<PAGE> 1
As Filed With the Securities and Exchange Commission November 10, 1997
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20509
S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CITIZENS EFFINGHAM BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
GEORGIA 6060 58-2299577
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification Number)
</TABLE>
802 South Laurel Street
P. O. Box 379
Springfield, Georgia 31329
(912) 754-0754
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
HARRY H. SHEAROUSE
802 South Laurel Street
P. O. Box 379
Springfield, Georgia 31329
(912) 754-0754
(Name, address and telephone number of agent for service)
---------------
With copy to:
J. WILEY ELLIS
Ellis, Painter, Ratterree & Bart LLP
2 E. Bryan Street, Suite 100
P. O. Box 9946
Savannah, Georgia 31412
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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====================================================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock 512,000 $10.00 5,120,000 $1,551.52
$1.00 par value
====================================================================================================================================
</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 specially 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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<PAGE> 2
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of
Regulation S-K
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<CAPTION>
Form S-1 Item No. & Heading Caption or Location in
- --------------------------- ----------------------
Prospectus
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<S> <C> <C>
1. Forepart of the Registration Cover Page of Registration
Statement and Outside Front Statement; Cross Reference
Cover Page of Prospectus Sheet; and Cover Page of
Prospectus
2. Inside Front and Outside Back Inside front cover and
Cover Pages of Prospectus outside back cover of
Prospectus
3. Summary Information, Risk Prospectus Summary;
Factors and Ratio of Earnings Risk Factors and Other
to Fixed Charges Investment Considerations
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Risk Factors and Other
Investment Considerations
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution The Offering
9. Description of the Securities to Description of Capital Stock
be Registered
10. Interest of Named Experts and Counsel Management -- Certain
Transactions and
Relationships; Legal Matters
11. Information with Respect to Prospectus Summary; The
the Registrant Company and the Bank; Use of
Proceeds; Dividends; Business of the Company
and the Bank; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Management; Shareholders;
Description of Capital Stock
12. Disclosure of Commission Description of Capital Stock
Position on Indemnification -- Indemnification of
for Securities Act Liabilities Officers and Directors
</TABLE>
<PAGE> 3
Subject to Completion, Dated , 1997
------------------- ------
512,000 Shares
Common Stock
($1.00 par value)
CITIZENS EFFINGHAM BANCSHARES, INC.
A Proposed Bank Holding Company for
CITIZENS BANK OF EFFINGHAM
A Proposed Bank
Citizens Effingham Bancshares, Inc., a Georgia corporation (the
"Company"), is offering 512,000 shares of its common stock, par value $1.00 per
share (the "Common Stock") at a purchase price of $10.00 per share to be issued
in connection with the organization of Citizens Bank of Effingham, a proposed
Georgia bank (the "Bank") and the issuance of the Bank's capital stock to the
Company.
THE PURCHASE OF THESE SECURITIES INVOLVES CERTAIN RISKS. SEE
"RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS".
The Company has been organized to hold, upon receipt of all regulatory
approvals, all of the capital stock of the Bank. On July 18, 1997, the Georgia
Department of Banking and Finance (the "Department") accepted for filing an
application from fourteen individuals (the "Organizers") to organize the Bank.
The Department granted preliminary approval of the application to organize the
Bank on October 17, 1997.
The Company filed an application with the Board of Governors of the
Federal Reserve System ("Federal Reserve Board") on October 1, 1997 and an
application with the Department for approval to become a bank holding company by
using approximately 98% of the net proceeds of this Offering to acquire all of
the capital stock of the Bank. See "Use of Proceeds."
The acquisition by the Company of the capital stock of the Bank is
subject to the above-described regulatory approvals. Until all of such approvals
have been received, all funds received by the Company from the Offering (net of
organization and pre-opening expenses and offering expenses in the case of the
Organizers' Account as described herein) will be held in escrow and invested in
certain specified investments. If by October 1, 1998, all of such regulatory
approvals have not been received, or if by April 1, 1998, all 512,000 shares of
the Common Stock have not been sold, all funds available from escrow (proceeds
from the Offering less any expenses associated with the Offering, plus any
investment profits thereon) will promptly be paid to shareholders or the
Subscribers, as the case may be, on a pro rata basis. See "Escrow of Proceeds"
and "The Offering."
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THE COMPANY WILL ISSUE THE SHARES OFFERED HEREBY BEFORE IT HAS OBTAINED
ALL FINAL REGULATORY APPROVALS NECESSARY FOR IT TO ACQUIRE THE CAPITAL STOCK OF
THE BANK. AFTER SHARES ARE ISSUED, THE PROCEEDS OF THIS OFFERING, EVEN WHILE IN
ESCROW, MAY BE SUBJECT TO THE CLAIMS OF CREDITORS, WHICH MIGHT REDUCE OR DELAY
THE PAYMENT OF ESCROWED FUNDS TO SHAREHOLDERS SHOULD SUCH BECOME NECESSARY. See
"Risk Factors - Failure to Obtain Regulatory Approval."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE GEORGIA DEPARTMENT OF BANKING AND
FINANCE OR THE FEDERAL RESERVE BOARD NOR HAS ANY OF THESE AGENCIES PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<CAPTION>
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Proceeds
Price to Underwriting to the
Offerees Discount Company (1)
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<S> <C> <C> <C>
Per Share.... $ 10.00 $ N/A $ 10.00
Total........ $5,120,000 $ N/A $5,120,000
=========================================================================================
</TABLE>
(1) Before deducting expenses of this Offering which are estimated to be
$29,500. Total net proceeds to the Company from the sale of all 512,000
shares of Common Stock are estimated at $5,090,500. See "Use of
Proceeds."
The executive officers of the Company will receive no commission or
other compensation in connection with any sale of Common Stock but will be
reimbursed for expenses, if any, that they incur in connection with such sales,
including, but not limited to, expenses for printing, postage, stock
certificates, and accounting and legal expenses. See "Management."
The effective date of this Prospectus is , 1997,
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THE SHARES OF COMMON STOCK OF THE COMPANY OFFERED HEREBY AND THE SHARES
OF THE CAPITAL STOCK OF THE BANK TO BE PURCHASED BY THE COMPANY WITH THE
PROCEEDS OF THIS OFFERING ARE NOT DEPOSITS INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION.
NO AGENT OR OFFICER OF THE COMPANY OR THE BANK OR ANY OTHER PERSON HAS
BEEN AUTHORIZED TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION AND
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE BANK.
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.
The Company will furnish its shareholders with annual reports
containing audited financial information.
Prospective investors should only rely on information presented in this
Prospectus in making an investment decision. To the extent that other available
information not presented in this Prospectus, including information contained in
public files maintained by the Georgia Department of Banking and Finance and the
Federal Reserve Board, is inconsistent with information presented in this
Prospectus, such other information is superseded by the information presented in
this Prospectus.
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PROSPECTUS SUMMARY
The following Summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
The Company and the Bank
On March 31, 1997, twelve Effingham County residents formed the
Citizens Effingham Partnership (the "Partnership,") a partnership formed for the
purposes of forming a bank under the laws of the State of Georgia and a bank
holding company to purchase all of the shares of the bank and other acts
necessary to effectuate such purposes.
Citizens Effingham Bancshares, Inc. (the "Company") was incorporated as
a Georgia corporation on October 29, 1997 to serve as a holding company for
Citizens Bank of Effingham (the "Bank"), a bank being organized under the laws
of the State of Georgia. On July 18, 1997, the Department accepted for filing an
Application for Approval of Charter and Articles of Incorporation (the
"Application") under the name "Citizens Bank of Effingham," prepared by the
Organizers. Preliminary approval to organize the Bank was granted on October 17,
1997. The issuance of a bank charter will depend upon the final approval of the
Department and the compliance with the conditions contained in the Department's
preliminary approval, including capital requirements. The Company has filed an
application with the Federal Reserve Board and the Department for approval to
become a bank holding company by using approximately 98% of the net proceeds of
the Offering to acquire the capital stock of the Bank.
The primary activity of the Company will be the ownership and operation
of the Bank. The primary service area of the Bank will be the Municipalities of
Springfield, Rincon, and Guyton, and the contiguous areas of Effingham County,
Georgia. Its secondary service area will be portions of Chatham, Bulloch,
Screven, and Bryan Counties in Georgia. The Bank will engage in a general
community and commercial banking business targeting as its customers
individuals, professionals, and small to medium-sized businesses in the Bank's
primary service area, including small retail establishments and professional
service businesses. See "Business of the Company and the Bank".
The Company's office is located at 802 South Laurel Street, P.O. Box
379, Springfield, Georgia, 31329 and its telephone number is (912) 754-0754. The
Bank's main office will be at the same address. The Bank will also establish one
branch office at 600 Columbia Avenue, Rincon, Georgia, 31326.
Neither the Company, nor any principal of the Company, nor the Bank is
a party to any pending litigation or proceeding which could materially adversely
affect its business or assets, nor the business or assets of the affected
principal.
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<CAPTION>
The Offering
------------
<S> <C>
Securities Offered .............. Common Stock, $1.00 par value
per share, of the Company
Offering Price .................. $ 10.00 per share
Number of Shares Offered ........ 512,000(1)
Use of Proceeds ................. To purchase 100% of the capital
stock of the Bank; to pay
organization and pre-opening
expenses; and to fund other
corporate purposes, primarily
future capital needs of the
Bank. See "Use of Proceeds."
</TABLE>
(1) The Company anticipates receiving gross proceeds of $5,120,000 (before
organization and pre-opening expenses and offering expenses).
Escrow of Proceeds
The proceeds of this Offering will be placed in escrow with The
Savannah Bank, N.A. (the "Escrow Agent") under an escrow agreement (the "Escrow
Agreement") which provides that such proceeds shall be placed in two separate
accounts: (1) The Organizers' Account; and (2) the Public Offering Account. The
Escrow Agent will pay the allocable offering expenses out of each account,
estimated to be: $8,850 ($.058 per share) for the Organizers' Account, and
$20,650 ($.058 per share) for the Public Offering Account. The Escrow Agent will
pay all organizational and pre-opening expenses and approved capital
expenditures (estimated to be no more than $2,166,004 in the aggregate) incurred
and to be incurred out of the Organizers' Account. The escrowed funds will be
invested in deposit accounts or certificates of deposit which are fully insured
by the Federal Deposit Insurance Corporation or another agency of the United
States government, short-term securities issued or fully guaranteed by the
United States government, federal funds, or other investments as the Escrow
Agent and the Company shall agree. In the event all of the regulatory approvals
described herein have not been received by October 1, 1998, or if by April 1,
1998, all 512,000 shares of the Common Stock have not been sold, the net amounts
in the Escrow Accounts (less any Offering expenses), plus allocable investment
earnings, if any, will be returned to the initial investors or their successors
on a pro rata basis.
5
<PAGE> 8
The Organizers
The following persons are the Organizers of the Bank. As indicated,
some of them are Directors of the Company and will serve as Directors of the
Bank:
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D. Guerry Burns *Harry H. Shearouse
*Jon G. Burns *Thomas C. Strickland
*Charles E. Hartzog *Mariben M. Thompson
*Philip M. Heidt *Thomas O. Triplett, Sr.
*W. Harvey Kieffer *J. Terrell Webb
*C. Murray Kight *H. Mitchell Weitman
William F. Rahn *Wendel H. Wilson
</TABLE>
* Indicates those persons who are Directors of the Company and will serve as
Directors of the Bank.
The Organizers believe that their activities in the communities that
the Bank will serve will enable them to pursue business opportunities for the
Bank.
Risk Factors
An investment in the Common Stock involves certain risks, including,
among others, the necessity to obtain regulatory approvals, the completion of
this Offering, the lack of an operating history, competition from established
financial institutions, dependence upon key executive officers, dependence on
economic conditions in the Bank's target market areas, absence of an established
trading market for the shares, and the lack of assurance of dividends. See "Risk
Factors and Other Investment Considerations."
RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS
An investment in the shares of Common Stock offered hereby involves a
substantial degree of risk. The shares will not be insured by the Federal
Deposit Insurance Corporation ("FDIC") or any other governmental agency. An
investment should be made only after careful consideration of the risk factors
and other investment considerations set forth below and elsewhere in this
Prospectus, and should be undertaken only by persons who can afford an
investment involving such risks.
REGULATORY APPROVALS
The Organizers must receive final approval of the Department before the
Bank may begin operations as a Georgia bank. The Company must receive the
approval of the Federal Reserve Board and the Department before it can become
the holding company of the Bank. In addition, the Department and the Federal
Reserve Board must approve
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each of the executive officers of the Bank. Such approvals are dependent upon
several factors outside the control of the Organizers, and therefore no
assurance can be given that approvals will be granted, or, if granted, that the
Organizers will be able to satisfy all conditions that may be imposed in orders
granting such approvals. Any significant delay in obtaining necessary approvals
may result in increased pre-opening expenses and may reduce the potential
revenues and income of the Company and the Bank.
In the event the above-described regulatory approvals are not received
by the Company and the Bank on or before October 1, 1998, the proceeds of this
Offering (less offering expenses) will be returned to the Company's
shareholders. See "The Offering -- Escrow Arrangements."
NECESSITY TO COMPLETE OFFERING
The Organizers believe that an initial total capitalization of
$5,120,000 is necessary for the success of the Bank. No assurances are given
that the Offering will be completed or that the indicated net proceeds will be
received by the Company. In the event all 512,000 shares of the Common Stock
have not been sold by April 1, 1998, the proceeds of this Offering (less
offering expenses) will be returned to the subscribers of such shares. See "The
Offering Escrow Arrangements."
LACK OF OPERATING HISTORY
The Company and the Bank are currently in the organization stage and
have no operating history. As a consequence, prospective purchasers of shares of
the Common Stock offered hereby necessarily have limited information on which to
base an investment decision. As a bank holding company with the Bank as its only
asset, the Company's initial profitability will depend upon the Bank's
operations. The Bank's proposed operations are subject to risks of a new
business and, specifically, of a new bank. It is anticipated that the Bank will
incur operating losses in its first year of operations. Although the Organizers
anticipate that the Bank will become profitable in its second year of operations
and that all of its initial losses will be recovered by its third year of
operations, there is no assurance that the Bank will become profitable. 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. Therefore,
persons should not subscribe to shares unless they are in a position to lose the
entire amount of their investment without a material adverse effect on their
respective financial conditions.
7
<PAGE> 10
HIGHLY COMPETITIVE INDUSTRY
The financial services industry in general is characterized by
significant competition in attracting and retaining deposits and in lending
funds. In one or more aspects of its business, the Bank will compete with other
commercial banks, savings and loan associations, credit unions, finance
companies, mutual funds, insurance companies, and brokerage and investment
banking firms operating in the Effingham and contiguous counties. Most of these
competitors have substantially greater resources and lending limits than the
Bank and may offer certain services, such as multi-branch banking and trust,
investment and international banking services that the Bank initially will not
provide. New and larger financial institutions may also enter the Bank's market
area and compete with the Bank for deposits and lending opportunities in the
future. The level of competition among financial institutions in Georgia is
expected to increase further as a result of additional consolidation in the
financial services industry. The Company cannot predict the effect that this
increased competition will have on the operations of the Company or the Bank in
its market area. See "Business of the Company and the Bank - Competition."
DEPENDENCE ON KEY PERSONNEL
The Bank is, and for the foreseeable future will be, dependent upon the
services of Harry H. Shearouse, who is the proposed President and Chief
Executive Officer of the Company and the Bank and who is a Director of the
Company. A failure to replace Mr. Shearouse promptly, should his services become
unavailable, could have a material adverse effect on the Company and the Bank.
The Partnership has entered into an employment agreement with Mr. Shearouse for
a term of three years commencing on the opening date of the Bank, which will be
assigned to the Bank upon its formation.
The Company and the Bank intend to hire additional competent employees
and Department-approved officers before commencing business. Any changes to the
positions of President, Chief Lending Officer, or Chief Operations Officer
during the first two years of operations will be subject to approval by the
Department. See "Business of the Company and the Bank" and "Management."
REGULATION
The potential success or failure of the Company and Bank also may be
affected by state and federal regulations affecting banks, savings and loan
associations and bank and savings and loan holding companies generally.
Non-banking financial institutions, such as securities brokerage firms,
insurance companies and money market mutual funds, are permitted to offer
services that compete directly with the services offered by banking
institutions. At the same time, the services that banking institutions are
permitted to offer have been expanded, and restrictions have been reduced on the
rate of interest that may be paid by banking institutions on deposits. The
Bank's profitability will be largely dependent upon the rate differential
between the interest earned by the Bank on loans to
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customers and its investments, and the interest paid by the Bank on deposits and
other liabilities. While increasing competition may result in the Bank's paying
higher interest rates to obtain deposits, a comparable increase in interest
rates on its loans and the rate of return on its investments may not be
attainable, the result of which would be reduced spreads and lower earnings or
higher losses.
ECONOMIC RISKS
Unlike most companies, virtually all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have a
significant impact on a financial institution's performance. Profitable
operation of the Company depends on numerous factors, some of which will be
beyond the control of the Company's management. These factors include, but are
not limited to, the general level of interest rates in national money markets,
national and local economic conditions, housing demand, lending risks and
federal, state, and local taxation of and regulations affecting savings
institutions.
Because the Company's operations will be concentrated in Effingham
County, (rather than diversified across a number of different geographic areas
as occurs in the operations of some larger financial institutions), the economic
conditions in that county will be particularly important in determining the
future performance of the Company. Although the Bank expects favorable economic
development in its primary and secondary market areas, there is no assurance
that favorable economic development will occur or that the Bank's expectation of
corresponding growth will be achieved.
MONETARY POLICIES
Like all regulated financial institutions, the Bank will be affected by
monetary policies implemented by the Board of Governors of the Federal Reserve
System and other federal agencies. A primary instrument of monetary policy
employed by the Federal Reserve Board is the restriction or expansion of the
money supply through open market operations. This instrument of monetary policy
frequently causes volatile fluctuation in interest rates and can have a direct,
adverse effect on the operating results of financial institutions. Borrowings by
the United States Government to finance the federal deficit may also cause
fluctuation in interest rates and have similar adverse effects on the operating
results of such institutions.
ABSENCE OF TRADING MARKET; OFFERING PRICE
While the Common Stock being offered hereby will be freely transferable
by all shareholders except the Organizers immediately upon issuance, it is not
anticipated that there will be an active
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market for the Common Stock in the immediate future. Although the Common Stock
may be traded in the over-the-counter market in the future, no assurance can be
given that an active trading market for the Common Stock will develop, and the
Company does not anticipate listing the Common Stock for sale in the
over-the-counter market in the foreseeable future.
Because the Company and the Bank are in the organizational stage, the
offering price of $10.00 per share has been determined by the Organizers without
particular reference to historical or projected earnings, book value or other
customary criteria. The price per share was set arbitrarily. No assurances can
be given that any of the Common Stock can be resold for the offering price or
any other amount.
CONTROL
Because the Organizers intend to purchase, in the aggregate, a
significant portion of the shares offered hereby, the ability of other investors
as a group effectively to exercise control over the election of directors of the
Company and thereby exercise control over the supervision of the management of
the business of the Company and the Bank may be diminished.
DIVIDENDS
It is anticipated that the Company will not distribute any cash
dividends to its shareholders in the foreseeable future. The availability of
funds for distributions to shareholders will depend principally on the earnings
of the Bank and its ability to pay dividends to the Company, which are
restricted under certain circumstances by the regulations of the Department even
if earnings are available. Earnings of the Bank, if any, are expected to be
retained by the Bank for the foreseeable future to enhance its capital.
POSSIBLE NEED FOR ADDITIONAL CAPITAL
The Company has no present intention to borrow any funds or issue
additional equity securities after the Offering but may attempt to do so in the
future if additional capital is required. There can be no assurance of the
availability of additional capital or the terms on which the Company may be able
to obtain such capital, and the effect thereof on existing stockholders of the
Company cannot presently be determined.
Because the Partnership anticipates that the monies presently in the
Organizers' Account will be insufficient to pay all pre-opening and
organizational expenses and capital expenditures, the Partners have agreed to
borrow the monies necessary to pay these. The Partnership estimates that it will
require a loan of $750,000 to completely finance the remaining capital
expenditures and pre-
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opening and organizational expenses, but there can be no assurance that the
Partners will be able to obtain such a loan. See "The Offering--Escrow and
Issuance of Stock" and "Use of Proceeds."
FAILURE TO OBTAIN REGULATORY APPROVAL OR RAISE ANTICIPATED PROCEEDS
Subscription payments received by the Company in this Offering and
stock purchase payments from purchasers in the Public Offering will be held by
The Savannah Bank, N.A. (the "Escrow Agent") in two escrow accounts (the "Escrow
Accounts"). The Public Offering Account will be held in escrow until such time
as the Department grants final approval to the Bank and the Federal Reserve
Board and the Department have approved the Company's application to become a
bank holding company. The payments received in the Organizers Account may be
used to fund organizational and pre-opening expenses and approved capital
expenditures. The Escrow Accounts will be subject to certain disbursements
authorized in the Escrow Agreement by and between the Company and the Escrow
Agent. The funds in the Escrow Accounts will be invested in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit Insurance
Corporation or another agency of the United States government, short-term
securities issued or fully guaranteed by the United States government, federal
funds, or other investments as the Escrow Agent and the Company shall agree.
Unless the Company returns funds to the subscribers, any profits accruing on the
funds while in escrow will be the property of the Company. Shares of stock
subscribed and paid for in this Offering will be issued within sixty (60) days
following the completion of the offering. If by October 1, 1998, but after the
issuance of the shares offered hereby, the Department has not granted final
approval to the Bank or the Federal Reserve Board and the Department have not
approved the Company's application to become a bank holding company, funds
available from the Escrow Accounts will be paid promptly to shareholders on a
pro rata basis. If by April 1, 1998, all 512,000 shares of the Common Stock have
not been sold, funds available from the Escrow Accounts will be paid promptly to
the investors on a pro rata basis.
ANTI-TAKEOVER PROVISIONS; DIRECTOR LIABILITY
The Company's Articles of Incorporation (the "Articles") and Bylaws
contain certain provisions which provide, among other things, (i) that the
Company shall not engage in any business combination (as defined in the
Articles) with a person who became an interested shareholder (as defined in the
Articles) within five years prior to such business combination unless certain
conditions are met; (ii) for the necessity of approval of certain business
combinations by all continuing directors (as defined in the Articles) or
two-thirds of the continuing directors and a majority of the shares (excluding
shares beneficially owned by the interested shareholder who is a party to the
business combination), except that such approval is not required if the
consideration
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offered in the business combination satisfies certain fair price tests; (iii)
that approval by the holders of 75% of the Common Stock is required for
amendment of the foregoing provisions and certain other provisions of the
Articles (and any amendment to (i) above would not take effect until 18 months
after such amendment); (iv) for the issuance of shares of Common and Preferred
stock upon the approval of the Company's Board of Directors without stockholder
approval; (v) for the election of directors to three-year staggered terms; (vi)
as permitted by applicable statute, for the elimination, with certain
exceptions, of personal liabilities of directors and officers to the Company or
its stockholders for monetary damages resulting from any alleged breach of their
fiduciary duty to the Company; and (vii) that the Board of Directors, in
determining the best interest of the Company, may consider, among other factors,
the interests of the Company's employees, customers, suppliers and creditors and
the community in which offices of the Company are located.
These provisions may discourage non-negotiated takeover attempts
through which certain stockholders may otherwise receive a substantial premium
for their Common Stock over the then current market price and may tend to
perpetuate existing management. See "Description of Capital Stock - Certain
Provisions of the Company's Articles and Bylaws."
THE COMPANY AND THE BANK
Citizens Effingham Bancshares, Inc. was incorporated under the laws of
Georgia on October 29, 1997. The Company was organized primarily for the purpose
of becoming a bank holding company to acquire all of the capital stock of the
Bank. Initially, the Company's sole activity will be the ownership and operation
of the Bank when the Bank has received the necessary approvals to engage in
business.
The Bank's primary service area will be the Municipalities of
Springfield, Rincon, and Guyton and the contiguous areas in Effingham County,
Georgia, and its secondary service area will be portions of Chatham, Bulloch,
Screven, and Bryan Counties, Georgia. Organizers believe that the Bank's primary
service area represents a growing market for the services the Bank will provide.
The Bank will engage in a general community and commercial banking
business, emphasizing the banking needs of individuals and small to medium-sized
businesses and professional concerns in its primary service area and of
individuals and businesses in the community, including those located outside the
Bank's primary service area. The Bank will offer private banking services to
individuals and businesses.
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If and when all 512,000 shares of the Common Stock are sold, the
payments received in the Organizers' Account may be used to fund organizational
and pre-opening expenses and approved capital expenditures. If and when the
Company and the Bank receive all of the necessary regulatory approvals, the net
proceeds from this Offering in the Public Offering Account and the amounts
remaining in the Organizers' Account will be released to the Company, and the
Company will acquire all of the shares of capital stock of the Bank.
The Company's office is located at 802 South Laurel Street, P.O. Box
379, Springfield, Georgia, 31329 and its telephone number is (912) 754-0754. The
Bank's main office will be located at the same address. The Bank will also
establish one branch office at 600 Columbia Avenue, Rincon, Georgia, 31326.
THE OFFERING - ESCROW ARRANGEMENTS
The Company is hereby offering 512,000 shares of its Common Stock at a
price of $10.00 per share to the public at large.
