proposed operations are subject to
risks inherent in the establishment of a new business and, specifically, of a
new bank. Initially, all of the Bank's loans will be new loans to new
borrowers. Accordingly, it will take several years to determine the borrowers'
payment histories and, therefore, the quality of the Bank's loan portfolio
cannot be determined until that time. If the Bank is ultimately unsuccessful,
there is no assurance that shareholders will recover all or any part of their
investment in the Common Stock of the Company.
COMPETITIVE INDUSTRY
The banking business is highly competitive. The Bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms soliciting business from
residents of Gwinnett County, Georgia, many of which have greater resources
than will be available to the Bank or the Company. See "BUSINESS OF THE
COMPANY AND THE BANK -- The Bank -- Competition and Historic Deposit Trends."
HIGHLY REGULATED INDUSTRY
The potential success or failure of the Bank will depend not only upon
competitive factors, but also upon state and federal regulations affecting
banks and bank holding companies generally. Regulations now affecting the
Company and the Bank may be changed at any time, and there is no assurance that
such changes will not adversely affect the business of the Company and the
Bank.
EFFECT OF MONETARY POLICIES
The results of operations of the Bank will be affected by credit policies
of monetary authorities, particularly the Board of Governors of the Federal
Reserve System. There can be no assurance that the effect of actions by
monetary and fiscal authorities, including the Federal Reserve, will not have
an adverse effect on the deposit levels, loan demand or the business and
earnings of the Bank. See "SUPERVISION AND REGULATION -- Monetary Policies."
2
<PAGE> 7
SUCCESS DEPENDS ON ECONOMIC CONDITIONS
The success of the Bank will depend largely on the general economic
conditions in the Bank's primary service area ("PSA") of Gwinnett County,
Georgia. Although the Bank expects favorable economic development in this
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 "BUSINESS OF THE COMPANY AND THE BANK."
OFFERING PRICE ARBITRARILY DETERMINED
Since the Company and the Bank are in the process of being organized, the
Offering price of $10.00 per share has been determined arbitrarily by the
organizers without particular reference to historical or projected earnings,
book value or other customary criteria. The organizers did not retain an
independent investment banking firm to assist in determining the Offering
price. Should a market develop for the Common Stock of the Company, there is
no assurance that any of the Common Stock offered hereby could be resold for
the Offering price or any other amount.
NO DIVIDENDS
Since the Company and the Bank are both start-up operations, it will be
the policy of the Board of Directors of the Company to reinvest earnings for
the period of time necessary to help ensure the success of their operations.
As a result, the Company has no current plans to initiate the payment of cash
dividends, and its future dividend policy will depend on the Bank's earnings,
capital requirements, financial condition and other factors considered relevant
by the Board of Directors of the Company. See "DIVIDENDS." It is the
Company's policy not to pay dividends until the Bank is currently and
cumulatively profitable.
NO ESTABLISHED TRADING MARKET
There is no public trading market for the shares of the Common Stock of
the Company, and it is not anticipated that a market for the Common Stock will
develop as a result of this Offering. As a result, investors who may wish or
need to dispose of all or a part of their investment in the Common Stock, may
not be able to do so except by private direct negotiations with third parties
assuming that third parties are willing to purchase the Common Stock.
THE OFFERING
TERMS OF THE OFFERING
Minimum/Maximum. The Company is offering a minimum of 650,000 shares and
a maximum of 1,000,000 shares of its Common Stock for a price of $10.00 per
share, for an aggregate minimum Offering price of $6,500,000 and an aggregate
maximum Offering price of $10,000,000. The minimum purchase for any investor
(together with the investor's affiliates) is 500 shares of Common Stock
($5,000) unless the Company, in its sole discretion, accepts a subscription for
a lesser number of shares.
Organizer Subscriptions. The organizers of the Company intend to purchase
an aggregate of 110,000 shares of Common Stock sold in the Offering
(approximately 17% of the minimum and 11% of the maximum number of shares to be
sold). No organizer intends to individually purchase more than 5% of shares
sold in this Offering.
Offering Period and Expiration Date. The Offering period for the shares
will terminate at the earlier of the date all shares offered hereby are sold or
5:00 p.m. Atlanta, Georgia time, on * , 1997). This date
may be extended at the discretion of the Company for additional periods not
exceeding an aggregate of 180 days (i.e., until * , 1997).
Written notice of any such extension will be given to all persons who are
already subscribers at the time of the extension. The date on which this
Offering terminates plus any extension thereof is referred to in this
Prospectus as the "Expiration Date."
Subscription. As indicated below under "How to Subscribe," upon execution
and delivery of a subscription agreement for shares of the Common Stock,
subscribers will be required to deliver to the Company a check in the amount of
$10.00 times the number of shares subscribed for. All subscriptions will be
binding and irrevocable until the Expiration Date.
Escrow. Subscription proceeds will be deposited in an escrow account with
the Escrow Agent for the Company pending completion of this Offering.
Subscription proceeds held in the escrow account will be invested in a separate
account designated as "GBC Bancorp, Inc. Escrow Account." The Escrow Agent has
not investigated the desirability or advisability of an investment in the
Company, and has not approved, endorsed or passed upon the merits of the Common
Stock.
- -----------------
* The blanks will be completed when the Company's Registration Statement on
Form SB-2 is declared effective by the Securities and Exchange Commission.
3
<PAGE> 8
Company Discretion. The Company reserves the right, in its sole discretion,
to accept or reject any subscription in whole or in part on or before the
Expiration Date. Without limiting the generality of the foregoing, the
Company also reserves the right to accept subscriptions on a prorated basis
if it receives subscriptions for more than 1,000,000 shares. The Company
will notify all subscribers within five business days after the Expiration
Date whether their subscriptions have been accepted. With respect to any
subscriptions which are not accepted, in whole or in part, by the Company,
the notification will be accompanied by the unaccepted portion of the
subscription funds, without interest.
Termination. The Company reserves the right to terminate the Offering at any
time after 650,000 shares have been subscribed for if the Company determines
that the total amount of subscriptions will provide adequate capitalization
for the Company after payment of expenses.
Release From Escrow. Subscription proceeds will be released from escrow to
the Company upon the occurrence of all of the following events: (a) the sale
by the Company of at least 650,000 shares of its Common Stock, (b) receipt by
the Company of approval from the Federal Reserve and the Department of Banking
to become a bank holding company, (c) satisfaction by the Company of, or a
determination by the Company that it will satisfy, all of the conditions that
the Federal Reserve and the Department of Banking may impose in their
approvals to the Company, (d) receipt by the Bank of approval from the
Department of Banking and the FDIC of the Bank's application to organize a new
state bank and for deposit insurance, and (e) satisfaction by the Bank of, or
a determination by the Bank that it will satisfy, all of the conditions that
the Department of Banking and the FDIC have imposed in their approvals to the
Bank.
If the above conditions are met, the Company intends to instruct the Escrow
Agent to release to the Company the amount of subscription proceeds relating
to subscriptions or portions thereof accepted by the Company, together with
any interest earned thereon. Shares of the Company's Common Stock will be
issued to subscribers once the subscription proceeds have been released from
escrow. Any subscription proceeds received after the above conditions are
met but before termination of this Offering will not be deposited in the
escrow account, and will be available for immediate use by the Company, to
the extent accepted by the Company.
The Bank received approvals from the Department of Banking on January __,
1997 and its application with the FDIC is pending. The Bank expects to
receive approval from the FDIC in January of 1997. The Company expects to
receive approvals from the Federal Reserve and the Department of Banking
during the first quarter of 1997. In the opinion of the organizers, the only
significant condition to all of the foregoing approvals will be that a
minimum of 650,000 shares of Common Stock of the Company has to be sold in
this Offering. If the requisite shares are not sold, or if the Company or
the Bank determine that they cannot satisfy the other conditions included in
the approvals by the Expiration Date, then the subscription agreements will
be of no further force or effect, and the Escrow Agent shall return by
regular mail, to each subscriber at the address shown on the subscriber's
payment, all collected funds received from each subscriber, without interest;
and the Escrow Agent shall pay over and deliver to the Company all interest
earned on the collected funds received from each subscriber to be used solely
by the Company to pay organizational expenses of the Company and the Bank.
It is possible that subsequent to the release of the subscription funds from
escrow (the requisite shares having been sold and the determination having
been made that the other regulatory conditions will be satisfied) events
could occur which could have the effect of preventing the Bank from
commencing business. If that were to occur, the Company intends to liquidate
and would return to the then shareholders of the Company the portion of their
investment which is equal to their total investment less their pro rata share
of the expenses incurred by the Company and the Bank. See "USE OF PROCEEDS,"
"ESTIMATED EXPENDITURES" and "PRO FORMA CAPITALIZATION." While no assurance
can be given that the foregoing will not take place, the organizers cannot
foresee any such events and believe it is highly unlikely that such events
will occur. After consulting with applicable regulatory authorities, the
organizers are not aware of any Georgia state banks which failed to commence
business after they or their holding companies had raised the required
capital. Additionally, based on conversations with applicable regulatory
authorities, there are no indications that the Company and the Bank will have
any difficulty in satisfying the applicable regulatory conditions.
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 their
reasonable expenses incurred in the Offering. In reliance on Rule 3a4-1 of
the Exchange Act, the Company believes such officers and directors will not
be deemed to be brokers and/or dealers under the Exchange Act.
It is expected that the organizers will purchase a total of 110,000 of the
shares of Common Stock offered hereby. Any shares purchased by the
organizers in excess of their original commitment will be subject to
regulatory approval.
4
<PAGE> 9
HOW TO SUBSCRIBE
Preliminary Nonbinding Subscriptions.
Each prospective investor who (together with the investor's affiliates)
desires to purchase 500 or more shares must:
1. Complete, date and sign the Preliminary Subscription Agreement, which
is attached as Exhibit A to this Prospectus.
2. Return the completed Preliminary Subscription Agreement as follows:
HAND OR MAIL DELIVERY
GBC Bancorp, Inc.
165 Nash Street
Lawrenceville, Georgia 30246
Attention: Larry D. Key, President
3. Preliminary subscriptions are not binding on subscribers.
4. Do not send payment for your shares at this time.
Final Binding Subscriptions.**
1. When the Registration Statement relating to this Prospectus is declared
effective by the SEC, the Company will furnish a final Prospectus to all
subscribers together with the Acknowledgment of Subscription, which is attached
as Exhibit "B" to this Prospectus.
2. Subscribers will be asked to complete the Acknowledgment of
Subscription, acknowledging receipt of the final Prospectus, and to return it to
the Company.
3. Subscribers will also be asked to send a check to the Company made
payable to "the Columbus Bank and Trust Company--Escrow Account for GBC
Bancorp, Inc." in an amount equal to $10.00 multiplied by the number of shares
subscribed for.
4. The completed Acknowledgment of Subscription and check should be sent
to the Company as follows:
GBC Bancorp, Inc.
165 Nash Street
Lawrenceville, Georgia 30246
Attention: Larry D. Key, President
5. UPON RECEIPT BY THE COMPANY OF THE ACKNOWLEDGMENT AND PAYMENT FOR THE
SHARES SUBSCRIBED FOR, THE SUBSCRIPTION AGREEMENT WILL BECOME FINAL AND BINDING
AND WILL BE IRREVOCABLE.
USE OF PROCEEDS
The proceeds to the Company from the sale of shares of the Common Stock
offered hereby will be used to pay expenses of this Offering and organizational
expenses of the Company, which are estimated not to exceed $35,000, and to
repay in full a line of credit loan from the Joint Venture in the approximate
amount of $191,146 and then to capitalize the Bank through the purchase of
300,000 shares of the Bank's common stock, $10.00 par value, at $20.00 per
share.
The Company has established a $500,000 line of credit from the Gwinnett
Banking Joint Venture (the "Joint Venture") which is a joint venture formed by
the organizers of the Company and the Bank. Funds advanced to the Company
under the line of credit were used to pay certain organizational and Offering
expenses to the Company, including a portion of certain salaries of the
officers of the Company. The line of credit has a one-year term ending on July
17, 1997 and bears interest initially at 9.25%. The interest rate on the line
of credit will fluctuate automatically with the prime rate at a level of 1%
above prime rate. Interest is paid monthly. At September 30, 1996, the
aggregate outstanding balance on the lines of credit from the Joint Venture to
the Company and the Bank was $191,146. See "ESTIMATED EXPENDITURES" and "PRO
FORMA CAPITALIZATION."
- ------------------
** This section is not yet effective because the Prospectus is in
preliminary form.
5
<PAGE> 10
The Bank will use the $6,000,000 proceeds from the sale of its common stock
to the Company to pay expenses incurred in connection with the organization
of the Bank (estimated at $117,000), including consulting fees for market
analysis and feasibility studies, and legal and accounting fees and expenses,
and expenses incurred in connection with certain pre-opening operations of
the Bank (estimated at $201,748), including officers' and employees'
salaries, rent and occupancy, and interest expense. The total Offering,
organizational and pre-opening operating expenses as described above of the
Company and the Bank are not expected to exceed $353,748. The Bank has
established a $500,000 line of credit from the Joint Venture. The line of
credit has a one-year term ending on July 17, 1997 and bears interest
initially at 9.25%. The interest rate on the line of credit will fluctuate
automatically with the prime rate at a level of 1% above prime rate.
Interest is paid monthly. Funds advanced to the Bank under the line of credit
were used to pay certain organization and pre-opening expenses of the Bank.
The estimates of pre-opening operating expenses assume that the Bank will
open in the first quarter of 1997. While no assurance can be given that the
Bank will open by then, the organizers are hopeful that the Bank will actually
open during the first quarter of 1997.
ESTIMATED EXPENDITURES
In the opinion of the Company, the minimum gross proceeds of $6,500,000
from the Offering will satisfy the cash requirements of the Company and the
Bank for their respective first years of operation. It is not anticipated that
the Company will find it necessary to raise additional funds to meet
expenditures required to operate the business of the Company and the Bank over
the next five years. All anticipated material expenditures for such period
have been identified and provided for out of the proceeds of this Offering.
The following table illustrates the intended use by the Company and the
Bank of the gross proceeds of this Offering. Although the amounts set forth
below provide an indication of the proposed use of funds based upon the plans
and estimates of the organizers of the Company and the Bank, actual
expenditures may vary from the estimates.
<TABLE>
<CAPTION>
Minimum Offering Maximum Offering
---------------- ----------------
<S> <C> <C>
Gross Proceeds From This Offering (1)........ $6,500,000 $10,000,000
---------- -----------
Anticipated Use of Proceeds by the Company
Offering and Organizational Expenses (2)..... $ 35,000 $ 35,000
Working Capital.............................. 465,000 3,965,000
Capitalization of Bank through Purchase of
Common Stock of the Bank.................... 6,000,000 6,000,000
---------- -----------
Total...................................... $6,500,000 $10,000,000
========== ===========
Anticipated Use of Capital by the Bank
Organizational Expenses (2)................. $ 117,000 $ 117,000
Pre-opening Operating Expenses (2).......... 201,748 201,748
Working Capital............................. 5,681,252 5,681,252
---------- -----------
Total..................................... $6,000,000 $ 6,000,000
========== ===========
</TABLE>
- ----------------------
(1) Assuming sale of 650,000 shares and 1,000,000 shares, respectively, at
$10.00 per share.
(2) Reflects expenses to be paid directly out of the proceeds of this
Offering and amounts advanced under the lines of credit from the Joint
Venture. Funds advanced under the lines of credit have been utilized to
pay various organizational and pre-offering expenses of the
6
<PAGE> 11
Bank and the Company. The Company's line of credit will be repaid in full
by the Company from the proceeds of the Offering. The Bank's line of
credit will be repaid in full by the Bank from the proceeds of the sale of
its common stock to the Company.
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization as of September 30,
1996, and pro forma capitalization as of completion of the Offering, of the
Company assuming that 650,000 shares and 1,000,000 shares of the Common Stock,
respectively, are sold and the proceeds therefrom are invested as described
under "USE OF PROCEEDS" and "ESTIMATED EXPENDITURES."
<TABLE>
<CAPTION>
After the (1)
----------------------------
Actual as of
September 30, Minimum Maximum
1996 Offering Offering
---------------- ------------- -------------
<S> <C> <C> <C>
Debt
Total Debt (1) .......................... $191,146 $ -0- $ -0-
Shareholders' Equity
Common Stock, $1.00 par value,
3,000,000 shares authorized
(650,000 and 1,000,000 shares,
respectively, issued and outstanding)(2)..... $ 80(3) $ 650,080 $ 1,000,080
Additional paid-in capital................... 720(3)(4) 5,850,720(4) 9,000,720(4)
-------- ---------- -----------
Total shareholders' equity................... $ 800 $6,500,800 $10,000,800
======== ========== ===========
- --------------------------
</TABLE>
(1) Represents amounts outstanding under the Company's line of credit and
accounts payable from Gwinnett Banking Company Joint Venture.
(2) Represents the Company's sale of 650,000 shares and 1,000,000 shares of
Common Stock, respectively, at $10.00 per share.
(3) Represents 10 shares purchased by each director of the Company for $10.00
per share.
(4) The expenses of the Offering are charged against this account. These
expenses are estimated to be $35,000 and such amount was used in the
calculation of the amounts shown in columns two and three. Offering costs
incurred through September 30, 1996 consist primarily of legal expenses
totaling $10,000.
DIVIDENDS
Since the Company and the Bank are both start-up operations, it will be
the policy of the Board of Directors of the Company to reinvest earnings for
the period of time necessary to help ensure the success of their operations.
It is the Company's policy not to pay dividends until the Bank is currently and
cumulatively profitable. As a result, the Company has no current plans to
initiate the payment of cash dividends. See "SUPERVISION AND REGULATION --
Bank Regulation."
BUSINESS OF THE COMPANY
AND THE BANK
THE COMPANY
The Company was incorporated as a Georgia business corporation on August
21, 1996 to become a bank holding company by acquiring all the common stock of
the Bank upon its formation. Initially, the Bank will be the sole operating
subsidiary of the Company. The Company will apply to the Federal Reserve and
the Department of Banking for prior approval to use $6,000,000 of the proceeds
of this Offering to acquire the Bank. If such approvals are granted, upon its
acquisition of the common stock of the Bank, the Company will become a bank
holding company within the meaning of the Bank Holding Company Act of 1956, as
amended, and the Georgia Bank Holding Company Act. See "SUPERVISION AND
REGULATION."
The Company has been organized to facilitate the Bank's ability to serve
its future customers' requirements for financial services. The holding company
structure will provide flexibility for expansion of the Company's banking
business through the
7
<PAGE> 12
possible acquisition of other financial institutions and the provision of
additional banking-related services which the traditional commercial bank may
not provide under present laws. For example, banking regulations require that
the Bank maintain a minimum ratio of capital to assets. In event that the
Bank's growth is such that this minimum ratio is not maintained, the Company may
borrow funds, subject to capital adequacy guidelines of the Federal Reserve, and
contribute them to the capital of the Bank and otherwise raise capital in a
manner which is unavailable to the Bank under existing banking regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank. It is expected, however, that the Company may make
additional acquisitions in the future in the event that the Company becomes
profitable and such acquisitions are deemed to be in the best interest of the
Company and its shareholders. Such acquisitions, if any, will be subject to
certain regulatory approvals and requirements. See "SUPERVISION AND
REGULATION."
THE BANK
General. The organizers filed an application on behalf of the Bank with
the Department of Banking and with the FDIC on October 9, 1996, for authority
to organize as a state bank and trust company, the deposits of which will be
federally insured, and to conduct a commercial banking business from Gwinnett
County, Georgia. The organizers received approvals from the Department of
Banking on January ___, 1997 and expects to receive approval from the FDIC in
January of 1997. The Bank will not commence business until all pre-opening
conditions imposed by its regulators have been satisfied and the Department of
Banking has issued the bank a permit to begin business.
