<PAGE> 1
As filed with the Securities and Exchange Commission on March 10, 1997
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Registration No. 333-19081
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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
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<S> <C> <C>
GEORGIA (770) 995-0000 58-2265327
(State or jurisdiction of (Address, and telephone number (I.R.S. Employer
incorporation or organization) of principal executive offices) Identification Number)
</TABLE>
165 Nash Street
Lawrenceville, Georgia 30246
(770) 995-0000
(Address of principal place of business or
intended principal place of business)
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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)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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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. / /
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Title of Each Proposed Proposed
Class of Securities Amount to be Maximum Offering Maximum Aggregate Amount of
to be Registered Registered Price Per Unit Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $1.00 par value 1,200,000 Shares $10.00 $12,000,000 $3636(1)
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</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.
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(1) $3030 was paid in connection with the Company's initial filing with
the Commission. The Registration has increased the maximum offering to
$12,000,000
<PAGE> 2
GBC BANCORP, INC.
CROSS-REFERENCE SHEET
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REGISTRATION STATEMENT ITEM NUMBER CAPTION IN PROSPECTUS
AND HEADING ---------------------
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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
GBC BANCORP, INC.
A Proposed Bank Holding Company for
GWINNETT BANKING COMPANY (In Organization)
Up to 1,200,000 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 950,000 shares and a maximum of
1,200,000 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 the
Offering (approximately 11.6% of the minimum and 9.2% 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 950,000
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 950,000 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.
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Price to Underwriting Discounts Proceeds to
Public(1) and Commissions (2) Company(3)
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<S> <C> <C> <C>
Per Share........................ $ 10.00 -0- $ 10.00
Total Minimum(4)................. $ 9,500,000 -0- $ 9,500,000
Total Maximum(5)................. $12,000,000 -0- $12,000,000
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</TABLE>
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(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 $458,748.
(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 950,000 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 $9,500,000 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 1,200,000 shares at
$10.00 per share. See "THE OFFERING - Terms of the Offering."
The date of this Prospectus is March __, 1997.
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* 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 second quarter of 1997. Such approvals will require the Company to
sell at least 950,000 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 February 28, 1997 and the FDIC
application was also approved on February 28, 1997. 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 $9,000,000
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 second 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 and
administrative offices 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.
THE OFFERING
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Securities............................... Common Stock, $1.00 par value, of the Company
Offering Price........................... $10.00 per share
Number of Shares Offered................. Minimum: 950,000
Maximum: 1,200,000
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."
1
<PAGE> 6
RISK FACTORS
Investment in the Common Stock involves a significant degree of risk,
including that (i) the Company has not received all of the regulatory approvals
required before it can become a bank holding company; (ii) the Bank, which is
the sole subsidiary of the Company is in organization and has no operating
history; (iii) the banking industry is highly competitive and is highly
regulated, (iv) the results of operations of the Bank will be affected by
credit policies of monetary authorities; (v) the success of the Bank will
depend largely on the general economic conditions in the Bank's primary service
area; (vi) the Offering price for the Company's Common Stock has been
determined arbitrarily without particular reference to customary criteria;
(vii) it is the policy of the Board of Directors of the Company to reinvest
earnings and not pay dividends for the period of time necessary to ensure the
success of the Company's operations; and (viii) there is no public trading
market for the shares of the Company's Common Stock. See "RISK FACTORS."
2
<PAGE> 7
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 second
quarter of 1997. Such approvals will require the Company to sell at least
950,000 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 and
both such authorities issued their approvals on February 28, 1997. Both
approvals are subject to the condition that at least $9,000,000 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."
3
<PAGE> 8
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.
ANTITAKEOVER PROVISIONS IN THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The Articles of Incorporation of the Company contain certain provisions
which would have the effect of impending an attempt to change or remove
management of the Company or to gain control of the Company in a transaction
not supported by the Company's Board of Directors. Although the Company's
management believes that these protective provisions in the Company's Articles
of Incorporation and Bylaws are beneficial to shareholders of the Company, such
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. See "Antitakeover Provisions of the Company's Articles of Incorporation
and Bylaws."
THE OFFERING
TERMS OF THE OFFERING
Minimum/Maximum. The Company is offering a minimum of 950,000 shares and a
maximum of 1,200,000 shares of its Common Stock for a price of $10.00 per
share, for an aggregate minimum Offering price of $9,500,000 and an aggregate
maximum Offering price of $12,000,000. 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 11.6% of the minimum and 9.2% 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."
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* The blanks will be completed when the Company's Registration Statement
on Form SB-2 is declared effective by the Securities and Exchange
Commission.
4
<PAGE> 9
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.
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 1,200,000 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 950,000 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 950,000 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, and (d) 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. The Company will pay any interest earned on
the first $9,000,000 deposited with the Escrow Agent to the Bank. 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 and from the
FDIC on February 28, 1997. The Company expects to receive approvals from the
Federal Reserve and the Department of Banking during the second 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 950,000 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.
5
<PAGE> 10
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.
HOW TO SUBSCRIBE
Each prospective investor who (together with the investor's affiliates)
desires to purchase 500 or more shares must:
1. Complete, date and execute the Subscription Agreement, which is
attached as Exhibit "A" to this Prospectus.
2. Make a check payable to "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.
3. Return the completed Subscription Agreement as follows:
BY HAND OR OVERNIGHT DELIVERY: BY U.S. MAIL DELIVERY:
GBC Bancorp, Inc. GBC Bancorp, Inc.
318 Pike Street, Suite 475 P.O. Box 1719
Lawrenceville, Georgia 30246 Lawrenceville, Georgia 30246-1719
Attention: Larry D. Key, President Attention: Larry D. Key, President
4. UPON RECEIPT BY THE COMPANY OF 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 $40,000, and to
repay in full a line of credit loan from the Joint Venture in the approximate
amount of $350,100 at December 31, 1996 and then to capitalize the Bank through
the purchase of 450,000 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 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 December 31, 1996, the aggregate outstanding balance on the
lines of credit from the Joint Venture to the Company and the Bank was
$350,100. See "ESTIMATED EXPENDITURES" and "PRO FORMA CAPITALIZATION."
The Bank will use the $9,000,000 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 $301,748), 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 $458,748. 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 organizational and pre-opening expenses of the Bank.
The estimates of pre-opening operating expenses assume that the Bank will
open in the second 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 second quarter of 1997.
6
<PAGE> 11
ESTIMATED EXPENDITURES
In the opinion of the Company, the minimum gross proceeds of $9,500,000
from the Offering will satisfy the cash requirements of the Company and the
Bank for their respective first five years of operation. The Bank is required
to maintain capital of 6% over its initial five years of operations. 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.
7
<PAGE> 12
<TABLE>
<CAPTION>
Minimum Offering Maximum Offering
---------------- ----------------
<S> <C> <C>
Gross Proceeds From This Offering (1) $9,500,000 $12,000,000
Anticipated Use of Proceeds by the Company
Offering and Organizational Expenses (2) $ 40,000 $ 40,000
Working Capital ..................................................... 460,000 2,960,000
Capitalization of Bank through Purchase of
Common Stock of the Bank ....................................... 9,000,000 9,000,000
Total ...................................................... $9,500,000 $12,000,000
Anticipated Use of Capital by the Bank
Organizational Expenses (2) ......................................... $ 117,000 $ 117,000
Pre-opening Operating Expenses (2) .................................. 301,748 301,748
Working Capital ..................................................... 8,581,252 8,581,252
Total ...................................................... $9,000,000 $ 9,000,000
</TABLE>
(1) Assuming sale of 950,000 shares and 1,200,000 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 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.
8
<PAGE> 13
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization as of December 31, 1996,
and pro forma capitalization as of completion of the Offering, of the Company
assuming that 950,000 shares and 1,200,000 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
December 31, Minimum Maximum
1996 Offering Offering
------------ -------- --------
<S> <C> <C> <C>
Debt
Total Debt (1) ......................................................... $ 386,980 $ -0- $ -0-
Shareholders' Equity
Common Stock, $1.00 par value,
3,000,000 shares authorized
(950,000 and 1,200,000 shares, respectively,
issued and outstanding)(2) .................................................. $ 80(3) $ 950,080 $ 1,200,080
Additional paid-in capital .................................................. 720(3) 8,550,720 10,800,720
Deficit accumulated during the pre-opening
development stage (4) ....................................................... (238,538) (458,748) (458,748)
--------- ----------- ------------
Total shareholders' equity .................................................. $(237,738) $ 9,042,052 $ 11,542,052
========= =========== ============
</TABLE>
- ---------------------------
(1) Represents amounts outstanding under the Company's line of credit and
accounts payable to Gwinnett Banking Company Joint Venture.
(2) Represents the Company's sale of 950,000 shares and 1,200,000 shares of
Common Stock, respectively, at $10.00 per share.
(3) Represents 10 shares purchased by each organizer 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 $40,000 and such amount was used in the
calculation of the amounts shown in columns two and three. Offering costs
incurred through December 31, 1996 consist primarily of legal expenses
totaling approximately $28,000.
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."
9
<PAGE> 14
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 $9,000,000 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 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 or to acquire any significant assets. 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." It is not anticipated that the Company will need
to raise additional funds to meet its cash requirements for the next five
years.
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 and from the FDIC on February 28, 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.
10
<PAGE> 15
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 9,000 square feet office space is $135,000 or $15.00 per
square foot. The rental for the renewal will be increased based on the increase
in the Consumer Price Index.
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 second 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
executive 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 $15.66 per
square foot. 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 include 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 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
11
<PAGE> 16
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 Counties 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%.
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 County 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.
12
<PAGE> 17
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 Bank, Atlanta, 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 approximately $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. With regard to the Bank, deposit growth will consist of two
components: (i) the normal annual deposit growth for an existing institution;
and (ii) deposits attracted by management from previously established
relationships. Management believes that initially the Bank will not attract
100% of the normal deposit growth due to the initial size of the Bank and its
single location. However, management believes that at least 25% of the normal
deposit growth will be attracted due to the personal services offered by the
community bank and its centralized location in Gwinnett County. 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. The Bank's loan portfolio will consist of
42.5% single-family residential construction loans, 42.5% commercial loans, 10%
consumer and 5% Small Business Administration loans. Construction loans and
commercial loans are short-term obligations with interest rates based on prime
plus some percentage point. Therefore, more than 80% of the Bank's loan
portfolio's interest rate will be adjusted annually.
Management plans to take advantage of the 180-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 $9,000,000 in capital, $3,000,000 will be allocated to common stock,
$5,100,000 to paid-in capital, and $900,000 will be set aside as an expense
fund to cover pre-opening expenses and potential losses in its first year of
operation. The $900,000 expense fund will not be included in the Bank's
statutory capital base. Accordingly, the Bank's initial legal lending limits
will be $1,215,000 for unsecured loans and $2,025,000 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.