METHOD OF SUBSCRIPTION
Offerees in this Offering may subscribe for stock by completing and
delivering a signed Subscription Form, which is enclosed with this Prospectus,
to Citizens Effingham Bancshares, Inc., P.O. Box 379, Springfield, Georgia,
31329, together with a check, bank draft or money order in the amount of the
subscription price drawn to the order of The Savannah Bank, N.A., as Escrow
Agent.
The Company reserves the right to reject any offer to subscribe in
whole or in part or to cancel acceptance of subscription offers in whole or in
part until the date the shares purchased through this Offering are issued. If a
subscription or any part thereof is not accepted by the Company, the unaccepted
portion, without interest, shall be promptly returned to the subscriber.
EXPIRATION DATE
Subscriptions will be accepted by the Company until 5:00 p.m.
Springfield, Georgia time on April 1, 1998 or until such earlier time as the
Company has received subscriptions to all 512,000 shares of its Common Stock.
HOW TO PURCHASE
Persons may purchase Shares of the Common Stock by completing and
signing the Subscription Agreement and delivering it, together with the purchase
price, to the Company. The purchase price of $10.00 per Share must accompany the
Subscription Agreement and must be paid in cash, or by check, bank draft, or
money order made
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<PAGE> 16
payable to The Savannah Bank, N.A., as Escrow Agent. A Subscription Agreement
will be binding on the subscriber, but will not be binding upon the Company
until it is accepted by the Company.
The minimum subscription made by investors must be at least 100 Shares.
No person, corporation, or related interest may purchase more than 20% of the
outstanding shares of stock of this Offering. After all shares have been
subscribed, details of any purchases of more than 5% of the Bank's stock and any
Organizer purchase which has been financed will be sent to the Department.
ESCROW AND ISSUANCE OF STOCK
If the Company fails to sell 512,000 shares of Common Stock at the
offering price of $10.00 per share as of the close of business on April 1, 1998,
or if 512,000 shares have been sold but the Company has not received the total
amount due by that time, the Company will abandon the Offering and promptly
refund to each purchaser the consideration paid for his or her shares, less a
pro rata portion of any expenses incurred as a result of the Offering.
The Company reserves the right to allow the Organizers, subject to
regulatory approval, to purchase additional shares of Common Stock in order to
meet the minimum requirement of 512,000 shares sold, provided that: (i) the
maximum amount of such additional purchases which may be made by the Organizers
is 50,000 shares; and (ii) such purchases shall be made for investment purposes.
Until all necessary regulatory approvals are obtained and the necessary
capital is raised, the net proceeds from this Offering will be held in two
Escrow Accounts at The Savannah Bank, N.A. and invested in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit Insurance
Corporation or another agency of the United States government, short-term
securities issued or fully guaranteed by the United States government, federal
funds, or other investments as the Escrow Agent and the Company shall agree. The
proceeds of this Offering received from the Organizers will be held in one
account (the "Organizers' Account"); and the proceeds of this Offering received
from non-Organizers will be held in a second account (the "Public Offering
Account"). The Escrow Agent will pay the allocable offering expenses out of each
account, estimated to be: $8,850 ($.058 per share) for the organizers' Account,
and $20,650 ($.058 per share) for the Public Offering Account; and the Escrow
Agent will pay all organizational and pre-opening expenses and capital
expenditures incurred prior to receipt of all necessary regulatory approvals out
of the Organizers' Account. Organizational and pre-opening expenses are
estimated to be $276,104 and capital expenditures are estimated to be less than
$1,890,000, assuming the Bank opens by October 1, 1998.
14
<PAGE> 17
If the Company receives gross proceeds of $5,120,000 in the aggregate
from this Offering and issues shares of Common Stock to subscribers but the
Company and the Bank do not obtain the requisite final regulatory approvals by
October 1, 1998, all funds available from each Escrow Account will be paid
promptly to all shareholders whose funds are held in that account on a pro rata
basis. As noted above, in such event, all losses resulting from organizational
and pre-opening expenses and capital expenditures incurred by the Company will
be borne by the twelve Directors.
Organizational and pre-opening expenses include, but are not limited
to, filing fees, costs of professional and consulting services, travel expenses,
printing, postage and telephone costs related to the organization of the Company
and the Bank and pre-opening salaries, rent, and insurance. Capital expenditures
include the purchase of two parcels of land upon which the main office and a
branch will be built, building improvements, office equipment, deposits on
banking furniture and equipment and prepaid forms, supplies, and promotional
materials. All such capital expenditures shall be expressly approved by the
Board of Directors before the Company requests the funds from the Escrow Agent,
and it is estimated that such capital expenditures will not exceed $1,890,000.
It is estimated that organizational and pre-opening expenses will be $276,104 if
the Bank commences operations by October 1, 1998.
It is anticipated that there will be insufficient funds in the
Organizers' Account to pay all organizational and pre-opening expenses and
approved capital expenditures that will be necessary before final approval from
the Department is obtained. Therefore, the Directors have agreed to borrow an
estimated additional $750,000 for this purpose. Upon receipt of final approval,
the Bank will repay said loan, including interest.
If it becomes necessary to return proceeds of this Offering to
subscribers, subscribers may receive less than the Offering price of $10.00 per
share because of the deduction of Offering expenses and possible investment
losses while the funds are in escrow. If, for example, the expenses of this
Offering are $29,500, as estimated, and there are no investment losses or
profits, each non-organizer shareholder who subscribed to shares in this
Offering will be paid $9.942 per share if it becomes necessary to return funds
after the shares of Common Stock have been issued, and each Organizer who
purchases in this Offering will be paid less because he or she will be charged
with his or her equal share of organizational and pre-opening expenses and
approved capital expenditures incurred by the Company through the date of the
refund. It is possible that this return may be further reduced by amounts paid
to satisfy claims of creditors, as discussed in the following paragraph.
When the Company issues the shares of Common Stock offered
15
<PAGE> 18
hereby, the offering proceeds may be considered part of general corporate funds
and thus may be subject to the claims of creditors of the Company, including
claims against the Company that may arise out of actions of the Company's
officers, directors, or employees. Because the approval of the Bank's charter is
conditioned on the Company's raising funds to capitalize the Bank at $5,000,000,
the Company expects to issue the shares of Common Stock before it has obtained
all final regulatory approvals for the Bank. It is possible, therefore, that one
or more creditors may seek to attach the proceeds of the Offering while they are
still in the Escrow Accounts. If such an attachment occurred, and it became
necessary to pay the escrowed funds to shareholders because of failure to obtain
all necessary regulatory approvals, the payment process might be delayed; and if
it became necessary to pay creditors from the escrowed funds, the payments to
shareholders might be less than the amounts described above.
While the proceeds of this Offering are held in escrow, the Escrow
Agreement provides that the Escrow Agent will release to the Company from the
Organizers' Account amounts certified by the Company to be organizational and
pre-opening expenses and approved capital expenditures as described above and
that the Escrow Agent will release to the Company from both Escrow Accounts on a
pro rata per share basis the allocated expenses of this Offering.
USE OF PROCEEDS
The aggregate net proceeds to the Company from this Offering are
expected to be $5,090,050. These amounts assume the payment of $29,500 as
expenses of the Offering. The payments received in the Organizers' Account may
be used to fund organizational and pre-opening expenses and approved capital
expenditures. The net proceeds from the Public Offering Account will be held
until the Department grants final approval to the Bank and the Federal Reserve
Board and the Department have approved the Company's applications to become a
bank holding company, except that, as described in "The Offering--Escrow and
Issuance of Stock," certain disbursements to the Company will be made from the
Escrow Accounts.
Funds in the Organizers' Account of the Escrow Accounts will be used to
pay the Company's organizational expenses and the Bank's organizational and
pre-opening expenses and approved capital expenditures. When all regulatory
approvals have been obtained, the funds in all Escrow Accounts will be used to
capitalize the Bank through the purchase of all capital stock of the Bank at
$5,000,000 and to the extent not needed for such purposes, for general corporate
purposes, principally to fund possible additional capital needs of the Bank.
The proceeds that the Bank receives in exchange for its capital stock
will be used primarily to provide funds for the
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<PAGE> 19
Bank's investment and loan portfolios, for constructing the Bank's headquarters
in Springfield, Georgia and the branch in Rincon, Georgia, for furnishing and
equipping the Bank and for working capital. The Department requires that all of
the capital stock of the Bank shall be paid in, in full, in cash and that
$500,000 of the total capital funds shall be common stock, $3,750,000 paid in
surplus, and $750,000 shall be set aside as an expense fund to cover pre-opening
expenses and potential losses in the first year of operation.
Any net proceeds remaining after payment of expenses and purchase of
all of the Bank's stock will be invested by the Company in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit Insurance
Corporation or another agency of the United States government, short-term
securities issued or fully guaranteed by the United States government, federal
funds, or other investments as the Escrow Agent and the Company shall agree
until a determination is made by management to invest such funds in the Bank or
in other projects. The Organizers and management have no present intentions as
to other projects.
The Company expects to incur approximately $276,104 in organization and
pre-opening expenses which will, provided all necessary regulatory approvals are
obtained, be payable from the net proceeds of the Offering. The Organizers
expect that this amount will partially be offset by investment income during the
pre-opening period. Of the total estimated $276,104 of organizational and
pre-opening expenses, approximately $186, 091 will be used to pay salaries and
benefits and the remainder will be used for miscellaneous expenses such as rent,
legal, consulting, accounting and other expenses associated with the
organization of the Bank. Approximately $92,574 in organizational and
pre-opening expenses have been incurred as of September 30, 1997.
The Directors have guaranteed a $300,000 loan from the Savannah Bank,
N.A. to partially fund organizational and pre-opening expenses and capital
expenditures. The loan will be repaid from funds in the Organizers' Escrow
Account as soon as this Offering is completed. In addition, the Directors have
agreed to borrow an additional estimated $750,000 to fund any remaining
organizational and pre-opening expenses and capital expenditures. Upon receipt
of final approval from the Department, the Bank will repay said loan, including
interest.
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<PAGE> 20
The following table sets forth the proposed sources and uses of the
proceeds from this Offering. The figures for organizational and pre-opening
expenses are based on the assumptions that the Bank will commence operations on
October 1, 1998 and that there will be no investment earnings on the proceeds of
the offerings while they are held in escrow.
<TABLE>
Sources
<S> <C>
Gross proceeds ...................................... $ 5,120,000
Less: Offering Expenses ............................. (29,500)
Total Sources .............................. $ 5,090,500
===========
Uses
Organization and pre-opening expenses of the Company $ 5,000
Purchase of Bank capital stock (1) .................. 5,000,000
Other corporate purposes ............................ 85,500
Total Uses ................................. $ 5,090,500
===========
</TABLE>
(1) An estimated $276,104 of Bank organizational and pre-opening expenses
and not more than $1,890,000 of capital expenditures will be disbursed
from the Organizers' Escrow Account on behalf of the Bank, prior to the
Company's investment in the capital stock of the Bank. The $5,000,000
used to purchase the Bank's capital stock will be net of disbursements
previously made on behalf of the Bank. The previously advanced funds
will be expensed and capitalized by the Bank as appropriate.
The figures in the preceding table and footnote are estimates which are
considered reasonable, but there can be no assurance that the estimates will be
accurate. Variations could occur for many reasons. For example, if the Bank
opens for business later than the projected date, additional pre-operating
expenses would be incurred.
DIVIDENDS
It is anticipated that the Company will not pay any cash dividends on
its Common Stock in the foreseeable future. Dividends may be paid only out of
earnings of the Company. The availability of funds for payment of any dividends
will depend primarily upon the earnings of the Bank and its ability to pay
dividends to the Company.
Under current Georgia law, the Bank may not pay dividends out of
capital. It may pay dividends only out of undivided profits then on hand, after
deducting expenses including losses and bad debts. The Department requires that
all start-up losses be recovered and a cumulative profit made before dividends
are paid. In addition, the Bank is required by the Department to maintain the
Bank's
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<PAGE> 21
Capital Ratio, as defined by the Department's Statement of Policies, at not less
than 8% during the first three years of operation commencing upon the effective
date of a permit to begin business issued by the Department, and further the
Bank must maintain the Capital Ratio thereafter at levels consistent with the
published policies of the Department of Banking and Finance.
The Organizers anticipate that the earnings of the Bank will be
retained by the Bank during the foreseeable future and held for purposes of
enhancing the Bank's capital.
PRO FORMA CAPITALIZATION
The following table sets forth, as of the commencement of operations,
the expected capitalization of the Company, assuming all of the 512,000 shares
of Common Stock offered in this Offering are sold.
<TABLE>
<CAPTION>
Citizens Effingham Bancshares, Inc.
Shareholders' Equity:
- ---------------------
<S> <C>
Common Stock, $1.00 par
value, 20,000,000 shares
authorized, 512,000 issued and
outstanding ........................................ $ 512,000
Preferred Stock, $1.00 par
value, 10,000,000 shares
authorized, none outstanding ................... 0
Paid-in capital in
excess of par value (1) ............................ 4,608,000
Less Deficit Accumulated during
the development stage (2) .......................... (29,500)
Total shareholders' equity ......................... $5,090,500
==========
</TABLE>
- --------------------
(1) The expenses of this Offering, estimated at $29,500 in the aggregate,
will be charged against this account.
(2) Assuming no investment income. The cost incurred for the organization
of the Company has been expensed.
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<PAGE> 22
BUSINESS OF THE COMPANY AND THE BANK
GENERAL
The Company was incorporated as a Georgia corporation on October 29,
1997 to become a bank holding company by acquiring all the capital stock upon
the formation and chartering of the Bank. The primary activity of the Company
will be the ownership and operation of the Bank.
The proposed Bank will be organized as a bank under the laws of the
State of Georgia. Subject to regulatory approval, the Bank will engage in the
commercial banking business from its main office in Springfield, Georgia and its
branch office in Rincon, Georgia.
The Bank will engage in a general community and commercial banking
business, emphasizing the banking needs of individuals and small to medium-sized
businesses and professional service businesses in its primary service area and
of individuals and businesses in the community, including those located outside
the Bank's primary service area. The Bank will also offer private banking
services to individuals and businesses.
The Organizers believe the identified markets are not now adequately
served and that an opportunity exists for the Bank to penetrate these markets by
offering a variety of traditional and specialized banking services emphasizing
personal service, knowledge of local needs and accessibility of management.
BANKING SERVICES
The Bank intends to offer a full range of deposit services, including
checking accounts, savings accounts, and various time deposits ranging from
daily money market accounts to longer-term certificates of deposit. The
transaction accounts and time certificates will be tailored to the principal
market areas at rates competitive to those offered in the areas. In addition,
retirement accounts such as IRA (Individual Retirement Accounts) and SEP
(Simplified Employee Pension) accounts will be offered. All deposit accounts
will be insured by the FDIC up to the maximum amount (currently $100,000 per
account). The Bank intends to solicit these accounts from individuals,
businesses, foundations and organizations, and governmental authorities.
The Bank intends to offer a full range of short to medium-term
commercial and personal loans. The Organizers expect the Bank's primary lending
focus will be personal and business lending. Commercial loans will include both
secured and unsecured loans for working capital (including inventory and
receivables), business expansion and purchase of equipment and machinery.
Consumer loans will include secured and unsecured loans for financing
automobiles, home improvements, and personal investments. The Bank may originate
20
<PAGE> 23
fixed and variable rate mortgage loans and offer real estate construction and
acquisition loans.
The Bank intends to apply to join a network of automated teller
machines that may be used by Bank customers in other cities. The Bank also plans
to offer credit cards. The Bank does not intend to offer a full-service trust
department initially. Any exercise of trust powers will be contingent upon the
prior written approval of the Department and the Federal Deposit Insurance
Corporation.
LOCATION AND SERVICE AREA
The primary service area of the Bank will be the Municipalities of
Springfield, Rincon, and Guyton, Georgia and the contiguous areas of Effingham
County. Its secondary service area will include portions of Chatham, Bulloch,
Screven, and Bryan Counties, Georgia. The Bank's target markets are individuals
residing in the primary service area, small to medium-size businesses, including
retail shops and professional service businesses in the community.
The Bank's main office is located in the primary service area in
Springfield, the county seat for Effingham County, next to the new U.S. Post
Office on State Highway 21, a high-traffic area which serves as the entrance to
Springfield from the south. The branch office is also located in the primary
service area in Rincon. In recent years, all of the banks in the primary service
area have been acquired by banks with headquarters outside of Effingham County.
The Bank will emphasize that it is based in Effingham County and that the
Organizers and the executive officers are committed to the economic development
of the Effingham County area.
According to the Savannah Morning News article of March 22, 1997,
population in the primary service area grew 29.88% over the past six years, from
25,687 in 1990 to 33,363 on July 1 of 1996. The Georgia State Data Center
projects the population of Effingham County to reach 39,600 by the year 2000. An
estimated 85% of the county's population resides in the county's unincorporated
areas outside of Springfield, Rincon, and Guyton. In 1990, 73.8% of households
in the primary service area had a household income between $15,000-$75,000,
compared to the Georgia state population of 66.1% and the coastal Georgia region
population of 66.4%. However, only 3% of households in the primary service area
had incomes greater than $75,000 while the state and coastal region populations
were 8.4% and 5.8%, respectively. Households having income less than $15,000 was
23.2%, while it was 27.7% in the coastal region and 25.4% for the State of
Georgia.
ASSET AND LIABILITY MANAGEMENT
Assets of the Bank will consist primarily of loans and its investment
portfolio. In an effort to maintain adequate levels of
21
<PAGE> 24
liquidity and minimize fluctuations in the net interest margin (the difference
between interest income and interest expense), the rate sensitivity of the loan
and investment portfolios will be similar to the rate sensitivity of the Bank's
liabilities.
The loan portfolio will be comprised principally of adjustable rate
loans with reasonable maturities. Substantially all fixed rate mortgage loans
may be sold in the secondary market.
The Bank will invest the majority of its investment portfolio in highly
marketable short term assets, such as Federal Funds and issues of the United
States government and its agencies. By pricing loans on a variable rate
structure, or by keeping the maturity of the investment and loan portfolios
relatively short-term, the Bank expects to be able to maintain loan interest, or
to reinvest securities proceeds, at prevailing market rates, thereby helping to
maintain a generally consistent spread over the interest rates paid by the Bank
on the deposits which are used to fund the investment and loan portfolios.
Deposit accounts will represent the majority of the liabilities of the
Bank. These are expected to include checking accounts and interest-bearing
accounts, time deposits and certificates of deposit. The Bank plans for most
time deposits to have short maturities, but the maturities may be extended based
on liquidity needs of the Bank. In managing its liabilities, the Bank will
attempt to attract deposits from customers who, assuming rates are competitive,
will be inclined to maintain an ongoing relationship with the Bank.
FACILITIES
The Bank's main office will be located at 802 South Laurel Street,
Springfield, Georgia in a two story building in Springfield. The lot, 225' x
309', is under contract for purchase by the Company for $110,000. The building,
a structure of about 5,387 square feet of heated area, and the related banking
equipment, furnishings and computer systems will cost approximately $925,000.
The first floor will have office space for four loan officers, a lobby area with
space for a receptionist and two customer service representatives, five teller
stations, the loan department and bookkeeping areas, a fireproof storage area
for loan documents, and the bank's vault. The second floor will house the Bank's
Board room and a large open area for future expansion.
The Rincon office will be located in a two story building at 600
Columbia Avenue, Rincon, Georgia. This lot is under contract for purchase for
$225,000 and measures 215' x 245'. The building, (about 3,310 square feet in
size) and the related banking equipment, furnishings and computer systems will
cost approximately $630,000. The first floor will have office space for three
loan officers, a lobby area with space for two customer service
22
<PAGE> 25
representatives, four teller stations, the loan workroom, and the bank's vault.
The second floor will be dedicated to attic storage.
EMPLOYEES
The Chief Executive Officer of the Bank will be Harry H. Shearouse. It
is anticipated that the Bank will employ eighteen full time employees during its
first year of operation, including the executive officers, a branch manager,
lending Officers, operations, credit personnel as well as tellers,
administrative assistants and customer service representatives. The Bank will
seek to hire people experienced in the banking field and familiar with the
Effingham County area market.
PRE-OPENING ACTIVITIES
In its pre-opening phase, the Bank will construct, occupy, and furnish
its facilities, hire and train its staff, purchase or lease and install
equipment and systems necessary for the transaction of business, establish
correspondent banking relationships and make other arrangements for necessary
services.
LACK OF PROFITABILITY IN THE EARLY PERIOD OF OPERATION
It has been the experience in the banking industry for new banks to
operate at a loss in the first several years of operation. Every reasonable
effort will be made to reach a level of profitability as quickly as possible;
however, there can be no assurances that the Bank will be profitable during its
first few years of operation or at any time thereafter.
FEDERAL AND STATE LAWS AND REGULATION OF BANKS AND BANK HOLDING
COMPANIES
Bank holding companies and banks are extensively regulated under both
federal and state law. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions. Any change in
applicable law or regulation may have a material effect on the business of the
Company and ifs subsidiaries.
On July 18, 1997, the Department accepted for filing a Georgia bank
charter application submitted by the Organizers. A charter application requires
substantial information about a bank's organizers, the bank's proposed capital
structure, its competitors and the proposed market service area. The application
and subsequent investigation conducted on behalf of the Department determined
that (a) the applicants have complied with all provisions of law; (b) the
convenience and needs of the public will be served by the proposed bank or trust
company; (c) there is a reasonable promise of adequate support for the bank or
trust
23
<PAGE> 26
company in the light of: (i) the competition offered by existing banks and trust
companies and other financial institutions, (ii) the previous financial history
of the community as to banks, trust companies, and other financial institutions,
and (iii) the opportunities for profitable employment of bank funds as indicated
by the average demand for credit, the number of potential depositors, the volume
of bank transactions, and the businesses and industries of the community with
particular regard to their stability, diversification, and size; (d) the
character and fitness of the incorporators, directors and proposed officers are
such as to command the confidence of the community and to warrant the belief
that the business of the proposed bank or trust company will be honestly and
efficiently conducted; (e) there has not been any material violation of Section
7-1-391 of the Official Code of Georgia Annotated, pertaining to the payment of
fees to the Bank's organizers, such that approving the articles would impair the
policy manifested by that provision; and (f) the capital structure of the
proposed bank is adequate in relation to the amount and character of the
anticipated business of the bank and the safety of prospective investors.
Approval of the application for the Bank's charter was obtained from the
Department on October 17, 1997. The Company has applied to the Federal Reserve
Board and the Department for approval of the Company becoming a bank holding
company.
If and when the Bank commences operations, it will be subject to
extensive supervision and regulation by the Department, the FDIC and the Federal
Reserve Board.
The Bank will be insured by the FDIC and be a non-member of the Federal
Reserve System. Therefore, the Bank will be subject to applicable provisions of
the Federal Reserve Act which restrict the ability of any bank to extend credit
to its parent holding company or to any of the parent's subsidiaries, to
purchase the assets thereof, to issue a guarantee, acceptance or letter of
credit (including an endorsement or standby letter of credit) to its parent
holding company or the parent's subsidiaries, or to invest in the stock or
securities thereof or to take such stock or securities as collateral for loans
to any borrower.
The dividends that may be paid by the Bank to the Company are subject
to legal limitations. Dividends may be paid only out of earnings of the Company.
No dividends may be paid until start-up losses are recovered and a cumulative
profit made. The Company does not anticipate that the Bank will declare any
dividends for the foreseeable future.
Under regulations issued by the Department, the Bank generally will be
required to have enough capital to maintain a capital-to-asset ratio of at least
eight (8%) percent or $1,000,000, whichever is greater, for a projected three
years. The Bank's total capital must be sufficient to support the anticipated
volume and character of operations for a minimum of three years.
24
<PAGE> 27
The Federal Reserve Board enforces regulations that implement
risk-based rules for assessing bank and bank holding company capital adequacy.
The earnings of the Bank and, consequently of the Company, will be
affected significantly by the policies of the Federal Reserve Board, which
regulates the money supply in order to mitigate recessionary and inflationary
pressures. Among the techniques used to implement these objectives are open
market operations in United States Government securities, changes in the rate
paid by banks on bank borrowings, changes in reserve requirements against bank
deposits and limitations on interest rates that banks may pay on time and
savings deposits. These techniques are used in varying combinations to influence
overall growth and distribution of bank loans, investments and deposits, and
their use may also affect interest rates charged on loans or paid for deposits.
The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks in the past and
are expected to continue to do so in the future. Also important in terms of
effect on banks are controls on interest rates paid by banks on deposits and the
types of deposits that may be offered by banks. Generally, governmental
regulation on deposit-rate accounts has been lessened in recent years. Since
March 31, 1986, the prohibition against the payment of interest on non-personal
demand deposits has been the only regulatory deposit-rate account constraint.
The effect of deregulation of deposit interest rates has been to increase banks'
cost of funds and make them more sensitive to fluctuations in money market
rates.
In view of changing conditions in the national economy and money
markets, as well as the effect of actions by monetary and fiscal authorities, no
prediction can be made as to possible future changes in interest rates, deposit
levels, loan demand or the business and earnings of the Company and it
subsidiaries.
After acquiring the capital stock of the Bank, the Company will become
a bank holding company within the meaning of the Federal Bank Holding Company
Act of 1956 and Georgia law. Because of these statutes, the company's
acquisition of the Bank's stock must be approved by the Federal Reserve Board
and the Department. No assurance can be given as to whether or when such
approvals will be obtained.
After the Company has become a bank holding company, it will be
required to register as such with the Federal Reserve Board and the Department.