The Bank intends to be a full service commercial bank with trust powers to
be exercised at some time after opening. The principal business of the Bank
will be to accept deposits from the public and to make loans and other
investments. The principal source of funds for the bank's loans and
investments are expected to be demand, time, savings, and other deposits
(including negotiable orders of withdrawal or NOW accounts), amortization and
prepayments of loans and borrowings. A portion of the net proceeds of the
Offering will be used by the Bank to fund loans. The principal sources of
income for the Bank are expected to be interest and fees collected on loans,
interest and dividends collected on other investments and service charges. The
principal expenses of the Bank are expected to be interest paid on savings and
other deposits (including NOW accounts) interest paid on other borrowings by
the Bank, employee compensation, office expenses and other overhead expenses.
Philosophy. Management's philosophy with respect to the initial
operations of the Bank will be to emphasize prompt and responsive personal
service to the residents of Gwinnett County in order to attract customers and
acquire market share now controlled by other financial institutions in the
Bank's market area. The organizers believe that the Bank offers the residents
of Gwinnett County and the surrounding areas the opportunity to have an
ownership interest in a community bank, while also receiving the benefits
associated with a locally owned and managed community bank. Although other
community banks are located in the Gwinnett County area, the Bank will be
unique in that ownership of the Company's stock will be available to residents
in the community. Through ownership in the Company, the residents of the
community will have a greater role in the development of the Bank.
Management of the Bank intends to implement an active officer and director
call program to promote these efforts. The purpose of this call program will
be to describe the products, services and philosophy of the Bank to both
existing and new business prospects. In addition, the organizers of the Bank
represent a strong, stable, diversified cross-section of the business and
professional community which is at the core of the Bank's primary trade area.
Six members of the senior management team of the Company and the Bank have 125
collective years of banking experience, and served key roles in the development
of three banks. Given the changes and consolidation in the Gwinnett County's
banks, management believes that there is a need for a strong, stable community
bank that will be responsive to the small business and consumer banking needs
of residents of Gwinnett County.
BANK LOCATION AND FACILITIES
The Bank will be located in Lawrenceville, Georgia in Gwinnett County in a
two-story building leased from the Joint Venture. The site selected for the
proposed Bank is 165 Nash Street, Lawrenceville, Georgia. Branch offices are
not contemplated during the first five years of operation.
The Bank plans to provide services to Gwinnett County residents, as well
as to residents from the adjacent counties of Fulton, DeKalb and Cobb in
Georgia. The City of Lawrenceville is the county seat of Gwinnett County.
Lawrenceville had an estimated population of 17,300 as of April 1, 1994 and was
the largest city in the county followed by Snellville, Duluth, Lilburn, Buford,
Sugar Hill and Norcross.
The Bank will enter into a primary lease agreement with the Joint Venture
to lease permanent office space for the Bank located at 165 Nash Street (the
"Permanent Premises") for five years beginning on the completion of the
construction of the Permanent Premises with two five-year renewal options (the
"Lease Agreement"). Pursuant to the proposed Lease Agreement, the initial
annual rental for the 83 feet by 67 feet office space is $135,000 or $11,250
per month. The rental for the renewal will be increased based on the increase
in the Consumer Price Index.
8
<PAGE> 13
The Bank will lease temporary facilities at 165 Nash Street from the
Joint Venture for a rental of $5,000 a month beginning on the opening of the
Bank which is expected to occur in the first quarter of 1997 and until the
Permanent Premises are constructed. Upon completion of the construction of
Permanent Premises, the temporary modular office will be removed and temporary
operation and administrative offices will be vacated.
The organizers of the Bank obtained two appraisals for the fair rental
value of the Permanent Premises. One appraisal, dated October 8, 1996,
provided a range of market rental for the Permanent Premises. The mid point of
such range was $16.00 per square foot. The other appraisal, also dated
October 8, 1996, determined that fair market rental of the premises to be
$13,850 per month or $166,200 per year. Copies of the appraisals for the
Permanent Premises were filed with the Bank's application to the Department of
Banking and the FDIC.
The owner of the property and the building where the temporary and
Permanent Premises are located is the Joint Venture. The members of the Joint
Venture are directors of the Company and organizers of the Bank. In the
opinion of such organizers, the terms of the Lease Agreement are at least as
favorable to the Bank as terms available from unrelated third parties.
The Permanent Premises when completed will include a full-service teller
line and drive-in and walk-up windows. The Bank will not offer safe deposit
boxes.
PRIMARY SERVICE AREA
The Bank's primary service area ("PSA") is defined as all of Gwinnett
County, Georgia. The Bank also expects to serve the adjacent counties or parts
thereof of Cobb, DeKalb and Fulton. Gwinnett County is easily accessible from
all directions by several major roadways: I-85, U.S. Highway 23, 29 and 78 and
Georgia Highways 316, 985, 141, 20 and 120. The I-285 perimeter highway around
Atlanta passes within five miles of the Gwinnett County border. Lawrenceville
is approximately 35 miles northeast of downtown Atlanta and is approximately 40
miles from Athens, Georgia.
ECONOMIC AND DEMOGRAPHIC FACTORS
The City of Lawrenceville is served by the CSX Family Lines Railroad and
the Southern Railway on lines between Atlanta and Athens. Over 60
interstate/intrastate motor freight carriers serve Gwinnett County and many of
these maintain break/bulk terminals within Gwinnett County. General aviation
services are provided at Gwinnett County's Briscoe Field adjacent to
Lawrenceville. Gwinnett County is within 45 minutes of Atlanta's Hartsfield
International Airport. Gwinnett County currently does not have any public
transportation.
Gwinnett County has grown during each census since 1930. Its aggregate
rate of population growth between 1930 and 1990 was 1167.2%, making it
Georgia's second fastest growing county over this 60-year period. Gwinnett
County was one of only 38 counties (out of Georgia's 159) that did not
experience at least one population decline in the six censuses since 1930.
While Gwinnett County was Georgia's 17th most populous county in 1930, it was
the 4th most populous in 1990. In each of the two decades between 1970 and
1990, Gwinnett County's rate of growth exceeded 100%. From 1980 to 1990, it
was the third fastest growing county in Georgia. For three of the past 10
years, its rate of growth has been so rapid that it ranks as the fastest
growing county in the nation. Visions 2020: Baseline Forecasts has projected
that Gwinnett County will pass both Cobb and DeKalb County to become Georgia's
second most populous county during the second decade of the next century.
Given the fact that estimates of Gwinnett County's rate of population growth
have been continually revised upward during the past five years, the editors of
Georgia Trend Magazine indicate that it is not inconceivable that the County
could challenge Fulton County for first place by the year 2020.
According to the 1990 Census figures, 245,416 residents of Gwinnett
County, or 69.5% of the total population of 352,910, were over the age of
nineteen and thus potential customers of the proposed Bank. With only 4.8% of
the county's residents 65 years old or older, the third lowest percentage of
any county in the Atlanta metropolitan statistical area ("MSA"), management
believes that the banking market will be characterized by a strong loan demand
for consumer, commercial, and mortgage loans.
Gwinnett County has a diverse employment base. According to the Gwinnett
County Chamber of Commerce, approximately 383 high-tech companies, over 700
manufacturing firms and 274 international firms are located in Gwinnett County.
The largest employer in Gwinnett County is the Gwinnett County Public School
System with 8,400 employees. AT&T Atlanta Works and Scientific Atlanta follow
with 3,500 and 3,000 employees, respectively. There is also a wide variety of
manufacturing activity in Gwinnett County which contributes to its economic
stability.
Employment growth has also been strong. According to the Atlanta Regional
Commission, Gwinnett County has created 10,800 new jobs per year since 1985
which is 1,100 more new jobs than second place Fulton County at 9,700.
Gwinnett County's projected rate of job increase between 1995 and 2000 is 12.7%
which is the highest expected increase in the Atlanta MSA.
Gwinnett County also has low unemployment. In only two years between 1987
and 1993 did Gwinnett County's unemployment rate exceed 4.0%. Gwinnett County
has always been well below Georgia's average unemployment rate. Gwinnett
County's unemployment rate for 1993 was lower than any of the counties
contiguous to it. At the end of 1995, unemployment in Gwinnett County was at
3.6%.
9
<PAGE> 14
The housing and construction market in Gwinnett County has been and,
according to all forecasts, will continue to be strong. Housing units in
Gwinnett County increased by 137.2% during the decade 1980-1990 and by 15.8%
between 1990 and 1994. The bulk of the increase in housing was in single
family/duplex housing as opposed to multi-family dwellings or mobile homes, and
an inspection of Gwinnett County's many new residential subdivisions reveals
new units in a wide range of prices. For the month of June, 1996, Gwinnett
County led the Atlanta MSA (and all other counties in Georgia) in the number of
both single-family residential and total building permits. According to
statistics published by the Gwinnett County Chamber of Commerce, Gwinnett
County has also held first place in both categories of permits for every month
since the end of 1994.
In terms of office development, the Atlanta Regional Commission has
reported that Gwinnett County has a total inventory of 5.7 million square feet
in 194 buildings, with an overall vacancy rate of 10%. In terms of industrial
space, Gwinnett County accounts for more than 30% of the total in the MSA and
has been the MSA's most active market in new construction and absorption.
Gwinnett County has a total inventory of 53.5 million square feet of industrial
space and a current vacancy rate of 7.7%. The total inventory of retail space
is nine million square feet, and the vacancy rate is 7.8%. The Gwinnett County
Chamber of Commerce's 1996 Absorption Study, which provides a twelve-year
history of office and industrial growth in Gwinnett County, reports an annual
average of 248 projects and 5.2 million square feet. In 1995, 303 projects
were reported for Gwinnett County. According to the Gwinnett Chamber of
Commerce between 1984 and 1996, the number of hotels/motels in Gwinnett County
has grown from six to 66, with 25 facilities added in 1995-96 alone. Over the
past 12 years, the number of motel rooms has increased from 548 to 8,212.
During 1995, 2,360 apartment units were permitted in Gwinnett County.
COMPETITION AND HISTORICAL DEPOSIT TRENDS
Management believes that Gwinnett County has a very active and competitive
banking market. According to the Gwinnett County Chamber of Commerce,
Gwinnett County's bank deposits have shown a very healthy, steady growth rate
with the average annual growth rate at 17.13%. There have been a number of
mergers and acquisitions that have changed the general structure of the
industry with a reduction in the number of community banks based in Gwinnett
County. The largest financial institutions serving Gwinnett County as of June
30, 1996, were NationsBank of Georgia, N.A., SunTrust, Wachovia Bank of
Georgia, N.A. and First Union Bank of Georgia, N.A., who had $1,317,407,000,
$566,636,000, $570,529,000 and $477,587,000, respectively in deposits. The
largest Gwinnett County based banks as of June 30, 1996, are Bank of Gwinnett,
Lawrenceville; Brand Banking Co., Lawrenceville; and Peoples Bank, Buford,
which have $187,595,000; $174,332,000 and $126,160,000 respectively in
deposits. Based on published information, there are 18 banks, one thrift
institution and three credit unions that operate 100 offices in Gwinnett
County. There are approximately 18 financial institutions that have offices in
the immediate vicinity of the main office of the Bank.
Management believes that deposits will increase in Gwinnett County in the
next three years. Assuming that the Bank acquires 25% of the average deposit
growth per bank, deposits from the market growth in the next three years would
be $11,050,000; $17,182,000 and $21,773,000, respectively.
LENDING POLICY
The Bank is being established initially to support Gwinnett County and
plans to expand its support to the immediately-surrounding counties of Cobb,
DeKalb and Fulton in Georgia. The Bank will be authorized to make both secured
and unsecured loans to individuals, partnerships, corporations and other public
and private entities. Management believes that the Bank's lending business
will consist principally of making loans to small- and medium-sized businesses
and to their owners, officers and employees, loans to independent single-family
residential contractors, loans that are guaranteed by the Small Business
Administration and loans to individual consumers.
The Bank's legal lending limits will be 15% of its statutory capital base
(its capital stock, surplus, and appropriated retained earnings) for unsecured
loans and 25% of its statutory capital base for secured loans. Statutory
limits with respect to loans to a single entity may restrict the ability of the
Bank to originate large commercial or construction and development loans.
However, such loans may be originated in cooperation with other financial
institutions that commit to purchase such loans originated by the Bank.
Management anticipates that the Bank will focus its lending on the
extension of relatively short-term loans or, to the extent it makes long-term
loans, the extension of loans with variable or adjustable interest rates in an
effort to retain a positive spread between its interest income and expenses.
Management of the Bank anticipates at least 80% of the Bank's loan portfolio
will consist of variable-rate loans. Management also plans to take advantage
of the 120-day turnover in construction loans so that management can better
match the interest rates earned on the Bank's loans to the interest rates paid
on the Bank's deposits. Of the Bank's initial $6,000,000 in capital,
$3,000,000 will be allocated to common stock, $2,500,000 to paid-in capital,
and $500,000 will be set aside as an expense fund to cover pre-opening expenses
and potential losses in its first year of operation. The $500,000 expense fund
will not be included in the Bank's statutory capital base. Accordingly, the
Bank's initial legal lending limits will be $825,000 for unsecured loans and
$1,375,000 for secured loans. While the Bank expects generally to employ more
conservative lending limits, the Board of Directors will have discretion to
lend up to the legal lending limits as described above.
10
<PAGE> 15
Real Estate Loans. The Bank will make and hold real estate loans,
consisting primarily of single-family residential construction loans for
one-to-four unit family structures. The Bank will require a first lien
position on the land associated with the construction project and will offer
these loans to professional building contractors and homeowners. Loan
disbursements will require on-site inspections to assure the project is on
budget and that the loan proceeds are being used for the construction project
and not being diverted to another project. The loan-to-value ratio for such
loans will be predominantly 75% of the lower of the as-built appraised value or
project cost, and will be a maximum of 80% if the loan is amortized. Loans for
construction can present a high degree of risk to the lender, depending upon,
among other things, whether the builder can sell the home to a buyer, whether
the buyer can obtain permanent financing, whether the transaction produces
income in the interim and the nature of changing economic conditions.
Consumer Loans. The Bank plans to make consumer loans, consisting
primarily of installment loans to individuals for personal, family and
household purposes, including loans for automobiles, home improvements and
investments. Risks associated with consumer loans include, but are not limited
to, fraud, deteriorated or non-existing collateral, general economic downturn
and customer financial problems.
Commercial Loans. Commercial lending will be directed principally toward
small to mid-size businesses whose demand for funds falls within the legal
lending limits of the Bank. This category of loans includes loans made to
individual, partnership or corporate borrowers, and obtained for a variety of
business purposes. Risks associated with these loans can be significant and
include, but are not limited to, fraud, bankruptcy, economic downturn,
deteriorated or non-existing collateral and changes in interest rates.
INVESTMENTS
In addition to loans, the Bank will make other investments primarily in
obligations of the United States or obligations guaranteed as to principal and
interest by the United States and other taxable securities. No investment in
any of those instruments will exceed any applicable limitation imposed by law
or regulation.
DEPOSITS
The primary sources of deposits will be residents of, and businesses and
their employees located initially in Gwinnett County, and to a lesser extent
Cobb County, DeKalb County, Fulton County in Georgia obtained through personal
solicitation by the Bank's officers and directors. The Bank will be authorized
to accept and pay interest on deposits received from individuals, corporations,
partnerships and any other type of legal entity, including fiduciaries (such as
private trusts) subject to the requirements of the Department of Banking and
the FDIC with regard to the maximum rates of interests payable on deposits, the
manner in which such interest may be calculated and paid, the frequency of
payment and penalties for early withdrawal of deposits. Qualified deposits
will be issued by the FDIC in an amount up to $100,000.
TRUST POWERS
The Bank's Charter authorizes it to execute trust powers in accordance
with the Financial Institutions Code of Georgia. The Bank will not be
permitted to exercise such trust powers without approval from the Department of
Banking and the FDIC. Management of the Bank does not anticipate that the Bank
will seek approval to exercise its trust powers in the immediately foreseeable
future.
ASSET AND LIABILITY MANAGEMENT
The Bank intends to manage its assets and liabilities to provide an
optimum and stable net interest margin, a profitable after-tax return on assets
and return on equity, and adequate liquidity. These management functions will
be conducted within the framework of written loan and investment policies which
the Bank will adopt. The Bank will attempt to maintain a balanced position
between rate sensitive assets and rate sensitive liabilities. Specifically, it
will chart assets and liabilities on a matrix by maturity, effective duration,
and interest adjustment period, and endeavor to manage any gaps in maturity
ranges.
EMPLOYEES
Upon commencement of operations, the Bank is expected to have
approximately 15 full-time employees and no part-time employees. The Company
is not expected to have any employees who are not also employees of the Bank.
DATA PROCESSING SERVICES
The Bank has entered into a contract with Provesa, Inc. whereby Provesa
will provide data processing and item processing/imaging services for the Bank.
11
<PAGE> 16
MANAGEMENT
OFFICERS AND DIRECTORS
On August 21, 1996, the Board of Directors of the Company elected the
following persons as officers of the Company:
Larry D. Key President, Chief Executive Officer
John T. Hopkins III Executive Vice President, Chief Financial Officer,
Secretary and Treasurer
The following table sets forth for the initial members of the Board of
Directors of the Company (a) their names, addresses and ages at September 30,
1996, (b) the positions they will hold in the Bank, if any, (c) the number of
shares of Common Stock for which they intend to subscribe, and (d) the
percentage of outstanding shares such number will represent if the minimum
number of shares are sold in this Offering and if the maximum number of shares
are sold in this Offering.
<TABLE>
<CAPTION>
POSITION NUMBER % OF % OF
NAME AND ADDRESS AGE TO BE HELD OF SHARES(1) MINIMUM MAXIMUM
- ---------------- --- -------------------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Larry D. Key President, Chief
3300 Jim Moore Road Exec. Officer and
Dacula, Georgia 30211 51 Chairman 20,010 3.1% 2%
Director, Exec. V.
John T. Hopkins III President, Chief
4310 Antelope Lane Financial Officer,
Lithonia, Georgia 30058 54 Secy. and Treasurer 5,010 .7% .5%
Paul C. Birkhead Director, Exec. V.
4651 Warrior Trail Pres. and Sr. Loan
Lilburn, Georgia 30247 52 Officer 20,010 3.1% 2%
James B. Ballard
2400 Bagley Road
Cumming, Georgia 30130 52 Director 10,010 1.5% 1%
Jerry M. Boles
Boles Parts Supply, Inc.
1057 Boulevard, S.E.
Atlanta, Georgia 30312 56 Director 25,010 3.8% 2.5%
W. H. Britt
W. H. Britt & Assoc., Inc.
535 Grayson Parkway
Grayson, Georgia 30221 58 Director 5,010 .7% .5%
Norris J. Nash
Gwinnett DeKalb Realty, Inc.
4830 Lawrenceville Hwy.
Lilburn, Georgia 69 Director 5,010 .7% .5%
William S. Stanton
Print Direction, Inc.
1455 Oakbrook Drive
Norcross, Georgia 30093 41 Director 20,010 3.1% 2%
</TABLE>
- -------------------
(1) Each of the Directors of the Company purchased 10 shares of common stock
of the Company for $10.00 per share in connection with the initial
organization of the Company.
12
<PAGE> 17
In addition, Marcia N. Watkins will serve as Senior Vice President and Chief
Operating Officer of the Bank. She does not serve on the Board of Directors of
the Company or the Bank.
BIOGRAPHIES
JAMES B. BALLARD was the Chief Executive Officer, founder and a member of
the board of directors from 1972 until January 1996 of Spartan Constructors,
Inc., an industrial constructor serving the continental United States as well
as the international market. Mr. Ballard currently serves as a consultant to
Day and Zimmerman.