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
13
<PAGE> 18
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. The Bank's consumer loans will be both secured
and unsecured loans. Unsecured loans, however, will be only made to customers
of sound net worth, above average liquidity, and unquestionable repayment
ability. Unsecured loans will have maturities of less than one year. Secured
loans will be margined so that money received from collateral in a foreclosure
situation would repay the loan.
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. The
Bank will make secured and unsecured commercial loans. Unsecured commercial
loans, however, will be only made to customers who demonstrate sound net worth,
above average liquidity, and unquestionable repayment ability. Unsecured loans
will have maturities of less than one year. Secured loans will be margined so
that money received from collateral in a foreclosure situation would repay the
loan.
INVESTMENTS
In addition to loans, the Bank will make other investments in obligations
of the United States 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. Management anticipates
that the total deposit mix will consist of 20% non-interest-bearing demand
deposits, 26% interest bearing demand and money market deposits, 4% savings
deposits, 10% time deposits of $100,000 or more and 40% other time deposits.
The Bank will not utilize or permit the use of brokered deposits. Qualified
deposits will be insured 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
14
<PAGE> 19
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.
There are no expected significant changes in the number of employees of the
Company or the Bank.
DATA PROCESSING SERVICES
The Bank has entered into a three-year contract with Provesa, Inc. whereby
Provesa will provide data processing and item processing/imaging services for
the Bank. Data processing services are a normal service provided by data
processing entities and used by small community banks.
MANAGEMENT
OFFICERS AND DIRECTORS
On August 21, 1996, the Board of Directors of the Company elected the
following persons as officers of the Company:
<TABLE>
<S> <C>
Larry D. Key President, Chief Executive Officer
John T. Hopkins III Executive Vice President, Chief Financial Officer, Secretary and
Treasurer
</TABLE>
The Bylaws of the Company provide that there shall be nine members of the
Board of Directors. There are currently six members of the Board of Directors
of the Company and three vacancies. The current directors plan to fill these
vacancies with persons who have strong ties to Gwinnett County.
The following table sets forth for the current members of the Board of
Directors and senior and executive officers of the Company and the Bank (a)
their names, addresses and ages at March 1, 1997, (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 approximate 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 AFTER AFTER
NAME AND ADDRESS AGE TO BE HELD SHARES(1) MINIMUM MAXIMUM
- ---------------- --- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Larry D. Key 51 President, Chief 20,010 2.1% 1.7%
3300 Jim Moore Road Executive
Dacula, Georgia 30211 Officer and
Chairman
John T. Hopkins III 55 Executive Vice 5,010 .5% .4%
4310 Antelope Lane President, Chief
Lithonia, Georgia 30058 Financial Officer,
Secretary and
Treasurer
Paul C. Birkhead 52 Senior 20,010 2.1% 1.7%
4651 Warrior Trail Vice President -
Lilburn, Georgia 30247 Commercial Loan
Officer
</TABLE>
15
<PAGE> 20
<TABLE>
<CAPTION>
% %
POSITION NUMBER OF AFTER AFTER
NAME AND ADDRESS AGE TO BE HELD SHARES(1) MINIMUM MAXIMUM
- ---------------- --- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
James B. Ballard 52 Director 10,010 1.0% .8%
2400 Bagley Road
Cumming, Georgia 30130
Jerry M. Boles 56 Director 25,010 2.6% 2.0%
Boles Parts Supply, Inc.
1057 Boulevard, S.E.
Atlanta, Georgia 30312
W. H. Britt 58 Director 5,010 .5% .4%
W. H. Britt & Assoc., Inc.
535 Grayson Parkway
Grayson, Georgia 30221
Norris J. Nash 69 Director 5,010 .5% .4%
Gwinnett DeKalb Realty, Inc.
4830 Lawrenceville Hwy.
Lilburn, Georgia 30247
William S. Stanton
Print Direction, Inc.
1455 Oakbrook Drive
Norcross, Georgia 30093 41 Director 20,010 2.1% 1.7%
</TABLE>
- -------------
(1) Each of the Directors of the Company, Mr. Hopkins and Mr. Birkhead
purchased 10 shares of common stock of the Company for $10.00 per
share in connection with the initial organization of the Company.
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
16
<PAGE> 21
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:
<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 Senior Vice President $ 80,000
Marcia N. Watkins Senior Vice President and $ 55,000
Chief Operating Officer
</TABLE>
- --------------
(1) Through the organization of the Bank and until the Bank commences
business, the Joint Venture will pay 5% of the compensation expense for
these persons.
17
<PAGE> 22
The Bank plans to also hire a chief credit officer/senior loan officer and
to pay such officer an annual salary of $90,000. The employment of such officer
will be subject to the approval of the Department of Banking.
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 and Hopkins will each receive an automobile
allowance of $650 per month. In the case of Messrs. Key and Hopkins, 5% of
their automobile allowances will be paid by the Joint Venture until the Bank
commences business.
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. Management believes that the terms of the Company's line of credit
with the Joint Venture are as or more favorable than the Company could have
obtained from a non-affiliated lending institution. Neither the Company nor the
Bank will borrow from the Joint Venture after completion of the Offering.
It is anticipated that Columbus Bank and Trust Company, the Bankers Bank
and SunTrust Bank, Atlanta will operate as correspondent banks for the Bank.
The Bankers Bank will provide correspondent bank services such as check
clearing, international services, wire transfers and various additional
services for the Bank. Columbus Bank and Trust Company will serve as the Escrow
Agent in connection with the Offering and will serve the Bank through
purchasing and selling federal funds. SunTrust Bank, Atlanta will also assist
the Bank in purchasing and selling federal funds and with the Bank's
investments.
All of the relationships established or to be established with the banks
providing correspondent banking services were at arms-length. There is no
affiliation between the Bank and any of its officers and directors and any of
the Bank's correspondent Banks.
The Bank will enter into a Lease Agreement with the Joint Venture to lease
the Permanent Premises. Most of the members of the Joint Venture are directors
of the Company and organizers of the Bank. The Permanent Premises lease rate is
market rental value established by two MAI appraisals and, therefore, is as
favorable as rates obtainable from an unaffiliated third party. In addition,
during the period during which the Permanent Premises is being constructed, the
Bank will lease from a third party the temporary premises. 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 Common Stock 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.
18
<PAGE> 23
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 950,000 shares and a maximum of 1,200,000 shares will be issued
pursuant to this Offering. Eighty shares of Common Stock were issued prior to
the Offering to the initial organizers 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
950,000 shares and a maximum of 1,200,000 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-
19
<PAGE> 24
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 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
20
<PAGE> 25
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.
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 nine persons who are directors of the Company, only one will be
affiliated with the Company and 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
21
<PAGE> 26
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.
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,
22
<PAGE> 27
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.
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
23
<PAGE> 28
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.
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
</TABLE>
24
<PAGE> 29
<TABLE>
<S> <C> <C> <C> <C>
Adequately 4% or more 8% or more 4% or more --
Capitalized
Undercapitalized less than 4% less than 8% less than 4% --
Significantly less than 3% less than 6% less than 3% --
Undercapitalized
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 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
25
<PAGE> 30
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 December 31, 1996, and for the
period from July 17, 1996 until December 31, 1996, set forth herein have been
so included in reliance on the report of Mauldin & Jenkins, LLC independent
certified public accountants, given on the authority of that firm as experts in
accounting and auditing.
26
<PAGE> 31
===============================================================================
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>
<CAPTION>
TABLE OF CONTENTS
<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 1,200,000
SHARES OF
COMMON STOCK
PROSPECTUS
===============================================================================
<PAGE> 32
EXHIBIT A
SUBSCRIPTION AGREEMENT
GBC Bancorp, Inc.
318 Pike Street, Suite 475
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 Subscription Agreement
in connection with the Company's offering of Common Stock described in its
Prospectus dated March ___, 1997. (Such Prospectus, including any amendments
and supplements thereto, is herein called the "Prospectus.")
The undersigned agrees to purchase the shares of Common Stock
subscribed for herein for the purchase price of $10.00 per share. All checks
should be made payable to "Columbus Bank and Trust Company" - Escrow Account
for GBC Bancorp, Inc. A check in an amount equal to the full subscription price
is enclosed with this Subscription Agreement.
The undersigned acknowledges receipt of a copy of the Prospectus. The
undersigned further acknowledges that an investment in the Common Stock
involves significant risks, as set forth under "Risk Factors" in the
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 Prospectus, or any
recommendation or endorsement concerning an investment in the Common Stock.
The undersigned agrees that this Subscription Agreement is binding on
the undersigned and is irrevocable by the undersigned until the Expiration Date
as defined in the Prospectus. The undersigned acknowledges that this
Subscription Agreement shall not constitute a valid and binding obligation of
the Company until accepted by the Company in writing, and that the Company has
the right to reject this Subscription Agreement either in whole or in part, in
its sole discretion.
Number of Shares
(minimum 500 shares): ____________
_________________________________________________
Please PRINT or TYPE exact name(s) in
which undersigned desires shares to be registered
Total Subscription Price
(at $10.00 per share): $____________
(Continued)
<PAGE> 33
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.
Signature(s)*
- -----------------------------
Date
Please indicate form of ownership
- ----------------------------- the undersigned desires for the
Area Code and Telephone No. 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 __________________, 1997, 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.
<PAGE> 34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
II - 1
<PAGE> 35
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....................................................... $ 3,636.00
==========
Legal Fees and Expenses (Estimate)..................................... 28,000.00
==========
Accounting Fees and Expenses (Estimate)................................ 3,000.00
==========
Printing and Engraving Expenses (Estimate)............................. 4,500.00
Miscellaneous (Estimate)............................................... 864.00
----------
TOTAL.............................................................. $40,000.00
==========
</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
</TABLE>
II - 2
<PAGE> 36
<TABLE>
<S> <C>
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 $500,000 having Registrant as
Maker and Gwinnett Banking Company Joint Venture as Holder.
10.3 Provesa, Inc. Data Processing Agreement.
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 (for SEC use only)
</TABLE>
*Previously filed in connection with the Registrant's initial filing on
December 31, 1996.
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.
II - 3
<PAGE> 37
(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
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> 38
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 First
Amendment to Registration Statement to be signed on its behalf by the
undersigned, in the City of Lawrenceville, State of Georgia on March 6, 1997.
GBC Bancorp, Inc.
By: /s/ Larry D. Key
---------------------------
Larry D. Key, President and
Principal 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 First
Amendment to 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 (Principal March 6, 1997
- -------------------------- Executive Officer)
Larry D. Key
/s/ John T. Hopkins, III Executive Vice President, March 6, 1997
- -------------------------- Secretary and Treasurer, (Principal
John T. Hopkins, III Financial and Accounting Officer)
/s/ James B. Ballard* Director March 6, 1997
- --------------------------
James B. Ballard
</TABLE>
II - 5
<PAGE> 39
<TABLE>
<CAPTION>
Name Position Date
- ---- -------- ----
<S> <C> <C>
/s/ Jerry M. Boles* March 6, 1997
- ------------------------------
Jerry M. Boles
/s/ W. H. Britt* Director March 6, 1997
- ------------------------------
W. H. Britt
/s/ Norris J. Nash* Director March 6, 1997
- ------------------------------
Norris J. Nash
/s/ William S. Stanton*
- ------------------------------
William S. Stanton Director March 6, 1997
</TABLE>
*Signed by Larry D. Key as attorney in fact.