It will be required to file with both of these agencies annual reports and other
information regarding its business operations and those of its subsidiaries. It
will also be subject to examination by these two agencies and will be required
to obtain their approval before acquiring, directly or indirectly,
25
<PAGE> 28
ownership or control of any voting shares of a bank or bank subsidiary of the
bank holding company if, after such acquisition, it would own or control,
directly or indirectly, more than 5% of the voting stock of such bank or banking
subsidiary of the bank holding company. Furthermore, a bank holding company is,
with limited exceptions, prohibited from acquiring direct or indirect ownership
or control of any voting stock of any company which is not a bank or bank
holding company and must engage only in the business of banking or managing or
controlling banks or furnishing services to or performing services for its
subsidiary banks. One of the exceptions to this prohibition is the ownership of
shares of a company the activities of which the Federal Reserve Board has
determined to be so closely related to banking and managing or controlling banks
as to be a proper incident thereto.
A bank holding company and it subsidiaries are prohibited from engaging
in certain tie-in arrangements in connection with the extension of credit or
provision of any property or service. Thus, a bank may not extend credit, lease
or sell property or furnish any services or fix or vary the consideration for
such on the condition that (i) the customer obtain or provide some additional
credit, property or service from or to such bank (other than a loan, discount,
deposit or trust service related to and usually provided in connection with a
loan, discount, deposit or trust service), its bank holding company or any other
subsidiary of its bank holding company or (ii) the customer not obtain some
other credit, property or service from a competitor, except to the extent
reasonable conditions are imposed in a credit transaction to assure the
soundness of the credit extended.
The Federal Reserve Board has cease and desist powers over parent bank
holding companies and non-banking subsidiaries should their actions constitute a
serious threat to the safety, soundness or stability of a subsidiary bank.
Although the Company is not presently subject to any direct regulatory
restrictions on dividends (other than those of Georgia corporate law), the
Company's ability to pay cash dividends will depend on the amount of dividends
paid by the Bank, and any other subsequently acquired entities. See "Dividends."
The Company is also subject to certain restrictions with respect to engaging in
the business of issuing, underwriting and distributing securities.
The Company cannot predict what other legislation might be enacted or
what other regulations might be adopted, or if enacted or adopted, the effect
thereof on the Company's operations.
COMPETITION
The banking business is highly competitive. In one or more aspects of
its business the Bank, and consequently the Company, will compete with other
commercial banks, savings and loan
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<PAGE> 29
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking companies operating in the
primary and secondary markets. All three commercial banks in the Effingham
County market are branches or affiliates of larger regional holding companies.
The Organizers believe that the dominance of these institutions has resulted in
a decline in responsiveness and personalized service in the local banking
industry. The Bank plans to promote its ability to make decisions locally and a
high level of personal service. There are no savings and loan institutions
operating in the primary market area.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and notes thereto.
CAPITAL RESOURCES AND LIQUIDITY
The Company's organization and pre-opening expenses have been funded
through the borrowing, by the Citizens Effingham Partnership, of a $300,000 loan
from The Savannah Bank, N.A., guaranteed by the Directors. At August 31, 1997,
the Company had approximately $208,372.61 of cash available, $10,872.61 of which
was in the Partnership's bank account and $197,500.00 of which was remaining on
the Partnership's line of credit with the Savannah Bank, N.A. Management
believes that the amount available, when combined with an estimated $750,000
that the Directors have agreed to borrow, if necessary, will be adequate to fund
organizing activities through the date of receipt of the net proceeds from the
Offering. Upon final regulatory approval, the Company expects to use net
proceeds from the Offering in the Organizers' Account to repay the borrowings in
full.
ORGANIZATIONAL ACTIVITIES
The discussion below covers the organizing activities of the Citizens
Effingham Partnership from April 3, 1997 (date of inception) through August 31,
1997. The Partnership had only limited activity during its organization, and
there is no period comparable to that discussed below.
APRIL 3, 1997 (DATE OF INCEPTION) THROUGH AUGUST 31, 1997
For the period of April 3, 1997 (date of inception) through August 31,
1997, the Partnership was in the process of organizing. Accordingly, its
activities consisted of recruiting organizers and directors for the Company and
the proposed Bank, development of the Company's business plan, preparation of
applications for necessary regulatory approvals, preparation for the proposed
stock offerings,
27
<PAGE> 30
obtaining marketing and customer service studies and the administrative support
for these functions.
The Partnership incurred organization costs of $91,758 for the period
ended August 31, 1997. Of that amount, compensation expense totaled $38,223.00,
which consisted primarily of salaries, benefits and payroll taxes for the
Company's President. Legal fees totaled $3,530.00 and consulting fees totaled
$17,625.00, filing fees were $12,060.00, while interest expense totaled none
during the period. The other organizing expenses of $20,320.00 during the period
consisted of equipment, architectural fees, office supplies, travel, telephone
and other expenses.
EFFECTS OF INFLATION ON OPERATIONS
When the Company commences operations as a financial institution, the
majority of its assets and liabilities will be monetary in nature and,
therefore, will differ greatly from most industrial or commercial companies that
have significant investments in fixed assets. Due to this fact, the effects of
inflation on the Company's balance sheet will be minimal, meaning that there
will be no substantial increases or decreases in the Company's net purchasing
power over time. The most significant effect of inflation will be on other
expenses which tend to rise during periods of general inflation.
MANAGEMENT
ORGANIZERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
organizers, proposed directors, and executive officers of the Company and the
Bank. All of the Directors listed below are also Organizers of the Bank.
<TABLE>
<CAPTION>
Anticipated Amount of
Beneficial Ownership
of the Company's
Common Stock (1)
----------------
Position with % of Shares
the Company No. Outstanding
(Director's Position of After
Name (Age) Term Expires) with the Bank Shares Offering
- ---------- ------------- ------------- ------ --------
<S> <C> <C> <C> <C>
Harry H. President, Chief President, 10,000 1.95%
Shearouse Executive Officer Chief Executive
(50) and Director Officer and
(2000) Director
D. Guerry N/A Organizer 10,000 1.95%
Burns (80)
</TABLE>
28
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C>
Jon G. Burns Director (1999) Director 20,000 3.91%
(45)
Charles E. Director (1999) Director 12,500 2.44%
Hartzog
(61)
Philip M. Director (1999) Director 8,350 1.63%
Heidt
(49)
W. Harvey Director (1999) Director 7,500 1.46%
Kieffer
(55)
C. Murray Director (2000) Director 20,000 3.91%
Kight
(65)
William F. N/A Organizer 5,000 .98%
Rahn
(71)
Thomas C. Director (2000) Director 15,000 2.93%
Strickland, Jr.
(55)
Mariben M. Director (2000) Director 5,000 .98%
Thompson
(56)
Thomas O. Director (2001) Director 5,000 .98%
Triplett, Sr.
(62)
J. Terrell Director (2001) Director 20,000 3.91%
Webb
(67)
H. Mitchell Director (2001) Director 5,000 .98%
Weitman
(51)
Wendel H. Director (2001) Director 10,000 1.95%
Wilson
(53)
Total 153,350 29.95%
======= ======
</TABLE>
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<PAGE> 32
(1) 15,850 of these shares will be held of record by family members, trusts for
the benefit of, or corporations or retirement accounts controlled by the
individuals listed. 137,500 of these shares will be held by the Organizers, and
the proceeds from the sale of these shares will be placed in the Organizers'
Account of the Escrow Agent.
HARRY H. SHEAROUSE was born in Chatham County but has resided in
Effingham County his entire life. After graduating from Effingham County High
School, Mr. Shearouse attended Georgia Southern University, where he received a
Bachelor of Business Administration Degree. Mr. Shearouse has been involved in
banking for over 29 years, most recently as a Vice President for the First
National Bank of Effingham, a position he held from 1992 until 1997. Prior to
that, he was employed by the C & S National Bank/NationsBank from 1968 through
1992. Mr. Shearouse served as a director of the C & S Bank of Effingham
County/NationsBank until 1992. Mr. Shearouse is actively involved in the
community and is a member of several civic organizations.
D. GUERRY BURNS has resided in Effingham County since his birth and was
educated in the Effingham County school system. Prior to his retirement several
years ago, Mr. Burns was self-employed in the timber business. From 1965 until
1989, Mr. Burns served as a Director/Advisory Board Member of the C & S Bank of
Effingham County/NationsBank.
JON G. BURNS was born in Savannah, Georgia but has been a life-long
resident of Effingham County. After graduating from Effingham County High
School, Mr. Burns attended Georgia Southern University, where in 1975 he
received a B.S. degree in Political Science. Mr. Burns is presently the owner
and operator of B & S Feed and Farm Supply. He is also involved, along with his
two brothers, in a local timber sales business. Mr. Burns served as
Director/Advisory Board Member of the C & S National Bank/NationsBank from 1989
until January, 1997. He is actively involved in several civic organizations.
CHARLES E. HARTZOG was born in Savannah, Georgia but has lived in
Effingham County for over 55 years. Mr. Hartzog graduated from Rincon High
School in 1954 and attended Newberry College, where he received a B.S. degree in
Commerce in 1959. That year, he went to work for the Citizens and Southern
National Bank in Savannah, Georgia, beginning a career in banking that would
span 33 years. In 1969, he transferred to the Citizens and Southern Bank of
Effingham County, where for 23 years he served as President of the Bank. During
that time, he also served as a Director, and he served as an Advisory Board
Member through that time up until January, 1997. Mr. Hartzog continues to be
active in civic and other organizations, some of which he has served or is
presently serving in leadership positions.
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<PAGE> 33
PHILIP M. HEIDT was born in Effingham County, where he has lived all
his life. He was educated in the Effingham County school system. Mr. Heidt is
presently the owner of Heidt Real Estate Services, Inc., which operates Century
21/Heidt Realty. In addition to his real estate sales business, Mr. Heidt is
involved in numerous real estate development and rental projects in the area.
Mr. Heidt served as an Advisory Board Member to NationsBank from February of
1996 until January of 1997. Mr. Heidt is involved in community organizations,
where he serves in various leadership roles.
W. HARVEY KIEFFER was born in Effingham County and has resided there
all of his life. He was educated in the Effingham County school system. Mr.
Kieffer, who has been in the construction business all of his life, owns a
construction company that he has operated since 1989. Mr. Kieffer is also
involved in various real estate rental and development projects in the Effingham
County area.
C. MURRAY KIGHT was born in Swainsboro, Georgia, but has been a
resident of Effingham County for approximately 52 years. A 1949 graduate of
Effingham Academy, Mr. Kight was President of Kight Ford, Inc., a local Ford
dealership, from 1962 until 1985. Since leaving the dealership, Mr. Kight has
been actively involved in several real estate development and rental projects in
Effingham County. Mr. Kight served as an Advisory Board Member of C & S Bank of
Effingham County/NationsBank from 1974 until January, 1997. Mr. Kight is
actively involved in the community.
WILLIAM F. RAHN was born in Effingham County, where he has resided his
entire life. He was educated in the Effingham County school system. Prior to his
retirement, Mr. Rahn was a farmer for over 35 years. For 24 years, he served as
a Director/Advisory Board Member of The Citizens and Southern Bank of Effingham
County/NationsBank, ending his tenure in 1995. He is active in the community,
serving in several civic organizations.
THOMAS C. STRICKLAND, JR. was born in Chatham County, Georgia, but
became a permanent resident of Effingham County in 1971. After completing high
school in Chatham County, Mr. Strickland received a Bachelor of Business
Administration degree from Georgia Southern University. From 1971 until the
present, Mr. Strickland has owned and managed Strickland Funeral Home, Inc. Mr.
Strickland is also involved in real estate rental and development. He served as
an Advisory Board Member for the C & S National Bank/NationsBank for 8 years
until January, 1997. Mr. Strickland is active in the Effingham County community
and is a member of several civic organizations.
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<PAGE> 34
MARIBEN M. THOMPSON was born in Bulloch County and was educated in the
Bulloch County public school system. After graduating from high school, she
attended Georgia Southern University, where in 1962 she received a B.S. degree
in Education. Since 1963, when she became a permanent resident of Effingham
County, she began teaching in Effingham County. After teaching school for a
total of 25 years, she left the teaching profession to take advantage of several
business opportunities. For several years, Mrs. Thompson was owner and President
of Speak-Ezy Telephone Co., Inc., and she is presently active in assisting her
husband in the operations of several Effingham County businesses.
THOMAS O. TRIPLETT, SR. was born in Boone, North Carolina. After
graduating from Chilhowie High School in Virginia, he attended Bluefield
College, also in Virginia. In 1959, Mr. Triplett began a career in banking with
The Citizens and Southern National Bank (later NationsBank) in Savannah,
Georgia, where he worked until his retirement in 1993. During his 34 years in
banking, Mr. Triplett served in various capacities, retiring from the Bank as a
Vice-President. A former mayor and councilman for the City of Port Wentworth,
Georgia, he also served 18 years in the Georgia House of Representatives.
Although Mr. Triplett is retired, he continues to remain active; he currently
serves on the Department of Transportation Board from the First Congressional
District. Mr. Triplett has been a resident of Effingham County for approximately
three years.
J. TERRELL WEBB was born in Cobbtown, Georgia and shortly thereafter
moved to Effingham County. Immediately after graduating from Effingham Academy,
he attended the University of Georgia, where in 1951 he received a B.S. degree
in Pharmacy. He was the owner and operator of Webb's Rexall Drugs in
Springfield, Georgia from 1954 until 1981, when he sold his business. After
1981, he worked part-time as a pharmacist. Mr. Webb served as a
Director/Advisory Board Member of the C & S Bank of Effingham County/NationsBank
from 1972 until 1992. For many years Mr. Webb has been actively involved in the
Effingham County community and has served in numerous leadership positions.
H. MITCHELL WEITMAN was born in Effingham County, where he has resided
his entire life. After graduating from Effingham County High School, Mr. Weitman
received a B.S. degree in Pharmacy from the University of Georgia. Since his
graduation in 1969, Mr. Weitman has been employed as a pharmacist, working for
several companies before buying his own business in 1981. He presently is the
owner and operator of Weitman Pharmacy, Inc. in Springfield.
WENDEL H. WILSON was born in Effingham County where he has resided his
entire life. After graduating from Effingham County High School, he attended
Georgia Southern University, where he received a Bachelor of Business
Administration degree in Accounting. Mr. Wilson is a Certified Public Accountant
who worked for the accounting firm of Haskins & Sells until 1974, when he
32
<PAGE> 35
opened his own practice in Effingham County. He is presently the managing
partner of Wilson & Kessler, C.P.A. Mr. Wilson is also involved in several other
ventures in the Effingham County area. He is very active in civic organizations
and continues to serve in numerous leadership positions.
ELECTION OF OFFICERS AND DIRECTORS
The Board of Directors of the Company is elected by its shareholders.
The officers of the Company are selected by the Company's Board of Directors.
The Board of Directors of the Bank will be elected by the Company as sole
shareholder of the Bank. The officers of the Bank will be selected by the Bank's
Board of Directors. The initial Chief Lending Officer and Chief Operations
Officer must be prior approved by the Department, and any changes to the
positions of President, Chief Lending Officer, or Chief Operations Officer
during the first two years of operation must also be approved by the Department.
No family relationships exist among the directors and executive officers of the
Company or the proposed directors and executive officers of the Bank.
EXECUTIVE COMPENSATION
Harry H. Shearouse is the proposed President and Chief Executive
Officer of the Company and the Bank. The Partnership entered into an employment
contract with Mr. Shearouse for a term of three years commencing on the date on
which the Bank opens. Under this Agreement, Mr. Shearouse will receive a base
salary of $80,000.00 per annum until 512,000 shares of the Common Stock are
sold, at which point his base salary will increase to $90,000 per annum.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Certain of the officers and directors of the Company will have deposit
accounts with the Bank and may have other transactions with the Company or the
Bank, including loans in the ordinary course of business. All loans or other
extensions of credit made by the Bank to officers, directors, or principal
shareholders of the Company and to affiliates of such persons will be made in
the ordinary course of business on terms, including interest rates and
collateral, deemed by the Bank to be substantially the same as those prevailing
at the time for comparable transactions with independent third parties and do
not involve more than the normal risk of collectability or present other
unfavorable features.
Through August 31, 1997, the Partnership has paid all costs and
disbursements associated with forming the Company and the Bank, including
application filing fees, attorneys fees, feasibility studies, market analysis
and other costs. Amounts disbursed by the Partnership through August 31, 1997
totalled $91,861.00. In order to fund these costs, the Partnership has borrowed
$300,000 from The
33
<PAGE> 36
Savannah Bank, N.A., payable with interest at the prime rate of a Georgia bank
upon the approval of the Bank by the Department and other governmental entities,
but in no event later than March 30, 1998, which has been guaranteed by the
Directors. The Escrow Agreement allows a disbursement from the Organizers'
Escrow Account after the shares are issued but before the regulatory approvals
are obtained to allow the Company to repay the Organizers the Principal amount
loaned to the Company and accrued interest.
On August 7, 1997, 21 Centre Partnership, a Georgia General Partnership
comprised of Bank Organizers, Philip M. Heidt, W. Harvey Kieffer, C. Murray
Kight, and Thomas C. Strickland, Jr., entered into a contract with the
Partnership to sell the parcel of land upon which the Rincon branch will be
constructed. Two independent appraisals of the parcel, one by Coastal Area
Appraisal Services done on June 23, 1997 and the other by Johnnie Ganem Realty &
Appraisal Co. on July 18, 1997, each valued the parcel at $225,000, the price
for which the land was sold. 21 Centre Partnership made no real estate
commission on the sale.
Since March 16, 1997, 21 Centre Partnership has leased office space to
the Partnership at a rate of $660.00 per month, pursuant to an oral contract
between the parties.
SHAREHOLDERS
Of the 20,000,000 shares of authorized Common Stock, 512,000 shares are
expected to be issued and outstanding at the completion of this Offering. The
amount and percent of such outstanding stock to be owned directly or
beneficially by the Directors/Organizers and by the purchasers in this Offering,
are expected to be as follows:
<TABLE>
<CAPTION>
Number of Shares Percent of Total Shares
Title of Group Beneficially Owned to be Outstanding
- -------------- ------------------ -----------------
<S> <C> <C>
Directors/Organizers 153,350 29.95%
Other Purchasers 358,650 70.05%
in this
Offering
TOTAL 512,000 100.0%
======= =====
</TABLE>
To the best of the Company's knowledge, no person will, upon the
completion of this Offering, own of record or beneficially, more than five
percent (5%) of the outstanding Common Stock. There are no known arrangements,
either formal or informal, between the Company and any Organizer, executive
officer of the Company, or any other person for the purchase of shares of Common
Stock which would
34
<PAGE> 37
result in any person owning, of record or beneficially, more than five percent
(5%) of the Common Stock.
DESCRIPTION OF CAPITAL STOCK
The Company's Articles of Incorporation authorize the Company to issue
up to 20,000,000 shares of Common Stock, par value of $1.00 per share and
10,000,000 shares of Preferred Stock, $1.00 par value per share.
COMMON STOCK
As of the date of this Prospectus there were no shares of Common Stock
issued and outstanding, and upon completion of this Offering there will be
512,000 shares issued and outstanding. The remaining authorized shares of Common
Stock may be issued from time to time in such amounts as the Board of Directors
determines.
All shares of Common Stock 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 the assets of the Company
available for distribution to the shareholders. It is not anticipated that the
Company will pay any cash dividends on its Common Stock in the foreseeable
future. See "Dividends." Voting rights will be exclusively vested in the holders
of the Common stock, subject to any voting rights granted to holders of
Preferred Stock should any Preferred Stock be issued. 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 pre-emptive rights to
acquire authorized but unissued capital stock of the Company. 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.
PREFERRED STOCK
The Board of Directors, without shareholder approval, may issue
Preferred Stock with voting, conversion and liquidation rights which might
adversely affect the voting power and other rights of the holders of Common
Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have 512,000 shares
of Common Stock outstanding. The shares sold in this Offering will be freely
tradeable without restriction or registration under the Securities Act of 1933,
as amended (the "1933 Act"), except for shares purchased by an affiliate of the
Company, which will be subject to resale restrictions under the
35
<PAGE> 38
1933 Act. These "restricted securities" and securities held by "affiliates" may
be eligible for sale in the open market in accordance with the provisions of
Rule 144 promulgated under the 1933 Act.
In general, under Rule 144, a person (including an affiliate of the
Company) who has beneficially owned restricted shares for at least two years
would be entitled to sell within any three month period a number of restricted
shares that does not exceed the greater of one percent (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. Non-affiliates who have held restricted shares for at least three
years would be entitled to sell such shares under Rule 144 without regard to the
volume limitation. Affiliates may sell non-restricted shares under Rule 144
without regard to the length of their holding period. The Company anticipates
having no public market for its securities.
CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES AND BYLAWS
A number of provisions of the Company's Articles of Incorporation
("Articles") and Bylaws concern matters of corporate governance and certain
rights of shareholders. The following discussion is a general summary of certain
provisions of the Articles and Bylaws relating to stock ownership and transfers,
the Board of Directors and business combinations which might be deemed to have a
potential "anti-takeover" effect. These provisions may have the effect of
discouraging a future takeover attempt which is not approved by the Board of
Directors but which individual shareholders of the Company may deem to be in
their best interests or as a result of which shareholders might receive a
substantial premium for their shares over then current market prices. As a
result, shareholders who might desire to participate in such a transaction may
not have an opportunity to do so. Such provisions will also render the removal
of the current Board of Directors and management more difficult.
Board of Directors. The Board of Directors of the Company is divided
into three classes, each of which contains approximately one-third of the whole
number of the members of the Board. Each class serves a staggered term, with
approximately one-third of the total number of Directors being elected each
year. The Articles and By-Laws of the Company do not allow for cumulative voting
for the election of Directors.
A classified Board of Directors could make it more difficult for
shareholders, including those holding a majority of the outstanding shares, to
force an immediate change in the composition of a majority of the Board of
Directors. Since the terms of only one-third of the incumbent Directors expire
each year, it requires at least two annual elections for the shareholders to
change a
36
<PAGE> 39
majority, whereas a majority of a non-classified board may be changed in one
year. In the absence of the provisions of the Articles classifying the Board,
all of the Directors would be elected each year. The Organizers of the Company
believe that the staggered election of Directors tends to promote continuity of
management because only one-third of the Board of Directors is subject to
election each year. Staggered terms guarantee that in the ordinary course
approximately two-thirds of the Directors, or more, at any one time have had at
least one year's experience as Directors of the Company, and moderate the pace
of changes in the Board of Directors by extending the minimum time required to
elect a majority of Directors from one to two years.
The Articles allow the Company's Directors to consider not only the
Company and its shareholders in determining what is in the best interests of the
Company, but also the interests of employees, customers, suppliers and creditors
of the Company and the interests of the communities in which offices of the
Company are located. The Organizers believe that consideration of all such
factors gives the Board of Directors maximum flexibility in discharging its
duties.
Business Combination Provision. In addition to the Fair price
provisions described below, the Company's Articles and Bylaws incorporate
certain provisions of the Georgia Business Corporation Code, as amended (the
"Georgia Code"), which provide that the Company shall not engage in any business
combination (as defined in the Articles and in the Bylaws) with any person
acquiring direct or indirect beneficial ownership of 10% or more of the
outstanding shares of the Company's stock (an "interested shareholder") for a
period of five years following the date that such shareholder became an
interested shareholder unless (i) such business combination is approved by the
Board of Directors; (ii) such interested shareholder obtained at least 90% of
the Company's outstanding stock in the transaction which made such shareholder
an interested shareholder (excluding shares held by (a) directors, (b)
subsidiaries of the Company, or (c) employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer); or
(iii) prior to acquiring at least 90% of the Company's stock, the interested
shareholder received approval of a majority of the shareholders (excluding
shares held by Directors and officers) to effect the business combination. The
term "person" means an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
"Fair Price Provision". Under a "fair price provision" of the Articles
based on provisions of the Georgia Code, any business combination would require,
in addition to the vote otherwise required by law or the Articles, the unanimous
approval of the continuing directors (as defined in the Articles), provided that
37
<PAGE> 40
the continuing directors constitute at least three members of the Board of
Directors at the time of such approval, or the approval of at least two-thirds
of the continuing directors and the approval of the holders of a majority of the
shares outstanding and entitled to vote on the combination, other then voting
shares owned by the interested shareholder who is a party to the proposed
business combination. If, however, the interested shareholder has not ceased to
be an interested shareholder at any time within the three years prior to
consummation of the business combination and has not increased its share
ownership in the Company by more than one percent (1%) in any twelve-month
period, or if specified price criteria and other requirements are met, the
normal majority vote of shareholders would apply.
Unanimous continuing Director approval or approval by two-thirds of the
continuing Directors and the holders of a majority of the outstanding voting
shares of the Company, excluding all voting shares beneficially owned by the
interested shareholder involved in the proposed business combination, also is
not required if the interested shareholder is offering to pay a certain formula
price based upon the market value of the shares as of certain dates to ensure
that all shareholders of the Company receive a fair price for their shares.
Authorized Shares. The Articles authorize the issuance of 20,000,000
shares of Common Stock and 10,000,000 shares of Preferred stock. The shares of
Common Stock and Preferred Stock were authorized to provide the Company's Board
of Directors as much flexibility as possible in using such shares for purposes
including financings, acquisitions' stock dividends, stock splits, employee
stock options and other similar purposes. However, these additional authorized
shares may also be used by the Board of Directors to deter future attempt to
gain control of the Company. The Board of Directors has sole authority to
determine the terms of any one or more series of the Preferred Stock, including
voting rights, conversion rates and liquidation preferences. As a result of the
ability to fix voting rights for a series of preferred Stock, the Board of
Directors has the power to issue a series of Preferred Stock to persons friendly
to management in order to attempt to block a post-tender offer merger or other
transaction by which a third party seeks control, and thereby assist management
in retaining its position. There are currently no plans for the issuance of
Preferred Stock.