PAUL C. BIRKHEAD was Executive Vice President and Senior Lending Officer
of Commercial Bank of Georgia from 1988 when Commercial Bank opened until July
1995 when he resigned to participate in current organizing group of the
Company. Mr. Birkhead was Group Vice President of Commercial Lending of
Heritage Bank from 1984 until November 1987, when Heritage merged with Bank
South, N.A. Mr. Birkhead was Vice President of Commercial Lending for Bank
South, N.A. until he resigned in January 1988 to join the organizing group of
Commercial Bank of Georgia.
JERRY M. BOLES has been in the wholesale automotive after-market for 35
years. Mr. Boles is owner and president of Boles Parts Supply, Inc., which was
founded in 1964, with headquarters in Atlanta, Georgia and distribution
warehouses in Oklahoma City, Oklahoma; Tappahannock, Virginia and Dahlonega,
Georgia.
W. H. BRITT has been an active businessman in the Gwinnett County area
since 1975. He is the founder and owner of H & H Truck and Tractor, Inc., an
equipment sales company and W. H. Britt and Associates, Inc., a real estate
brokerage and development company. Mr. Britt was an organizer of Gwinnett
County Bank (Heritage Bank) in 1972 and served as a director until 1987 when
the bank was sold.
JOHN T. HOPKINS III was the Chief Financial Officer and Executive Vice
President of Commercial Bank of Georgia until he resigned in July 1996 to
participate in the Company's organizing group. Mr. Hopkins was Chief Financial
Officer and Chief Operating Officer of Paragon Mortgage from 1993 to 1995. He
was Chief Financial Officer of West Corp. which operated commercial, electrical
and mechanical contracting companies from 1989 to 1993. From 1985 to 1989, he
was Internal Auditor and Chief Financial Officer of Heritage Bank and Corporate
Accountant of Williams Service Group. Prior to 1985, Mr. Hopkins was a partner
with H. H. Brunet and Company, Certified Public Accountants, specializing in
the financial services industry.
LARRY D. KEY was the Executive Vice President and Chief Lending Officer of
Commercial Bank of Georgia from the merger of Commercial Bank of Georgia and
Commercial Bank of Gwinnett in March 1995 until he resigned in July 1996 to
participate in current organizing group. Mr. Key served as President and Chief
Executive Officer of the former Commercial Bank of Georgia from 1994 until
merger. He served as Executive Vice President and Chief Credit Officer of the
former Commercial Bank of Georgia from 1992 until 1994. Mr. Key was Senior
Vice President from the opening of the former Commercial Bank of Georgia in
1988 until 1992. He was Group Vice President and an advisory director of
Heritage Bank from 1984 until 1987. Mr. Key managed Moores Building Center,
Inc. in Dahlonega, Georgia from 1987 to 1988. Mr. Key served as a director of
Commercial Bancorp of Georgia, Inc. and Commercial Bank of Georgia from their
initial organization in 1988 until July 1996.
NORRIS J. NASH is the President of Metropolitan Land Development and
Investment Corporation and Gwinnett-DeKalb, Inc. He has been a real estate
developer since 1962. Mr. Nash has served as director of the former Gwinnett
County Bank, and on the Advisory Board of Wachovia Bank of Georgia, N.A.. Mr.
Nash was a member of the House of Representatives for Gwinnett County, District
22, Post #1 from 1967 to 1969.
WILLIAM S. STANTON is President of Print Direction, Inc. and Atlanta
Screen Print, Inc. Mr. Stanton has served as President of Print Direction
since its inception in 1984 and Atlanta Screen Print since 1988. He was an
Account Representative with Xerox Corporation from 1977 to 1981.
MARCIA N. WATKINS is Senior Vice President and Chief Operating Officer of
the Bank. Prior to serving as Senior Vice President and Chief Operating
Officer, Ms. Watkins served as Senior Vice President and Chief Operations
Officer of Commercial Bank of Georgia from its inception in February 1988 to
June 1996. Ms. Watkins was one of the original seven employees involved in the
opening of Gwinnett County Bank, a/k/a Heritage Bank, in February 1971. Ms.
Watkins served as Senior Operations Officer of Heritage Trust from February
1986 to February 1988. Ms. Watkins held various positions with the Heritage
Bank, including Vice President and Cashier between 1971 and 1986.
CASH COMPENSATION
While no employment agreements exist or are presently contemplated, it is
anticipated that the Company will pay initial annual salaries to its officers
as follows:
13
<PAGE> 18
<TABLE>
<CAPTION>
Person Position Salary
------- -------- ------
<S> <C> <C>
Larry D. Key President; Chief Executive $130,000(1)
Officer and Chairman
John T. Hopkins III Executive Vice President, $ 95,000(1)
Chief Financial Officer,
Secretary and Treasurer
<CAPTION>
In addition, the Bank will pay initial annual salaries to its officers as follows:
Person Position Salary
------ -------- ------
<S> <C> <C>
Paul C. Birkhead Executive Vice President $ 95,000
Marcia N. Watkins Senior Vice President and $ 55,000
Chief Operating Officer
</TABLE>
- -----------------
(1) The Bank will be responsible for 90% of these initial salaries and the
Company will be responsible for the remainder.
The officers of the Company and the Bank will also receive health, life
and disability insurance under the same plan and terms as other employees of
the Bank. In addition, Messrs. Key, Hopkins and Birkhead will each receive an
automobile allowance of $650 per month.
Directors of the Bank will not be compensated for their services as
directors until the Bank earns a profit both currently and cumulatively.
CERTAIN TRANSACTIONS
It is possible that the Company and the Bank will have banking and other
business transactions in the ordinary course of business with directors and
officers of the Company and the Bank, including members of their families or
corporations, partnerships or other organizations in which such directors and
officers have a controlling interest. If such transactions occur, they will be
on substantially the same terms (including price, interest rate and collateral)
as those prevailing at the time for comparable transactions with unrelated
parties, and any banking transactions will not be expected to involve more than
the normal risk of collectibility or present other unfavorable features to the
Company and the Bank.
In addition, the Company and the Bank each have a line of credit loan from
the Joint Venture which consists of the organizers of the Company and the Bank
in the aggregate amount of $500,000 to pay organizational and pre-opening
expenses for the Company and Bank. The line of credit has a one-year term
ending on July 17, 1997 and bears interest at an initial rate of 9.25% which
interest rate will fluctuate automatically with the prime rate at a level of
1.0% above prime rate. Interest on the amounts advanced under the line of
credit are payable monthly on the last day of each calendar month. The line of
credit and interest costs will be repaid by the Company from the proceeds of
this Offering. See "USE OF PROCEEDS." The line of credit and interest costs
will be repaid by the Bank from the proceeds of the sale of its common stock to
the Company.
It is anticipated that Columbus Bank and Trust Company will operate as the
correspondent bank for the Bank. Columbus Bank and Trust is wholly owned by
Synovus Financial Corporation.
The Bank will enter into a Lease Agreement with the Joint Venture to lease
the Permanent Premises. The members of the Joint Venture are directors of the
Company and organizers of the Bank. See "BUSINESS OF THE COMPANY" and "THE
BANK--Bank Location and Facilities."
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
There is currently no market for the shares of Common Stock and it is not
likely that an active trading market will develop for the shares in the future.
There are no present plans for the Company's Common Stock to be traded on any
stock exchange or over-the-counter market. As a result, investors who need or
wish to dispose of all or part of their shares may be unable to do so except in
private, directly negotiated sales.
14
<PAGE> 19
DESCRIPTION OF COMMON STOCK OF THE COMPANY
GENERAL
The Company's Articles of Incorporation authorize the Company to issue up
to 3,000,000 shares of Common Stock, par value $1.00 per share, of which a
minimum of 650,000 shares and a maximum of 1,000,000 shares will be issued
pursuant to this Offering. Eighty shares of Common Stock were issued prior to
the Offering to the initial directors of the Company.
All shares of Common Stock of the Company will be entitled to share
equally in dividends from funds legally available therefor, when, as and if
declared by the Board of Directors, and upon liquidation or dissolution of the
Company, whether voluntary or involuntary, to share equally in all assets of
the Company available for distribution to the shareholders. It is not
anticipated that the Company will pay any cash dividends on the Common Stock in
the near future. See "DIVIDENDS." Each holder of Common Stock will be
entitled to one vote for each share on all matters submitted to the
shareholders. Holders of Common Stock will not have any preemptive right to
acquire authorized but unissued capital stock of the Company. There is no
cumulative voting, redemption right, sinking fund provision, or right of
conversion in existence with respect to the Common Stock. All shares of the
Common Stock issued in accordance with the terms of this Offering as described
in this Prospectus will be fully-paid and non-assessable.
SHARES HELD BY AFFILIATES
Upon completion of this Offering, the Company will have a minimum of
650,000 shares and a maximum of 1,000,000 shares outstanding from the Offering.
All of these shares will be freely tradeable without restriction or
registration under the Securities Act of 1933, as amended (the "1933 Act"),
except for shares purchased in this Offering by the officers and directors of
the Company.
Such officers and directors are "affiliates" of the Company (as that term
is defined in Rule 144 adopted under the 1933 Act) and, as a result, their
shares will be subject to certain resale restrictions.
Rule 144 generally provides that a person (including an affiliate of the
Company) who has beneficially owned shares for at least two years would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 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 such sale, whichever is greater. While affiliates may
generally sell nonrestricted shares under Rule 144 without regard to the length
of their holding period, all shares purchased by the officers and directors
will be purchased for investment purposes and not with a present intention of
redistribution.
There can be no assurance that a public market for the Common Stock will
exist at any time subsequent to this Offering. As a result, investors who may
wish or who need to dispose of all or a part of their investment in the Common
Stock may not be able to do so except for private direct negotiations with
third parties, assuming that third parties are willing to purchase the Common
Stock.
ANTITAKEOVER PROVISIONS OF THE COMPANY'S
ARTICLES OF INCORPORATION AND BYLAWS
The Articles of Incorporation of the Company contain certain provisions
which would have the effect of impeding an attempt to change or remove
management of the Company or to gain control of the Company in a transaction
not supported by its Board of Directors (the "Protective Provisions"). In
general, one purpose of the Protective Provisions is to assist the Company's
Board of Directors in playing a role in connection with attempts to acquire
control of the Company, so that the Board of Directors of the Company can
further and protect the interests of the Company and its shareholders as
appropriate under the circumstances, including if the Board of Directors
determines that a sale of control is in the best interest of the Company and
its shareholders, by enhancing the Board's ability to maximize the value to be
received by the shareholders upon such sale.
Although the Company's management believes the Protective Provisions are,
therefore, beneficial to shareholders of the Company, the Protective Provisions
also may tend to discourage some takeover bids. As a result, shareholders of
the Company may be deprived of opportunities to sell some or all of their
shares at prices that represent a premium over prevailing market prices. On
the other hand, defeating undesirable acquisition offers can be a very
expensive and time-consuming process. To the extent that the Protective
Provisions discourage undesirable proposals, the Company may be able to avoid
those expenditures of time and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of the
Company's Common Stock temporarily, enabling shareholders to sell their shares
at a price higher than that which otherwise would prevail. In addition, the
Protective Provisions may decrease the market price of the Company's Common
Stock by making the stock less attractive to persons who invest in securities
in anticipation of price increases from potential acquisition attempts. The
Protective Provisions also may make it more difficult and time consuming for a
potential acquirer to obtain control of the Company through replacing the Board
of Directors and management. Furthermore, the Protective Provisions
15
<PAGE> 20
may make it more difficult for shareholders of the Company to replace the Board
of Directors or management, even if a majority of the shareholders believes such
replacement is in the best interests of the Company. As a result, the Protective
Provisions may tend to perpetuate the incumbent Board of Directors and
management.
The Articles of Incorporation of the Company also contain a provision
which eliminates the potential personal liability of directors for monetary
damages. In addition, the Bylaws of the Company contain certain provisions
which provide indemnification for directors of the Company.
The Protective Provisions and the provisions relating to elimination of
liability and indemnification of directors are discussed more fully below.
CHANGE IN NUMBER OF DIRECTORS
Article 7 of the Articles of Incorporation of the Company provides that
any change in the number of directors of the Company, as set forth in its
Bylaws, would have to be made by the affirmative vote of 2/3 of the entire
Board of Directors or by the affirmative vote of the holders of at least 2/3 of
the outstanding shares of Common Stock.
Under Georgia law, the number of directors may be increased or decreased
from time to time by amendment to the Bylaws, unless the Articles of
Incorporation provide otherwise or unless the number of directors is otherwise
fixed by the shareholders.
REMOVAL OF DIRECTORS
Article 8 of the Articles of Incorporation of the Company provides that
directors of the Company may be removed during their terms with or without
cause by the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock. "Cause" for this purpose is defined as final
conviction of a felony, request or demand for removal by any bank regulatory
authority having jurisdiction over the Company, or determination by at least
2/3 of the incumbent directors of the Company that the conduct of the director
to be removed has been inimical to the best interests of the Company.
Under Georgia law, any or all of the directors of a corporation may be
removed with or without cause by the affirmative vote of a majority of the
shares represented at a meeting at which a quorum is represented and entitled
to vote thereon, unless the Articles of Incorporation provide otherwise.
LIMITATION OF LIABILITY
Article 10 of the Company's Articles of Incorporation, subject to certain
exceptions, eliminates the potential personal liability of a director for
monetary damages to the Company and to the shareholders of the Company for
breach of a duty as a director. There is no elimination of liability for (a) a
breach of duty involving appropriation of a business opportunity of the
Company, (b) an act or omission not in good faith or involving intentional
misconduct or a knowing violation of law, (c) a transaction from which the
director derives an improper material tangible personal benefit, or (d) as to
any payment of a dividend or approval of a stock repurchase that is illegal
under the Georgia Business Corporation Code. Article 10 does not eliminate or
limit the right of the Company or its shareholders to seek injunctive or other
equitable relief not involving monetary damages.
Article 10 was adopted by the Company pursuant to the Georgia Business
Corporation Code which allows Georgia corporations, with the approval of their
shareholders, to include in their Articles of Incorporation a provision
eliminating or limiting the liability of directors, except in the circumstances
described above. Article 10 was included in the Company's Articles of
Incorporation to encourage qualified individuals to serve and remain as
directors of the Company. While the Company has not experienced any problems
in locating directors, it could experience difficulty in the future as the
Company's business activities increase and diversify. Article 10 was also
included to enhance the Company's ability to secure liability insurance for its
directors at a reasonable cost. While the Company intends to obtain liability
insurance covering actions taken by its directors in their capacities as
directors, the Board of Directors believes that the current director's
liability insurance environment, and the environment for the foreseeable
future, is characterized by increasing premiums, reduced coverage and an
increasing risk of litigation and liability. The Board of Directors believes
that Article 10 will enable the Company to secure such insurance on terms more
favorable than if such a provision were not included in the Articles of
Incorporation.
SUPERMAJORITY VOTING ON CERTAIN TRANSACTIONS
Under Article 12 of the Articles of Incorporation of the Company, with
certain exceptions, any merger or consolidation involving the Company or any
sale or other disposition of all or substantially all of its assets will
require the affirmative vote of the holders of at least 2/3 of the outstanding
shares of Common Stock. However, if the Board of Directors of the Company has
approved the particular transaction by the affirmative vote of 2/3 of the
entire Board, then the applicable provisions of Georgia law would govern and
shareholder approval of the transaction would require the affirmative vote of
the holders of only a majority of the outstanding shares of Common Stock
entitled to vote thereon.
16
<PAGE> 21
The primary purpose of this Article is to discourage any party from
attempting to acquire control of the Company through the acquisition of a
substantial number of shares of Common Stock followed by a forced merger or
sale of assets without negotiation with management. Such a merger or sale
might not be in the best interests of the Company or its shareholders. This
provision may also serve to reduce the risk of a potential conflict of interest
between a substantial shareholder on the one hand and the Company and its other
shareholders on the other.
The foregoing provision could enable a minority of the Company shareholders
to prevent a transaction favored by the majority of the shareholders. Also, in
some circumstances, the directors could cause a 2/3 vote to be required to
approve the transaction by withholding their consent to such a transaction,
thereby enhancing their positions with the Company and the Bank. However, of
the eight persons who are directors of the Company, only two will be affiliated
with the Company and only three with the Bank in a full-time management
position.
EVALUATION OF AN ACQUISITION PROPOSAL
Article 13 of the Company's Articles of Incorporation provides that the
response of the Company to any acquisition proposal made by another party will
be based on the Board's evaluation of the best interests of the Company and its
shareholders. As used herein, the term "acquisition proposal" refers to any
offer of another party (a) to make a tender offer or exchange offer for any
equity security of the Company, (b) to merge or consolidate the Company with
another corporation, or (c) to purchase or otherwise acquire all or
substantially all of the properties and assets owned by the Company.
Article 13 charges the Board, in evaluating an acquisition proposal, to
consider all relevant factors, including (a) the expected social and economic
effects of the transaction on the employees, customers and other constituents
(e.g., suppliers of goods and services) of the Company and the Bank, (b) the
expected social and economic effects on the communities within which the
Company and the Bank operate, and (c) the consideration being offered by the
other corporation in relation (i) to the then current value of the Company as
determined by a freely negotiated transaction and (ii) to the Board of
Directors' then estimate of the Company's future value as an independent
entity. The enumerated factors are not exclusive, and the Board may consider
other relevant factors.
This Article has been included in the Company's Articles of Incorporation
because the Bank is charged with providing support to and being involved with
the communities it serves, and the Board believes its obligations in evaluating
an acquisition proposal extend beyond evaluating merely the consideration being
offered in relation to the then market or book value of the Common Stock. No
provisions of Georgia law specifically enumerate the factors a corporation's
board of directors should consider in the event the corporation is presented
with an acquisition proposal.
While the value of the consideration offered to shareholders is the main
factor when weighing the benefits of an acquisition proposal, the Board
believes it appropriate also to consider all other relevant factors. For
example, this Article directs the Board to evaluate the consideration being
offered in relation to the then current value of the Company determined in a
freely negotiated transaction and in relation to the Board's then estimate of
the future value of the Company as an independent concern. A takeover bid
often places the target corporation virtually in the position of making a
forced sale, sometimes when the market price of its stock may be depressed.
The Board believes that frequently the consideration offered in such a
situation, even though it may be in excess of the then market value (i.e., the
value at which shares are then currently trading), it is less than that which
could be obtained in a freely negotiated transaction. In a freely negotiated
transaction, management would have the opportunity to seek a suitable partner
at a time of its choosing and to negotiate for the most favorable price and
terms which reflect not only the current value, but also the future value of
the Company.
One effect of this Article may be to discourage a tender offer in advance.
Often an offeror consults the Board of a target corporation prior to or after
commencing a tender offer in an attempt to prevent a contest from developing.
In the opinion of the Board, this provision will strengthen its position in
dealing with any potential offeror which might attempt to acquire the Company
through a hostile tender offer. Another effect of this Article may be to
dissuade shareholders who might be displeased with the Board's response to an
acquisition proposal from engaging the Company in costly litigation. This
provision, however, does not affect the right of a shareholder displeased with
the Board's response to an acquisition proposal to institute litigation against
the Company and to allege that the Board breached an obligation to shareholders
by not limiting its evaluation of an acquisition proposal to the value of the
consideration being offered in relation to the then market or book value of the
Common Stock.
Article 13 would not make an acquisition proposal regarded by the Board as
being in the best interests of the Company more difficult to accomplish. It
would, however, permit the Board to determine that an acquisition proposal was
not in the best interests of the Company (and thus to oppose it) on the basis
of the various factors deemed relevant. In some cases, such opposition by the
Board might have the effect of maintaining the positions of incumbent
management.
