<PAGE> 1
As filed with the Securities and Exchange Commission on December 4, 1997.
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------------
SOUTHEAST COMMERCE HOLDING COMPANY
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Georgia 6021 Applied For
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
100 Galleria Parkway, Suite 400
Atlanta, Georgia 30339
(770) 956-4034
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
----------------------------
Richard A. Parlontieri
Chief Executive Officer
100 Galleria Parkway, Suite 400
Atlanta, Georgia 30339
(770) 956-4034
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------
Copies of all communications, including copies of all
communications sent to agent for service, should be sent to:
Richard A. Parlontieri Neil E. Grayson, Esq.
Southeast Commerce Holding Company Nelson Mullins Riley & Scarborough, L.L.P.
100 Galleria Parkway, Suite 400 999 Peachtree Street, N.E., Suite 1400
Atlanta, Georgia 30339 Atlanta, Georgia 30309
(770) 956-4034 (404) 817-6000
(770) 956-4035 (Fax) (404) 817-6225 (Fax)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] 33-_________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] 33-_________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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==========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE AGGREGATE PRICE (1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value.... 1,500,000 $10.00 $15,000,000 $4,425
==========================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933. The registrant
hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
===============================================================================
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion, Dated ___________
PROSPECTUS
SOUTHEAST COMMERCE HOLDING COMPANY
A Proposed Holding Company For
Commerce Bank
1,500,000 SHARES OF COMMON STOCK
-------------------------------
This Prospectus relates to the offer of a minimum of 510,000 and a
maximum of 1,500,000 shares of common stock, par value $.01 per share (the
"Common Stock"), to be issued by Southeast Commerce Holding Company, a Georgia
corporation (the "Company"), which has been organized to own all of the capital
stock of Commerce Bank (the "Bank").
Sale of the Common Stock will commence on or about ___________. This is
a "best efforts" offering by the Company, and it will be terminated by the
Organizers upon the sale of 1,500,000 shares or March 31, 1998, whichever occurs
first, unless the offering is extended, at the discretion of the Company, for
additional periods ending no later than March 31, 1999. However, the Organizers
reserve the right to terminate the offering at any time after the sale of the
minimum offering of 510,000 shares. Subscriptions are binding on subscribers and
may not be revoked by subscribers without the consent of the Company.
Prospective investors should carefully review the Prospectus before
subscribing for shares. SUBSCRIBERS MUST WARRANT IN THE SUBSCRIPTION AGREEMENT
THAT THEY HAVE RECEIVED A COPY OF THIS PROSPECTUS. See "The Offering -- How to
Subscribe." The Company has established a minimum subscription of 100 shares and
a maximum subscription by any subscriber of 5% of the total number of shares
sold in the offering. However, the Organizers reserve the right to waive these
limits without notifying any subscriber. In addition, the Organizers reserve the
right to purchase up to 100% of the shares of stock being offered hereunder if
necessary to complete the offering. Proceeds of the offering will be deposited
in an escrow account at The Bankers Bank, as escrow agent, pending receipt of
subscriptions and subscription proceeds for a minimum of 510,000 shares and
satisfaction of certain other conditions of the offering. Any subscription
proceeds accepted after satisfaction of the conditions set forth above but
before termination of this offering will not be deposited in escrow but will be
available for immediate use by the Company to fund offering and organizational
expenses and for working capital. See "The Offering -- Conditions of the
Offering and Release of Funds."
INVESTMENT IN THESE SECURITIES INVOLVES SIGNIFICANT RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS
ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
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Underwriting
Price to Discounts and Proceeds to the
Public(1) Commissions (2) Company(3)
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<S> <C> <C> <C>
Per Share.................. $ 10.00 None $ 10.00
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Total (Minimum)....... None $ 5,100,000
(Maximum)....... $ 5,100,000 None $15,000,000
$15,000,000
================================================================================
</TABLE>
(1) The offering price has been arbitrarily established by the Company. See
"Risk Factors -- Offering Price."
(2) This offering is expected to be made on behalf of the Company primarily
by its directors and executive officers, to whom no commission or other
compensation will be paid on account of such activity, although they
will be reimbursed for reasonable expenses incurred in the offering.
The Company believes such officers and directors will not be deemed
brokers under the Securities Exchange Act of 1934 (the "Exchange Act")
based on reliance on Rule 3a4-1 of the Exchange Act. Offers and sales
may also be made on a best-efforts basis by one or more brokers or
dealers. See "The Offering."
(3) Before deducting expenses related to this offering and the organization
of the Company, estimated to be approximately $75,000. See "Use of
Proceeds -- By the Company."
-------------------------------
The date of this Prospectus is ____________, 1997.
<PAGE> 3
REPORTS TO SHAREHOLDERS
The Company is not a reporting company as defined by the Securities and
Exchange Commission (the "SEC"). The Company will furnish its shareholders with
annual reports containing audited financial information for each fiscal year and
will distribute quarterly reports for the first three quarters of each fiscal
year containing unaudited summary financial information. The Company's fiscal
year ends on December 31.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933 with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement. For further information with respect to the Company and the Common
Stock, please see the Registration Statement and the exhibits thereto. The
Registration Statement may be examined at, and copies of the Registration
Statement may be obtained at prescribed rates from, the Public Reference Section
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
The SEC also maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants,
such as the Company, that file electronically with the Commission.
The Company and the Organizers have filed or will file various
applications with the Office of Thrift Supervision. Prospective investors should
rely only on information contained in this Prospectus and in the Company's
related Registration Statement in making an investment decision. To the extent
that other available information not presented in this Prospectus, including
information available from the Company and information in public files and
records maintained by the Office of Thrift Supervision, is inconsistent with
information presented in this Prospectus, such other information is superseded
by the information presented in this Prospectus. Projections appearing in the
applications were based on assumptions that the Organizers believed were
reasonable, but as to which no assurances can be made. The Company specifically
disaffirms those projections for purposes of this Prospectus and cautions
prospective investors against placing reliance on them for purposes of making an
investment decision.
<PAGE> 4
SUMMARY
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus.
- --------------------------------------------------------------------------------
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS
OR SAVINGS DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY.
- --------------------------------------------------------------------------------
OVERVIEW
Southeast Commerce Holding Company, a Georgia corporation (the
"Company"), was incorporated primarily to hold all of the capital stock of its
proposed federal savings bank subsidiary, Commerce Bank (the "Bank"). The
Company may not acquire the capital stock of the Bank without the prior approval
of the Office of Thrift Supervision (the "OTS"). The Company will initially
engage only in the business of owning and managing the Bank, and the Bank will
focus its core business on first and second residential mortgages, home equity
loans, refinancing, consumer loans, commercial loans, private banking and SBA
lending.
The thrift charter will allow the Bank to operate in all fifty states
and to branch into any county in the state of Georgia without any additional
regulatory approval. The thrift charter will also give the Company more
flexibility to pursue strategic opportunities to grow its customer base and to
create cross-selling opportunities to those same customers. The Company intends
eventually to build a multi-site financial services institution that focuses its
core business on community banking as it relates to real estate and other
related areas of commerce. These businesses may include, but will not be limited
to, a residential mortgage company, a wholesale mortgage company, a small loan
finance company, and a property/ casualty insurance company.
The Company intends to use state-of-the-art technology to offer
electronic banking services and products and provide better service to its
customers. The Bank's operating strategies will be based on its philosophy of
Better People, Better Service, Better Bankingsm.
THE BANK
The Organizers (as defined below) filed an application with the OTS in
October 1997 to charter the Bank as a federal savings bank. The Organizers
expect to obtain preliminary approval of the Bank's application for a charter in
January 1998. The issuance of a charter will depend, among other things, upon
compliance with certain legal requirements that may be imposed by the OTS,
including capitalization of the Bank with at least a specified minimum amount of
capital, which the Organizers believe will be $5,000,000. Additionally, the
Company must obtain the approval of the OTS to become a unitary thrift holding
company before acquiring the capital stock of the Bank.
As a federally chartered savings association, the Bank will have
general authority to originate and purchase loans secured by real estate,
secured or unsecured loans for commercial, corporate, business, or agricultural
purposes, and loans for personal, family, or household purposes. The Bank will
initially emphasize retail banking, home mortgages, real estate development, and
consumer lending needs. The Bank will not be permitted to make non-real estate
commercial purpose loans that exceed 20% of its assets or non-real estate
consumer purpose loans that exceed 35% of its assets. While not restricted by
law, the Bank expects initially to limit its lending activities primarily to
Cobb County, Georgia, and the surrounding areas.
The Bank's initial office will be located at Paces Summit, located in
historic Vinings, Georgia. Richard A. Parlontieri will be the Chairman and Chief
Executive Officer of the Company, and Louis J. Douglass, III will be the
President and Chief Executive Officer of the Bank. Mr. Douglass has over 30
years of banking experience, most of which was acquired with community banks and
regional banks serving the Atlanta and North Georgia markets. See "Management."
The Organizers presently are engaged in completing the tasks necessary to open
the Bank by the June 1998, although no assurances can be given that the Bank
will open for business or that the projected opening date can be achieved.
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The principal executive offices of both the Company and the Bank will
initially be located at 100 Galleria Parkway, Suite 400, Atlanta, Georgia 30339.
The Company's telephone number is (770) 956-4034.
THE ORGANIZERS
The organizers of the Company and the Bank (the "Organizers") are Gary
M. Bremer, Richard C. Carter, Louis J. Douglass, III, Terry L. Ferrero, Stephen
R. Gross, G. Webb Howell, Richard A. Parlontieri, Frank E. Perisino, and Donnie
Russell. Additional individuals may be added as Organizers, subject to
regulatory approval. All of the Organizers will serve as directors of the
Company and the Bank.
The Organizers (together with members of their immediate families)
intend to purchase an aggregate of at least 115,000 shares of the Common Stock
to be sold in this offering at a purchase price of $10.00 per share. In
recognition of the financial risks incurred by the Organizers, the Company
intends to allow each Organizer to acquire a warrant to purchase an additional
share of Common Stock for each share he or she purchases in the offering. The
Organizers may subscribe for up to 100% of the shares in the offering if
necessary to help the Company achieve the minimum subscription level necessary
to release subscription proceeds from escrow, and some Organizers may decide to
purchase additional shares even if the minimum subscription amount has been
achieved. Any shares purchased by the Organizers in excess of their original
commitment will be purchased for investment and not with a view to the resale of
such shares. Because purchases by the Organizers may be substantial, investors
should not place any reliance on the sale of a specified minimum offering amount
as an indication of the merits of this offering or that an Organizer's
investment decision is shared by unaffiliated investors. See "The Offering" and
"Management."
THE OFFERING
Securities Offered....... Common Stock of the Company, par value $.01
per share
Offering Price........... $10.00 per share
Number of Shares
Offered ............... Minimum 510,000
....................... Maximum 1,500,000
Use of Proceeds.......... The Company will use the net proceeds of the
offering to capitalize the Bank at a minimum
of $5,000,000 and a maximum of $5,990,000
through the purchase of all of the capital
stock of the Bank, subject to regulatory
approval; to pay organizational expenses of
the Company and the expenses of this
offering, estimated to be approximately
$75,000; and to provide working capital. The
Company plans to retain sums in excess of
the minimum necessary to capitalize the Bank
at the Company and initially invest the sums
in United States government securities or as
a deposit at the Bank. The Company may be
required by the OTS to capitalize the Bank
at a level in excess of the minimum of
$5,000,000, in which case the Company would
have to receive additional net proceeds in
the offering or obtain additional capital
from another source.
IF THE CONDITIONS FOR RELEASING SUBSCRIPTION
FUNDS FROM ESCROW ARE MET AND SUCH FUNDS ARE
RELEASED BUT FINAL REGULATORY APPROVAL TO
COMMENCE BANKING OPERATIONS IS NOT OBTAINED
FROM THE OTS OR THE BANK DOES NOT OPEN FOR
ANY OTHER REASON, IT IS POSSIBLE THAT
SUBSCRIBERS COULD BE RETURNED AN AMOUNT LESS
THAN THEIR ORIGINAL INVESTMENT. See "Risk
Factors --Return of Less Than Subscription
Amount." The Bank will use the $5,000,000
received from the sale of its stock to the
Company to pay organizational and
pre-opening expenses of the Bank; to
renovate and furnish the Bank's offices; and
to provide working capital to be used for
business purposes, including
4
<PAGE> 6
paying officers' and employees' salaries and
making loans and investments. See "Use of
Proceeds."
Conditions to
Offering............... This offering will be terminated and all
subscription funds (without interest) will
be returned promptly to subscribers unless
on or before March 31, 1998 (or such later
date if the offering is extended by the
Company for additional periods not to extend
beyond March 31, 1999), (i) the Company has
accepted subscriptions and payment in full
for a minimum of 510,000 shares; and (ii)
the Company has obtained approval of the OTS
to acquire the capital stock of the Bank and
thereafter to become a unitary thrift
holding company. Subscription proceeds for
shares subscribed for will be deposited
promptly in an escrow account with The
Bankers Bank, as escrow agent (the "Escrow
Agent"), under the terms of an escrow
agreement (the "Escrow Agreement"), pending
the satisfaction of the conditions set forth
above or the termination of the offering.
Upon satisfaction of the conditions set
forth above, all subscription funds held in
escrow, including any interest actually
earned thereon, shall be released to the
Company for its immediate use. Any
subscription proceeds accepted after
satisfaction of the conditions set forth
above but before termination of this
offering will not be deposited in escrow but
will be available for immediate use by the
Company to fund offering and organizational
expenses and for working capital. See "The
Offering."
Plan of
Distribution........... Offers and sales of the Common Stock will be
made on behalf of the Company primarily by
certain of its officers and directors. The
officers and directors will receive no
commissions or other remuneration in
connection with such activities, but they
will be reimbursed for reasonable expenses
incurred in the offering. The Company may
also use brokers or dealers to sell shares
on behalf of the Company. Subscriptions are
binding on subscribers and may not be
revoked by subscribers except with the
consent of the Company. The Company may, in
its sole discretion, allocate shares among
subscribers in the event of an
oversubscription for the shares. In
determining which subscriptions to accept,
in whole or in part, the Company may take
into account any factors it considers
relevant, including the order in which
subscriptions are received, a subscriber's
potential to do business with, or to direct
customers to, the Bank, and the Company's
desire to have a broad distribution of stock
ownership.
RISK FACTORS
An investment in the shares offered hereby involves certain risks,
including, among others, lack of an operating history, dependence on key
employees of the Bank, significant control of the Company by the Organizers,
absence of an existing market for the Common Stock and lack of assurance that an
active trading market in the Common Stock will develop, no intention to pay
dividends in the foreseeable future, and competition from a number of other
financial institutions with substantially greater financial and other resources
than the Bank will have. See "Risk Factors."
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RISK FACTORS
An investment in the shares offered hereby involves certain risks. A
subscription for shares should be made only after careful consideration of the
risk factors set forth below and elsewhere in this Prospectus and should be
undertaken only by persons who can afford an investment involving such risks.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS
OR SAVINGS DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY.
RETURN OF LESS THAN SUBSCRIPTION AMOUNT
The amounts paid by subscribers in this offering will be held in escrow
until (i) the Company has accepted subscriptions and payment in full for a
minimum of 510,000 shares; and (ii) the Company has obtained approval of the OTS
to acquire the capital stock of the Bank and thereafter to become a unitary
thrift holding company. If these conditions are not met by March 31, 1998, or by
such subsequent date, not beyond March 31, 1999, to which the offering may be
extended by the Company, all subscriptions will be returned promptly in full,
without interest. All interest earned thereon shall be used by the Company to
fund organizational expenses. If these conditions are satisfied, the
subscription amounts held in escrow may be paid to the Company and shares issued
to subscribers, and all interest earned on the subscription proceeds will be
retained by the Company. Once the Company has met the conditions for the
offering, the Escrow Agreement will be terminated and any subscription proceeds
accepted after satisfaction of the conditions set forth above but before
termination of this offering will not be deposited in escrow but will be
available for immediate use by the Company to fund offering and organizational
expenses and for working capital. When subscription amounts are received by the
Company, the Company will use a portion of the proceeds to repay the Organizers
the amounts advanced by them for organizational and offering expenses. The
Company will then fund future expenses out of the subscription amounts received.
If the conditions for releasing subscription funds from escrow are met
and such funds are released but final regulatory approval to commence banking
operations is not obtained from the OTS or the Bank does not open for any other
reason, the Company's board of directors intends to propose that the
shareholders approve a plan to liquidate the Company. Upon such a liquidation,
the Company would be dissolved and the Company's net assets (generally
consisting of the amounts received in this offering plus any interest earned
thereon, less the amount of all costs and expenses incurred by the Company and
the Bank, including the salaries of employees of the Bank and other pre-opening
expenses) would be distributed to the shareholders. In such event, the Company
will have incurred numerous expenses related to the organization of the Company
and the Bank, and the amount distributed to shareholders may be substantially
less than the subscription amount, and in an extreme case shareholders may not
be returned any amount.
NEW ENTERPRISE
The Company and the Bank currently are in the organizational stage, and
neither has any operating history. As a consequence, prospective purchasers of
the shares have limited information on which to base an investment decision. As
a holding company, the Company's profitability will depend upon the Bank's
operations. The Bank's proposed operations are subject to the risks inherent in
the establishment of any new business and, specifically, of a new bank. The
Company expects that the Bank will incur substantial initial expenses and may
not be profitable for several years after commencing business, if ever.
Shareholders are likely to experience dilution in the book value of the Common
Stock due to operating losses expected to be incurred during the initial years
of the Bank's operations.
DEPENDENCE ON KEY EMPLOYEES
As a new enterprise, the Company and the Bank will be materially
dependent on the performances of Richard A. Parlontieri, who will be the
Chairman and Chief Executive Officer of the Company, and Louis J.
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<PAGE> 8
Douglass, III, who will be the President and Chief Executive Officer of the
Bank. The loss of the services of Mr. Parlontieri and Mr. Douglass or their
failure to perform their management functions in the manner anticipated by the
Organizers could have a material adverse effect on the Company and the Bank. The
Company has entered into a letter of employment with Mr. Douglass. See
"Management -- Employment Agreements."
CONTROL OF THE COMPANY; PURCHASES BY ORGANIZERS
The Organizers, all of whom will serve as directors of the Company and
the Bank, and members of their immediate families intend to purchase an
aggregate of at least 115,000 shares, equal to 22.6% of the minimum number of
shares offered hereby and 7.7% of the maximum number of shares offered hereby,
at a purchase price of $10.00 per share. Additionally, in recognition of their
acceptance of the financial risks incurred in connection with the organization
of the Company and the Bank, the Organizers will be granted, for nominal
consideration, warrants to purchase one share of Common Stock for each share
purchased by them in this offering. See "Management -- Stock Warrants." Assuming
that the Organizers purchase the indicated number of shares in this offering,
and assuming all warrants issued in conjunction with shares purchased by the
Organizers are exercised, the Organizers would own, as a group, 36.8% of the
Common Stock to be outstanding upon the completion of this offering and exercise
of the warrants if the minimum number of shares is sold and 14.2% of the Common
Stock if the maximum number of shares is sold and the warrants exercised.
Organizers may purchase additional shares in the offering and additional persons
may be named as Organizers, subject to regulatory approval. The Organizers may
subscribe for up to 100% of the shares in this offering if necessary to help the
Company achieve the minimum subscription level necessary to release subscription
proceeds from escrow, and some Organizers may decide to purchase additional
shares even if the minimum subscription amount has been achieved. See "The
Offering" and "Management." As a result of the anticipated stock ownership in
the Company by the Organizers, together with the influence which may be exerted
by such persons due to their positions as directors of the Company and the Bank,
the Organizers as a group will have substantial control of the Company and the
Bank following the offering. Because purchases by the Organizers may be
substantial, investors should not place any reliance on the sale of a specified
minimum offering amount as an indication of the merits of this offering or that
an Organizer's investment decision is shared by unaffiliated investors.
The warrants to be granted to the Organizers will be exercisable at a
price of $10.00 per share for a period of ten years after this offering is
terminated. As a result, the Organizers will have the opportunity to profit from
any rise in the market value of the Common Stock or any increase in the net
worth of the Company and can be expected to exercise the warrants, if at all, at
a time when such exercise would result in the dilution of the interests of other
investors purchasing shares in this offering. Furthermore, the exercise of a
substantial number of warrants by the Organizers could adversely impact the
market value of the shares. In addition, the terms on which the Company may be
able to obtain additional capital could be adversely affected, and the holders
of the warrants could possibly exercise the warrants at a time when the Company
could obtain any needed capital by a new offering of securities on terms more
favorable to the Company than those provided for by the warrants. See
"Management -- Stock Warrants."
OFFERING PRICE
Because the Company and the Bank are in organization, the offering
price of $10.00 per share was determined by the Organizers without reference to
traditional criteria for determining stock value such as book value or
historical or projected earnings since such criteria are not applicable to
companies with no history of operations. The price per share was set to enable
the Company to raise gross proceeds of between $5,100,000 and $15,000,000 in
this offering through the sale of a reasonable number of shares, and the price
per share is essentially equivalent to the initial book value per share prior to
the payment of the Company's and the Bank's organizational expenses. No
assurance is or can be given that any of the shares could be resold for the
offering price or any other amount.
7
<PAGE> 9
ABSENCE OF TRADING MARKET
There currently is no market for the shares and, although the Company
has filed a registration statement with the Securities and Exchange Commission
(the "SEC") to register the issuance of the Common Stock in the offering under
the Securities Act of 1933 (the "Securities Act"), it is not likely that any
trading market will develop for the shares in the future. There are no present
plans for the Common Stock to be traded on any stock exchange or in the
over-the-counter market. Furthermore, the development of any trading market for
the shares may be adversely affected by purchases of large amounts of shares in
this offering by the Organizers since shares purchased by the Organizers will
generally not be freely tradable. As a result, investors who may need or wish to
dispose of all or part of their shares may be unable to do so except in private,
directly negotiated sales. In addition, sales of substantial amounts of Common
Stock after the offering, by the Organizers or others, could adversely affect
prevailing market prices. See "Description of Capital Stock -- Shares Eligible
for Future Sale."
COMPETITION
The banking business is highly competitive, and the Bank will encounter
strong competition from other savings institutions, as well as from commercial
banks, mortgage banking firms, consumer finance companies, securities brokerage
firms, insurance companies, money market mutual funds, and other financial
institutions operating in the Cobb County area and elsewhere. A number of these
competitors are well established in the Cobb County area. Most of them have
substantially greater resources and lending limits, as well as a lower cost of
funds, than the Bank and may offer certain services, such as extensive and
established branch networks and trust services, that the Bank either does not
expect to provide or will not provide initially. As a result of these
competitive factors, the Bank may have to pay higher rates of interest to
attract deposits. In addition, non-depository institution competitors are
generally not subject to the extensive regulations applicable to the Company and
the Bank. Recent federal legislation permits commercial banks to establish
operations nationwide, further increasing competition from out-of-state
financial institutions. See "Proposed Business -- Competition" and "Supervision
and Regulation." Although the Organizers believe that the Bank will be able to
compete effectively with these institutions, no assurances can be given in this
regard.
SUPERVISION AND REGULATION
The banking industry is heavily regulated. The success of the Company
and the Bank depends not only on competitive factors but also on state and
federal regulations affecting banks, thrifts, and their holding companies. These
regulations are primarily intended to protect depositors, not shareholders.
Regulation of the financial institutions industry is undergoing continued
changes, and the ultimate effect of such changes cannot be predicted. In
December 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted, and FDICIA and the regulations thereunder have increased
the regulatory and supervisory requirements for financial institutions, which
has resulted and will continue to result in increased operating expenses.
Legislation that would eliminate the charter for federal savings banks and
savings associations is under discussion. If such legislation is enacted, the
Bank would be required to convert its federal savings bank charter to either a
national bank charter or a state depository institution charter. Additional
statutes affecting financial institutions have been proposed and may be enacted.
Regulations now affecting the Company and the Bank may be modified at any time,
and there is no assurance that such modifications will not adversely affect the
business of the Company and the Bank. See "Supervision and Regulation."
ECONOMIC CONDITIONS
The success of the Company and the Bank will depend, to a certain
extent, upon economic and political conditions, both local and national, as well
as governmental monetary policies. Conditions such as inflation, recession,
unemployment, high interest rates, short money supply, and other factors beyond
the control of the Company and the Bank may adversely affect the Bank's deposit
levels and loan demand and, therefore, the earnings of the Bank and the Company.
Although the Organizers expect favorable economic development in the
8
<PAGE> 10
Bank's market area, there is no assurance that favorable economic development
will occur or that the Bank's expectation of corresponding growth will be
achieved. See "Proposed Business."
DIVIDEND POLICY
The Company has no plans to pay any cash dividends to its shareholders
in the foreseeable future. Since the Company and the Bank are both start-up
operations and may incur initial losses, both the Company and the Bank intend to
retain any earnings for the period of time management believes necessary to
ensure the success of their operations. The Company will be dependent upon the
Bank for its earnings and funds to pay dividends on the Common Stock. The
payment of dividends by the Company and the Bank is also subject to legal and
regulatory restrictions. Any payment of dividends by the Company in the future
will depend on the Bank's earnings, capital requirements, financial condition,
and other factors considered relevant by the Board of Directors. See "Dividend
Policy," "Proposed Business," and "Supervision and Regulation."
LENDING LIMIT
The Bank is limited in the amount it can loan a single borrower
(including the borrower's related interests) by the amount of the Bank's
capital. These limits will increase and decrease as the Bank's capital increases
and decreases. Unless the Bank is able to sell participations in its loans to
other financial institutions, the Bank will not be able to meet all of the
lending needs of loan customers requiring aggregate extensions of credit above
these limits.
DILUTION
In recognition of their acceptance of the financial risks incurred in
connection with the organization of the Company and the Bank, the Organizers
will be granted, for nominal consideration, warrants to purchase one share of
Common Stock for each share purchased by them in this offering. See "Management
- -- Stock Warrants." Assuming that the Organizers purchase the indicated number
of shares in this offering, and assuming all warrants issued in conjunction with
shares purchased by the Organizers are exercised, the Organizers would own, as a
group, 36.8% of the Common Stock to be outstanding upon the completion of this
offering and exercise of the warrants if the minimum number of shares is sold
and 14.2% of the Common Stock if the maximum number of shares is sold and the
warrants exercised. After the offering, the Company expects to adopt a stock
option plan which will permit the Company to grant options to officers,
directors, key employees, advisors, and consultants of the Company. The Company
anticipates that it will initially authorize the issuance of 175,000 shares
under the stock option plan. This plan would include the options the Company
will be obligated to issue to Mr. Douglass under the terms of his letter of
employment. Exercise of these options could have a dilutive effect on the
shareholders' interest in the Company's earnings and book value. In addition,
the Company may issue additional stock options or shares of Common Stock or
preferred stock in the future. Any such stock offering by its nature could be
dilutive to the holdings of purchasers in this offering.
ANTITAKEOVER EFFECTS
The Company has certain takeover defenses in place, including (i)
certain provisions relating to meetings of shareholders; (ii) the ability of the
Board of Directors to issue additional shares of common stock and preferred
stock authorized in the Articles of Incorporation without shareholder approval;
(iii) a staggered board of directors; and (iv) a provision in the Company's
bylaws providing that individuals affiliated with business competitors of the
Company may not qualify to serve on the Company's Board of Directors. Any of
these measures may impede the takeover of the Company without the approval of
the Company's Board of Directors. See "Description of Capital Stock - Certain
Antitakeover Effects."
9
<PAGE> 11
THE OFFERING
GENERAL
The Company is offering for sale a minimum of 510,000 shares and a
maximum of 1,500,000 shares of its Common Stock at a price of $10.00 per share
to raise gross proceeds of between $5,100,000 and $15,000,000 for the Company.
The minimum purchase for any investor (together with the investor's affiliates)
is 100 shares and the maximum purchase is 5% of the offering unless the Company,
in its sole discretion, accepts a subscription for a lesser or greater number of
shares.
The Organizers (together with members of their immediate families)
intend to purchase an aggregate of at least 115,000 shares of the Common Stock
to be sold in this offering. The Organizers may subscribe for up to 100% of the
shares in the offering if necessary to help the Company achieve the minimum
subscription level necessary to release subscription proceeds from escrow, and
some Organizers may decide to purchase additional shares even if the minimum
subscription amount has been achieved. Any shares purchased by the Organizers in
excess of their original commitment will be purchased for investment and not
with a view to the resale of such shares. See "Description of Capital Stock of
the Company -- Shares Eligible for Future Sale." Because purchases by the
Organizers may be substantial, investors should not place any reliance on the
sale of a specified minimum offering amount as an indication of the merits of
this offering or that an Organizer's investment decision is shared by
unaffiliated investors. See "Management."
Subscriptions to purchase shares will be received until midnight,
Atlanta, Georgia time, on March 31, 1998, unless all of the shares are earlier
sold or the offering is earlier terminated or extended by the Company. See
"Conditions to the Offering and Release of Funds." The Company reserves the
right to terminate the offering at any time or to extend the expiration date for
additional periods not to extend beyond March 31, 1999. The date the offering
terminates is referred to herein as the "Expiration Date." No written notice of
an extension of the offering period need be given prior to any extension and any
such extension will not alter the binding nature of subscriptions already
accepted by the Company. Once the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), it
will file quarterly reports on Form 10-Q and will make such documents available
to subscribers who request a copy. In addition, the Company intends to provide
quarterly communications to all subscribers which will include information
concerning any extensions of the offering. Extension of the Expiration Date
might cause an increase in the Company's organizational and pre-opening expenses
and in the expenses incurred with this offering. The Company may use the
services of brokers or dealers to effectuate the sales of these securities. See
"Plan of Distribution."
Following acceptance by the Company, subscriptions will be binding on
subscribers and may not be revoked by subscribers except with the consent of the
Company. In addition, the Company reserves the right to cancel accepted
subscriptions at any time and for any reason until the proceeds of this offering
are released from escrow (as discussed in greater detail in "Conditions to the
Offering and Release of Funds" below), and the Company reserves the right to
reject, in whole or in part and in its sole discretion, any subscription. The
Company may, in its sole discretion, allocate shares among subscribers in the
event of an oversubscription for the shares. In determining which subscriptions
to accept, in whole or in part, the Company may take into account any factors it
considers relevant, including the order in which subscriptions are received, a
subscriber's potential to do business with, or to direct customers to, the Bank,
and the Company's desire to have a broad distribution of stock ownership. If the
Company rejects any subscription, or accepts a subscription but in its
discretion subsequently elects to cancel all or part of such subscription, the
Company will refund promptly the amount remitted that corresponds to $10.00
multiplied by the number of shares as to which the subscription is rejected or
canceled. Certificates representing shares duly subscribed and paid for will be
issued by the Company promptly after the offering conditions are satisfied and
escrowed funds are delivered to the Company.
10
<PAGE> 12
CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS
Subscription proceeds accepted by the Company for the initial 510,000
shares subscribed for in this offering will be promptly deposited in an escrow
account with the Escrow Agent until the conditions to this offering have been
satisfied or the offering has been terminated. The offering will be terminated,
no shares will be issued, and no subscription proceeds will be released from
escrow to the Company, unless on or before the Expiration Date (i) the Company
has accepted subscriptions and payment in full for a minimum of 510,000 shares;
and (ii) the Company has obtained approval of the OTS to acquire the capital
stock of the Bank and thereafter to become a unitary thrift holding company. Any
subscription proceeds accepted after satisfaction of the conditions set forth
above but before termination of this offering will not be deposited in escrow
but will be available for immediate use by the Company to fund offering and
organizational expenses and for working capital.
If the above conditions are not satisfied by the Expiration Date or the
offering is otherwise earlier terminated, accepted subscription agreements will
be of no further force or effect and the full amount of all subscription funds
will be returned promptly to subscribers, without interest. The Company will
retain any interest earned thereon to repay the expenses incurred by the
Organizers in organizing the Company and the Bank. Any expenses not paid with
such interest will be paid by the Organizers.
The Escrow Agent has not investigated the desirability or advisability
of an investment in the shares by prospective investors and has not approved,
endorsed, or passed upon the merits of an investment in the shares. Subscription
funds held in escrow will be invested in interest-bearing savings accounts,
short-term United States Treasury securities, FDIC-insured bank deposits, or
such other investments as the Escrow Agent and the Company shall agree. The
Organizers do not intend to invest the subscription proceeds held in escrow in
instruments that would mature after the Expiration Date of the offering.