II - 6
<PAGE> 40
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT............................................................................................F-2
BALANCE SHEET, DECEMBER 31, 1996........................................................................................F-3
STATEMENT OF LOSS, PERIOD FROM JULY 17, 1996, DATE OF INCEPTION,
TO DECEMBER 31, 1996...............................................................................................F-4
STATEMENT OF STOCKHOLDERS' (DEFICIT), PERIOD FROM JULY 17, 1996,
DATE OF INCEPTION, TO DECEMBER 31, 1996............................................................................F-5
STATEMENT OF CASH FLOWS, PERIOD FROM JULY 17, 1996, DATE OF
INCEPTION, TO DECEMBER 31, 1996....................................................................................F-6
NOTES TO FINANCIAL STATEMENTS...........................................................................................F-7
</TABLE>
F-1
<PAGE> 41
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 December 31, 1996, and the
related statements of loss, stockholders' (deficit) and cash flows for the
period from July 17, 1996, date of inception, to December 31, 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 December 31, 1996, and the results of its operations and
its cash flows for the period from July 17, 1996, date of inception, to
December 31, 1996, in conformity with generally accepted accounting principles.
MAULDIN & JENKINS, LLC
Atlanta, Georgia
January 10, 1997
F-2
<PAGE> 42
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 800
Equipment 31,785
Deferred organization and stock offering costs 116,657
------------------
$ 149,242
==================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES, due to related party $ 386,980
------------------
COMMITMENTS
STOCKHOLDERS' (DEFICIT)
Common stock, $1 par value; 3,000,000 shares authorized;
80 shares issued and outstanding 80
Capital surplus 720
Deficit accumulated during the development stage (238,538)
------------------
Total stockholders' (deficit) (237,738)
------------------
$ 149,242
==================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-3
<PAGE> 43
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION, TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPENSES
<S> <C>
Personnel expenses $ 182,596
Interest 6,933
Equipment and occupancy expenses 33,407
Other expenses 15,602
-----------------
(238,538)
-----------------
Net loss and deficit accumulated during the development stage $ (238,538)
=================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-4
<PAGE> 44
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' (DEFICIT)
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION, TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK DURING THE TOTAL
------------------------- CAPITAL DEVELOPMENT STOCKHOLDERS'
SHARES PAR VALUE SURPLUS STAGE (DEFICIT)
---------- -------------- -------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 17, 1996 (DATE OF INCEPTION) -- $ -- $ -- $ -- $ --
Issuance of 80 shares of common stock 80 80 720 -- 800
Net loss -- (238,538) (238,538)
----- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1996 80 $ 80 $ 720 $(238,538) $(237,738)
===== ========= ========= ========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-5
<PAGE> 45
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION, TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $(238,538)
Adjustment to reconcile net loss to net cash provided by
operating activities:
Preopening expenses incurred by the Joint Venture
on behalf of the Company 238,538
---------
Net cash provided by operating activities --
---------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 800
---------
Net cash provided by financing activities 800
---------
Net increase in cash 800
Cash at beginning of period --
---------
Cash at end of period $ 800
=========
NONCASH TRANSACTION
Cost of equipment and deferred organization and stock offering
costs incurred by the Joint Venture on behalf of the Company $ 148,442
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-6
<PAGE> 46
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. The Company intends to acquire
100% of the issued and outstanding capital stock of Gwinnett
Banking Company (the "Bank"), a corporation organized under the
laws of the State of Georgia to conduct a general banking
business in Lawrenceville, Georgia. In addition to the
conditional approval of the organization of the Bank granted by
the Georgia Department of Banking and Finance (the "DBF"), the
Federal Deposit Insurance Corporation (the "FDIC"), also
approved the application previously filed by the Bank's
organizers for FDIC insurance of Bank's deposits. As an insured
bank, the Bank will be a member of the Bank Insurance Fund. The
Company has filed an application with the Federal Reserve Bank
of Atlanta (the "FRB") and the DBF to become a bank holding
company. 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-7
<PAGE> 47
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:
<TABLE>
<S> <C>
Consulting $ 15,000
Legal 82,479
Filing fees 15,090
Other 4,088
--------
$116,657
========
</TABLE>
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-8
<PAGE> 48
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 December 31, 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 December 31, 1996 are as follows:
<TABLE>
<S> <C>
ASSETS
Cash $ 11,444
Investment in Company 800
Due from Company 386,980
Other assets 5,997
--------
Total assets $405,221
========
LIABILITIES
Line of credit $350,100
Accounts payable 50,275
Other 4,846
--------
Total liabilities $405,221
Total liabilities ========
</TABLE>
F-9
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2. DUE TO RELATED PARTY (CONTINUED)
As of December 31, 1996, the Joint Venture had incurred
organization and preopening expenses on behalf of the Company as
follows:
<TABLE>
<S> <C>
ORGANIZATION:
Fixed assets purchased:
Furniture and equipment $ 31,785
--------
Deferred organization and stock
offering costs:
Consulting fees 15,000
Legal fees 82,479
Filing fees and other 19,178
--------
116,657
--------
PREOPENING EXPENSES:
Personnel expenses 182,596
Interest 6,933
Equipment and occupancy expenses 33,407
Other expenses 15,602
--------
238,538
--------
Total $386,980
========
</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.
<PAGE> 50
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 950,000 shares and a maximum of 1,200,000
shares of the Company's common stock at a price of $10 per
share.
F-11
<PAGE> 51
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 $500,000 having
Registrant as Maker and Gwinnett Banking Company Joint Venture
as Holder. ----
10.3 Provesa, Inc. Data Processing Agreement. ----
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 ----
24.1* Power of Attorney (appeared on the signature page to the Registration
Statement on Form SB-2). ----
27 Financial Data Schedule ----
</TABLE>
- --------------------
*Previously filed in connection with the Registrant's initial filing on
December 31, 1996.
<PAGE> 1
EXHIBIT 5.1
LEGAL OPINION OF WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
<PAGE> 2
March 6, 1997
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 950,000 shares and a maximum of
12,000,000 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.
<PAGE> 3
GBC Bancorp, Inc.
March 6, 1997
Page 2
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.
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> 4
EXHIBIT A
INTERPRETIVE STANDARDS
APPLICABLE TO CERTAIN LEGAL OPINIONS
TO THIRD PARTIES IN CORPORATE TRANSACTIONS
EFFECTIVE JANUARY 1, 1992
PURPOSE AND SCOPE OF INTERPRETIVE STANDARDS
The purpose of these Interpretive Standards is to explain the meaning
of Opinion Letters (which incorporate these Interpretive Standards by
reference) addressed to non-client third parties in connection with corporate
acquisition or financing transactions. Included in these Interpretive Standards
are general qualifications to legal opinions, common assumptions as to fact and
law, standards governing an opinion that an agreement is "enforceable" and
interpretations of certain recurring legal opinions and confirmations of fact.
Incorporation in an Opinion Letter of these Interpretive Standards is intended
to shorten the content of the letter while expanding the mutual understanding
of its meaning. Any part of these Interpretive Standards, however, may be
overridden by a specific statement in an Opinion Letter which supersedes a
contrary Interpretive Standard.
Definitions of Terms Used in Interpretive Standards
The following capitalized terms have the following meanings when used
in these Interpretive Standards:
Agreement means the primary legal document which evidences the
Transaction.
Assets means all of the tangible and intangible real and personal
property of Company.
Company means the entity which is the client of Opinion Giver and on
whose behalf the Opinion Letter is given.
Documents means the Agreement, together with any other document
identified in the Opinion Letter, which contain one or more obligations of
Company related to the Transaction.
GBCC means the Georgia Business Corporation Code in effect on the date
of the Opinion Letter.
Law(s), whether or not a capitalized term, means the constitution,
statutes, judicial and administrative decisions, and rules and regulations of
governmental agencies of the Opining Jurisdiction and, unless otherwise
specified, federal law.
<PAGE> 5
Local Law means the statutes, administrative decisions, and rules and
regulations of any county, municipality or subdivision, whether created at the
federal, state or regional level.
Opining Jurisdiction means a jurisdiction, the law of which Opinion
Giver addresses.
Opinion means a legal opinion contained in an Opinion Letter.
Opinion Giver means the law firm or lawyer giving an Opinion.
Opinion Letter means the letter containing one or more Opinions or
confirmations of fact by Opinion Giver.
Opinion Recipient means the person or persons to whom the Opinion
Letter is addressed.
Other Agreements mean documents (other than the Documents) to which
Company is a party or by which Company is bound.
Other Counsel means counsel (other than Opinion Giver) providing a
legal opinion or confirmation of fact on aspects of the Transaction directed to
Opinion Recipient or Opinion Giver or both.
Other Jurisdiction means any jurisdiction (other than the Opining
Jurisdiction) the law of which is stipulated to be the governing law.
Personal Property means all of the tangible and intangible personal
property of Company.
Primary Lawyer Group has the meaning discussed in Interpretive
Standard 7.
Public Authority Documents means certificates issued by a
governmental office or agency, such as the Secretary of State, or by a private
organization having access to and regularly reporting on government files and
records, as to a person's property or status.
Remedies Opinion means an Opinion dealing with the enforceability
against Company of one or more Documents.
Transaction means the transaction with respect to which the Opinion
Letter is given.
2
<PAGE> 6
Qualifications To Each Opinion
1. Law Addressed by Opinion.
If an Opinion Letter is expressly limited to the Law of one or more
specified jurisdictions or to one or more discrete laws within one or more
jurisdictions, an Opinion with respect to any other law, or the effect of any
other law, is disclaimed.
2. Scope of Opinion.
An Opinion covers only those matters both essential to the conclusion
stated by the Opinion and, based upon prevailing norms and expectations found
among experienced legal practitioners in the Opining Jurisdiction, reasonable
in the circumstances. Other matters are not included in an Opinion by
implication. The following matters, including their effects and the effects of
noncompliance, are not covered by implication or otherwise in any Opinion,
unless coverage is specifically addressed in the Opinion Letter as provided by
Interpretive Standard 11:
<TABLE>
<S> <C>
(1) Local Law
(2) Law relating to permissible rates, computation or disclosure of interest, e.g., usury
(3) Antitrust and unfair competition law
(4) Securities law
(5) Fiduciary obligations
(6) Pension and employee benefit law, e.g., ERISA
(7) Regulations G, T, U and X of the Board of Governors of the Federal Reserve System
(8) Fraudulent transfer tax
(9) Environmental law
(10) Land use and subdivision law
(11) Except with respect to a No Consent Opinion (Interpretive Standard 28), Hart-Scott-
Rodino, Exon-Florio and other laws related to filing requirements, other than charter-
related filing requirements, such as requirements for filing articles of merger
(12) Except with respect to a No Violation Opinion (Interpretive Standard 27), law
concerning creation, attachment, perfection or priority of a security interest in any
Assets
(13) Bulk transfer law
(14) Tax law
(15) Patent, copyright, trademark and other intellectual property law
(16) Racketeering law, e.g., RICO
(17) Criminal statutes of general application, e.g., mail fraud and wire fraud
(18) Health and safety law, e.g., OSHA
(19) Labor law
(20) Law concerning national or local emergency
</TABLE>
3
<PAGE> 7
3. Unwarranted Reliance.
Opinion Giver may not rely for purposes of the Opinion Letter upon
information, whether or not in a Public Authority Document, or (except in the
case of arbitrary or hypothetical assumptions contained in an overriding
agreement referred to in Interpretive Standard 11 or as stated in Interpretive
Standard 22 with respect to choice of law) upon an assumption otherwise
appropriate, if Opinion Giver has knowledge that such information or assumption
would be unreasonable. "Knowledge" or "recognizes" for purposes of the
foregoing sentence and wherever used in these Interpretive Standards means the
current awareness of information by any lawyer in the Primary Lawyer Group.