AMENDMENT OF PROVISIONS
Any amendment of Articles 7, 8, 10, 12, and 13 of the Company's Articles
of Incorporation requires the affirmative vote of the holders of at least 2/3
of the outstanding shares of Common Stock, unless 2/3 of the entire Board of
Directors approves the amendment. If 2/3 of the Board approves the amendment,
the applicable provisions of Georgia law would govern, and the approval of only
a majority of the outstanding shares of Common Stock would be required.
17
<PAGE> 22
INDEMNIFICATION
The Bylaws of the Company contain certain indemnification provisions which
provide that directors, officers, employees or agents of the Company will be
indemnified against expenses actually and reasonably incurred by them if they
are successful on the merits of a claim or proceeding.
When a case or dispute is not ultimately determined on its merits (i.e.,
it is settled), the indemnification provisions provide that the Company will
indemnify directors when they meet the applicable standard of conduct. The
applicable standard of conduct is met if the director acted in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, if the director
had no reasonable cause to believe his or her conduct was unlawful. Whether
the applicable standard of conduct has been met is determined by the Board of
Directors, the shareholders or independent legal counsel in each specific case.
The Bylaws of the Company also provide that the indemnification rights set
forth therein are not exclusive of other indemnification rights to which a
director may be entitled under any bylaw, resolution or agreement, either
specifically or in general terms approved by the affirmative vote of the
holders of a majority of the shares entitled to vote thereon. The Company can
also provide for greater indemnification than that set forth in the Bylaws if
it chooses to do so, subject to approval by the Company's shareholders. The
Company may not, however, indemnify a director for liability arising out of
circumstances which constitute exceptions to limitation of a director's
liability for monetary damages.
The indemnification provisions of the Bylaws specifically provide that the
Company may purchase and maintain insurance on behalf of any director against
any liability asserted against such person and incurred by him in any such
capacity, whether or not the Company would have had the power to indemnify
against such liability.
The Company is not aware of any pending or threatened action, suit or
proceeding involving any of its directors or officers for which indemnification
from the Company may be sought.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the 1933 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 1933
Act and will be governed by the final adjudication of such issue.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both
federal and state law. The following is a brief summary of certain statutes,
rules and regulations affecting the Company and the Bank. This summary is
qualified in its entirety by reference to the particular statutory and
regulatory provision referred to below and is not intended to be an exhaustive
description of the statutes or regulations applicable to the business of the
Company and the Bank. Supervision, regulation and examination of the Company
and the Bank by the bank regulatory agencies are intended primarily for the
protection of depositors rather than shareholders of the Company.
BANK HOLDING COMPANY REGULATION
The Company will be a registered holding company under the Bank Holding
Company Act of 1956 (the "BHC Act") and the Georgia Bank Holding Company Act
(the "Georgia BHC Act") and will be regulated under such acts by the Board of
Governors of the Federal Reserve System (the "Federal Reserve") and by the
Department of Banking, respectively.
As a bank holding company, the Company is required to file annual reports
with the Federal Reserve and the Department of Banking and such additional
information as the applicable regulator may require pursuant to the BHC Act and
the Georgia BHC Act. The Federal Reserve and the Department of Banking may
also conduct examinations of the Company to determine whether it is in
compliance with both the BHC Act and the Georgia BHC Act and the regulations
promulgated thereunder.
The BHC Act also requires every bank holding company to obtain prior
approval from the Federal Reserve before acquiring direct or indirect ownership
or control of more than 5% of the voting shares of any bank which is not
already majority owned or controlled by that bank holding company. Acquisition
of any additional banks would also require prior approval from the Department of
Banking.
18
<PAGE> 23
On September 29, 1994, President Clinton signed the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Interstate Act") which
amended federal law to permit bank holding companies to acquire existing banks
in any state effective September 29, 1995, and any interstate bank holding
company is permitted to merge its various bank subsidiaries into a single bank
with interstate branches effective June 1, 1997. States have the authority to
authorize interstate branching prior to June 1, 1997, or alternatively, to opt
out of interstate branching prior to that date.
In addition to having the right to acquire ownership or control of other
banks, a bank holding company is authorized to acquire ownership or control of
non-banking companies, provided the activities of such companies are so closely
related to banking or managing or controlling banks that the Federal Reserve
considers such activities to be proper to the operation and control of banks.
Regulation Y, promulgated by the Federal Reserve, sets forth those activities
which are regarded as closely related to banking or managing or controlling
banks and, thus, are permissible activities for bank holding companies, subject
to approval by the Federal Reserve in individual cases.
Federal Reserve policy requires a bank holding company to act as a source
of financial strength and to take measures to preserve and protect bank
subsidiaries in situations where additional investments in a troubled bank may
not be warranted. Under these provisions, a bank holding company may be
required to loan money to its subsidiaries in the form of capital notes or
other instruments which qualify for capital under regulatory rules. Any loans
by the holding company to such subsidiary banks are likely to be unsecured and
subordinated to such bank's depositors and perhaps to its other creditors.
BANK REGULATION
The Company will initially have one subsidiary bank. The Bank will be a
state bank chartered under the laws of the State of Georgia and will be subject
to examination by the Department of Banking. The Department of Banking
regulates or monitors all areas of a bank's operations and activities,
including reserves, loans, mergers, issuance of securities, payment of
dividends, interest rates and establishment of branches.
The Bank will also be insured and regulated by the Federal Deposit
Insurance Corporation (the "FDIC"). The major functions of the FDIC with
respect to insured banks include paying depositors to the extent provided by law
in the event an insured bank is closed without adequately providing for payment
of the claims of depositors, acting as a receiver of state banks placed in
receivership when so appointed by state authorities, and preventing the
continuance or development of unsound and unsafe banking practices. In
addition, the FDIC is authorized to examine insured state banks which are not
members of the Federal Reserve to determine the condition of such banks for
insurance purposes. The FDIC also approves conversions, mergers, consolidations
and assumption of deposit liability transactions between insured banks and
noninsured banks or institutions to prevent capital or surplus diminution in
such transactions where the resulting, continued or assuming bank is an insured
non-member state bank.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the BHC Act on any extension of credit to the bank
holding company or any of its subsidiaries, on investment in the stock or other
securities of the bank holding company or its subsidiaries, and on the taking
of such stock or securities as collateral for loans to any borrower. In
addition, a bank holding company and its subsidiaries are prohibited from
engaging in certain tying arrangements in connection with any extension of
credit or provision of any property or services.
CAPITAL REQUIREMENTS
Regulatory agencies measure capital adequacy with a framework that makes
capital requirements sensitive to the risk profile of the individual banking
institution. The guidelines define capital as either Tier 1 capital (primarily
shareholders equity) or Tier 2 capital (certain debt instruments and a portion
of the reserve for loan losses). There are two measures of capital adequacy
for bank holding companies and their subsidiary banks: the Tier 1 leverage
ratio and the risk-based capital requirements. Bank holding companies and
their subsidiary banks must maintain a minimum Tier 1 leverage ratio of 4%. In
addition, Tier 1 capital must equal 4% of risk-weighted assets, and total
capital (Tier 1 plus Tier 2) must equal 8% of risk-weighted assets. These are
minimum requirements, however, and institutions experiencing internal growth
(which will initially be the case for the Bank) or making acquisitions, as well
as institutions with supervisory or operational weaknesses, will be expected to
maintain capital positions well above these minimum levels.
The federal banking agencies have proposed amending the capital adequacy
standards to provide for the consideration of interest rate risk in the overall
determination of a bank's capital ratio and to require banks with greater
interest rate risk to maintain adequate capital for the risk. It is uncertain
what effect these regulations, when implemented, would have on the Company and
the Bank.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"1991 Act") imposes a regulatory matrix which requires the federal banking
agencies to take prompt corrective action to deal with depository institutions
that fail to meet their minimum capital requirements or are otherwise in a
troubled condition. The prompt corrective action provisions require
undercapitalized institutions to become subject to an increasingly stringent
array of restrictions, requirements and prohibitions, as their capital levels
deteriorate and supervisory problems mount. Should these corrective measures
prove unsuccessful in recapitalizing the institution and correcting its
problems, the 1991 Act mandates that the institution be placed in receivership.
19
<PAGE> 24
Pursuant to regulations promulgated under the 1991 Act, the corrective
actions that the banking agencies either must or may take are tied primarily to
an institution's capital levels. In accordance with the framework adopted by
the 1991 Act, the banking agencies have developed a classification system,
pursuant to which all banks and thrifts are placed into one of five categories:
well-capitalized institutions, adequately capitalized institutions,
undercapitalized institutions, significantly undercapitalized institutions and
critically undercapitalized institutions. The capital thresholds established
for each of the categories are as follows:
<TABLE>
<CAPTION>
Total Tier 1 Risk-
Capital Category Tier 1 Capital Risk-Based Capital Based Capital Other
- ---------------- --------------- ------------------ ------------- --------------------
<S> <C> <C> <C> <C>
Well Capitalized 5% or more 10% or more 6% or more Not subject to a
capital directive
Adequately
Capitalized 4% or more 8% or more 4% or more --
Undercapitalized less than 4% less than 8% less than 4% --
Significantly
Undercapitalized less than 3% less than 6% less than 3% --
Critically 2% or less
Undercapitalized tangible equity -- -- --
</TABLE>
The Department of Banking 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 will be required to maintain a primary capital ratio of 8% during its
first three years of operation.
The capital guidelines can affect the Company and the Bank in several
ways. After completion of this Offering, the Company and the Bank will both
have capital ratios which are significantly greater than those required for
"well capitalized" institutions. However, rapid growth, poor loan portfolio
performance, poor earnings performance, or a combination of these factors,
could change the capital position of the Company and the Bank, making an
additional capital infusion necessary.
CRA AND FAIR LENDING
On April 19, 1995, the federal bank regulatory agencies adopted revisions
to the regulations promulgated pursuant to the Community Reinvestment Act (the
"CRA"), which are intended to set distinct assessment standards for financial
institutions. The revised regulation contains three evaluation tests: (a) a
lending test which will compare the institution's market share of loans in low-
and moderate-income areas to its market share of loans in its entire service
area and the percentage of a bank's outstanding loans to low- and
moderate-income areas or individuals, (b) a services test which will evaluate
the provision of services that promote the availability of credit to low- and
moderate-income areas, and (c) an investment test, which will evaluate an
institution's record of investments in organizations designed to foster
community development, small- and minority-owned businesses and affordable
housing lending, including state and local government housing or revenue bonds.
The regulation is designed to reduce the paperwork requirements of the current
regulations and provide regulators, institutions and community groups with a
more objective and predictable manner with which to evaluate the CRA
performance of financial institutions. The rule became effective on January 1,
1996 when evaluation under streamlined procedures began for institutions with
assets of less than $250 million that are owned by a holding company with total
assets of less than $1 billion.
Congress and various federal agencies (including, in addition to the bank
regulatory agencies, the Department of Housing and Urban Development, the
Federal Trade Commission and the Department of Justice) (collectively the
"Federal Agencies") responsible for implementing the nation's fair lending laws
have been increasingly concerned that prospective home buyers and other
borrowers are experiencing discrimination in their efforts to obtain loans. In
recent years, the Department of Justice has filed suit against financial
institutions which it determined had discriminated, seeking fines and
restitution for borrowers who allegedly suffered from discriminatory practices.
Most, if not all, of these suits have been settled (some for substantial sums)
without a full adjudication on the merits.
On March 8, 1994, the Federal Agencies, in an effort to clarify what
constitutes lending discrimination and to specify the factors the agencies will
consider in determining if lending discrimination exists, announced a joint
policy statement detailing specific discriminatory practices prohibited under
the Equal Credit Opportunity Act and the Fair Housing Act. In the policy
statement, three
20
<PAGE> 25
methods of proving lending discrimination were identified: (a) overt evidence of
discrimination, when a lender blatantly discriminates on a prohibited basis; (b)
evidence of disparate treatment, when a lender treats applicants differently
based on a prohibited factor even where there is no showing that the treatment
was motivated by prejudice or a conscious intention to discriminate against a
person, and (c) evidence of disparate impact, when a lender applies a practice
uniformly to all applicants, but the practice has a discriminatory effect, even
where such practices are neutral on their face and are applied equally, unless
the practice can be justified on the basis of business necessity.
FDIC INSURANCE ASSESSMENTS
The Bank will be subject to FDIC deposit insurance assessments for the
Bank Insurance Fund. The FDIC has implemented a risk-based assessment system
whereby banks are assessed on a sliding scale depending on their placement in
nine separate supervisory categories. Beginning in January, 1996, the
highest-rated institutions were required to pay the statutory annual minimum of
$2,000 for FDIC insurance. Rates for all other institutions were reduced by
four cents per $100 as well, leaving a premium range of 3 cents to 27 cents per
$100.
FUTURE REQUIREMENTS
Statutes and regulations are regularly proposed which contain wide-ranging
proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. It cannot be predicted
whether or what form any proposed statute or regulation will be adopted or the
extent to which the business of the Company and the Bank may be affected by
such statute or regulation.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Womble Carlyle Sandridge & Rice, PLLC, Atlanta, Georgia.
EXPERTS
The financial statements of the Company at September 30, 1996, and for the
period from August 21, 1996 (inception) until September 30, 1996, set forth
herein have been so included in reliance on the report of Mauldin & Jenkins,
independent certified public accountants, given on the authority of that firm
as experts in accounting and auditing.
21
<PAGE> 26
- -----------------------------------------------------------
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL REPORT
SEPTEMBER 30, 1996
- -----------------------------------------------------------
F-1
<PAGE> 27
GBC BANCORP, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
TABLE OF CONTENTS
Page
----
Independent Auditor's Report................................................F-3
Balance Sheet, September 30, 1996...........................................F-4
Statement of Loss, Period from July 17, 1996, Date of Inception,
to September 30, 1996..................................................F-5
Statement of Stockholder's (Deficit), Period from July 17, 1996,
Date of Inception, to September 30, 1996...............................F-6
Statement of Cash Flows, Period from July 17, 1996, Date of
Inception, to September 30, 1996.......................................F-7
Notes to Financial Statements...............................................F-8
F-2
<PAGE> 28
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
GBC Bancorp, Inc.
Lawrenceville, Georgia
We have audited the accompanying balance sheet of GBC Bancorp, Inc., a
development stage company, as of September 30, 1996, and the related
statements of loss, stockholder's (deficit) and cash flows for the period
from July 17, 1996, date of inception, to September 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 accounts 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 GBC Bancorp, Inc. as of
September 30, 1996, and the results of its operations and its cash flows
for the period from July 17, 1996, date of inception, to September 30,
1996, in conformity with generally accepted accounting principles.
MAULDIN & JENKINS, LLC
Atlanta, Georgia
November 1, 1996
F-3
<PAGE> 29
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 800.00
Equipment 30007.00
Deferred organization and stock offering costs 53895.00
------------
$ 84702.00
------------
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES, due to related party $ 191146.00
------------
COMMITMENTS
STOCKHOLDERS' (DEFICIT)
Common stock, $1 par value; 3,000,000 shares authorized;
80 shares issued and outstanding 80.00
Capital surplus 720.00
Deficit accumulated during the development stage -107244.00
------------
Total stockholder's (deficit) -106444.00
0
------------
$ 84702.00
</TABLE> ------------
See Notes to Financial Statements.
F-4
<PAGE> 30
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION, TO SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
EXPENSES
<S> <C>
Personnel expenses $ 77823.00
Interest 1456.00
Equipment and occupancy expenses 18872.0O
Other expenses 9093.00
------------
107244.00
------------
Net loss and deficit accumulated during the development stage $ -107244.00
------------
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 31
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' (DEFICIT)
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION, TO SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated Total
------------------------------ During the Stockholder's
Shares Par Capital Development (Deficit)
Value Surplus Stage Equity
----------- ------------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 17, 1996 (DATE OF INCEPTION) $ $ $ $
ISSUANCE OF 80 SHARES OF COMMON STOCK 80.00 80.00 720.00 800.00
Net loss -107244.00 -107244.00
----------- -------------- ------------- ----------- -----------
BALANCE, SEPTEMBER 30, 1996 80.00 $ 80.00 $ 720.00 $-107244.00 -106444.00
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE> 32
GBC BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION, TO SEPTEMBER 30, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $-107244.00
Adjustment to reconcile net loss to net cash provided by
operating activities:
Preopening expenses incurred by the Joint Venture
on behalf of the Company 107244.00
---------
net cash provided by operating activities ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 800.00
---------
Net cash provided by financing activities 800.00
---------
Net increase in cash 800.00
Cash at beginning of period 0
---------
Cash at end of period $ 800.00
---------
NONCASH TRANSACTION
Cost of equipment and deferred organization and stock offering
costs incurred by the Joint Venture on behalf of the Company $83902.00
---------
</TABLE>
See Notes to Financial Statements.
F-7
<PAGE> 33
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
GBC Bancorp, Inc. (the "Company") was incorporated on August 21, 1996,
to operate as a bank holding company pursuant to the Federal Bank
Holding Company Act of 1956, as amended, and the Georgia Bank Holding
Company Act, and to purchase 100% of the issued and outstanding
capital stock of Gwinnett Banking Company (the "Bank"), an association
to be organized under the laws of the State of Georgia, which will
conduct a general banking business in Lawrencevile, Georgia. The
Organizers have filed a joint application with the Georgia Department
of Banking and Finance (the "DBF") and the Federal Deposit Insurance
Corporation (the "FDIC") to charter the proposed Bank and for FDIC
insurance of the Bank's deposits. Upon receipt of preliminary approval
from the DBF, the Company will file an application to become a bank
holding company with the Federal Reserve Board (the "FRB") and the
DBF. Upon obtaining regulatory approval, the Company will be a
registered bank holding company subject to regulation by the FRB and
the DBF.
Activities since inception have consisted of the Company's and the
Bank's organizers engaging in organizational and preopening activities
necessary to obtain regulatory approvals and to prepare to commence
business as a financial institution.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
F-8
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
ORGANIZATION AND STOCK OFFERING COSTS
Organization costs will be amortized in accordance with applicable DBF
regulations and accounting policies over a period not to exceed five
years from the commencement of operations. Stock offering costs will
be charged to capital surplus upon completion of the stock offering.
Additional costs are expected to be incurred for organization costs
and stock offering costs.
Following is a summary of deferred organization and stock offering
costs:
Consulting $ 15000.00
Legal 38895.00
----------
$ 53895.00
----------
INCOME TAXES
The Company will be subject to Federal and state income taxes when
taxable income is generated. No income taxes have been accrued because
of operating losses incurred during the preopening period.
FISCAL YEAR
The Company will adopt a calendar year for both financial reporting
and tax reporting purposes.
F-9
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS
NOTE 2. DUE TO RELATED PARTY
To facilitate the formation of the Company and the Bank, the
organizers of the Company formed Gwinnett Banking Company Joint
Venture ("the Joint Venture") on July 17, 1996. The Joint Venture has
established a $500,000 line of credit with an independent bank for the
purpose of paying organization and preopening expenses for the Company
and the Bank and the expenses of the Company's common stock offering.