If the above conditions are satisfied, the subscription amounts held in
escrow may be paid to the Company and shares issued to subscribers. Once the
Company has met the conditions for the offering, the Escrow Agreement will be
terminated, and any subscription proceeds accepted after satisfaction of the
conditions before termination of this offering will not be deposited in escrow
but will be available for immediate use by the Company to fund offering and
organizational expenses and for working capital. When the subscription funds are
released to the Company, the Company will use a portion of the proceeds to repay
the Organizers the amounts advanced by them for organizational and offering
expenses.
If the conditions for releasing subscription funds from escrow are met
and such funds are released but final regulatory approval to commence banking
operations is not obtained from the OTS or the Bank does not open for any other
reason, the Board of Directors intends to propose that the shareholders approve
a plan to liquidate the Company. Upon such a liquidation, the Company would be
dissolved and the Company's net assets (generally consisting of the amounts
received in this offering plus any interest earned thereon, less the amount of
all costs and expenses incurred by the Company and the Bank, including the
salaries of employees of the Bank and other pre-opening expenses) would be
distributed to the shareholders. In such event, the Company will have incurred
numerous expenses related to the organization of the Company and the Bank, and
the amount distributed to shareholders may be substantially less than the
subscription amount, and in an extreme case shareholders may not be returned any
amount.
PLAN OF DISTRIBUTION
Offers and sales of the Common Stock will be made on behalf of the
Company primarily by certain of its officers and directors. The officers and
directors will receive no commissions or other remuneration in connection with
such activities, but they will be reimbursed for reasonable expenses incurred in
the offering. In reliance on Rule 3a4-1 of the Exchange Act, the Company
believes such officers and directors will not be deemed to be brokers and/or
dealers under the Exchange Act.
11
<PAGE> 13
The Company may also use brokers and/or dealers in order to effect the
sale of the Common Stock. The Company has no present arrangements or agreements
with any such brokers and/or dealers with respect to this offering. The Company
anticipates that all such arrangements, if any, would be on a "best efforts"
basis, with the Company paying to the broker and/or dealer a commission based on
the shares sold through its efforts. The Company believes that the range of
possible commissions to be paid to brokers and/or dealers in such transactions
would be $.50 to $.70 per share. If broker/dealers are used, all such funds will
be promptly transmitted to the Escrow Agent under the terms of the escrow
agreement.
HOW TO SUBSCRIBE
Shares may be subscribed for by delivering the subscription agreement
(the "Subscription Agreement") attached hereto as Exhibit A, completed and
executed, to the Sales agent, on or prior to the Expiration Date. Subscribers
should retain a copy of the completed Subscription Agreement for their records.
The subscription price is due and payable when the Subscription Agreement is
delivered. Payment must be made in United States dollars by cash or by check,
bank draft or money order drawn to the order of The Bankers Bank, Escrow Account
for Southeast Commerce Holding Company in the amount of $10.00 multiplied by the
number of shares subscribed for.
USE OF PROCEEDS
BY THE COMPANY
Upon satisfaction of all of the conditions discussed in "The Offering
- -- Conditions to the Offering and Release of Funds," all subscription funds held
in escrow will be released and will become capital of the Company. The gross
proceeds to the Company from the sale of the shares offered hereby will be
between $5,100,000 and $15,000,000. The Company will use a portion of the
offering proceeds to pay any sales agent commissions and to pay (or reimburse
the organizers for) the organizational and offering expenses of the Company and
the organizational and pre-opening expenses of the Bank (which are described in
the following section) through the date of the release of funds held in escrow.
The organizational and offering expenses of the Company will consist primarily
of legal, accounting, marketing, and printing expenses, and the Company
anticipates that they will not exceed $75,000.
After payment of these expenses, the Company will use a minimum of $5,000,000
and a maximum of $5,990,000 of the gross proceeds to purchase all of the capital
stock of the Bank. The Company will retain the balance of the proceeds and
intends initially to invest them in United States government securities or as a
deposit with the Bank. The Company intends eventually to use these sums to
develop a multi-site financial services institution that focuses its core
business on community banking as it relates to real estate and other related
areas of commerce. These businesses may include a residential real mortgage
company, a wholesale mortgage company, a small loan finance company, and a
property/casualty insurance company. The Company may also use such proceeds for
potential expansion opportunities, such as the establishment of additional
branches or, the acquisition of other financial institutions. The Company does
not currently have any definitive plans regarding any such expansion
possibilities.
The following table sets forth the anticipated use of proceeds by the
Company based on the sale of the minimum number and maximum number of shares in
this offering.
<TABLE>
<CAPTION>
Minimum Maximum
Offering (1) Offering (2)
------------ ------------
<S> <C> <C>
Gross proceeds from offering $ 5,100,000 $15,000,000
Expenses for organization and issuance and
distribution of Common Stock (75,000) (75,000)
Investment in capital stock of the Bank (5,000,000) (5,990,000)
----------- -----------
Remaining proceeds $ 25,000 $ 8,935,000
=========== ===========
</TABLE>
12
<PAGE> 14
(1) Assumes that 510,000 shares of Common Stock are sold in this offering. (2)
Assumes that 1,500,000 shares of Common Stock are sold in this offering.
BY THE BANK
The Bank currently plans to use up to approximately $500,000 of the
proceeds it receives from the sale of its stock to the Company to reimburse the
Company and the Organizers for amounts advanced by the Company and the
Organizers to pay organizational and pre-opening expenses of the Bank.
Organizational expenses of the Bank, estimated at $100,000, include consulting
fees, expenses for market analysis and feasibility studies, and legal fees and
expenses. Pre-opening expenses, estimated at $150,000, include officers' and
employees' salaries and benefits (assuming the Bank opens for business on its
target date of May 1, 1998). In addition, the Company anticipates that
approximately $100,000 will be used for renovation of the Bank's offices. For
furniture, fixtures, and equipment (including computer equipment) for the
offices, the Bank expects to spend approximately $150,000 in 1998. The balance
of the proceeds to be received by the Bank and available for use in the first
year (estimated at $4,500,000 if the minimum number of shares is sold and
$5,490,000 if the maximum number is sold) will be used for loans to customers,
investments, and other general corporate purposes.
The following table depicts the anticipated use of proceeds by the
Bank. All proceeds received by the Bank will be in the form of an investment by
the Company in the Bank's capital stock.
<TABLE>
<CAPTION>
Minimum Maximum
Offering(1) Offering(2)
---------- ----------
<S> <C> <C>
Investment by the Company in the Bank's capital stock. $5,000,000 $5,990,000
Reimbursement to the Company and Organizers for
amounts advanced to the Bank for organizational
and pre-opening expenses of the Bank............ $ (250,000)
$ (250,000)
Furniture, Fixtures and Equipment..................... $ (150,000) $ (150,000)
Renovation of Bank Offices............................ $ (100,000) $ (100,000)
---------- ----------
Remaining Proceeds.................................... $4,500,000 $5,490,000
========== ==========
</TABLE>
- ---------------------------------------
(1) Assumes that 510,000 shares of Common Stock are sold in this offering.
(2) Assumes that 1,500,000 shares of Common Stock are sold in this offering.
Although the amounts set forth above provide an indication of the
proposed use of funds based on the Organizers' plans and estimates, actual
expenses may vary from the estimates. These estimates were based on assumptions
that the Organizers believed were reasonable, but as to which no assurances can
be given. The Organizers believe that the estimated minimum net proceeds of the
offering will satisfy the cash requirements of the Company and the Bank for
their respective first three years of operations and that neither the Company
nor the Bank will need to raise additional funds for operations during this
period, but there can be no assurance that this will be the case.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
November 30, 1997, and the pro forma consolidated capitalization of the Company
and the Bank, as adjusted to give effect to the sale of the minimum of 510,000
shares in this offering. The Bank has established May 1, 1998 as the target date
for opening the Bank; accordingly, the "As Adjusted" column reflects estimated
pre-opening expenses of the Company and the Bank through May 1, 1998.
13
<PAGE> 15
<TABLE>
<CAPTION>
November 30,
------------
Shareholders' Equity 1997 As Adjusted
- -------------------- ------------ -----------
<S> <C> <C>
Common Stock, par value $.01 per share;
10,000,000 shares authorized; ten
shares issued and outstanding(1);
510,000 shares issued and outstanding
as adjusted (minimum offering) $ 0 $ 5,100
Preferred Stock, par value $.01 per
share; 10,000,000 shares authorized;
no shares issued and outstanding 0 0
Additional paid-in capital(2) 100 5,019,900
Deficit accumulated during the
pre-opening stage(3) (37,596) (150,000)
-----------
Total shareholders' equity (deficit)(4) $ (37,496) $ 4,875,000
=========== ===========
</TABLE>
- ------------------------------------
(1) Richard A. Parlontieri was issued ten shares upon organization of the
Company which will be redeemed for $10.00 per share (the price at which
they were issued) upon the first issuance of shares offered hereby. The
stated capital for ten shares is $.10.
(2) The expenses of the offering will be charged against this account.
These expenses are estimated to be approximately $75,000 and this
amount has been used in the calculation of the amount shown in the "As
Adjusted" column.
(3) The deficit results from the expensing of estimated pre-opening
expenses. As of November 30, 1997, approximately $37,596 of pre-opening
expenses and $62,900 of capitalizable organizational and offering costs
had been incurred on behalf of the Company and the Bank, and the
Company's total accumulated shareholder's deficit was $37,496. The
Organizers estimate that a total of $150,000 of pre-opening expenses,
$175,000 of organizational costs ($100,000 for the Bank and $75,000 for
the Company), and up to $150,000 of capitalizable property costs for
the purchase of furniture, fixtures, and equipment are expected to be
incurred by the Company and the Bank prior to the commencement of
operations (assumed to occur in May 1998). However, no assurances can
be given that the Bank will open by this date or at all, and the amount
of pre-opening expenses and organizational costs could ultimately be
greater than currently estimated. Furniture, fixtures, and equipment
will be capitalized and amortized over the life of the lease or over
the estimated useful life of the asset. The Company will retain any
interest earned on subscription payments held in escrow prior to
conclusion of the offering. Such interest will be used to help offset
the deficit accumulated during the pre-opening stage, but the figures
shown above do not include any estimate of the interest which may be
earned.
(4) The shareholders are likely to experience additional dilution due to
operating losses expected to be incurred during the initial years of
the Bank's operations.
DIVIDEND POLICY
The Board of Directors expects initially to follow a policy of
retaining any earnings to provide funds to operate and expand the business.
Consequently, it is unlikely that any cash dividends will be paid in the near
future. The Company's ability to pay any cash dividends to its shareholders in
the future will depend primarily on the Bank's ability to pay dividends to the
Company. In order to pay dividends to the Company, the Bank must comply with the
requirements of all applicable laws and regulations. See "Supervision and
Regulation -- The Bank -- Dividends" and "Supervision and Regulation The Bank
- --Capital Requirements." In addition to the availability of funds from the Bank,
the future dividend policy of the Company is subject to the discretion of the
14
<PAGE> 16
Board of Directors and will depend upon a number of factors, including future
earnings, financial condition, cash needs, and general business conditions.
PROPOSED BUSINESS
GENERAL
The Company was incorporated as a Georgia corporation on August 22,
1997, primarily to own and control all of the capital stock of the Bank. The
Company initially will engage in no business other than owning and managing the
Bank. As a federally chartered savings association, the Bank will have general
authority to originate and purchase loans secured by real estate, secured or
unsecured loans for commercial, corporate, business, or agricultural purposes,
and loans for personal, family, or household purposes. The Bank will initially
emphasize retail banking, home mortgages, real estate development, and consumer
lending needs. The Bank will not be permitted to make non-real estate commercial
purpose loans that exceed 20% of its assets or non-real estate consumer purpose
loans that exceed 35% of its assets. While not restricted by law, the Bank
expects initially to limit its lending activities primarily to Cobb County,
Georgia, and the surrounding areas.
The Organizers have chosen a holding company structure under which the
Company will acquire all of the capital stock of the Bank because, in the
judgment of the Organizers, the holding company structure provides flexibility
that would not otherwise be available. The Company will initially engage only in
the business of owning and managing the Bank, and the Bank will focus its core
business on first and second residential mortgages, home equity loans,
refinancing, consumer loans, commercial loans, private banking and SBA lending.
The thrift charter will allow the Bank to operate in all fifty states
and to branch into any county in the state of Georgia without any additional
regulatory approval. The thrift charter will also give the Company more
flexibility to pursue strategic opportunities to grow its customer base and to
create cross-selling opportunities to those same customers. The Company intends
eventually to build a multi-site financial services institution that focuses its
core business on community banking as it relates to real estate and other
related areas of commerce. These businesses may include, but will not be limited
to, a residential mortgage company, a wholesale mortgage company, a small loan
finance company, and a property/ casualty insurance company.
The Company intends to use a state-of-the-art technology, fully
integrated, client-server core retail banking system which the Bank believes
will permit it to offer better service to its customers. The Bank's operating
strategies will be based on its philosophy of Better People, Better Service,
Better Bankingsm.
MARKETING FOCUS
Most of the banks in the Cobb County area are now local branches of
large regional banks. Although size gives the larger banks certain advantages in
competing for business from large corporations, including higher lending limits
and the ability to offer services in other areas of Georgia and the Cobb County
area, the Organizers believe that there is a void in the community banking
market in the Cobb County area and believe that the Bank can successfully fill
this void. As a result, the Company generally will not attempt to compete for
the banking relationships of large corporations, but will concentrate its
efforts on small- to medium-sized businesses and on individuals.
The Bank plans to advertise to emphasize the Company's local ownership,
community bank nature, and ability to provide more personalized service than its
competition. The Organizers, as long-time residents and business people in the
Cobb County area, have determined the credit needs of the area through personal
experience and communications with their business colleagues. The Organizers
believe that the proposed community bank focus of the Bank is likely to succeed
in this market. The Organizers believe that the area will react favorably to the
Bank's emphasis on service to small businesses, individuals, and professional
concerns. However, no assurances in this respect can be given.
15
<PAGE> 17
LOCATION AND SERVICE AREA
While not restricted by law, the Bank expects initially to draw 75% of
its business from Cobb County, Georgia, and the surrounding areas. Cobb County,
which will be the Bank's primary service area, has been one of the fastest
growing regions in Georgia over the last several years. The county's population
has grown from 447,745 in 1990 to 538,832 in 1996, and per capita income in the
county was $30,000 as of 1996 making it the second largest county in the state.
The Company's address is 100 Galleria Parkway, Suite 400, Atlanta,
Georgia 30339. The Company's telephone number is (770) 956-4034. See
"Facilities."
DEPOSITS
The Bank intends to offer a full range of deposit services that are
typically available in most banks and savings and loan associations, including
checking accounts, commercial accounts, savings accounts, and other time
deposits of various types, ranging from daily money market accounts to
longer-term certificates of deposit. The transaction accounts and time
certificates will be tailored to the Bank's principal market area at rates
competitive to those offered in the Cobb County area. In addition, the Bank
intends to offer certain retirement account services, such as Individual
Retirement Accounts (IRAs). The Bank intends to solicit these accounts from
individuals, businesses, associations and organizations, and governmental
authorities.
LENDING ACTIVITIES
General. The Bank intends to emphasize a range of lending services,
including real estate, commercial and consumer loans, to individuals and
small-to medium-sized businesses and professional concerns that are located in
or conduct a substantial portion of their business in the Bank's market area.
The Bank will initially emphasize retail banking, home mortgages, real estate
development, and consumer lending needs. The Bank will not be permitted to make
non-real estate commercial purpose loans that exceed 20% of its assets or
non-real estate consumer purpose loans that exceed 35% of its assets.
Real Estate Loans. The Organizers expect that one of the primary
components of the Bank's loan portfolio will be loans secured by first or second
mortgages on real estate. These loans will generally consist of commercial real
estate loans, construction and development loans, and residential real estate
loans (but will exclude home equity loans, which are classified as consumer
loans). Loan terms generally will be limited to five years or less, although
payments may be structured on a longer amortization basis. Interest rates may be
fixed or adjustable, and will more likely be fixed in the case of shorter term
loans. The Bank will generally charge an origination fee. Management will
attempt to reduce credit risk in the commercial real estate portfolio by
emphasizing loans on owner-occupied office and retail buildings where the
loan-to-value ratio, established by independent appraisals, does not exceed 80%.
In addition, the Bank will typically require personal guarantees of the
principal owners of the property backed with a review by the Bank of the
personal financial statements of the principal owners. The principal economic
risk associated with each category of anticipated loans, including real estate
loans, is the creditworthiness of the Bank's borrowers. The risks associated
with real estate loans vary with many economic factors, including employment
levels and fluctuations in the value of real estate. The Bank will compete for
real estate loans with a number of bank competitors which are well established
in the Cobb County area. Most of these competitors have substantially greater
resources and lending limits than the Bank. As a result, the Bank may have to
charge lower interest rates to attract borrowers. See "Competition" below. The
Bank may also originate loans for sale into the secondary market. The Bank
intends to limit interest rate risk and credit risk on these loans by locking
the interest rate for each loan with the secondary investor and receiving the
investor's underwriting approval prior to originating the loan.
16
<PAGE> 18
Commercial Loans. The Bank will make loans for commercial purposes in
various lines of businesses. Equipment loans will typically be made for a term
of five years or less at fixed or variable rates, with the loan fully amortized
over the term and secured by the financed equipment and with a loan-to-value
ratio of 80% or less. Working capital loans will typically have terms not
exceeding one year and will usually be secured by accounts receivable,
inventory, or personal guarantees of the principals of the business. For loans
secured by accounts receivable or inventory, principal will typically be repaid
as the assets securing the loan are converted into cash, and in other cases
principal will typically be due at maturity. The principal economic risk
associated with each category of anticipated loans, including commercial loans,
is the creditworthiness of the Bank's borrowers. The risks associated with
commercial loans vary with many economic factors, including the economy in the
Cobb County area. The well-established banks in the Cobb County area will make
proportionately more loans to medium- to large-sized businesses than the Bank.
Many of the Bank's anticipated commercial loans will likely be made to small- to
medium-sized businesses which may be less able to withstand competitive,
economic, and financial conditions than larger borrowers.
Consumer Loans. The Bank will make a variety of loans to individuals
for personal and household purposes, including secured and unsecured installment
and term loans, home equity loans and lines of credit, and revolving lines of
credit such as credit cards. These loans typically will carry balances of less
than $25,000 and, in the case of non-revolving loans, will be amortized over a
period not exceeding 48 months or will be ninety-day term loans, in each case
bearing interest at a fixed rate. The revolving loans will typically bear
interest at a fixed rate and require monthly payments of interest and a portion
of the principal balance. The underwriting criteria for home equity loans and
lines of credit will generally be the same as applied by the Bank when making a
first mortgage loan, as described above, and home equity lines of credit will
typically expire ten years or less after origination. As with the other
categories of loans, the principal economic risk associated with consumer loans
is the creditworthiness of the Bank's borrowers, and the principal competitors
for consumer loans will be the established banks in the Cobb County area.
Loan Approval and Review. The Bank's loan approval policies will
provide for various levels of officer lending authority. When the amount of
aggregate loans to a single borrower exceeds that individual officer's lending
authority, the loan request will be considered and approved by an officer with a
higher lending limit or the officers' loan committee. The Bank will establish an
officers' loan committee that has lending limits, and any loan in excess of this
lending limit will be approved by the directors' loan committee. The Bank will
not make any loans to any director, officer, or employee of the Bank unless the
loan is approved by the board of directors of the Bank and is made on terms not
more favorable to such person than would be available to a person not affiliated
with the Bank.
Lending Limits. The Bank's lending activities will be subject to a
variety of lending limits imposed by federal law. While differing limits apply
in certain circumstances based on the type of loan or the nature of the borrower
(including the borrower's relationship to the Bank), in general the Bank will be
subject to a loan-to-one-borrower limit. Since the enactment of FIRREA in 1989,
a savings association generally may not make loans to one borrower and related
entities in an amount which exceeds 15% of its unimpaired capital and surplus,
although loans in an amount equal to an additional 10% of unimpaired capital and
surplus may be made to a borrower if the loans are fully secured by readily
marketable securities. Unless the Bank is able to sell participations in its
loans to other financial institutions, the Bank will not be able to meet all of
the lending needs of loan customers requiring aggregate extensions of credit
above these limits. It is not currently anticipated that the Bank will have an
initial loan loss reserve when it commences operations.
OTHER BANKING SERVICES
Other anticipated bank services include cash management services, safe
deposit boxes, travelers checks, direct deposit of payroll and social security
checks, and automatic drafts for various accounts. The Bank plans to become
associated with a shared network of automated teller machines that may be used
by Bank customers throughout Georgia and other regions. The Bank also plans to
offer MasterCard and VISA credit card services
17
<PAGE> 19
through a correspondent bank as an agent for the Bank. The Bank does not plan to
exercise trust powers during its initial years of operation.
COMPETITION
The banking business is highly competitive. The Bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, and money market mutual funds operating in the Cobb
County area and elsewhere. In 1996, there were more than 160 branches of
financial institutions operating in Cobb County, holding over $4.5 billion in
deposits. A number of these competitors are well established in the Cobb County
area. Most of them have substantially greater resources and lending limits than
the Bank and offer certain services, such as extensive and established branch
networks and trust services, that the Bank either does not expect to provide or
will not provide initially. As a result of these competitive factors, the Bank
may have to pay higher rates of interest to attract deposits.
FACILITIES
The Bank's initial office will be located in Paces Summit in historic
Vinings. The Bank's address is 100 Galleria Parkway, Suite 400, Atlanta, Georgia
30339. The Bank will be located on the first floor of the Paces Summit office
complex and will operate a 5,000 square foot facility. The Company believes that
the facilities will adequately serve the Bank's needs for its first several
years of operation.
EMPLOYEES
The Company anticipates that, upon commencement of operations, the Bank
will have approximately 12 full-time employees. The Company will not have any
employees other than its officers.
LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company or the
Bank or any of their properties are subject.
SUPERVISION AND REGULATION
The Company and the Bank are subject to state and federal banking laws
and regulations which impose specific requirements or restrictions on and
provide for general regulatory oversight with respect to virtually all aspects
of operations. These laws and regulations are generally intended to protect
depositors, not shareholders. To the extent that the following summary describes
statutory or regulatory provisions, it is qualified in its entirety by reference
to the particular statutory and regulatory provisions. Any change in applicable
laws or regulations may have a material effect on the business and prospects of
the Company. Beginning with the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA") and following with FDICIA, which
was enacted in 1991, numerous additional regulatory requirements have been
placed on the banking industry in the past several years, and additional changes
have been proposed. The banking industry is also likely to change significantly
as a result of the passage of the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking Act") The operations of the
Company and the Bank may be affected by legislative changes and the policies of
various regulatory authorities. The Company is unable to predict the nature or
the extent of the effect on its business and earnings that fiscal or monetary
policies, economic control, or new federal or state legislation may have in the
future.
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<PAGE> 20
THE COMPANY
The Company will be a registered holding company under both the Savings
and Loan Holding Company Act (the "SLHCA") set forth in Section 10 of the Home
Owners Loan Act ("HOLA") and the Financial Institutions Code of Georgia. The
Company will be regulated under such acts by the OTS and by the Department of
Banking and Finance (the "DBF"), respectively. As a savings and loan holding
company, the Company will be required to file with the OTS an annual report and
such additional information as the OTS may require pursuant to the SLHCA. The
OTS will also conduct examinations of the Company and each of its subsidiaries.
As a unitary savings and loan holding company owning only one savings
institution, the Company will generally be allowed to engage and invest in a
broad range of business activities not permitted to commercial bank holding
companies or multiple savings and loans holding companies, provided that the
Bank continues to qualify as a "qualified thrift lender." See "--the Bank
- --Qualified Thrift Lender Requirements."
The SLHCA and the Financial Institutions Code of Georgia will prohibit
the Company from acquiring control of another savings association or another
savings and loan holding company without prior approval from the OTS and the
DBF, respectively. However, savings and loan holding companies are allowed to
acquire or to retain as much as 5% of the voting shares of a savings institution
or savings and loan holding company without regulatory approval.
The OTS may not approve an acquisition that would result in the
formation of certain types of interstate holding company networks. The OTS is
precluded from approving an acquisition that would result in the formation of a
multiple holding company controlling institutions in more than one state unless
the acquiring company or one of its savings institution subsidiaries is
authorized to acquire control of an institution or to operate an office in the
additional state pursuant to a supervisory acquisition authorized under Section
13(k) of the Federal Deposit Insurance Act or unless the statutes of the state
in which the institution to be acquired is located permits such an acquisition.
THE BANK
General. Subject to receipt of the necessary approvals of its pending
applications, the Bank will operate as a federal savings bank incorporated under
the laws of the United States and subject to examination by the OTS. The OTS
will regulate or monitor virtually all areas of the Bank's operations, including
security devices and procedures, adequacy of capitalization and loss reserves,
loans, investments, borrowings, deposits, mergers, issuances of securities,
payment of dividends, interest rates payable on deposits, interest rates or fees
chargeable on loans, establishment of branches, corporate reorganizations,
maintenance of books and records, and adequacy of staff training to carry on
safe lending and deposit gathering practices. The OTS will require the Bank to
maintain certain capital ratios and will impose limitations on the Bank's
aggregate investment in real estate, bank premises, and furniture and fixtures.
The Bank will be required by the OTS to prepare quarterly reports on the Bank's
financial condition and to conduct an annual audit of its financial affairs in
compliance with minimum standards and procedures prescribed by the OTS. OTS
Regulations generally provide that federal savings banks must be examined no
less frequently than every 18 months. The Bank also is subject to assessments by
the OTS to cover the costs of such examinations.
As a federally chartered savings institution, the Bank generally will
not be subject to those provisions of Georgia law governing state chartered
financial institutions or to the jurisdiction of the DBF. However, the DBF
interprets the Financial Institutions Code of Georgia to require the prior
approval of the DBF for any acquisition of control of any savings institution
(whether chartered by state or federal authority) located in Georgia.
19
<PAGE> 21
The DBF also interprets the Financial Institutions Code of Georgia to
include savings and loan holding companies as "bank holding companies," thus
giving the DBF the authority to make examinations of the Company and any
subsidiaries and to require periodic and other reports. Existing DBF regulations
do not restrict the business activities or investments of the Company or the
Bank.
State usury laws are applicable to federally insured institutions with
regard to loans made within Georgia. Generally speaking, Georgia law does not
establish ceilings on interest rates although certain specialized types of
lending, in which the Bank engages, such as making loans of $3,000 or less, are
subject to interest rate limitations.
Subsidiary institutions of a savings and loan holding company, such as
the Bank, are subject to certain restrictions imposed by the Federal Reserve Act
on any extension of credit to the holding company or any of its subsidiaries, on
investment in the stock or other securities thereof, and on the taking of such
stock or securities as collateral for loans to any borrower. In addition, a
holding company and its subsidiaries are prohibited from engaging in certain
tying arrangements in connection with any extension of credit or provision of
any property or services.
Capital Requirements. OTS regulations require that federal savings
banks maintain (i) "tangible capital" in an amount of not less than 1.5% of
total assets, (ii) "core capital" in an amount not less than 3.0% of total
assets, and (iii) a level of risk-based capital equal to 8% of risk-weighted
assets. Under OTS regulations, the term "core capital" generally includes common
stockholders' equity, noncumulative perpetual preferred stock and related
surplus, and minority interests in the equity accounts of consolidated
subsidiaries less unidentifiable intangible assets (other than certain amounts
of supervisory goodwill) and certain investments in certain subsidiaries plus
90% of the fair market value of readily marketable purchased mortgage servicing
rights and purchased credit card relationships (subject to certain conditions).
"Tangible capital" generally is defined as core capital minus intangible assets
and investments in certain subsidiaries, except purchased mortgage servicing
rights.
In determining total risk-weighted assets for purposes of the
risk-based requirement, (i) each off-balance sheet asset must be converted to
its on-balance sheet credit equivalent amount by multiplying the face amount of
each such item by a credit conversion factor ranging from 0% to 100% (depending
upon the nature of the asset), (ii) the credit equivalent amount of each
off-balance sheet asset and each on-balance sheet asset must be multiplied by a
risk factor ranging from 0% to 200% (again depending upon the nature of the
asset) and (iii) the resulting amounts are added together and constitute total
risk-weighted assets. "Total capital"- risk-based capital requirement equals the
sum of core capital plus supplementary capital (which, as defined, includes the
sum of, among other items, perpetual preferred stock not counted as core
capital, limited life preferred stock, subordinated debt, and general loan and
lease loss allowances up to 1.25 % of risk-weighted assets) less certain
deductions. The amount of supplementary capital that may be counted towards
satisfaction of the total capital requirement may not exceed 100% of core
capital, and OTS regulations require the maintenance of a minimum ratio of core
capital to total risk-weighted assets of 4%.
OTS regulations also include an interest-rate risk component in the
risk-based capital requirement. Under this regulation, an institution is
considered to have excess interest rate-risk if, based upon a 200-basis point
change in market interest rates, the market value of an institution's capital
changes by more than 2%. The OTS risk-based capital standards also provide for
concentration of credit risk, risk from nontraditional activities and actual
performance, and expected risk of loss on multi-family mortgages.
Capital requirements higher than the generally applicable minimum
requirement may be established for a particular savings association if the OTS
determines that the institution's capital was or may become inadequate in view
of its particular circumstances.
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<PAGE> 22
Additionally, the DBF requires that savings and loan holding companies,
such as the Company, must maintain a 5% Tier 1 leverage ratio on a consolidated
basis.
Deposit Insurance. Deposits at the Bank are insured to a maximum of
$100,000 for each insured depositor by the FDIC. The FDIC establishes rates for
the payment of premiums by federally insured commercial banks and savings banks,
or thrifts, for deposit insurance. A separate Bank Insurance Fund ("BIF") and
Savings Association Insurance Fund ("SAIF") are maintained for commercial banks
and thrifts, respectively, with insurance premiums from the industry used to
offset losses from insurance payouts when banks and thrifts fail. Due to the
high rate of failures in the late 1980's and early 1990's, the fees that
commercial banks and thrifts pay to BIF and SAIF have increased. Since 1993,
insured depository institutions like the Bank have paid for deposit insurance
under a risk-based premium system. Under this system, until mid-1995 depositor
institutions paid to BIF or SAIF from $0.23 to $0.31 per $100 of insured
deposits depending on its capital levels and risk profile, as determined by its
primary federal regulator on a semi-annual basis. As each fund achieves its
designated reserve ratio, however, the FDIC has the authority to lower the
premium assessments for that fund to a rate that would be sufficient to maintain
the designated reserve ratio. In August 1995, the FDIC determined that the BIF
had achieved its designated reserve ratio and approved lower BIF premium rates
for deposit insurance by the BIF for all but the riskiest institutions. On
November 14, 1995, the FDIC determined that BIF deposit insurance premiums for
well- capitalized banks would be further reduced to the then-statutory minimum
of $2,000 per institution per year, effective January 1, 1996. Because the SAIF
remained significantly below its designated reserve ratio, insurance premiums
for assessable SAIF deposits were not reduced in either FDIC action.
The current financial condition of the SAIF resulted in the adoption of
the Deposit Insurance Funds Act of 1996 ("DIFA"), which was enacted on September
30, 1996 as part of the Omnibus Consolidated Appropriations Act. Under DIFA, a
special one-time assessment of 65.7 cents per $100 of assessable SAIF deposits
was collected on November 27, 1996 and applied retroactively to SAIF deposits as
of March 31, 1995. DIFA provides that special assessments will be deductible
under Section 162 of the Internal Revenue Code in the year in which the
assessment is paid. After collection of the special assessment, it is expected
that the SAIF would achieve its designated reserve ratio and SAIF premium rates
would then become the same as BIF rates. DIFA further provides that BIF and SAIF
are to be merged, creating the "Deposit Insurance Fund," on January 1, 1999,
provided that bank and savings association charters are combined by that date.
DIFA further assesses premiums for Financing Corporation Bond debt service
("FICO"). Beginning January 1, 1997, FICO premiums for BIF and SAIF became 1.3
and 6.4 basis points, respectively. Full pro rata sharing of FICO will begin no
later than January 1, 2000.