Indemnification of Officers and Directors. As permitted by the Georgia
Code, the Articles contain provisions which eliminate the personal liability of
Directors and officers for monetary damages to the Company or its shareholders
for breach of their fiduciary duties as Directors, except to the extent such
elimination of liability is prohibited by the Georgia Code. In accordance with
the Georgia Code, these provisions do not limit the liability of any
38
<PAGE> 41
Director (a) for any appropriation, in violation of duties, of any business
opportunity for the Company, (b) for acts or omissions which involve intentional
misconduct or a knowing violation of law, (c) for any type of liability set
forth in Section 14-2-832 of the Official Code of Georgia Annotated, and (d) for
any transaction from which the director or officer derived any improper personal
benefit. The provisions do not limit or eliminate the rights of the Company or
any shareholder to seek an injunction or any other non-monetary relief in the
event of a breach of a Director's fiduciary duty. In addition, these provisions
apply only to claims against a Director arising out of his role as a Director
and do not relieve a Director from liability for violations of statutory law
such as certain liabilities imposed on a Director under the federal securities
law.
The Bylaws of the Company and provisions of the Georgia Code further
provide that the Company may indemnify litigation expenses of Directors'
officers, employees and agents of the Company if these expenses were incurred as
a result of a legal proceeding brought against such person for acts undertaken
in his official capacity if such person acted in good faith or not opposed to
the best interests of the Company and, in the case of any criminal proceeding,
he or she had no reasonable cause to believe his or her conduct was unlawful.
The purpose of those provisions is to assist the Company in retaining
qualified individuals to serve as Directors and officers by limiting their
exposure to personal liability for serving as such.
The Company is not aware of any pending of threatened action, suit or
proceeding involving any of its Directors, officers, employees or agents for
which indemnification from the Company may be sought. Insofar as indemnification
for liabilities (primarily relating to public distribution of securities)
arising under the 1933 Act may be permitted to Directors, officers and
controlling persons of the Company, or of any affiliate of the Company pursuant
to the Articles of Incorporation or otherwise, the Board of Directors has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. Accordingly, it is possible that the indemnification
provisions of the Articles may not apply to liabilities arising under the 1933
Act unless the prospective indemnitee is successful in the proceeding in
question.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for
the Company by Ellis, Painter, Ratterree & Bart, L.L.P., Savannah, Georgia.
39
<PAGE> 42
EXPERTS
The financial statements as of August 31, 1997 and for the period April
3, 1997 through August 31, 1997 included in this Prospectus have been so
included in reliance on the report of Thigpen, Jones, Seaton & Co. independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") 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 hereby made to the Registration Statement and the exhibits thereto. Each
summary herein of additional information included in the Registration Statement
or any exhibit thereto is qualified in its entirety by reference to such
information or exhibit. The Registration Statement may be obtained from the
Commission upon payment of the prescribed fees therefor, or may be examined at
the Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
40
<PAGE> 43
CITIZENS EFFINGHAM
PARTNERSHIP
FINANCIAL STATEMENTS
PERIOD ENDED AUGUST 31, 1997
F-1
<PAGE> 44
CITIZENS EFFINGHAM PARTNERSHIP
FINANCIAL STATEMENTS
PERIOD ENDED AUGUST 31, 1997
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT..............................................1
FINANCIAL STATEMENTS:
Balance Sheet ........................................................2
Statement of Income.....................................................3
Statement of Cash Flows.................................................4
Notes to Financial Statements...........................................5
</TABLE>
F-2
<PAGE> 45
[THIGPEN, JONES, SEATON & CO., P.C. LETTERHEAD]
CERTIFIED PUBLIC ACCOUNTANTS Robert E. Thigpen, Jr., CPA
Scotty C. Jones, CPA
211 North Franklin Street - P.O. Box 400 Frank W. Seaton. Jr., CPA
Dublin, Georgia 31040-0400
Tel: 912-272-2030 - Fax: 912-272-3318
INDEPENDENT AUDITORS' REPORT
Partners
Citizens Effingham Partnership
We have audited the accompanying balance sheet of Citizens Effingham
Partnership as of August 31, 1997, and the related statements of income and cash
flows for the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Citizens Effingham
Partnership as of August 31, 1997, and the results of its operations and its
cash flows for the period then ended in conformity with generally accepted
accounting principles.
/s/ THIGPEN, JONES, SEATON & CO., P.C.
October 20, 1997
F-3
<PAGE> 46
CITIZENS EFFINGHAM PARTNERSHIP
BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
AS OF AUGUST 31,
-----------------------
1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Current Assets-
Cash and cash equivalents $ 10,873
- -----------------------------------------------------------------------------------------------------------------------
Property, at cost:
Land 2,260
Furniture and fixtures 253
Construction in process 9,300
- -----------------------------------------------------------------------------------------------------------------------
Total 11,813
Less - accumulated depreciation -
- -----------------------------------------------------------------------------------------------------------------------
Property, net 11,813
- -----------------------------------------------------------------------------------------------------------------------
Other Asset-
Organization costs 79,945
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 102,631
=======================================================================================================================
LIABILITIES AND EQUITY
Current Liabilities:
Short-term notes payable $ 102,500
Payroll tax liabilities 131
- -----------------------------------------------------------------------------------------------------------------------
Total Current Liabilities $ 102,631
- -----------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Equity -
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 102,631
=======================================================================================================================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
F-4
<PAGE> 47
CITIZENS EFFINGHAM PARTNERSHIP
STATEMENT OF INCOME
================================================================================
<TABLE>
<CAPTION>
----------------------------
Period Ended August 31,
----------------------------
1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
REVENUES $ -
LESS EXPENSES -
- --------------------------------------------------------------------------------------------------------------------
NET INCOME $ -
====================================================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-5
<PAGE> 48
CITIZENS EFFINGHAM PARTNERSHIP
STATEMENT OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Period Ended August 31,
------------------------
1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ -
Adjustments to reconcile net income to net cash provided by operating activities:
Changes in assets and liabilities attributable to operations: -
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities -
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (11,813)
Organization costs (79,945)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (91,758)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 102,500
Accrued liabilities 131
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 102,631
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,873
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR -
- ------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 10,873
==================================================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-6
<PAGE> 49
CITIZENS EFFINGHAM PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
PERIOD ENDED AUGUST 31, 1997
================================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. REPORTING ENTITY - The Citizens Effingham Partnership began with a
group of twelve partners in the Spring of 1997 and plans to
charter a State Bank in Springfield, Georgia. The partnership
received regulatory approval of their application to charter this
bank from the State Department of Banking and Finance on October
17, 1997 and is pending approval from the Federal Deposit
Insurance Corporation. Citizens Effingham Partnership intends to
form a holding company (Citizens Effingham Bancshares, Inc.) that
will own 100% of the shares of the proposed state chartered bank,
Citizens Bank of Effingham.
The reporting period for the statements of income and cash flows
is from April 3, 1997, when the first activity occured, to August
31, 1997.
2. PROPERTY AND DEPRECIATION - The cost of property, plant, and
equipment will be depreciated over the estimated useful lives of
the related assets. The cost of leasehold improvements will be
depreciated (amortized) over the lesser of the length of the
related leases or the estimates useful lives of the assets.
Depreciation is computed on the straight line method for financial
reporting purposes and on the accelerated basis for income tax
purposes.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
CLASSIFICATION LIFE
----------------------------------------------------------------------------------
<S> <C>
Furniture and fixtures 7-15 Years
----------------------------------------------------------------------------------
</TABLE>
Expenditures for maintenance, repairs, and minor renewals are
charged to expense when incurred. Expenditures for improvements,
replacements, and major renewals are capitalized. Assets retired
or otherwise disposed of are eliminated from the asset accounts
along with related amounts of accumulated depreciation. Any gains
or losses from disposals are included in income.
.
Citizens Bank of Effingham (In Organization) is currently in
organization status, therefore normal business activities have not
yet begun. Accordingly, all property purchased has been
capitalized and depreciation will not be recorded until the assets
are placed into service.
3. CASH AND CASH EQUIVALENTS - For the purposes of the statement of
cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to
be cash equivalents. This includes money market deposit accounts
and short-term certificates of deposit.
4. MANAGEMENT ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at August 31, 1997 and
revenues and expenses during the period then ended. Actual results
could differ from those estimates.
5. ORGANIZATION COST - All cost associated with the application
process up to the point of final regulatory approval will be
capitalized. At the beginning of operation these will start being
amortized on the straight line method over 60 months.
F-7
<PAGE> 50
CITIZENS EFFINGHAM PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
PERIOD ENDED AUGUST 31, 1997
================================================================================
B. SHORT-TERM NOTES PAYABLE
Short-term notes payable consisted of the following at August 31, 1997:
<TABLE>
<CAPTION>
1997
- ----------------------------------------------------------------------------------------
<S> <C>
The Savannah Bank $ 102,500
- ----------------------------------------------------------------------------------------
</TABLE>
These borrowings are against a line of credit that has been established
with The Savannah Bank, N.A. for a total of $300,000 with interest at
the prime rate as established by The Savannah Bank, N.A. The current
rate is 8.25% with interest payable at maturity. Principal and accrued
interest will be due at maturity on March 30, 1998.
C. RELATED PARTY TRANSACTIONS
The note payable at The Savannah Bank, N.A. is fully guaranteed by the
twelve organizers. Each organizer individually guarantees amounts not
to exceed $34,000.
An agreement to purchase the proposed branch site has been contracted
with 21 Centre Partnership of which the partners are organizers of the
Bank. See Note D for further information on these proposed
transactions.
Presently, the partnership is renting an office from 21 Centre
Partnership of which several of the organizers are partners.
D. COMMITMENTS
Citizens Effingham Partnership, the organizers of the proposed Citizens
Bank of Effingham, have entered into an agreement with Harry Shearouse
as Chief Executive Officer and President of the proposed bank. This
agreement obligates Citizens Effingham Partnership to pay Mr. Shearouse
an annual salary of $80,000, payable bi-monthly beginning March 16,
1997, and increasing to $90,000 once all stock has been sold.
Additional provisions of the contract provide for family medical
insurance and contains a severance provision for termination without
cause after operations have commenced.
Citizens Effingham Partnership, the organizers of Citizens Bank of
Effingham, has entered into a tax-free land exchange agreement with
three individuals to acquire a site for the Bank in Springfield,
Georgia. The partnership has also entered into a contract with 21
Centre Partnership to purchase real estate for the Rincon branch site.
Century 21 Heidt Realty is handling both transactions and is owned by
Philip M. Heidt (an organizer).
The organizers have also entered into an agreement with Blewett
Consulting Engineers and Richmod Hill Design Center, Inc. for the
purpose of engineering and architectural design services for two bank
buildings to be located in Springfield, Georgia and the other to be
located in Rincon, Georgia.
F-8
<PAGE> 51
CITIZENS EFFINGHAM PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
PERIOD ENDED AUGUST 31, 1997
================================================================================
E. DISCLOSURES RELATING TO STATEMENT OF CASH FLOWS
CASH FLOWS RELATING TO INTEREST AND INCOME TAXES - Cash paid during the
period for interest and income taxes was as follows:
<TABLE>
<CAPTION>
Period Ended August 31, 1997
----------------------------------------------------------------------------------------------------
<S> <C>
Interest (net of amount capitalized) $ -
----------------------------------------------------------------------------------------------------
Income Taxes $ -
----------------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE> 52
==============================================================================
NO DEALER, SALESMAN OR OTHER
PERSON HAS BEEN AUTHORIZED TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND IF
GIVEN OR MADE, SUCH INFORMATION AND
REPRESENTATIONS SHOULD NOT BE RELIED
UPON. THIS PROSPECTUS DOES NOT 512,000 SHARES
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OF
SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS CITIZENS EFFINGHAM
NOR ANY SALE HEREUNDER SHALL, UNDER ANY BANCSHARES, INC.
CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
-------------------
COMMON STOCK
TABLE OF CONTENTS
PAGE
----
Prospectus Summary .............. 4 ----------
Risk Factors and Other PROSPECTUS
Investment Considerations ..... 6 ----------
The Company and the Bank ........ 12
Use of Proceeds ................. 16
Dividends ....................... 18
Pro Forma Capitalization ........ 19
Business of the Company and
the Bank ...................... 20
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations .................... 27
Management ...................... 28
Shareholders .................... 34
Description of Capital Stock .... 35
Legal Matters ................... 39
Experts ......................... 40
Additional Information .......... 40
Audited Financial Statements NOVEMBER , 1997
for the Citizens Effingham -----
Partnership for Period
Ended August 31, 1989 .........F-1
===============================================================================
<PAGE> 53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth an itemized statement of all expenses
in connection with the issuance and distribution of the securities being
registered:
<TABLE>
<CAPTION>
Public
------
<S> <C>
Filing Fee - Securities and Exchange
Commission $ 1,552
Printing, Postage and Engraving Expenses 2,000
Legal Fees 12,000
Escrow Agent's Fees 1,500
Accounting Fees 7,500
"Blue Sky" Fees and Expenses 2,955
Miscellaneous 2,003
-------
TOTAL $29,510
=======
</TABLE>
Item 14. Indemnification of Directors and Officers
(A) The Articles of Incorporation of the Registrant provide for
the limitation of a Director's liability to the full extent permitted by
Section 14-2-202(b)(4), Official Code of Georgia, as amended, as follows:
A director or officer of this Corporation shall not be personally
liable to the Corporation or its shareholders for monetary damages for
breach of the duty of care or other duty as a director or officer,
except: (a) for any appropriation, in violation of duties, of any
business opportunity for the Corporation, (b) for acts or omissions
which involve intentional misconduct or a knowing violation of law,
(c) for any type of liability set forth in Section 14-2-832 of the
Official Code of Georgia Annotated, or (d) for any transaction from
which the director or officer derived any improper personal benefit.
If the Official Code of Georgia Annotated is amended after approval
by the shareholders of this Article XI to further eliminate or limit
the personal liability of directors, then the liability of a director
or officer of the Corporation shall be eliminated or limited to the
fullest
II-1
<PAGE> 54
extent permitted by the Official Code of Georgia Annotated, as so
amended.
Any repeal or modification of the foregoing paragraph by the
shareholders of the Corporation shall not adversely affect any right or
protection of a director of officer of the Corporation existing at the time of
such repeal or modification.
(B) The By-Laws of the Registrant provide for the indemnification
of directors, officers and other persons as follows:
8.4 EXPENSES. Expenses incurred by any person who was or is a
party or who is threatened to be made a party to any threatened,
pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative, and whether formal or
informal, by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust or other
enterprise, in defending any civil, criminal, administrative or
investigative action, suit or proceeding, may be paid by the
Corporation in advance of the final disposition of such action, suit
or proceeding, as authorized by the Board of Directors generally or as
to a specific case or as to a specific person or persons (designated
by name, title or class of persons) upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such
amount if it shall be ultimately determined that he is not entitled to
be indemnified by the Corporation as authorized under the applicable
provisions of the Georgia Business Corporation Code and upon
compliance with any further requirements of law pertaining to such
advances.
8.5 NON EXCLUSIVITY. The indemnification provided by Section 8.4
shall not be deemed exclusive of any other rights, in respect of
indemnification or otherwise, to which those seeking indemnification
may be entitled under any bylaw or resolution approved by the
affirmative vote of the holders of the majority of the shares entitled
to vote thereon taken at a meeting the notice of which specified that
such bylaw or resolution would be placed before the shareholders, both
as to action by a director, officer, employee or agent in his official
capacity and as to action in another capacity while holding such
office or position, provided such indemnification does not exceed
the powers of indemnity permitted to corporations under the provisions
of the Georgia Business Corporation Code, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators
of such person.
II-2
<PAGE> 55
(C) The following sections of Georgia law concern indemnification
of officers, directors and other persons by corporations:
O.C.G.A. 14-2-850. PART DEFINITIONS.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(2) "Director" or "officer" means an individual who is or was
a director or officer, respectively, of a corporation or who, while a
director or officer of the corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee,
employee, or agent of another domestic or foreign corporation,
partnership, joint venture, trust, employee benefit plan, or other
entity. A director or officer is considered to be serving an employee
benefit plan at the corporation's request if his or her duties to the
corporation also impose duties on, or otherwise involve services by,
the director or officer to the plan or to participants in or
beneficiaries of the plan. Director or officer includes, unless the
context otherwise requires, the estate or personal representative of a
director or officer.
(3) "Disinterested director" means a director who at the time
of a vote referred to in subsection (c) of Code Section 14-2-853 or a
vote or selection referred to in subsection (b) or (c) of Code Section
14-2-855 or subsection (a) of Code Section 14-2-856 is not:
(A) A party to the proceeding; or
(B) An individual who is a party to a proceeding having
a familial, financial, professional, or employment relationship with
the director whose indemnification or advance for expenses is the
subject of the decision being made with respect to the proceeding,
which relationship would, in the circumstances, reasonably be expected
to exert an influence on the director's judgment when voting on the
decision being made.
(4) "Expenses" includes counsel fees.
(5) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan), or reasonable expenses incurred
with respect to a proceeding.
II-3
<PAGE> 56
(6) "Official capacity" means:
(A) When used with respect to a director, the office or
director in a corporation; and
(B) When used with respect to an officer, as contemplated
in Code Section 14-2-857, the office in a corporation held by
the officer.
Official capacity does not include service for any other domestic or
foreign corporation or any partnership, joint venture, trust, employee
benefit plan, or other entity.
(7) "Party" means an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
(8) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative and whether formal or informal.
O.C.G.A. 14-2-851. AUTHORITY TO INDEMNIFY.
(a) Except as otherwise provided in this Code section, a
corporation may indemnify an individual who is a party to a proceeding
because he or she is or was a director against liability incurred in
the proceeding if:
(1) Such individual conducted himself or herself in
good faith; and
(2) Such individual reasonably believed:
(A) In the case of conduct in his or her
official capacity, that such conduct was in the best
interests of the corporation;
(B) In all other cases, that such conduct was
at least not opposed to the best interests of the
corporation; and
(C) In the case of any criminal proceeding,
that the individual had no reasonable cause to
believe such conduct was unlawful.
(b) A director's conduct with respect to an employee benefit
plan for a purpose he or she believed in good faith to be in the
interests of the participants in and beneficiaries of the plan is
conduct that satisfies the requirement of subparagraph (a)(2)(B) of
this Code section.
II-4
<PAGE> 57
(c) The termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did not
meet the standard of conduct described in this Code section.
(d) A corporation may not indemnify a director under this
Code section:
(1) In connection with a proceeding by or in the
right of the corporation, except for reasonable expenses
incurred in connection with the proceeding if it is determined
that the director has met the relevant standard of conduct
under this Code section; or
(2) In connection with any proceeding with respect to
conduct for which he or she was adjudged liable on the basis
that personal benefit was improperly received by him or her,
whether or not involving action in his or her official
capacity.
O.C.G.A. 14-2-852. MANDATORY INDEMNIFICATION.
A corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he or she was a
party because he or she was a director of the corporation against reasonable
expenses incurred by the director in connection with the proceeding.
O.C.G.A. 14-2-853. ADVANCE FOR EXPENSES.
(a) A corporation may, before final disposition of a
proceeding, advance funds to pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding because
he or she is a director if he or she delivers to the corporation:
(1) A written affirmation of his or her good faith
belief that he or she has met the relevant standard of conduct
described in Code Section 14-2-851 or that the proceeding
involves conduct for which liability has been eliminated under
a provision of the articles of incorporation as authorized by
paragraph (4) of subsection (b) of Code Section 14-2-202; and
(2) His or her written undertaking to repay any funds
advanced if it is ultimately determined that the director is
not entitled to indemnification under this part.
II-5
<PAGE> 58
(b) The undertaking required by paragraph (2) of subsection
(a) of this Code section must be an unlimited general obligation of
the director but need not be secured and may be accepted without
reference to the financial ability of the director to make repayment.
(c) Authorizations under this Code section shall be made:
(1) By the board of directors:
(A) When there are two or more disinterested
directors, by a majority vote of all the disinterested
directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of
a committee of two or more disinterested directors
appointed by such a vote; or
(B) When there are fewer than two disinterested
directors, by the vote necessary for action by the board
in accordance with subsection (c) of Code Section
14-2-824, in which authorization directors who do not
qualify as disinterested directors may participate; or
(2) By the shareholders, but shares owned or voted
under the control of a director who at the time
does not qualify as a disinterested director
with respect to the proceeding may not be voted
on the authorization.
O.C.G.A. 14-2-854. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR
EXPENSES.
(a) A director who is a party to a proceeding because he or
she is a director may apply for indemnification or advance for
expenses to the court conducting the proceeding or to another court of
competent jurisdiction. After receipt of an application and after
giving any notice it considers necessary, the court shall:
(1) Order indemnification or advance for expenses if it
determines that the director is entitled to indemnification
under this part; or
(2) Order indemnification or advance for expenses if it
determines, in view of all the relevant circumstances, that it
is fair and reasonable to indemnify the director or to advance
expenses to the director, even if the director has not met the
relevant standard of conduct set
II-6
<PAGE> 59
forth in subsections (a) and (b) of Code Section 14-2-851,
failed to comply with Code Section 14-2-853, or was adjudged
liable in a proceeding referred to in paragraph (1) or (2) of
subsection (d) of Code Section 14-2-851, but if the director
was adjudged so liable, the indemnification shall be limited
to reasonable expenses incurred in connection with the
proceeding.
(b) If the court determines that the director is entitled to
indemnification or advance for expenses under this part, it may also
order the corporation to pay the director's reasonable expenses to
obtain court-ordered indemnification or advance for expenses.
O.C.G.A. 14-2-855. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.
(a) A corporation may not indemnify a director under Code
Section 14-2-851 unless authorized thereunder and a determination has
been made for a specific proceeding that indemnification of the
director is permissible in the circumstances because he or she has met
the relevant standard of conduct set forth in Code Section 14-2-851.
(b) The determination shall be made:
(1) If there are two or more disinterested directors,
by the board of directors by a majority vote of all the
disinterested directors (a majority of whom shall for such
purpose constitute a quorum) or by a majority of the members
of a committee of two or more disinterested directors
appointed by such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in paragraph
(1) of this subsection; or
(B) If there are fewer than two disinterested
directors, selected by the board of
directors (in which selection directors
who do not qualify as disinterested
directors may participate); or
(3) By the shareholders, but shares owned by or voted
under the control of a director who at the time does not
qualify as a disinterested director may not be voted on the
determination.
II-7
<PAGE> 60
(c) Authorization of indemnification or an obligation to
indemnify and evaluation as to reasonableness of expenses shall be
made in the same manner as the determination that indemnification is
permissible, except that if there are fewer than two disinterested
directors or if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to reasonableness
of expenses shall be made by those entitled under subparagraph (b) (2)
(B) of this Code section to select special legal counsel.
O.C.G.A. 14-2-856. SHAREHOLDER APPROVED INDEMNIFICATION.
(a) If authorized by the articles of incorporation or a
bylaw, contract, or resolution approved or ratified by the
shareholders by a majority of the votes entitled to be cast, a
corporation may indemnify or obligate itself to indemnify a director
made a party to a proceeding including a proceeding brought by or in
the right of the corporation, without regard to the limitations in
other Code sections of this part, but shares owned or voted under the
control of a director who at the time does not qualify as a
disinterested director with respect to any existing or threatened
proceeding that would be covered by the authorization may not be voted
on the authorization.
(b) The corporation shall not indemnify a director under this
Code section for any liability incurred in a proceeding in which the
director is adjudged liable to the corporation or is subjected to
injunctive relief in favor of the corporation:
(1) For any appropriation, in violation of the director's
duties, of any business opportunity of the corporation;
(2) For acts or omissions which involve intentional
misconduct or a knowing violation of law;
(3) For the types of liability set forth in Code Section
14-2-832; or
(4) For any transaction from which he or she received
an improper personal benefit.
(c) Where approved or authorized in the manner described in
subsection (a) of this Code section, a corporation may advance or
reimburse expenses incurred in advance of final disposition of the
proceeding only if:
(1) The director furnishes the corporation a written
affirmation of his or her good faith belief that his or
II-8
<PAGE> 61
her conduct does not constitute behavior of the kind described
in subsection (b) of this Code section; and
(2) The director furnishes the corporation a written
undertaking, executed personally or on his or her behalf, to
repay any advances if it is ultimately determined that the
director is not entitled to indemnification under this Code
section.
O.C.G.A 14-2-857. INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS.
(a) A corporation may indemnify and advance expenses under
this part to an officer of the corporation who is a party to a
proceeding because he or she is an officer of the corporation:
(1) To the same extent as a director; and
(2) If he or she is not a director, to such further
extent as may be provided by the articles of incorporation,
the bylaws, a resolution of the board of directors, or
contract except for liability arising out of conduct that
constitutes:
(A) Appropriation, in violation of his or her
duties, of any business opportunity of the corporation;
(B) Acts or omissions which involve intentional
misconduct or a knowing violation of law;
(C) The types of liability set forth in Code Section
14-2-832; or
(D) Receipt of an improper personal benefit.
(b) The provisions of paragraph (2) of subsection (a) of this
Code section shall apply to an officer who is also a director if the
sole basis on which he or she is made a party to the proceeding is an
act or omission solely as an officer.