The line of credit bears interest at the lender's prime rate plus 1%
and matures on July 17, 1997. Interest is payable monthly. The
interest rate at September 30, 1996 was 9.25%. The organizers have
personally guaranteed repayment of the line of credit. All funds
advanced by the Joint Venture on behalf of the Company and the Bank
will be repaid from the proceeds of the stock offering. The Company's
ability to repay these advances and relieve the organizers from their
personal guarantees depends upon the completion of the offering. The
assets and liabilities of the Joint Venture as of September 30, 1996
are as follows:
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in Company $ 800.00
Due from Company 191146.00
Other assets 2600.00
----------
Total assets $194546.00
----------
LIABILITIES
Line of credit $ 160000.00
Accounts payable 34546.00
----------
Total liabilities $194546.00
----------
</TABLE>
F-10
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS
NOTE 2. DUE TO RELATED PARTY (Continued)
As of September 30, 1996, the Joint Venture had incurred organization
and preopening expenses on behalf of the Company as follows:
<TABLE>
<CAPTION>
ORGANIZATION:
<S> <C>
Fixed assets purchased:
Furniture and equipment $ 30007.00
------------
Deferred organization and stock
offering costs: 15000.00
Consulting fees 38895.00
------------
Legal fees 53895.00
------------
PREOPENING EXPENSES:
Personnel expenses 77823.00
Interest 1456.00
Equipment and occupancy expenses 18872.00
Other expenses 9093.00
------------
107244.00
------------
Total $ 191146.00
------------
</TABLE>
NOTE 3. COMMITMENTS
The Joint Venture has entered into an agreement to acquire a two acre
tract of land for the proposed site for the location of the Bank for a
price of $251,575. The Joint Venture will retain ownership of the
property and will lease to the Bank permanent office space for an
initial annual rental of $135,000. Prior to completion of permanent
facilities for the Bank, the Joint Venture will lease to the Bank
temporary modular facilities for a monthly rental of $5,000. In the
opinion of the organizers of the Joint Venture, the terms of the
leases are at least as favorable to the Bank as terms available from
unrelated third parties.
F-11
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS
NOTE 4. COMMON STOCK OFFERING
The Company proposes to file a Registration Statement on Form SB-2
with the Securities and Exchange Commission offering for sale a
minimum of 650,000 shares and a maximum of 1,000,000 shares of the
Company's common stock at a price of $10 per share.
F-12
<PAGE> 38
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated November 1, 1996, accompanying the financial
statements of GBC Bancorp, Inc., as of and for the period ending September 30,
1996, contained in the 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."
MAULDIN & JENKINS, LLC
December 30, 1996
<PAGE> 39
===============================================================================
The Company reserves the right, in its sole discretion, to reject any and all
subscriptions, and no subscription will be effective until accepted by the
Company.
No person has been authorized by the Company to give any information or to make
any representations not contained in this Prospectus, and any information or
statement not contained herein must not be relied upon as having been
authorized by the Company. The delivery of this Prospectus does not imply that
the information contained herein is correct as of any time subsequent to its
date.
The Company has undertaken to update this Prospectus to reflect any facts or
events arising after the date hereof, which individually or in the aggregate
represent a fundamental change in the information set forth herein and to
include any material information with respect to the plan of distribution not
previously disclosed in this Prospectus or any material changes to such
information.
Each subscriber should consult his or her own counsel, accountants and other
professional advisors as to all matters concerning his or her investment in
shares of the Common Stock.
The shares of Common Stock of the Company offered hereby are not deposits
insured by the Federal Deposit Insurance Corporation.
This Prospectus does not constitute an offer to sell in any jurisdiction or a
solicitation of an offer to buy any of the shares of the Common Stock to any
person in any jurisdiction in which such offer or solicitation is unlawful.
TABLE OF CONTENTS
<TABLE>
<S> <C>
REPORTS TO SHAREHOLDERS................................ ii
ADDITIONAL INFORMATION................................. ii
SUMMARY................................................ 1
RISK FACTORS........................................... 2
THE OFFERING........................................... 3
USE OF PROCEEDS........................................ 5
ESTIMATED EXPENDITURES................................. 5
PRO FORMA CAPITALIZATION............................... 6
DIVIDENDS.............................................. 7
BUSINESS OF THE COMPANY AND THE BANK................... 7
MANAGEMENT............................................. 12
MARKET FOR COMMON STOCK AND RELATED
SHAREHOLDER MATTERS................................... 14
DESCRIPTION OF COMMON STOCK OF THE
COMPANY............................................... 15
ANTITAKEOVER PROVISIONS OF THE
COMPANY'S ARTICLES OF INCORPORATION
AND BYLAWS............................................ 15
SUPERVISION AND REGULATION............................. 18
LEGAL MATTERS.......................................... 21
EXPERTS................................................ 21
</TABLE>
===============================================================================
GBC BANCORP, INC.
A PROPOSED BANK HOLDING COMPANY
FOR
GWINNETT BANKING COMPANY
A PROPOSED STATE BANK
UP TO 1,000,000
SHARES OF
COMMON STOCK
PROSPECTUS
===============================================================================
<PAGE> 40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
II-1
<PAGE> 41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Consistent with the pertinent provisions of the laws of Georgia, the
Registrant's Articles of Incorporation provide that the Registrant shall have
the power to indemnify its directors and officers against expenses (including
attorneys' fees) and liabilities arising from actual or threatened actions,
suits or proceedings, whether or not settled, to which they become subject by
reason of having served in such role if such director or officer acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Registrant and, with respect to a criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Advances against expenses shall be made so long as the person seeking
indemnification agrees to refund the advances if it is ultimately determined
that he or she is not entitled to indemnification. A determination of whether
indemnification of a director or officer is proper because he or she met the
applicable standard of conduct shall be made (a) by the Board of Directors of
the Registrant, (b) in certain circumstances, by independent legal counsel in a
written opinion, or (c) by the affirmative vote of a majority of the shares
entitled to vote.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses of the sale of the Registrant's Common Stock, $1.00 par value,
are as follows:
<TABLE>
<S> <C>
Registration Fee ................................................. $ 3,030.30
Legal Fees and Expenses (Estimate) ............................... 25,000.00
Accounting Fees and Expenses (Estimate) .......................... 2,000.00
Printing and Engraving Expenses (Estimate) ....................... 4,500.00
Miscellaneous (Estimate) ......................................... 469.70
TOTAL ......................................... $35,000.00
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The sales to Messrs. Key, Hopkins, Birkhead, Ballard, Boles, Britt, Nash
and Stanton were exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) of such Act because it was a transaction by an issuer
which did not involve a public offering.
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- ------------
<S> <C>
3.1 Articles of Incorporation, as amended
3.2 Bylaws
4.1 Instruments Defining Rights of Security Holders. (See Articles of
Incorporation at Exhibit 3.1 hereto and Bylaws at Exhibit 3.2 hereto.)
4.2 Specimen Common Stock Certificate
</TABLE>
II-2
<PAGE> 42
<TABLE>
<S> <C>
5.1 Legal Opinion of Womble Carlyle Sandridge & Rice, PLLC
10.1 Escrow Agreement between the Registrant and Columbus Bank and Trust
Company.
10.2 Line of Credit Promissory Note in the amount of $500,000 having
Registrant as Maker and Gwinnett Banking Company Joint Venture as
Holder.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Mauldin & Jenkins, LLC
23.2 Consent of Womble Carlyle Sandridge & Rice, PLLC (appears in Legal
Opinion at Exhibit 5.1 hereto).
24.1 Power of Attorney (appeared on the signature page to the Registration
Statement on Form SB-2).
27 Financial Data Schedule
</TABLE>
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change 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
maximum estimated offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act of 1933, to
treat each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at the time to
be the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration
any of the securities being registered which remain unsold at the end of
the offering.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
provisions set forth in Item 24, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a
II-3
<PAGE> 43
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 44
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Lawrenceville, State of Georgia on December 30, 1996.
GBC Bancorp, Inc.
By: /s/ Larry D. Key
-------------------------------
Larry D. Key, President and
Chief Executive Officer
Power of Attorney
Know all men by these presents that each person whose signature appears
below constitutes and appoints each of Larry D. Key and John T. Hopkins III his
true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, for such persons and in such person's name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective 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 said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully and to all interests and purposes as such person might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue of the powers herein granted.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Position Date
- ---- -------- ----
<S> <C> <C>
/s/ Larry D. Key President and Chairman (Chief December 30, 1996
- ----------------------- Executive Officer)
Larry D. Key
/s/ John T. Hopkins III Director, Executive Vice President, December 30, 1996
- ----------------------- Secretary and Treasurer, (Principal
John T. Hopkins, III Financial and Accounting Officer)
/s/ James B. Ballard Director December 30, 1996
- -----------------------
James B. Ballard
/s/ Paul C. Birkhead Director December 30, 1996
- -----------------------
Paul C. Birkhead
</TABLE>
II-5
<PAGE> 45
<TABLE>
<CAPTION>
Name Position Date
- ---- -------- ----
<S> <C> <C>
/s/ Jerry M. Boles Director December 30, 1996
- ----------------------
Jerry M. Boles
/s/ W. H. Britt Director December 30, 1996
- ----------------------
W. H. Britt
/s/ Norris J. Nash Director December 30, 1996
- ----------------------
Norris J. Nash
/s/ William S. Stanton Director December 30, 1996
- ----------------------
William S. Stanton
</TABLE>
II-6
<PAGE> 46
EXHIBIT A
PRELIMINARY SUBSCRIPTION AGREEMENT
GBC Bancorp, Inc.
165 Nash Street
Lawrenceville, Georgia 30246
Gentlemen:
The undersigned hereby subscribes for and agrees to purchase the number of
shares of Common Stock, par value $1.00 per share (the "Common Stock"), of GBC
Bancorp, Inc., a Georgia corporation (the "Company"), indicated below. The
undersigned has executed and delivered this Preliminary Subscription Agreement
in connection with the Company's offering of Common Stock described in its
Preliminary Prospectus dated ____________________, 1997. (Such Prospectus,
including any amendments and supplements thereto, is herein called the
"Preliminary Prospectus.")
The undersigned agrees to purchase the shares of Common Stock subscribed
for herein for the purchase price of $10.00 per share.
The undersigned acknowledges receipt of a copy of the Preliminary
Prospectus. The undersigned further acknowledges that an investment in the
Common Stock involves significant risks, as set forth under "Risk Factors" in
the Preliminary Prospectus. The undersigned understands that no federal or
state agency has made any findings or determination regarding the fairness of
the offering of the Common Stock, the accuracy or adequacy of the Preliminary
Prospectus, or any recommendation or endorsement concerning an investment in
the Common Stock.
The undersigned represents that the undersigned is a resident of _________
County, Georgia.
The undersigned agrees that this subscription is not binding on the
undersigned and is revocable by the undersigned until the undersigned furnishes
to the Company an acknowledgment of Subscription and payment for the shares
subscribed for. The undersigned acknowledges that the Company has the right to
reject this Preliminary Subscription Agreement either in whole or in part, in
its sole discretion.
<TABLE>
<S> <C> <C>
Number of Shares
(minimum 500 shares): _____________ ____________________________________________
Total Subscription Price Please PRINT or TYPE exact name(s) in
(at $10.00 per share): $____________ which undersigned desires shares to be registered
</TABLE>
Do not send the Purchase Price for your shares at this time.
(Continued)
II-7
<PAGE> 47
SUBSTITUTE W-9
Under the penalties of perjury, I certify that: (1) the Social Security number
or Taxpayer Identification Number given below is correct; and (2) I am not
subject to backup withholding. INSTRUCTION: YOU MUST CROSS OUT #2 ABOVE IF
YOU HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.
_____________________________ ___________________________________________
Date Signature(s)*
_____________________________ ___________________________________________
Area Code and Telephone No. Please indicate form of ownership the
undersigned desires for the shares
(individual, joint tenants with right of
survivorship, tenants in common, trust,
corporation, partnership, custodian, etc.)
_____________________________
Social Security
or Federal Taxpayer
Identification No.
___________________________________________
Street Address
___________________________________________
City/State/Zip Code
TO BE COMPLETED BY THE COMPANY
Accepted as of __________________, 199__, as to ___________ shares.
GBC BANCORP, INC.
By: ____________________________________
Signature
____________________________________
Print Name
* 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 case of joint
tenants, each joint owner must sign.
II-8
<PAGE> 48
EXHIBIT B
ACKNOWLEDGMENT OF SUBSCRIPTION
GBC BANCORP, INC.
165 NASH STREET
LAWRENCEVILLE, GEORGIA 30246
Dear Subscriber:
Please sign below as indicated to acknowledge receipt of a final prospectus and
to convert your preliminary subscription to a final and binding subscription.
Please enclose a check payable to "The Columbus Bank and Trust Company--Escrow
Account for GBC Bancorp, Inc." in the amount of $10.00 multiplied by the number
of shares you intend to subscribe for.
Your stock certificate(s) representing shares of common stock duly authorized
and fully paid will be issued to you as soon as possible after all subscription
funds are released to the Company from the subscription escrow account, all as
described in the Prospectus dated ________________, 1997. In the event (a)
that the Offering is canceled, or (b) that subscriptions for the minimum number
of 600,000 shares are not obtained, your subscription funds will be returned to
you as described in the Prospectus.
Very truly yours,
GBC Bancorp, Inc.
By:_________________________________________
Larry D. Key, President
Date:_______________________________________
The undersigned acknowledges the receipt of the final Prospectus of GBC
Bancorp, Inc. and converts the Preliminary Subscription Agreement to a final
Subscription Agreement, which will be binding and irrevocable until the
Expiration Date as defined in the Prospectus. The undersigned encloses
$_________ for the purchase of __________ shares, at the purchase price of
$10.00 per share.
____________________________________________
Signature
____________________________________________
Print Name
____________________________________________
Date
II-9
<PAGE> 49
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page
- ------- ----------- ----
<S> <C> <C>
3.1 Articles of Incorporation, as amended --------
3.2 Bylaws --------
4.1 Instruments Defining Rights of Security Holders.
(See Articles of
Incorporation at Exhibit 3.1 hereto and Bylaws at Exhibit 3.2
hereto.) --------
4.2 Specimen Common Stock Certificate --------
5.1 Legal Opinion of Womble Carlyle Sandridge & Rice, PLLC --------
10.1 Escrow Agreement between the Registrant and Columbus Bank and
Trust Company. --------
10.2 Line of Credit Promissory Note in the amount of $___________
having Registrant as Maker and Gwinnett Banking Company Joint
Venture as Holder. --------
21.1 Subsidiaries of the Registrant. --------
23.1 Consent of Mauldin & Jenkins. --------
23.2 Consent of Womble Carlyle Sandridge & Rice, PLLC (appears in Legal
Opinion at Exhibit 5.1 hereto). --------
24.1 Power of Attorney (appeared on the signature page to the
Registration Statement on Form SB-2). --------
27 Financial Data Schedule --------
</TABLE>
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION, AS AMENDED
<PAGE> 2
ARTICLES OF INCORPORATION
OF
GWINNETT BANKING COMPANY
1.
The name of the Corporation is: "Gwinnett Banking Company."
2.
The Corporation is organized pursuant to the provisions of the
Georgia Business Corporation Code.
3.
The object of the Corporation is pecuniary gain and profit,
and the Corporation is formed for the purpose of becoming and operating as a
bank holding company and engaging in such related and permissible activities in
connection therewith as the Board of Directors may from time to time specify by
resolution.
4.
The Corporation shall have authority to issue Three Million
(3,000,000) shares of common stock (the "Common Stock"), $1.00 par value.
5.
The initial registered office of the Corporation shall be at
1275 Peachtree Street, N.E., Suite 700, Atlanta, Georgia 30309. The initial
registered agent of the Corporation at such address shall be Steven S. Dunlevie,
Esquire.
6.
The mailing address of the initial principal office of the
Corporation is 318 West Pike Street, Suite 475, Lawrenceville, Georgia 30246.
- 1 -
<PAGE> 3
7.
(a) Except as provided in paragraph (b) of this Article 7, the
Board of Directors shall have the right to adopt, amend or repeal the bylaws of
the Corporation by the affirmative vote of a majority of all directors then in
office, and the shareholders shall have such right by the affirmative vote of a
majority of the issued and outstanding shares of the Corporation entitled to
vote in an election of directors.
(b) Notwithstanding paragraph (a) of this Article 7, any
amendment of the bylaws of the Corporation changing the number of directors
shall require the affirmative vote of two-thirds (2/3) of all directors then in
office or the affirmative vote of the holders of two-thirds (2/3) of the issued
and outstanding shares of the Corporation entitled to vote in an election of
directors, at any regular or special meeting of the shareholders, and notice of
the proposed changes must be contained in the notice of the meeting.
8.
(a) At any shareholders' meeting with respect to which notice
of such purpose has been given, the entire Board of Directors or any individual
director may be removed without cause only by the affirmative vote of the
holders of a majority of the issued and outstanding shares of the Corporation.
(b) At any shareholders' meeting with respect to which notice of such purpose
has been given, the entire Board of Directors or any individual director may be
removed with cause only by the affirmative vote of the holders of a majority of
the shares of the Corporation represented at the meeting either in person or by
proxy.
- 2 -
<PAGE> 4
(c) For purposes of this Article 8, a director of the
Corporation may be removed for cause if (i) the director has been convicted of a
felony; (ii) any bank regulatory authority having jurisdiction over the
Corporation requests or demands the removal; or (iii) at least two-thirds (2/3)
of the directors of the Corporation then in office, excluding the director to be
removed, determine that the director's conduct has been inimical to the best
interests of the Corporation.
(d) Unless two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 8 may be amended or rescinded
only by the affirmative vote of the holders of at least two-thirds (2/3) of the
issued and outstanding shares of the Corporation entitled to vote in an election
of directors, at any regular or special meeting of the shareholders, and notice
of the proposed change must be contained in the notice of the meeting.
9.
The initial Board of Directors of the Corporation shall
consist of eight (8) members who shall be and whose addresses are:
James B. Ballard 2400 Bagley Road
Cumming, Georgia 30130
Paul C. Birkhead 4651 Warrior Trail
Lilburn, Georgia 30247
Jerry M. Boles 4435 Pemberton Cove
Alpharetta, Georgia 30202
W.H. Britt 3260 Briscoe Road
Loganville, Georgia 30249
John T. Hopkins III 4310 Antelope Lane
Lithonia, Georgia 30058
- 3 -
<PAGE> 5
Larry D. Key 3300 Jim Moore Road
Dacula, Georgia 30211
Norris J. Nash 1176 Oleander Drive
Lilburn, Georgia 30246
William S. Stanton, Jr. 5081 Hodgins Street
Lilburn, Georgia 30247
10.
(a) A director of the Corporation shall not be personally
liable to the Corporation or its shareholders for monetary damages, for breach
of any duty as a director, except for liability for:
(i) any appropriation, in violation of his or
her duties, of any business opportunity of
the Corporation;
(ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing
violation of law;
(iii) the types of liability set forth in Section
14-2-832 of the Georgia Business Corporation
Code dealing with unlawful distributions of
corporate assets to shareholders; or
(iv) any transaction from which the director
derived an improper material tangible
personal benefit.
(b) Any repeal or modification of this Article by the
shareholders of the Corporation shall be prospective only and shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
(c) Unless two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 10 may be amended or rescinded
only by the affirmative vote of the
-4-
<PAGE> 6
holders of at least two-thirds (2/3) of the issued and outstanding shares of the
Corporation entitled to vote thereon, at any regular or special meeting of the
shareholders, and notice of the proposed change must be contained in the notice
of the meeting.
11.
Any action required by law or by the Bylaws of the Corporation
to be taken at a meeting of the shareholders of the Corporation, and any action
which may be taken at such a meeting, may be taken without a meeting, if written
consent, setting forth the action so taken, is signed by persons entitled to
vote at a meeting those shares having sufficient voting power to cast not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote were present and
voted. Notice of such action without a meeting by less than unanimous written
consent shall be given within ten (10) days after taking such action to those
shareholders of record on the date when the written consent is first executed
and whose shares were not represented on the written consent.
12.
(a) Approval of any merger or share exchange of the
Corporation with or into any other corporation, or any sale, lease, exchange or
other disposition of all or substantially all of the assets of the Corporation
to any other corporation, person or other entity, shall require either:
(i) the affirmative vote of two-thirds (2/3) of
the directors of the Corporation then in
office and the affirmative vote of a
majority of the issued and outstanding
shares of the Corporation entitled to vote;
or
(ii) the affirmative vote of a majority of the
directors of the Corporation then in office
and the affirmative vote of the holders of
at least two-
-5-
<PAGE> 7
thirds (2/3) of the issued and outstanding
shares of the Corporation entitled to vote.