As an insurer, the FDIC issues regulations, conducts examinations and
generally supervises the operations of its insured institutions. Any insured
institution which does not operate in accordance with or conform to FDIC
regulations, policies and directives may be sanctioned for non-compliance. The
FDIC has the authority to suspend or terminate insurance of deposits upon the
finding that the institution has engaged in unsafe or unsound practices, is
operating in an unsafe or unsound condition, or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC. If insurance of
accounts is terminated by the FDIC, the deposits in the institution will
continue to be insured by the FDIC for a period of two years following the date
of termination. The FDIC requires an annual audit by independent accountants and
also periodically makes its own examinations of insured institutions.
In addition to deposit insurance premiums, savings institutions also
must bear a portion of the administrative costs of the OTS through an assessment
based on the level of total assets of each insured institution and which
differentiates between troubled and nontroubled savings institutions.
Additionally, the OTS assesses fees for the processing of various applications.
Transactions With Affiliates and Insiders. The Bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which place limits on the
amount of loans or extensions of credit to, or investments in, or certain other
transactions with, affiliates and on the amount of advances to third parties
collateralized by the
21
<PAGE> 23
securities or obligations of affiliates. The aggregate of all covered
transactions is limited in amount, as to any one affiliate, to 10% of the bank's
capital and surplus and, as to all affiliates combined, to 20% of the bank's
capital and surplus. Furthermore, within the foregoing limitations as to amount,
each covered transaction must meet specified collateral requirements. Compliance
is also required with certain provisions designed to avoid the taking of low
quality assets.
The Bank is also subject to the provisions of Section 23B of the
Federal Reserve Act which, among other things, prohibit an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with non-affiliated companies. The Bank is subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit
(i) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.
Dividends. The Bank is subject to regulatory restrictions on the
payment of dividends, including a prohibition of payment of dividends from its
capital. All dividends must be paid out of the undivided profits then on hand,
after deducting expenses, including losses and bad debts. The Bank must also
obtain approval from the OTS prior to the payment of any dividends to the
Company. In addition, under FDICIA, the Bank may not pay a dividend if, after
paying the dividend, the Bank would be undercapitalized.
Branching. As a federal savings bank, there are no regulatory
restrictions on the Bank's ability to branch within or without the state of
Georgia.
Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, a financial institution's primary federal regulator
(this is the OTS for the Bank) shall evaluate the record of the financial
institutions in meeting the credit needs of their local communities, including
low and moderate income neighborhoods, consistent with the safe and sound
operation of those institutions. These factors are also considered in evaluating
mergers, acquisitions, and applications to open a branch or facility.
Liquidity. Under applicable federal regulations, savings associations
are required to maintain an average daily balance of liquid assets (including
cash, certain time deposits, certain bankers' acceptances, certain corporate
debt securities and highly rated commercial paper, securities of certain mutual
funds and specified United States government, state or federal agency
obligations) equal to a monthly average of not less than a specified percentage
of the average daily balance of the savings association's net withdrawable
deposits plus short-term borrowings. Under HOLA, this liquidity requirement may
be changed from time to time by the OTS to any amount within the range of 4% to
10% depending upon economic conditions and the deposit flows of member
institutions, and currently is 5%. Savings institutions also are required to
maintain an average daily balance of short-term liquid assets at a specified
percentage (currently 1%) of the total of the average daily balance of its net
withdrawable deposits and short-term borrowings.
Equity Investments. The OTS has revised its risk-based capital
regulation to modify the treatment of certain equity investments and to clarify
the treatment of other equity investments. Equity investments that are
permissible for both savings banks and national banks will no longer be deducted
from savings associations' calculations of total capital over a five-year
period. Instead, permissible equity investments will be placed in the 100%
risk-weight category, mirroring the capital treatment prescribed for those
investments when made by national banks under the regulations of the OCC. Equity
investments held by savings associations that are not permissible for national
banks must still be deducted from assets and total capital.
Qualified Thrift Lender Requirement. A federal savings bank is deemed
to be a "qualified thrift lender" ("QTL") as long as its "qualified thrift
investments" equal or exceed 65% of its "portfolio assets" on a monthly
22
<PAGE> 24
average basis in nine out of every 12 months. Qualified thrift investments
generally consist of (i) various housing related loans and investments (such as
residential construction and mortgage loans, home improvement loans, mobile home
loans, home equity loans and mortgage-backed securities), (ii) certain
obligations of the FDIC, and (iii) shares of stock issued by any FHLB, the FHLMC
or the FNMA. Qualified thrift investments also include certain other specified
investments, subject to a percentage of portfolio assets limitation. For
purposes of the QTL test, the term "portfolio assets" means the savings
institution's total assets minus goodwill and other intangible assets, the value
of property used by the savings institution to conduct its business, and liquid
assets held by the savings institution in an amount up to 20% of its total
assets.
OTS regulations provide that any savings association that fails to meet
the definition of a QTL must either convert to a national bank charter or limit
its future investments and activities (including branching and payments of
dividends) to those permitted for both savings associations and national banks.
Further, within one year of the loss of QTL status, a holding company of a
savings association that does not convert to a bank charter must register as a
bank holding company and will be subject to all statutes applicable to bank
holding companies. In order to exercise the powers granted to federally
chartered savings associations and maintain full access to FHLB advances, the
Bank must meet the definition of a QTL.
Loans to One Borrower Limitations. HOLA generally requires savings
associations to comply with the loans to one borrower limitations applicable to
national banks. National banks generally may make loans to a single borrower in
amounts up to 15% of their unimpaired capital and surplus, plus an additional
10% of capital and surplus for loans secured by readily marketable collateral.
HOLA provides exceptions under which a savings association may make loans to one
borrower in excess of the generally applicable national bank limits. A savings
association may make loans to one borrower in excess of such limits under one of
the following circumstances: (i) for any purpose, in any amount not to exceed
$500,000; or (ii) to develop domestic residential housing units, in an amount
not to exceed the lesser of $30 million or 30% of the savings association's
unimpaired capital and unimpaired surplus, provided other conditions are
satisfied.
Commercial Real Property Loans. HOLA limits the aggregate amount of
commercial real estate loans that a federal savings association may make to an
amount not in excess of 400% of the savings association's capital.
ELIMINATION OF FEDERAL SAVINGS ASSOCIATION CHARTER
Legislation that would eliminate the federal savings association
charter is under discussion. If such legislation is enacted, the Bank would be
required to convert its federal savings bank charter to either a national bank
charter or to a state depository institution charter. Various legislative
proposals also may result in the restructuring of federal regulatory oversight,
including, for example, consolidation of the OTS into another agency, or
creation of a new Federal banking agency to replace the various such agencies
which presently exist. The Bank is unable to predict whether such legislation
will be enacted or, if enacted, what the effect of such legislation will be.
Federal Home Loan Bank System. The FHLB System consists of 12 regional
FHLBs, each subject to supervision and regulation by the Federal Housing Finance
Board. The FHLBs provide a central credit facility for member savings
associations. The maximum amount that the FHLB of Atlanta will advance
fluctuates from time to time in accordance with changes in policies of the
Federal Home Finance Board and the FHLB of Atlanta, and the maximum amount
generally is reduced by borrowings from any other source. In addition, the
amount of FHLB advances that a savings association may obtain will be restricted
in the event the institution fails to constitute a QTL.
Federal Reserve System. The Federal Reserve Board has adopted
regulations that require savings associations to maintain nonearning reserves
against their transaction accounts (primarily NOW and regular checking
accounts). These reserves may be used to satisfy liquidity requirements imposed
by the OTS. Because
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<PAGE> 25
required reserves must be maintained in the form of cash or a
non-interest-bearing account at a Federal Reserve Bank, the effect of this
reserve requirement is to reduce the amount of the Bank's interest-earning
assets.
Savings institutions also have the authority to borrow from the Federal
Reserve "discount window." Federal Reserve Board regulations, however, require
savings associations to exhaust all FHLB sources before borrowing from a Federal
Reserve bank.
Other Regulations. Interest and certain other charges collected or
contracted for by the Bank are subject to state usury laws and certain federal
laws concerning interest rates. The Bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as the federal
Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers; the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and public officials to
determine whether a financial institution will be fulfilling its obligation to
help meet the housing needs of the community it serves; the Equal Credit
Opportunity Act, prohibiting discrimination on the basis of race, creed or other
prohibited factors in extending credit; the Fair Credit Reporting Act of 1978,
governing the use and provision of information to credit reporting agencies; the
Fair Debt Collection Act, governing the manner in which consumer debts may be
collected by collection agencies; and the rules and regulations of the various
federal agencies charged with the responsibility of implementing such federal
laws. The deposit operations of the Bank also are subject to the Right to
Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with
administrative subpoenas of financial records, and the Electronic Funds Transfer
Act and Regulation E issued by the Federal Reserve Board to implement that act,
which governs automatic deposits to and withdrawals from deposit accounts and
customers' rights and liabilities arising from the use of automated teller
machines and other electronic banking services.
ENFORCEMENT POWERS
FIRREA expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties" (primarily including management,
employees, and agents of a financial institution, and independent contractors
such as attorneys and accountants and others who participate in the conduct of
the financial institution's affairs). These practices can include the failure of
an institution to timely file required reports or the filing of false or
misleading information or the submission of inaccurate reports. Civil penalties
may be as high as $1,000,000 a day for such violations. Criminal penalties for
some financial institution crimes have been increased to twenty years. In
addition, regulators are provided with greater flexibility to commence
enforcement actions against institutions and institution-affiliated parties.
Possible enforcement actions include the termination of deposit insurance.
Furthermore, FIRREA expanded the appropriate banking agencies' power to issue
cease-and-desist orders that may, among other things, require affirmative action
to correct any harm resulting from a violation or practice, including
restitution, reimbursement, indemnifications or guarantees against loss. A
financial institution may also be ordered to restrict its growth, dispose of
certain assets, rescind agreements or contracts, or take other actions as
determined by the ordering agency to be appropriate.
RECENT LEGISLATIVE DEVELOPMENTS
From time to time, various bills are introduced in the United States
Congress with respect to the regulation of financial institutions. Certain of
these proposals, if adopted, could significantly change the regulation of banks
and the financial services industry. The Company cannot predict whether any of
these proposals will be adopted or, if adopted, how these proposals would affect
the Company.
EFFECT OF GOVERNMENTAL MONETARY POLICIES
The earnings of the Bank will be affected by domestic economic
conditions and the monetary and fiscal policies of the United States government
and its agencies. The Federal Reserve Board's monetary policies have
24
<PAGE> 26
had, and will likely continue to have, an important impact on the operating
results of commercial banks through its power to implement national monetary
policy in order, among other things, to curb inflation or combat a recession.
The monetary policies of the Federal Reserve Board have major effects upon the
levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation of
the discount rate on borrowings of member banks and the reserve requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.
25
<PAGE> 27
MANAGEMENT
GENERAL
The following table sets forth the respective names, positions with the
Company and the Bank, and anticipated subscriptions of the Organizers. The
Organizers may elect to purchase more than the shares indicated below.
Additionally, in recognition of their acceptance of the financial risks incurred
in connection with the organization of the Company and the Bank, the Organizers
will be granted, for nominal consideration, warrants to purchase one share of
Common Stock for each share purchased by them in this offering. See "Management
- -- Stock Warrants."
<TABLE>
<CAPTION>
Anticipated Subscription
------------------------------------------
Percentage of Percentage of
Position With Number of Minimum Maximum
Name Company/Bank(1) Shares(2) Offering(3) Offering(4)
- ---- --------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Gary M. Bremer Class II Director; 20,000 3.92% 1.33%
Organizer
Richard C. Carter Class II Director; 10,000 1.96% 0.66%
Organizer
Louis J. Douglass, III Class II Director; 10,000 1.96% 0.66%
President; Chief
Executive Officer of the
Bank; Organizer
Terry L. Ferrero Class I Director; 20,000 3.92% 1.33%
Organizer
Stephen R. Gross Class III Director; 10,000 1.96% 0.66%
Organizer
G. Webb Howell Class I Director; 12,500 2.45% 0.83%
Organizer
Frank E. Perisino Class III Director; 10,000 1.96% 0.66%
Organizer
Richard A. Parlontieri Class III Director; 12,500 2.45% 0.83%
Chairman; Chief Executive
Officer of the Company;
Organizer
Donnie Russell Class I Director; 10,000 1.96% 0.66%
Organizer
TOTAL 115,000 22.54% 7.67%
======= ===== ====
</TABLE>
- --------------------------
(1) The terms of the Class I Directors will expire in 1998; the terms of the
Class II Directors will expire in 1999; and the terms of the Class III
Directors will expire in 2000.
(2) All of such purchases will be at a price of $10.00 per share, the same
price at which shares are being offered to the public. Additionally, in
recognition of their acceptance of the financial risks incurred in
connection with the organization of the Company and the Bank, the
Organizers will be granted, for nominal consideration, warrants to
purchase one share of Common Stock for each share purchased by them in
this offering. See "Management -- Stock Warrants." Assuming that the
Organizers purchase the indicated number of shares in this offering, and
assuming all warrants issued in conjunction with shares purchased by the
Organizers are exercised, the Organizers would own, as a group, 36.8% of
the Common Stock to be outstanding upon the completion of this offering
and exercise of the warrants if the minimum number of shares is sold and
14.2% of the Common Stock if the maximum number of shares is sold and the
warrants exercised. No person is expected to own more than 5% of the
shares of the Common Stock immediately after the offering. However,
Organizers may purchase up to 100% of the shares in the offering if
necessary for the
26
<PAGE> 28
Company to achieve the minimum capital requirement and also may decide to
purchase additional shares in the offering even if the minimum offering is
fully subscribed. Any shares purchased by the Organizers in excess of their
original commitment will be purchased for investment and not with a view to
the resale of such shares. Although each Organizer has agreed with the other
Organizers that he will subscribe for the number of shares indicated above,
neither the Organizers nor any other subscriber will be obligated to
purchase shares except pursuant to a valid subscription agreement executed
after receipt of this Prospectus. This table includes shares which are
expected to be beneficially owned by the Organizers upon completion of the
offering.
(3) Assumes that the minimum number of 510,000 shares are sold in this offering.
(4) Assumes that the maximum number of 1,500,000 shares are sold in this
offering.
All of the Organizers will serve as directors of the Company and the Bank.
BIOGRAPHICAL INFORMATION
GARY M. BREMER, age 58, is founder and Chairman of Simione Central
Holdings, Inc., a publicly traded Information Systems and Management Services
Company in the home health industry. He is founder and former Chairman/CEO of
Central Health Services. He is currently a Director and Treasurer of NAHC
(National Association of Home Care), co-founder and Director for the Foundation
for Medically Fragile Children, Member of the Board for the Caring Institute,
Member of the Board for the Foundation for Hospice and Home Care, and co-founder
for the HUG Center (a non-profit organization which provides day care services
to chronically ill children). He is currently a director of Fayette County Bank.
Mr. Bremer has also served on Speaker Newt Gingrich's Medicare Advisory Council.
RICHARD C. CARTER, age 48, is Vice President of Marketing with Life of
the South Insurance Company. He is a graduate of Troy State University, Troy,
Alabama, where he majored in Business Management. He has over twenty years
experience in marketing and management of health and financial services
insurance products. Carter is a charter member of the Association of Health
Insurance Agents and is a member of the National Association of Life
Underwriters, Atlanta South Association. He holds the designation of Certified
Health Consultant.
LOUIS J. DOUGLASS, III, age 53, has been the proposed President and
Chief Executive Officer of the Bank since December 1, 1997. From 1993 until he
joined the Bank, he served as a director and an executive vice president of
Regions Bank, Forsyth County, Georgia (formerly Peoples Bank of Forsyth, an
affiliate of First National Bank of Gainesville), where he was responsible for
branch managers, commercial lenders, construction lending department, loan
operations, and day to day activities of managing the bank. Prior to his
community bank experience, Mr. Douglass was with Citizens and Southern National
Bank for over 20 years. While at C&S he was responsible for both the commercial
and retail sides of the bank in several districts which ranged in size from 16
to 24 branches throughout greater Atlanta. From 1994 to 1996, Mr. Douglass
served as Treasurer of the Forsyth Rotary Club. He was also on the Construction
Committee (1995-1996), Nominating Committee (1996-1997) and Yacht Club Committee
(1997) for the Atlanta Athletic Club. From 1993 to 1996 he served as the
director for Sawnee Community Center. Mr. Douglass has also served as a director
for the Northeast Chapter- Robert Morris Associates and the Forsyth Chamber of
Commerce Economic Development Committee. From 1995 to 1996 Mr. Douglass was
involved in the Sheshunoff Affiliation Program. He has also actively
participated in the Marist Booster Club and the Georgia Bankers Association.
TERRY L. FERRERO, age 46, is President and Chief Executive Officer of
American Wholesale Building Supply, a wholesale distribution and commercial
renovation company with offices in Georgia and Florida. Prior to founding
American Wholesale, Mr. Ferrero was a National Sales Executive with Steel
Building Products Group of U.S. Steel for over 15 years. Mr. Ferrero serves on
numerous Advisory Boards for the building supply and commercial renovation
industry. He is active with several charities, including Habitat for Humanity,
United Cerebral Palsy and Scottish Rite Hospital.
27
<PAGE> 29
STEPHEN R. GROSS, age 50, is a founding member of Gross, Collins &
Cress, P.C. He was Regional Managing Partner, National Director of Business
Consulting, and a member of the Executive Committee of the predecessor national
accounting firm. Gross, a native of Atlanta, graduated from Duke University with
a focus in corporate finance and attended Georgia State University graduate
school majoring in accounting and tax. He has taught business planning, real
estate services and computer consulting to CPAs throughout Georgia and has been
a national speaker and trainer on these subjects.
G. WEBB HOWELL, age 44, is an Agent Field Consultant for State Farm
Insurance in Marietta, Georgia. Howell has been in the State Farm organization
since 1974. He is a Chartered Life Underwriter and a Chartered Financial
Consultant and a member of the Atlanta chapter of both of these organizations,
as well as a member of the National Association of Life Underwriters. Howell
attended Clayton College and National Louis University. He was an organizer of
First Community Bank Services, Inc., the holding company for Fayette County
Bank, and he is currently a director of Fayette County Bank.
RICHARD A. PARLONTIERI, age 51, is President/CEO of Habersham Resource
Management, a consulting firm with over16 years experience in the financial
services industry. He was an organizer of First Community Bank Services, Inc.,
the holding company for Fayette County Bank, and he is currently a director of
Fayette County Bank. His community involvement includes currently serving as
Chairman, U.S. Selective Service Board, past City Councilman, Peachtree City,
Georgia; Chairman, Association of Fayette County Governments; Chairman,
Peachtree City Planning Commission; President, Fayette County American Heart
Association and Organizer/Director, Fayette Family YMCA.
FRANK E. PERISINO, age 53, is owner/operator of FMK Enterprises, Inc.,
which operates X-Press Car Rental and Leasing in Atlanta, Georgia, and the
National Car Rental Franchise for Albany, Georgia. Mr. Perisino also owns
X-Press Car Rental, Inc., a Florida corporation. He has held management
positions with Hertz and Budget Rent-A-Car, and has worked as a consultant to
car rental companies throughout the East Coast. He received an Associates Degree
in Business from Robert Morris College in Pennsylvania, and a Bachelor of
Science Degree from West Liberty State College in West Virginia.
DONNIE RUSSELL, age 54, is Chairman/CEO of Buddy's Homes, a 30 year old
manufactured housing sales and marketing company. He is President/CEO of Buddy's
Financial Group, Founder/Director of Chandeleur Homes, a manufactured housing
company, Director of American Heart Association of Fayette County, and Director
of GMHA. He was an organizer of First Community Bank Services, Inc., the holding
company for Fayette County Bank, and he is currently a director of Fayette
County Bank. He has a B.S. degree from Auburn University.
EMPLOYMENT AGREEMENTS
The Company has entered into a letter of employment with Mr. Douglass
for a three year term pursuant to which Mr. Douglass will serve as the President
and Chief Executive Officer of the Bank. Mr. Douglass will be paid a salary of
$110,000, plus his yearly medical insurance premium. Mr. Douglass will be
eligible to participate in any management incentive program of the Bank or any
long-term equity incentive program and will be eligible for grants of stock
options and other awards thereunder. Upon the closing of the offering (or as
soon thereafter as an appropriate stock option plan is adopted by the Company),
Mr. Douglass will be granted an option to purchase 10,000 shares of Common Stock
at $10.00 per share. The options will vest over a three-year period and will
have a term of ten years. Additionally, Mr. Douglass will participate in the
Bank's retirement, welfare and other benefit programs and is entitled to a life
insurance policy and an accident liability policy and reimbursement for
automobile expenses, club dues, and travel and business expenses. The letter of
employment with Mr. Douglass also provides that following termination of his
employment with the Bank and for a period of twelve months thereafter, Mr.
Douglass, may not (i) be employed in the banking business as a director, officer
at the vice-president level or higher, or organizer or promoter of, or provide
executive management services to, any
28
<PAGE> 30
financial institution within a ten-mile radius of the Bank's offices, (ii)
solicit major customers of the Bank for the purpose of providing financial
services, or (iii) solicit employees of the Bank for employment.
DIRECTOR COMPENSATION
The Organizers do not intend for the Company or the Bank to pay
directors' fees until such time as the Bank is cumulatively profitable. However,
the Company and the Bank reserve the right to pay directors' fees. In addition,
after the offering, the Company expects to adopt a stock option plan which will
permit the Company to grant options to officers, directors, key employees,
advisors, and consultants of the Company. The Company anticipates that it will
initially authorize the issuance of 175,000 shares under the stock option plan
and intends to reserve approximately 75,000 shares of these shares for issuance
to directors over a three year period.
STOCK WARRANTS
The Organizers of the Company and the Bank have indicated their
intention to purchase shares of the Common Stock offered hereby at a price
$10.00 per share, the same price at which shares are being offered to others. In
recognition of the financial risks undertaken by the Organizers in advancing
organization and offering expenses, the Company will allow each Organizer to
purchase at a nominal price a warrant to purchase one additional share for every
share he or she purchases in this offering. The warrants become exercisable on
the date that the Bank opens for business and will be exercisable in whole or in
part at any time during the ten-year period following that date, at an exercise
price equal to $10.00 per share. The warrants and shares issued pursuant to the
exercise of such warrants will be transferable, subject to compliance with
applicable securities laws. If the OTS issues a capital directive or other order
requiring the Bank to obtain additional capital, the warrants will be forfeited
if not then exercised.
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
The Company and the Bank expect to have banking and other transactions
in the ordinary course of business with Organizers, directors, and officers of
the Company and the Bank and their affiliates, including members of their
families or corporations, partnerships, or other organizations in which such
Organizers, officers, or directors have a controlling interest, on substantially
the same terms (including price, or interest rates and collateral) as those
prevailing at the time for comparable transactions with unrelated parties. Such
transactions are not expected to involve more than the normal risk of
collectibility nor present other unfavorable features to the Company and the
Bank. Loans to individual directors and officers must also comply with the
Bank's lending policies and statutory lending limits, and directors with a
personal interest in any loan application will be excluded from the
consideration of such loan application. The Company intends for all of its
transactions with Organizers or other affiliates of the Company or the Bank to
be on terms no less favorable to the Company than could be obtained from an
unaffiliated third party and to be approved by a majority of the Company's
disinterested directors.
EXCULPATION AND INDEMNIFICATION
The Company's Articles of Incorporation contain a provision which,
subject to certain limited exceptions, limits the liability of a director to the
Company or its shareholders for any breach of duty as a director. There is no
limitation of liability for: a breach of duty involving appropriation of a
business opportunity of the Company; an act or omission which involves
intentional misconduct or a knowing violation of law; any transaction from which
the director derives an improper personal benefit; or as to any payments of a
dividend or any other type of distribution that is illegal under Section
14-2-832 of the Georgia Business Corporation Code (the "Code"). In addition, if
at any time the Code shall have been amended to authorize further elimination or
limitation of the liability of director, then the liability of each director of
the Company shall be eliminated or limited to the fullest extent permitted by
such provisions, as so amended, without further action by the shareholders,
unless the provisions of the Code require such action. The provision does not
limit the right of the
29
<PAGE> 31
Company or its shareholders to seek injunctive or other equitable relief not
involving payments in the nature of monetary damages.
The Company's bylaws contain certain provisions which provide
indemnification to directors of the Company that is broader than the protection
expressly mandated in Sections 14-2-852 and 14-2-857 of the Code. To the extent
that a director or officer of the Company has been successful, on the merits or
otherwise, in the defense of any action or proceeding brought by reason of the
fact that such person was a director or officer of the Company, Sections
14-2-852 and 14-2-857 of the Code would require the Company to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith. The Code expressly allows the Company to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Company and the
Bank pursuant to the Articles of Incorporation or Bylaws, or otherwise, the
Company and the Bank have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
The Board of Directors also has the authority to extend to officers,
employees, and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The Board of Directors
intends to extend indemnification rights to all of its executive officers.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
GENERAL
The authorized capital stock of the Company consists of 10,000,000
shares of common stock, par value $.01 per share, and 10,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). The following
summary describes the material terms of the Company's capital stock. Reference
is made to the Articles of Incorporation of the Company, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, for
a detailed description of the provisions thereof summarized below.
COMMON STOCK
Holders of shares of the Common Stock are entitled to receive such
dividends as may from time to time be declared by the Board of Directors out of
funds legally available therefor. The Company does not plan to declare any
dividends in the immediate future. See "Dividend Policy." Holders of Common
Stock are entitled to one vote per share on all matters on which the holders of
Common Stock are entitled to vote and do not have any cumulative voting rights.
Shareholders have no preemptive, conversion, redemption or sinking fund rights.
In the event of a liquidation, dissolution or winding-up of the Company, holders
of Common Stock are entitled to share equally and ratably in the assets of the
Company, if any, remaining after the payment of all debts and liabilities of the
Company and the liquidation preference of any outstanding Preferred Stock. The
outstanding shares of Common Stock are, and the shares of Common Stock offered
by the Company hereby when issued will be, fully paid and nonassessable. The
rights, preferences and privileges of holders of Common Stock are subject to any
classes or series of Preferred Stock that the Company may issue in the future.
There currently is no market for the shares and, although the Company
has filed a registration statement with the SEC to register the issuance of the
Common Stock in the offering under the Securities Act of 1933, it is not likely
that any trading market will develop for the shares in the future. There are no
present plans for the Common Stock to be traded on any stock exchange or in the
over-the-counter market.
30
<PAGE> 32
PREFERRED STOCK
The Articles provide that the Board of Directors is authorized, without
further action by the holders of the Common Stock, to provide for the issuance
of shares of Preferred Stock in one or more classes or series and to fix the
designations, powers, preferences, and relative, participating, optional and
other rights, qualifications, limitations, and restrictions thereof, including
the dividend rate, conversion rights, voting rights, redemption price, and
liquidation preference, and to fix the number of shares to be included in any
such classes or series. Any Preferred Stock so issued may rank senior to the
Common Stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding-up, or both. In addition, any such shares of
Preferred Stock may have class or series voting rights. Upon completion of this
offering, the Company will not have any shares of Preferred Stock outstanding.
Issuances of Preferred Stock, while providing the Company with flexibility in
connection with general corporate purposes, may, among other things, have an
adverse effect on the rights of holders of Common Stock, and in certain
circumstances such issuances could have the effect of decreasing the market
price of the Common Stock. The Company has no present plan to issue any shares
of Preferred Stock.
CERTAIN ANTITAKEOVER EFFECTS
The provisions of the Articles, the Bylaws and the Georgia corporation
law summarized in the following paragraphs may be deemed to have antitakeover
effects and may delay, defer, or prevent a tender offer or takeover attempt that
a shareholder might consider to be in such shareholder's best interest,
including those attempts that might result in a premium over the market price
for the shares held by shareholders, and may make removal of management more
difficult.
Authorized but Unissued Stock. The authorized but unissued shares of
Common Stock and Preferred Stock will be available for future issuance without
shareholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of Common Stock and Preferred
Stock may enable the Board of Directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of the Company by means of a proxy contest, tender offer,
merger or otherwise, and thereby protect the continuity of the Company's
management.
Number of Directors. The Bylaws provide that the number of directors
shall be fixed from time to time by resolution by at least a majority of the
directors then in office, but may not consist of fewer than five nor more than
twenty-five members.
Classified Board of Directors. The Articles and Bylaws divide the Board
of Directors into three classes of directors serving staggered three-year terms.
As a result, approximately one-third of the Board of Directors will be elected
at each annual meeting of shareholders. The classification of directors,
together with the provisions in the Articles and Bylaws described below that
limit the ability of shareholders to remove directors and that permit the
remaining directors to fill any vacancies on the Board of Directors, will have
the effect of making it more difficult for shareholders to change the
composition of the Board of Directors. As a result, at least two annual meetings
of shareholders may be required for the shareholders to change a majority of the
directors, whether or not a change in the Board of Directors would be beneficial
to the Company and its shareholders and whether or not a majority of the
Company's shareholders believes that such a change would be desirable.
Removal of Directors and Filling Vacancies. The Articles of
Incorporation provide that shareholders may not remove a director without cause.
The Bylaws also provide that all vacancies on the Board of Directors, including
those resulting from an increase in the number of directors, may be filled by a
majority of the remaining directors, even if they do not constitute a quorum.
When one or more directors resign from the Board of
31
<PAGE> 33
Directors effective at a future date, a majority of directors then in office,
including the directors who are to resign, may vote on filling the vacancy.
Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The Bylaws establish advance notice procedures with regard to
shareholder proposals and the nomination, other than by or at the direction of
the Board of Directors or a committee thereof, of candidates for election as
directors. These procedures provide that the notice of shareholder proposals and
shareholder nominations for the election of directors at any meeting of
shareholders must be in writing and be received by the Secretary of the Company
not later than ninety days prior to the meeting. The Company may reject a
shareholder proposal or nomination that is not made in accordance with such
procedures.
Certain Nomination Requirements. Pursuant to the Bylaws, the Company
has established certain nomination requirements for an individual to be elected
as a director of the Company at any annual or special meeting of the
shareholders, including that the nominating party provide the Company within a
specified time prior to the meeting (i) notice that such party intends to
nominate the proposed director; (ii) the name of and certain biographical
information on the nominee; and (iii) a statement that the nominee has consented
to the nomination. The chairman of any shareholders' meeting may, for good cause
shown, waive the operation of these provisions. These provisions could reduce
the likelihood that a third party would nominate and elect individuals to serve
on the Board of Directors.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have a minimum of
510,000 and a maximum of 1,500,000 shares of Common Stock outstanding. The
shares sold in this offering will be freely tradable, without restriction or
registration under the Securities Act, except for shares purchased by
"affiliates" of the Company, which will be subject to resale restrictions under
the Securities Act. An affiliate of the issuer is defined in Rule 144 under the
Securities Act as a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
issuer. Rule 405 under the Securities Act defines the term "control" to mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of the person whether through the ownership of
voting securities, by contract or otherwise. Directors of the Company and the
Bank will likely be deemed to be affiliates. These securities held by affiliates
may be sold without registration in accordance with the provisions of Rule 144
or another exemption from registration.
In general, under Rule 144, an affiliate of the Company or a person
holding restricted shares may sell, within any three-month period, a number of
shares no greater than 1% of the then outstanding shares of the Common Stock or
the average weekly trading volume of the Common Stock during the four calendar
weeks preceding the sale, whichever is greater. Rule 144 also requires that the
securities must be sold in "brokers' transactions," as defined in the Securities
Act, and the person selling the securities may not solicit orders or make any
payment in connection with the offer or sale of securities to any person other
than the broker who executes the order to sell the securities. This requirement
may make the sale of the Common Stock by affiliates of the Company pursuant to
Rule 144 difficult if no trading market develops in the Common Stock. Rule 144
also requires persons holding restricted securities to hold the shares for at
least one year prior to sale.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia.
32
<PAGE> 34
EXPERTS
The financial statements of the Company dated November 30, 1997, and
for the period from August 22, 1997 (inception), until November 30, 1997, have
been audited by Bricker & Melton, P.A., as stated in their report appearing
elsewhere herein, and have been so included in reliance on the report of such
firm given upon their authority as an expert in accounting and auditing.