4. Reliance on Other Sources of Information.
Subject to Interpretive Standard 3, Opinion Giver may rely, without
investigation, upon facts established by a Public Authority Document, facts
provided by an agent of Company or others and, if discussed in the Opinion
Letter, facts asserted by a party to the Transaction in a representation or
warranty embodied in the Documents, provided:
(1) if not established by a Public Authority Document,
the facts do not constitute a statement, directly or in practical effect, of
the legal conclusion in question;
(2) the person providing facts is, in Opinion Giver's
professional judgment, an appropriate source; and
(3) if the facts are set forth in a certificate, Opinion
Giver has used reasonable professional judgment as to its form and content.
5. Scope of Opinion Giver's Inquiry.
Opinion Giver is presumed to have reviewed such documents and given
consideration to such matters of law and fact as Opinion Giver deemed
appropriate in order to give an Opinion or confirmation of fact, unless Opinion
Giver has expressly limited the scope of inquiry in the Opinion Letter. A
recital of specific documents reviewed or specific procedures followed, without
more, is not a limitation on the scope of Opinion Giver's inquiry for purposes
of the foregoing presumption.
6. Opinion or Confirmation Qualified by Knowledge of Opinion
Giver.
Whenever an Opinion Letter qualifies an Opinion or confirmation of
fact by the words "to our knowledge," "known to us" or words of similar
meaning, the quoted words mean the current awareness by lawyers in the Primary
Lawyer Group of information such lawyers recognize as relevant to the Opinion
or confirmation so qualified. The quoted words do not include within what is
known information not within such current awareness that might be revealed if a
canvass of
4
<PAGE> 8
lawyers outside the Primary Lawyer Group were made, if the Opinion Giver's
files were searched or if any other investigation were made.
7. "Primary Lawyer Group."
"Primary Lawyer Group" means that lawyer in Opinion Giver's
organization who signs the Opinion Letter and, solely as in information
relevant to an Opinion or confirmation issue, any lawyer in Opinion Giver's
organization who is responsible for providing the response concerning the
particular issue.
8. Who May Rely On Opinion.
Opinion Recipient and designated principals of Opinion Recipient, if
Opinion Recipient is identified in the Opinion Letter as an agent for
designated principals, are the only persons entitled to rely upon any Opinion
or confirmation of fact contained in the Opinion Letter, and then only for
purposes of the Transaction.
9. Other Counsel.
Opinion Giver's responsibility for the opinion of Other Counsel
depends upon what it stated in the Opinion Letter. A statement that Opinion
Giver has relied on an opinion of Other Counsel means only that Opinion Giver
believes that (i) based upon Other Counsel's professional reputation, it is
competent to render such opinion, and (ii) such opinion on its face appears to
address the matters upon which Opinion Giver places reliance. A statement that
Opinion Giver believes that Opinion Recipient is justified in relying on an
opinion of Other Counsel means that Opinion Giver has assumed the
responsibility for verifying the accuracy of the opinion of Other Counsel. If
no concurrence by Opinion Giver is expressed, no concurrence is implied. If
Opinion Giver merely identifies or remains silent with respect to the opinion
of Other Counsel, Opinion Giver assumes no responsibility for Other Counsel's
opinion, and Opinion Recipient may not assume that Opinion Giver has relied
upon Other Counsel's opinion.
10. Updating.
An Opinion Letter speaks as of the date of its delivery, and Opinion
Giver has no obligation to advise Opinion Recipient or anyone else of any
matter of fact or law thereafter occurring, whether or not brought to the
attention of Opinion Giver, even though that matter affects any analysis or
conclusion in the Opinion Letter.
11. Overriding Agreement.
Opinion Giver and Opinion Recipient may agree upon arbitrary or
hypothetical assumptions that may not be true and upon qualifications,
standards or interpretations inconsistent with these Interpretive Standards.
Any such agreement with respect to such assumptions, qualifications,
5
<PAGE> 9
standards or interpretations, when described with reasonable particularity in
the Opinion Letter, will supersede any contrary provision of these Interpretive
Standards.
Assumptions
12. Assumptions As To Parties Other Than Company.
Opinion Recipient in the Transaction has acted in good faith and
without notice of any defense against enforcement of rights created by, or
adverse claim to any property transferred as part of, the Transaction. Each
party to the Transaction other than Company has complied with all laws
applicable to it that affect the Transaction.
13. Assumptions As To Natural Persons and Documents.
Each natural person acting on behalf of any party to the Transaction
has sufficient legal competency to carry out such person's role in the
Transaction. Each document submitted to Opinion Giver for review is accurate
and complete, each document purporting to be original is authentic each
document purporting to be a copy conforms to an authentic original, and each
signature on a document is genuine.
14. Assumption As To Transaction.
The Transaction complies with any test required by law of good faith
or fairness. Each party will act in accordance with the terms and conditions of
the Documents.
15. Assumption As To Accessibility of Laws.
Each Law for which Opinion Giver is deemed to be responsible is
published, accessible and generally available to lawyers practicing in the
Opining Jurisdiction.
16. Assumptions As To Company.
No discretionary act of Company or on its behalf will be taken after
the date of the Transaction if such act might result in a violation of law or
breach or default under any agreement, decree, writ, judgment or court order.
Company will obtain all permits and governmental approvals and take all other
actions which are both (i) relevant to performance of the Documents or
consummation of the Transaction, and (ii) required in the future under
applicable law. Company holds requisite title and rights to its Assets.
17. Assumptions As To Other Agreement.
Any Other Agreement will be enforced as written.
6
<PAGE> 10
18. Assumption As To Understanding.
There is no understanding or agreement not embodied in a Document
among parties to the Transaction that would modify any term of a Document or
any right or obligation of a party.
19. Assumption As To Absence of Mistake or Fraud.
With respect to the Transaction and the Documents, there has been no
mutual mistake of fact and there exists no fraud or duress.
20. Assumption As To Invalidity.
No issue of unconstitutionality or invalidity of a relevant Law exists
unless a reported case has so held.
Remedies Opinion Standards
21. Meaning of Remedies Opinion.
A. General Meaning. The Remedies Opinion, with respect to any
referenced Document, and subject to the limitations contained in these
Interpretive Standards and in the Opinion Letter, means that:
(i) a contract has been formed under the law of contracts
of the jurisdiction applicable under Interpretive Standard 22; and
(ii) under laws normally applicable to contracts like the
Document, to parties like the Company and to transactions like the
Transaction, each obligation imposed on Company by the Document, each
agreement made by Company in the Document, and each right, benefit and
remedy conferred by Company in the Document, will be given effect as
stated in the Document.
B. Existence of Contract. The professional judgment reflected in
subparagraph A(i) above requires the Opinion Giver to conclude that:
(i) All legal requirements under contract law for the
formation of a contract of the type involved in the referenced
Document effective against Company (other than requirements that would
be covered by a Corporate Status Opinion, a Corporate Powers Opinion
and a Corporate Acts Opinion discussed at Interpretive Standards 24, 25
and 26) are met, such as necessary formalities (including compliance
with any applicable statute of frauds), consideration (where
necessary), definiteness, and the inclusion of essential terms.
7
<PAGE> 11
(ii) The Document does not violate a law as to formation
of contracts that would prevent a court presented with the Document
from enforcing it.
(iii) Company does not presently have available any
contractual defense to the Document, such as the statute of
limitations.
22. Choice of Law in Remedies Opinion.
If a Document covered by the Remedies Opinion contains no governing
law provision, or contains a governing law provision which names the Opining
Jurisdiction, the Remedies Opinion means that if Company is brought before a
proper court of the Opining Jurisdiction to enforce rights under the Document,
and if such court applies the substantive law of the Opining Jurisdiction, the
result will be as stated in the Opinion and these Interpretive Standards.
If the Document contains a governing law provision which names a
jurisdiction other than the Opining Jurisdiction, the Remedies Opinion does not
opine whether any court of any jurisdiction will give effect to the governing
law provision in the Agreement, but assumes that if Company is brought before a
proper court of the Opining Jurisdiction to enforce rights under the Document,
such court will apply the substantive law of the Opining Jurisdiction,
notwithstanding the governing law provision in the Document, and based upon
such assumption, the result will be as stated in the Opinion and these
Interpretive Standards.
The Remedies Opinion does not extend to the content or effect of any
law other than the law of the Opining Jurisdiction and federal law.
23. Exceptions to the Remedies Opinion.
Any Remedies Opinion contained in an Opinion Letter which incorporates
these Interpretive Standards by reference will be deemed not to address the
matters excluded in Interpretive Standard 2 and subject to the following
exceptions:
(i) The effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights and remedies of
creditors. This includes the effect of the Federal Bankruptcy Code in
its entirely, including manner of contract rejection, fraudulent
conveyance and obligation, turn-over, preference, equitable
subordination, automatic stay, conversion of a non-recourse obligation
into a recourse obligation, and substantive consolidation. This also
includes state laws regarding fraudulent transfers, obligations, and
conveyances, including O.C.G.A. Section 18-2-20, et. seq., and state
receivership laws.
(ii) The effect of general principles of equity, whether
applied by a court of law or equity. This includes the following
concepts: (a) principles governing the availability of specific
performances, injunctive relief or other traditional equitable
remedies; (b) principles affording traditional equitable defenses
(e.g., waiver, laches and estoppel); (c) good faith and
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<PAGE> 12
fair dealing; (d) reasonableness; (e) materiality of the breach; (f)
impracticability or impossibility of performance; (g) the effect of
obstruction, failure or perform or otherwise to act in accordance with
an agreement by any person other than Company; (h) the effect of
Section 1-102(3) of the Uniform Commercial Code; and (i)
unconscionability.
(iii) The effect and possible unenforceability of
contractual provisions providing for choice of governing law.
(iv) The possible unenforceability of provisions
purporting to waive certain rights of guarantors.