(b) The Board of Directors shall have the power to determine
for the purposes of this Article 12, on the basis of information known to the
Corporation, whether any sale, lease, exchange or other disposition of part of
the assets of the Corporation involves substantially all of the assets of the
Corporation.
(c) Unless two-thirds (2/3) of the directors then in office
shall approve the proposed change, Article 12 may be amended or rescinded only
by the affirmative vote of the holders of at least two-thirds (2/3) of the
issued and outstanding shares of the Corporation entitled to vote thereon at any
regular or special meeting of the shareholders, and notice of the proposed
change must be contained in the notice of the meeting. 13. (a) The Board of
Directors, when evaluating any offer of another party (i) to make a tender offer
or exchange offer for any equity security of the Corporation, (ii) to merge or
consolidate any other corporation with the Corporation, or (iii) to purchase or
otherwise acquire all or substantially all of the assets of the Corporation,
shall, in determining what is in the best interests of the Corporation and its
shareholders, give due consideration to all relevant factors, including without
limitation: (A) the short-term and long-term social and economic effects on the
employees, customers, shareholders and other constituents of the Corporation and
its subsidiaries, and on the communities within which the Corporation and its
subsidiaries operate (it being understood that any subsidiary bank of the
Corporation is charged with providing support to and being involved in the
communities it serves); and (B) the consideration being offered by the other
party in relation to the
-6-
<PAGE> 8
then-current value of the Corporation in a freely negotiated transaction and in
relation to the Board of Directors' then-estimate of the future value of the
Corporation as an independent entity.
(b) Unless two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 13 may be amended or rescinded
only by the affirmative vote of the holders of at least two-thirds (2/3) of the
issued and outstanding shares of the Corporation entitled to vote thereon, at
any regular or special meeting of the shareholders, and notice of the proposed
change must be contained in the notice of the meeting.
14.
Should any provision of these Articles of Incorporation, or
any clause hereof, be held to be invalid, illegal or unenforceable, in whole or
in part, the remaining provisions and clauses of these Articles of Incorporation
shall remain valid and fully enforceable.
15.
The name and address of the incorporator of the Corporation
is:
Larry D. Key
318 West Pike Street
Suite 475
Lawrenceville, Georgia 30246
-7-
<PAGE> 9
IN WITNESS WHEREOF, the undersigned has caused these Articles
of Incorporation to be executed this ______ day of August, 1996.
GWINNETT BANKING COMPANY
By:____________________________________
Steven S. Dunlevie, Esquire
Attorney for Incorporator
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
1275 Peachtree Street, N.E.
Suite 700
Atlanta, Georgia 30309
(404) 872-7000
-8-
<PAGE> 10
ARTICLES OF AMENDMENT
OF
GWINNETT BANKING COMPANY
The Articles of Incorporation of GWINNETT BANKING COMPANY, originally
filed with the Secretary of State, State of Georgia, on August 21, 1996, are
hereby amended for the purpose of changing the corporation's name as follows:
I.
The name of the Corporation is:
GWINNETT BANKING COMPANY
II.
The Amendment adopted by the Corporation is as follows:
(1) The Corporation's Articles of Incorporation dated
August 21, 1996, are hereby amended by deleting the name of the
Corporation in all places where it appears therein, and by inserting in
lieu thereof the following name:
GBC BANCORP, INC.
III.
The aforesaid Amendment was duly adopted by the Board of Directors of
the Corporation in accordance with the provisions of the Official Code of
Georgia Annotated, Section 14-2-1002.
IV.
Said Amendment does not provide for an exchange, reclassification or
cancellation of issued shares.
V.
No change is effected in the amount of the Corporation's stated
capital.
<PAGE> 11
IN WITNESS WHEREOF, GWINNETT BANKING COMPANY has caused these Articles
of Amendment to be executed and its corporate seal to be affixed and has caused
the foregoing to be attested effective on the ________ day of _________, 1996.
GWINNETT BANKING COMPANY
BY: /s/ Larry D. Key
------------------------
LARRY D. KEY, President
ATTEST:
/s/ John T. Hopkins III
- ------------------------------
JOHN T. HOPKINS III, Secretary
(CORPORATE SEAL)
2
<PAGE> 1
EXHIBIT 3.2
BYLAWS OF GBC BANCORP, INC.
<PAGE> 2
BYLAWS OF GWINNETT BANKING COMPANY
<PAGE> 3
BYLAWS
GWINNETT BANKING COMPANY
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE ONE - OFFICE.........................................................1
ARTICLE TWO - SHAREHOLDERS' MEETINGS.........................................1
2.1 Annual Meeting.............................................1
2.2 Special Meetings...........................................1
2.3 Place......................................................1
2.4 Notice.....................................................1
2.5 Quorum.....................................................2
2.6 Proxies; Required Vote.....................................2
2.7 Presiding Officer and Secretary............................2
2.8 Shareholder List...........................................2
2.9 Action in Lieu of Meeting..................................2
ARTICLE THREE - DIRECTORS....................................................2
3.1 Management.................................................2
3.2 Number of Directors........................................3
3.3 Vacancies..................................................3
3.4 Election of Directors......................................3
3.5 Removal....................................................3
3.6 Resignation................................................3
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.7 Compensation...............................................3
3.8 Honorary and Advisory Directors............................3
ARTICLE FOUR - COMMITTEES....................................................4
4.1 Executive Committee........................................4
4.2 Other Committees...........................................5
4.3 Removal....................................................5
ARTICLE FIVE - MEETINGS OF THE BOARD OF DIRECTORS............................5
5.1 Time and Place.............................................5
5.2 Regular Meetings...........................................5
5.3 Special Meetings...........................................5
5.4 Content and Waiver of Notice...............................6
5.5 Quorum; Participation by Telephone.........................6
5.6 Action in Lieu of Meeting..................................6
5.7 Interested Directors and Officers..........................6
ARTICLE SIX - OFFICERS, AGENTS AND EMPLOYEES.................................7
6.1 General Provision..........................................7
6.2 Powers and Duties of the Chairman of the Board, Directors
and the President..........................................7
6.3 Powers and Duties of Vice Presidents.......................8
6.4 Powers and Duties of the Secretary.........................8
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.5 Powers and Duties of the Treasurer..........................8
6.6 Appointment, Powers and Duties of Assistant Secretaries.....9
6.7 Appointment, Powers and Duties of Assistant Treasurers......9
6.8 Delegation of Duties........................................9
ARTICLE SEVEN - CAPITAL STOCK.................................................9
7.1 Certificates................................................9
7.2 Shareholder List...........................................10
7.3 Transfer of Shares.........................................10
7.4 Record Dates...............................................10
7.5 Registered Owner...........................................10
7.6 Transfer Agent and Registrar...............................11
7.7 Lost Certificates..........................................11
7.8 Fractional Shares or Scrip.................................11
ARTICLE EIGHT - BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS...................11
8.1 Inspection of Books and Records............................11
8.2 Seal.......................................................12
8.3 Annual Statements..........................................12
ARTICLE NINE - INDEMNIFICATION...............................................13
9.1 Authority to Indemnify.....................................13
9.2 Mandatory Indemnification..................................13
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
9.3 Advances for Expenses......................................13
9.4 Court-ordered Indemnification and Advances for Expenses....13
9.5 Determination of Indemnification...........................13
9.6 Authorization of Indemnification...........................14
9.7 Other Rights...............................................14
9.8 Insurance..................................................15
9.9 Continuation of Expenses...................................15
ARTICLE TEN - NOTICES: WAIVERS OF NOTICE.....................................15
10.1 Notices....................................................15
10.2 Waivers of Notice..........................................15
ARTICLE ELEVEN - EMERGENCY POWERS............................................15
11.1 Bylaws.....................................................15
11.2 Lines of Succession........................................16
11.3 Head Office................................................16
11.4 Period of Effectiveness....................................16
11.5 Notices....................................................16
11.6 Officers as Directors Pro Tempore..........................16
11.7 Liability of Officers, Directors and Agents................16
ARTICLE TWELVE - CHECKS, NOTES, DRAFTS, ETC..................................17
</TABLE>
iv
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE THIRTEEN - AMENDMENTS................................................17
</TABLE>
v
<PAGE> 8
BYLAWS
OF
GWINNETT BANKING COMPANY
ARTICLE ONE
OFFICES
The Corporation shall at all times maintain its principal
office in Lawrenceville, Georgia, its registered office in the State of Georgia
and its registered agent at that address, but it may have other offices located
within or outside the State of Georgia as the Board of Directors may determine.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 Annual Meeting. A meeting of the shareholders of the
Corporation shall be held annually, within six (6) months after the end of each
fiscal year of the Corporation. The annual meeting shall be held at such time
and place and on such date as the Directors shall determine from time to time
and as shall be specified in the notice of the meeting.
2.2 Special Meetings. Special meetings of the shareholders may
be called at any time by the Corporation's Board of Directors, its President,
and by the Corporation upon the written request of any one or more shareholder,
owning an aggregate of not less than twenty-five percent (25%) of the
outstanding capital stock of the Corporation. Special meetings shall be held at
such time and place and on such date s shall be specified in the notice of the
meeting.
2.3 Place. Annual or special meetings of shareholders may be
held within or without the State of Georgia.
2.4 Notice. Notice of annual or special shareholders meetings
stating place, day and hour of the meeting shall be given in writing not less
than ten nor more than sixty days before the date of the meeting, either mailed
to the last known address or personally given to each shareholder. Notice of any
special meeting of shareholders shall state the purpose or purposes for which
the meeting is called. The notice of any meeting at which amendments to or
restatements of the Articles of Incorporation, merger or share exchange of the
Corporation, or the disposition of corporate assets requiring shareholder
approval are to be considered shall state such purpose, and shall further comply
with all requirements of law. Notice of a meeting may be waived by an instrument
in writing executed before or after the meeting. The waiver need not specify the
purpose of the meeting or the business transacted, unless one of the purposes of
the meeting concerns a plan of merger or share exchange, in which event the
waiver shall comply with the further requirements of law concerning
<PAGE> 9
such waivers. Attendance at such meeting in person or by proxy shall constitute
a waiver of notice thereof.
2.5 Quorum. At all meetings of shareholders a majority of the
outstanding shares of stock shall constitute a quorum for the transaction of
business, and no resolution or business shall be transacted without the
favorable vote of the holders of a majority of the shares represented at the
meeting and entitled to vote. A lesser number may adjourn from day to day, and
shall announce the time and place to which the meeting is adjourned.
2.6 Proxies; Required Vote. At every meeting of the
shareholders, including meetings of shareholders for the election of directors,
any shareholder having the right to vote shall be entitled to vote in person or
by proxy, but no proxy shall be voted after eleven months from its date, unless
said proxy provides for a longer period. Each shareholder shall have one vote
for each share of stock having voting power, registered in his or her name on
the books of the Corporation. If a quorum is present, the affirmative vote of
the majority of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders, except as otherwise
provided by law, by the Articles of Incorporation or by these Bylaws.
2.7 Presiding Officer and Secretary. At every meeting of
shareholders, the Chairman or the President, or, if such officers shall not be
present, then the person appointed by one of them shall preside. The Secretary
or an Assistant Secretary, or if such officers shall not be present, the
appointee of the presiding officer of the meeting, shall act as secretary of the
meeting.
2.8. Shareholder List. The officer or agent having charge of
the stock transfer books of the Corporation shall produce for inspection of any
shareholder at, and continuously during, every meeting of the shareholders, a
complete alphabetical list of shareholders showing the address and share
holdings of each shareholder. If the record of shareholders readily shows such
information, it may be produced in lieu of such a list.
2.9 Action in Lieu of Meeting. Any action to be taken at a
meeting of the shareholders of the Corporation, or any action that may be taken
at a meeting of the shareholders, may be taken without a meeting if consent in
writing setting for the action so taken shall be signed by those person who
would be entitled to vote at a meeting those shares having voting power to cast
not less than the minimum number (or numbers, in the case of voting by class) of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote were present and voted.
ARTICLE III
DIRECTORS
3.1 Management. Subject to these Bylaws, or any lawful
agreement between the shareholders, the full and entire management of the
affairs and business of the Corporation shall be
- 2 -
<PAGE> 10
vested in the Board of Directors, which shall have and may exercise all of the
powers that may be exercised or performed by the Corporation.
3.2 Number of Directors. The Board of Directors shall consist
of not less than seven (7) nor more than fifteen (15) members. The number of
Directors may be fixed or changed from time to time, within the minimum and
maximum, by the shareholders by the affirmative vote of two-thirds (662/3%) of
the issued and outstanding shares of the Corporation entitled to vote in an
election of Directors, or by the Board of Directors by the affirmative vote of
two-thirds (662/3%) of all Directors then in office.
3.3 Vacancies. The directors, even though less than a quorum,
may fill any vacancy on the Board of Directors, including a vacancy created by
an increase in the number of directors. Such appointment by the directors shall
continue until the expiration of the term of the director whose place has become
vacant or, in the case of an increase in the number of directors, until the next
meeting of the shareholders.
3.4 Election of Directors. The Directors shall be elected at
each annual shareholders meeting and shall serve for a term of one year and
until their successors are elected or qualified.
3.5 Removal. Any Director may be removed from office, at a
meeting with respect to which notice of such purpose is given (a) without cause,
only upon the affirmative vote of the holders of a majority of the issued and
outstanding shares of the Corporation, and (b) with cause, only upon the
affirmative vote of the holders of a majority of the issued and outstanding
shares of the Corporation represented at the meeting either in person or by
proxy.
3.6 Resignation. Any director may resign at any time either
orally at any meeting of the Board of Directors or by so advising the Chairman
of the Board of Directors or the President or by giving written notice to the
Corporation. A director who resigns may postpone the effectiveness of his or her
resignation to a future date or upon the occurrence of a future event specified
in a written tender of resignation. If no time of effectiveness is specified
therein, a resignation shall be effective upon tender. A vacancy shall be deemed
to exist at the time a resignation is tendered, and the Board of Directors or
the shareholders may, then or thereafter, elect a successor to take office when
the resignation by its terms becomes effective.
3.7 Compensation. Directors may be allowed such compensation
for their services as directors as may from time to time be fixed by resolution
of the Board of Directors.
3.8 Honorary and Advisory Directors. When a director of the
Corporation retires under the retirement policies of the Corporation as
established from time to time by the Board of Directors, such director
automatically shall become an Honorary Director of the Corporation following his
or her retirement. The Board of Directors of the Corporation also may appoint
any individual an Honorary Director, Director Emeritus, or member of any
advisory board established by
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the Board of Directors. Any individual automatically becoming an Honorary
Director or appointed an Honorary Director, Director Emeritus, or member of an
advisory board as provided by this Section 3.8 may be compensated as provided in
Section 3.7, but such individual may not vote at any meeting of the Board of
Directors or be counted in determining a quorum as provided in Section 5.5 and
shall not have any responsibility or be subject to any liability imposed upon a
director, or otherwise be deemed a director.
ARTICLE FOUR
COMMITTEES
4.1 Executive Committee.
(a) The Board of Directors may, by resolution
adopted by a majority of the entire Board of Directors, designate an Executive
Committee consisting of one or more directors. Each Executive Committee member
shall hold office until the first meeting of the Board of Directors after the
annual meeting of shareholders and until the member's successor is elected and
qualified, or until the member's death, resignation or removal, or until the
member shall cease to be a director.
(b) During the intervals between the meetings of
the Board of Directors, the Executive Committee may exercise all the authority
of the Board of Directors; provided, however, that the Executive Committee shall
not have the power to amend or repeal any resolution of the Board of Directors
that by its terms shall not be subject to amendment or repeal by the Executive
Committee, and the Executive Committee shall not have the authority of the Board
of Directors in reference to (i) the amendment of the Articles of Incorporation
or Bylaws of the Corporation; (ii) the adoption of a plan or merger or
consolidation; (iii) the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Corporation; or (iv) a
voluntary dissolution of the Corporation or the revocation of any such voluntary
dissolution.
(c) The Executive Committee shall meet from time
to time on call of the Chairman of the Board of Directors or the President or of
any two or more members of the Executive Committee. Meetings of the Executive
Committee may be held at such place or places, within or without the State of
Georgia, as the Executive Committee shall determine or as may be specified or
fixed in the respective notices or waivers of such meetings. The Executive
Committee may fix its own rules of procedure, including provision for notice of
its meetings. It shall keep a record of its proceedings and shall report these
proceedings to the Board of Directors at the meeting thereof held next after
they have been taken, and all such proceedings shall be subject to revision or
alteration by the Board of Directors except to the extent that action shall have
been taken pursuant to or in reliance upon such proceedings prior to any such
revision or alteration.
(d) The Executive Committee shall act by
majority vote of its members; provided, however, that contracts or transactions
of and by the Corporation in which officers or directors of the Corporation are
interested shall require the affirmative vote of a majority of the
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disinterested members of the Executive Committee at a meeting of the Executive
Committee at which the material facts as to the interest and as to the contract
or transaction are disclosed or known to the members of the Executive Committee
prior to the vote.
(e) Members of the Executive Committee may
participate in committee proceedings by means of conference telephone or similar
communications equipment by means of which all persons participating in the
proceedings can hear each other, and such participation shall constitute
presence in person at such proceedings.
(f) The Board of Directors, by resolution
adopted in accordance with paragraph (a) of this Section, may designate one or
more directors as alternate members of the Executive Committee who may act in
the place and stead of any absent member or members at any meeting of said
committee.
4.2 Other Committees. The Board of Directors, by resolution
adopted by a majority of the entire Board of Directors, may designate one or
more additional committees, each committee to consist of one or more of the
directors of the Corporation, which shall have such name or names and shall have
and may exercise such powers of the Board of Directors, except the powers denied
to the Executive Committee, as may be determined from time to time by the Board
of Directors. Such committees shall provide for their own rules of procedure,
subject to the same restrictions thereon as provided above for the Executive
Committee.
4.3 Removal. The Board of Directors shall have power at any
time to remove any member of any committee, with or without cause, and to fill
vacancies in and to dissolve any such committee.
ARTICLE FIVE
MEETINGS OF THE BOARD OF DIRECTORS
5.1 Time and Place. Meetings of the Board of Directors may be
held at any place either within or without the State of Georgia.
5.2 Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place, within or without
the State of Georgia, as shall be determined by the Board of Directors from time
to time.
5.3 Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors or the
President on not less than one day's notice by mail, telegram, cablegram,
personal delivery or telephone to each director and shall be called by the
Chairman of the Board of Directors or the President in like manner and on like
notice on the written request of any two or more directors. Any such special
meeting shall be held at such time and place, within or without the State of
Georgia, as shall be stated in the notice of the meeting.
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5.4 Content and Waiver of Notice. No notice of any meeting of
the Board of Directors need state the purposes thereof, except as may be
otherwise provided in these Bylaws. Notice of any meeting may be waived by an
instrument in writing executed before or after the meeting. Attendance in person
at any such meeting shall constitute a waiver of notice thereof unless the
director at the beginning of the meeting (or promptly upon his or her arrival)
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
5.5 Quorum; Participation by Telephone. At all meetings of the
Board of Directors, the presence of a majority of the authorized number of
directors shall be necessary and sufficient to constitute a quorum for the
transaction of business. Directors may participate in any meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting by means of such communications equipment shall constitute the presence
in person at such meeting. Except as may be otherwise specifically provided by
law, the Articles of Incorporation or these Bylaws, all resolutions adopted and
all business transacted by the Board of Directors shall require the affirmative
vote of a majority of the directors present at the meeting. In the absence of a
quorum, a majority of the directors present at any meeting may adjourn the
meeting from time to time until a quorum is present. Notice of any adjourned
meeting need only be given by announcement at the meeting at which the
adjournment is taken.