33
<PAGE> 35
SOUTHEAST COMMERCE HOLDING COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
ATLANTA, GEORGIA
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT AUDITORS .......................................... F-1
FINANCIAL STATEMENTS
Balance sheet - November 30, 1997 ................................. F-2
Statement of Operations for the Period from
Inception (August 22, 1997) to November 30, 1997 ................. F-3
Statement of Changes in Stockholders' Equity
for the Period from Inception (August 22, 1997)
to November 30, 1997 ............................................. F-4
Statement of Cash Flows for the Period from
Inception (August 22, 1997) to November 30, 1997 ................. F-5
Notes to Financial Statements as of November 30, 1997 ................... F-6
</TABLE>
<PAGE> 36
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Southeast Commerce Holding Company
Atlanta, Georgia
We have audited the accompanying balance sheet of Southeast Commerce
Holding Company (a development stage corporation), as of November 30, 1997, and
the related statements of operations, changes in stockholders' equity and cash
flows for the period from, inception (August 22, 1997) to November 30, 1997.
These financial statements are the responsibility of Southeast Commerce Holding
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 Southeast Commerce
Holding Company as of November 30, 1997, and the results of its operations,
changes in stockholders' equity and cash flows for the period from inception
(August 22, 1997) to November 30, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
Southeast Commerce Holding Company will continue as a going concern. As
discussed in Note 1 to the financial statements, Southeast Commerce Holding
Company is in the organization state and has not commenced operations. Also, as
discussed in Note 2, Southeast Commerce Holding Company's future operations are
dependent on obtaining capital through an initial stock offering and obtaining
the necessary final regulatory approvals to operate under a federal savings bank
charter. These factors and the expense associated with the development of a new
banking institution raise substantial doubt about Southeast Commerce Holding
Company's ability to continue as a going concern. Management's plans in regard
to these matters are described in Note 2. The financial statements do not
include any adjustments relating to the recoverability of reported asset amounts
or the amount of liabilities that might result from the outcome of this
uncertainty.
Bricker & Melton, P.A.
November 30, 1997
Duluth, Georgia
F-1
<PAGE> 37
SOUTHEAST COMMERCE HOLDING COMPANY
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
NOVEMBER 30, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 24,444
---------
Total current assets 24,444
---------
Deferred organization costs 62,900
Prepaid expenses 6,336
Other assets 18,347
---------
TOTAL ASSETS $ 112,027
=========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Current liabilities
Accounts payable $ 9,523
Note payable (Note 2) 140,000
---------
TOTAL LIABILITIES 149,523
---------
STOCKHOLDER'S EQUITY
Preferred stock, par value $.01 per
share; 10,000,000 shares authorized --
Common stock, $.01 par value, 10,000,000 shares
authorized, 10 shares issued and outstanding --
Additional paid-in-capital 100
Deficit accumulated during the development state (37,596)
---------
TOTAL STOCKHOLDERS' EQUITY (37,496)
---------
Commitments and contingencies (Note 3) --
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 112,027
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 38
SOUTHEAST COMMERCE HOLDING COMPANY
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF INCOME
FOR THE PERIOD FROM INCEPTION (AUGUST 22, 1997) TO NOVEMBER 30, 19997
<TABLE>
<S> <C>
EXPENSES
Interest expense 240
Salaries and employee benefits 26,988
Rent expense 6,665
Other operating 3,703
-------
NET LOSS $37,596
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 39
SOUTHEAST COMMERCE HOLDING COMPANY
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD FROM INCEPTION (AUGUST 22, 1997) TO NOVEMBER 30, 1997
<TABLE>
<CAPTION>
(DEFICIT
ACCUMULATED
ADDIITIONAL DURING THE
COMMON PAID-IN DEVELOPMENT
STOCK CAPITAL STAGES TOTAL
----- ------- ------------ -----
<S> <C> <C> <C> <C>
Proceeds from the
sale of 10
organization shares -- $ 100 - $ 100
Net loss -- -- (37,596) $ 37,596
----- ------- -------- --------
Balance, November 30,
1997 $ -- $ 100 $(37,596) $(37,496)
===== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 40
SOUTHEAST COMMERCE HOLDING COMPANY
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (AUGUST 22, 1997) TO NOVEMBER 30, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(37,596)
Adjustments to reconcile net income to net cash used by operating
activities:
Increase in prepaid and other assets (24,683)
Increase in accounts payable 9,523
---------
NET CASH USED BY OPERATING ACTIVITIES (52,756)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Deferred organization costs (62,900)
---------
NET CASH USED BY INVESTING ACTIVITIES (62,900)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of organization shares 8,100
Redemption of organization shares (8,000)
Proceeds from note payable 140,000
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 140,100
---------
NET DECREASE IN CASH AND CASH EQUIVALENTS 24,444
CASH AND CASH EQUIVALENTS BEGINNING OF
PERIOD --
---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,444
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 41
SOUTHEAST COMMERCE HOLDING COMPANY
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (AUGUST 22, 1997) TO NOVEMBER 30, 1997
NOTE 1 --ORGANIZATION
Southeast Commerce Holding Company was formed to organize and own all of
the capital stock of Commerce Bank (the Bank); together they are herein referred
to as "the Company." The organizers of the Company filed an application to
charter the Bank as a federal savings bank with the Office of Thrift
Supervision. Provided the necessary capital is raised and the necessary
regulatory approvals are received, it is expected that operations will commence
in the second quarter of 1998.
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and to general practices within the banking
industry.
Operations through November 30, 1997, relate primarily to expenditures for
incorporating and organizing the Company.
The Company plans to raise a minimum of $5,100,000 through an offering of
its $.01 par value common stock. The organizers, directors and members of their
immediate families expect to subscribe for a minimum in the aggregate of
approximately $1,150,000 of the Company's common stock at a purchase price of
$10.00 per share.
Upon the completion of the sale of common stock and opening of the Bank,
incurred organization costs, estimated to be $50,000, (consisting principally of
legal, regulatory, consulting and incorporation fees) will be deferred and
amortized over the Company's initial 60 months of operations. Offering expenses,
estimated to be $25,000, (consisting principally of direct incremental costs of
the stock offering) will be deducted from the proceeds of the offering, and
pre-opening expenses (consisting principally of salaries, overhead and other
operating costs) will be charged against the initial period's operating results.
For purpose of reporting cash flows, cash and cash equivalents include
cash on hand and amounts due from banks.
NOTE 2--LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $37,596 for the period from inception
(August 22, 1997) to November 30, 1997.
At November 30, 1997, the Company is totally funded by a $500,000 line of
credit with a bank at adjustable prime rate, currently 8.5 percent. The line of
credit is unsecured and requires interest only payments on a quarterly basis
with total principal plus interest due at maturity on August 27, 1998. Personal
guarantees of the organizers, up to $83,333 each, were required by the lender.
This line of credit has been used to repay (without interest) the organizers'
initial funding of the Company and to provide additional operating funds until
permanent funding is obtained. As of November 30, 1997, approximately $140,000
has been drawn against this line of credit. Management believes that the current
level of expenditures is well within the financial capabilities of the
organizers and is adequate to meet existing obligations and fund current
operations, but commencing banking operations is dependent upon the Company
successfully completing the stock offering and obtaining regulatory approval.
F-6
<PAGE> 42
NOTE 2--LIQUIDITY AND GOING CONCERN CONSIDERATIONS, (Continued)
To provide permanent funding for its operation, the Company is currently
anticipating offering a minimum of 510,000 and a maximum of 1,500,000 shares of
its common stock, $.01 par value, at $10 per share in an initial public
offering. Costs related to the organization and registration of the Company's
common stock will be paid from the gross proceeds of the offering. Should
subscriptions for the minimum offering not be obtained, amounts paid by
subscribers with their subscriptions will be returned and the offer will be
withdrawn.
NOTE 3--COMMITMENTS
The Company entered into a letter of employment with the President and
Chief Executive Officer of the Bank. The letter of employment continues for
three years and provides for an annual base salary of $110,000 per year, plus an
annual medical insurance premium and such other benefits as hospitalization,
disability and life insurance, which are generally made available to other
senior executives of the Company and the Bank.
On October 14, 1997, the Company entered into a lease agreement for office
space at its planned main office location, subject to the following conditions
(i) preliminary and final charter approval is received from the Office of Thrift
Supervision, (ii) the Federal Deposit Insurance Corporation (FDIC) approves said
chartered association for FDIC-provided insurance, and (iii) the Company raises
not less than $5,000,000 in capital. The anticipated commencement date of the
lease is April 1, 1998, with a ten-year term. The Company has deposited
$18,347.50 as of November 30, 1997.
F-7
<PAGE> 43
SOUTHEAST COMMERCE HOLDING COMPANY
TO: Southeast Commerce Holding Company
100 Galleria Parkway, Suite 400
Atlanta, Georgia 30339
Gentlemen:
You have informed me that Southeast Commerce Holding Company, a Georgia
corporation (the "Company"), is offering up to 1,500,000 shares of its Common
Stock, par value $.01 per share (the "Common Stock"), at a price of $10.00 per
share payable as provided herein and as described in and offered pursuant to the
Prospectus furnished with this Subscription Agreement to the undersigned (the
"Prospectus").
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned hereby tenders this subscription, together with payment in United
States currency by check, bank draft, or money order payable to "The Bankers
Bank as Escrow Agent for Southeast Commerce Holding Company" the amount
indicated below (the "Funds"), representing the payment of $10.00 per share for
the number of shares of Common Stock indicated below. The total subscription
price must be paid at the time the Subscription Agreement is executed.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that the
Company shall have the right to accept or reject this subscription in whole or
in part, for any reason whatsoever. The Company may reduce the number of shares
for which the undersigned has subscribed, indicating acceptance of less than all
of the shares subscribed on its written form of acceptance.
3. ACKNOWLEDGMENTS. The undersigned hereby acknowledges that he or she
has received a copy of the Prospectus. This Subscription Agreement creates a
legally binding obligation and the undersigned agrees to be bound by the terms
of this Agreement.
4. REVOCATION. The undersigned agrees that once this Subscription
Agreement is tendered to the Company, it may not be withdrawn and that this
Agreement shall survive the death or disability of the undersigned.
BY EXECUTING THIS AGREEMENT, THE SUBSCRIBER IS NOT WAIVING ANY RIGHTS HE OR SHE
MAY HAVE UNDER FEDERAL SECURITIES LAWS, INCLUDING THE SECURITIES ACT OF 1933 AND
THE SECURITIES EXCHANGE ACT OF 1934.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-1
<PAGE> 44
Please indicate in the space provided below the exact name or names and
address in which the stock certificate representing shares subscribed for
hereunder should be registered.
<TABLE>
<S> <C> <C>
- ----------------------------------- -----------------------------------------------------------------------------
Number of Shares Subscribed Name or Names of Subscribers (Please Print)
for (minimum _______ shares)
$
- ----------------------------------- -----------------------------------------------------------------------------
Total Subscription Price Please indicate form of ownership desired (individual,
at $10.00 per share (funds must joint tenants with right of survivorship, tenants in
be enclosed) common, trust corporation, partnership, custodian, etc.)
Date: (L.S.)
------------------------------ -----------------------------------------------------------------------
Signature of Subscriber(s)*
(L.S.)
- ----------------------------------- -----------------------------------------------------------------------
Social Security Number or Federal Signature of Subscriber(s)*
Taxpayer Identification Number
Street (Residence) Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
City, State and Zip Code
</TABLE>
*When signing as attorney, trustee, administrator, or guardian, please give
your full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. In the case of joint tenants or tenants
in common, each owner must sign.
TO BE COMPLETED BY THE COMPANY:
Accepted as of , 199 , as to shares.
------------------ -- ------------
SOUTHEAST COMMERCE HOLDING COMPANY
--------------------------------------
By:
Title:
A-2
<PAGE> 45
FEDERAL INCOME TAX BACKUP WITHHOLDING
In order to prevent the application of federal income tax backup
withholding, each subscriber must provide the Escrow Agent with a correct
Taxpayer Identification Number ("TIN"). An individual's social security number
is his or her TIN. The TIN should be provided in the space provided in the
Substitute Form W-9, which is set forth below.
Under federal income tax law, any person who is required to furnish his or
her correct TIN to another person, and who fails to comply with such
requirements, may be subject to a $50 penalty imposed by the IRS.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of taxes, a refund may
be obtained from the IRS. Certain taxpayers, including all corporations, are not
subject to these backup withholding and reporting requirements.
If the shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, "Applied For" should be written
in the space provided for the TIN on the Substitute Form W-9.
SUBSTITUTE FORM W-9
Under penalties of perjury, I certify that: (i) The number shown on this
form is my correct Taxpayer Identification Number (or I am waiting for a
Taxpayer Identification Number to be issued to me), and (ii) I am not subject to
backup withholding because: (a) I am exempt from backup withholding; or (b) I
have not been notified by the Internal Revenue Service ("IRS") that I am subject
to backup withholding as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am no longer subject to backup
withholding.
You must cross out item (ii) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or
dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from
the IRS that you are not longer subject to backup withholding, do not cross out
item (ii).
Each subscriber should complete this section.
<TABLE>
<S> <C>
- -------------------------------- ----------------------------------
Signature of Subscriber Signature of Subscriber
- -------------------------------- ----------------------------------
Printed Name Printed Name
- -------------------------------- ----------------------------------
Social Security or Employer Social Security or Employer
Identification No. Identification No.
</TABLE>
A-3
<PAGE> 46
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER AT ANY TIME SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THE INFORMATION HEREIN IS CORRECT AT ANY TIME AFTER THE DATE HEREOF.
- -------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Reports to Shareholders...........................Inside Cover
Additional Information............................Inside Cover
Summary .....................................................3
Risk Factors ................................................6
The Offering ...............................................10
Use of Proceeds ............................................12
Capitalization .............................................13
Dividend Policy ............................................14
Proposed Business ..........................................15
Supervision and Regulation .................................18
Management .................................................26
Description of Capital Stock of the Company ................30
Legal Matters ..............................................32
Experts ....................................................33
Financial Statements ......................................F-1
Subscription Agreement ....................................A-1
</TABLE>
- -------------------------
UNTIL __________, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
1,500,000 SHARES
SOUTHEAST COMMERCE
HOLDING COMPANY, INC.
A PROPOSED HOLDING COMPANY FOR
COMMERCE BANK
(PROPOSED)
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
____________, 1997
-----------------
================================================================================
<PAGE> 47
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Item 24. Indemnification of Directors and Officers
The Company's Articles of Incorporation contain a provision which, subject
to certain limited exceptions, limits the liability of a director to the Company
or its shareholders for any breach of duty as a director. There is no limitation
of liability for: a breach of duty involving appropriation of a business
opportunity of the Company; an act or omission which involves intentional
misconduct or a knowing violation of law; any transaction from which the
director derives an improper personal benefit; or as to any payments of a
dividend or any other type of distribution that is illegal under Section
14-2-832 of the Georgia Business Corporation Code (the "Code"). In addition, if
at any time the Code shall have been amended to authorize further elimination or
limitation of the liability of director, then the liability of each director of
the Company shall be eliminated or limited to the fullest extent permitted by
such provisions, as so amended, without further action by the shareholders,
unless the provisions of the Code require such action. The provision does not
limit the right of the Company or its shareholders to seek injunctive or other
equitable relief not involving payments in the nature of monetary damages.
The Company's bylaws contain certain provisions which provide
indemnification to directors of the Company that is broader than the protection
expressly mandated in Sections 14-2-852 and 14-2-857 of the Code. To the extent
that a director or officer of the Company has been successful, on the merits or
otherwise, in the defense of any action or proceeding brought by reason of the
fact that such person was a director or officer of the Company, Sections
14-2-852 and 14-2-857 of the Code would require the Company to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith. The Code expressly allows the Company to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Company and the
Bank pursuant to the Articles of Incorporation or Bylaws, or otherwise, the
Company and the Bank have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
The Board of Directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The Board of Directors
has extended or intends to extend indemnification rights to all of its executive
officers.
The Company has the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Company
against any liability asserted against him or incurred by him in any such
capacity, whether or not the Company would have the power to indemnify him
against such liability under the bylaws.
II-1
<PAGE> 48
Item 25. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting commissions) of the sale of
the shares of Common Stock are as follows:
<TABLE>
<S> <C>
Registration Fee $ 4,545
Printing and Engraving 6,000
Legal Fees and Expenses 20,000
Miscellaneous Disbursements 5,000
-------
TOTAL $35,545
=======
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
On August 23, 1997, the Company issued ten shares of its Common Stock to
one of its Organizers, Mr. Richard A. Parlontieri, in order to complete the
Company's organization. The price per share was $10.00 for a total purchase
price of $100.00. There were no underwriting discounts or commissions paid with
respect to this transaction. The Company has the right to redeem Mr.
Parlontieri's stock at the original purchase price of $100.00 and intends to do
so upon completion of this offering. The sale was exempt under Section 4(2) of
the Securities Act of 1933.
Item 27. Exhibits.
<TABLE>
<S> <C>
3.1. Articles of Incorporation
3.2. Bylaws
4.1. See Exhibits 3.1 and 3.2 for provisions in the Company's Articles of
Incorporation and Bylaws defining the rights of holders of the Common
Stock
4.2. Form of Certificate of Common Stock
5.1. Opinion Regarding Legality
10.1. Letter of Employment dated November 18, 1997, between the Company and
Louis J. Douglass, III
10.2. Line of Credit Agreement dated August 27, 1997, between The Company
and The Bankers Bank
10.3. Lease Agreement dated October 14, 1997, between the Company, as
lessee, and Regent Paces Ferry Office I, Inc., as lessor
10.4 Escrow Agreement dated ____________, 1997 between The Company and The
Bankers Bank*
23.1. Consent of Independent Public Accountants
</TABLE>
II-2
<PAGE> 49
<TABLE>
<S> <C>
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)
24.1. Power of Attorney (contained in signature page of this filing)
27.1. Financial Data Schedule (for electronic filing purposes)
</TABLE>
Item 28. Undertakings.
The undersigned Company will:
(a)(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the provisions described in Item
24 above, or otherwise, the Company 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 Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
- ------------------------
* To be filed by amendment
II-3
<PAGE> 50
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 Atlanta,
State of Georgia, on December 2, 1997.
SOUTHEAST COMMERCE HOLDING COMPANY
By: /s/ Richard A. Parlontieri
---------------------------
Richard A. Parlontieri
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard A. Parlontieri and Louis J.
Douglass, III, and each of them his true and lawful attorney-in-fact and agent
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto such attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that such
attorney-in-fact and agent, 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 in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Gary M. Bremer
- --------------------------
Gary M. Bremer Director December 2, 1997
/s/ Richard C. Carter
- --------------------------
Richard C. Carter Director December 2, 1997
/s/ Louis J. Douglass, III
- --------------------------
Louis J. Douglass, III Director December 2, 1997
/s/ Terry L. Ferrero
- --------------------------
Terry L. Ferrero Director December 2, 1997
/s/ Stephen R.Gross
- --------------------------
Stephen R. Gross Director December 2, 1997
/s/ G. Webb Howell
- --------------------------
G. Webb Howell Director December 2, 1997
</TABLE>
(Signatures continued on following page)
II-4
<PAGE> 51
SIGNATURES
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Richard A. Parlontieri
- --------------------------
Richard A. Parlontieri President; December 2, 1997
Chief Executive Officer
of the Company; Director
/s/ Frank E. Perisino
- --------------------------
Frank E. Perisino Director December 2, 1997
/s/ Donnie Russell
- --------------------------
Donnie Russell Director December 2, 1997
</TABLE>
II-5
<PAGE> 52
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
3.1. Articles of Incorporation
3.2. Bylaws
4.1. See Exhibits 3.1 and 3.2 for provisions in the Company's Articles of
Incorporation and Bylaws defining the rights of holders of the Common
Stock
4.2. Form of Certificate of Common Stock
5.1. Opinion Regarding Legality
10.1. Letter of Employment dated November 18, 1997, between the Company and
Louis J. Douglass, III
10.2. Line of Credit Agreement dated August 27, 1997, between The Company
and The Bankers Bank
10.3. Lease Agreement dated October 14, 1997, between the Company, as
lessee, and Regent Paces Ferry Office I, Inc., as lessor
10.4 Escrow Agreement dated _________, 1997 between The Company and The
Bankers Bank*
23.1. Consent of Independent Public Accountants
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)
24.1. Power of Attorney (contained in signature page of this filing)
27.1. Financial Data Schedule (for electronic filing purposes)
</TABLE>
- ------------------------------
* To be filed by amendment
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
SOUTHEAST COMMERCE HOLDING COMPANY
ARTICLE ONE
NAME
The name of the corporation is Southeast Commerce Holding Company.
ARTICLE TWO
CAPITALIZATION
The corporation shall have the authority, exercisable by its board of
directors, to issue up to 10,000,000 shares of common stock, par value $.01 per
share. In addition to the Common Stock, the corporation shall have the
authority, exercisable by its Board of Directors, to issue 10,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"), any part or
all of such shares of Preferred Stock may be established and designated from
time to time by the Board of Directors by filing an amendment to these Articles
of Incorporation, which is effective without shareholder action, in accordance
with the appropriate provisions of the Act, and any amendment or supplement
thereto (a "Preferred Stock Designation"), in such series and with such
preferences, limitations, and relative rights as may be determined by the Board
of Directors. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of a majority of the votes of the Common
Stock, without a vote of the holders of the shares of Preferred Stock, or of any
series thereof, unless a vote of any such holders is required by law or pursuant
to the Preferred Stock Designation or Preferred Stock Designations establishing
the series of Preferred Stock.
ARTICLE THREE
INITIAL REGISTERED OFFICE AND AGENT
The street address and county of the initial registered office of the
corporation shall be at 6600 Powers Ferry Road, Suite 300, Atlanta, Georgia
30339. The initial registered agent of the corporation at such address shall be
Richard Parlontieri.
ARTICLE FOUR
INCORPORATOR
The name and address of the incorporator is as follows:
Neil E. Grayson, Esq.
First Union Plaza
999 Peachtree Street, N.E., Suite 1400
Atlanta, Georgia 30309
<PAGE> 2
ARTICLE FIVE
MAILING ADDRESS OF PRINCIPAL OFFICE
The mailing address of the initial principal office of the corporation
is as follows:
6600 Powers Ferry Road
Suite 300
Atlanta, Georgia 30339
ARTICLE SIX
LIMITATION ON DIRECTOR LIABILITY
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of the duty of
care or any other duty as a director, except that such liability shall not be
eliminated for:
(i) any appropriation, in violation of the director's
duties, of any business opportunity of the corporation;
(ii) acts or omissions that involve intentional
misconduct or a knowing violation of law;
(iii) liability under Section 14-2-832 (or any successor
provision or redesignation thereof) of the Georgia Business
Corporation Code; and
(iv) any transaction from which the director received
an improper personal benefit.
If at any time the Georgia Business Corporation Code (the "Code") shall
have been amended to authorize the further elimination or limitation of the
liability of a director, then the liability of each director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Code, as
so amended, without further action by the shareholders, unless the provisions of
the Code, as amended, require further action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article
Six shall not adversely affect the elimination or limitation of liability or
alleged liability pursuant hereto of any director of the corporation for or with
respect to any alleged act or omission of the director occurring prior to such a
repeal or modification.
2
<PAGE> 3
ARTICLE SEVEN
INITIAL DIRECTORS
The name and address of the initial director of the corporation is:
Richard Parlontieri
6600 Powers Ferry Road
Suite 300
Atlanta, Georgia 30339
IN WITNESS WHEREOF, the undersigned executes these Articles of
Incorporation on August 22, 1997.
/s/ Neil E. Grayson
-----------------------------------
Neil E. Grayson, Esq., Incorporator
3
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
SOUTHEAST COMMERCE HOLDING COMPANY
ADOPTED AS OF AUGUST 23, 1997
<PAGE> 2
BYLAWS
OF
SOUTHEAST COMMERCE HOLDING COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE ONE
OFFICE............................................................. 1
1.1 REGISTERED OFFICE AND AGENT........................................ 1
1.2 PRINCIPAL OFFICE................................................... 1
1.3 OTHER OFFICES...................................................... 1
ARTICLE TWO
SHAREHOLDERS' MEETINGS............................................. 1
2.1 PLACE OF MEETINGS.................................................. 1
2.2 ANNUAL MEETINGS.................................................... 1
2.3 SPECIAL MEETINGS................................................... 2
2.4 NOTICE OF MEETINGS................................................. 2
2.5 WAIVER OF NOTICE................................................... 2
2.6 VOTING GROUP; QUORUM; VOTE REQUIRED TO ACT......................... 2
2.7 VOTING OF SHARES................................................... 3
2.8 PROXIES............................................................ 3
2.9 PRESIDING OFFICER.................................................. 3
2.10 ADJOURNMENTS....................................................... 4
2.11 CONDUCT OF THE MEETING............................................. 4
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
2.12 ACTION OF SHAREHOLDERS WITHOUT A MEETING........................... 4
2.13 MATTERS CONSIDERED AT ANNUAL MEETINGS.............................. 4
ARTICLE THREE
BOARD OF DIRECTORS................................................. 5
3.1 GENERAL POWERS..................................................... 5
3.2 NUMBER, ELECTION AND TERM OF OFFICE................................ 5
3.3 REMOVAL OF DIRECTORS............................................... 6
3.4 VACANCIES.......................................................... 6
3.5 COMPENSATION....................................................... 6
3.6 COMMITTEES OF THE BOARD OF DIRECTORS............................... 6
3.7 QUALIFICATION OF DIRECTORS......................................... 6
3.8 CERTAIN NOMINATION REQUIREMENTS.................................... 7
3.9 ADDITIONAL NOMINATION REQUIREMENTS................................. 8
ARTICLE FOUR
MEETINGS OF THE BOARD OF DIRECTORS................................. 8
4.1 REGULAR MEETINGS................................................... 8
4.2 SPECIAL MEETINGS................................................... 8
4.3 PLACE OF MEETINGS.................................................. 8
4.4 NOTICE OF MEETINGS................................................. 8
4.5 QUORUM............................................................. 8
4.6 VOTE REQUIRED FOR ACTION........................................... 8
4.7 PARTICIPATION BY CONFERENCE TELEPHONE.............................. 9
4.8 ACTION BY DIRECTORS WITHOUT A MEETING.............................. 9
</TABLE>
ii
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<TABLE>
<S> <C> <C>
4.9 ADJOURNMENTS....................................................... 9
4.10 WAIVER OF NOTICE.................................................... 9
ARTICLE FIVE
OFFICERS............................................................ 9
5.1 OFFICES............................................................. 9
5.2 TERM............................................................... 10
5.3 COMPENSATION....................................................... 10
5.4 REMOVAL............................................................ 10
5.5 CHAIRMAN OF THE BOARD.............................................. 10
5.6 PRESIDENT.......................................................... 10
5.7 VICE PRESIDENTS.................................................... 10
5.8 SECRETARY.......................................................... 11
5.9 TREASURER.......................................................... 11
ARTICLE SIX
DISTRIBUTIONS AND DIVIDENDS........................................ 11
ARTICLE SEVEN
SHARES............................................................. 11
7.1 SHARE CERTIFICATES................................................. 11
7.2 RIGHTS OF CORPORATION WITH RESPECT TO
REGISTERED OWNERS.................................................. 12
7.3 TRANSFERS OF SHARES................................................ 12
7.4 DUTY OF CORPORATION TO REGISTER TRANSFER........................... 12
7.5 LOST, STOLEN, OR DESTROYED CERTIFICATES............................ 12
</TABLE>
iii
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<TABLE>
<S> <C> <C>
7.6 FIXING OF RECORD DATE.............................................. 12
7.7 RECORD DATE IF NONE FIXED.......................................... 13
ARTICLE EIGHT
INDEMNIFICATION.................................................... 13
8.1 INDEMNIFICATION OF DIRECTORS....................................... 13
8.2 INDEMNIFICATION OF OTHERS.......................................... 13
8.3 OTHER ORGANIZATIONS................................................ 14
8.4 ADVANCES........................................................... 14
8.5 NON-EXCLUSIVITY.................................................... 14
8.6 INSURANCE.......................................................... 14
8.7 NOTICE............................................................. 15
8.8 SECURITY........................................................... 15
8.9 AMENDMENT.......................................................... 15
8.10 AGREEMENTS......................................................... 15
8.11 CONTINUING BENEFITS................................................ 15
8.12 SUCCESSORS......................................................... 16
8.13 SEVERABILITY....................................................... 16
8.14 ADDITIONAL INDEMNIFICATION......................................... 16
ARTICLE NINE
MISCELLANEOUS...................................................... 16
9.1 INSPECTION OF BOOKS AND RECORDS.................................... 16
9.2 FISCAL YEAR........................................................ 16
</TABLE>
iv
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<TABLE>
<S> <C> <C>
9.3 CORPORATE SEAL..................................................... 16
9.4 ANNUAL STATEMENTS.................................................. 17
9.5 NOTICE............................................................. 17
ARTICLE TEN
Amendments......................................................... 17
</TABLE>
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BYLAWS
OF
SOUTHEAST COMMERCE HOLDING COMPANY
================================================================================
References in these Bylaws to "Articles of Incorporation" are to the
Articles of Incorporation of SOUTHEAST COMMERCE HOLDING COMPANY, INC., a Georgia
corporation (the "Corporation"), as amended and restated from time to time.
All of these Bylaws are subject to contrary provisions, if any, of the
Articles of Incorporation (including provisions designating the preferences,
limitations, and relative rights of any class or series of shares), the Georgia
Business Corporation Code (the "Code"), and other applicable law, as in effect
on and after the effective date of these Bylaws. References in these Bylaws to
"Sections" shall refer to sections of the Bylaws, unless otherwise indicated.
================================================================================
ARTICLE ONE
OFFICE
1.1 REGISTERED OFFICE AND AGENT. The Corporation shall maintain a
registered office and shall have a registered agent whose business office is the
same as the registered office.
1.2 PRINCIPAL OFFICE. The principal office of the Corporation shall be
at the place designated in the Corporation's annual registration with the
Georgia Secretary of State.
1.3 OTHER OFFICES. In addition to its registered office and principal
office, the Corporation may have offices at other locations either in or outside
the State of Georgia.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 PLACE OF MEETINGS. Meetings of the Corporation's shareholders may be
held at any location inside or outside the State of Georgia designated by the
Board of Directors or any other person or persons who properly call the meeting,
or if the Board of Directors or such other person or persons do not specify a
location, at the Corporation's principal office.
2.2 ANNUAL MEETINGS. The Corporation shall hold an annual meeting of
shareholders, at a time determined by the Board of Directors, to elect directors
and to transact
<PAGE> 8
any business that properly may come before the meeting. The annual meeting may
be combined with any other meeting of shareholders, whether annual or special.
2.3 SPECIAL MEETINGS. Special meetings of shareholders of one or more
classes or series of the Corporation's shares may be called at any time by the
Board of Directors, the Chairman of the Board, or the President, and shall be
called by the Corporation upon the written request (in compliance with
applicable requirements of the Code) of the holders of shares representing 25%
or more of the votes entitled to be cast on each issue proposed to be considered
at the special meeting; provided, however, that at any time the Corporation has
more than 100 shareholders of record, such written request must be made by the
holders of a majority of such votes. The business that may be transacted at any
special meeting of shareholders shall be limited to that proposed in the notice
of the special meeting given in accordance with Section 2.4 (including related
or incidental matters that may be necessary or appropriate to effectuate the
proposed business).
2.4 NOTICE OF MEETINGS. In accordance with Section 9.5 and subject to
waiver by a shareholder pursuant to Section 2.5, the Corporation shall give
written notice of the date, time, and place of each annual and special
shareholders' meeting no fewer than 10 days nor more than 60 days before the
meeting date to each shareholder of record entitled to vote at the meeting. The
notice of an annual meeting need not state the purpose of the meeting unless
these Bylaws require otherwise. The notice of a special meeting shall state the
purpose for which the meeting is called. If an annual or special shareholders'
meeting is adjourned to a different date, time, or location, the Corporation
shall give shareholders notice of the new date, time, or location of the
adjourned meeting, unless a quorum of shareholders was present at the meeting
and information regarding the adjournment was announced before the meeting was
adjourned; provided, however, that if a new record date is or must be fixed in
accordance with Section 7.6, the Corporation must give notice of the adjourned
meeting to all shareholders of record as of the new record date who are entitled
to vote at the adjourned meeting.