(v) The possible unenforceability of provisions requiring
indemnification for, or providing exculpation, release or exemption
from liability for, action or inaction, to the extent such action or
inaction involves negligence or willful misconduct or to the extent
otherwise contrary to public policy.
(vi) The possible unenforceability of provisions
purporting to require arbitration of disputes.
(vii) The possible unenforceability of provisions
prohibiting competition, the solicitation or acceptance of customers,
of business relationships or of employees, the use of disclosure of
information, or other activities in restraint of trade.
(viii) The possible unenforceability of provisions imposing
increased interest rates or late payment charges upon delinquency in
payment or default or providing for liquidated damages, or for
premiums on prepayment, acceleration, redemption, cancellation, or
termination, to the extent any such provisions are deemed to be
penalties or forfeitures.
(ix) The possible unenforceability of waivers or advance
consents that have the effect of waiving statutes of limitation,
marshaling of assets or similar requirements, or as to the
jurisdiction of courts, the venue of actions, the right to jury trial
or, in certain cases, notice.
(x) The possible unenforceability of provisions that
waivers or consents by a party may not be given effect unless in
writing or in compliance with particular requirements or that a
person's course of dealing, course of performance, or the like or
failure or delay in taking actions may not constitute a waiver of
related rights or provisions or that one or more waivers may not under
certain circumstances constitute a waiver of other matters of the same
kind.
(xi) The effect of course of dealing, course of
performance, or the like, that would modify the terms of an agreement
or the respective rights or obligations of the parties under an
agreement.
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<PAGE> 13
(xii) The possible unenforceability of provisions that
enumerated remedies are not exclusive or that a party has the
right to pursue multiple remedies without regard to other remedies
elected or that all remedies are cumulative.
(xiii) The effect of O.C.G.A. Section 13-1-11 on provisions
relating to attorneys fees.
(xiv) The possible unenforceability of provisions that
determinations by a party or party's designee are conclusive.
(xv) The possible unenforceability of provisions
permitting modifications of an agreement only in writing.
(xvi) The possible unenforceability of provisions that the
provisions of an agreement are severable.
(xvii) The effect of laws requiring mitigation of damages.
(xviii) The possible unenforceability of provisions
permitting the exercise, under certain circumstances, of rights
without notice or without providing opportunity to cure failures to
perform.
(xix) The effect of agreements as to rights of set off
otherwise than in accordance with the applicable law.
Interpretations
24. Corporate Status Opinion.
An Opinion to the effect that Company was duly organized as a
corporation and is existing in good standing under the laws of the State of
Georgia (Corporate Status Opinion) is subject to the following understandings:
(1) "duly organized" means that Company (i) properly
complied with the Georgia statutory requirements for incorporation,
and (ii) property complied with the Georgia statutory requirements for
organization;
(2) "is existing" means that Company is a corporation
which has not ceased to exist under the GBCC;
(3) The Opinion refers to the status of Company only for
purposes of and under the GBCC; and
10
<PAGE> 14
(4) "good standing" has no official meaning under the
GBCC, and for purposes of any Opinion with respect to a corporation
subject to the GBCC means;
(i) Company has filed no notice of intent to
dissolve under Section 1403 of the GBCC;
(ii) the Secretary of State has signed no
certificate of dissolution with respect to Company;
(iii) the Superior Court of the county of Company's
registered office has entered no decree ordering Company
dissolved; and
(iv) Company has satisfied its tax and annual
registration requirements under Section 1420 of the GBCC.
An Opinion limited to the conclusion that the Company "is a
corporation" means that third parties may not challenge Company's corporate
existence, the State of Georgia recognizes such existence, and the state may
challenge Company's incorporation only under the circumstances described in
Section 203(b) of the GBCC.
25. Corporate Powers Opinion.
An Opinion to the effect that Company has the corporate power to
execute and deliver a Document, to perform its obligations under a Document, to
own and use its Assets and to conduct its business (Corporate Powers Opinion)
is subject to the following understandings:
(1) the Opinion refers only to the GBCC and Company's
articles of incorporation as sources of corporate power;
(2) "power" refers only to whether the acts referenced in
the Opinion are ultra vires;
(3) the Opinion is built upon an assumption that the
Corporate Status Opinion could also be given;
(4) "own and use" refers to every right Company has in
the Assets;
(5) the Opinion refers to Assets owned and used and
business conducted on the date of the Opinion, and not those
contemplated for future ownership, use or conduct except to the extent
the acquisition of the Assets or conduct of the business is concurrent
with, and recognized by Opinion Giver as constituting part of, the
consummation of the Transaction; and
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<PAGE> 15
(6) the Opinion does not affirm that Company is engaged
in no unlawful business and in no business which Georgia law would not
permit to be conducted by a corporation incorporated under the GBCC.
26. Corporate Acts Opinion.
An Opinion to the effect that Company has duly authorized the
execution and delivery of, and performance by Company under, the Documents and
has duly executed and delivered the Documents (Corporate Acts Opinion) is
subject to the following understandings:
(1) the Opinion affirms compliance with all corporate
action necessary under the GBCC, Company's articles of incorporation
and bylaws and, if applicable, Company's duly adopted policies and
practices for delegation of authority in order to authorize the
execution and delivery of, and performance under, the Documents;
(2) the Opinion affirms that the execution and delivery
of the Documents was, and Company's performance of its obligations
under the Documents in accordance with the Documents as written will
be, in accordance with the authorization;
(3) the Opinion is built upon an assumption that the
Corporate Status Opinion and the Corporate Powers Opinion could also
be given;
(4) the Opinion addresses no law other than the GBCC and
applicable law of agency.
27. No Violation Opinion.
An Opinion to the effect that Company's execution and delivery of the
Documents do not, and if Company were now to perform its obligations under the
Documents such performance would not, result in (i) a violation of Company's
articles of incorporation, bylaws or any law to which Company or its Assets are
subject, or (ii) a breach of or default under described agreements, or (iii) a
creation or imposition of contractual liens or security interests arising out
of described agreements, or (iv) a violation of any known judicial or
administrative decree, writ, judgment or order to which Company or its Assets
are subject (No Violation Opinion) is subject to the following understandings:
(1) a "violation" or "breach of default" means any act or
omission that, by itself or upon notice or the passage of time or
both, would constitute a violation, breach or default giving rise to
a remedy under the document or law in question;
(2) the Opinion addresses only the relevant facts and law
as they exist on the date of the Opinion Letter;
12
<PAGE> 16
(3) "agreements" refers to agreements, indentures,
documents and other instruments in writing, identified in the Opinion
Letter;
(4) references to any law or to "decree, writ, judgment
or order" or the like include only those (i) which either prohibit
performance by Company under the Documents or subject the Company to a
fine, penalty or other similar sanction, and (ii) which a lawyer,
using customary professional diligence, would reasonably recognize as
applicable to the Company and the Transaction;
(5) the Opinion addresses only whether the specific terms
of the relevant Document violate the law or cause a breach of or
default under the specific terms of an obligation created by a
described Other Agreement, taking into account information provided in
accordance with Interpretive Standard 4 and other facts known to
Opinion Giver;
(6) the Opinion does not address acts permitted or
contemplated but not required, or inferred but not set forth, by the
relevant Document, except to the extent such acts are concurrent with,
and recognized by Opinion Giver as constituting part of, the
consummation of the Transaction;
(7) to the extent the interpretation of words in
described agreements requires resort to law, the law is that of the
Opining Jurisdiction; and
(8) the Opinion does not address liens or security
interests created by or in favor of Opinion Recipient, created under a
Document or arising by operation of law.
28. No Consent Opinion.
An Opinion to the effect that no consent, approval, authorization or
other action by, or filing with, any governmental authority is required for
Company's execution and delivery of the Documents and consummation of the
Transaction (No Consent Opinion) is subject to the understandings set forth in
Interpretive Standards 2 and 27(2) and (4). "Required" means that there is no
governmental consent, approval, authorization or filing, the absence of which
would either prohibit performance by Company of its obligations under the
Documents or subject Company to a fine, penalty or other similar sanction.
29. Capitalization Opinion.
An Opinion to the effect that described shares have been duly
authorized and are, or upon issuance will be, validly issued, fully paid and
nonaccessible (Capitalization Opinion) is subject to the following
understandings:
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<PAGE> 17
(1) the Opinion affirms compliance with all corporate
action necessary to create and issue the shares under the Georgia
corporate law in effect at the time of such creation and issuance
("Corporate Code") and Company's articles of incorporation and bylaws;
(2) "duly authorized" means Company had the corporate
power to create the shares, the shares so created have the rights and
attributes required by the Corporate Code, and the rights and
attributes of the shares so created were permitted by the Corporate
Code and are permitted by the GBCC and Company's articles of
incorporation and bylaws;
(3) "validly issued" means that at the time of issuance
the Company had sufficient authorized and unissued shares to permit
the shares to be issued, Company took the steps necessary to accord
shareholder status to the persons to whom the shares were issued and
Company has taken no step to deprive the shares of the "validly
issued" status;
(4) "fully paid and nonaccessible" means that the
consideration received upon issuance of the shares (i) was legally
sufficient, (ii) satisfied the requirements of the Corporate Code,
Company's articles of incorporation and bylaws, and relevant corporate
resolutions, (iii) was approved (e.g., as to value of property or
services) by the directors or shareholders, as required, and (iv) was
in fact received, subject to paragraph (1) above; and
(5) the Opinion is based upon the assumption that the
Corporate Status Opinion could also be given.
30. Share Transfer Opinion.
The only laws addressed in any Opinion as to the rights of a seller in
shares of Company acquired by any purchaser are the GBCC and Article 8 of the
UCC, and no Opinion is given regarding liens (other than UCC security
interests) that may be perfected without filing or possession of the share
certificate. The Opinion is based upon the assumption that the Capitalization
Opinion could also be given.
31. Personal Property Transfer Opinion.
An Opinion as to Company's transfer of Personal Property expresses no
opinion as to Company's title. See Interpretive Standard 16.
32. Foreign Qualification Confirmation.
A confirmation to the effect that Company is qualified to transact
business as a foreign corporation in any one or more named jurisdictions is not
a legal opinion, but a statement which may be based solely upon one or more
certificates referenced in the Opinion Letter and limited in meaning to the
words of each certificate. No implication arises from such confirmation that
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<PAGE> 18
certificates have been acquired from all jurisdictions in which Company is
required to be qualified, or that certificates obtained are from the
appropriate public officials in the jurisdictions referenced.
33. Litigation Confirmation.
A confirmation regarding litigation pending or threatened in writing
against Company or any Assets derives from Opinion Giver's knowledge as defined
at Interpretive Standard 6 and certificate reliance discussed at Interpretive
Standard 4, but not from any reviews of public or court records or files of
Opinion Giver or others.
Incorporation by Reference Accord
34. These Interpretive Standards may be incorporated by reference
in the Opinion Letter by a statement similar to the following:
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 incorporated in this Opinion
Letter by this reference.