(c) An officer of a corporation who is not a director is
entitled to mandatory indemnification under Code Section 14-2-852, and
may apply to a court under Code Section 14-2-854 for indemnification
or advances for expenses, in each case to the same extent to which a
director may be entitled to indemnification or advances for expenses
under those provisions.
II-9
<PAGE> 62
(d) A corporation may also indemnify and advance expenses to
an employee or agent who is not a director to the extent, consistent
with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of
directors, or contract.
O.C.G.A. 14-2-858. INSURANCE.
A corporation may purchase and maintain insurance on behalf of
an individual who is a director, officer, employee, or agent of the
corporation or who, while a director, officer, employee, or agent of
the corporation, serves at the corporation's request as a director,
officer, partner, trustee, employee, or agent of another domestic or
foreign corporation, partnership, joint venture, trust, employee
benefit plan, or other entity against liability asserted against or
incurred by him or her in that capacity or arising from his or her
status as a director, officer, employee, or agent, whether or not the
corporation would have power to indemnify or advance expenses to him
or her against the same liability under this part.
O.C.G.A. 14-2-859. APPLICATION OF PART.
(a) A corporation may, by a provision in its articles of
incorporation or bylaws or in a resolution adopted or a contract
approved by its board of directors or shareholders, obligate itself in
advance of the act or omission giving rise to a proceeding to provide
indemnification or advance funds to pay for or reimburse expenses
consistent with this part. Any such obligatory provision shall be
deemed to satisfy the requirements for authorization referred to in
subsection (c) of Code Section 14-2-853 or subsection (c) of Code
Section 14-2-855. Any such provision that obligates the corporation to
provide indemnification to the fullest extent permitted by law shall
be deemed to obligate the corporation to advance funds to pay for or
reimburse expenses in accordance with Code Section 14-2-853 to the
fullest extent permitted by law, unless the provision specifically
provides otherwise.
(b) Any provision pursuant to subsection (a) of this Code
section shall not obligate the corporation to indemnify or advance
expenses to a director of a predecessor of the corporation, pertaining
to conduct with respect to the predecessor, unless otherwise
specifically provided. Any provision for indemnification or advance
for expenses in the articles of incorporation, bylaws, or a resolution
of the board of directors or shareholders, partners, or, in the case
of limited liability companies, members or managers of a predecessor
of the corporation or other entity in a merger or
II-10
<PAGE> 63
in a contract to which the predecessor is a party, existing at the
time the merger takes effect, shall be governed by paragraph (3) of
subsection (a) of Code Section 14-2-1106.
(c) A corporation may, by a provision in its articles of
incorporation, limit any of the rights to indemnification or advance
for expenses created by or pursuant to this part.
(d) This part does not limit a corporation's power to pay or
reimburse expenses incurred by a director or an officer in connection
with his or her appearance as a witness in a proceeding at a time when
he or she is not a party.
(e) Except as expressly provided in Code Section 14-2-857,
this part does not limit a corporation's power to indemnify, advance
expenses to, or provide or maintain insurance on behalf of an employee
or agent.
Item 15. Recent Sales of Unregistered Securities
None.
Item 16. Exhibits and Financial Statement Schedules
<TABLE>
<S> <C>
3.1 Articles of Incorporation
3.2 By-Laws
4 Specimen of certificate for Common Stock
5 Opinion and Consent of Ellis, Painter, Ratterree & Bart, LLP
10.1 Partnership Agreement
10.2 Amendment to Partnership
10.3 Contracts to Purchase Land (to be filed by amendment)
10.4 Employment Agreement of Harry H. Shearouse (to be filed by amendment)
10.5 Escrow Agreement
23.1 Consent of Thigpen, Jones, Seaton & Co.
23.2 Consent of Ellis, Painter, Ratterree & Bart, LLP.
24 Powers of Attorney
27 Financial Data Schedule (FOR SEC USE)
</TABLE>
II-11
<PAGE> 64
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, 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-12
<PAGE> 65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Springfield
and State of Georgia on the 5th day of November, 1997.
CITIZENS EFFINGHAM BANCSHARES, INC.
By: /s/ Harry H. Shearouse
-----------------------------------------
Harry H. Shearouse
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints HARRY H. SHEAROUSE, his true and lawful
attorney-in-fact, with full power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any 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, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Date
----
<S> <C> <C>
/s/ Harry H. Shearouse President, Chief Executive 11/5/97
- -------------------------------- Officer and Director -------
Harry H. Shearouse
/s/ Jon G. Burns Director 11/5/97
- -------------------------------- -------
Jon G. Burns
/s/ Charles E. Hartzog Director 11/5/97
- -------------------------------- -------
Charles E. Hartzog
/s/ Philip M. Heidt Director 11/5/97
- -------------------------------- -------
Philip M. Heidt
/s/ W. Harvey Kieffer Director 11/5/97
- -------------------------------- -------
W. Harvey Kieffer
</TABLE>
<PAGE> 66
<TABLE>
<S> <C> <C>
/s/ C. Murray Kight Director 11/5/97
- -------------------------------- -------
C. Murray Kight
/s/ Thomas C. Strickland, Jr. Director 11/5/97
- -------------------------------- -------
Thomas C. Strickland, Jr.
/s/ Mariben M. Thompson Director 11/5/97
- -------------------------------- -------
Mariben M. Thompson
/s/ Thomas O. Triplett, Sr. Director 11/5/97
- -------------------------------- -------
Thomas O. Triplett, Sr.
/s/ J. Terrell Webb Director 11/5/97
- -------------------------------- -------
J. Terrell Webb
/s/ H. Mitchell Weitman Director 11/5/97
- -------------------------------- -------
H. Mitchell Weitman
/s/ Wendel H. Wilson Director 11/5/97
- -------------------------------- -------
Wendel H. Wilson
</TABLE>
<PAGE> 67
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
3.1 Articles of Incorporation
3.2 By-Laws
4 Specimen of Certificate for Common Stock
5 Opinion and Consent of Ellis, Painter, Ratterree & Bart, LLP
10.1 Partnership Agreement
10.2 Amendment to Partnership
10.3 Contracts to Purchase Land (to be filed by amendment)
10.4 Employment Agreement of Harry H. Shearouse (to be filed by amendment)
10.5 Escrow Agreement
23.1 Consent of Thigpen, Jones, Seaton & Co., P.C.
23.2 Consent of Ellis, Painter, Ratterree & Bart, LLP.
24 Powers of Attorney
27 Financial Data Schedule (FOR SEC USE)
</TABLE>
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
CITIZENS EFFINGHAM BANCSHARES, INC.
ARTICLE I
The name of the Corporation is CITIZENS EFFINGHAM BANCSHARES, INC.
ARTICLE II
The Corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
ARTICLE III
The period of duration of the Corporation shall be perpetual.
ARTICLE IV
The Corporation is a corporation for profit and is organized for the
following purposes, which may be carried out directly or through interests in
other entities:
To control banks and to engage in any other activity permitted to a
bank holding company by all pertinent rules and regulations; to do all other
things which may be necessary, proper or appropriate in the ordinary course of
business to carry out such activities; to engage in the business of buying,
holding, selling, improving, leasing, renting, manufacturing, producing,
processing, adapting, preparing, storing, warehousing, distributing, using and
otherwise handling, dealing in, dealing with or disposing of personal property,
whether or not related to the foregoing; to engage in the business of buying,
holding, selling, improving, leasing, renting, using or otherwise handling,
dealing in, dealing with and disposing of real property, whether or not related
to the foregoing; to act as broker, agent or representative of persons,
corporations or other organizations or entities; to engage in the business of
rendering services of any nature, whether or not related to any of the
foregoing; to apply for, to obtain and to hold patents on inventions, processes
and other matters; to grant licenses under patents or with respect to any other
plans, processes, designs, information or know-how; to organize or to direct
the operations of, or to acquire, hold, sell, pledge and otherwise deal in all
or part of the interests, shares or other securities of, one or more
corporations or other organizations or entities; to acquire, hold, sell, pledge
and otherwise deal in other investment assets of any kind or character
whatsoever: to engage in any lawful act or activities related or incidental to
the foregoing; and to engage in any lawful act or activities for which
corporations may be organized under the Georgia Business Corporation Code.
<PAGE> 2
ARTICLE V
The total authorized capital stock of the Corporation shall be
$30,000,000, divided into the following classes:
<TABLE>
<CAPTION>
Authorized Number
-----------------
Class of Shares of Each Class Par Value
- --------------- ------------- ---------
<S> <C> <C>
Common 20,000,000 $1.00
Preferred 10,000,000 $1.00
</TABLE>
The shares may be issued by the Corporation from time to time as approved
by its board of directors without the approval of its stockholders except as
otherwise provided in this Article V or to the extent that such approval is
required by governing law, rule, or regulation. The consideration for the
issuance of the shares shall be paid in full before their issuance and shall
not be less than the par value of $1.00 per share. Neither promissory notes nor
future services shall constitute payment or part payment for the issuance of
shares of the Corporation. The consideration for the shares shall be cash,
tangible or intangible property (to the extent direct investment in such
property would be permitted to the Corporation), labor, or services actually
performed for the Corporation or any combination of the foregoing. In the
absence of actual fraud in the transaction, the value of such property, labor,
or services, as determined by the board of directors of the Corporation, shall
be conclusive. Upon payment of such consideration such shares shall be deemed
to be fully paid and nonassessable.
Nothing contained in this Article V (or in any supplementary articles
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to vote more than one vote per share,
provided, however, that this restriction on voting separately by class or
series shall not apply:
(i) To any provision which would authorize the holders of preferred stock,
voting as a class or series, to elect some members of the board of directors,
less than a majority thereof, in the event of default in the payment of
dividends on any class or series of preferred stock;
(ii) To any provision which would require the holders of preferred stock,
voting as a class, to approve the merger or consolidation of the Corporation
with another corporation or the sale, lease, or conveyance (other than by
mortgage or pledge) of properties or business in exchange for securities of a
corporation other than the Corporation if the preferred stock is exchanged for
securities of such other corporations; and
(iii) To any amendment which would adversely change the specific terms of
any class or series of capital stock as set forth in this Article V (or in any
supplementary articles hereto), including any amendment which would create or
enlarge any class or series ranking prior thereto in rights and preferences. An
amendment which increases the number of authorized shares of any class or
series of capital stock, or substitutes the surviving corporation in a merger
or consolidation of the Corporation, shall not be considered to be such an
adverse change.
A description of the different classes and series of the Corporation's
capital stock and a statement of the designations, and the relative rights,
preferences, and limitations of the shares of each class of the series of
capital stock are as follows:
2
<PAGE> 3
A. Common stock. Except as provided in this Article V (or in any
supplementary articles hereto) the holders of the common stock shall
exclusively possess all voting power.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preference over the common stock as to the payment of dividends, the full
amount of dividends and of sinking fund or retirement fund or other retirement
payments, if any, to which such holders are respectively entitled, in
preference to the common stock, then dividends may be paid on the common stock
and on any class or series of stock entitled to participate therewith as to
dividends, out of any asset legally available for the payment of dividends; but
only when and as declared by the board of directors.
Except as provided in Articles VIII, IX and X hereinafter, each share of
common stock shall have the same relative rights as and be identical in all
respects to all the other shares of common stock.
B. Preferred stock. The board of directors of the Corporation may provide
in supplementary articles hereto for one or more classes of preferred stock
which shall be separately identified. The shares of any class may be divided
into and issued in series, with each series separately designated so as to
distinguish the shares thereof from the shares of all other series and classes.
All shares of the same class shall be identical except as to the following
relative rights and preferences, as to which there may be variations between
different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if
so, from which date(s), the payment date(s) for dividends, and the
participating or other special rights, if any, with respect to
dividends;
(c) The voting powers, full or limited, if any, of shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which, such
shares may be redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of
the Corporation;
(f) Whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund
and the manner of its application, including the price or prices at
which such shares may be redeemed or purchased through the application
of such funds;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the
Corporation, and, if so, the conversion price(s), or the rate(s) of
exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such
conversion or exchange;
3
<PAGE> 4
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of
the same or any other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the
same relative rights as and be identical in all respects to all the other
shares of the same series.
The board of directors shall have authority to divide, by the adoption
of supplementary articles, any authorized class of preferred stock into series,
and, within the limitations set forth in this Article V and these Articles of
Incorporation, fix and determine the relative rights and preferences of the
shares of any series so established. Prior to the issuance of any preferred
shares of a series established by supplementary articles adopted by the board
of directors, the Corporation shall file with the Secretary to the board a
dated copy of those supplementary articles established in designating the
series and fixing and determining the relative rights and preferences thereof.
ARTICLE VI
Holders of the capital stock of the Corporation shall not be entitled
to pre-emptive rights with respect to any shares of the Corporation which may
be issued.
ARTICLE VII
1. The number of directors of the Corporation shall be as set forth in
Bylaws adopted by the Corporation and shall be divided into three (3)
classes as nearly equal in number as possible. Directors of the First
Class shall hold office until the first annual meeting of the
shareholders following their election; Directors of the Second Class
shall hold office until the second annual meeting following their
election; and Directors of the Third Class shall hold office until the
third annual meeting following their election. At each annual meeting
of shareholders, beginning with the first annual meeting, directors
shall be chosen for a term of three (3) years to succeed those
Directors whose terms expire.
2. Any vacancy in the Board of Directors resulting from the death,
resignation or retirement of a director, or any other cause other than
removal by the shareholders or increase in the number of directors
shall be filled by a majority vote of the remaining directors, though
less than a quorum, for a term corresponding to the unexpired term of
his or her predecessor in office.
3. Newly-created directorships resulting from any increase in the
authorized number of directors shall be filled by a majority vote of
the remaining directors though less than a quorum, and the directors
so chosen shall hold office for a term expiring at the next annual
meeting of shareholders at which a successor shall be elected and
shall qualify.
4. At any meeting of the shareholders called for that purpose, the
entire board of directors or any individual director may be removed
from office, with or without cause, upon the
4
<PAGE> 5
affirmative vote of the holders of at least seventy-five (75%) percent
of the outstanding voting shares of the Corporation and the
affirmative vote of the holders of at least seventy-five (75%) percent
of the outstanding voting shares of the Corporation other than those
of which an interested shareholder, as defined in Article VIII hereof,
is the beneficial owner.
ARTICLE VIII
1. As used in this Article VIII, the terms:
(1) "Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is
controlled by, or is under common control with, a specified
person.
(2) "Announcement date" means the date of the first general
public announcement of the proposal of the business
combination.
(3) "Associate" when used to indicate a relationship with any
person, means:
(A) Any corporation or organization, other than the
Corporation or a subsidiary of the Corporation, of
which such person is an officer, director, or
partner or is the beneficial owner of 10 percent or
more of any class of equity securities;
(B) Any trust or other estate in which such person
has a beneficial interest of 10 percent or more, or
as to which such person serves as a trustee or in a
similar fiduciary capacity; and
(C) Any relative or spouse of such person, or any
relative of such spouse, who has the same home as
such person.
(4) "Beneficial owner" - a person shall be considered to be
the beneficial owner of any equity securities:
(A) Which such person or any of such person's
affiliates or associates owns, directly or
indirectly;
(B) Which such person or any of such person's
affiliates or associates, directly or indirectly,
has:
(i) The right to acquire, whether such
right is exercisable immediately or only after the
passage of time, pursuant to any agreement,
arrangement, or understanding or upon the exercise
of conversion rights, exchange rights, warrants or
options, or otherwise; or
(ii) The right to vote pursuant to any
agreement, arrangement, or understanding; or
(C) Which are owned, directly or indirectly, by any
other person with which such person or any of such
person's affiliates or associates has any agreement,
5
<PAGE> 6
arrangement, or understanding for the purpose of
acquiring, holding, voting, or disposing of equity
securities.
(5) Business combinations means:
(A) Any merger or consolidation of the Corporation
or any subsidiary with (i) any interested
shareholder or (ii) any other corporation, whether
or not itself an interested shareholder, which is,
or after the merger or consolidation would be, an
affiliate of an interested shareholder that was an
interested shareholder prior to the consummation of
the transaction;
(B) Any sale, lease, transfer, or other disposition,
other than in the ordinary course of business, in
one transaction or in a series of transactions in
any twelve (12) month period, to any interested
shareholder or any affiliate or any interested
shareholder, other than the Corporation or any of
its subsidiaries, of any assets of the Corporation
or any subsidiary having, measured at the time the
transaction or transactions are approved by the
board of directors of the Corporation, an aggregate
book value as of the end of the Corporation's most
recently ended fiscal quarter of ten (10) percent or
more of the net assets of the Corporation as of the
end of such fiscal quarter;
(C) The issuance or transfer by the Corporation, or
any subsidiary, in one transaction or a series of
transactions in any twelve (12) month period, of any
equity securities of the Corporation or any
subsidiary which have an aggregate market value of
five percent (5%) or more of the total market value
of the outstanding common and preferred shares of
the corporation whose shares are being issued, to
any interested shareholder or any affiliate of any
interested shareholder, other than the Corporation
or any of its subsidiaries, except pursuant to the
exercise of warrants or rights to purchase
securities offered pro rata to all holders of the
Corporation's voting shares or any other method
affording substantially proportionate treatment to
the holders of voting shares;
(D) The adoption of any plan or proposal for the
liquidation or dissolution of the Corporation in
which anything other than cash will be received by
an interested shareholder or an affiliate of any
interested shareholder; or
(E) Any reclassification of securities, including
any reverse stock split, or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its subsidiaries, which has
the effect, directly or indirectly, in one
transaction or a series of transactions in any
twelve (12) month period, of increasing by five
percent (5%) or more the proportionate amount of the
outstanding shares of any class or series of equity
securities of the Corporation or any subsidiary
which is directly or indirectly beneficially owned
by an interested shareholder or any affiliate of any
interested shareholder.
(6) "Continuing director" means any member of the board of
directors who is not an affiliate or associate of an
interested shareholder or any of its affiliates, other than
the Corporation or any of its subsidiaries, and who was a
director of the Corporation prior
6
<PAGE> 7
to the determination date, and any successor to such
continuing director who is not an affiliate or an associate of
an interested shareholder or any of its affiliates, other than
the Corporation or its subsidiaries, and is recommended or
elected by a majority of all of the continuing directors.
(7) "Control," including the terms "Controlling", "Controlled
by", and "under common control with," means the possession,
directly or indirectly, of the power to direct or to cause the
direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or
otherwise, and the beneficial ownership of shares representing
ten percent (10%) or more of the votes entitled to be cast by
a corporation's voting shares shall create an irrebuttable
presumption of control.
(8) "Corporation" shall include any trust merging with a
domestic corporation pursuant to Official Code of Georgia
Annotated Section 53-12-59.
(9) "Determination date" means the date on which an
interested shareholder first became an interested shareholder.
(10) "Fair market values" means:
(A) In the case of securities, the highest closing
sale price, during the period beginning with and
including the determination date and for 29 days
prior to such date, of such a security on the
principal United States securities exchange
registered under the Securities Exchange Act of 1934
on which such securities are listed, or, if such
securities are not listed on any such exchange, the
highest closing sales price reported with respect to
such a security, in each case during the 30 day
period referred to above, on the National
Association of Securities Dealers, Inc., Automatic
Quotation System, or any system then in use, or, if
no such quotations are available, the fair market
value on the date in question of such a security as
determined in good faith at a duly called meeting of
the board of directors by a majority of all of the
continuing directors, or, if there are no continuing
directors, by the entire board of directors; and
(B) In the case of property other than securities,
the fair market value of such property on the date
in question as determined in good faith at a duly
called meeting of the board of directors by a
majority of all of the continuing directors, or, if
there are no continuing directors, by the entire
board of directors of the Corporation.
(11) "Interested shareholders" means any person, other than
the Corporation or its subsidiaries, that:
(A) (i) Is the beneficial owner of ten percent (10%)
or more of the voting power of the outstanding
voting shares of the Corporation; or
(ii) Is an affiliate of the Corporation and, at any
time within the two (2) year period immediately
prior to the date in question, was the beneficial
owner of ten percent (10%) or more of the voting
power of the then outstanding voting
7
<PAGE> 8
shares of the Corporation; and
(B) For the purpose of determining whether a person
is an interested shareholder, the number of voting
shares deemed to be outstanding shall not include
any unissued voting shares which may be issuable
pursuant to any agreement, arrangement, or
understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
(12) "Voting shares" means shares entitled to vote generally
in the election of directors.
2. In addition to any vote otherwise required by law or these Articles
of Incorporation, a business combination shall be:
(1) Unanimously approved by the continuing directors, provided
that the continuing directors constitute at least three
members of the board of directors at the time of such
approval; or
(2) Recommended by at least two-thirds of the continuing
directors and approved by a majority of the votes entitled to
be cast by holders of voting shares, other than voting shares
beneficially owned by the interested shareholder who is, or
whose affiliate is, a party to the business combination.
3. (1) As used in this Section 3, the term "Interested
shareholder" refers to the interested shareholder which is
party to, or an affiliate of which is party to, the business
combination in question.
(2) The vote required by Section 2 of this Article VIII does
not apply to a business combination if each of the following conditions
is met:
(A) The aggregate amount of the cash, and the fair market
value as of five days before the consummation of the business
combination of consideration other than cash, to be received
per share by holders of any class of common shares or any
class or series of preferred shares in such business
combination is at least equal to the highest of the following:
(i) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting
dealers' fees, paid by the interested shareholder for
any shares of the same class or series acquired by
it:
(a) Within the two (2) year period immediately prior
to the announcement date; or
(b) In the transaction in which it became an
interested shareholder, whichever is higher;
(ii) The fair market value per share of such class or
series as determined on the announcement date and as
determined on the determination date, whichever is
higher; or
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(iii) In the case of shares other than common
shares, the highest preferential amount per share to which
the holders of shares of such class or series are entitled in
the event of any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation; provided that
this subparagraph shall only apply if the interested
shareholder has acquired shares of such class or series
within the two-year period immediately prior to the
announcement date:
(B) The consideration to be received by holders of any class
or series of outstanding shares is to be in cash or in the
same form as the interested shareholder has previously paid
for shares of the same class or series. If the interested
shareholder has paid for shares of any class or series of
shares with varying forms of consideration, the form of
consideration for such class or series of shares shall be
either cash or the form used to acquire the largest number of
shares of such class or series previously acquired by it;
(C) After the interested shareholder has become an interested
shareholder and prior to the consummation of such business
combination:
(i) Unless approved by a majority of the continuing
directors, there shall have been:
(a) No failure to declare and pay at the regular
date therefor any full periodic dividends, whether
or not cumulative, on any outstanding preferred
shares of the Corporation;
(b) No reduction in the annual rate of dividends
paid on any class of common shares, except as
necessary to reflect any subdivision of the shares;
(c) An increase in such annual rate of dividends as
is necessary to reflect any reclassification,
including any reverse share split, recapitalization,
reorganization, or any similar transaction which has
the effect of reducing the number of outstanding
shares; and
(d) No increase in the interested shareholder's
percentage ownership of any class or series of
shares of the Corporation by more than one percent
(1%) in any twelve (12) month period;
(ii) The provisions of subsections (2)(C)(i)(a) and
(b) of this Section 3 shall not apply if the interested
shareholder or an affiliate or associate of the interested
shareholder did not vote as a director of the Corporation in
a manner inconsistent with subsections (2)(c)(i)(a) and (b)
of this Section 3 and the interested shareholder, within ten
days after any act or failure to act inconsistent with
subdivisions (2)(C)(i)(a) and (b) of this Section 3, notified
the board of directors of the Corporation in writing that the
interested shareholder disapproved thereof and requested in
good faith that the board of directors rectify the act or
failure to act; and
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(D) After the interested shareholder has become an interested
shareholder, the interested shareholder has not received the
benefit, directly or indirectly, except proportionately as a
shareholder, of any loans, advances, guarantees, pledges, or
other financial assistance or any tax credits or other tax
advantages provided by the Corporation or any of its
subsidiaries, whether in anticipation of or in connection
with such business combination or otherwise.
4. The requirements of Section 2 of this Article VIII shall not
apply to a business combination with an interested shareholder or its
affiliates if, during the three (3) year period immediately preceding
the consummation of the business combination, the interested
shareholder has not at any time during such period:
(1) Ceased to be an interested shareholder; or
(2) Increased its percentage ownership of any class or series
of common or preferred shares of the Corporation by more than
one percent (1%) in any twelve (12) month period.
5. Notwithstanding any other provision of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding
the fact that a lesser percentage may be specified by law, these
Articles of Incorporation, or the Bylaws of the Corporation), both the
affirmative vote of the holders of at least seventy-five (75%) of the
outstanding voting shares of the Corporation and the affirmative vote
of the holders of at least seventy-five (75%) of the outstanding
voting shares of the Corporation other than those of which an
interested shareholder is the beneficial owner, shall be required to
amend or repeal, or adopt any provision inconsistent with, this
Article VIII of these Articles of Incorporation, in addition to any
affirmative vote required by law or these Articles of Incorporation
with respect to any other shares of capital stock of the Corporation;
provided, however, that this Section 5 shall not apply to any such
amendment, repeal, or adoption which has been unanimously recommended
to the shareholders of the Corporation by the continuing directors
then in office.