2.5 WAIVER OF NOTICE. A shareholder may waive any notice required by the
Code, the Articles of Incorporation, or these Bylaws, before or after the date
and time of the matter to which the notice relates, by delivering to the
Corporation a written waiver of notice signed by the shareholder entitled to the
notice. In addition, a shareholder's attendance at a meeting shall be (a) a
waiver of objection to lack of notice or defective notice of the meeting unless
the shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting, and (b) a waiver of objection to
consideration of a particular matter at the meeting that is not within the
purpose stated in the meeting notice, unless the shareholder objects to
considering the matter when it is presented. Except as otherwise required by the
Code, neither the purpose of nor the business transacted at the meeting need be
specified in any waiver.
2.6 VOTING GROUP; QUORUM; VOTE REQUIRED TO ACT. (a) Unless otherwise
required by the Code or the Articles of Incorporation, all classes or series of
the Corporation's shares entitled to vote generally on a matter shall for that
purpose be considered a single voting group (a "Voting Group"). If either the
Articles of Incorporation or the Code requires
2
<PAGE> 9
separate voting by two or more Voting Groups on a matter, action on that matter
is taken only when voted upon by each such Voting Group separately. At all
meetings of shareholders, any Voting Group entitled to vote on a matter may take
action on the matter only if a quorum of that Voting Group exists at the
meeting, and if a quorum exists, the Voting Group may take action on the matter
notwithstanding the absence of a quorum of any other Voting Group that may be
entitled to vote separately on the matter. Unless the Articles of Incorporation,
these Bylaws, or the Code provides otherwise, the presence (in person or by
proxy) of shares representing a majority of votes entitled to be cast on a
matter by a Voting Group shall constitute a quorum of that Voting Group with
regard to that matter. Once a share is present at any meeting other than solely
to object to holding the meeting or transacting business at the meeting, the
share shall be deemed present for quorum purposes for the remainder of the
meeting and for any adjournments of that meeting, unless a new record date for
the adjourned meeting is or must be set pursuant to Section 7.6 of these Bylaws.
(b) Except as provided in Section 3.4, if a quorum exists, action on a
matter by a Voting Group is approved by that Voting Group if the votes cast
within the Voting Group favoring the action exceed the votes cast opposing the
action, unless the Articles of Incorporation, a provision of these Bylaws that
has been adopted pursuant to Section 14-2-1021 of the Code (or any successor
provision), or the Code requires a greater number of affirmative votes.
2.7 VOTING OF SHARES. Unless otherwise required by the Code or the
Articles of Incorporation, each outstanding share of any class or series having
voting rights shall be entitled to one vote on each matter that is submitted to
a vote of shareholders.
2.8 PROXIES. A shareholder entitled to vote on a matter may vote in
person or by proxy pursuant to an appointment executed in writing by the
shareholder or by his or her attorney-in-fact. An appointment of a proxy shall
be valid for 11 months from the date of its execution, unless a longer or
shorter period is expressly stated in the proxy.
2.9 PRESIDING OFFICER. Except as otherwise provided in this Section 2.9,
the Chairman of the Board, and in his or her absence or disability the
President, shall preside at every shareholders' meeting (and any adjournment
thereof) as its chairman, if either of them is present and willing to serve. If
neither the Chairman of the Board nor the President is present and willing to
serve as chairman of the meeting, and if the Chairman of the Board has not
designated another person who is present and willing to serve, then a majority
of the Corporation's directors present at the meeting shall be entitled to
designate a person to serve as chairman. If no director of the Corporation is
present at the meeting or if a majority of the directors who are present cannot
be established, then a chairman of the meeting shall be selected by a majority
vote of (a) the shares present at the meeting that would be entitled to vote in
an election of directors, or (b) if no such shares are present at the meeting,
then the shares present at the meeting comprising the Voting Group with the
largest number of shares present at the meeting and entitled to vote on a matter
properly proposed to be considered at the meeting. The chairman of the meeting
may designate other persons to assist with the meeting.
3
<PAGE> 10
2.10 ADJOURNMENTS. At any meeting of shareholders (including an adjourned
meeting), a majority of shares of any Voting Group present and entitled to vote
at the meeting (whether or not those shares constitute a quorum) may adjourn the
meeting, but only with respect to that Voting Group, to reconvene at a specific
time and place. If more than one Voting Group is present and entitled to vote on
a matter at the meeting, then the meeting may be continued with respect to any
such Voting Group that does not vote to adjourn as provided above, and such
Voting Group may proceed to vote on any matter to which it is otherwise entitled
to do so; provided, however, that if (a) more than one Voting Group is required
to take action on a matter at the meeting and (b) any one of those Voting Groups
votes to adjourn the meeting (in accordance with the preceding sentence), then
the action shall not be deemed to have been taken until the requisite vote of
any adjourned Voting Group is obtained at its reconvened meeting. The only
business that may be transacted at any reconvened meeting is business that could
have been transacted at the meeting that was adjourned, unless further notice of
the adjourned meeting has been given in compliance with the requirements for a
special meeting that specifies the additional purpose or purposes for which the
meeting is called. Nothing contained in this Section 2.10 shall be deemed or
otherwise construed to limit any lawful authority of the chairman of a meeting
to adjourn the meeting.
2.11 CONDUCT OF THE MEETING. At any meeting of shareholders, the chairman
of the meeting shall be entitled to establish the rules of order governing the
conduct of business at the meeting.
2.12 ACTION OF SHAREHOLDERS WITHOUT A MEETING. Action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if the action is taken by all shareholders entitled to vote on the
action or, if permitted by the Articles of Incorporation, by persons who would
be entitled to vote at a meeting shares having voting power to cast the
requisite number of votes (or numbers, in the case of voting by groups) that
would be necessary to authorize or take the action at a meeting at which all
shareholders entitled to vote were present and voted. The action must be
evidenced by one or more written consents describing the action taken, signed by
shareholders entitled to take action without a meeting, and delivered to the
Corporation for inclusion in the minutes or filing with the corporate records.
Where required by Section 14-2-704 or other applicable provision of the Code,
the Corporation shall provide shareholders with written notice of actions taken
without a meeting.
2.13 MATTERS CONSIDERED AT ANNUAL MEETINGS. Notwithstanding anything to
the contrary in these Bylaws, the only business that may be conducted at an
annual meeting of shareholders shall be business brought before the meeting (a)
by or at the direction of the Board of Directors prior to the meeting, (b) by or
at the direction of the Chairman of the Board or the President, or (c) by a
shareholder of the Corporation who is entitled to vote with respect to the
business and who complies with the notice procedures set forth in this Section
2.13. For business to be brought properly before an annual meeting by a
shareholder, the shareholder must have given timely notice of the business in
writing to the Secretary of the Corporation. To be timely, a shareholder's
notice must be delivered or mailed to and received at the principal offices of
the Corporation not less than thirty nor more than sixty days prior to any
4
<PAGE> 11
must have given timely notice of the business in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be delivered or mailed
to and received at the principal offices of the Corporation not less than thirty
nor more than sixty days prior to an such meeting (provided, however, that if
less than thirty-one days' notice of the meeting is given to shareholders, such
written notice shall be delivered or mailed, as prescribed, to the Secretary of
Corporation not later than the close of the tenth day following the day on which
notice of the meeting was mailed to shareholders). A shareholder's notice to the
Secretary shall set forth a brief description of each matter of business the
shareholder proposes to bring before the meeting and the reasons for conducting
that business at the meeting; the name, as it appears on the Corporation's
books, and address of the shareholder proposing the business; the series or
class and number of shares of the Corporation's capital stock that are
beneficially owned by the shareholder; and any material interest of the
shareholder in the proposed business. The chairman of the meeting shall have the
discretion to declare to the meeting that any business proposed by a shareholder
to be considered at the meeting is out of order and that such business shall not
be transacted at the meeting if (i) the chairman concludes that the matter has
been proposed in a manner inconsistent with this Section 2.13 or (ii) the
chairman concludes that the subject matter of the proposed business is
inappropriate for consideration by the shareholders at the meeting.
ARTICLE THREE
BOARD OF DIRECTORS
3.1 GENERAL POWERS. All corporate powers shall be exercised by or under
the authority of, and the business and affairs of the Corporation shall be
managed by, the Board of Directors, subject to any limitation set forth in the
Articles of Incorporation, in bylaws approved by the shareholders, or in
agreements among all the shareholders that are otherwise lawful.
3.2 NUMBER, ELECTION AND TERM OF OFFICE. The number of directors of the
Corporation shall be fixed by resolution of the Board of Directors or of the
shareholders from time to time and, until otherwise determined, shall be between
five and twenty-five; provided, however, that no decrease in the number of
directors shall have the effect of shortening the term of an incumbent director.
The number of directors shall initially be fixed at nine. The number of members
of the Board of Directors can be increased or decreased within the foregoing
range at any time by the Board of Directors, if, in any case after proxy
materials for an annual meeting of shareholders have been mailed to
shareholders, any person named therein to be nominated at the direction of the
Board of Directors becomes unable or unwilling to serve, the number of
authorized directors shall be automatically reduced by a number equal to the
number of such persons. The members of the Board of Directors need not be
shareholders nor need they be residents of any particular state. Unless provided
otherwise by the Articles of Incorporation, the terms of office of directors
will be staggered by dividing the total number of directors into three classes,
with each class accounting for one-third, as near as may be, of the
5
<PAGE> 12
total. The terms of directors in the first class expire at the first annual
shareholders' meeting after their election, the terms of the second class expire
at the second annual shareholders' meeting after their election, and the terms
of the third class expire at the third annual shareholders' meeting after their
election. At each annual shareholders' meeting held thereafter, directors shall
be chosen for a term of three years to succeed those whose terms expire. If the
number of directors is changed, any increase or decrease shall be so apportioned
among the classes as to make all classes as nearly equal in number as possible,
and when the number of directors is increased and any newly created
directorships are filled by the board, the terms of the additional directors
shall expire at the next election of directors by the shareholders. Each
director, except in the case of his earlier death, written resignation,
retirement, disqualification or removal, shall serve for the duration of his
term, as staggered, and thereafter until his successor shall have been elected
and qualified.
3.3 REMOVAL OF DIRECTORS The entire Board of Directors or any individual
director may be removed with cause by the shareholders, provided that directors
elected by a particular Voting Group may be removed only by the shareholders in
that Voting Group. Removal action may be taken only at a shareholders' meeting
for which notice of the removal action has been given. A removed director's
successor, if any, may be elected at the same meeting to serve the unexpired
term. Directors may not be removed without cause.
3.4 VACANCIES. A vacancy occurring in the Board of Directors may be
filled for the unexpired term, unless the shareholders have elected a successor,
by the affirmative vote of a majority of the remaining directors, whether or not
the remaining directors constitute a quorum; provided, however, that if the
vacant office was held by a director elected by a particular Voting Group, only
the holders of shares of that Voting Group or the remaining directors elected by
that Voting Group shall be entitled to fill the vacancy; provided further,
however, that if the vacant office was held by a director elected by a
particular Voting Group and there is no remaining director elected by that
Voting Group, the other remaining directors or director (elected by another
Voting Group or Groups) may fill the vacancy during an interim period before the
shareholders of the vacated director's Voting Group act to fill the vacancy. A
vacancy or vacancies in the Board of Directors may result from the death,
resignation, disqualification, or removal of any director, or from an increase
in the number of directors.
3.5 COMPENSATION. Directors may receive such compensation for their
services as directors as may be fixed by the Board of Directors from time to
time. A director may also serve the Corporation in one or more capacities other
than that of director and receive compensation for services rendered in those
other capacities.
3.6 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may
designate from among its members an executive committee or one or more other
standing or ad hoc committees, each consisting of one or more directors, who
serve at the pleasure of the Board of Directors. Subject to the limitations
imposed by the Code, each committee shall have the authority set forth in the
resolution establishing the committee or in any other resolution of the Board of
Directors specifying, enlarging, or limiting the authority of the committee.
3.7 QUALIFICATION OF DIRECTORS. No individual who is or becomes a
Business Competitor (as defined below) or who is or becomes affiliated with,
employed by or a representative of any individual, corporation, association,
partnership, firm, business enterprise or other entity or organization which the
Board of Directors, after having such
6
<PAGE> 13
matter formally brought to its attention, determines to be in competition with
the Corporation or any of its subsidiaries (any such individual, corporation,
association, partnership, firm, business enterprise or other entity or
organization being hereinafter referred to as a "Business Competitor") shall be
eligible to serve as a director if the Board of Directors determines that it
would not be in the Corporation's best interests for such individual to serve as
a director of the Corporation. Such affiliation, employment or representation
may include, without limitation, service or status as an owner, partner,
shareholder, trustee, director, officer, consultant, employee, agent, or
counsel, or the existence of any relationship which results in the affected
person having an express or implied obligation to act on behalf of a Business
Competitor; provided, however, that passive ownership of a debt or equity
interest not exceeding 1% of the outstanding debt or equity, as the case may be,
in any Business Competitor shall not constitute such affiliation, employment or
representation. Any financial institution having branches or affiliates in Cobb
County, Georgia, shall be presumed to be a Business Competitor unless the Board
of Directors determines otherwise.
3.8 CERTAIN NOMINATION REQUIREMENTS. No person may be nominated for
election as a director at any annual or special meeting of shareholders unless
(a) the nomination has been or is being made pursuant to a recommendation or
approval of the Board of Directors of the Corporation or a properly constituted
committee of the Board of Directors previously delegated authority to recommend
or approve nominees for director; (b) the person is nominated by a shareholder
of the Corporation who is entitled to vote for the election of the nominee at
the subject meeting, and the nominating shareholder has furnished written notice
to the Secretary of the Corporation, at the Corporation's principal office, not
less than thirty nor more than sixty days prior to any such meeting (provided,
however, that if less than thirty-one days' notice of the meeting is given to
shareholders, such written notice shall be delivered or mailed, as prescribed,
to the Secretary of Corporation not later than the close of the tenth day
following the day on which notice of the meeting was mailed to shareholders),
and the notice (i) sets forth with respect to the person to be nominated his or
her name, age, business and residence addresses, principal business or
occupation during the past five years, any affiliation with or material interest
in the Corporation or any transaction involving the Corporation, and any
affiliation with or material interest in any person or entity having an interest
materially adverse to the Corporation, and (ii) is accompanied by the sworn or
certified statement of the shareholder that the nominee has consented to being
nominated and that the shareholder believes the nominee will stand for election
and will serve if elected; or (c) (i) the person is nominated to replace a
person previously identified as a proposed nominee (in accordance with the
provisions of subpart (b) of this Section 3.8) who has since become unable or
unwilling to be nominated or to serve if elected, (ii) the shareholder who
furnished such previous identification makes the replacement nomination and
delivers to the Secretary of the Corporation (at the time of or prior to making
the replacement nomination) an affidavit or other sworn statement affirming that
the shareholder had no reason to believe the original nominee would be so unable
or unwilling, and (iii) such shareholder also furnishes in writing to the
Secretary of the Corporation (at the time of or prior to making the replacement
nomination) the same type of information about the replacement nominee as
required by subpart (b) of this Section 3.8 to have been furnished about the
original nominee. The chairman of any meeting of shareholders at which one or
more directors are to be elected, for
7
<PAGE> 14
good cause shown and with proper regard for the orderly conduct of business at
the meeting, may waive in whole or in part the operation of this Section 3.8.
3.9 ADDITIONAL NOMINATION REQUIREMENTS. Notwithstanding Section 3.8, if
the Corporation or any banking subsidiary of the Corporation is subject to the
requirements of Section 914 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, then no person may be nominated by a shareholder for
election as a director at any meeting of shareholders unless the shareholder
furnishes the written notice required by Section 3.8 to the secretary of the
Corporation at least ninety days prior to the date of the meeting and the
nominee has received regulatory approval to serve as a director prior to the
date of the meeting.
ARTICLE FOUR
MEETINGS OF THE BOARD OF DIRECTORS
4.1 REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held in conjunction with each annual meeting of shareholders. In addition,
the Board of Directors may, by prior resolution, hold regular meetings at other
times.
4.2 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by or at the request of the Chairman of the Board, the President, or any
director in office at that time.
4.3 PLACE OF MEETINGS. Directors may hold their meetings at any place in
or outside the State of Georgia that the Board of Directors may establish from
time to time.
4.4 NOTICE OF MEETINGS. Directors need not be provided with notice of
any regular meeting of the Board of Directors. Unless waived in accordance with
Section 4.10, the Corporation shall give at least two days' notice to each
director of the date, time, and place of each special meeting; provided that if
notice is given personally or by telephone or telecopy, such notice shall be
required only 24 hours before the time at which such meeting is to be held.
Notice of a meeting shall be deemed to have been given to any director in
attendance at any prior meeting at which the date, time, and place of the
subsequent meeting was announced.
4.5 QUORUM. At meetings of the Board of Directors, a majority of the
directors then in office shall constitute a quorum for the transaction of
business.
4.6 VOTE REQUIRED FOR ACTION. If a quorum is present when a vote is
taken, the vote of a majority of the directors present at the time of the vote
will be the act of the Board of Directors, unless the vote of a greater number
is required by the Code, the Articles of Incorporation, or these Bylaws. A
director who is present at a meeting of the Board of Directors when corporate
action is taken is deemed to have assented to the action taken unless (a) he or
she objects at the beginning of the meeting (or promptly upon his or her
arrival) to
8
<PAGE> 15
holding the meeting or transacting business at it; (b) his or her dissent or
abstention from the action taken is entered in the minutes of the meeting; or
(c) he or she delivers written notice of dissent or abstention to the presiding
officer of the meeting before its adjournment or to the Corporation immediately
after adjournment of the meeting. The right of dissent or abstention is not
available to a director who votes in favor of the action taken.
4.7 PARTICIPATION BY CONFERENCE TELEPHONE. Members of the Board of
Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment through which all persons
participating may hear and speak to each other. Participation in a meeting
pursuant to this Section 4.7 shall constitute presence in person at the meeting.
4.8 ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent, describing the action taken, is signed
by each director and delivered to the Corporation for inclusion in the minutes
or filing with the corporate records. The consent may be executed in
counterpart, and shall have the same force and effect as a unanimous vote of the
Board of Directors at a duly convened meeting.
4.9 ADJOURNMENTS. A meeting of the Board of Directors, whether or not a
quorum is present, may be adjourned by a majority of the directors present to
reconvene at a specific time and place. It shall not be necessary to give notice
to the directors of the reconvened meeting or of the business to be transacted,
other than by announcement at the meeting that was adjourned, unless a quorum
was not present at the meeting that was adjourned, in which case notice shall be
given to directors in the same manner as for a special meeting. At any such
reconvened meeting at which a quorum is present, any business may be transacted
that could have been transacted at the meeting that was adjourned.
4.10 WAIVER OF NOTICE. A director may waive any notice required by the
Code, the Articles of Incorporation, or these Bylaws before or after the date
and time of the matter to which the notice relates, by a written waiver signed
by the director and delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. Attendance by a director at a meeting shall
constitute waiver of notice of the meeting, except where a director at the
beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or to transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
ARTICLE FIVE
OFFICERS
5.1 OFFICES. The officers of the Corporation shall consist of a
President and a Secretary, each of whom shall be elected or appointed by the
Board of Directors. The Board of Directors may also elect a Chairman of the
Board from among its members. The Board of
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Directors from time to time may create and establish the duties of other offices
and may elect or appoint, or authorize specific senior officers to appoint, the
persons who shall hold such other offices, including a Treasurer, one or more
Vice Presidents (including Executive Vice Presidents, Senior Vice Presidents,
Assistant Vice Presidents, and the like), one or more Assistant Secretaries, and
one or more Assistant Treasurers. Whether or not so provided by the Board of
Directors, the Chairman of the Board may appoint one or more Assistant
Secretaries and one or more Assistant Treasurers. Any two or more offices may be
held by the same person. Until a Treasurer is appointed by the Board, the
Secretary shall be responsible for the duties of the Treasurer described in
Section 5.9 below.
5.2 TERM. Each officer shall serve at the pleasure of the Board of
Directors (or, if appointed by a senior officer pursuant to this Article Five,
at the pleasure of the Board of Directors or any senior officer authorized to
have appointed the officer) until his or her death, resignation, or removal, or
until his or her replacement is elected or appointed in accordance with this
Article Five.
5.3 COMPENSATION. The compensation of all officers of the Corporation
shall be fixed by the Board of Directors or by a committee or officer appointed
by the Board of Directors. Officers may serve without compensation.
5.4 REMOVAL. All officers (regardless of how elected or appointed) may
be removed, with or without cause, by the Board of Directors, and any officer
appointed by another officer may also be removed, with or without cause, by any
senior officer authorized to have appointed the officer to be removed. Removal
will be without prejudice to the contract rights, if any, of the person removed,
but shall be effective notwithstanding any damage claim that may result from
infringement of such contract rights.
5.5 CHAIRMAN OF THE BOARD. The Chairman of the Board (if there be one)
shall preside at and serve as chairman of meetings of the shareholders and of
the Board of Directors (unless another person is selected under Section 2.9 to
act as chairman). The Chairman of the Board shall perform other duties and have
other authority as may from time to time be delegated by the Board of Directors.
5.6 PRESIDENT. Unless otherwise provided in these Bylaws or by
resolution of the Board of Directors, the President shall be the chief executive
officer of the Corporation, shall be charged with the general and active
management of the business of the Corporation, shall see that all orders and
resolutions of the Board of Directors are carried into effect, shall have the
authority to select and appoint employees and agents of the Corporation, and
shall, in the absence or disability of the Chairman of the Board, perform the
duties and exercise the powers of the Chairman of the Board. The President shall
perform any other duties and have any other authority as may be delegated from
time to time by the Board of Directors, and shall be subject to the limitations
fixed from time to time by the Board of Directors.
5.7 VICE PRESIDENTS. The Vice President (if there be one) shall, in the
absence or disability of the President, or at the direction of the President,
perform the duties and exercise
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<PAGE> 17
the powers of the President, whether the duties and powers are specified in
these Bylaws or otherwise. If the Corporation has more than one Vice President,
the one designated by the Board of Directors or the President (in that order of
precedence) shall act in the event of the absence or disability of the
President. Vice Presidents shall perform any other duties and have any other
authority as from time to time may be delegated by the Board of Directors or the
President.
5.8 SECRETARY. The Secretary shall be responsible for preparing minutes
of the meetings of shareholders, directors, and committees of directors and for
authenticating records of the Corporation. The Secretary or any Assistant
Secretary shall have authority to give all notices required by law or these
Bylaws. The Secretary shall be responsible for the custody of the corporate
books, records, contracts, and other documents. The Secretary or any Assistant
Secretary may affix the corporate seal to any lawfully executed documents
requiring it, may attest to the signature of any officer of the Corporation, and
shall sign any instrument that requires the Secretary's signature. The Secretary
or any Assistant Secretary shall perform any other duties and have any other
authority as from time to time may be delegated by the Board of Directors or the
President.
5.9 TREASURER. Unless otherwise provided by the Board of Directors, the
Treasurer shall be responsible for the custody of all funds and securities
belonging to the Corporation and for the receipt, deposit, or disbursement of
these funds and securities under the direction of the Board of Directors. The
Treasurer shall cause full and true accounts of all receipts and disbursements
to be maintained and shall make reports of these receipts and disbursements to
the Board of Directors and President upon request. The Treasurer or Assistant
Treasurer shall perform any other duties and have any other authority as from
time to time may be delegated by the Board of Directors or the President.
ARTICLE SIX
DISTRIBUTIONS AND DIVIDENDS
Unless the Articles of Incorporation provide otherwise, the Board of
Directors, from time to time in its discretion, may authorize or declare
distributions or share dividends in accordance with the Code.
ARTICLE SEVEN
SHARES
7.1 SHARE CERTIFICATES. The interest of each shareholder in the
Corporation shall be evidenced by a certificate or certificates representing
shares of the Corporation, which shall be in such form as the Board of Directors
from time to time may adopt in accordance with the Code. Share certificates
shall be in registered form and shall indicate the date of issue, the
11
<PAGE> 18
name of the Corporation, that the Corporation is organized under the laws of the
State of Georgia, the name of the shareholder, and the number and class of
shares and designation of the series, if any, represented by the certificate.
Each certificate shall be signed by the President or a Vice President (or in
lieu thereof, by the Chairman of the Board or Chief Executive Officer, if there
be one) and may be signed by the Secretary or an Assistant Secretary; provided,
however, that where the certificate is signed (either manually or by facsimile)
by a transfer agent, or registered by a registrar, the signatures of those
officers may be facsimiles.
7.2 RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED OWNERS. Prior to
due presentation for transfer of registration of its shares, the Corporation may
treat the registered owner of the shares (or the beneficial owner of the shares
to the extent of any rights granted by a nominee certificate on file with the
Corporation pursuant to any procedure that may be established by the Corporation
in accordance with the Code) as the person exclusively entitled to vote the
shares, to receive any dividend or other distribution with respect to the
shares, and for all other purposes; and the Corporation shall not be bound to
recognize any equitable or other claim to or interest in the shares on the part
of any other person, whether or not it has express or other notice of such a
claim or interest, except as otherwise provided by law.
7.3 TRANSFERS OF SHARES. Transfers of shares shall be made upon the
books of the Corporation kept by the Corporation or by the transfer agent
designated to transfer the shares, only upon direction of the person named in
the certificate or by an attorney lawfully constituted in writing. Before a new
certificate is issued, the old certificate shall be surrendered for cancellation
or, in the case of a certificate alleged to have been lost, stolen, or
destroyed, the provisions of Section 7.5 of these Bylaws shall have been
complied with.
7.4 DUTY OF CORPORATION TO REGISTER TRANSFER. Notwithstanding any of the
provisions of Section 7.3 of these Bylaws, the Corporation is under a duty to
register the transfer of its shares only if: (a) the share certificate is
endorsed by the appropriate person or persons; (b) reasonable assurance is given
that each required endorsement is genuine and effective; (c) the Corporation has
no duty to inquire into adverse claims or has discharged any such duty; (d) any
applicable law relating to the collection of taxes has been complied with; (e)
the transfer is in fact rightful or is to a bona fide purchaser; and (f) the
transfer is in compliance with applicable provisions of any transfer
restrictions of which the Corporation shall have notice.
7.5 LOST, STOLEN, OR DESTROYED CERTIFICATES. Any person claiming a share
certificate to be lost, stolen, or destroyed shall make an affidavit or
affirmation of this claim in such a manner as the Corporation may require and
shall, if the Corporation requires, give the Corporation a bond of indemnity in
form and amount, and with one or more sureties satisfactory to the Corporation,
as the Corporation may require, whereupon an appropriate new certificate may be
issued in lieu of the one alleged to have been lost, stolen or destroyed.
7.6 FIXING OF RECORD DATE. For the purpose of determining shareholders
(a) entitled to notice of or to vote at any meeting of shareholders or, if
necessary, any adjournment
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<PAGE> 19
thereof, (b) entitled to receive payment of any distribution or dividend, or (c)
for any other proper purpose, the Board of Directors may fix in advance a date
as the record date. The record date may not be more than 70 days (and, in the
case of a notice to shareholders of a shareholders' meeting, not less than 10
days) prior to the date on which the particular action, requiring the
determination of shareholders, is to be taken. A separate record date may be
established for each Voting Group entitled to vote separately on a matter at a
meeting. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting,
unless the Board of Directors shall fix a new record date for the reconvened
meeting, which it must do if the meeting is adjourned to a date more than 120
days after the date fixed for the original meeting.
7.7 RECORD DATE IF NONE FIXED. If no record date is fixed as provided in
Section 7.6, then the record date for any determination of shareholders that may
be proper or required by law shall be, as appropriate, the date on which notice
of a shareholders' meeting is mailed, the date on which the Board of Directors
adopts a resolution declaring a dividend or authorizing a distribution, or the
date on which any other action is taken that requires a determination of
shareholders.
ARTICLE EIGHT
INDEMNIFICATION
8.1 INDEMNIFICATION OF DIRECTORS. The Corporation shall indemnify and
hold harmless any director of the Corporation (an "Indemnified Person") who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, whether formal or informal, including any
action or suit by or in the right of the Corporation (for purposes of this
Article Eight, collectively, a "Proceeding") because he or she is or was a
director, officer, employee, or agent of the Corporation, against any judgment,
settlement, penalty, fine, or reasonable expenses (including, but not limited
to, attorneys' fees and disbursements, court costs, and expert witness fees)
incurred with respect to the Proceeding (for purposes of this Article Eight, a
"Liability"), provided, however, that no indemnification shall be made for: (a)
any appropriation by a director, in violation of the director's duties, of any
business opportunity of the Corporation; (b) any acts or omissions of a director
that involve intentional misconduct or a knowing violation of law; (c) the types
of liability set forth in Code Section 14-2-832; or (d) any transaction from
which the director received an improper personal benefit.
8.2 INDEMNIFICATION OF OTHERS. The Board of Directors shall have the
power to cause the Corporation to provide to officers, employees, and agents of
the Corporation all or any part of the right to indemnification permitted for
such persons by appropriate provisions of the Code. Persons to be indemnified
may be identified by position or name, and the right of indemnification may be
different for each of the persons identified. Each officer, employee, or
13
<PAGE> 20
agent of the Corporation so identified shall be an "Indemnified Person" for
purposes of the provisions of this Article Eight.
8.3 OTHER ORGANIZATIONS. The Corporation shall provide to each director,
and the Board of Directors shall have the power to cause the Corporation to
provide to any officer, employee, or agent, of the Corporation who is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, or agent of another corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise all or any part of the right to
indemnification and other rights of the type provided under Sections 8.1, 8.2,
8.4, and 8.10 of this Article Eight (subject to the conditions, limitations, and
obligations specified in those Sections) permitted for such persons by
appropriate provisions of the Code. Persons to be indemnified may be identified
by position or name, and the right of indemnification may be different for each
of the persons identified. Each person so identified shall be an "Indemnified
Person" for purposes of the provisions of this Article Eight.
8.4 ADVANCES. Expenses (including, but not limited to, attorneys' fees
and disbursements, court costs, and expert witness fees) incurred by an
Indemnified Person in defending any Proceeding of the kind described in Sections
8.1 or 8.3, as to an Indemnified Person who is a director of the Corporation, or
in Sections 8.2 or 8.3, as to other Indemnified Persons, if the Board of
Directors has specified that advancement of expenses be made available to any
such Indemnified Person, shall be paid by the Corporation in advance of the
final disposition of such Proceeding as set forth herein. The Corporation shall
promptly pay the amount of such expenses to the Indemnified Person, but in no
event later than 10 days following the Indemnified Person's delivery to the
Corporation of a written request for an advance pursuant to this Section 8.4,
together with a reasonable accounting of such expenses; provided, however, that
the Indemnified Person shall furnish the Corporation a written affirmation of
his or her good faith belief that he or she has met the applicable standard of
conduct and a written undertaking and agreement to repay to the Corporation any
advances made pursuant to this Section 8.4 if it shall be determined that the
Indemnified Person is not entitled to be indemnified by the Corporation for such
amounts. The Corporation may make the advances contemplated by this Section 8.4
regardless of the Indemnified Person's financial ability to make repayment. Any
advances and undertakings to repay pursuant to this Section 8.4 may be unsecured
and interest-free.
8.5 NON-EXCLUSIVITY. Subject to any applicable limitation imposed by the
Code or the Articles of Incorporation, the indemnification and advancement of
expenses provided by or granted pursuant to this Article Eight shall not be
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any provision of the Articles of
Incorporation, or any Bylaw, resolution, or agreement specifically or in general
terms approved or ratified by the affirmative vote of holders of a majority of
the shares entitled to be voted thereon.
8.6 INSURANCE. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee, or agent of the Corporation, or who, while serving in such a capacity,
is also or was also serving at the
14
<PAGE> 21
request of the Corporation as a director, officer, trustee, partner, employee,
or agent of any corporation, partnership, joint venture, trust, employee benefit
plan, or other enterprise, against any Liability that may be asserted against or
incurred by him or her in any such capacity, or arising out of his or her status
as such, whether or not the Corporation would have the power to indemnify him or
her against such liability under the provisions of this Article Eight.