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<PAGE> 1
EXHIBIT 10.3
PROVESA, INC. DATA PROCESSING AGREEMENT
<PAGE> 2
PROVESA, INC.
DATA PROCESSING AGREEMENT
This DATA PROCESSING AGREEMENT is made and entered into as of the 11 day of
December, 1996, by and between Gwinett Banking Company, located at 318 West
Pike Place, Suite 475, Lawrenceville, Georgia 30246 and its successors (herein
referred to as the "Participating Bank"), and Provesa, Inc., located at 3150
Holcombe Bridge Rd. Suite 200, Norcross, Georgia 30071 (herein referred to as
the "Computer Center").
In consideration of the mutual promises and covenants contained herein, the
parties hereto agree as follows:
1. DATA PROCESSING SERVICES. Computer Center agrees to render to
Participating Bank the data processing services described on
Exhibit "A" (the "Services") for the term of this Agreement, and
Participating Bank agrees to purchase the Services. This Agreement
describes the general nature of the Services and the terms under
which the Computer Center is to provide or make the Services
available to the Participating Bank. In the event of any conflict
between the language of this Agreement and any brochures, verbal
representations, or other materials describing the Services, the
language of this Agreement shall control.
2. CONVERSION OF PARTICIPATING BANK'S INFORMATION.
a) Within a reasonable time following execution of this
Agreement, Computer Center will undertake the
programming required to convert Participating Bank's
information files into a format compatible with the
Computer Center systems. Participating Bank agrees to
cooperate with Computer Center in this endeavor and to
provide all information and assistance required for
Computer Center to successfully convert Participating
Bank's information files to a form compatible with Computer
Center's systems and equipment so that Computer Center can
provide the Services. Among other things, Participating
Bank shall deliver conversion input information, in its
entirety, in a mutually acceptable medium, as and when the
parties agree.
b) Computer Center shall determine, in accordance with its
normal acceptance procedures, when Participating
Bank's information files have been successfully converted
and when the Services to be provided by Computer Center to
Participating Bank are operational and available for
Participating Bank's use. Participating Bank agrees to
review and check the information converted by Computer
Center within ten (10) days after notice to Participating
Bank of Computer Center's completion of conversion.
Computer Center reserves the right to postpone conversion
of Participating Bank's information files if Participating
Bank is late in delivering its conversion input information
or if any other circumstances arise that might jeopardize
the successful completion of Participating Bank's
information conversion or the processing of the
Participating Bank's following day's transactions for
any other customers of Computer Center.
c) In the event the conversion process is stopped, canceled, or
suspended by Participating Bank, Participating Bank
agrees to pay Computer Center all labor costs, expenses,
and charges incurred by Computer Center in preparing to
perform under this Agreement. Computer Center shall submit
to Participating Bank an itemized statement of all such
charges and Participating Bank agrees to pay said statement
prior to the return to Participating Bank of any conversion
input information or data provided to Computer Center and,
in any event, within thirty (30) days after receipt.
d) Computer Center shall provide to Participating Bank
training for a maximum of five (5) working days so that
Participating Bank may fully utilize the Services provided
by Computer Center at the time of conversion of
Participating Bank's information.
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<PAGE> 3
3. INPUT AND OUTPUT DATA. Participating Bank shall be
responsible for providing to Computer Center all input
data and other information necessary for Computer Center to
perform the Services and to prepare those reports described
on attached Exhibit "C" (the "Reports"). The input data
shall be transmitted by Participating Bank to Computer
Center in a format acceptable to Computer Center via an
approved telecommunication method and system.
Participating Bank is solely responsible for the accuracy
and delivery of all information to be provided to Computer
Center for processing. Computer Center agrees to provide
Participating Bank with Reports at such times as are
described on Exhibit "C," provided, however, that in any
event Computer Center shall have a reasonable amount of
time after receipt of the input data from Participating
Bank to process such data. All Reports shall be delivered
by Computer Center to Participating Bank by
telecommunications to a remote printer designated by
Participating Bank. The design and format of any Reports
or forms to be prepared by Computer Center must be approved
by Computer Center.
4. TERM. This Agreement shall begin on the date hereof and
shall remain in effect for a period of three (3) years
(the "Term") following the first full calendar month in
which any Services commonly known as processing services
are provided by Computer Center to Participating Bank, as
evidenced by the billing records of Computer Center. This
Agreement shall automatically renew for the same Term
unless written notice of termination is delivered by either
party to the other at least one hundred eighty (180) days
prior to the original expiration date or subsequent renewal
expiration dates of the Agreement.
5. ASSISTANCE FROM PARTICIPATING BANK. In addition to the
input data to be delivered by Participating Bank
pursuant to paragraph 3 above, Computer Center's
performance of the Services may, from time to time, require
data, documents, descriptions or acts to be furnished by,
or to be qualified or processed in part by, the
Participating Bank or its personnel. Computer Center
agrees to give prompt notice of such requirements to
Participating Bank, and Participating Bank agrees to
furnish such data, documents, descriptions or acts and to
make such personnel, records and facilities available
within such time or times after its receipt of such notice
and in such manner as shall be reasonably necessary to
enable the Computer Center to perform the Services.
6. COMMUNICATIONS. Participating Bank shall bear all risk of
loss or damage to items, records, other input data, or
Reports and other output data during communication or
delivery of such data between the Participating Bank's
office and the Computer Center. Participating Bank shall
be responsible for and shall pay all charges related to
communications between Participating Bank and Computer
Center.
7. EQUIPMENT.
a) Participating Bank agrees that it is responsible
for all communications between Participating
Bank and Computer Center. When communicating with,
or transferring data to, or receiving date from,
Computer Center, Participating Bank shall, at its
own cost and expense, use and maintain only such
terminals, modems and other hardware, firmware and
software (hereinafter collectively referred to as
the "Equipment") as may be compatible with the
systems and communications networks of Computer
Center. The Participating Bank's Equipment must be
completely compatible with the systems and
communications networks of Computer Center and, if
requested by Computer Center, Participating Bank
shall be responsible for providing sufficient
information about the Equipment to Computer Center
and for performing adequate tests to demonstrate
that the Equipment is in good working order and
completely compatible with the systems and
communications networks of Computer Center. In the
event Computer Center believes it is in its and its
clients' best interest to upgrade Computer Center's
systems to more efficient and capable equipment or
to keep Computer Center competitive, Participating
Bank agrees to acquire any Equipment necessary to
keep Participating Bank and Computer Center fully
compatible.
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<PAGE> 4
b) Unless otherwise agreed by the parties, Computer
Center shall schedule and arrange for the
communications services, including communications
equipment installation, with the communication
provider. Participating Bank shall be responsible
for paying all charges imposed by the provider of
the communications equipment, such as the telephone
company, for the Equipment installation, as well as
for any charges for additional connections or
changes to locations or future services. Computer
Center shall not be responsible for the reliability
or continued availability of the telephone lines,
communications facilities, or electrical power used
by Participating Bank in utilizing the Services
provided by Computer Center hereunder. Computer
Center will cooperate with communications vendors as
appropriate so that communications between
Participating Bank and Computer Center facilities
function properly.
8. LIMITATION OF LIABILITY
a) Computer Center shall not be responsible for any
failure in providing the Services, any delays
in processing, or any failure or delay in the
delivery of any Reports that may be caused, in whole
or in part, by strikes, lockouts, riots, epidemics,
governmental actions or regulations, natural
disaster, fire, inclement weather, acts of God,
computer breakdown or failure, communications
failure, interruptions in telephone or electrical
service, courier's failure to timely deliver, or any
other causes beyond its reasonable control. In the
event such delays exist without interruption for a
period of more than thirty (30) days, Participating
Bank or Computer Center may elect to terminate this
Agreement without breach. Participating Bank is
under no duty to make any payments to Computer
Center for any period exceeding five (5) consecutive
business days in which the Services are not
performed by Computer Center as a result of a
natural disaster or other phenomenon mentioned
above.
b) Computer Center's obligation to Participating
Bank hereunder in performing the Services is to
exercise the same degree of care and diligence used
in processing information and compiling reports for
its own use. Computer Center's sole responsibility
to Participating Bank or any third party for any
claims, notwithstanding the form of such claims
(e.g., contract, negligence or otherwise), arising
out of errors or omissions in the Services or
Reports provided or to be provided hereunder and
caused by Computer Center (provided that
Participating Bank shall have promptly notified
Computer Center of any such errors or omissions),
shall be to furnish at Computer Center's costs the
correct Services or Report and/or to correct the
applicable Participating Bank files.
c) Computer Center will make every reasonable effort
to be available to provide Services during the
hours referred to in paragraph 20 below.
Accordingly, Computer Center's liability to
Participating Bank or any third party for claims,
notwithstanding the form of such claims (e.g.,
contract, negligence or otherwise) arising out of the
unavailability or inaccessibility of Computer
Center's system, or the interruption in or delay of
Services provided or to be provided by Computer
Center hereunder, shall be to use reasonable efforts
to resume the Services as promptly as practicable,
provided, however, that Computer Center shall not be
responsible for communication failures caused, in
whole or in part, by the incompatibility or failure
of Participating Bank's Equipment or by third party
telecommunication or electric lines or equipment.
d) Computer Center shall not be liable to
Participating Bank for errors resulting from
defects in, or malfunctions of, the mechanical or
electronic equipment used by Participating Bank or
Computer Center in performing the duties and
obligations contemplated in and covered by this
Agreement.
e) Computer Center shall not be liable for damages
arising under this Agreement, regardless of the
claim, unless such damages result from gross
negligence or willful misconduct on the part of
Computer Center's officers or employees, in which
case Computer Center's liability will be limited to
actual damages directly resulting from such gross
negligence or willful misconduct. In any event, any
damages for which Computer Center may be liable
shall be limited to the service charges received by
Computer Center from Participating Bank for Services
during the twelve (12) months prior to the alleged
damage. If Participating Bank desires to obtain
insurance protection against any such losses, or to
cover fidelity losses through an endorsement to its
own blanket bond coverage, Computer Center agrees to
cooperate with Participating Bank in obtaining such
insurance. In the event Participating Bank recovers
insurance proceeds pursuant to such insurance, such
proceeds shall constitute a setoff against actual
damages claimed by Participating Bank that directly
result from gross negligence or willful misconduct
of Computer Center. It is understood that all costs
and expenses of such insurance shall be paid by
Participating Bank. Computer Center agrees to
maintain, with coverage amounts determined by
Computer Center, fidelity bond
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<PAGE> 5
coverage with respect to any dishonest acts
which may be committed by Computer Center personnel,
and insurance in policy amounts and types determined
by Computer Center, with respect to hazards,
including losses by Computer Center from fire,
disaster, and other events which may interrupt
normal service.
f) IN NO EVENT WILL COMPUTER CENTER BE RESPONSIBLE
FOR SPECIAL, RELIANCE, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES ARISING OUT OF ANY ACT OR
OMISSION BY COMPUTER CENTER IN CONNECTION WITH THIS
AGREEMENT, EVEN IF COMPUTER CENTER HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER SUCH
DAMAGES ARISE IN AN ACTION AT LAW OR IN EQUITY, FOR
BREACH OF CONTRACT, BREACH OF WARRANTY, PRODUCT
LIABILITY, BREACH OF UCC PROVISIONS, NEGLIGENCE OR
INTENTIONAL TORT. FURTHERMORE, COMPUTER CENTER
SHALL NOT BE LIABLE FOR PARTICIPATING BANK'S LOST
PROFITS, LOSS OF BUSINESS OPPORTUNITIES, OR FOR
EXEMPLARY DAMAGES. THE PROVISIONS HEREOF ARE IN
LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, WHETHER
OF MERCHANTABILITY, FITNESS OR OTHERWISE.