5.6 Action in Lieu of Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting if a written consent thereto is signed by
all members of the Board of Directors or of such committee, as the case may be,
and such written consent is filed with the minutes of the proceedings of the
Board of Directors and upon compliance with any further requirements of law
pertaining to such consents.
5.7 Interested Directors and Officers. An interested director
of officer is one who is a party to a contract or transaction with the
Corporation or who is an officer or director of, or has a financial interest in,
another corporation, partnership or association which is a party to a contract
or transaction with the Corporation. Contracts and transactions between the
Corporation and one or more interested directors or officers shall not be void
or voidable solely because of the involvement or vote of such intersted persons
as long as (a) the contract or transaction is approved in good faith by the
Board of Directors or appropriate committee by the affirmative vote of a
majority of disinterested directors, even if the disinterested directors be less
than a quorum, at a meeting of the Board of Directors or committee at which the
material facts as to the interested person or persons and the contract or
transaction are disclosed or known to the Board of Directors or committee prior
to the vote; or (b) the contract or transaction is approved in good faith by the
shareholders after the material facts as to the interested person or persons and
the contract or transaction has been disclosed to them; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the Board of Directors, committee or shareholders.
Interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or committee which authorizes the contract or
transaction.
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ARTICLE SIX
OFFICERS, AGENTS AND EMPLOYEES
6.1 General Provisions. The officers of the Corporation shall
be a President and a Secretary, and may include a Treasurer, Chairman of the
Board of Directors, one or more Vice Presidents, one or more Assistant
Secretaries, and one or more Assistant Treasurers. The officers shall be elected
by the Board of Directors at the first meeting of the Board of Directors after
the annual meeting of the shareholders in each year or shall be appointed as
provided in these Bylaws. The Board of Directors may elect other officers,
agents and employees, who shall have such authority and perform such duties as
may be prescribed by the Board of Directors. All officers shall hold office
until the meeting of the Board of Directors following the next annual meeting of
the shareholders after their election or appointment and until their successors
shall have been elected or appointed and shall have qualified. Any two or more
offices may be held by the same person. Any officer, agent or employee of the
Corporation may be removed by the Board of Directors with or without cause.
Removal without cause shall be without prejudice to such person's contract
rights, if any, but the election or appointment of any person as an officer,
agent or employee of the Corporation shall not of itself create contract rights.
The compensation of officers, agents and employees elected by the Board of
Directors shall be fixed by the Board of Directors or by a committee thereof,
and this power may also be delegated to any officer, agent or employee as to
persons under his or her direction or control. The Board of Directors may
require any officer, agent or employee to give security for the faithful
performance of his or her duties.
6.2 Powers and Duties of the Chairman of the Board of
Directors and the President. The powers and duties of the Chairman of the Board
of Directors and the President, subject to the supervision and control of the
Board of Directors, shall be those usually appertaining to their respective
offices and whatever other powers and duties are prescribed by these Bylaws or
by the Board of Directors.
(a) The Chairman of the Board of Directors shall
preside at all meetings of the Board of Directors and at all meetings of the
shareholders. The Chairman of the Board shall perform such other duties as the
Board of Directors may from time to time direct. The Vice-Chairman shall act as
Chairman of the Board of Directors unless another director is elected Chairman.
(b) The President shall, unless otherwise
provided by the Board of Directors, be the chief executive officer of the
Corporation. The President shall have general charge of the business and affairs
of the Corporation and shall keep the Board of Directors fully advised. The
President shall employ and discharge employees and agents of the Corporation,
except such as shall be elected by the Board of Directors, and he or she may
delegate these powers. The President shall have such powers and perform such
duties as generally pertain to the office of the President, as well as such
further powers and duties as may be prescribed by the Board of Directors. The
President may vote the shares or other securities of any other domestic or
foreign corporation of any type or
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kind which may at any time be owned by the Corporation, may execute any
shareholders' or other consents in respect thereof and may in his or her
discretion delegate such powers by executing proxies, or otherwise, on behalf of
the Corporation. The Board of Directors, by resolution from time to time, may
confer like powers upon any other person or persons.
6.3 Powers and Duties of Vice Presidents. Each Vice President
shall have such powers and perform such duties as the Board of Directors or the
President may prescribe and shall perform such other duties as may be prescribed
by these Bylaws. In the absence or inability to act of the President, unless the
Board of Directors shall otherwise provide, the Vice President who has served in
that capacity for the longest time and who shall be present and able to act,
shall perform all duties and may exercise any of the powers of the President.
The performance of any such duty by a Vice President shall be conclusive
evidence of his or her power to act.
6.4 Powers and Duties of the Secretary. The Secretary shall
have charge of the minutes of all proceedings of the shareholders and of the
Board of Directors and shall keep the minutes of all their meetings at which he
or she is present. Except as otherwise provided by these Bylaws, the Secretary
shall attend to the giving of all notices to shareholders and directors. He or
she shall have charge of the seal of the Corporation, shall attend to its use on
all documents the execution of which on behalf of the Corporation under its seal
is duly authorized and shall attest the same by his or her signature whenever
required. The Secretary shall have charge of the record of shareholders of the
Corporation, of all written request by shareholders that notices be mailed to
them at an address other than their addresses on the record of the shareholders,
and of such other books and papers as the Board of Directors may direct. Subject
to the control of the Board of Directors, the Secretary shall have all such
powers and duties as generally are incident to the position of Secretary or as
may be assigned to the Secretary by the President or the Board of Directors.
6.5 Powers and Duties of the Treasurer. The Treasurer shall
have charge of all funds and securities of the Corporation, shall endorse the
same for deposit or collection when necessary andn deposit the same to the
credit of the Corporation in such banks or depositories as the Board of
Directors may authorize. The Treasurer may endorse all commercial documents
requiring endorsements for or on behalf of the Corporation and may sign all
receipts and vouchers for payment made to the Corporation. The Treasurer shall
have all such powers and duties as generally are incident to the position of
Treasurer or as may be assigned to the Treasurer by the President or by the
Board of Directors.
6.6 Appointment, Powers and Duties of Assistant Secretaries.
Assistant Secretaries may be appointed by the President or elected by the Board
of Directors. In the absence or inability of the Secretary to act, any Assistant
Secretary may perform all the duties and exercise all the powers of the
Secretary. The performance of any such duty shall be conclusive evidence of the
Assistant Secretary's power to act. An Assistant Secretary shall also perform
such other duties as the Secretary or the Board of Directors may assign to him
or her.
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6.7 Appointment, Powers and Duties of Assistant Treasurers.
Assistant Treasurers may be may be appointed by the President or elected by the
Board of Directors. In the absence or inability of the Treasurer to act, an
Assistant Treasurer may perform all the duties and exercise all the powers of
the Treasurer. The performance of any such duty shall be conclusive evidence of
the Assistant Treasurer's power to act. An Assistant Treasurer shall also
perform such other duties as the Treasurer or the Board of Directors may assign
to him or her.
6.8 Delegation of Duties. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors (or in the case of Assistant
Secretaries or Assistant Treasurers only, the President) may confer for the time
being the powers and duties, or any of them, of such officer upon any other
officer or elect or appoint any new officer to fill a vacancy created by death,
resignation, retirement or termination of any officer. In such latter event such
new officer shall serve until the next annual election of officers.
ARTICLE SEVEN
CAPITAL STOCK
7.1 Certificates.
(a) The interest of each shareholder shall be
evidenced by a certificate or certificates representing shares of the
Corporation which shall be in such form as the Board of Directors may from time
to time adopt and shall be numbered and shall be entered into the books of the
Corporation as they are issued. Each certificate representing shares shall set
forth upon the face thereof the following:
(i) the name of the Corporation;
(ii) that the Corporation is organized
under the laws of the State of Georgia;
(iii) the name or names of the person or
persons to whom the certificate is issued;
(iv) the number and class of shares, and
the designation of the series, if any, which the certificate represents; and
(v) if any shares represented by the
certificates are nonvoting shares, a statement or notation to that effect; and,
if the shares represented by the certificate are subordinate to shares of any
other class or series with respect to dividends or amounts payable on
liquidation, the certificate shall further set forth on either the face or the
back thereof a clear and concise statement to that effect.
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(b) Each certificate shall be signed by the
President or a Vice President and the Secretary or an Assistant Secretary and
may be sealed with the seal of the Corporation or a facsimile thereof. If a
certificate is countersigned by a transfer agent or registered by a registrar,
other than the Corporation itself or an employee of the Corporation, the
signature of any such officer of the Corporation may be a facsimile. In case any
officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates shall
cease to be such officer or officers of the Corporation, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates may
nevertheless be delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signatures shall have been used
thereon had not ceased to be such officer or officers.
7.2 Shareholder List. The Corporation shall keep or cause to
be kept a record of the shareholders of the Corporation which readily shows, in
alphabetical order or by alphabetical index, and by classes or series of stock,
if any, the names of the shareholders entitled to vote, with the address of and
the number of shares held by each. Said record shall be presented and kept open
at all meetings of the shareholders.
7.3 Transfer of Shares. Transfers of stock shall be made on
the books of the Corporation only by the person named in the certificate, or by
power of attorney lawfully constituted in writing, and upon surrender of the
certificate, or in the case of a certificate alleged to have been lost, stolen
or destroyed, upon compliance with the provisions of Section 7.7 of these
Bylaws.
7.4 Record Dates. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than seventy days and,
in case of a meeting of shareholders, not less than ten days, prior to the date
on which the particular action requiring such determination of shareholders is
to be taken.
7.5 Registered Owner. The Corporation shall be entitled to
treat the holder of record of any share of stock of the Corporation as the
person entitled to vote such share, to receive any dividend or other
distribution with respect to such share, and for all other purposes and
accordingly shall not be bound to recognize any equitable or other claim or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.
7.6 Transfer Agent and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars and may require
each stock certificate to bear the signature or signatures of a transfer agent
or a registrar or both.
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7.7 Lost Certificates. Any person claiming a certificate of
stock to be lost, stolen or destroyed shall make an affidavit or affirmation of
the fact in such manner as the Board of Directors may require and, if the
directors so require, shall give the Corporation a bond of indemnity in form and
amount and with one or more sureties satisfactory to the Board of Directors,
whereupon an appropriate new certificate may be issued in lieu of the
certificate alleged to have been lost, stolen or destroyed.
7.8 Fractional Shares or Scrip. The Corporation may, when and
if authorized so to do by its Board of Directors, issue certificates for
fractional shares or scrip in order to effect share transfers, share
distributions or reclassifications, mergers, consolidations or reorganizations.
Holders of fractional shares shall be entitled, in proportion to their
fractional holdings, to exercise voting rights, receive dividends and
participate in any of the assets of the Corporation in the event of liquidation.
Holders of scrip shall not, unless expressly authorized by the Board of
Directors, be entitled to exercise any rights of a shareholder of the
Corporation, including voting rights, dividend rights or the right to
participate in any assets of the Corporation in the event of liquidation. In
lieu of issuing fractional shares or scrip, the Corporation may pay in cash the
fair value of fractional interests as determined by the Board of Directors; and
the Board of Directors may adopt resolutions regarding rights with respect to
fractional shares or scrip as it may deem appropriate, including without
limitation the right for persons entitled to receive fractional shares to sell
such fractional shares or purchase such additional fractional shares as may be
needed to acquire one full share, or sell such fractional shares or scrip for
the account of such persons.
ARTICLE EIGHT
BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS
8.1 Inspection of Books and Records.
(a) Any person who shall be the holder of record
of, or authorized in writing by the holders of record of, at least two percent
(2%) of the outstanding shares of any class or series of the Corporation, upon
written demand stating the purpose thereof, shall have the right to examine in
person or by agent or attorney, at any reasonable time or times, for any proper
purpose, the books and records of account, minutes and record of shareholders
and to make extracts therefrom.
(b) A shareholder may inspect and copy the
records described in the immediately preceding paragraph only if (i) his or her
demand is made in good faith and for a proper purpose that is reasonably
relevant to his or her legitimate interest as a shareholder; (ii) the
shareholder describes with reasonable particularity his or her purpose and the
records he or she desires to inspect; (iii) the records are directly connected
with the stated purpose; and (iv) the records are to be used only for that
purpose.
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(c) If the Secretary or a majority of the
Corporation's Board of Directors or Executive Committee members find that the
request is proper, the Secretary shall promptly notify the shareholder of the
time and place at which the inspection may be conducted.
(d) If said request is found by the Secretary,
the Board of Directors or the Executive Committee to be improper, the Secretary
shall so notify the requesting shareholder on or prior to the date on which the
shareholder requested to conduct the inspection. The Secretary shall specify in
said notice the basis for the rejection of the shareholder's request.
(e) The Secretary, Board of Directors and the
Executive Committee shall at all times be entitled to rely on the corporate
records in making any determination hereunder.
8.2 Seal. The Corporate seal shall be in such form
as the Board of Directors may from time to time determine. In the event it is
inconvenient to use such a seal at any time, the signature of the Corporation
followed by the word "Seal" enclosed in parentheses or scroll shall be deemed
the seal of the Corporation.
8.3 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 Corporation shall prepare:
(a) A balance sheet showing in reasonable detail
the financial condition of the Corporation 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 written request, the
Corporation promptly shall mail to any shareholder of record a copy of its most
recent balance sheet and profit and loss statement.
ARTICLE NINE
INDEMNIFICATION
9.1 Authority to Indemnify. The Corporation shall
indemnify or obligate itself to indemnify an individual made a party to a
proceeding because he or she is or was a director, officer, employee or
agent of the Corporation (or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) for reasonable
expenses, judgments, fines, penalties and amounts paid in settlement
(including attorneys' fees), incurred in connection with the proceeding if
the individual acted in a manner he or she believed in good faith to be in or
not opposed to the best interests of the Corporation and, in the case of any
criminal proceeding, he or she had no reasonable cause to believe his or
her conduct was unlawful. The termination of a proceeding by judgment,
order, settlement, or conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director, officer,
employee or agent did not meet the standard of conduct set forth above.
Indemnification permitted
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under this Section in connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in connection with the
proceeding.
9.2 Mandatory Indemnification. To the extent that a director,
officer, employee or agent of the Corporation has been successful, on the merits
or otherwise, in the defense of any proceeding to which he or she was a party,
or in defense of any claim, issue, or matter therein, because he or she is or
was a director, officer, employee or agent of the Corporation, the Corporation
shall indemnify the director, employee or agent against reasonable expenses
incurred by him or her in connection therewith.
9.3 Advance for Expenses. The Corporation shall pay for or
reimburse the reasonable expenses incurred by a director, officer, employee or
agent of the Corporation who is a party to a proceeding in advance of final
disposition of the proceeding if (a) he or she furnishes the Corporation written
affirmation of his or her good faith belief that he or she has met the standard
of conduct set forth in Section 9.1 of this Section, and (b) he or she furnishes
the Corporation a written undertaking, executed personally or on his or her
behalf, to repay any advance if it is ultimately determined that he or she is
not entitled to indemnification. The undertaking required by this Section must
be an unlimited general obligation but need not be secured and may be accepted
without reference to financial ability to make repayment.
9.4 Court-ordered Indemnification and Advances for Expenses. A
director, officer, employee or agent of the Corporation who is a party to a
proceeding may apply for indemnification or advances for expenses to the court
conducting the proceeding or to another court of competent jurisdiction.
9.5 Determination of Indemnification. Except as provided in
Section 9.2 and except as may be ordered by the court, the Corporation may not
indemnify a director, officer, employee or agent under Section 9.1 unless
authorized thereunder and a determination has been made in the specific case
that indemnification of the director, officer, employee or agent is permissible
in the circumstances because he or she has met the standard of conduct set forth
in Section 9.1. The determination shall be made:
(a) By the Board of Directors by majority vote
of a quorum consisting of directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained, by majority
vote of a committee duly designated by the Board of Directors (in which
designation directors who are parties may participate), consisting solely of two
or more directors not at the time parties to the proceeding;
(c) By special legal counsel:
(i) Selected by the Board of Directors
or its committee in the manner prescribed in paragraph (a) or (b) of this
Section; or
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(ii) If a quorum of the Board of
Directors cannot be obtained and a committee cannot be designated, selected by a
majority vote of the full Board of Directors (in which selection directors who
are parties may participate); or
(d) By the shareholders, but shares owned by or
voted under the control of directors who are at the time parties to the
proceeding may not be voted on the determination.
9.6 Authorization of Indemnification. Authorization of
indemnification or an obligation to indemnify and evaluation as to the
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of Section 9.5 to select counsel.
9.7 Other Rights. The indemnification and advancement of
expenses provided by or granted pursuant to this Article Nine shall not be
deemed exclusive of any other rights, in respect of indemnification or
otherwise, to which those seeking indemnification or advancement of expenses may
be entitled under any bylaw, resolution, agreement or contract either
specifically or in general terms approved by the affirmative vote of the holders
of a majority of the shares entitled to vote thereon taken at a meeting the
notice of which specified that such bylaw, resolution or agreement would be
placed before the stockholders, both as to action by a director, trustee,
officer, employee or agent in his or her official capacity and as to action in
another capacity while holding such officer or position; except that no such
other rights, in respect to indemnification or otherwise, may be provided or
granted to a director, trustee, officer, employee, or agent pursuant to this
Section 9.7 by the Corporation for liability for (a) any appropriation, in
violation of his or her duties, of any business opportunity of the Corporation;
(b) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (c) the types of liability set forth in Section
14-2-832 of the Georgia Business Corporation Code dealing with illegal or
unauthorized distributions of corporate assets, whether as dividends or in
liquidation of the Corporation or otherwise; or (d) any transaction from which
the director derived an improper material tangible personal benefit.
9.8 Insurance. The Corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer,
employee, or agent of the Corporation or who, while a director, officer,
employee, or agent of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership joint venture, trust,
employee benefit plan, or other enterprise against liability asserted against or
incurred by him or her in that capacity or arising from his or her status as a
director, officer, employee, or agent whether or not the Corporation would have
power to indemnify him or her against the same liability under this Article
Nine.
9.9 Continuation of Expenses. The indemnification and
advancement of expenses provided by or granted pursuant to this Article Nine
shall continue as to a person who has ceased to be a director, trustee, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
-14-
<PAGE> 22
ARTICLE TEN
NOTICES: WAIVERS OF NOTICE
10.1 Notices. Except as otherwise specifically provided in
these Bylaws, whenever under the provision of these Bylaws notice is required
to be given to any shareholder, director or officer, it shall not be construed
to mean personal notice, but such notice may be given by personal notice, by
telegram or cablegram, or by mail by depositing the same in the post office or
letter box in a postage prepaid sealed wrapper, addressed to such shareholder,
director or officer at such address as appears on the books of the Corporation,
and such notice shall be deemed to be given at the time when the same shall be
thus sent or mailed.
10.2 Waivers of Notice. Except as otherwise provided in these
Bylaws, when any notice is required to be given by law, by the Articles of
Incorporation or by these Bylaws, a written waiver thereof, signed by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. In the case of a shareholder, such waiver
of notice may be signed by the shareholder's attorney or proxy duly appointed
in writing.
ARTICLE ELEVEN
EMERGENCY POWERS
11.1 Bylaws. The Board of Directors may adopt emergency
bylaws, subject to repeal or change by action of the shareholders, which shall,
notwithstanding any provision of law, the Articles of Incorporation or these
Bylaws, be operative during any emergency in the conduct of the business of the
Corporation resulting from an attack on the United States or on a locality in
which the Corporation conducts its business or customarily holds meetings of its
Board of Directors or its shareholders, or during any nuclear or atomic
disaster, or during the existence of any catastrophe, or other similar emergency
condition, as a result of which a quorum of the Board of Directors or a standing
committee thereof cannot readily be convened for action. The emergency bylaws
may make any provision that may be practical and necessary for the circumstances
of the emergency.