8.7 NOTICE. If the Corporation indemnifies or advances expenses to a
director under any of Sections 14-2-851 through 14-2-854 of the Code in
connection with a Proceeding by or in the right of the Corporation, the
Corporation shall, to the extent required by Section 14-2-1621 or any other
applicable provision of the Code, report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting.
8.8 SECURITY. The Corporation may designate certain of its assets as
collateral, provide self-insurance, establish one or more indemnification
trusts, or otherwise secure or facilitate its ability to meet its obligations
under this Article Eight, or under any indemnification agreement or plan of
indemnification adopted and entered into in accordance with the provisions of
this Article Eight, as the Board of Directors deems appropriate.
8.9 AMENDMENT. Any amendment to this Article Eight that limits or
otherwise adversely affects the right of indemnification, advancement of
expenses, or other rights of any Indemnified Person hereunder shall, as to such
Indemnified Person, apply only to Proceedings based on actions, events, or
omissions (collectively, "Post Amendment Events") occurring after such amendment
and after delivery of notice of such amendment to the Indemnified Person so
affected. Any Indemnified Person shall, as to any Proceeding based on actions,
events, or omissions occurring prior to the date of receipt of such notice, be
entitled to the right of indemnification, advancement of expenses, and other
rights under this Article Eight to the same extent as if such provisions had
continued as part of the Bylaws of the Corporation without such amendment. This
Section 8.9 cannot be altered, amended, or repealed in a manner effective as to
any Indemnified Person (except as to Post Amendment Events) without the prior
written consent of such Indemnified Person.
8.10 AGREEMENTS. The provisions of this Article Eight shall be deemed to
constitute an agreement between the Corporation and each Indemnified Person
hereunder. In addition to the rights provided in this Article Eight, the
Corporation shall have the power, upon authorization by the Board of Directors,
to enter into an agreement or agreements providing to any Indemnified Person
indemnification rights substantially similar to those provided in this Article
Eight.
8.11 CONTINUING BENEFITS. The rights of indemnification and advancement
of expenses permitted or authorized by this Article Eight shall, unless
otherwise provided when such rights are granted or conferred, continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such person.
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<PAGE> 22
8.12 SUCCESSORS. For purposes of this Article Eight, the term
"Corporation" shall include any corporation, joint venture, trust, partnership,
or unincorporated business association that is the successor to all or
substantially all of the business or assets of this Corporation, as a result of
merger, consolidation, sale, liquidation, or otherwise, and any such successor
shall be liable to the persons indemnified under this Article Eight on the same
terms and conditions and to the same extent as this Corporation.
8.13 SEVERABILITY. Each of the Sections of this Article Eight, and each
of the clauses set forth herein, shall be deemed separate and independent, and
should any part of any such Section or clause be declared invalid or
unenforceable by any court of competent jurisdiction, such invalidity or
unenforceability shall in no way render invalid or unenforceable any other part
thereof or any separate Section or clause of this Article Eight that is not
declared invalid or unenforceable.
8.14 ADDITIONAL INDEMNIFICATION. In addition to the specific
indemnification rights set forth herein, the Corporation shall indemnify each of
its directors and such of its officers as have been designated by the Board of
Directors to the full extent permitted by action of the Board of Directors
without shareholder approval under the Code or other laws of the State of
Georgia as in effect from time to time.
ARTICLE NINE
MISCELLANEOUS
9.1 INSPECTION OF BOOKS AND RECORDS. The Board of Directors shall have
the power to determine which accounts, books, and records of the Corporation
shall be available for shareholders to inspect or copy, except for those books
and records required by the Code to be made available upon compliance by a
shareholder with applicable requirements, and shall have the power to fix
reasonable rules and regulations (including confidentiality restrictions and
procedures) not in conflict with applicable law for the inspection and copying
of accounts, books, and records that by law or by determination of the Board of
Directors are made available. Unless required by the Code or otherwise provided
by the Board of Directors, a shareholder of the Corporation holding less than
two percent of the total shares of the Corporation then outstanding shall have
no right to inspect the books and records of the Corporation.
9.2 FISCAL YEAR. The Board of Directors is authorized to fix the fiscal
year of the Corporation and to change the fiscal year from time to time as it
deems appropriate.
9.3 CORPORATE SEAL. The corporate seal will be in such form as the Board
of Directors may from time to time determine. The Board of Directors may
authorize the use of one or more facsimile forms of the corporate seal. The
corporate seal need not be used unless its use is required by law, by these
Bylaws, or by the Articles of Incorporation.
16
<PAGE> 23
9.4 ANNUAL STATEMENTS. Not later than four months after the close of
each fiscal year, and in any case prior to the next annual meeting of
shareholders, the Corporation shall prepare (a) a balance sheet showing in
reasonable detail the financial condition of the Corporation as of the close of
its fiscal year, and (b) a profit and loss statement showing the results of its
operations during its fiscal year. Upon receipt of 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, in such form and with
such information as the Code may require.
9.5 NOTICE. (a) Whenever these Bylaws require notice to be given to any
shareholder or to any director, the notice may be given by mail, in person, by
courier delivery, by telephone, or by telecopier, telegraph, or similar
electronic means. Whenever notice is given to a shareholder or director by mail,
the notice shall be sent by depositing the notice in a post office or letter box
in a postage-prepaid, sealed envelope addressed to the shareholder or director
at his or her address as it appears on the books of the Corporation. Any such
written notice given by mail shall be effective: (i) if given to shareholders,
at the time the same is deposited in the United States mail; and (ii) in all
other cases, at the earliest of (x) when received or when delivered, properly
addressed, to the addressee's last known principal place of business or
residence, (y) five days after its deposit in the mail, as evidenced by the
postmark, if mailed with first-class postage prepaid and correctly addressed, or
(z) on the date shown on the return receipt, if sent by registered or certified
mail, return receipt requested, and the receipt is signed by or on behalf of the
addressee. Whenever notice is given to a shareholder or director by any means
other than mail, the notice shall be deemed given when received.
(b) In calculating time periods for notice, when a period of time
measured in days, weeks, months, years, or other measurement of time is
prescribed for the exercise of any privilege or the discharge of any duty, the
first day shall not be counted but the last day shall be counted.
ARTICLE TEN
AMENDMENTS
Except as otherwise provided under the Code, the Board of Directors shall
have the power to alter, amend, or repeal these Bylaws or adopt new Bylaws. Any
Bylaws adopted by the Board of Directors may be altered, amended, or repealed,
and new Bylaws adopted, by the shareholders. The shareholders may prescribe in
adopting any Bylaw or Bylaws that the Bylaw or Bylaws so adopted shall not be
altered, amended, or repealed by the Board of Directors.
* * * * * *
17
<PAGE> 1
[FORM OF FACE OF CERTIFICATE]
SOUTHEAST COMMERCE HOLDING COMPANY
INCORPORATED UNDER THE LAWS OF GEORGIA
THE CORPORATION IS TO ISSUE 15,000,000 SHARES OF COMMON STOCK - PAR VALUE $.01
EACH
This certifies that _______________________________is the registered holder of
_______________________________ Shares of Common Stock which are fully paid and
non-assessable and transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ______________ day of _______________ A.D. 19____
- --------------------------------- ----------------------------------
SECRETARY PRESIDENT
[FORM OF BACK OF CERTIFICATE]
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C> <C> <C>
TEN COM --as tenants in common UNIF GIFT MIN ACT-- ______Custodian
TEN ENT --as tenants by the entireties (Cust)(Minor)
JT TEN --as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
<PAGE> 2
____________________ Attorney to transfer the said shares on the books of the
within-named Corporation with full power of substitution in the premises.
Dated,
---------------------
--------------------------
In presence of
- ------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 5.1
<TABLE>
<S> <C> <C>
NEGLAW OFFICES
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP
NEIL E. GRAYSON 999 PEACHTREE STREET, N.E. OTHER OFFICES:
(404) 817-6113 FIRST UNION PLAZA CHARLESTON, SOUTH CAROLINA
INTERNET ADDRESS: [email protected] SUITE 1400 CHARLOTTE, NORTH CAROLINA
ATLANTA, GEORGIA 30309 COLUMBIA, SOUTH CAROLINA
TELEPHONE (404) 817-6000 GREENVILLE, SOUTH CAROLINA
FACSIMILE (404) 817-6050 MYRTLE BEACH, SOUTH CAROLINA
WWW.NMRS.COM
</TABLE>
December 4, 1997
Southeast Commerce Holding Company
100 Galleria Parkway, Suite 400
Atlanta, Georgia 30339
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to Southeast Commerce Holding Company (the "Company")
in connection with the filing of a Registration Statement on Form SB-2 (the
"Registration Statement"), under the Securities Act of 1933, covering the
offering of up to 1,500,000 shares (the "Shares") of the Company's Common Stock,
par value $.01 per share. In connection therewith, we have examined such
corporate records, certificates of public officials, and other documents and
records as we have considered necessary or proper for the purpose of this
opinion.
The opinions set forth herein are limited to the laws of the State of
Georgia and applicable federal laws.
Based on the foregoing, and having regard to legal considerations which we
deem relevant, we are of the opinion that the Shares, when issued and delivered
as subscribed in the Registration Statement, will be legally issued, fully paid,
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
By: /s/ Neil E. Grayson
----------------------------------
Neil E. Grayson
<PAGE> 1
EXHIBIT 10.1
SOUTHEAST COMMERCE HOLDING COMPANY
100 GALLERIA PARKWAY, SUITE 400
ATLANTA, GEORGIA 30339
Louis J. Douglass, III
4931 Mill Stream Court
Dunwoody, Georgia 30338
Dear Lou:
We are pleased to propose this LETTER OF AGREEMENT (this "Agreement")
dated as of November 18, 1997, to be entered into between Southeast Commerce
Holding Company, a Georgia corporation (the "Employer" or the "Company") which
is the proposed thrift holding company for Commerce Bank (Proposed), a proposed
thrift (the "Thrift"), and Louis J. Douglass, III, an individual resident of
Georgia (the "Executive").
The Employer is in the process of organizing the Thrift, and the Executive
has agreed to serve as President and Chief Executive Officer of the Thrift. Upon
organization of the Thrift, the Employer and the Executive contemplate that this
Agreement will be assigned by the Employer to the Thrift and that the Thrift
will assume the duties of the Company hereunder (except pursuant to Section 3).
Following such assignment, the term "Employer" as used herein from time to time
shall refer to the Thrift.
The Employer recognizes that the Executive's contribution to the growth
and success of the Thrift during its organization and initial years of
operations will be a significant factor in the success of the Thrift. The
Employer desires to provide for the employment of the Executive in a manner
which will reinforce and encourage the dedication of the Executive to the Thrift
and promote the best interests of the Thrift and its shareholders. The Executive
is willing to serve the Employer (and, after assignment of this Agreement, the
Thrift) on the terms and conditions herein provided. Certain terms used in this
Agreement are defined in Section 14 hereof.
In consideration of the foregoing, the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Employer shall employ the Executive, and the
Executive shall serve the Employer, as President and Chief Executive Officer of
the Thrift upon the terms and conditions set forth herein. The Executive shall
have such authority and responsibilities consistent with his position as are set
forth in the Company's or the Thrift's Bylaws or assigned by the Company's or
the Thrift's Board of Directors (the "Board") from time to time. The Executive
shall devote his full business time, attention, skill and efforts to the
performance of his duties hereunder, except during periods of illness or periods
of vacation and leaves of absence consistent with Thrift policy. The Executive
may devote reasonable periods to service as a director or advisor to other
organizations, to charitable and community activities, and to managing his
personal investments, provided that such activities do not materially interfere
with the performance of his duties hereunder and are not in conflict or
competitive with, or adverse to, the interests of the Company or the Thrift.
<PAGE> 2
2. Term. Unless earlier terminated as provided herein, the Executive's
employment under this Agreement shall commence on the date hereof and be for a
term (the "Term") of three years, with an annual review for renewal, which may
be extended for additional time periods by mutual agreement of the Executive and
the Employer.
3. Compensation and Benefits.
(a) The Employer shall pay the Executive a salary at a rate of not less
than $110,000 per annum in accordance with the salary payment practices of the
Employer. The Executive shall also receive a $15,000 cash bonus on the opening
date of the Thrift.
(b) The Executive shall participate in any retirement, welfare, deferred
compensation, life and health insurance, and other benefit plans or programs of
the Employer now or hereafter applicable to the Executive or applicable
generally to employees of the Employer.
(c) On the date of the closing of the stock offering for the initial
capitalization of the Thrift, or as soon thereafter as an appropriate stock
option plan is adopted by the Board, the Company shall grant to the Executive an
option to purchase 10,000 shares of Common Stock. The option will be represented
by a separate stock option agreement which will provide that the option will
vest over a three-year period (4,000 shares on the first anniversary of the
opening date of the Thrift and 3,000 shares on the second and third anniversary,
so long as the Executive is still employed by the Employer on each anniversary).
However, the option agreement will also provide that if the Executive's
employment is terminated for any reason other than for Cause, then the options
will vest in full immediately upon such termination.
(d) Beginning on the date of this Agreement, the Company shall provide
the Executive with a monthly automobile allowance not to exceed $600 per month.
In addition, the Employer shall pay the dues pertaining to the Executive's
membership in an area country club in an amount to be agreed upon by the
parties.
(e) Beginning on the date of this Agreement, the Employer shall
reimburse the Executive for reasonable travel and other expenses related to the
Executive's duties which are incurred and accounted for in accordance with the
normal practices of the Employer.
4. Termination.
(a) Notwithstanding the Term of this Agreement, the Employer has the
right to terminate this Agreement at any time in accordance with this Section 4.
(b) If the Employer terminates the Executive's employment under this
Agreement prior to the end of the Term for any reason other than Cause, the
Employer shall pay to the Executive severance compensation in an amount equal to
100% of his then current monthly base salary each month for twelve months from
the date of termination, plus any bonus earned or accrued through the date of
termination.
(c) If the Executive's employment is terminated because of the
Executive's death, the Executive's estate shall receive any sums due him as base
salary and/or reimbursement of expenses
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<PAGE> 3
through the end of the month during which death occurred, plus any bonus earned
or accrued under the through the date of death.
(d) If the Executive's employment is terminated for Cause, or if the
Executive resigns, the Executive shall receive any sums due him as base salary
and/or reimbursement of expenses through the date of such termination.
(e) With the exceptions of the provisions of this Section 4, and the
express terms of any benefit plan under which the Executive is a participant, it
is agreed that, upon termination of the Executive's employment, the Employer
shall have no obligation to the Executive for, and the Executive waives and
relinquishes, any further compensation or benefits (exclusive of COBRA
benefits). At the time of termination of employment, the Employer and the
Executive shall enter into a mutually satisfactory form of release acknowledging
such remaining obligations and discharging both parties, as well as the
Employer's officers, directors and employees with respect to their actions for
or on behalf of the Employer, from any other claims or obligations arising out
of or in connection with the Executive's employment by the Employer, including
the circumstances of such termination.
(f) In the event that the Executive's employment is terminated for any
reason, the Executive shall (and does hereby) tender his resignation as a
director of the Employer and effective as of the date of termination.
(g) Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
5. Protection of Trade Secrets. The Executive agrees to maintain in
strict confidence and, except as necessary to perform his duties for the
Employer, the Executive agrees not to use or disclose any Trade Secrets of the
Employer during or after his employment. As provided by Georgia statutes, "Trade
Secret" means information, including a formula, pattern, compilation, program,
device, method, technique, process, drawing, cost data or customer list, that:
(i) derives economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use; and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.
6. Protection of Other Confidential Information. In addition, the
Executive agrees to maintain in strict confidence and, except as necessary to
perform his duties for the Employer, not to use or disclose any Confidential
Business Information of the Employer during his employment and for a period of
24 months following termination of the Executive's employment. "Confidential
Business Information" shall mean any internal, non-public information (other
than Trade Secrets already addressed above) concerning the Employer's financial
position and results of operations (including revenues, assets, net income,
etc.); annual and long-range business plans; product or service plans; marketing
plans and methods; training, educational and administrative manuals; customer
and supplier information and purchase histories; and employee lists. The
provisions of Sections 5 and 6 above shall also apply to protect Trade Secrets
and Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.
7. Return of Materials. The Executive shall surrender to the Employer,
promptly upon its request and in any event upon termination of the Executive's
employment, all media, documents,
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<PAGE> 4
notebooks, computer programs, handbooks, data files, models, samples, price
lists, drawings, customer lists, prospect data, or other material of any nature
whatsoever (in tangible or electronic form) in the Executive's possession or
control, including all copies thereof, relating to the Employer, its business,
or its customers. Upon the request of the Employer, employee shall certify in
writing compliance with the foregoing requirement.
8. Restrictive Covenants.
(a) No Solicitation of Customers. During the Executive's employment with
the Employer and for a period of 12 months thereafter, the Executive shall not
(except on behalf of or with the prior written consent of the Employer), either
directly or indirectly, on the Executive's own behalf or in the service or on
behalf of others, (A) solicit, divert, or appropriate to or for a Competing
Business, or (B) attempt to solicit, divert, or appropriate to or for a
Competing Business, any person or entity that was a customer of the Employer or
any of its Affiliates on the date of termination and is located in the Territory
and with whom the Executive has had material contact.
(b) No Recruitment of Personnel. During the Executive's employment with
the Employer and for a period of 12 months thereafter, the Executive shall not,
either directly or indirectly, on the Executive's own behalf or in the service
or on behalf of others, (A) solicit, divert, or hire away, or (B) attempt to
solicit, divert, or hire away, to any Competing Business located in the
Territory, any employee of or consultant to the Employer or any of its
Affiliates engaged or experienced in the Business, regardless of whether the
employee or consultant is full-time or temporary, the employment or engagement
is pursuant to written agreement, or the employment is for a determined period
or is at will.
(c) Non-Competition Agreement. During the Executive's employment with the
Employer and for a period of 12 months thereafter, the Executive shall not
(without the prior written consent of the Employer) compete with the Employer or
any of its Affiliates by, directly or indirectly, forming, serving as an
organizer, director or officer of, or consultant to, or acquiring or maintaining
more than a 1% passive investment in, a depository financial institution or
holding company therefor if such depository institution or holding company has
one or more offices or branches located in the Territory. Notwithstanding the
foregoing, the Executive may serve as an officer of or consultant to a
depository institution or holding company therefor even though such institution
operates one or more offices or branches in the Territory, if the Executive's
employment does not directly involve, in whole or in part, the depository
financial institution's or holding company's operations in the Territory.
9. Independent Provisions. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision or clause of this Agreement, or portion thereof, shall be held by any
court or other tribunal of competent jurisdiction to be illegal, void, or
unenforceable in such jurisdiction, the remainder of such provision shall not be
thereby affected and shall be given full effect, without regard to the invalid
portion. It is the intention of the parties that, if any court construes any
provision or clause of this Agreement, or any portion thereof, to be illegal,
void, or unenforceable because of the duration of such provision or the area or
matter covered thereby, such court shall reduce the duration, area, or matter of
such provision, and, in its reduced form, such provision shall then be
enforceable and shall be enforced. The Executive and the Employer hereby agree
that they will negotiate in good faith to amend this Agreement from time to time
to modify the terms of Sections 8(a), 8(b), and 8(c), the definition of the term
"Territory," and the definition of the term "Business," to reflect changes in
the Employer's business and affairs so that the scope of the limitations placed
on the Executive's activities
4
<PAGE> 5
by Section 8 accomplishes the parties' intent in relation to the then current
facts and circumstances. Any such amendment shall be effective only when
completed in writing and signed by the Executive and the Employer.
10. Successors; Binding Agreement. The rights and obligations of this
Agreement shall bind and inure to the benefit of the surviving corporation in
any merger or consolidation in which the Employer is a party, or any assignee of
all or substantially all of the Employer's business and properties. The
Executive's rights and obligations under this Agreement may not be assigned by
him, except that his right to receive accrued but unpaid compensation,
unreimbursed expenses and other rights, if any, provided under this Agreement
which survive termination of this Agreement shall pass after death to the
personal representatives of his estate.
11. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, however, that all
notices to the Employer shall be directed to the attention of the Employer with
a copy to the Secretary of the Employer. All notices and communications shall be
deemed to have been received on the date of delivery thereof.
12. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Georgia without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in State of Georgia.
13. Enforcement. The Executive agrees that in the event of any breach or
threatened breach by the Executive of any covenant contained in Section 8(a),
8(b), or 8(c) hereof, the resulting injuries to the Employer would be difficult
or impossible to estimate accurately, even though irreparable injury or damages
would certainly result. Accordingly, an award of legal damages, if without other
relief, would be inadequate to protect the Employer. The Executive, therefore,
agrees that in the event of any such breach, the Employer shall be entitled to
obtain from a court of competent jurisdiction an injunction to restrain the
breach or anticipated breach of any such covenant, and to obtain any other
available legal, equitable, statutory, or contractual relief. Should the
Employer have cause to seek such relief, no bond shall be required from the
Employer, and the Executive shall pay all attorney's fees and court costs which
the Employer may incur to the extent the Employer prevails in its enforcement
action.
14. Certain Definitions.
(a) "Affiliate" shall mean any business entity controlled by, controlling
or under common control with the Employer.
(b) "Business" shall mean the operation of a depository financial
institution, including, without limitation, the solicitation and acceptance of
deposits of money and commercial paper, the solicitation and funding of loans
and the provision of other banking services, and any other related business
engaged in by the Employer or any of its Affiliates as of the date of
termination.
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<PAGE> 6
(c) "Cause" shall consist of any of (A) the commission by the Executive of
a willful act (including, without limitation, a dishonest or fraudulent act) or
a grossly negligent act, or the willful or grossly negligent omission to act by
the Executive, which is intended to cause, causes or is reasonably likely to
cause material harm to the Employer (including harm to its business reputation),
(B) the indictment of the Executive for the commission or perpetration by the
Executive of any felony or any crime involving dishonesty, moral turpitude or
fraud, (C) the material breach by the Executive of this Agreement that, if
susceptible of cure, remains uncured ten days following written notice to the
Executive of such breach, (D) the receipt of any form of notice, written or
otherwise, that any regulatory agency having jurisdiction over the Employer
intends to institute any form of formal or informal (e.g., a memorandum of
understanding which relates to the Executive's performance) regulatory action
against the Executive or the Employer or the Employer (provided that the Board
of Directors determines in good faith, with the Executive abstaining from
participating in the consideration of and vote on the matter, that the subject
matter of such action involves acts or omissions by or under the supervision of
the Executive or that termination of the Executive would materially advance the
Employer's compliance with the purpose of the action or would materially assist
the Employer in avoiding or reducing the restrictions or adverse effects to the
Employer related to the regulatory action); (E) the exhibition by the Executive
of a standard of behavior within the scope of his employment that is materially
disruptive to the orderly conduct of the Employer's business operations
(including, without limitation, substance abuse or sexual misconduct) to a level
which, in the Board of Directors' good faith and reasonable judgment, with the
Executive abstaining from participating in the consideration of and vote on the
matter, is materially detrimental to the Employer's best interest, that, if
susceptible of cure remains uncured ten days following written notice to the
Executive of such specific inappropriate behavior; or (F) the failure of the
Executive to devote his full business time and attention to his employment as
provided under this Agreement that, if susceptible of cure, remains uncured 30
days following written notice to the Executive of such failure.
(d) "Competing Business" shall mean any business that, in whole or in
part, is the same or substantially the same as the Business.
(e) "Territory" shall mean a radius of ten miles from (i) the main office
of the Employer or (ii) any branch office of the Employer.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. Failure of the Employer to enforce
any of the provisions of this Agreement or any rights with respect thereto shall
in no way be considered to be a waiver of such provisions or rights, or in any
way affect the validity of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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<PAGE> 7
IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective as
of the date first above written.
SOUTHEAST COMMERCE HOLDING COMPANY
ATTEST:
By: /s/ Tammy A. Boleman By: /s/ Richard A. Parlontieri
----------------------- ----------------------------------
Name: Tammy A. Boleman Name: Richard A. Parlontieri
Title: Title: Chief Executive Officer
(CORPORATE SEAL)
EXECUTIVE
By: /s/ Louis J. Douglass, III
----------------------------
Name: Louis J. Douglass, III
7
<PAGE> 1
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SOUTH EAST COMMERCE HOLDING CO. THE BANKERS BANK Loan Number
103 VAN NESS 3715 NORTHSIDE PARKWAY NW ------------------------
PEACHTREE CITY, GA 30269 300 NORTH CREEK, SUITE 800 Date August 27, 1997
ATLANTA, GA 30327 --------------------------------
Maturity Date August 27, 1998
----------------------
Loan Amount $ $500,000.00
-----------------------
BORROWER'S NAME AND ADDRESS Renewal of
"I" Includes each borrower above, jointly and LENDER'S NAME AND ADDRESS -------------------------
severally "You" means the lender, its successors and
assigns
- ------------------------------------------------ ---------------------------------------------- ------------------------------------
For value received, I promise to pay to you, or your order, at your address listed above the PRINCIPAL sum of Five Hundred
Thousand Dollars $500,000.00
[ ] Single Advance: I will receive all of this principal sum on _______________________. No additional advances are contemplated
under this note.
[X] Multiple Advance: The principal sum shown above is the maximum amount of principal I can borrow under this note. On
__________________ I will receive the amount of $________________________ and future principal advances are contemplated.
Conditions: The conditions for future advances are FINANCIALS INFORMATION HAS BEEN PROVIDED AS REQUESTED BY LENDER. BORROWER
IS NOT IN DEFAULT ON THIS LOAN OR ANY OTHER OBLIGATION TO ANOTHER LENDER
[X] Open End Credit: You and I agree that I may borrow up to the maximum principal sum more than one time. This feature is
subject to all other conditions and expires on AUGUST 27, 1998.
[ ] Closed End Credit: You and I agree that I may borrow (subject to all other conditions) up to the maximum principal sum
only one time.
INTEREST: I agree to pay interest on the outstanding principal balance from AUGUST 27, 1997 at the rate of 8.50% per year until
the Index Rate changes as indicated below.
[X] Variable Rate: This rate may then change as stated below.
[X] Index Rate: The future rate will be AT the following index rate: PRIME RATE AS PUBLISHED IN THE MONEY RATES SECTION OF
THE WALL STREET JOURNAL. IF MORE THAN ONE RATE EXISTS, THEN THE HIGHER RATE WILL PREVAIL.
[ ] No Index: The future rate will not be subject to any internal or external index. It will be entirely in your control
[X] Frequency and Timing: The rate on this note may change as often as DAILY. A change in the interest rate will take effect
ON THE EFFECTIVE DATE OF CHANGE IN THE ABOVE INDEX RATE
[ ] Limitations: During the term of this loan, the applicable annual interest rate will not be mare than % or
less than _______________________%. The rate may not change more ___________________% each Effect of Variable Rate:
A change in the interest rate will have the following effect on the payments:
[X] The amount of each scheduled payment will change. [ ] The amount of the final payment will change.
[ ] ______________________________________________________________________________________________________________________
ACCRUAL METHOD: Interest will be calculated on a 360/ACTUAL basis
COST MATURITY RATE: I agree to pay interest on the unpaid balance of this note owing after maturity, and until paid in full, as
stated below:
[ ] on the same fixed or variable rate basis in effect before maturity (as indicated above).
[X] at a rate equal to THE INDEX RATE PLUS 2.0%
[X] LATE CHARGE: If a payment is made more than 15 days after it is due, I agree to pay a late charge of $25.00
[ ] ADDITIONAL CHARGE: In addition to interest, I agree to pay the following charges which [ ] are [ ] are not included in the
principal amount above:
PAYMENTS: I agree to pay this note as follows:
[X] Interest: I agree to pay accrued interest QUARTERLY BEGINNING OCTOBER 1, 1997 AND EVERY QUARTER THEREAFTER UNTIL
PAID IN FULL
[X] Principal: I agree to pay the principal AT MATURITY DATE OF AUGUST 22, 1998
[ ] Installments: I agree to pay this note ____________ payments. The first payment will be in the amount of $_____________
and will be due _____________________. A payment of $_____________will be due thereafter. The final payment of the entire
unpaid balance of principal and interest will be due ____________________________________________________________________.
PURPOSE: The purpose of this loan LINE OF CREDIT
ADDITIONAL TERMS:
</TABLE>
SECURITY INTEREST: I give you a security interest in all of the Property
described below that I now own and that I may own in the future
(including, but not limited to, all parts, accessories, repairs,
improvements, and accessions to the Property), wherever the Property is or
may be located, and all proceeds and products from the Property.
[ ] Inventory: All inventory which I hold for ultimate sale or lease, or
which has been or will be supplied under contracts of service, or which
are raw materials, work in progress, or materials used or consumed in
my business.
[ ] Equipment: All equipment including, but not limited to, all machinery,
vehicles, furniture, fixtures, manufacturing equipment, farm machinery
and equipment, shop equipment, _____ and recordkeeping equipment, and
parts and tools. All equipment described in a list or schedule which I
give to you will also be included in the secured property, but such
________ not necessary for a valid security interest in my equipment.
[ ] Farm Products: All farm products including, but not limited:
(a) all poultry and livestock and their young, along with their
products, produce and replacements;
(b) all crops, annual or perennial, and all products of the crops; and
(c) all feed, seed, fertilizer, medicines, and other supplies used or
produced in my farming operations
[ ] Accounts, Instruments, Documents, Chattel Paper and Other rights to
Payment: All rights I have now and that I may have in the future to the
payment of money including, but not limited to: (a) payment for goods
and other property sold or ________ or for service rendered, whether or
not I have earned such payment by performance; and (b) rights to
payment arising out of all present and future debt instruments, chattel
paper and loans and obligations receivable.
The above include any rights and interests (including all liens and security
interests) which I may have by law or agreement against any account
debtor or obligor of mine.
[ ] General Intangibles: All general intangibles including, but not limited
to, tax refunds, applications for patents, patients, copyrights,
trademarks, trade secrets, good will, trade names, _____________,
permits and franchises, and the right to use my name.
[ ] Government Payments and Program: All payments, accounts, general
intangibles, or other benefits (including, but not limited to, payments
in kind deficiency payments, letters of entitlement, warehouse
receipts, storage payments, emergency assistance payments, diver_____
payments, and conservation reserve payments) in which I now have and in
the future may have any rights or interest and which arise under or as
a result of any preexisting , current or future Federal or state
governmental program (including, but not limited to, all programs
administered by the Commodity Credit Corporation and the ASDS).
[ ] The accrued property includes, but is not limited by, the following;
PERSONAL GUARANTIES OF G. WEBB HOWELL, STEPHEN R. GROSS, FRANK E.
PERISINO, GARY M. BREMER, RICHARD C. CARTER, JR., RICHARD A.
PARLONTIERI, TERRY L. FERRERO, AND DONNIE H. RUSSELL.
<TABLE>
<S> <C>
Property will be used for a [ ] personal [ ]___________________________________________purpose
[ ] business [ ] agricultural SIGNATURES AND SEALS: IN WITNESS WHEREOF, I HAVE SIGNED
This agreement covers _____ to be _____ mineral s(including oil and MY NAME AND AFFIXED MY SEAL ON THIS 27TH DAY OF AUGUST,
gas), ____ or crops growing or to be grown, the description of the 1997, BY DOING SO, I AGREEMENT TO THE TERMS OF THIS
real estate is: NOTE (INCLUDING THOSE ON PAGE 2). I HAVE RECEIVED A
___________________________________________________________________ COPY ON TODAY'S DATE.
___________________________________________________________________ Richard A. Parlontieri (SEAL)
___________________________________________________________________ -------------------------------------------------------
____, ____ this agreement on the real estate records. SOUTHEAST COMMERCE HOLDING COMPANY
_______ owner (if not me)__________________________________________ BY: RICHARD A. PARLONTIERI
___________________________________________________________________ ________________________________________________(SEAL)
___________________________________________________________________ ________________________________________________(SEAL)
NATURE FOR LENDER
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
To: The Bankers Bank August 27, 1997
Atlanta, Georgia
FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and
in consideration of any loan or other financial accommodation heretofore or
hereafter at any time made or granted to Stephen R. Gross (hereinafter call the
"Debtor") by The Bankers Bank (hereinafter together with its successors and
assigns, called the "Bank"), the undersigned hereby unconditionally guarantee(s)
the full and prompt payment when due, whether by declaration or otherwise, and
at all times hereafter, of all obligations of the Debtor to the Bank, however
and whenever incurred or evidenced, whether direct or indirect, absolute or
contingent, or due to or become due (collectively called "Liabilities"), and the
undersigned further agree(s) to pay all expenses (including attorney's fees)
paid or incurred by the Bank in endeavoring to collect he Liabilities, or any
part thereof, and in enforcing this guaranty. The right of recovery against the
undersigned is, however, limited to the amount of Ninety Three Thousand Seven
Hundred Fifty and 00/100 Dollars ($93,750.00), plus interest on such amount and
plus all expenses of enforcing this guaranty.