9. COMPLIANCE WITH FEDERAL REGULATIONS. Computer Center
warrants that it maintains a formal agreement with a
suitable processing center to providebackup facilities
capable of processing Participating Bank's data and
satisfying all requirements of this Agreement. Further,
Computer Center shall comply with all federal rules and
regulations applicable to it relating to the conduct of its
business.
10. REVIEW OF REPORTS. It will be the responsibility of
Participating Bank to maintain audit controls and/or
procedures which may be required by supervisory authorities
under regulations to which the Participating Bank is
subject. Balancing of input totals to computer generated
output totals will be the responsibility of Participating
Bank, and Computer Center accepts no responsibility for the
correctness of these totals. Computer Center will exercise
reasonable care and diligence in maintaining controls over
the Services rendered Pursuant to this Agreement.
11. THIRD PARTY AUDIT. Computer Center shall provide to
Participating Bank a copy of the most recent third
party service audit of the records of Computer Center upon
request by Participating Bank and payment by Participating
Bank of a reasonable and customary charge. If requested,
Computer Center shall also provide to Participating Bank
annual audited financial information regarding Computer
Center at no charge.
12. FEES. In consideration of the Services provided by
Computer Center, Participating Bank shall pay to
Computer Center each month, in advance based upon the prior
month's activity, those fees described on attached Exhibit
"B." The fees set forth on Exhibit "B" are exclusive of any
applicable taxes or assessments, however designated, which
may be levied or assessed by any government or other taxing
authority having jurisdiction to levy such tax upon the
Services. Participating Bank agrees to pay Computer Center
the amount of such taxes or assessments, whenever requested
by Computer Center. The fees described on Exhibit "B" may
be changed from time to time by Computer Center upon thirty
(30) days prior notice to Participating Bank, provided,
however, that the maximum annual increase in any fee
described in Exhibit "B" shall not exceed six percent (6%).
In the event the Participating Bank acquires another
financial institution or branch of a financial institution,
the Computer Center reserves the right to review volume
growth (assets and account volume) and make necessary
adjustments in pricing as may more accurately reflect the
Computer Center's standard account pricing as described in
Exhibit "B".
13. OTHER FEES. In the event Participating Bank requests
that Computer Center procure forms that are to be
supplied by Participating Bank pursuant to Exhibit "C",
Participating Bank shall pay to Computer Center the cost of
such forms plus Computer Center's reasonable and customary
markup when billed. If overtime and/or special handling is
requested by Participating Bank or is required because of
delays not the fault of Computer Center, Participating Bank
agrees to pay Computer Center at the established rates then
in effect for overtime and/or special handling for
production operations and for any other out-of-pocket
expense related thereto. If it is necessary for Computer
Center to return the finished products to Participating
Bank by special carrier or special messenger, Computer
Center shall notify Participating Bank by telephone and
Participating Bank shall be charged with out-of-pocket
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<PAGE> 6
expenses incurred by Computer Center as a result of such
special handling, unless Participating Bank objects to such special
handling at the time it receives such notice. In the event Computer
Center agrees to develop any development costs plus a reasonable
markup. In addition, Participating Bank may be required to pay a
license fee as agreed by the parties for such special software.
14. Confidentiality.
a) Computer Center agrees to hold in confidence
all information relating to the assets,
liabilities or other business affairs of
Participating Bank, or any customers of
Participating Bank, which are received by Computer
Center pursuant to this Agreement or in the course
of rendering the Services. It is expressly agreed
and understood, however, that performance of the
Services will be subject to examination by
regulatory authorities, including, but not limited
to, (I) the Comptroller of Currency, (ii) the
Board of Governors of the Federal Reserve System,
(iii) the Board of Directors of the Federal
Deposit Insurance Corporation, and (iv) the State
Banking Department, and that as part of the
performance of Services hereunder, Computer Center
shall submit or furnish to the regulatory agencies
reports, information, assurances or other data as
may be required under applicable laws and
regulations to which either party is subject.
b) Participating Bank acknowledges and agrees
that all computer programs, codes, and
information regarding Computer Center's business
operations, pricing, the terms and conditions of
this Agreement, the Computer Center pricing manual
and any other contract documents, the Computer
Center systems, and related matters (hereinafter
collectively referred to as "Proprietary
Information"), are the exclusive and confidential
property of Computer Center, or the third parties
from whom Computer Center has secured the right to
use computer programs. Participating Bank
understands that the harm that could be caused to
Computer Center should the Proprietary Information
be disclosed to its competitors and others having
no need to know of the Proprietary Information.
Therefore, Participating Bank agrees to hold all
such Proprietary Information in strictest
confidence. Participating Bank will instruct its
employees who have access to or who use the
Proprietary Information to keep same confidential
by using no less than the same degree of care and
discretion that Participating Bank uses with
respect to its own confidential and proprietary
information. On termination of this Agreement
Participating Bank shall return all Proprietary
Information to Computer Center and shall cease to
use the same for any purpose whatsoever. This
paragraph shall not apply to any information
furnished by Computer Center which is already in
the public domain at the time of disclosure to
Participating Bank or to any information
independently developed by Participating Bank
outside this Agreement. This provision shall
survive termination of this Agreement, regardless
of cause, for a period of five (5) years from date
of termination.
15. Deconversion.
a) Upon termination of this Agreement, Computer
Center will dispose of all Participating Bank
files still in the Computer Center's system In
such manner deemed appropriate by Computer Center
unless Participating Bank, prior to the date of
termination, furnishes to Computer Center written
instructions for the disposal of Participating
Bank files, which instructions Computer Center
will, if reasonable and feasible, comply with at
Participating Bank's expense. Participating Bank's
master file data will be maintained by Computer
Center for a period of thirty (30) days subsequent
to termination, after which time it may, at the
option of Computer Center, be destroyed.
b) Deconversion information or data shall not be made
available to Participating Bank until
Participating Bank has first paid, in a form
acceptable to Computer Center, all sums due
Computer Center, including all monthly charges
that might be due if deconversion occurs prior to
normal expiration of this Agreement, all accrued
and unpaid Information processing and other
charges, and all deconversion charges.
Participating Bank understands that it will be
billed and agrees to pay such bills for any
additional services or reports provided by
Computer Center after deconversion at the request
of Participating Bank for audit verification or
other purposes, at Computer Center's normal rates
for such services or reports. Participating Bank
agrees that Computer Center shall have a lien on
Participating Bank's information and data until
all sums due are paid in full. Release of said
lien by surrender of possession by Computer Center
shall not affect any claim Computer Center might
have for payments due it from Participating Bank.
-5-
<PAGE> 7
16. Inspection. Computer Center agrees that all records
relating to Participating Bank at all times shall be
subject to inspection and review by Participating Bank or
its auditors, designees, accountants and appropriate
examiners from the applicable state and federal bank
regulatory agencies, upon reasonable notice to Computer
Center. Computer Center further agrees to prepare such
reports, grant computer usage and permit programming
examination as may be necessary to meet the audit
requirements of Participating Bank. Reasonable charges
shall be made to and be payable by Participating Bank for
all special programming and other computer usage in excess
of any programming or usage to which Participating Bank may
be entitled pursuant to Exhibit "B."
17. Title to Software. All right, title and interest in
and to any and all computer programs, and the source
codes therefor, used by Computer Center in the performance
of Services, including any special programs written
specifically for Participating Bank, shall be and remain
the property of Computer Center.
18. Priority. Computer Center shall advise Participating
Bank by letter of any system changes that would affect
procedures or Reports. Computer Center also agrees that
Participating Bank's data shall have priority for
processing over any data of entities, other than banks,
savings and loans, credit unions and other financial
institutions.
19. Binding Effect and Assignment. This Agreement and all
the provisions hereof shall be binding upon, and inure
to the benefit of, the parties hereto and their respective
successors and permitted assigns. Neither this Agreement
nor any of the rights or obligations of either party
hereunder shall be assigned or delegated by such party to
any other person without Prior written consent of the other
party hereto, except that Computer Center (or any successor
to Computer Center) may, at any time during the Term
hereof, assign its rights and delegate its obligations
hereunder to any subsidiary or division of Computer Center
or any other entity which controls, is controlled by, or is
under common control with Computer Center.
20. Availability of Services. Computer Center's
system will be available for communication between
Participating Bank and Computer Center from 8 A.M. to 7
P.M.(5 days per week). Participating Bank's daily cut off
time for items capture, file maintenance and data
transmissions will be no later than 6:00 PM each day.
21. Termination by Participating Bank. The parties
further agree and acknowledge that there may be certain
circumstances in which Participating Bank desires to
discontinue Computer Center's provision of one or more of
the Services prior to the expiration date of this
Agreement. In such event, Computer Center will suffer
substantial loss or injury that is difficult or impossible
to accurately estimate. Accordingly, in an effort to
liquidate in advance the sum that should represent the loss
or damages which would be actually sustained by Computer
Center as a result of such early termination by
Participating Bank of any Services provided hereunder, the
parties have agreed on the amount specified below as a
reasonable pre-estimate of Computer Center's probable loss.
If Participating Bank desires to discontinue any Services
hereunder, Participating Bank shall give Computer Center
one hundred eighty (180) days advance. written notice and
shall pay Computer Center an amount equal to 75 % of the
estimated remaining service fees with respect to the
Services being discontinued or the monthly "minimum
charge," whichever is greater, for the remainder of the
Term beginning on the effective date of termination. The
"estimated remaining service fees" for the Services being
discontinued shall be calculated by multiplying the average
monthly service fees billed for the Services being
discontinued for the six (6) months immediately preceding
notice of early termination by the number of months
remaining under the Term of this Agreement. The "minimum
charge" will be determined by Exhibit "B" of this
Agreement. This amount is due per the provisions of
paragraph 15(b).
-6-
<PAGE> 8
22. TERMINATION BY COMPUTER CENTER. In the event that
Computer Center desires to cancel this Agreement or
discontinue Services hereunder, it shall give Participating
Bank one hundred eighty (180) days advance written notice
and this Agreement or any Service hereunder shall be
cancelled in full.
23. ENTIRE AGREEMENT. This instrument, along with the
appendices and schedules incorporated herein by
reference, constitutes the entire agreement and
understanding between the parties with respect to the
subject matter hereof. Representations and agreement not
expressly contained or incorporated by reference herein
shall not be binding upon either party as warranties or
otherwise. Modifications of this Agreement must be in
writing and signed by duly authorized representative of the
parties.