ARTICLE IX
1. For purposes of this Article IX, the definitions contained in
Article VIII of these Articles of Incorporation shall be applicable
with the following exceptions:
(1) For purposes of this Article IX, a person shall not be
considered to be the "Beneficial owner" as that term is defined in
subsection (4) of Section 1 of Article VIII, of:
(A) Stock tendered pursuant to a tender or exchange offer
made by such person or any of such person's affiliates or
associates until such tendered stock is accepted for purchase
or exchange; or
(B) Any equity securities which such person or such person's
affiliates or associates have the right to vote pursuant to
any agreement, arrangement, or understanding if the
agreement, arrangement, or understanding to vote such stock
arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made to ten or
more persons.
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(2) For purposes of this Article IX, Business combinations
means:
(A) Any merger or consolidation of the Corporation or any
subsidiary with: (1) any interested shareholder; or (ii) any
other corporation, whether or not itself an interested
shareholder, which is, or after the merger or consolidation
would be, an affiliate of an interested shareholder that was
an interested shareholder prior to the consummation of the
transaction other than as a result of the interested
shareholder's ownership of the Corporation's voting shares;
(B) Any sale, lease, transfer, or other disposition, other
than in the ordinary course of business, in one transaction
or in a series of transactions, to any interested shareholder
or any affiliate or associate of any interested shareholder,
other than the Corporation or any of its subsidiaries, of any
assets of the Corporation or any subsidiary having, measured
at the time the transaction or transactions are approved by
the Board of Directors, an aggregate book value as of the end
of the Corporation's most recently ended fiscal quarter of
ten percent (10%) or more of the net assets of the
Corporation as of the end of such fiscal quarter;
(C) The issuance or transfer by the Corporation, or any
subsidiary, in one transaction or a series of transactions,
of any equity securities of the Corporation or any subsidiary
which have an aggregate market value of five percent (5%) or
more of the total market value of the Outstanding common and
preferred shares of the Corporation whose shares are being
issued to any interested shareholder or any affiliate or
associate of any interested shareholder, other than the
Corporation or any of its subsidiaries, except pursuant to
the exercise of warrants or rights to purchase securities
offered pro rata to all holders of the Corporation's voting
shares or any other voting shares, and except pursuant to the
exercise or conversion of securities exercisable for or
convertible into shares of the Corporation, or any
subsidiary, which securities were outstanding prior to the
time that any interested shareholder became such;
(D) The adoption of any plan or proposal for the
liquidation or dissolution of the Corporation;
(E) Any reclassification of securities, including any reverse
stock split, or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
subsidiaries, which has the effect, directly or indirectly,
of increasing by five percent (5%) or more the proportionate
amount of the outstanding shares of any class or series of
equity securities of the Corporation or any subsidiary which
is directly or indirectly beneficially owned by any
interested shareholder or any affiliate of any interested
shareholder; or
(F) Any receipt by the interested shareholder, or any
affiliate or associate of the interested shareholder, other
than in the ordinary course of business, of the benefit,
directly or indirectly (except proportionately as a resident
domestic corporation), of any loans, advances, guarantees,
pledges, or other financial benefits or assistance or any tax
credits or other tax advantages provided by or through the
Corporation or any of its subsidiaries.
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(3) For purposes of this Article IX and Article VIII of these
Articles of Incorporation, the presumption of "Controls" created by
subsection (7) of Section 1 of Article VIII shall not apply where such
person holds voting shares, in good faith and not for the purpose of
circumventing this Article IX or Article VIII, as an agent, bank,
broker, nominee, custodian, or trustee for one or more owners who do
not individually or as a group have control of the Corporation.
2. (a) Notwithstanding any other provision of these Articles of
Incorporation (except for the provisions of subsection (b) of this Section 2
and Section 3 of this Article IX), the Corporation shall not engage in any
business combination with any interested shareholder for a period of five (5)
years following the date that such shareholder became an interested
shareholder, unless:
(1) Prior to such date the Board of Directors approved either
the business combination or the transaction which resulted in the
shareholder becoming an interested shareholder;
(2) In the transaction which resulted in the shareholder
becoming an interested shareholder, the interested shareholder became
the beneficial owner of at least ninety percent (90%) of the voting
shares of the Corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned by: (A) persons who are directors or
officers, their affiliates, or associates; (B) subsidiaries of the
Corporation, and (C) employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or
exchange offer; or
(3) Subsequent to becoming an interested shareholder, such
shareholder acquired additional shares resulting in the interested
shareholder being the beneficial owner of at least ninety percent
(90%) of the outstanding voting shares of the Corporation and the
business combination was approved at an annual or special meeting of
shareholders by the holders of a majority of the voting shares
entitled to vote thereon, excluding from said vote, for the purpose of
this paragraph only, the voting shares beneficially owned by the
interested shareholder or by (A) any director or officer of this
Corporation, his affiliates, or associates; (B) subsidiaries of this
Corporation; and (C) employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or
exchange offer.
(b) The restrictions contained in this Section (2) shall not
apply if a shareholder: (1) becomes an interested shareholder inadvertently;
(2) as soon as practicable divests sufficient shares so that the shareholder
ceases to be an interested shareholder; and (3) would not, at any time within
the five (5) year period immediately prior to a business combination between
the Corporation and such shareholder, have been an interested shareholder but
for the inadvertent acquisition.
3. Notwithstanding any other provision of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the Corporation), both the affirmative vote of
the holders of at least seventy-five percent (75%) of the outstanding voting
shares of the Corporation and the affirmative vote of the holders of at least
seventy-five percent (75%) of the outstanding voting shares of the Corporation
other than those of which an interested shareholder is the beneficial owner,
shall be required to amend or repeal, or adopt any provision inconsistent with
this Article IX of these
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Articles of Incorporation, in addition to any affirmative vote required by law
or these Articles of Incorporation with respect to any other shares of capital
stock of the Corporation; provided, however, that this Section 3 shall not
apply to any such amendment, repeal or adoption which has been unanimously
recommended to the shareholders of the Corporation by the continuing directors
then in office. Any action to repeal this Article IX shall not be effective
until eighteen (18) months after the shareholder vote to effect such repeal and
shall not apply to any business combination between this Corporation and any
person who became an interested shareholder of this Corporation on or prior to
such repeal.
ARTICLE X
1. All of the requirements imposed by Article 11, Parts 2 and 3
of the Georgia Business Corporation Code (the Parts are together referred to as
the "Incorporated Code", as such may be amended, restated or modified from time
to time), are and shall be applicable to the Corporation. All of the
requirements imposed by the Incorporated Code shall be in addition to and
cumulative of all other requirements imposed with respect to the Corporation's
affairs by these Articles of Incorporation and by the Bylaws of the
Corporation, including, without limitation, the requirements of Articles VIII
and IX of these Articles of Incorporation.
2. This Article X may also only be repealed by both the
affirmative vote of at least two-thirds of the continuing directors (as defined
in the Incorporated Code) and a majority of the votes entitled to be cast by
voting shares of this Corporation, other than shares beneficially owned by any
interested shareholder, in addition to any other vote required by these
Articles of Incorporation. Any action to repeal Article X shall not be
effective until eighteen (18) months after the shareholder vote to effect such
repeal and shall not apply to any business combination between this Corporation
and any person who became an interested shareholder of this Corporation on or
prior to such repeal.
ARTICLE XI
A director or officer of this Corporation shall not be personally liable to
the Corporation or its shareholders for monetary damages for breach of the duty
of care or other duty as a director or officer, except: (a) for any
appropriation, in violation of duties, of any business opportunity for the
Corporation, (b) for acts or omissions which involve intentional misconduct or
a knowing violation of law, (c) for any type of liability set forth in Section
14-2-832 of the Official Code of Georgia Annotated, or (d) for any transaction
from which the director or officer derived any improper personal benefit. If
the Official Code of Georgia Annotated is amended after approval by the
shareholders of this Article XI to further eliminate or limit the personal
liability of directors, then the liability of a director or officer of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Official Code of Georgia Annotated, as so amended.
Any repeal or modification of the foregoing paragraph by the shareholders
of the Corporation shall not adversely affect any right or protection of a
director or officer of the Corporation existing at the time of such repeal or
modification.
ARTICLE XII
In discharging the duties of their respective positions and in determining
what is believed to be in the best interests of the Corporation, the board of
directors, committees of the board of directors, and individual
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directors, in addition to considering the effects of any action on the
Corporation or its shareholders, may consider the interests of the employees,
customers, suppliers, and creditors of the Corporation and its subsidiaries,
the communities in which offices or other establishments of the Corporation and
its subsidiaries are located, and all other factors such directors consider
pertinent; provided, however, that any such provision shall be deemed solely to
grant discretionary authority to the directors and shall not be deemed to
provide to any constituency any right to be considered.
ARTICLE XIII
The address of the initial registered office of the Corporation is 802 S.
Laurel Street, Springfield, Effingham County, Georgia 31329, and the initial
registered agent of the corporation at such address is Harry H. Shearouse.
ARTICLE XIV
The mailing address of the initial principal office of the Corporation is
P.O. Box 379, Springfield, Effingham County, Georgia 31329.
ARTICLE XV
The name and address of the incorporator is:
J. Wiley Ellis
Ellis, Painter, Ratterree & Bart
P.O. Box 9946
Savannah, Georgia 31412
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation.
/s/ J. WILEY ELLIS
-----------------------------------
J. WILEY ELLIS
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EXHIBIT 3.2
CITIZENS EFFINGHAM BANCSHARES, INC.
BYLAWS
ARTICLE I
OFFICES
The Corporation shall at all times maintain a registered office in the
State of Georgia and a registered agent at that address but may have other
offices located within or without the State of Georgia as the Board of
Directors may determine.
ARTICLE II
SHAREHOLDERS' MEETINGS
2.1. ANNUAL MEETING. A meeting of shareholders of the Corporation
shall be held annually, within five (5) months of the end of each fiscal year
of the Corporation. The annual meeting shall be held at such time and place and
on such date as the directors shall determine from time to time and as shall be
specified in the notice of the meeting. All shareholder proposals to be acted
upon at an annual meeting of shareholders must be written and provided to the
Corporation at least sixty (60) days in advance of the annual meeting.
2.2 SPECIAL MEETINGS. Special meetings of the shareholders may be
called at any time by the President or upon written request to the President by
any holder or holders of, in the aggregate, at least a majority of all issued
and outstanding capital stock of the Corporation. Special meetings shall be
held at such time and place and on such date as shall be specified in the
notice of the meeting.
2.3 PLACE. Annual or special meetings of shareholders may be held
within or without the State of Georgia.
2.4. NOTICE. Notice of annual shareholders' meetings stating the
place, day and hour of the meeting shall be given in writing not less than 10
nor more than 60 days before the date of such meeting. Notice of special
shareholders' meetings called by the President shall state the place, day and
hour of the meeting and shall be given in writing not less than 10 nor more
than 60 days before the date of such meeting. Notice of special shareholders'
meetings called by shareholders holding, in the aggregate, at least a majority
of all issued and outstanding capital stock of the Corporation shall state the
place, day and hour of the meeting and shall be given in writing not less than
50 nor more than 60 days before the date of such meeting. Notice of any annual
or special shareholders' meeting shall be either mailed to the last known
address of such shareholder as shown in the stock records of the Corporation or
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personally given to the shareholder. Notice of any special meeting of
shareholders shall state the purpose or purposes for which the meeting is
called. The notice of any meeting at which amendments to or restatements of the
Articles of Incorporation, merger or consolidation of the Corporation, or the
disposition of corporate assets requiring shareholder approval are to be
considered shall state such purpose, and shall further comply with all
requirements of law. Notice of a meeting may be waived by an instrument in
writing executed before or after the meeting. The waiver need not specify the
purpose of the meeting or the business transacted, unless one of the purposes
of the meeting concerns a plan of merger or consolidation, in which case the
waiver shall comply with the further requirements of law concerning such
waivers. Attendance at such meeting in person or by proxy shall constitute a
waiver of notice thereof unless the shareholder shall provide written notice to
the Corporation prior to the taking of any action by the shareholders at such
meeting that his attendance is not to be deemed a waiver of the requirement
that such notice be given or of the adequacy of any notice that may have been
given to such shareholder.
2.5. QUORUM. At all meetings of shareholders a majority of the
outstanding shares of stock shall constitute a quorum for the transaction of
business, and no resolution or business shall be transacted without the
favorable vote of the holders of a majority of the shares represented at the
meeting and entitled to vote. A lesser number may adjourn from day to day, and
shall announce the time and place to which the meeting is adjourned.
2.6. PROXIES; REQUIRED VOTE. At every meeting of the shareholders,
including meetings of shareholders for the election of directors, any
shareholder having the right to vote shall be entitled to vote in person or by
proxy, but no proxy shall be voted after eleven months from its date, unless
said proxy provides for a longer period. Each shareholder shall have one vote
for each share of stock having voting power, registered in his name on the
books of the Corporation. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders, except as otherwise
provided by law, by the Articles of Incorporation or by these bylaws.
2.7. PRESIDING OFFICER AND SECRETARY. At every meeting of
shareholders the Chairman of the Board, or in his absence or if there be none,
the Vice Chairman of the Board, or in his absence of if there be none, the
President, or in his absence a Vice President, or, if none be present, the
appointee of the meeting, shall preside. The Secretary, or in his absence an
Assistant Secretary, or if none be present, the appointee of the presiding
officer of the meeting, shall act as secretary of the meeting.
2.8. SHAREHOLDER LIST. The officer or agent having charge of the
stock transfer books of the Corporation shall produce for inspection of any
shareholder at, and continuously during, every meeting of the shareholders, a
complete alphabetical list of shareholders arranged by voting group (and within
each voting group by class or series of shares) showing the address and share
holdings of each shareholder. If the record of shareholders readily shows such
information, it may be produced in lieu of such a list.
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2.9. ACTION IN LIEU OF MEETING. Any action to be taken at a meeting of
the shareholders of the Corporation, or any action that may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof and
any further requirements of law pertaining to such consents have been complied
with.
ARTICLE III
DIRECTORS
3.1. MANAGEMENT. Subject to these bylaws, or any lawful agreement
between the shareholders, the full and entire of the affairs and business of
the Corporation shall management be vested in the Board of Directors, which
shall have and may exercise all of the powers that may be exercised or
performed by the Corporation.
3.2 NUMBER OF DIRECTORS. The Board of Directors shall consist of
between five (5) and fifteen (15) members. The actual number may be fixed or
changed from time to time within the range above established by the
shareholders or by the Board of Directors.
3.3 VACANCIES. The directors may fill the place of any director which
may become vacant prior to the expiration of his term or may fill any vacancies
created by an increase in the number of directors, by vote of a majority of the
remaining directors, though less than a quorum, or by the sole remaining
director, as the case may be, such appointment by the directors to continue
until the expiration of the term of the director whose place has become vacant
or whose place has been newly created and until a successor is elected.
3.4 ELECTION OF DIRECTORS. Directors shall be elected annually, at the
annual meeting of shareholders or at a special meeting in lieu of the annual
meeting of shareholders or by written consent of the holders of shares entitled
to vote thereon in lieu of a meeting. The directors shall serve for a term of
one year and until their successors are elected. If the annual election of
directors is not held on the date designated therefor, the directors shall
cause such election to be held as soon thereafter as convenient.
Notwithstanding anything to the contrary contained in these Bylaws, shareholder
proposals to nominate a director for election at any annual meeting of the
shareholders' or special meeting in lieu thereof must be written and provided
to the Corporation at least thirty (30) but no more than sixty (60) days prior
to such meeting.
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3.5 RESIGNATION. Any director may resign at any time either orally at
any meeting of the Board of Directors or by so advising the Chairman of the
Board, if any, or the President, or by giving written notice to the
Corporation. A director who resigns may postpone the effectiveness of his
resignation to a future date or upon the occurrence of a future event specified
in a written tender of resignation. If no time of effectiveness is specified
therein, a resignation shall be effective upon tender. A vacancy shall be
deemed to exist at the time a resignation is tendered, and the Board of
Directors or the shareholders may, then or thereafter, elect or appoint a
successor to take office when the resignation by its terms becomes effective.
3.6 COMPENSATION. Directors may be allowed such compensation for
attendance at regular or special meetings of the Board of Directors and of any
special or standing committees thereof as may be determined from time to time
by resolution of the Board of Directors.
ARTICLE IV
COMMITTEES
4.1 EXECUTIVE COMMITTEE. (a) The Board of Directors may by resolution
adopted by a majority of the entire Board designate an Executive Committee of
one or more directors. Each member of the Executive Committee shall hold office
until the first meeting of the Board of Directors after the annual meeting of
shareholders next following his election and until his successor is elected and
qualified, or until his death resignation or removal, or until he shall cease
to be a director.
(b) During the intervals between the meetings of the Board of
Directors, the Executive Committee may exercise all the authority of the Board
of Directors; provided, however, that the Executive Committee shall not have
the power to amend or repeal any resolution of the Board of Directors that by
its terms shall not be subject to amendment or repeal by the Executive
Committee, and the Executive Committee shall not have the authority of the
Board of Directors in reference to the following: (1) approving or proposing to
shareholders action required to be approved by shareholders; (2) filling
vacancies on the Board of Directors or on any of its committees; (3) amending
the Articles of Incorporation; (4) adopting, amending or repealing bylaws; or
(5) approving a plan of merger or share exchange not requiring shareholder
approval.
(c) The Executive Committee shall meet from time to time on
call of the Chairman of the Board or the President or of any two or more
members of the Executive Committee. Meetings of the Executive Committee may be
held at such place or places, within or without the State of Georgia, as the
Executive Committee shall determine or as may be specified or fixed in the
respective notices or waivers
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of such meetings. The Executive Committee may fix its own rules of procedure,
including provision for notice of its meetings. It shall keep a record of its
proceedings and shall report these proceedings to the Board of Directors at the
meeting thereof held next after they have been taken, and all such proceedings
shall be subject to revision or alteration by the Board of Directors except to
the extent that action shall have been taken pursuant to or in reliance upon
such proceedings prior to any such revision or alteration.
(d) The Executive Committee shall act by majority vote of its
members, provided, that contracts or transactions of and by the Corporation in
which officers or directors of the Corporation are interested shall require the
affirmative vote of a majority of the disinterested members of the Executive
Committee, at a meeting of the Executive Committee at which the material facts
as to the interest and as to the contract or transaction are disclosed or known
to the members of the Executive Committee prior to the vote.
(e) Members of the Executive Committee may participate in
committee proceedings by means of conference telephone or similar
communications equipment by means of which all persons participating in the
proceedings can hear each other, and such participation shall constitute
presence in person at such proceedings.
(f) The Board of Directors, by resolution adopted in
accordance with paragraph (a) of this section, may designate one or more
directors as alternate members of the Executive Committee who may act in the
place and stead of any absent member or members at any meeting of said
committee.
4.2. OTHER COMMITTEES. The Board of Directors, by resolution adopted
by a majority of the Board, may designate one or more additional committees,
each committee to consist of two or more of the directors of the Corporation,
which shall have such name or names and shall have and may exercise such powers
of the Board of Directors, except the powers denied to the Executive Committee,
as may be determined from time to time by the Board of Directors. Such
Committees shall provide for their own rules of procedure, subject to the same
restrictions thereon as provided above for the Executive Committee.
4.3 REMOVAL. The Board of Directors shall have power at any time to
remove any member of any committee, with or without cause, and to fill
vacancies in and to dissolve any such committee.
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ARTICLE V
MEETINGS OF THE BOARD OF DIRECTORS
5.1 TIME AND PLACE. Meetings of the Board of Directors may be held at
any place either within or without Georgia. Each newly elected Board of
Directors may hold such meeting at such place and time as shall be fixed by the
consent in writing of all the directors. In any such case no notice of such
meeting to the newly elected directors shall be necessary in order legally to
constitute the meeting. If the Board of Directors is elected by written consent
of shareholders without a meeting, then the newly elected Board shall meet as
soon as is reasonably practicable after such consent is duly filed with the
Corporation, at the call of the Chairman of the Board, if any, or of the
President or of at least one-third of the directors then in office, at such
time and place as shall be specified by written notice thereof given to each
director either by personal delivery or by mail, telegram or cablegram at least
two days before the meeting.
5.2 REGULAR MEETINGS. Regular meetings of the Board of Directors may
be held without notice at such time and place, within or without the State of
Georgia, as shall be determined by the Board of Directors from time to time.
5.3 SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the president on not
less than one day's notice by telephone, mail, telegram, cablegram, courier
service, facsimile transmission or other electronic means, or personal delivery
to each director and shall be called by the Chairman of the Board, the
President or the Secretary in like manner and on like notice on the written
request of any two or more directors. Any such special meeting shall be held at
such time and place, within or without the State of Georgia, as shall be stated
in the notice of meeting. No notice of any meeting of the Board of Directors
need state the purposes thereof.
5.4 WAIVER OF NOTICE. Notice of any meeting may be waived by an
instrument in writing executed before or after the meeting. Attendance in
person at any constitute a waiver of notice thereof.
5.5 QUORUM. At all meetings of the Board of Directors, the presence of
a majority of all directors shall be necessary and sufficient to constitute a
quorum for the transaction of business. Directors may participate in any
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other,
and participation in a meeting by means of such communications equipment shall
constitute presence in person at such meeting. The act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
law, the Articles of Incorporation or by these bylaws. In the absence of a
quorum a majority of the
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<PAGE> 7
directors present at any meeting may adjourn the meeting from time to time
until a quorum is present. Notice of any adjourned meeting need only be given
by announcement at the meeting at which the adjournment is taken.
5.6 ACTION IN LIEU OF MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent setting forth the action so
taken is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is delivered to the Corporation
for filing with the minutes of the proceedings of the Board of Directors or of
such committee and any further requirements of law pertaining to such consents
have been complied with.
5.7 INTERESTED DIRECTORS AND OFFICERS. An interested director or
officer is one who is a party to a contract or transaction with the Corporation
or who is an officer or director of, or has a financial interest in, another
corporation, partnership, association or other entity which is a party to a
contract or transaction with the Corporation. Contracts and transactions
between the Corporation and one or more interested directors or officers shall
not be void or voidable solely because of the involvement or vote of such
interested persons as long as either: (i) the contract or transaction is
approved in good faith by the Board of Directors or appropriate committee by
the affirmative vote of a majority of disinterested directors, even if the
disinterested directors be less than a quorum, at a meeting of the Board or
committee at which the material facts as to the interest of the interested
person or persons and the contract or transaction are disclosed or known to the
Board or committee prior to the vote; or (ii) the contract or transaction is
approved in good faith by the shareholders after the material facts as to the
interest of the interested person or persons and the contract or transaction
have been disclosed to them; or (iii) the contract or transaction is fair as to
the Corporation as of the time it authorized, approved or ratified by the
Board, committee, or shareholders. Interested directors may be counted in
determining the presence of a quorum at a meeting of the Board or committee
which authorized the contract or transaction.
ARTICLE VI
OFFICERS, AGENTS AND EMPLOYEES
6.1 GENERAL PROVISIONS. The officers of the Corporation shall consist
of a President, a Secretary, and a Treasurer, and may include a Chairman of the
Board, a Vice Chairman of the Board, one or more Executive Vice Presidents,
Senior Vice Presidents and Vice Presidents, one or more Assistant Secretaries,
and one or more Assistant Treasurers. The officers shall be elected by the
Board of Directors at the first meeting of the Board of Directors after the
annual meeting of the shareholders in each year or shall be appointed as
provided in these bylaws. The Board of Directors may elect other
7
<PAGE> 8
officers, agents and employees, who shall have such authority and perform such
duties as may be prescribed by the Board of Directors. All officers shall hold
office until the meeting of the Board of Directors following the next annual
meeting of the shareholders after their election or appointment and until their
successors shall have been elected or appointed and shall have qualified. Any
two or more offices may be held by the same person. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause. Such removal without cause shall be without prejudice to such
person's contract rights, if any, but the election or appointment of any person
as an officer, agent or employee of the Corporation shall not of itself create
contract rights. The compensation of officers, agents and employees elected by
the Board of Directors shall be fixed by the Board of Directors, but this power
may be delegated to any officer, agent or employee as to persons under his
direction or control. The Board of Directors may require any officer, agent or
employee to give security for the faithful performance of his duties.
6.2 POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD, THE VICE CHAIRMAN
OF THE BOARD AND THE PRESIDENT. The powers and duties of the Chairman of the
Board, the Vice Chairman of the Board and the President, subject to the
supervision and control of the Board of Directors, shall be those usually
appertaining to their respective offices and whatever other powers and duties
are prescribed by these bylaws or by the Board of Directors.
(a) The Chairman of the Board shall preside at all meetings
of the Board of Directors and at all meetings of the shareholders.
(b) The Vice Chairman of the Board shall, in the absence or
disability of the Chairman, perform the duties of the Chairman.
(c) The President shall, unless otherwise provided by the
Board of Directors, be the chief executive officer of the Corporation. He shall
have general charge of the business and affairs of the Corporation and shall
keep the Board of Directors fully advised. He shall employ and discharge
employees and agents of the Corporation, except such as shall be elected by the
Board of Directors, and he may delegate those powers. He shall have such powers
and perform such duties as generally pertain to the office of the President, as
well as such further powers and duties as may be prescribed by the Board of
Directors. The President may vote the shares or other securities of any other
domestic or foreign corporation of any type or kind which may at any time be
owned by the Corporation, may execute any shareholders' or other consents in
respect thereof and may in his discretion delegate such powers by executing
proxies, or otherwise, on behalf of the Corporation. The Board of Directors, by
resolution from time to time, may confer like powers upon any other person or
persons.
6.3 POWERS AND DUTIES OF VICE PRESIDENTS. Each Executive Vice
President, Senior Vice President and Vice President shall have such powers and
perform such duties as the Board of Directors or the President may prescribe
and shall perform such other duties as may be prescribed by these bylaws.