Undersigned hereby transfers and conveys to the Bank any and al balances,
credits, deposits, accounts, items and monies of the undersigned now or
hereafter with the Bank, and the Bank is hereby given a lien upon security title
to and a security interest in all property of the undersigned of every kind and
description now or hereafter in the possession or control of the Bank for any
reason, including all dividends and distributions on or other rights in
connection therewith.
In the event of the death, incompetency, dissolution, or insolvency (as
defined by the Uniform Commercial Code as in effect at that time in Georgia) of
the Debtor, or if a petition bankruptcy be filed by or against the Debtor, or if
a receiver be appointed for any part of the property or assets of the Debtor, or
if any judgment be entered against the Debtor, or if the Bank shall feel
insecure with respect to Liabilities and if any such event should occur at a
time when any of the Liabilities may not then be due and payable, the
undersigned agrees to pay to the Bank upon demand the full amount which would be
payable hereunder by the undersigned if all Liabilities were then due and
payable.
Bank may, without demand or notice of any kind, at any time when any
amount shall be due and payable hereunder by any of the undersigned, appropriate
and apply toward the payment of such amount, and is such order of application as
the Bank may from time to time elect, any property, balances, credits, deposits,
accounts, items or monies of such undersigned in the possession or control of
the Bank for any purpose.
This guaranty shall be continuing absolute and unconditional and shall
remain in full force and effect as to the undersigned, subject to discontinuance
of this guaranty as to any of the undersigned (including, without limitation,
any undersigned who shall become deceased, incompetent or dissolved) only as
follows: Any of the undersigned, and any person duly authorized and acting on
behalf of any of the undersigned, may given written notice to the Bank of
discontinuance of this guaranty as to the undersigned by whom or on whose behalf
such notice is given, but no such notice shall be effective in any respect until
it is actually received by the Bank and no such notice shall affect or impair
the obligations hereunder of the undersigned by whom or on whose behalf such
notice if given with respect to any Liabilities existing at the date of receipt
of such notice by the Bank, any interest thereon or any expenses paid or
incurred by the Bank in endeavoring to collect such Liabilities, or any part
thereof, an in enforcing this guaranty against such undersigned. Any such notice
of discontinuance by or on behalf of any of the undersigned shall not affect or
impair the obligations hereunder of any other of the undersigned.
The Bank may, from time to time, without notice to the undersigned (or any
of them), (a) retain or obtain a security interest in any property to secure any
of the Liabilities or any obligation hereunder, (b) retain or obtain the primary
or secondary liability of any party or parties, in addition to the undersigned,
with respect to any of the Liabilities, (c) extend or renew for any period
whether or not longer than the original period), alter or exchange any of the
Liabilities, (d) release or compromise any liability of any of the undersigned
hereunder or any liability of any other party or parties primarily or
secondarily liable on any of the Liabilities, (e) release its security interest,
if any, in all or any property securing any of the Liabilities or any obligation
hereunder and permit any substitution or exchange for any such property, and (f)
respond to the undersigned (or any of them) for payment of any of the
Liabilities, whether or not the Bank shall have resorted to any property
securing any of the Liabilities or any obligation hereunder or shall have
proceeded against any other of the undersigned or any other party primarily or
secondarily liable on any of the Liabilities.
Any amount received by the Bank from whatever source and applied by it
toward the payment of the Liabilities shall be applied in such order of
application as the Bank may from time to time elect.
The undersigned hereby expressly waive(s): (a) Notice of acceptance of
this guaranty, (b) notice of existence or creation of all or any of the
Liabilities, (c) presentment, demand, notice of dishonor, protect, and all other
notices whatsoever, and (d) all diligence in collection or protection of or
realization upon the Liabilities or any thereof, any obligation hereunder, or
any security for any of the foregoing.
The creation or existence from time to time of Liabilities in excess of
the amount to which the right of recovery under this guaranty is limited is
hereby authorized, without notice to the undersigned (or any of them), and shall
in no way effect or impair this guaranty.
The Bank may, without notice of any kind, sell, assign, or transfer all of
any of the Liabilities, and in such event each and every immediate and
successive assignee, transferee, or holder of all or any of the Liabilities,
shall have the right to enforce this guaranty, by suit or otherwise, for the
benefit of such assignee, transferee, or holder, as fully as if such assignee,.
transferees or holder were herein by name specifically given such rights, powers
and benefits, but the Bank shall have an unimpaired right, prior and superior to
that of any such assignee, transferee or holder, to enforce this guaranty for
the benefit of the Bank, as to so much of the Liabilities as it has not sold,
assigned, or transferred.
No delay or failure on the part of the Bank in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
by the Bank of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No action of the Bank
permitted hereunder shall in any way impair or affect this guaranty. For the
purpose of this guaranty, Liabilities shall include all obligations of the
Debtor to the Bank, notwithstanding any right or power of the Debtor or anyone
else to assert any claim or defense, as to the invalidity of unenforceability of
any such obligation, and no such claim or defense shall impair or affect the
obligations of the undersigned hereunder.
This guaranty shall be binding upon the undersigned, and upon the heirs,
legal representatives, successors, and assigns of the undersigned. If more than
one party shall execute his guaranty, the term "undersigned" shall mean all
parties executing this guaranty, all such parties shall be jointly and severally
obligated hereunder.
This guaranty has been made and delivered in the State of Georgia, and
shall be governed by the laws of that State. Wherever possible each provision of
their guaranty shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this guaranty shall be prohibited
by or invalid under such law, such provision shall be ineffective so the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this guaranty.
IN WITNESS WHEREOF the undersigned have hereunto set their hands and
affixed their seals the day and year above written.
Guarantor: Southeast Commerce
Holding Company
-------------------------
By: /s/ Stephen R. Gross
---------------------
Stephen R. Gross
Witness: /s/ Richard A. Parlontieri
--------------------------
<PAGE> 1
EXHIBIT 10.3
LEASE AGREEMENT
Between
REGENT PACES FERRY OFFICE I, INC.,
a Georgia corporation
as Landlord
and
Southeast Commerce Holding Company
a Georgia Corporation
as Tenant
Dated: October 14, 1997
<PAGE> 2
PACES SUMMIT I
2410 PACES FERRY ROAD
ATLANTA, GEORGIA
SUMMARY OF BASIC LEASE TERMS
<TABLE>
<S> <C> <C>
1. Lease Date: October 14, 1997
1. Landlord: Regent Paces Ferry Office I, Inc., a Georgia
corporation.
1. Landlord's Address for Notices: c/o Regent Partners, Inc.
3340 Peachtree Road, N.E.
Suite 1500
Atlanta, Georgia 30326-1078
Attention: Property Manager
1. Landlord's Address for Payment c/o Regent Partners, Inc.
of Rent: 3340 Peachtree Road, N.E.
[Section 4] Suite 1500
Atlanta, Georgia 30326-1078
Attention: Property Manager
1. Tenant: Southeast Commerce Holding Company, a Georgia
corporation
1. Tenant's Address for Notices Prior to 100 Galleria Parkway
Commencement Suite 400
[Section 12.1] Atlanta, Ga. 30339
Attention: Rich Parliontieri
1. Tenant's Address for Notices Southeast Commerce Holding Company
After Commencement Date: 2410 Paces Ferry Road
[Section 12.1] Suite 190
Atlanta, Georgia 30339
Attention: Rich Parliontieri
1. Premises: Suite No. 190 located on the first (1st) floor(s) of
[Section 2] the Building substantially as shown on the floor
plan attached hereto as Exhibit B
1. Stipulated Square Footage of Premises: 5,436 rentable square feet
Premises:
1. Stipulated Square Footage of the 120,344 rentable square feet
Building:
1. Tenant's Share: 4.52%, Representing a fraction, the numerator of
which is the Stipulated Square Footage of the
Premises and the denominator of which is the
Stipulated Square Footage of the Building
1. Term: Approximately 10 years, and 0 months beginning
[Section 3] on the Commencement Date and ending at 11:59
p.m. on the Expiration Date, unless sooner
terminated as provided herein
1. Anticipated Commencement Date: April 1, 1998; the actual Commencement Date shall
[Section 3] be determined in accordance with Section 3
1. Expiration Date: Approximately 10 years and 0 months after the
[Section 3] Commencement Date
1. Base Rent:
[Section 4.1]
</TABLE>
<TABLE>
<CAPTION>
Portion of Annual Base Annual Base Monthly Base
Lease Term Rent/RSF Rent Rent
---------- -------- ---- ----
<S> <C> <C> <C>
4/1/98-3/31/00 $20.25 $110,079.00 $ 9,173.25
4/1/00-3/31/03 $23.00 $125,028.00 $10,419.00
4/1/03-3/31/08 $25.00 $135,900.00 $11,325.00
------ ------ ------ ------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
1. Operating Expenses Calendar year ending December 31, 1998
Base Year:
[Section 4.3]
1. Initial Installment: $9,173.25
[Section 4.6]
1. Security Deposit: $9,173.25
[Section 4.7]
1. Use: General office purposes
[Section 8.1]
1. Tenant's Broker and Address for Notices: Chet Ping Realty
103 Van Ness
Peachtree City, Ga. 30269
1. Parking Spaces: 3.7 spaces for each 1,000 square feet of Stipulated
[Section 12.8] Square Footage of the Premises within the Parking
Facilities
1. Design Fee Allowance: $1.00 multiplied by Stipulated Rentable Square
[Exhibit D] Footage of Premises, for total Design Fee
Allowance of $5,436.00
1. Buildout Allowance: $21.00 multiplied by Stipulated Rentable Square
[Exhibit D] Footage of Premises for total Buildout Allowance of
$114,156
1. Exhibits: The following are attached to this Lease and by this
reference incorporated into this Lease:
Summary of Basic Lease Information
Special Stipulations
Exhibit A - Property
Exhibit B - Floor Plans for Premises
Exhibit C - Rules and Regulations
Exhibit D - Work Letter
Exhibit E - Acknowledgement, Acceptance and
Amendment
Exhibit F - Building Shell Construction
Exhibit G - Statement of Tenant in Re: Lease
Exhibit H - Additional Land Within Complex
Exhibit I - Indemnification and Release Agreement
</TABLE>
The foregoing Summary of Basic Lease Terms (the "Summary of Lease
Terms") is hereby incorporated into and made a part of the Lease. Each
reference in the Summary of Lease Terms shall mean the information set forth
above and shall be construed to incorporate all of the terms provided under the
particular Lease paragraph pertaining to such information. In the event of a
conflict between the Summary of Lease Terms and the Lease, the Lease shall
prevail.
2
<PAGE> 4
TABLE OF CONTENTS
LEASE AGREEMENT
<TABLE>
<CAPTION>
No. Description Page
- --- ----------- ----
<S> <C> <C>
1. Basic Lease Information and Certain Definitions..................................................1
1.1 Building...........................................................................1
1.2 Commencement Date..................................................................1
1.3 Common Area or Common Areas........................................................1
1.4 Complex............................................................................1
1.5 CPI................................................................................1
1.6 Estimated Operating Expense Increase...............................................1
1.7 Estimated Operating Statement......................................................1
1.8 Expense Increase Year..............................................................2
1.9 Land...............................................................................2
1.10 Landlord's Architect...............................................................2
1.11 Landlord's Broker..................................................................2
1.12 Lease Year.........................................................................2
1.13 Manager............................................................................2
1.14 Operating Expense Base.............................................................2
1.15 Operating Expense Increase.........................................................2
1.16 Operating Expenses.................................................................2
1.17 Operating Statement................................................................2
1.18 Parking Facilities.................................................................2
1.19 Percentage Increase................................................................2
1.20 Property...........................................................................2
1.21 Rent...............................................................................3
1.22 Rules and Regulations..............................................................3
1.23 Summary of Lease Term..............................................................3
1.24 Work Letter........................................................................3
2. Premises.........................................................................................3
3. Lease Term.......................................................................................3
4. Rent.............................................................................................3
4.1 Base Rent..........................................................................3
4.2 Base Rent Adjustment...............................................................3
4.3 Operating Expense Increase.........................................................4
4.4 Operating Expenses.................................................................5
4.5 General Provisions Regarding Rent..................................................7
4.6 Initial Installment................................................................8
4.7 Security Deposit...................................................................8
4.8 Landlord's Security Interest.......................................................9
4.9 Late Charges.......................................................................9
5. Construction, Alteration, Maintenance and Repair................................................10
5.1 Building Allowance and Tenant Finishes............................................10
5.2 Repairs By Landlord...............................................................10
5.3 Repairs By Tenant.................................................................10
5.4 Alterations and Improvements......................................................10
5.5 Performance of Maintenance, Repairs, Alterations and Improvements.................10
5.6 Liens.............................................................................11
6. Possession of Premises..........................................................................11
6.1 Landlord's Failure to Give Possession.............................................11
6.2 Acceptance and Waiver.............................................................11
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
6.3 Surrender of Premises.............................................................11
6.4 Cleaning Premises.................................................................12
7. Services........................................................................................12
7.1 Building Services.................................................................12
7.2 Excess Services...................................................................12
7.3 Interruption of Services..........................................................13
7.4 Electrical Service................................................................13
7.5 Health Club Facility..............................................................13
8. Use and Occupancy of the Premises...............................................................14
8.1 Permitted Use.....................................................................14
8.2 Signs.............................................................................14
8.3 Hazardous Materials...............................................................14
8.4 Carding and Advertising...........................................................15
8.5 Removal of Fixtures...............................................................15
8.6 Entering Premises.................................................................15
9. Tenant's Insurance; Waivers and Indemnities.....................................................16
9.1 Insurance Coverages...............................................................16
9.2 Insurance Policy Requirements.....................................................16
9.3 Blanket Insurance Policies........................................................17
9.4 Waivers...........................................................................17
9.5 Indemnities.......................................................................17
10. Default and Remedies............................................................................18
10.1 Default...........................................................................18
10.2 Remedies..........................................................................18
11. Destruction or Damage; Condemnation.............................................................20
11.1 Destruction or Damage.............................................................20
11.2 Condemnation......................................................................20
12. Additional Provisions...........................................................................21
12.1 Service of Notice.................................................................21
12.2 Mortgagee's Rights................................................................21
12.3 Governmental Regulations..........................................................22
12.4 Abandonment of Premises...........................................................23
12.5 Assignment and Subletting.........................................................23
12.6 Tenant's Estoppel.................................................................24
12.7 Attorney's Fees and Homestead.....................................................24
12.8 Parking...........................................................................24
12.9 Storage...........................................................................25
12.10 Waste Disposal....................................................................25
12.11 Brokers...........................................................................25
12.12 Sale of Building..................................................................26
12.13 Transfer of Tenants...............................................................26
12.14 Alteration of Common Area.........................................................26
12.15 No Estate In Land.................................................................26
12.16 Cumulative Rights.................................................................26
12.17 Paragraph Titles..................................................................27
12.18 Severability; Interpretation......................................................27
12.19 Damage or Theft of Personal Property..............................................27
12.20 Holding Over......................................................................27
12.21 Rules and Regulations.............................................................27
12.22 Quiet Enjoyment...................................................................27
12.23 Entire Agreement..................................................................28
12.24 Limitation of Liability...........................................................28
12.25 Submission of Agreement...........................................................28
12.26 Authority.........................................................................28
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C> <C>
12.27 Force Majeure.....................................................................28
12.28 Multiple Tenants..................................................................28
12.29 Time is of the Essence............................................................28
12.30 Governing Law.....................................................................28
12.31 Waiver of Rights..................................................................28
12.32 Special Stipulations..............................................................28
12.33 Landlord's Tradenames.............................................................29
</TABLE>
3
<PAGE> 7
SUMMARY OF BASIC LEASE TERMS
SPECIAL STIPULATIONS
EXHIBIT A PROPERTY
EXHIBIT B FLOOR PLANS FOR PREMISES
EXHIBIT C RULES AND REGULATIONS
EXHIBIT D WORK LETTER
EXHIBIT E ACKNOWLEDGMENT, ACCEPTANCE AND AMENDMENT
EXHIBIT F BUILDING SHELL CONSTRUCTION
EXHIBIT G STATEMENT OF TENANT IN RE: LEASE
EXHIBIT H ADDITIONAL LAND WITHIN COMPLEX
EXHIBIT I INDEMNIFICATION AND RELEASE AGREEMENT
<PAGE> 8
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter called the "Lease") is made and
entered into this 14 day of October, 1997, by and between REGENT PACES FERRY
OFFICE I, INC., a Georgia corporation (hereinafter called "Landlord"); and
Southeast Commerce Holding Company, a Georgia corporation (hereinafter called
"Tenant").
1. BASIC LEASE INFORMATION AND CERTAIN DEFINITIONS. Each of the
terms capitalized and defined in this Section shall refer to and shall have the
respective meaning set forth in this Section.
1.1. BUILDING: The six (6) story building having
approximately 120,344 rentable square feet of space constructed or to be
constructed by Landlord on the Land, together with any additions, replacements
or alterations to same.
1.2. COMMENCEMENT DATE: That certain date on which the
Term and the Rent payable hereunder shall commence, as such date is determined
pursuant to the provisions of Section 3 hereof.
1.3. COMMON AREA OR COMMON AREAS: All areas, whether
improved or unimproved, within the exterior boundaries of the Land and easement
areas outside of the exterior boundaries of the Land which benefit the Land,
which are now or hereafter made available for the nonexclusive use, convenience
and benefit of Landlord and Tenant and other tenants of the Building, their
employees, agents, customers, invitees or licensees, including without
limitation, malls, lobby areas, walkways, driveways, curbs, gutters, sidewalks,
corridors, loading zones, parking areas, storage areas, stairwells, elevators,
service areas, signs, decorative improvements, such as sculptures and
fountains, courts, paving, lighting and landscaped and planted areas. The
meaning of "Common Area" or "Common Areas" may be expanded, contracted or
otherwise altered in accordance with the provisions of Section 12.14.
1.4. COMPLEX: The Land, the Building, the Parking
Structure and the Common Areas, and the real property adjacent to the Land
described on Exhibit H, and any office buildings, hotels, retail facilities,
parking structures and common areas located thereon or associated therewith, as
the same may be altered, enlarged or reconfigured from time to time.
1.5. CPI: The "Consumer Price Index for all Urban
Consumers, U.S. Cities Average, All Items (1982-84 = 100)" issued by the Bureau
of Labor Statistics of the United States Department of Labor. If the manner in
which such index is determined by said Bureau of Labor Statistics shall be
substantially revised, an adjustment shall be made by Landlord to such index as
revised which would produce results equivalent, as nearly as possible, to those
which would have been obtained if such index had not been so revised. If the
1982-84 average shall no longer be used as an index of 100, such change shall
constitute a substantial revision. If the Consumer Price Index published by the
Bureau of Labor Statistics of the United States Department of Labor is
discontinued, then the Consumer Price Index published by the United States
Department of Commerce shall be substituted (with proper adjustment); and if
the United States Department of Commerce Index is also discontinued, then
Landlord shall designate a suitable substitute.
1.6. ESTIMATED OPERATING EXPENSE INCREASE: Landlord's
estimate of (a) the amount by which the Operating Expenses for an Expense
Increase Year will be in excess of the Operating Expense Base multiplied by (b)
Tenant's Share.
1.7. ESTIMATED OPERATING STATEMENT: A statement rendered
to Tenant setting forth: (a) Landlord's reasonable estimate of the projected
Operating Expenses for the then-current Expense Increase Year; (b) a
computation of the Estimated Operating Expense Increase due for the
then-current Expense Increase Year; (c) a computation of the monthly Estimated
Operating Expense Increase installments to be paid by Tenant pursuant to the
<PAGE> 9
Estimated Operating Statement, being one-twelfth (1/12) of the amount
determined pursuant to clause (b) above; and (d) a computation of the amount
due Landlord, or credit due Tenant, in respect of the lapsed months of the
then-current Expense Increase Year.
1.8. EXPENSE INCREASE YEAR: Each calendar year,
commencing with the calendar year following the Commencement Date, falling, in
whole or in part, within the Lease Term.
1.9. LAND: That certain tract or parcel of land
described with particularity on Exhibit A.
1.10. LANDLORD'S ARCHITECT: Hendrick Associates, or such
other Georgia licensed architect as Landlord may select.
1.11. LANDLORD'S BROKER: Regent Partners, Inc., a Georgia
corporation.
1.12. LEASE YEAR: Each and every twelve (12) full
calendar month period during the Term of this Lease, provided that the first
Lease Year shall also include any partial month of the Term in which the
Commencement Date falls if the Commence Date does not fall on the first day of
a month. The first Lease Year shall commence on the Commencement Date and end
on the last day of the twelfth (12th) full calendar month thereafter.
1.13. MANAGER: Any entity appointed by Landlord to manage
the Building and/or perform all or certain of Landlord's obligations under this
Lease. The Manager as of the date hereof is Regent Partners, Inc.
1.14. OPERATING EXPENSE BASE: Operating Expenses for the
Building for the Base Year.
1.15. OPERATING EXPENSE INCREASE: The payments to be made
by Tenant to Landlord in the amounts, at the times and in the manner provided
for by Section 4.3.
1.16. OPERATING EXPENSES: As defined in Section 4.4.
1.17. OPERATING STATEMENT: A statement setting forth (a)
the Operating Expenses for an Expense Increase Year; (b) a computation of the
total Operating Expense Increase payable by Tenant for such Expense Increase
Year; (c) an accounting for Estimated Operating Expense Increase payments, if
any, made during such Expense Increase Year; and (d) the amount of Operating
Expense Increase then payable to Landlord, or the credit in respect thereof to
which Tenant is entitled, for such Expense Increase Year, taking into account
(with respect to any such credit) any increase in Estimated Operating Expense
Increase payments due Landlord pursuant to any Estimated Operating Statement
also rendered with respect to the then-current Expense Increase Year.
1.18. PARKING FACILITIES: The parking facilities
constructed or to be constructed by Landlord on the Land.
1.19. PERCENTAGE INCREASE: When computed with respect to
the adjustment to Base Rent to occur as of January 1 of any calendar year, as
outlined in Section 4.2 of this Lease, stated as a percentage, derived by using
the published CPI with respect to the December immediately preceding such
adjustment date (or, if no CPI is published for such December, the CPI most
recently published prior to the date of the adjustment) divided by the
published CPI with respect to the December prior to the Commencement Date (or,
if no CPI is published for such December, the CPI most recently published prior
to the January 1 immediately preceding the Commencing Date).
1.20. PROPERTY: The Land and any improvements now or
hereafter located thereon, including without limitation, the Building and the
Parking Facilities.
2
<PAGE> 10
1.21. RENT: The Base Rent and the Additional Rent as
defined in Section 4.3.
1.22. RULES AND REGULATIONS: The agreements of Tenant
concerning the operation and/or use of the Premises and/or the balance of the
Complex contained in Exhibit C, as same may be modified or replaced from time
to time by Landlord in its sole, but reasonable, discretion.
1.23. SUMMARY OF LEASE TERM: The Summary of Basic Lease
Terms attached hereto.
1.24. WORK LETTER: The description of the work to be
performed by Landlord to complete the Premises set forth on Exhibit D.
2. PREMISES. For and in consideration of the rents, covenants,
agreements and stipulations herein contained to be paid, kept and performed by
Tenant, Landlord does hereby rent and least to Tenant and Tenant does hereby
rent and lease from Landlord for use as an office the Premises. The Premises
shall be prepared for Tenant's occupancy in the manner and subject to the
provisions of the Work Letter.
3. LEASE TERM. Tenant shall have and hold the Premises for the
Term unless this Lease terminates earlier. The Term shall begin on the date
(the "Commencement Date") which shall be, subject to the provisions of the Work
Letter, the earlier to occur of (i) the Anticipated Commencement Date or (ii)
thirty (30) days after the date on which Landlord notifies Tenant that the
construction of the Building (excluding space within the Building to be
occupied by other tenants or which is otherwise unnecessary for Tenant's use
and enjoyment of the Premises) and build-out of the initial improvements for
the Premises, if any, to be made by Landlord in accordance with the Work Letter
are substantially completed, but in no event later than the date Tenant first
occupies all or any portion of the Premises for the conduct of its business,
and shall terminate at 11:59 p.m. on the Expiration Date, unless sooner
terminated or extended as hereinafter provided. Promptly following the
Commencement Date, Landlord and Tenant shall enter into a letter agreement in
the form attached hereto as Exhibit E, specifying, among other things, the
Commencement Date and the Expiration Date. To the extent any improvements are
to be made by Landlord to the Premises in accordance with the Work Letter, such
improvements shall be deemed to be "substantially completed" when Landlord, in
its reasonable judgment and in consultation with its architect and/or
contractors, certifies to Tenant that (i) such improvements have been
substantially completed and (ii) any certificate of occupancy necessary for
Tenant's occupancy of the Premises in accordance with the provisions of this
Lease has been duly issued.
4. RENT.
4.1. BASE RENT. Tenant shall pay to Landlord, at
Landlord's Address for Payment of Rent, or at such other place as Landlord
shall designate in writing to Tenant, the Base Rent in the amount(s) set forth
in item 15 of the Summary of Lease Terms for the Lease Year in question. For
the purposes of this Lease the rentable square feet within the Premises shall
be the Stipulated Square Footage of the Premises. The Base Rent for each Lease
Year shall be payable in equal monthly installments, due on the first day of
each calendar month, in advance, in legal tender of the United States of
America, without abatement, demand, deduction or offset whatsoever. One full
monthly installment of Base Rent shall be due and payable on the Commencement
Date and a like monthly installment of Base Rent shall be due and payable on or
before the first day of each calendar month following the Commencement Date
during the Term hereof; provided, that if the Commencement Date should be a
date other than the first day of a calendar month, the monthly Base Rent
installment payable on the Commencement Date by Tenant shall be prorated to
that partial calendar month, and the excess shall be applied as a credit
against the next monthly Base Rent installment. Tenant shall pay, as Additional
Rent, all other amounts or sums due from Tenant to Landlord under this Lease.
4.2. BASE RENT ADJUSTMENT. The amount of the Base Rent
shall be increased as of January 1 of each calendar year of the Lease Term to
equal the Base Rent stated in item
3
<PAGE> 11
15 of the Summary of Lease Terms for such Lease Year plus an amount equal tot
he produce obtained by multiplying (i) such Base Rent for such Lease Year by
(ii) the Percentage Increase determined as of the date of adjustment; provided,
however, that Base Rent (as previously adjusted) shall never decrease by virtue
of this Section. Landlord shall notify Tenant in writing of the new annual Base
Rent amount and the new monthly installment amount thereof at least three (3)
days prior to the date on which the increase in Base Rent becomes effective or,
if Landlord is not reasonably able to determine such amounts by such time,
promptly following the time when such amounts can reasonably be determined.
Tenant covenants and agrees to pay to Landlord the adjusted Base Rent in equal
monthly installments on the first day of each and every month for the pertinent
calendar year after notification of the adjusted Base Rent from Landlord.
Failure or inability of Landlord to notify Tenant prior to the pertinent
January 1 adjustment date, however, shall not affect Tenant's obligation to pay
Base Rent as adjusted for each and every month of the relevant calendar year
and, if Tenant has not been notified of the adjusted amounts of Base Rent prior
to January 1 of the calendar year in question, Tenant shall continue to pay
Base Rent at the rate in effect prior to the date of adjustment until notified
of the new amounts, after which time Tenant shall (x) make further payments of
Base Rent thereafter arising as so adjusted and (y) pay to Landlord in a lump
sum any difference arising with respect to Base Rent payments made by Tenant
for the calendar year in question prior to the date of Tenant's receipt of such
notice. Notwithstanding anything contained herein to the contrary, in no event
shall the Base Rent Adjustment contemplated hereby result in an increase in
Base Rent of less than two (2%) percent of the Base Rent payable by Tenant
prior to such adjustment date.
4.3. OPERATING EXPENSE INCREASE:
(a) Tenant covenants and agrees to pay to Landlord the
Operating Expense Increase for each Expense Increase Year during the Term,
which amount shall be computed by subtracting the Operating Expense Base from
the Operating Expenses shown on the Operating Statement for the Expense
Increase Year in question, and multiplying the result by Tenant's Share. Under
no circumstances shall Tenant be entitled to any refund of or credit against
Operating Expenses for any Expense Increase Year should Operating Expenses ever
be less than the Operating Expense Base. Within one hundred twenty (120) days
after the expiration of each Expense Increase Year, Landlord shall furnish
Tenant with an Operating Statement. The Operating Expense Increase shall,
except as provided in paragraph (b) of this Section 4.3, be due from Tenant
thirty (30) days after the rendering of the Operating Statement for such
Expense Increase Year.
(b) Landlord may render an Estimated Operating Statement
for any Expense Increase Year. If and when so rendered from time to time,
Tenant shall pay to Landlord in advance on the first day of each calendar month
the monthly Estimated Operating Expense Increase installments provided for in
such Estimated Operating Statement, such payments to continue until another
Estimated Operating Statement is rendered. Upon the rendering of an Operating
Statement for any Expense Increase Year for which Estimated Operating Expense
Increase installments were paid by Tenant, Tenant shall, within thirty (30)
days thereafter, pay to Landlord the sum of (x) the excess, if any, of the
Operating Expense Increase due for such Expense Increase Year over the monthly
Estimated Operating Expense Increase installments paid by Tenant in respect of
such Expense Increase Year and (y) the excess, if any, of the Estimated
Operating Expense installments due for the then-current Expense Increase Year,
as shown on the current Estimated Operating Statement, over the Estimated
Operating Expense Increase installments then being paid by Tenant multiplied by
the number of months which shall have elapsed, in whole or in part, since the
commencement of the current Expense Increase Year. If Tenant's Estimated
Operating Expense Increase installments for the prior or current Expense
Increase Year shall exceed the Operating Expense Increase due for the prior
Expense Increase Year or the Estimated Operating Expense Increase due for the
current Expense Increase Year, respectively, such excess shall first be
credited against any amounts shown due on the Operating Statement and the
Estimated Operating Statement and the balance, if any, shall be credited
against the next succeeding installments or installments of Operating Expense
Increase or Estimated Operating Expense Increase becoming due hereunder,
provided, however, that if the Lease Term shall expire or this Lease shall
terminate prior to full
4
<PAGE> 12
application of such credit, any balance due Tenant shall be refunded to Tenant
by Landlord if Tenant is not in default under this Lease (and, if Tenant is in
default hereunder, such balance shall be held as additional security for
Tenant's performance, may be applied by Landlord toward the cure of any such
default and shall not be refunded until any such default is completely cured by
Tenant).
(c) Operating Expense Increase shall be prorated on a
daily basis for any Expense Increase Year not wholly falling within the Term.
(d) Tenant acknowledges that certain Operating Expenses
will vary depending on an overall occupancy levels in the Building. If the
average occupancy level of the Building was less than ninety-five percent (95%)
of the total rentable square footage of the Building during the Base Year or
any Expense Increase Year, the actual Operating Expenses for the Base Year or
Expense Increase Year in question, as applicable, shall be adjusted to equal
Landlord's reasonable estimate of Operating Expenses had ninety-five (95%) of
the total rentable square footage of the Building been occupied. Landlord and
Tenant further acknowledge that the Building is or may be part of the larger
group of buildings operated by Landlord or managed by the Manager, and that
certain of the costs of management, operation, maintenance, repair and security
of such group of buildings from time to time shall be allocated among and
shared by two or more of the buildings within such group of buildings
(including the Building). It is also understood that certain costs incurred
with respect to various facilities surrounding the Building may, from time to
time, be allocated (if appropriate) entirely to the Building. This
determination of all such costs and their allocation shall be made by Landlord
in accordance with sound accounting principles. Accordingly, the term
"Operating Expenses", as used in this Lease, shall from time to time include
some of the costs, expenses, and taxes enumerated below which were incurred
with respect to and allocated to or shared by the Building in accordance with
the foregoing. Notwithstanding the foregoing or anything else contained in this
Lease to the contrary, Tenant understands and agrees that its right to use
other portions of the Complex of which the Property is a part (including the
common areas of such Complex) are those available to the general public and
that this Lease does not grant to it additional rights of use. Specifically,
but without limitation, nothing in this Lease affords Tenant any rights of
parking within the Complex except as may be expressly provided in Section 12.8.