11.2 Lines of Succession. The Board of Directors, either
before or during any such emergency, may provide, and from time to time modify,
lines of succession in the event that during such an emergency any or all
officers or agents of the Corporation shall for any reason be rendered incapable
of discharging their duties.
11.3 Head Office. The Board of Directors, either before or
during any such emergency, may (effective during the emergency) change the head
office or designate several alternative head offices or regional offices, or
authorize the officers to do so.
-15-
<PAGE> 23
11.4 Period of Effectiveness. To the extent not inconsistent
with any emergency bylaws so adopted, these Bylaws shall remain in effect during
any such emergency and upon its termination, the emergency bylaws shall cease to
be operative.
11.5 Notices. Unless otherwise provided in emergency bylaws,
notice of any meeting of the Board of Directors during any such emergency may be
given only to such of the directors as it may be feasible to reach at the time,
and by such means as may be feasible at the time, including publication, radio
or television.
11.6 Officers as Directors Pro Tempore. To the extent required
to constitute a quorum at any meeting of the Board of Directors during any such
emergency, the officers of the Corporation who are present shall, unless
otherwise provided in emergency bylaws, be deemed, in order of rank and within
the same rank in order of seniority, directors for such meeting.
11.7 Liability of Officers, Directors and Agents. No officer,
director, agent or employee acting in accordance with any emergency bylaw shall
be liable except for willful misconduct. No officer, director, agent or employee
shall be liable for any action taken by him or her in good faith in such an
emergency in furtherance of the ordinary business affairs of the Corporation
even though not authorized by the bylaws then in effect.
ARTICLE TWELVE
CHECKS, NOTES, DRAFTS, ETC.
Checks, notes, drafts, acceptances, bills of exchange and
other orders or obligations for the payment of money shall be signed by such
officer or officers or person or persons as the Board of Directors by resolution
shall from time to time designate.
ARTICLE THIRTEEN
AMENDMENTS
The Bylaws of the Corporation may be altered or amended and
new bylaws may be adopted by the shareholders at any annual or special meeting
of the shareholders or by the Board of Directors at any regular or special
meeting of the Board of Directors; provided, however, that, if such action is to
be taken at a meeting of the shareholders, notice of the general nature of the
proposed change in the Bylaws shall be given in the notice of meeting. The
shareholders may provide by resolution that any bylaw provision repealed,
amended, adopted, or altered by them may not be repealed, amended, adopted or
altered by the Board of Directors. Except as otherwise provided in these
Articles of Incorporation, action by the shareholders with respect to bylaws
shall by taken by an affirmative vote of a majority of all shares entitled to
elect Directors, and action by the Board of Directors with respect to bylaws
shall be taken by an affirmative vote of a majority of all Directors then
holding office.
-16-
<PAGE> 1
EXHIBIT 4.2
SPECIMEN COMMON STOCK CERTIFICATE
<PAGE> 2
NUMBER SHARES
[ARTWORK]
GBC BANCORP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF GEORGIA
AUTHORIZED 3,000,000 SHARES COMMON STOCK
$1.00 PAR VALUE
This Certifies that ____________________________________________________ is the
registered holder of ___________________________________________________ Shares
of the above corporation, which are fully paid and non-assessable and
transferable only on the books of the Corporation by the holder hereof in
person or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, she said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be
hereunder affixed this _______________ day of __________________ A.D. 19_____
[SEAL]
___________________________________ ___________________________________
PRESIDENT SECRETARY
<PAGE> 3
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws of regulations.
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT-- ......... Custodian .........
(Cust) (Minor)
TEN ENT -- as tenants by the entireties under Uniform Gifts to Minors
JT TEN -- as joint tenants with right of Act ....................
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
/ /
_______________________________________ ________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ________________________________________________________________________
________________________________________________________________________________
Attorney to transfer the said shares on the books of the within-named
Corporation with full power of substitution in the premises.
Dated, _______________________
________________________________
In presence of
______________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 5.1
LEGAL OPINION OF
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
<PAGE> 2
December 31, 1996
GBC Bancorp, Inc.
165 Nash Street
Lawrenceville, Georgia 30246
Dear Ladies and Gentlemen:
We are acting as special counsel to GBC Bancorp, Inc., a
Georgia corporation (the "Company"). In such capacity, we have supervised
certain proceedings taken by the Company in connection with the registration
under the Securities Act of 1933, as amended, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder (collective, the
"Act"), of the offer and sale of a minimum of 650,000 shares and a maximum of
10,000,000 shares (the "Shares") of common stock, $1.00 par value, of the
Company.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the documents and corporate records relating
to the authorization, issuance and sale of the Shares and have made such other
investigation as we have deemed appropriate and relevant in order to furnish the
opinion set forth below.
This opinion letter is limited by, and is in accordance with
the January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretive Standards are attached hereto as Exhibit A and are
incorporated in the opinion letter by this reference. Capitalized terms used in
this opinion letter and not otherwise defined herein shall have the meanings
assigned to them in the Interpretive Standards.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as original
documents, and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to questions of fact material and
relevant to our opinion, where such facts were not independently verified by us,
we have relied, to the extent we deemed such reliance proper, upon certificates
or representations of officers and representatives of the Company and
appropriate federal, state and local officials.
Based upon the foregoing, we are of the opinion that the
Shares have been duly authorized and when sold, will be validly issued, fully
paid and nonaccessible.
<PAGE> 3
GBC Bancorp, Inc.
December 26, 1996
Page 2
We hereby consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement on Form SB-2 filed with
the Securities and Exchange Commission by the Company in connection with the
offer and sale of the Shares.
This letter is furnished solely to you and may not be relied
upon by any third party.
Sincerely yours,
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
<PAGE> 1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of the ____
day of ____________, 1997, by and between GBC BANCORP, INC., a Georgia
corporation (the "Company"), and COLUMBUS BANK AND TRUST COMPANY (the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, the Company contemplates a public securities offering
of a Minimum Offering of 650,000 Shares and a Maximum Offering of 1,000,000
Shares (the "Offering") in connection with an application filed with the Georgia
Department of Banking and Finance and the Federal Reserve Bank of Atlanta to
organize a bank holding company under the laws of the State of Georgia to hold
all of the common stock of Gwinnett Banking Company, a bank and trust company
organized under the laws of the State of Georgia with deposits insured by the
Federal Deposit Insurance Corporation; and
WHEREAS, the Company wishes to establish an escrow account
with the Escrow Agent so as to segregate all subscription payments received
pursuant to the Offering;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1. The Company hereby appoints and designates the Escrow Agent
as escrow agent for the purposes set forth herein. The Escrow Agent hereby
acknowledges and accepts said appointment and designation. The parties hereto
understand that the Escrow Agent, by accepting such appointment and designation,
in no way endorses the merits of the Offering or the suitability of the
investment for any prospective investor. The Company hereby acknowledges that
the status of the Escrow Agent is that of an agent only for the limited purposes
set forth herein, and the Company hereby agrees that in the Offering it will not
represent or imply that the Escrow Agent, by serving as escrow agent hereunder
or otherwise, has investigated, approved, or endorsed the desirability or
advisability of the investment in the securities, or has approved, endorsed, or
passed upon the merits of the investment, whatsoever, in connection with the
offer or sale of the securities other than by acknowledgment that it has agreed
to serve as escrow agent for the limited purposes herein set forth.
2. The Company hereby covenants and agrees to promptly remit
to the Escrow Agent all checks for the subscription payments in the amount of
the Offering price of $10.00 per Share received from subscribers to the
Offering. The Company will not deduct any fees or expenses whatsoever from such
subscription payments. All subscription payments delivered to the Escrow Agent
hereunder shall be deposited immediately by the Escrow Agent in a separate
account designated as "GBC Bancorp, Inc. Escrow Account" (the "Escrow Account").
The Escrow Account shall be created and maintained subject to the customary
rules and procedures of the Escrow Agent
<PAGE> 2
EXHIBIT 10.1
ESCROW AGREEMENT BETWEEN
GBC BANCORP, INC.
AND
COLUMBUS BANK AND TRUST COMPANY
<PAGE> 3
pertaining to such accounts. The Escrow Agent shall have no responsibility for
subscription payments not received and collected in the normal course of its
business, and any check or other instrument determined to be uncollectible by
the Escrow Agent shall be returned promptly to the Company. The Escrow Agent
shall invest all subscription funds in short-term government money market
securities or similar short-term money market securities, or in short-term
certificates of deposit or other interest bearing accounts, which investment(s)
may be selected by the Company upon reasonable notice given to the Escrow Agent
in writing. The subscription funds deposited in the Escrow Account shall not
become the property of the Company until disbursed hereunder or be subject to
the debts of the Company, except as expressly provided herein; and the Escrow
Agent shall not make or permit any disbursements from the Escrow Account, except
as expressly provided herein.
3. All subscription funds shall be held by the Escrow Agent
until the occurrence of the events specified below authorizing the release of
such funds, either by paying the same to the Company with interest or by
returning same to the subscribers without interest:
(a) In the event the Escrow Agent has received, on or
before the close of business on ___________, 199_ (or
________, 199_, if the Company elects to extend the Expiration
Date of the Offering and furnish written notice thereof to the
Escrow Agent prior thereto), the subscription payments as
described in Paragraph 2 hereof for at least the 650,000
Shares of the Minimum Offering, the Escrow Agent, upon the
written certification of the Company, pursuant to which the
Company (i) identifies the subscriptions which they have
accepted and, if accepted in part, to the extent to which each
has been accepted, and (ii) certifies to the Escrow Agent that
it has satisfied the conditions precedent to the release of
such funds as described in the Prospectus, shall promptly
deliver and pay over to the Company all proceeds from
subscriptions so accepted, together with all interest earned
on all subscription funds held in the Escrow Account, and
shall return to all subscribers whose subscriptions have been
rejected in whole or in part the amount of subscription
proceeds so rejected, without interest.
(b) In the event the Escrow Agent has not received,
prior to the close of business on ___________, 199_ (or
________, 199_, if the Company elects to extend the Expiration
Date of the Offering and furnish written notice thereof to the
Escrow Agent prior thereto), the subscription payments as
described in Paragraph 2 hereof for at least the 650,000
Shares of the Minimum Offering, the Escrow Agent shall return
by regular mail, to each subscriber at the address shown on
the subscriber's payment, all collected funds received from
each subscriber, without interest; and the Escrow Agent shall
pay over and deliver to the Company all interest earned on the
collected funds received from each subscriber, to be used
solely by the Company to pay organizational expenses of the
Company and Gwinnett Banking Company. Any payment hereunder by
the Escrow Agent may be made by a check of the Escrow Agent.
At such time as the Escrow Agent shall have made all the
payments and remittances provided for in this Paragraph, this
Agreement will be
-2-
<PAGE> 4
deemed terminated and the Escrow Agent released from all
further obligations and responsibilities hereunder.
(c) In the event the Escrow Agent has received, on or
before the close of business on ___________, 199_ (or
________, 199_, if the Company elects to extend the Expiration
Date of the Offering and furnish written notice thereof to the
Escrow Agent prior thereto), the subscription payments as
described in Paragraph 2 hereof for up to the 1,000,000 Shares
of the Maximum Offering, and provided that the Minimum
Offering as described in paragraph 3(a) hereof shall have been
achieved, the Escrow Agent, upon the written request of the
Company, pursuant to which the Company (i) identifies the
subscriptions which they have accepted and, if accepted in
part, to the extent to which each has been accepted, and (ii)
certifies to the Escrow Agent that it has satisfied the
conditions precedent to the release of such funds as described
in the Prospectus, shall, on a weekly basis, promptly deliver
and pay over to the Company all proceeds from subscriptions so
accepted, in excess of those proceeds delivered and paid over
to the Company under paragraph 3(a) hereof, together with all
interest earned on such subscription funds held in the Escrow
Account, and shall return to all subscribers whose
subscriptions have been rejected in whole or in part the
amount of subscription proceeds so rejected, without interest.
At such time as the Escrow Agent shall have made all the
payments and remittances provided for in this Paragraph, this
Agreement shall be deemed terminated and the Escrow Agent
released from all further obligations and responsibilities
hereunder.
4. The Escrow Agent shall be entitled to a fee for its
services under this Agreement and the amount of such fee shall be set forth in
Exhibit A attached hereto and incorporated herein by reference. The Company
shall be responsible for all tax reports required by law to be sent to the
subscribers.
5. In performing any of its duties under this 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 such person
may incur as a result of the Escrow Agent so acting or failing to act; provided
that Escrow Agent shall be liable for damages arising out of its willful default
or gross negligence under this Agreement. Accordingly, 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 other parties
hereto given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder or (ii) action taken or omitted
to be taken in reliance upon any document, including any written notice or
instructions provided for in this 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, which the Escrow Agent shall
in good faith believe to be genuine, to have been signed or presented by proper
person(s), and to conform with the provisions of this Agreement.
-3-
<PAGE> 5
6. The Company agrees to indemnify and hold the Escrow Agent
harmless against any and all losses, claims, damages, liabilities, and expenses,
including, without limitation, reasonable costs of investigation, attorneys'
fees, and disbursements which may be imposed upon 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 Agreement or involving the subject
matter hereof; except that if Escrow Agent shall be found guilty of willful
default or gross negligence under this Agreement, then, in such event, Escrow
Agent shall bear all such losses, claims, damages, and expenses.
7. In the event of a dispute between any of the parties hereto
or with any third parties sufficient in the discretion of the Escrow Agent to
justify its doing so, the Escrow Agent shall be entitled to tender unto 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 institute such legal
proceedings as it deems appropriate, and thereupon be discharged from all
further duties under this Agreement. Any such legal action may be brought in any
such court as Escrow Agent shall determine to have jurisdiction thereof. The
filing of any such legal proceedings will not deprive Escrow Agent of its
compensation earned prior to such filing.
8. Notices given pursuant to this Agreement shall be in
writing and shall be deemed received when delivered to the appropriate parties
at the following addresses:
Company: GBC Bancorp, Inc.
P. O. Box 1719
Lawrenceville, GA 30246-1719
Attention: Mr. Larry D. Key
President
Escrow Agent: Columbus Bank and Trust Company
P. O. Box 120
Columbus, Georgia 31902
Attention: Mr. John G. Creech
Vice President
Correspondent Banking Manager
9. This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof. This Agreement supersedes and any
other agreements, either oral or in writing, between the parties hereto. Each
party to this Agreement acknowledges that no representation, inducements,
promises, or agreements, oral or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied or expressly
referred to herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding. This Agreement may not be
modified or amended by oral agreement, but only by an agreement in writing
signed by the parties hereto.
-4-
<PAGE> 6
10. This Agreement shall be construed under the laws of the
State of Georgia.
11. The recitals set forth at the beginning of this Agreement
are incorporated by reference in, and made a part of, this Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands
and affixed their seals as of the date first above written.
COMPANY:
GBC BANCORP, INC., a Georgia
corporation
By:_________________________________
Attest: ______________________________
[CORPORATE SEAL]
ESCROW AGENT:
COLUMBUS BANK AND TRUST
COMPANY
By:______________________________
Attest: ______________________________ (Name: ________________________)
(Name: ______________________) (Title: _______________________)
(Title: _____________________)
[BANK SEAL]
- 5 -
<PAGE> 7
EXHIBIT A
The Escrow Agent shall be entitled to a fee of not less than
$________, payable upon the execution of this Agreement; and any increase in
such fee resulting from additional services rendered, or costs incurred, by the
Escrow Agent shall be mutually agreed upon by the parties hereto acting in good
faith.
<PAGE> 1
EXHIBIT 10.2
LINE OF CREDIT PROMISSORY NOTE
IN THE AMOUNT OF $500,000
HAVING GBC BANCORP, INC. AS MAKER
AND
GWINNETT BANKING COMPANY JOINT VENTURE
AS HOLDER
<PAGE> 2
LINE OF CREDIT
PROMISSORY NOTE
________, Georgia
$500,000.00 July 17, 1996
FOR VALUE RECEIVED, the undersigned promises to pay GWINNETT
BANKING COMPANY JOINT VENTURE, up to the aggregate principal sum of FIVE HUNDRED
THOUSAND AND NO/100 ($500,000.00) DOLLARS, with interest on the unpaid principal
balance from the date of this Note, until paid, at the rate specified
hereinafter. The principal and interest shall be payable at, or such other
place as the holder hereof may designate in writing until the entire
indebtedness evidenced hereby is fully paid, except that any remaining
indebtedness, if not sooner paid, shall be due and payable on July 17, 1997.
The initial interest rate shall be 9.25% per annum, which
initial rate will fluctuate automatically with the Prime Rate of Columbus Bank
and Trust Company at a level of 1.0 percentage point above such Prime Rate.
Interest shall be paid periodically on the last day of each calendar month until
this Note is paid in full.
If any installment under this Note remains past due for thirty
(30) days or more, the outstanding principal balance of this Note shall bear
interest during the period in which the undersigned is in default at a rate
equal to 1.0% above the per annum interest rate being charged under this Note at
such time, or, if such increased rate of interest may not be collected from the
undersigned under applicable law, then at the maximum increased rate of
interest, if any, which may be collected from the undersigned under applicable
law.
The indebtedness evidenced by this Note may be prepaid at any
time and from time to time before maturity, in whole or in part, without
penalty. Prepayments shall be applied against the outstanding principal balance
of this Note and shall not extend or postpone the due date of any monthly
interest payments unless the holder hereof shall agree otherwise in writing. The
holder hereof may require that any partial prepayments be made on the date
monthly interest payments are due.
If any payment under this Note is not paid when due, the
entire principal amount outstanding hereunder and accrued interest thereon shall
at once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, reasonable attorney's fees.
From time to time, without affecting the obligation of the
undersigned or the successors or assigns of the undersigned to pay the
outstanding principal balance of this Note and observe the covenants of the
undersigned contained herein, without giving notice to or obtaining the
<PAGE> 3
consent of the undersigned, the successors or assigns of the undersigned, and
without liability on the part of the holder hereof, the holder hereof may, at
the option of the holder hereof, extend the time for payment of said outstanding
principal balance or any part thereof, reduce the payments thereon, release
anyone liable on any of said outstanding principal balance, accept a renewal of
this Note, modify the terms and time of payment of said outstanding principal
balance, join in any extension or subordination agreement, release any security
given heretofore, take or release other or additional security, and agree in
writing with the undersigned to modify the rate of interest or term of this Note
or change the amount of the monthly interest payments payable hereunder. No one
or more of such actions shall constitute a novation.
Presentment, notice of dishonor, and protest are hereby waived
by all makers, sureties, guarantors and endorsers hereof.
This Note shall be governed by the law of the State of
Georgia.
WITNESS the hand and corporate seal of the undersigned.
GBC BANCORP, INC.
By:_______________________________________(SEAL)
John T. Hopkins III, Executive Vice President
2
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF GBC BANCORP, INC.
<PAGE> 2
EXHIBIT 21.1
SUBSIDIARIES OF GBC BANCORP, INC.
GBC Bancorp, Inc. proposes to acquire Gwinnett Banking Company (In
Organization). Gwinnett Banking Company is being organized under the laws of the
state of Georgia.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF MAULDIN & JENKINS, PLLC
<PAGE> 2
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated November 1, 1996, accompanying the financial
statements of GBC Bancorp, Inc., as of and for the period ending September 30,
1996, contained in the 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."
MAULDIN & JENKINS, PLLC
By:_________________________________
December 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-17-1996
<PERIOD-END> SEP-30-1996
<CASH> 800
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 800
<PP&E> 30,007
<DEPRECIATION> 0
<TOTAL-ASSETS> 84,702
<CURRENT-LIABILITIES> 191,146
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> (106,524)
<TOTAL-LIABILITY-AND-EQUITY> (106,444)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 105,788
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,456
<INCOME-PRETAX> (107,244)
<INCOME-TAX> 0
<INCOME-CONTINUING> (107,244)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107,244)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