8
<PAGE> 9
In the absence or inability to act of the President, unless the Board of
Directors shall otherwise provide, the Executive Vice President, or if there be
none, the Senior Vice President who has served in that capacity for the longest
time and who shall be present and able to act, or if there be none, the Vice
President who has served in that capacity for the longest time and who shall be
present and able to act, shall perform all duties and may exercise any of the
powers of the president. The performance of any such duty by an Executive Vice
President, a Senior Vice President or a Vice President shall be conclusive
evidence of his power to act.
6.4 POWERS AND DUTIES OF THE SECRETARY. The Secretary shall have
charge of the minutes of all proceedings of the shareholders and of the Board
of Directors and shall keep the minutes of all their meetings at which he is
present. Except as otherwise provided by these bylaws he shall attend to the
giving of all notices to shareholders and directors. He shall have charge of
the seal of the Corporation, shall attend to its use on all documents the
execution of which on behalf of the Corporation under its seal is duly
authorized and shall attest the same by his signature whenever required. He
shall have charge of the record of shareholders of the Corporation, of all
written requests by shareholders that notices be mailed to them at an address
other than their addresses on the record of shareholders, and of such other
books and papers as the Board of Directors may direct. Subject to the control
of the Board of Directors, he shall have all such powers and duties as
generally are incident to the position of corporate secretary or as may be
assigned to him by the President or the Board of Directors.
6.5 POWERS AND DUTIES OF THE TREASURER. The Treasurer shall have
charge of all funds and securities of the Corporation shall endorse the same
for deposit or collection when necessary and deposit the same to the credit of
the Corporation in such banks or depositories as the Board of Directors may
authorize. He may endorse all commercial documents requiring endorsements for
or on behalf of the Corporation and may sign all receipts and vouchers for
payments made to the Corporation. He shall have all such powers and duties as
generally are incident to the position of corporate treasurer or as may be
assigned to him by the President or by the Board of Directors.
6.6 DELEGATION OF DUTIES. In case of the absence of any officer of the
Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors (or in the case of Assistant Secretaries or
Assistant Treasurers only, the President) may confer for the time being the
powers and duties, or any of them, of such officer upon any other officer
(provided that the powers and duties of the President may not be conferred upon
the Secretary, and vice versa), or elect or appoint any new officer to fill a
vacancy created by death, resignation, retirement or termination of any
officer. In such latter event such new officer shall serve until the next
annual election of officers.
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<PAGE> 10
ARTICLE VII
CAPITAL STOCK
7.1 CERTIFICATES. The interest of each shareholder shall be
evidenced by a certificate representing shares of the Corporation which shall
be in such form as the Board of Directors may from time to time adopt and shall
be numbered and shall be entered in the books of the Corporation as they are
issued. Each certificate representing shares shall set forth upon the face
thereof the following:
(a) the name of this Corporation;
(b) that the Corporation is organized under the Laws of
the State of Georgia;
(c) the name or names of the person or persons to whom
the certificate is issued;
(d) the number and class of shares, and the designation
of the series, if any, which the certificate
represents;
(e) if any shares represented by the certificate are
nonvoting shares, a statement or notation to that
effect; and, if the shares represented by the
certificate are subordinate to shares of any other
class or series with respect to dividends or amounts
payable on liquidation, shall further set forth on
either the face or back of the certificate a clear
and concise statement to that effect.
Each certificate shall be signed by the President or a Vice President
and the Secretary or an Assistant Secretary and may be sealed with the seal of
the Corporation or a facsimile thereof. If a certificate is countersigned by a
transfer agent or registered by a registrar, other than the Corporation itself
or an employee of the Corporation, the signature of any such officer of the
Corporation may be a facsimile. In case any officer or officers who shall have
signed, or whose facsimile signature or signatures shall have been used on, any
such certificate or certificates shall cease to be such officer or officers of
the Corporation, whether because of death, resignation, or otherwise, before
such certificate or certificates shall have been delivered by the Corporation,
such certificate or certificates may nevertheless be delivered as though the
person or persons who signed such certificate or certificates or whose
facsimile signatures shall have been used thereon had not ceased to be such
officer or officers.
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<PAGE> 11
7.2 SHAREHOLDER LIST. The Corporation shall keep or cause to be kept a
record of the shareholders of the Corporation which readily shows, in
alphabetical order or by alphabetical index, by voting group and, within each
voting group, by classes or series of stock, if any, the names of shareholders
entitled to vote, with the address of and the number of shares held by each.
Said record shall be presented and kept open at all meetings of the
shareholders.
7.3 TRANSFERS OF SHARES. Transfers of stock shall be made on the books
of the Corporation only by the person named in the certificate, or by power of
attorney lawfully Constituted in writing, and upon surrender of the certificate
thereof, or in the case of a certificate alleged to have been lost, stolen or
destroyed, upon compliance with the provisions Of Section 7.7 of these bylaws.
7.4 RECORD DATES. (a) For the purpose of determining Shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be closed
for a stated period but not to exceed 70 days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least 10 days immediately preceding such meeting.
(b) In lieu of closing the stock transfer books, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than 70 days and, in
case of a meeting of shareholders, not less than 10 days, prior to the date on
which the particular action requiring such determination of shareholders is to
be taken.
7.5 REGISTERED OWNER. The Corporation shall be entitled to treat the
holder of record of any share of stock of the Corporation as the person
entitled to vote such share, to receive any dividend or other distribution with
respect to such share, and for all other purposes and accordingly shall not be
bound to recognize any equitable or other claim or interest in such share on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
7.6 TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint
one or more transfer agents and one or more registrars and may require each
stock certificate to bear the signature or signatures of a transfer agent or a
registrar or both.
7.7 LOST CERTIFICATES. Any person claiming a certificate of stock to
be lost, stolen or destroyed shall make an affidavit or affirmation of the fact
in such manner as the Board of Directors may require and shall, if the
directors so require, give the Corporation a bond of indemnity in form and
amount and with one or more sureties satisfactory to the Board of Directors,
whereupon an appropriate new certificate may be issued in lieu of the
certificate alleged to have been lost, stolen or destroyed.
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<PAGE> 12
7.8 FRACTIONAL SHARES OR SCRIP. The Corporation may, when and if
authorized so to do by its Board of Directors, issue certificates for
fractional shares or scrip in order to effect share transfers, share
distributions or reclassifications, mergers, consolidations or reorganizations.
Holders of fractional shares shall be entitled, in proportion to their
fractional holdings, to exercise voting rights, receive dividends and
participate in any of the assets of the Corporation in the event of
liquidation. Holders of scrip shall not, unless expressly authorized by the
Board of Directors, be entitled to exercise any rights of a shareholder of the
Corporation, including voting rights, dividend rights or the right to
participate in any distribution of assets of the Corporation in the event of
liquidation. In lieu of issuing fractional shares or scrip, the Corporation may
pay in cash the fair value of fractional interests as determined by the Board
Of Directors; and the Board of Directors may adopt resolutions regarding rights
with respect to fractional shares or scrip as it may deem appropriate,
including without limitation the right for persons entitled to receive
fractional shares to purchase such additional fractional shares as may be
needed to acquire one full share, or sell such fractional shares or scrip for
the account of such persons.
ARTICLE VIII
BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS; EXPENSES
8.1 INSPECTION OF BOOKS AND RECORDS. Any person who is the holder of
record of, or authorized in writing by the holders of record of, more than two
percent (2%) of the outstanding shares of any class or series of the
Corporation, upon written demand stating the purpose thereof, shall have the
right to inspect in person or by agent or attorney, at any reasonable time or
times, excerpts from minutes of any meeting of the Board of Directors, records
of any action of a committee thereof while acting in place of the Board of
Directors on behalf of the Corporation, minutes of any meeting of shareholders,
and records of action taken by the shareholders or Board of Directors without a
meeting, accounting records of the Corporation, and the record of shareholders
and to make copies therefrom.
A shareholder may inspect and copy the records described in the
immediately preceding paragraph only if: (1) his demand is made in good faith
and for a proper purpose that is reasonably relevant to his legitimate interest
as a shareholder; (2) he describes with reasonable particularity his purpose
and the records he desires to inspect; (3) the records are directly connected
with his purpose; and (4) the records are to be used only for the stated
purpose.
If the Secretary or a majority of the Board of Directors or members of
the Executive Committee of the Corporation find the request proper, the
Secretary shall promptly notify the shareholder of the time and place at which
the inspection may be conducted.
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<PAGE> 13
If said request is found by the Secretary, the Board of Directors or
the Executive Committee not to be proper, the Secretary shall promptly notify
the requesting shareholder on or prior to the date on which the shareholder
requested to conduct the inspection. The Secretary shall specify in said notice
the basis for the rejection of the shareholder's request.
The Secretary, the Board of Directors, and the Executive Committee
shall at all times be entitled to rely on the corporate records in making any
determination hereunder.
8.2 SEAL. The corporate seal shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such a seal at any time, the Signature of the Corporation followed by the
word "Seal" enclosed in parentheses or scroll shall be deemed the seal of the
Corporation.
8.3 ANNUAL STATEMENTS. Not later than four months after the close of
each fiscal year, and in any case prior to the next annual meeting of the
shareholders, the Corporation shall prepare:
(a) a balance sheet showing in reasonable detail the
financial condition of the Corporation as of the close of its fiscal year;
(b) A profit and loss statement showing the results of its
operations during its fiscal year. Upon written request, the Corporation
promptly shall mail to any shareholder of record a copy of the most recent such
balance sheet and profit and loss statement; and
(c) Such other documents and reports as may be required by
law.
8.4 EXPENSES. Expenses incurred by any person who was or is a party or
who is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, and whether formal or informal, by reason of the fact that he is
or was a director, officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust or other
enterprise, in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding' as authorized by the
Board of Directors generally or as to a specific case or as to a specific
person or persons (designated by name, title or class of persons) upon receipt
of an undertaking by or on behalf of the director, officer, employee or agent
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized under the
applicable provisions of the Georgia Business Corporation Code and upon
compliance with any further requirements of law pertaining to such advances.
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<PAGE> 14
8.5 NONEXCLUSIVITY. The indemnification provided by Section 8.4 shall
not be deemed exclusive of any other rights, in respect of indemnification or
otherwise, to which those seeking indemnification may be entitled under any
bylaw or resolution approved by the affirmative vote of the holders of a
majority of the shares entitled to vote thereon taken at a meeting the notice
of which specified that such bylaw or resolution would be placed before the
shareholders, both as to action by a director, officer, employee or agent in
his official capacity and as to action in another capacity while holding such
office or position, provided such indemnification does not exceed the powers of
indemnity permitted to corporations under the provisions of the Georgia
Business Corporation code, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE IX
NOTICES: WAIVERS OF NOTICE
9.1 NOTICES. Except as otherwise specifically provided in these
bylaws, whenever under the provisions of these bylaws notice is required to be
given to any shareholder, director or officer, it shall not be construed to
mean personal notice, but such notice may be given by personal notice or by
cable, telegraph, or facsimile transmission, or by mail by depositing the same
in the post office or letter box in a postage-paid sealed wrapper, addressed to
such shareholder, officer or director at such address as appears on the books
of the Corporation and such notice shall be deemed to be given at the time when
the same shall be thus sent or mailed.
9.2 WAIVERS OF NOTICE. Except as otherwise provided in these bylaws,
when any notice whatever is required to be given by law, by the Articles of
Incorporation or by these bylaws, a written waiver thereof, signed by the
person entitled whether before or after the time stated therein, shall be
deemed equivalent to notice. In the case of a shareholder, such waiver of
notice may be signed by the shareholder's attorney or proxy duly appointed in
writing.
ARTICLE X
EMERGENCY POWERS
10.1 BYLAWS. The Board of Directors may adopt emergency bylaws subject
to repeal or change by action of the shareholders which shall, notwithstanding
any provision of law, the Articles of Incorporation or these bylaws, be
operative during any emergency in the conduct of the business of the
Corporation resulting from any catastrophic event including, without
limitation, an attack on the United States or on a locality in which the
Corporation conducts its business or customarily holds meetings of
14
<PAGE> 15
its Board of Directors or its shareholders, or during any nuclear or atomic
disaster, or the existence of any catastrophe, or other similar emergency
condition, as a result of which a quorum of the Board of Directors cannot
readily be convened for action. The emergency bylaws may make any provision
that may be practical and necessary under the circumstances of the emergency.
10.2 LINES OF SUCCESSION. The Board of Directors, either before or
during any such emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all officers or
agents of the Corporation shall for any reason be rendered unavailable or
otherwise incapable of discharging their duties.
10.3 HEAD OFFICE. The Board of Directors, either before or during any
such emergency, may, effective in the emergency, change the head office or
designate several alternative head offices or regional offices, or authorize
the officers to do so.
10.4 PERIOD OF EFFECTIVENESS. To the extent not inconsistent with any
emergency bylaws so adopted, these bylaws shall remain in effect during any
such emergency and upon its termination the emergency bylaws shall cease to be
operative.
10.5 NOTICES. Unless otherwise provided in emergency bylaws, notice of
any meeting of the Board of Directors during any such emergency may be given
only to such of the directors as it may be practicable to reach at the time,
and by such means as may be practical at the time, including publication,
radio, or television.
10.6 OFFICERS AS DIRECTORS PRO TEMPORE. To the extent required to
constitute a quorum at any meeting of the Board of Directors during any such
emergency, the officers of the Corporation who are present shall, unless
otherwise provided in emergency bylaws, be deemed, in order of rank and within
the same rank in order of seniority, directors for such meeting.
10.7 LIABILITY OF OFFICERS, DIRECTORS AND AGENTS. No officer director,
agent or employee acting in accordance with any emergency bylaws shall be
liable except for willful misconduct. No officer, director, agent or employee
shall be liable for any action taken by him in good faith in such an emergency
in furtherance of the ordinary business affairs of the Corporation even though
not authorized by the bylaws then in effect.
ARTICLE XI
CHECKS, NOTES, DRAFTS, ETC.
Checks, notes, drafts, acceptances, bills of exchange and other orders
or obligations for the payment of money shall be signed by such officer or
officers or person or persons as the Board of Directors by resolution shall
from time to time designate.
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ARTICLE XII
AMENDMENTS
The bylaws of the Corporation may be altered or amended and new bylaws
may be adopted by the shareholders at any annual or special meeting of the
shareholders or by the Board of Directors at any regular or special meeting of
the Board of Directors; provided, however, that if such action is to be taken
at a meeting of the shareholders, notice of the general nature of the proposed
change in the bylaws shall be given in the notice of the meeting. The
shareholders may provide by resolution that any bylaw provision repealed,
amended, adopted, or altered by them may not be repealed, amended, adopted or
altered by the Board of Directors. Action by the shareholders with respect to
bylaws shall be taken by an affirmative vote of a majority of all shares
entitled to elect directors, and action by the Board of Directors with respect
to bylaws shall be taken by an affirmative vote of a majority of all directors
then holding office.
16
<PAGE> 1
EXHIBIT 4
INCORPORATED UNDER THE LAWS OF THE
STATE OF GEORGIA
NUMBER [LOGO] SHARES
CITIZENS EFFINGHAM BANCSHARES, INC.
PAR VALUE $1.00
THIS CERTIFIES THAT _________________________________________ is the owner of
_________________________________________________ Shares of the Capital Stock of
transferable only on the Books of the Corporation by the holder
hereof in person or by duly authorized Attorney, on surrender
of this Certificate properly endorsed.
[SEAL] IN WITNESS WHEREOF the duly authorized officers of this
Corporation have hereunto subscribed their names and caused the
corporate Seal to be hereto affixed at______________________
this____________day of_________________A.D. 19_______________
------------------------ --------------------------------
Secretary President
<PAGE> 2
CERTIFICATE
FOR
SHARES
OF THE
CAPITAL STOCK
CITIZENS EFFINGHAM
BANCSHARES, INC.
ISSUED TO
---------------
DATED
---------------
FOR VALUE RECEIVED,_______hereby sell, assign and transfer
unto__________________________________________________________________
________________________________________________________________Shares
of the Capital Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint____________________________________
to transfer the said Stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated___________________19__________
In presence of
- -------------------------------------- ------------------------------------
NOTICE. THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 5
[ELLIS, PAINTER, RATTERREE & BART LLP LETTERHEAD]
November 5, 1997
Citizens Effingham Bancshares, Inc.
802 South Laurel Street
P. O. Box 379
Springfield, Georgia 31329
Re: Registration with the Securities and Exchange Commission of
512,000 shares of common stock.
Ladies and Gentlemen:
We have acted as counsel for Citizens Effingham Bancshares, Inc. in
connection with the proposed offering of 512,000 shares of common stock, $1.00
par value.
We are familiar with the Articles of Incorporation and By-Laws of the
Company, and we have examined such additional records as we deem necessary for
the opinions herein expressed.
Based upon the foregoing, we are of the opinion that:
1. Citizens Effingham Bancshares, Inc. is a corporation duly
organized and existing under the laws of Georgia and is in good standing under
the laws of that state.
2. All proceedings necessary to authorize the sale of
512,000 shares of common stock have been taken.
3. The 512,000 shares of common stock being registered, when sold and
paid for, will be legally issued, fully-paid, and non-assessable.
<PAGE> 2
4. We hereby consent to references to this opinion in the
registration statement to be filed by Citizens Effingham
Bancshares, Inc. and to references to our firm in the prospectus
under the heading "Legal Matters."
Yours very truly,
ELLIS, PAINTER, RATTERREE & BART
By:/s/ J. Wiley Ellis
----------------------------------
J. Wiley Ellis
<PAGE> 1
PARTNERSHIP AGREEMENT
THIS PARTNERSHIP AGREEMENT made this 31st day of March 1997 among the
undersigned residents of Effingham County, Georgia (the "Partners").
W I T N E S S E T H:
WHEREAS, the Partners desire to form a bank under the laws of the
State of Georgia to be known as "CITIZENS BANK OF EFFINGHAM" (the "Bank") and a
Georgia bank holding company to own the Bank, to be known as CITIZENS EFFINGHAM
BANCSHARES, INC. (the "Holding Company"); and
WHEREAS, the Partners desire to make such filings, engage such
employees and agents, raise such capital and do such other things as are
necessary to form the Bank and the Holding Company; and
WHEREAS, the Partners have agreed to accomplish the foregoing by means
of, and upon the terms and conditions set forth in, this Partnership Agreement;
NOW THEREFORE, in consideration of the mutual promises herein
contained, the Partners do hereby agree as follows:
1. The Partnership shall be known as the "CITIZENS EFFINGHAM
PARTNERSHIP".
2. The Partnership is only to engage in the business of forming the
Bank and the Holding Company and is not to engage in any other activity without
the unanimous consent of the Partners.
3. The Partners shall share equally in the profits and losses of the
Partnership and will be equally liable for any debts or other obligations of
the Partnership.
4. The Partnership will borrow up to Three Hundred Thousand
($300,000.00) Dollars from The Savannah Bank, N.A., or such other financial
institution as the Partnership shall determine and each Partner shall guarantee
such loan jointly and severally, but in no event shall the lender be entitled
to recover from any Partner more than $______________. No further loan
guarantees or contributions to capital shall be required of a Partner without
his/her consent.
5. Additional Partners may be admitted to the Partnership provided
such additional Partners also agree to jointly and severally guarantee the loan
referred to above and in the same amount specified above.
6. All actions of the Partnership shall be determined by a majority
vote of all the Partners.
<PAGE> 2
7. The Partnership books shall be maintained at the office of the
Partnership and each Partner shall at all times have access thereto.
IN WITNESS WHEREOF, the Partners have signed this Partnership
Agreement as of the date first above written.
/s/ Thomas O. Triplett, Sr. /s/ Thomas C. Strickland, Jr.
- --------------------------- -----------------------------
/s/ Philip M. Heidt /s/ C. Murray Kight
- --------------------------- -----------------------------
/s/ Wendel H. Wilson /s/ Harry H. Shearouse
- --------------------------- -----------------------------
/s/ H. Mitchell Witman /s/ John G. Burns
- --------------------------- -----------------------------
/s/ J. Terrell Webb /s/ Charles E. Hartzog
- --------------------------- -----------------------------
/s Mariben M. Thompson /s/ W. Harvey Kieffer
- --------------------------- -----------------------------
<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO CITIZENS EFFINGHAM PARTNERSHIP
THIS AMENDMENT, made this 31st day of October, 1997, to the CITIZENS
EFFINGHAM PARTNERSHIP formed on the 31st day of March 1997 (the "Partnership")
among the undersigned residents of Effingham County, Georgia (the "Partners").
W I T N E S E T H:
WHEREAS, the Partners are forming a bank under the laws of the State
of Georgia, known as "CITIZENS BANK OF EFFINGHAM" (the "Bank") and a Georgia
bank holding company which owns the Bank, known as CITIZENS EFFINGHAM
BANCSHARES, INC. (the "Holding Company"); and
WHEREAS, the Partners wish to amend the original Partnership Agreement
to allow the Partners to borrow additional monies to finance any organizational
and pre-opening expenses and capital expenditures necessary to open the Bank,
including approximately $1,900,000 for the acquisition and construction of
banking offices in Springfield and Rincon, Georgia, for which the funds in the
Organizers' Account (which will be created under the Escrow Agreement to be
signed at the time an offering of the stock of the Holding Company is made to
the public) may not be sufficient to provide; and
WHEREAS, the Partners have agreed to accomplish the foregoing by means
of, and upon the terms and conditions set forth in, this Amendment to the
Partnership Agreement;
NOW THEREFORE, in consideration of the mutual promises herein
contained, the Partners do hereby agree as follows:
1. To the extent the monies in the Organizers' Account are
insufficient to provide the funding for the capital expenditures herein
described, the Partners will borrow from The Savannah Bank, N.A., or such other
financial institution as the Partnership shall determine, such amounts,
estimated to be approximately $750,000, (the "Loan") as are necessary to pay
such organizational and pre-opening expenses and capital expenditures.
2. The Partners will use this money to construct the facilities
in Springfield and Rincon, to furnish the facilities, and to pay any other
capital expenditures or organizational or pre-opening expenses the Partners
deem necessary to open the Bank.
3. Each Partner shall guarantee the Loan jointly and severally,
but in no event shall the Lender be entitled to recover from any Partner more
than $78,125.00. No further loan guarantees or contributions to capital shall be
required of a Partner without his/her consent.
<PAGE> 2
IN WITNESS WHEREOF, the Partners have signed this Amendment to
Partnership Agreement as of the date first above written.
/s/ Charles E. Hartzog /s/ Thomas C. Strickland, Jr.
- ------------------------------- ----------------------------------
/s/ Thomas O. Triplett, Sr. /s/ Wendel H. Wilson
- ------------------------------- ----------------------------------
/s/ Jon G. Burns /s/ W. Harvey Kieffer
- ------------------------------- ----------------------------------
/s/ Mariben M. Thompson /s/ Philip M. Heidt
- ------------------------------- ----------------------------------
/s/ C. Murray Kight /s/ J. Terrell Webb
- ------------------------------- ----------------------------------
/s/ H. Mitchell Weitman /s/ Harry H. Shearouse
- ------------------------------- ----------------------------------
<PAGE> 1
EXHIBIT 10.5
STATE OF GEORGIA )
) ESCROW AGREEMENT
COUNTY OF EFFINGHAM )
THIS ESCROW AGREEMENT dated the _____ day of _______________, 1997, by
and between CITIZENS EFFINGHAM BANCSHARES, INC. (the "Company"), a Georgia
corporation which upon the receipt of certain regulatory approvals described
herein would become the sole shareholder of THE CITIZENS BANK OF EFFINGHAM,
presently in organization (the "Bank"), and THE SAVANNAH BANK, N.A., a
federally-chartered national bank (the "Escrow Agent").