24. SEVERABILITY. In the event that one or more of the
provisions of this Agreement is for any reason held to
be invalid or unenforceable, such holdings shall not affect
the remaining provisions of this Agreement.
25. APPLICABLE LAW. This Agreement is made and entered
into in Norcross, Georgia, and shall be governed by the
laws of the State of Georgia.
COMPUTER CENTER: PARTICIPATING BANK:
PROVESA, INC. GWINNETT BANKING COMPANY
BY: /s/ Stacey Webb BY: /s/ Marcia Watkins
-------------------------------- -----------------------------
(Signature) (Signature)
NAME: Stacey Webb NAME: Marcia Watkins
------------------------------ ---------------------------
(Please Print or Type) (Please Print or Type)
TITLE: VP TITLE: COO/Sr. Vice President
----------------------------- --------------------------
DATE: 12/11/96 DATE: 12-30-96
------------------------------ ---------------------------
-7-
<PAGE> 9
ADDITIONAL TERMS AND CONDITIONS ADDENDUM
TO
DATA PROCESSING AGREEMENT
THIS ADDITIONAL TERMS AND CONDITIONS ADDENDUM (hereinafter referred to as
"Addendum") is made this 11th day of December 1996, by and between GWINNETT
BANKING COMPANY (hereinafter referred to as "Participating Bank"), whose
business address is 318 West Pike Place, Suite 475 and PROVESA, INC.
(hereinafter referred to as "Computer Center"), whose business address is 3150
Holcombe Bridge Road, Suite 200, Norcross, Georgia 30093.
WHEREAS, Computer Center and Participating Bank have entered into a Data
Processing Agreement dated December 11, 1996, (hereinafter referred to as
"Agreement"); and
WHEREAS, the parties to the Agreement and this Addendum wish to provide for
terms and conditions different from those stated in the Agreement.
The parties hereto agree as follows:
In the event GWINNETT BANKING COMPANY does not open for business as scheduled,
this contract shall be null and void.
Each and all of the terms, provisions and conditions of the Agreement, to the
extent they are not directly in conflict with this additional Terms and
Conditions Addendum, are incorporated herein by reference and made a part
hereof, and remain In full force and effect.
PROVESA, INC. GWINNETT BANKING COMPANY
By: /s/ Stacey Webb BY: /s/ Marcia Watkins
------------------------------- --------------------------------
(Signature) (Signature)
Name: Stacey Webb Name: Marcia Watkins
----------------------------- ------------------------------
Title: VP Title: COO/Sr. Vice President
---------------------------- -----------------------------
Date: 12/11/96 Date: 12/30/96
----------------------------- ------------------------------
-1-
<PAGE> 10
EXHIBIT A
SERVICES PROVIDED:
Processes the following applications:
Central Information File
Demand Deposit Accounts
NOW Accounts
Money Market Accounts
Line of Credit
Savings Accounts
Certificates for Deposits
IRA Accounts
Loans
Add-On's
Add-On GILAs
Simple Interest
General Ledger
Proof and Transit
File Folder
Account Reconciliation
Automated Teller Machine
Card Management
PROVESA, INC., offers several other personal computer based financial
institution packages that can be purchased for additional charges. Please
contact your sales representative for additional pricing.
They include:
VISION Optical Disk Storage
INFOVOICE Voice Response System
BRIDGE-IT Financial Report Writer
PROVESA, INC., markets various hardware for use in financial institutions.
Some of these include personal computers, terminals, printers, modems,
communication equipment, personal computer software, and other various
products. Please contact your sales representative for additional pricing.
-8-
<PAGE> 11
EXHIBIT B
APPLICATION PROCESSING
$.35 Per Account
(DDA, Savings, Loans, CDs, General Ledger, etc.)
$.175 Per Account
Central Information File (CIF)
OR
$2,000 Per Month Minimum - Year 1
$2,500 Per Month Minimum - Year 2
$3,000 Per Month Minimum - Year 3
AUTOMATED TELLER MACHINE PROCESSING
$400 Per Month Connect Fee
$300 Per Month for each ATM includes monitoring
DEBIT CARD MANAGEMENT PROCESSING
$150 Minimum Per Month OR $.12 Per Card Per Month
$ 50 Minimum Per Month or $.10 Per Transaction Per Month
MISCELLANEOUS DATA PROCESSING CHARGES
<TABLE>
<S> <C> <C>
Account Reconciliation $ 25.00 Minimum
Reconciliation Charge $ .005 Per Item
Audit Confirmation Generation $ 150.00 Minimum
Confirmation Charge $ .40 Each
Magnetic Tape Reporting $ 25.00 Each
(e.g., Credit Bureau, IRS, Insurance, Account Reconciliation)
Carriage Tape $ 15.00 Each
Amortization Schedules $ 5.00 Each
Preprinted Customer Labels $ .05 Each
OTHER CHARGES
"Caption" Installation and Training* $7500.00
Programming Services * $ 75.00 Per Hour
(Minimum two hours)
Customer Support Training*
Participating Bank's Location $ 400.00 Per Day Per CSR
Provesa, Inc. Facility $ 100.00 Per Day Per Person
Data Communications or Hardware Services*
Regular Service $ 50.00 Per Hour
Emergency Service $ 125.00 Per Hour
Data Processing Operation Services
Overtime/Special Handling $ 75.00 Per Hour
On-Line Device Support $ 10.00 Per Device
</TABLE>
* Plus all out-of-pocket expenses (e.g., meals, lodging, travel). Travel will
be billed at current IRS allowable rate from Provesa facility to customer
site and return.
-9-
<PAGE> 12
EXHIBIT C
REPORTS
-------
<TABLE>
<CAPTION>
Description Frequency
DDA
- ---
<S> <C>
Daily Transaction Recap Summary Daily
Stop Pay/Hold File Maintenance Daily
Stop Pay/Hold Journal Daily
Stop Pay Suspects Report Daily
Transfer Journal Daily
Transfer Register Daily
Teller Cash Summary Daily
Teller Transaction Analysis Daily
Trial Balance and Transaction Journal Daily
NOW Trial Balance Daily
Money Market Trial Balance Daily
Daily Overdraft Report Daily
NSF Report Daily
Unposted Transactions Daily
Significant Balance Changes Daily
Branch Totals by Type Daily
DDA Totals by Type Daily
Drawing on Today's Deposits Daily
New Account Report Daily
Closed Account Report Daily
Purged Accounts Report Daily
Money Market Excessive Withdrawals Daily
Federal Withholding Report Daily
NSF Notices Daily
Overdraft Notices As App.
New Account and File Maintenance Cards Daily
Account Statements Monthly
Monthly New Accounts Report Monthly
Monthly Closed Accounts Report Monthly
Commercial Account Analysis Monthly
SAVINGS
- --------
Cumulative Trial Balance and Transaction Journal Daily
Full Trial Balance and Transaction Journal Weekly
Unposted Transaction Daily
Significant Balance Changes Daily
New Accounts Report Daily
Closed Accounts Report Daily
Purged Accounts Report Daily
Federal Withholding Report Daily
New Account and File Maintenance Cards Daily
Monthly New Accounts Report Monthly
Monthly Closed Accounts Report Monthly
Account Statement Quarterly
</TABLE>
-10-
<PAGE> 13
<TABLE>
<CAPTION>
CD
- --
<S> <C>
Trail Balance Weekly
CD Activity Summary Daily
Reserve Requirement Report Daily
CD Maturity Schedule Daily
New CD Report Daily
Closed CD Report Daily
Matured CD Report Daily
Purged CD Report Daily
Matured CDs Pending Report Daily
Renewed CDs Report Daily
Transaction Posting Journal Daily
CD Rate Change Report Daily
Interest Payment Report Daily
New CD/File Maintenance Card Daily
Customer Notice of Deposit Daily
Final Maturity Notice Daily
Capitalization Notice Daily
Automatic Renewal Notice Daily
CD Checks Daily
CD Maturity Schedule Monthly
IRA Over Contribution Report Monthly
Customer Statements/Combined Annually
On-Line Call Reports As App.
CONSOLIDATED LOANS
- ------------------
New Loan Report Daily
Paid Cut Loan Report Daily
On-Line Loan G/L Entries Daily
Automatic G/L Entry Report Daily
On-Line Control Totals Daily
Loan Trial Balance Weekly
Branch Totals Report Daily
Installment Balance Control Daily
Commercial Balance Control Daily
Loan Activity Report(s) Daily
Delinquent Loan Report Daily
New/Paid Out Loan Card Daily
Past Due Notices As App.
Billing Notices Daily
Collection Cards As App.
Automatic Debits and Credits Daily
Automatic Debits and Credits Report Daily
Delinquent Loan Cards Daily
Commitment Loan Trial Monthly
Delinquent Notices As App.
Rate Change Notices As App.
Rate Change Report Daily
Loan History Cards As Requested
Purged Loan Report Annually
Renewed Loan Report Daily
Platform Pending Loan Report Daily
Dealer Loan Report As Requested
Loan Coupon Report Weekly
On-Line Call Reports As App.
Maturity Forecast Report Weekly
</TABLE>
-11-
<PAGE> 14
CONSOLIDATED LOANS - Continued
<TABLE>
<S> <C>
Interest Rate Analysis Monthly
Loan Officer Analysis Monthly
Loan Insurance Report Monthly
Loan FDIC Report Monthly
FASB-91 Fee Costs Reports Daily
Unposted Loan Report Daily
Loan Exception Report Daily
Loan Tickler Report Daily
GENERAL LEDGER
Statement of Condition (Current Period) Daily
Statement of Condition (Prior Period) Daily
Income and Expense Journal Daily
Account Statements Monthly
CIF AND OTHER REPORTS
On-Line Audit Report Daily
Employee Terminal Usage Report Daily
Consolidated 1099s Annually
Consolidated 1098s and Reports Annually
Consolidated IRS Mag Tape Annually
Purged CIF Accounts Annually
On-Line Teller Report
Line of Credit Trial Balance Daily
Line of Credit Statements Daily
Check Reconcilement Report
Error Check Reconcilement Report
Xmas Club Checks Annually
Xmas Club Report Annually
</TABLE>
-12-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF MAULDIN & JENKINS, LLC
<PAGE> 2
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated January 10, 1997, accompanying the financial
statements of GBC Bancorp, Inc., as of and for the period ending December 31,
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
March 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-17-1996
<PERIOD-END> DEC-31-1996
<CASH> 800
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 800
<PP&E> 31,785
<DEPRECIATION> 0
<TOTAL-ASSETS> 149,242
<CURRENT-LIABILITIES> 386,980
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> (237,818)
<TOTAL-LIABILITY-AND-EQUITY> (237,738)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 231,605
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,933
<INCOME-PRETAX> (238,538)
<INCOME-TAX> 0
<INCOME-CONTINUING> (238,538)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (238,538)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