WHEREAS, as described in the prospectus dated ________________ ___,
1997, the Company, through a non-underwritten public offering, intends to
solicit from prospective shareholders subscriptions for approximately 512,000
shares of common stock in the Company at $10 per share (hereinafter referred to
as the "Offering"); and
WHEREAS, the Company will utilize not less than $5,000,000 of aggregate
proceeds of the Offering to acquire the capital stock of the Bank; and
WHEREAS, in connection with the Offering, the Company intends to accept
stock subscription offers in substantially the form attached hereto as Exhibit A
(the "Subscription Forms") from persons subscribing to shares in the Offering
wherein subscribers would make payment to the Escrow Agent under the terms
hereof, pending disposition as provided herein; and
WHEREAS, the Company anticipates issuing its common capital stock (the
"Common Stock") to the subscribers of the Offering (collectively the
"Subscribers," which term shall, prior to the issuance of the Common Stock,
refer to persons whose subscriptions
<PAGE> 2
have been accepted by the Company, and after issuance of the Common Stock, shall
refer to the shareholders of the Company of record), immediately upon completion
of the Offering and prior to its receipt of (i) final approval of the Bank's
charter by the Georgia Department of Banking and Finance (the "Department") and
(ii) the approvals of the applications of the Company to acquire the capital
stock of the Bank filed with the Department and the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"); and
WHEREAS, upon issuance of the Common Stock, all such issued Common
Stock will be validly issued and fully paid and nonassessable shares of common
stock of the Company; and
WHEREAS, for the benefit of the Subscribers and as agent of the
Company, the Escrow Agent will hold the funds paid to the Escrow Agent as
aforesaid until receipt by the Company of the aforesaid approvals from the
Department and the Federal Reserve Board, except as disbursements may be herein
authorized; and
WHEREAS, the Escrow Agent is agreeable to serving as Escrow Agent upon
the terms and conditions stated herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the undersigned
hereby agree as follows:
1. The Escrow Agent agrees to accept funds as herein provided from the
Subscribers for accepted subscriptions with the completed original Subscription
Forms and to hold said funds and invest them and disburse them as herein
provided until the
2
<PAGE> 3
Department grants final approval of the Bank's charter and the Department and
the Federal Reserve Board each grants final approval of the Company's
acquisition of the capital stock of the Bank, which approvals the parties agree
shall be conclusively established by written confirmation from the Company of
such approvals accompanied by (i) a true copy of the original Department's
letter authorizing the release of the escrow funds and (ii) true copies of
letters of approval from the Department and the Federal Reserve Board under
Section 3(a)(i) of the Federal Bank Holding Company Act, in each case as
certified by the President of the Company. Amounts designated on Exhibit B
hereto (the "Organizers") shall be held by the Escrow Agent in one account
called the "Organizers' Account." All funds received by other Subscribers in the
Offering shall be held by the Escrow Agent in an account called the "Public
Offering Account." The Organizers' Account and the Public Offering Account are
sometimes collectively herein referred to as the "Accounts." All funds received
by the Escrow Agent from Subscribers shall be, at the time of receipt by the
Escrow Agent, deemed received by the Company, and shall be for accepted
subscriptions; provided, however, that the Company may, after the deposit of
funds paid by a Subscriber, cancel the accepted subscription, or any portion
thereof, in its discretion as set forth in the Prospectus. Upon the cancellation
of an accepted subscription, in whole or in part, the Escrow Agent shall, upon
notice from the Company to that effect, return the proceeds relating to the
cancelled subscription, or portion thereof, to the
3
<PAGE> 4
Subscriber together with income thereon as allocated pursuant to the terms
hereof, but less, with respect to any income thereon, any portions required by
law to be withheld (which amounts shall timely be paid to the appropriate
authority).
2. If (1) fewer than 512,000 shares of Common Stock have been
subscribed to by 5:00 p.m. on April 1, 1998, (2) by 5:00 p.m. on October 1, 1998
the Escrow Agent has not received notice from the Company that the Department
has authorized the release of the amounts on deposit in the Escrow Accounts and
that the Federal Reserve Board and the Department have approved the Company's
acquisition of the Bank's capital stock, or (3) the Escrow Agent sooner receives
written notice from the Company that the Bank has failed to receive any of such
approvals or that the Company has withdrawn or cancelled the Offering, then the
Escrow Agent shall promptly refund to each Subscriber the liquidated value of
his pro rata share of the escrow funds held in the Account in which each
Subscriber's funds have been placed (on a per share basis) and any income
thereon determined pursuant to paragraph 4 hereof, less the following:
(i) with respect to any income earned in the Account from
which refund is being made, any portion required by law to be withheld
(which amounts will timely be paid by the Escrow Agent to the
appropriate authority) shall be withheld;
(ii) the pro rata share of the expenses of the Offering,
based on the number of shares represented by the funds initially in
each account, shall be withheld. The expenses of
4
<PAGE> 5
the Offering include but are not limited to, filing fees, costs of
professional and consulting fees, travel expense, printing, postage,
telephone and supply costs related to the Offering, as certified to the
Escrow Agent by the Company ("Offering Expenses");
(iii) if a Subscriber's funds have been placed in the
Organizers Account, then the pre-opening and organizational expenses of
the Company and the Bank including but not limited to filing fees,
costs of professional and consulting fees, travel expenses, printing,
postage, telephone and supply costs related to the organization of the
Company and the Bank, all pre-opening salaries for employees of the
Company and the Bank, all capital expenditures and other amounts
approved by the Board of Directors of the Company required for the
Company or the Bank to make improvements or to purchase real estate,
equipment, furniture or services related to the business of either, or
to construct banking facilities, and the amounts owed by the Directors
pursuant to loans made to the Directors d/b/a the Citizens Effingham
Partnership, as certified from time to time to the Escrow Agent by the
Company ("Pre-opening and Organizational Expenses and Capital
Expenditures") shall be deducted pro rata from each Organizer's funds
and shall be paid to the Company.
3. In the event the refund described in Paragraph 2 above shall take
place after issuance of the Common Stock, such refund shall be in the form of a
cash dividend to the extent allowed under
5
<PAGE> 6
applicable law, unless in the judgment and sole discretion of the Company,
another method of distribution would be more advantageous to the Subscribers.
Payments received by the Escrow Agent need not be in a collected funds status by
April 1, 1998 but collected funds must be received with respect to such payments
prior to the issuance of the Common Stock and in any event be due no later than
one (1) week after April 1, 1998.
In the event of a dividend to Subscribers of the funds held by the
Escrow Agent hereunder, as described above, which occurs after the shares of
Common Stock are issued to the Subscriber, the Company will promptly notify the
Escrow Agent and all of its shareholders, and such notice will further set a
record date (which will not be more than 20 days after the date of such notice)
to be used to determine which of the Company's shareholders will be entitled to
receive the dividend. In the event of any dividend of escrow funds after shares
of the Common Stock are issued, the Escrow Agent will make any payments of the
escrow funds provided for in this Agreement to the shareholders of the Company
of record as of the record date described above.
4. At such time prior to October 1, 1998 as the Company presents
written verification of the authorization by the Department to release the
amounts held in the Accounts and the approvals of the Federal Reserve Board and
the Department described in Section 1 to the Escrow Agent, the Escrow Agent
shall pay to the Company the liquidated value of the funds or investments held
pursuant to this Agreement, together with all income earned
6
<PAGE> 7
thereon, in accordance with written instructions to be received from the Company
and the Department. If requested by the Company, the Escrow Agent will certify
to the Department or any other regulatory authority that it is holding funds
pursuant to this Agreement for capitalization of the Bank.
5. Immediately upon receipt by the Escrow Agent of the proceeds from
the sale of all 512,000 shares of the Common Stock offered in the Offering, the
Escrow Agent, as instructed in writing by the Company, shall disburse from the
Organizers Account an amount equal to the Pre-opening and Organizational
Expenses and Capital Expenditures then incurred, defined in Paragraph 2 above,
and a pro rata share of the expenses of the Offering, as certified to the Escrow
Agent by the Company. Thereafter, from time to time the Escrow Agent, as
instructed in writing by the Company, shall disburse from the Organizers Account
amounts equal to the Pre-opening and Organizational Expenses and Capital
Expenditures incurred by the Company from time to time and not yet disbursed
from the Organizers' Account. All shares of Common Stock issued by the Company
shall be fully paid and nonassessable notwithstanding the Escrow Agent holding
the subscription proceeds therefor for the benefit of the Company pursuant to
the terms hereof.
6. The Offering will expire on or before April 1, 1998.
7. (a) If prior to the date of issuance of the Common Stock to
Subscribers, income on the escrow funds or investments is required to be
disbursed to a Subscriber, the Subscriber's allocated share of such income shall
be calculated as follows:
7
<PAGE> 8
(i) Each Subscriber shall be credited with one
allocation point for each day the initial subscription proceeds
representing each share of Common Stock subscribed or purchased by each
Subscriber have been invested in the Account holding the subject
subscription proceeds. The total allocation points, equal to the number
of days multiplied by the number of subscribed or purchased shares of
each Subscriber in the same Account, shall hereinafter be referred to
as such Subscriber's "Subscriber Allocation Points."
(ii) The Subscriber Allocation Points of each Subscriber
shall be added to the Subscriber Allocation Points of all other
Subscribers whose funds are held in the same Account, such sum being
hereinafter referred to as the "Aggregate Allocation Points."
(iii) The total interest earned from the investments in the
Account in which a Subscriber's funds are held shall be allocated to
each Subscriber in an amount equal to the total interest earned from
the investments in said Account multiplied by a fraction, the numerator
of which shall be such Subscriber's Subscriber Allocation Points, and
the denominator of which shall be the Aggregate Allocation Points.
(b) If after the date of issuance of the Common Stock, income on the
Account or investment is required to be disbursed to a Subscriber, the
Subscriber's share of such income shall be allocated pro rata on a per share
basis among the Subscribers in all Accounts.
8
<PAGE> 9
8. If the parties shall be in disagreement about the interpretation of
this Agreement, or about the rights and obligations, or the propriety of any
action contemplated by the Escrow Agent hereunder, the Escrow Agent may, but
shall not be required to, file an appropriate civil action to resolve the
disagreement. The Escrow Agent shall be indemnified for all costs, including
reasonable attorney's fees, in connection with such civil action, and shall be
fully protected in suspending all or part of its activities under the Agreement
until a final judgment in such action is received.
9. Any certification required hereunder from the Company shall be
signed by the President or a Vice President and the Secretary or Assistant
Secretary of the Company and shall contain a statement that the Board of
Directors of the Company has expressly approved any disbursement to the Company
other than those expressly identified on Exhibit C hereto attached. The Escrow
Agent may act in reliance upon any writing or instrument or signature which it,
in good faith, believes to be genuine; may assume the validity and accuracy of
any statement or assertion contained in such a writing or instrument; and may
assume that any person purporting to give any writing, notice, advice, or
instructions in connection with the provisions hereof has been duly authorized
to do so. The Escrow Agent shall not be liable in any manner for the sufficiency
or correctness as to form, manner and execution, or validity of any instrument
deposited in the escrow, nor as to the identity, authority, or right of any
person executing
9
<PAGE> 10
the same; and its duties hereunder shall be limited to the safekeeping of
agreements, monies, instruments or other documents received by it as such escrow
holder, and to the disposition of the same in accordance with the written
instrument accepted by it in this Agreement.
10. Unless the Escrow Agent discharges any of its duties hereunder in a
grossly negligent manner or is guilty of bad faith or willful misconduct with
regard to its duties hereunder, the undersigned hereby agrees to indemnify the
Escrow Agent and hold it harmless from any and all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expense, fees,
or charges of any character or nature, which it may incur or with which it may
be threatened by reason of its acting as Escrow Agent under this Agreement; and
in connection herewith, to indemnify the Escrow Agent against any and all
expenses, including reasonable attorney's fees and the cost of defending any
action, suit or proceeding or resisting any claim. The Escrow Agent shall be
vested with a lien on all property deposited hereunder for indemnification, for
reasonable attorney's fees, court costs, for any suit, interpleader or
otherwise, or any other expenses, fees or charges of any character or nature,
which may be incurred by said Escrow Agent by reason of disputes arising between
the makers of the escrow as to the correct interpretation of this Agreement and
instructions given to the Escrow Agent hereunder, or otherwise, with the right
of said Escrow Agent, regardless of the instructions aforesaid, to hold the said
property until and unless said additional expenses, fees, and charges shall be
fully paid.
10
<PAGE> 11
11. The Escrow Agent agrees that the Company, with the approval of a
majority of the Subscribers (whose Subscriptions or share holdings aggregate
more than 50% of the total amount of shares subscribed or outstanding at the
time notice of removal is given), may remove it as escrow agent hereunder at any
time upon thirty (30) days written notice to the Escrow Agent, and substitute
another bank therefor, in which event the Escrow Agent, upon receipt of written
notice thereof, shall account for and deliver to such substituted escrow agent
all funds and obligations held by it pursuant to this Agreement, less any
amounts then due and unpaid to it for fees and expenses as herein provided for
and the Escrow Agent shall thereafter be discharged from all liability
hereunder.
12. The Escrow Agent may resign as escrow agent hereunder at any time
upon thirty (30) days written notice to the Company and the Subscribers. The
Company and a majority of the Subscribers (whose Subscriptions or share holdings
aggregate more than 50% of the total amount of shares subscribed or outstanding
at the time notice of resignation is given), shall jointly select a successor
escrow agent. The Escrow Agent, upon receipt of written notice of designation of
a successor escrow agent, shall account for and deliver to such successor escrow
agent all funds and obligations held by it pursuant to this Agreement, less any
amounts then due and unpaid to it for fees and expenses as herein provided for,
and the Escrow Agent shall thereafter be discharged from all liability
hereunder. If the Company and the Subscribers cannot agree upon a
11
<PAGE> 12
successor escrow agent, the Escrow Agent, after prior written notice to them,
may account for and deliver to a court of competent jurisdiction all funds and
obligations held by it pursuant to this Agreement, less any amount then due and
unpaid to it for fees and expenses as herein provided for, including fees and
expenses incurred in making proper delivery to such court, and the Escrow Agent
shall thereafter be discharged from all liability hereunder.
13. The Escrow Agent is directed to invest all collected funds
deposited pursuant to the terms hereof in deposit accounts or certificates of
deposit which are fully insured by the Federal Deposit Insurance Corporation or
another agency of the United States government, short-term securities issued or
fully guaranteed by the United States government, federal funds, or other
investments as the Escrow Agent and the Company shall agree. In the event any
check of a Subscriber is returned for insufficient funds or other reason to the
Escrow Agent after deposit by the Escrow Agent, the Escrow Agent shall promptly
return the check to the Company to take whatever action as the Company deems
necessary.
14. The Escrow Agent shall be entitled to receive as compensation for
its services as Escrow Agent a fee as may be agreed upon by separate letter; if
such agreement is not in effect, its customary charges for acting as Escrow
Agent under its regularly published schedule of compensation in effect at such
time as the services are rendered shall be applicable.
15. The Escrow Agent may consult with counsel of its own choice and
shall have full and complete authorization and
12
<PAGE> 13
protection in accordance with the opinion of such counsel. The Escrow Agent
shall otherwise not be liable for any mistakes of fact or errors of judgment, or
for any acts or omissions of any kind, unless caused by its gross negligence,
bad faith or willful misconduct.
16. Any notices or items to be delivered hereunder shall be deemed
properly given or done if mailed by certified mail, postage prepaid, to the
parties at the following designated addresses:
As to the Company:
Citizens Effingham Bancshares, Inc.
802 South Laurel Street
Post Office Box 379
Springfield, Georgia 31329
Attention: Harry H. Shearouse
As to the Escrow Agent:
The Savannah Bank, N.A.
25 Bull Street
Savannah, Georgia 31401
Attention: Pamela Snelling
17. All payments, returns and deliveries to Subscribers hereunder shall
be mailed by first class mail to the residential or business address of such
Subscriber appearing on his Subscription Agreement. Any payment to a Subscriber
may be made by a check of the Escrow Agent; provided, however, that in the event
of payments, returns and deliveries to Subscribers after the issuance of the
Common Stock, any such mailing shall be to the address shown on the stock
registration books of the Company on the Record Date for such payment, return or
delivery, or if no Record Date shall have been established, to the last address
shown on the stock registration books of the Company.
13
<PAGE> 14
18. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no implied duties or obligations shall be read
into this Agreement against the Escrow Agent. The Company hereby acknowledges
that the status of the Escrow Agent is that of agent only for the limited
purposes set forth herein, and hereby agrees that in making the Offering, there
shall be no representation or implication that the Escrow Agent, by serving as
escrow agent hereunder or otherwise, has investigated the desirability or
advisability of investment in the shares of the Company or has approved,
endorsed, or passed upon the merits of the investment, nor shall the name of the
Escrow Agent be used in any manner whatsoever in connection with the offer or
sale of the shares of the Company other than by acknowledgment that it has
agreed to serve as Escrow Agent for the limited purposes herein set forth,
except with the prior written consent of the Escrow Agent.
19. This Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their respective successors and assigns.
20. This Agreement shall be construed and enforced in accordance with
the laws of Georgia without giving effect to principles of conflict of law. The
provisions of this Agreement are severable, and the invalidity of any one or
more provisions shall not be deemed to invalidate the remainder.
21. This Agreement constitutes the entire agreement among the parties
hereto with respect to transactions contemplated herewith with respect to the
escrow funds and it supersedes all prior
14
<PAGE> 15
discussions, understandings, or agreements between said parties.
IN WITNESS WHEREOF, the undersigned have set their hands and seals this
___ day of _________________, 1997.
CITIZENS EFFINGHAM BANCSHARES, INC.
By:
-----------------------------------------
Its:
----------------------------------------
(Seal)
WITNESSES:
- ---------------------------
- ---------------------------
THE SAVANNAH BANK, N.A., ESCROW AGENT
By:
-----------------------------------------
Its:
----------------------------------------
(Seal)
WITNESSES:
- ---------------------------
- ---------------------------
15
<PAGE> 16
EXHIBIT A
SUBSCRIPTION AGREEMENT
Citizens Effingham Bancshares, Inc.
802 South Laurel Street
Springfield, Georgia 31329
Attn: Harry H. Shearouse
Ladies and 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
Citizens Effingham Bancshares, 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 ________________, 1997. (Such Prospectus, including any
amendments and supplements thereto, is herein called the "Prospectus.")
The undersigned intends to purchase the shares of Common Stock
subscribed for herein for the purchase price of $10.00 per share.
The undersigned acknowledges receipt of a copy of the 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 finding 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 HIS SUBSCRIPTION IS BINDING ON THE
UNDERSIGNED AND IS IRREVOCABLE BY THE UNDERSIGNED FOR THE PERIOD BEGINNING 72
HOURS AFTER THE UNDERSIGNED EXECUTES AND DELIVERS THIS SUBSCRIPTION AGREEMENT TO
THE COMPANY AND ENDING ON APRIL 1, 1998. 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. THE UNDERSIGNED
ACKNOWLEDGES 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 100 shares):_________
_______________________________
Please PRINT or TYPE exact
Total Subscription Price name(s) in which undersigned
(at $10.00 per share), desires shares to be registered
payable to The Savannah
Bank, N.A., Escrow Agent: $__________
<PAGE> 17
REPRESENTATION OF RESIDENCE
To verify the residence of prospective offerees and to obtain a written
representation from each as to his or her legal residence, please complete the
following:
(a) I am a bona fide resident of the State of ___________
State
and have been for at least _____ years.
(b) I have filed a State of ___________ Income Tax Return as
State
an in-state resident for at least _____ years.
(c) I am registered to vote in ______________, ____________,
City County
_____________________.
State
SUBSTITUTE W-9
Under the penalties of perjury, I certify that: (1) the Social Security number
of Taxpayer Identification Number given below is correct; and (2) I am not
subject to backup withholding.
INSTRUCTION: YOU MUST CROSS OUT #2 ABOVE IF YOU HAVE BEEN NOTIFIED BY THE
INTERNAL REVENUE SERVICE THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
____________________________ ___________________________________
Date Signature(s)*
____________________________ ___________________________________
Area Code and Telephone No. Please indicate form of ownership
the undersigned desires for the
shares (individual, joint tenants
with right of survivorship, tenants
in common, trust, corporation,
partnership, custodian, etc.)
____________________________
Social Security of Federal
Taxpayer Identification No. ___________________________________
Street Address
___________________________________
City/State/Zip Code
<PAGE> 18
TO BE COMPLETED BY THE COMPANY
Accepted as of _________________, 199 , as to _______ shares.
CITIZENS EFFINGHAM BANCSHARES, 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> 19
NOTICE OF RESCISSION
To: Citizens Effingham Bancshares, Inc.
802 South Laurel Street
Springfield, Georgia 31329
I hereby exercise my right to rescind my purchase of _________ shares
of the Common Stock of Citizens Effingham Bancshares, Inc.
This rescission is made within seventy-two (72) hours of the earlier of
my execution of a written agreement to purchase said shares, or the payment for
such shares. I understand that the effective date of this rescission shall be
the date of delivery of this Notice or the depositing of same, properly
addressed and with adequate postage thereon, in the United States Mail.
DATED, this _____ day of _________________, 199__.
____________________________ ___________________________________
Address Print Name
____________________________ ___________________________________
City Signature
<PAGE> 20
EXHIBIT B
Common Stock Beneficially Owned by Organizers
<TABLE>
<CAPTION>
Amount of
Name Beneficial Ownership (1)
- ----------------------------- ------------------------
<S> <C>
D. Guerry Burns 10,000
Jon G. Burns 20,000
Charles E. Hartzog 12,500
Philip M. Heidt 8,350
W. Harvey Kieffer 7,500
C. Murray Kight 20,000
William F. Rahn 5,000
Harry H. Shearouse 10,000
Thomas C. Strickland, Jr. 15,000
Mariben M. Thompson 5,000
Thomas O. Triplett, Sr. 5,000
J. Terrell Webb 20,000
H. Mitchell Weitman 5,000
Wendel H. Wilson 10,000
-------
TOTAL 153,350
=======
</TABLE>
(1) 15,850 of these shares will be held of record by family members of, trusts
for the benefit of, or corporations or retirement accounts controlled by, the
individuals listed, and the proceeds from the sale of these shares will be
placed in the Public Offering Account. The proceeds from the sale of 137,500 of
these shares will be placed in the Organizers' Account.
<PAGE> 21
EXHIBIT C
PROJECTED ORGANIZATIONAL AND PRE-OPENING EXPENSES
APRIL 3, 1997 THROUGH OCTOBER 1, 1998
<TABLE>
<S> <C>
Pre-opening Expenses
Fees to Proposed Bank Management
CEO through December 1997 $ 63,327
CEO beginning January 1998 67,500
SCO beginning August 1998 11,666
CFO beginning July 1998 16,251
Matching FICA, etc. 18,541
Health Insurance for CEO 8,806
Consulting Fees 15,000
Accounting Fees 4,500
Attorney Fees 10,000
Regulatory Fees 12,000
Rent 12,210
Telephone 4,625
Electricity 2,313
Water 555
Lease on Copier and Fax Machine 2,775
Office Expense 8,595
Travel and Auto Expense 2,220
Miscellaneous 2,220
Advertising 5,000
Interest Expense 8,000
--------
TOTAL ORGANIZATIONAL AND
PRE-OPENING EXPENSES 276,104
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form S-1 of our report dated October 20, 1997,
relating to the financial statements of Citizens Effingham Partnership, which
appears in such Prospectus. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ THIGPEN, JONES, SEATON & CO., P.C.
- --------------------------------------
THIGPEN, JONES, SEATON & CO., P.C.
Dublin, Georgia
<PAGE> 1
EXHIBIT 23.2
ELLIS, PAINTER, RATTERREE & BART LLP
ATTORNEYS AT LAW
POST OFFICE BOX 9946
SAVANNAH, GEORGIA 31412-0146
TELEPHONE (912) 233-9700
FACSIMILE (912) 233-2281
November 5, 1997
Citizens Effingham Bancshares, Inc.
802 South Laurel Street
P. O. Box 379
Springfield, Georgia 31329
Re: Registration with the Securities and Exchange Commission of 512,000
shares of common stock.
Ladies and Gentlemen:
We have acted as counsel for Citizens Effingham Bancshares, Inc. in
connection with the proposed offering of 512,000 shares of common stock, $1.00
par value.
We are familiar with the Articles of Incorporation and By-Laws of the
Company, and we have examined such additional records as we deem necessary for
the opinions herein expressed.
Based upon the foregoing, we are of the opinion that:
1. Citizens Effingham Bancshares, Inc. is a corporation duly organized
and existing under the laws of Georgia and is in good standing under the laws of
that state.
2. All proceedings necessary to authorize the sale of 512,000 shares of
common stock have been taken.
3. The 512,000 shares of common stock being registered, when sold and
paid for, will be legally issued, fully-paid, and non-assessable.
<PAGE> 2
4. We hereby consent to references to this opinion in the registration
statement to be filed by Citizens Effingham Bancshares, Inc. and to references
to our firm in the prospectus under the heading "Legal Matters."
Yours very truly,
ELLIS, PAINTER, RATTERREE & BART
By: /s/ J. Wiley Ellis
--------------------------------
J. Wiley Ellis
<PAGE> 1
EXHIBIT 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Springfield
and State of Georgia on the 5th day of November, 1997.
CITIZENS EFFINGHAM BANCSHARES, INC.
By: /s/ Harry H. Shearouse
-----------------------------------------
Harry H. Shearouse
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints HARRY H. SHEAROUSE, his true and lawful
attorney-in-fact, with full power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any 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, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Date
----
<S> <C> <C>
/s/ Harry H. Shearouse President, Chief Executive 11/5/97
- -------------------------------- Officer and Director -------
Harry H. Shearouse
/s/ Jon G. Burns Director 11/5/97
- -------------------------------- -------
Jon G. Burns
/s/ Charles E. Hartzog Director 11/5/97
- -------------------------------- -------
Charles E. Hartzog
/s/ Philip M. Heidt Director 11/5/97
- -------------------------------- -------
Philip M. Heidt
/s/ W. Harvey Kieffer Director 11/5/97
- -------------------------------- -------
W. Harvey Kieffer
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
/s/ C. Murray Kight Director 11/5/97
- -------------------------------- -------
C. Murray Kight
/s/ Thomas C. Strickland, Jr. Director 11/5/97
- -------------------------------- -------
Thomas C. Strickland, Jr.
/s/ Mariben M. Thompson Director 11/5/97
- -------------------------------- -------
Mariben M. Thompson
/s/ Thomas O. Triplett, Sr. Director 11/5/97
- -------------------------------- -------
Thomas O. Triplett, Sr.
/s/ J. Terrell Webb Director 11/5/97
- -------------------------------- -------
J. Terrell Webb
/s/ H. Mitchell Weitman Director 11/5/97
- -------------------------------- -------
H. Mitchell Weitman
/s/ Wendel H. Wilson Director 11/5/97
- -------------------------------- -------
Wendel H. Wilson
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> AUG-31-1997
<EXCHANGE-RATE> 1
<CASH> 0
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 0
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 0
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 0
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 0
<INCOME-PRETAX> 0
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