4.4. OPERATING EXPENSES.
(a) Operating Expenses shall be all those expenses of
operating, servicing, managing, maintaining and repairing the Property,
Building, and the Common Areas in a manner deemed by Landlord reasonable and
appropriate and in the best interest of the tenants of the Building and in a
manner consistent with first-class office buildings in the Atlanta, Georgia
area. Operating Expenses shall include, without limitation, the following:
(1) All real and personal property ad valorem
taxes and assessments, whether general or special, applicable to the Land, the
Building, and the Common Areas any furniture, fixtures, machinery, apparatus,
systems and appurtenances of Landlord used in connection therewith or the
operation thereof, including without limitation, sewer rents, rates and
charges, transit taxes, and any other federal, state or local governmental
charge, general, special, ordinary or extraordinary, and any and all reasonable
costs and expenses incurred by Landlord in seeking a reduction or refund of any
such taxes and assessments and assessments and charges payable under any
private easement or restrictive covenant agreements benefiting or burdening the
Land. However, Tenant shall not be obligated for income or franchise taxes or
any other taxes imposed on or measured by Landlord's net income or profits from
the operation of the Building or otherwise, unless there is imposed in the
future such a tax in lieu of the real property ad valorem taxes, in which event
such tax shall be deemed an Operating Expense of the Building.
(2) Insurance premiums and deductible amounts,
including, without limitation, for commercial general liability, "all risks"
property, rent loss and other coverages
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carried by Landlord on the Building, the Property and any easement areas
benefiting the Property.
(3) All utility costs and expenses, including
without limitation, water, power, heating, lighting, ventilation, sanitary
sewer and air conditioning, but not including those utility charges actually
paid by Tenant or other tenants of the Building.
(4) Janitorial and maintenance expenses,
including:
(i) Janitorial services and janitorial
supplies and other materials used in the operation and maintenance of the
Building.
(ii) The cost of maintenance and service
agreements on mechanical systems and equipment, window cleaning, grounds
maintenance, pest control, security, trash and snow removal, and other similar
services or agreements relating to the operation, maintenance and repair of the
Building, the Property and the Common Areas; and
(iii) Costs and expenses paid or incurred
by Landlord for the maintenance and repair of the Land, the Building, the
Common Areas and the mechanical systems and equipment and personal property
used in connection therewith, including without limitation, the heating,
ventilating and air conditioning equipment, elevators and escalators, if any,
plumbing and electrical systems and equipment, light bulbs and broken glass,
including replacement thereof.
(5) Management fees equal to 4% of gross rents
paid with respect to the Property (provided gross rents shall not include
Operating Expenses actually paid to Landlord) and the market rental value of a
management office actually located in the Building or in another building which
serves the Building; provided, that if such management office serves buildings
other than the Building, the market rental value of such management office
shall be equitably apportioned to the Building;
(6) The costs, including interest, amortized over
its useful life, or at Landlord's option, the time period within which the
operating efficiency realized from the installation of such capital improvement
shall result in an operating expense savings equal the cost of acquiring and
installing such capital improvement, of any capital improvement made to the
Building by or on behalf of Landlord after the date of this Lease which is
required under any governmental law or regulation that was not applicable to
the Building at the time of its construction, and of the acquisition and
installation of any device or equipment designed to improve the operating
efficiency of any system within the Building.
(7) All services, supplies, repairs, replacements
or other expenses directly and reasonably associated with servicing,
maintaining, managing and operating the Land, the Building and the Common
Areas.
(8) Wages and salaries of Landlord's employees
(not above the level of Building Manager) to the extent engaged in the
maintenance, operation, repair, security and services of the Building,
including without limitation, so called fringe benefits, social security taxes,
unemployment insurance taxes, costs for providing coverage for disability
benefits, cost of any pensions, hospitalization, welfare or retirement plans,
or any other similar or like expenses incurred under the provision of any
collective bargaining agreement, costs of uniforms, and all other costs or
expenses that Landlord pays to or on behalf of employees to the extent engaged
in the operation, maintenance, repair and security of the Land, the Building
and the Common Areas. Such costs related to employee who perform such services
for other properties in addition to the Property shall be equitably apportioned
to the Property to reflect the proportionate time such employee allocates to
the Property.
(9) Legal and accounting costs and expenses.
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(10) Landscaping and grounds maintenance costs
and expenses and security service costs and expenses unless Landlord hires a
third party to provide such services pursuant to a service contract and the
cost of that service contract is already included in Operating Expenses as
described above.
(11) The costs of "Muzak" services, if any.
(12) Costs and expenses of redecorating,
painting and carpeting the Common Areas within the Building.
(13) Expenses incurred in the purchase or
acquisition of materials and supplies in connection with all the foregoing.
(14) Such other expenses paid by Landlord, from
time to time, in connection with the operation and maintenance of the
Building,, the Property and the Common Areas as would be expected to be paid by
a reasonable and prudent operator and manager of a building and site comparable
to the Land, the Building and the Common Areas.
4.5. GENERAL PROVISIONS REGARDING RENT:
(a) The provisions of this Section 4 concerning the
payment of Operating Expense Increase shall survive the expiration or earlier
termination of the Term as to any and all sums due Landlord up to the date
thereof, including any Operating Expense Increase due for the last Expense
Increase Year, or portion thereof, falling within the Lease Term, which sum
shall be paid promptly by Tenant in accordance with the terms of this Section
4. Within one hundred twenty (120) days following the expiration or earlier
termination of the Term, Landlord shall render a final Operation Statement,
certified by Landlord, and Landlord and Tenant shall adjust the Operation
Expense Increase payment or credit due Landlord or Tenant, as the case may be,
for the last Expense Increase Year of the Term, all in accordance with the
foregoing provisions of Section 4.3.
(b) It is understood and agreed that Tenant's payment of
Operating Expense Increase shall not be deemed payments of rental as that term
is construed in relation to governmental wage and price control or analogous
governmental actions now or hereafter affecting the amount of rental which
Landlord may charge Tenant. Notwithstanding the foregoing, in the event that
such governmental actions or controls prevent the application of all or any
part of the provisions of this Section 4 regarding the payment of Operating
Expense Increase, Tenant hereby agrees to pay as monthly rent hereunder the
monthly Base Rent plus one-twelfth (1/12) of the Operating Expense Increase
which was due for the Expense Increase Year preceding the year of the
institution of such actions or controls, but in no case to exceed the maximum
rent permitted by such actions or controls.
(c) Tenant covenants and agrees to be liable for and to
pay in a timely manner all taxes and assessments levied or assessed against
personal property, furniture and fixtures placed by Tenant in the Premises.
Further, and in addition to the Base Rent and Operating Expense Increase,
Tenant shall reimburse Landlord, within the thirty (30) days after written
demand, for any and all taxes payable by Landlord (other than net income
taxes), whether or not now customary or within the contemplation of the parties
hereto, (i) upon, measured by or reasonably attributable to the cost or value
of Tenant's equipment, furniture, or personal property located in the Premises,
or any leasehold improvements made in or to the Premises by or for tenant
regardless of whether such improvements were constructed by Landlord or Tenant
regardless of whether title to such improvements shall be in the name of
Landlord, or Tenant; (ii) upon, measured by or reasonably attributable to the
Rent payable hereunder, or any component thereof, levied by any governmental
body with respect to the receipt of such Rent; (iii) upon or with respect to
the possession, leasing, operating, management, maintenance, alteration,
repair, use or occupancy by Tenant of the Premises or any portion thereof; and
(iv) upon this transaction or any document to which Tenant is a party creating
or transferring rights, an interest or an estate in the Premises. In the event
that it shall not be lawful for Tenant so to reimburse Landlord, the monthly
Base Rent payable to Landlord
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under this Lease shall, to the maximum extent permitted by law, be revised to
net Landlord the same net Base Rent after the imposition of any such tax upon
Landlord as would have been payable to Landlord prior to the imposition of any
such tax. Tenant shall also be solely liable for any taxes, including rental,
sales and use taxes, assessed directly against Tenant by any governmental
authority.
(d) It is understood and agreed that Base Rent and
Operating Expense Increase shall be due and payable as provided herein, without
setoff or deduction whatsoever. Operating Expense Increase and each and every
other charge, fee, cost or expense which Tenant is obligated or liable to pay
to, refund to or reimburse Landlord shall, for the purposes of the default
provisions of this Lease, be deemed Additional Rent due from Tenant, and
Tenant's failure to so pay, refund or reimburse, when due shall entitle
Landlord to all the remedies provided for herein and at law or in equity on
account of failure to pay Rent.
(e) Base Rent, Operating Expense Increase and other sums
due hereunder shall be paid in legal tender at Landlord's Address for Payment
of Rent, or to such other address as may be specified by Landlord by notice
given from time to time as provided herein. No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly installment of Base Rent or any
other component of Rent due hereunder, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment of Rent (or any
portion thereof) be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such Rent or to pursue any other remedy provided in this Lease or
under applicable law.
(f) Delay by Landlord in providing Tenant with any
statements regarding Operating Expense Increase shall not relieve Tenant from
the obligation to pay Operating Expense Increase upon the rendering of such
statements.
4.6. INITIAL INSTALLMENT. Simultaneously with the
execution of this Lease, Tenant shall pay to Landlord the Initial Installment.
Such sum shall be applied by Landlord to the first monthly installment(s) of
Base Rent as they become due hereunder. In the event Tenant fails to take
possession of the Premises in accordance with the all the terms hereof, such
sum shall be retained by Landlord for application in reduction, but not in
satisfaction, of damages suffered by Landlord as a result of such breach by
Tenant.
4.7. SECURITY DEPOSIT. Landlord acknowledges that it has
received the Security Deposit from Tenant, simultaneously with the execution of
this Lease. The Security Deposit shall be security for the full and faithful
performance and observance by Tenant of the covenants, terms and conditions of
this Lease, including without limitation, the payment of Rent, on the part of
Tenant to be kept and performed. No interest shall be payable on the Security
Deposit, and the Security Deposit need not be held in a segregated account and
may be commingled with Landlord's separate funds. It is agreed and acknowledged
by Tenant that the Security Deposit is not an advance payment of rent or a
measure of Landlord's damages in the case of default by Tenant. Upon the
occurrence of any event of default under this Lease, Landlord may use, apply or
retain the whole or any part of the Security Deposit to the extent required for
the payment of all or any part or component of Rent or any other sum as to
which Tenant is in default or for the payment of any other injury, expenses or
liability resulting from any event of default. Use, application or retention of
the Security Deposit by Landlord shall not prohibit or limit Landlord's
exercise of any other remedies Landlord may have for Tenant's default.
Following any such application of the Security Deposit, Tenant shall pay to
Landlord on demand an amount necessary to restore the Security Deposit to its
original amount. In the vent that Tenant shall fully and faithfully comply with
all of the terms, provisions, covenants and conditions of this Lease, the
Security Deposit shall be returned to Tenant within thirty (30) days after the
Expiration Date and after delivery of possession of the Premises to Landlord
shall be released from all liability for the return of the Security Deposit,
and Tenant shall look to the new landlord for its return, so long as the
transferring Landlord assigns and transfers the Security Deposit to the
acquiring landlord or provides the acquiring landlord a credit for same. The
Security Deposit shall not be assigned or encumbered by Tenant, and any such
assignment or encumbrance shall be void.
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4.8. LANDLORD'S SECURITY INTEREST. In addition to any
landlord's lien arising at law or by statute, Landlord shall have, at al times,
and Tenant hereby grants to Landlord a valid security interest, to secure
payment of Rent and other sums of money becoming due hereunder from Tenant, and
to secure performance by Tenant of any covenant, agreement or condition
contained herein, in and upon all goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Tenant presently or which may
hereafter be situated in the Premises, and all proceeds therefrom, and such
property shall not be removed therefrom without the consent of Landlord until
all arranges in Rent as well as any and all other sums of money then due to
Landlord hereunder shall first have been paid and discharged and all of the
covenants, agreements, and conditions hereof have been fully complied with and
performed by Tenant. This provision shall be considered a security agreement
and, in consideration of this Lease, upon the occurrence of an event of default
by Tenant, Landlord may, in addition to any other remedies provided herein,
exercise all remedies granted a "Secured Party" under the Uniform Commercial
Code in force in the State of Georgia. Without limitation. Landlord may enter
upon the Premises and tax possession of any and all goods, wares, equipment,
fixtures, furniture, improvements, and other personal property of Tenant
situated on or in the Premises, without liability for trespass or conversion,
and sell the same at public or private sale, with or without having such
property at the sale, after giving Tenant reasonable notice of the time and
place of any public sale or of the time after which any private sale is to be
made, for cash or on credit, or for such price and terms as Landlord deems
best, at which sale the Landlord or its assigns may purchase unless otherwise
prohibited by law. Unless otherwise provided by law, and without intending to
exclude any other manner of giving Tenant reasonable notice, the requirement of
reasonable notice shall be met if such notice is given in the manner prescribed
in Section 12.1 of this Lease at least five (5) days before the time of sale.
Landlord may also, at its option, foreclose the lien created hereby in the
manner and form provided for the foreclosure of security instruments or in any
other manner permitted by law. The proceeds from any such disposition, less any
and all expenses connected with the taking of possession, holding and selling
of the property (including reasonable attorneys' fees and other expenses),
shall be applied as a credit against the indebtedness secured by the security
interest granted in this Section 4.8. Any surplus shall be paid to Tenant or as
otherwise required by law, and Tenant shall pay any deficiencies forthwith.
Upon request by Landlord, Tenant agrees to execute and deliver to Landlord a
financing statement or statements (and continuation statements as necessary) in
form sufficient to perfect the security interest of Landlord in the
aforementioned property and proceeds thereof under the provisions of the
Uniform Commercial Code in force in the State of Georgia. Any statutory or
common law lien for rent is not hereby waived, the security interest herein
granted being in addition and supplementary thereto.
4.9. LATE CHARGES. Other remedies for non-payment of Rent
notwithstanding, if any monthly installment of Base Rent or Additional Rent is
not received by Landlord on or before the date due, or if any payment due
Landlord by Tenant which does not have a scheduled due date is not received by
Landlord on or before the fifth (5th) business day following the date Tenant
receives an invoice for such payment, a late charge in an amount equal to the
greater of $100,. or five percent 95%) of such past due amount shall be
immediately due and payable as Additional Rent and interest shall accrue from
the date past due until paid in an amount equal to the lesser of eighteen
percent (10%) per annum or the highest rate permitted by applicable law (the
"Interest Rate"). Nothing contained herein shall be deemed to require Landlord
to accept any payment of Rent received by Landlord after the expiration of the
due date unless such delinquent Rent payment is paid within the applicable cure
period and accompanied by such late charges as are herein described.
Additionally, Tenant shall pay to Landlord a processing and handling fee of
fifty dollars ($50.00) for any check of Tenant's which is returned to Landlord
because of insufficient funds, to compensate Landlord for its additional
administrative costs and expenses in handling such items, it being agreed that
the exact amount thereof would be difficult or impossible to ascertain.
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5. CONSTRUCTION, ALTERATION, MAINTENANCE AND REPAIR.
5.1. BUILDING ALLOWANCE AND TENANT FINISHES. The initial
improvements to the Premises, if any, shall be governed by the Work Letter
attached hereto as Exhibit D and its provisions shall control in the event of a
conflict with any of the other provisions of this Lease.
5.2. REPAIRS BY LANDLORD. Tenant, by taking possession of
the Premises, shall accept and shall be held to have accepted the Premises as
suitable for the use intended by this Lease. Landlord shall not be required,
after possession of the Premises has been delivered to Tenant, to make any
repairs or improvements to the Premises, except as set forth in this Lease.
Within thirty (30) days after the Commencement Date, Tenant will execute and
deliver to Landlord the acknowledgment, acceptance and amendment agreement
attached hereto as Exhibit E and made a part hereof. Landlord shall maintain in
good condition and repair the exterior walls, roof, Common Areas, foundation,
structural portions and the central portions of the Building's mechanical,
electrical, plumbing and HVAC systems, but only those portions responsible for
central distribution which shall include the central HVAC units located on any
floor even if a single tenant occupies all the space in the Building such HVAC
unit serves and not the branches which serve only one tenant's space (the
"Central Building Systems"), provided such repairs are not occasioned by
Tenant, Tenant's invitees or anyone in the employ or control of Tenant.
Landlord shall not be responsible for the maintenance and repair of any such
mechanical systems or equipment to the extent they provide service solely to
the Premises, including without limitation, any supplementary air conditioning
equipment, and the maintenance of any such equipment shall be solely Tenant's
duty and responsibility.
5.3. REPAIRS BY TENANT. Except as described in Section 5.2
above, Tenant shall, at its own cost and expense, maintain the Premises, but
specifically excluding the Central Building Systems, in good condition and
repair and in a neat and clean, first-class condition, including making all
necessary repairs and replacements. Tenant shall further, at its own cost and
expense, repair or restore any damage or injury to all or any part of the
Building, the Property or the Common Areas caused by Tenant or Tenant's agents,
employees, invitees, visitors or contractors, including but not limited to any
repair or replacements necessitated by (i) the construction or installation of
improvements to the Premises by or on behalf of Tenant, and (ii) the moving of
any Property into or out of the Premises. Landlord, at Tenant's expense, shall
have the right to perform or cause to be performed by Landlord's contractors or
workmen all maintenance, repairs, alterations, additions or improvements Tenant
is required or authorized to perform under this Lease, and the costs and
expenses related thereto together with a three percent (3%) management fee
shall be charged to Tenant as Additional Rent and shall become due and payable
by Tenant with the monthly installment of Base Rent next due hereunder.
5.4. ALTERATIONS AND IMPROVEMENTS. Tenant shall not make or
allow to be made any alterations, physical additions or improvements in or to
the Premises without first obtaining in writing Landlord's written consent for
such alterations or additions, which consent may be granted or withheld in the
sole, absolute discretion of Landlord. Upon Landlord's request, Tenant will
furnish Landlord plans and specifications for any proposed alterations,
additions or improvements and shall reimburse Landlord for its reasonable cost
to review such plans. Any alterations, physical additions or improvements shall
at once become the Property of Landlord; provided, however, Landlord, at its
option, may require Tenant to remove any alterations, additions or improvements
in order to restore the Premises to the condition existing on the Commencement
Date. All costs of any such alterations, additions or improvements shall be
borne by Tenant.
5.5. PERFORMANCE OF MAINTENANCE, REPAIRS, ALTERATIONS AND
IMPROVEMENTS. All maintenance, repairs, alterations, additions or improvements
performed by Tenant shall (a) be made in a good, first-class, workmanlike
manner, (b) be performed in such a manner as to maintain harmonious labor
relations, (c) not adversely affect the Central Building Systems, (d) comply
with all building, safety, fire, plumbing, electrical and other codes and
governmental requirements, (e) not result in any usage in water, electricity,
gas or other utilities or of heating, ventilating or air conditioning (either
during or after such work) in
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excess of the capacities Landlord is generally obligated to provide to the
Premises, unless prior written arrangements satisfactory to Landlord are made
with respect thereto and (f) be made in a manner that does not disturb other
tenants (i.e., any loud work must be performed during non-business hours).
Tenant must maintain appropriate liability and builder's risk insurance
throughout the construction. Tenant does hereby indemnify and hold Landlord
harmless from and against all claims for damages or death or persons or damage
or destruction of property arising out of the performance of any such
alterations, additions or improvements made by or on behalf of Tenant. Under no
circumstances shall Landlord be required to pay, during the Term of this Lease
and any extensions or renewals thereof, any ad valorem or property tax on such
alterations, additions or improvements, Tenant hereby covenanting to pay all
such taxes when they become due. In the event any maintenance, repairs,
alterations, additions or improvements are to be performed by contractors or
workmen other than Landlord's contractors or workmen, any such contractors or
workmen must first be approved, in writing, by Landlord. Landlord agrees to
assign to Tenant any rights it may have against the contractor of the Premises
with respect to any work performed by said contractor in connection with any
such work performed by Landlord or at the request of Landlord on behalf of
Tenant.
5.6. LIENS. No work performed by Tenant in the Premises in
the nature of erection, construction, alteration, addition, improvements,
remodeling, maintenance or repair shall be deemed to be for the immediate use
and benefit of Landlord, and no mechanic's, materialmen's or other liens shall
be allowed against the estate of Landlord by reason of any consent given by
Landlord to Tenant to improve the Premises. Tenant shall promptly pay all
persons furnishing labor or materials with respect to any work performed by or
on behalf of Tenant or its contractors on or about the Premises and Tenant
shall discharge of record within twenty (20) days following the date Tenant
receives actual notice of the filing thereof, by payment or bonding, any
mechanic's or materialmen's lien filed against the Premises, the Building or
the Complex for work or materials claimed to have been furnished to or on
behalf of Tenant.
6. POSSESSION OF PREMISES.
6.1. LANDLORD'S FAILURE TO GIVE POSSESSION. Landlord shall
not be liable for damages to Tenant for failure to deliver possession of the
Premises to Tenant if such failure is due to no fault of Landlord or to the
failure of any construction or remodeling of the Building or the Premises to be
completed or to the failure of any previous tenant to vacate the Premises.
Landlord will use its reasonable good faith efforts to give possession to
Tenant by the Anticipated Commencement Date of the Term. If Landlord's failure
to do so is caused by the act of any previous tenant holding over, Landlord
agrees to transfer to Tenant the right to prosecute in its own name any cause
of action which Landlord may have against such tenant holding over, Tenant to
hold for itself any recovery in such action, except for any amounts due
Landlord as Rent hereunder.
6.2. ACCEPTANCE AND WAIVER. Landlord shall not be liable
to Tenant, its agents, employees, guests or invitees (and, if Tenant is any
entity, its officers, managers, members, partners, agents, employees, guest or
invitees) for any damage caused to any of them due to the Building or any part
or appurtenances thereof being improperly constructed or being or becoming out
of repair, or arising from the leaking of gas, water, sewer or steam pipes, or
from electricity, but Tenant, by moving into the Premises and taking possession
thereof, shall accept, and shall be held to have accepted the Premises as
suitable for the purposes for which the same are leased, and shall accept and
shall be held to have accepted the Building and every appurtenances thereof,
and Tenant by said act waives any and all defects therein.
6.3. SURRENDER OF PREMISES. Whenever under the terms
hereof Landlord is entitled to possession of the Premises, Tenant at once shall
surrender the Premises and the keys thereto to Landlord in the same condition
as on the Commencement Date hereof, casualty damage and natural wear and tear
only one excepted, and Tenant shall remove all of its personal property
therefrom and shall, if directed to do so by Landlord, remove all improvements
which have been made therein by or on behalf of Tenant, including any
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improvements made prior to the Commencement Date; provided, however, that
Tenant shall not be permitted to remove any movable furniture, personal
property or equipment from the Premises at any time, including at the end of
the term or any renewal thereof, or other sooner termination of this Lease, if
Tenant is then in material default under this Lease. All such property not
promptly removed by Tenant shall be deemed abandoned by Tenant and title to
same shall pass to Landlord under this Lease as by a bill of sale. Whenever
under the terms hereof, Landlord is entitled to possession of the Premises,
Landlord may forthwith reenter the Premises and repossess itself thereof and
remove all persons and effects therefrom, using such force as may be necessary
without being guilty of forcible entry, detainer, trespass or other tort.
Tenant's obligation to observe or perform these covenants shall survive the
expiration or other termination of the Term of this Lease. If the last day of
the Term of this Lease or any renewal falls on Sunday or a legal holiday, this
Lease shall expire on the business day immediately preceding.
6.4. CLEANING PREMISES. Upon vacating the Premises, Tenant
agrees to clean the Premises thoroughly or to pay Landlord for the cleaning
necessary to restore the Premises to their condition when Tenant's possession
commenced, casualty damage and natural wear and tear only excepted, regardless
of whether any Security Deposit has been forfeited.
7. SERVICES.
7.1. BUILDING SERVICES. The normal business hours of the
Building shall be from 8:00 A.M. to 6:00 P.M. on Monday through Friday, and
9:00 A.M. to 1:00 P.M. on Saturday, exclusive of national holidays and other
days observed generally as holidays in Atlanta, Georgia. Landlord shall furnish
the following services for the Building during the normal business hours of the
Building except as noted:
(i) Elevator service for passenger and
delivery needs;
(ii) Heating and air conditioning;
(iii) Hot and cold running water for all
rest rooms and lavatories;
(iv) Soap, paper towels, and toilet
tissue for public rest rooms;
(v) Janitorial service, which includes
sanitizing, dusting, cleaning, mopping, vacuuming and removal of trash not
requiring special handling, Monday through Friday;
(vi) Custodial, electrical and
mechanical maintenance services are provided Monday through Friday;
(vii) Electric power for lighting and
outlets not in excess of a total of 5 watts per rentable square foot of the
Premises at 100% connected load; and
(viii) Replacement of Building standard
lamps and ballasts as needed.
7.2. EXCESS SERVICES. Tenant shall have no right to any
services in excess of those provided herein. If Tenant desires to use services
in an amount or for a period in excess of that provided for herein, then
Landlord, at its option, may provide same, but as a condition to providing such
additional services Landlord reserves the right to charge Tenant as Additional
Rent hereunder a reasonable sum as reimbursement for the direct cost of such
added services; charge Tenant for the cost of any additional equipment or
facilities or modifications thereto, necessary to provide the additional
services; and/or to discontinue providing such excess services to Tenant. In
the event of disagreement as to the reasonableness of such charge, the opinion
of the appropriate local utility company or an independent professional
engineering firm shall prevail.
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7.3. INTERRUPTION OF SERVICES. Landlord shall not be
liable for any damages directly or indirectly resulting from the failure to
furnish or the interruption in any of the services described above. Landlord
shall use all reasonable efforts to furnish uninterrupted services as required
above, and no such failure or delay shall constitute actual or constructive
eviction of Tenant or operate to relieve Tenant from the prompt and punctual
performance of each and all of the covenants to be performed herein by Tenant.
Landlord shall also not be liable to Tenant for damage to person or property
caused by defects in, or repairs to the cooling, heating, electric, water
elevator or other apparatus or systems or by water discharge from sprinkler
systems, if any, in the Building.
7.4. ELECTRICAL SERVICE. Landlord reserves the right to
peter the Premises or any portion thereof separately, and if the Premises (or
any portion thereof), are so separately metered, Tenant shall pay all
electricity furnished to the Premises which is so separately metered. Tenant
shall not, without Landlord's prior written consent, use any equipment,
including without limitation, electronic data processing machines, punchcard
machines, duplicating machines, mainframe computers, photocopiers, printers or
other machines which use electric current in excess of 110 volts, which will
increase the amount of electricity ordinarily furnished for use of the Premises
as general office space or which require clean circuits or other special
distribution circuits. If Tenant desires additional 110 volt electrical power
beyond that supplied by Landlord as provided above, electric current in excess
of 110 volts, or other special power requirements or circuits, then Tenant may
requires Landlord to provide such supplemental power to the Premises, which
request Landlord may grant or withhold in its reasonable discretion. If
Landlord furnishes such power or circuits, Tenant shall pay Landlord on demand,
the cost of the design, installation and maintenance of the facilities required
to provide such additional or special electrical power or circuits and the cost
of all electrical currents so provided at a rate not to exceed that which would
be charged by the power company providing electric service to the Building, or
its successor, if Tenant were a direct customer thereof. Landlord may require
separate electrical metering of such supplemental electrical power or circuits
to the Premises, and Tenant shall pay, upon demand, the cost of design,
installation and maintenance of such metering facilities. In no event shall
Tenant have access to any electrical closets in the Building, it being agreed
that any electrical engineering, design or contract work shall be performed by
Landlord or an electrical engineer and/or electrical contractor designated by
Landlord at Tenant's expense.
7.5. HEALTH CLUB FACILITY. Landlord anticipates that it
will (but shall not be obligated to) construct, maintain, and operate an
unattended health facility, including restrooms, showers and changing
facilities for males and females in approximately 1,500 square feet of space
located on the basement level of the Building (the "Health Facility"),
containing such equipment and facilities as Landlord shall deem appropriate in
its sole discretion. As a condition precedent to the ability of Tenant and any
other party obtaining access to the Health Facility through Tenant using the
Health Facility, Tenant shall execute an Indemnification and Release Agreement
in a form substantially similar to Exhibit K, attached hereto and incorporated
by this reference, thereby agreeing to indemnify, release and hold harmless
Landlord from any and all claims and actions arising from the use of the Health
Facility by Tenant and Tenant's officers, members, managers, employees, agents
and invitees and other persons gaining access to the Health Facility by or
through Tenant (the "Tenant Health Facility Users"). Any use by Tenant Health
Facility Users shall be at Tenant's and such persons' sole risk and Landlord
shall have no responsibility for such persons. All Tenant Health Facility Users
shall execute a waiver and release agreement waiving and releasing any and all
claims, actions or causes of action which any such person has or may have which
result from or in any manner relate to such person's gaining access to and
making use of the Health Facility. In the event that Landlord should construct
and establish the Health Facility, the Health Facility shall be available for
use by Tenant Health Facility Users at no charge. Landlord shall have the right
to discontinue operating the Health Facility at any time it shall deem
appropriate.
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8. USE AND OCCUPANCY OF THE PREMISES.
8.1. PERMITTED USE. Tenant shall use and occupy the
Premises for general office purposes and for no other purpose. The Premises
shall not be used for any illegal purpose, nor in violation of any valid laws,
ordinances, rules or regulations of any governmental body, nor in any manner to
create any nuisance or trespass, nor in any manner to vitiate the insurance or
increase the rate of insurance on the Premises or the Building, nor in any
manner inconsistent with the first-class nature of the Building.
8.2. SIGNS. Tenant shall obtain the written approval of
Landlord prior to placing and maintaining, or causing or permitting to be
placed and maintained any sign, advertising matter or other thing of any kind,
on the exterior of the Premises, or any decorating, lettering or advertising
matter on any exterior door of the Premises or any inside walls of the Premises
which would be visible from the exterior of the Premises without the prior
written consent of Landlord, which consent shall not be unreasonably withheld.
All exterior and elevator lobby signs shall, unless Landlord otherwise
specifically consents in writing, conform to uniform building sign
specifications promulgated by Landlord and Landlord shall provide and install
same at Tenant's cost and expense. Tenant shall place no signs upon the outside
walls or the roof of the Building or in any of the Common Areas.
8.3. HAZARDOUS MATERIALS.
(a) Tenant hereby covenants that, from and after the
date hereof and thereafter during the Term except for ordinary cleaning and
office supplies used and stored on the Premises by Tenant in the ordinary
course of its business (i.e., cleaning solvents, toner, ink etc.), Tenant shall
not cause or permit any "Hazardous Substances" (as hereinafter defined) to be
placed, held, located or disposed of in or about the Premises or the Complex or
any part of either and that neither the Premises nor the Complex, nor any part
of either, shall ever be used by Tenant or persons claiming under Tenant as a
storage site (whether permanent or temporary) for any Hazardous Substances. For
purposes of this Section 8.3, "Hazardous Substances" shall mean and include
those elements or compounds which are contained in the list of hazardous
substances adopted by the United States Environmental Protection Agency (EPA)
or the list of toxic pollutants designated by Congress or the EPA or which are
defined as hazardous, toxic, pollutant, infectious or radioactive by any other
federal, state or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to or imposing liability (including, without
limitation, strict liability) or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material, as now or at any
time hereafter in effect (collectively "Environmental Laws").
(b) Tenant hereby agrees to comply with all
Environmental Laws with regard to its use and occupancy of the Premises and to
indemnify Landlord and hold Landlord harmless from and against any and all
losses, liabilities, including strict liability, damages, injuries, expenses,
including reasonable attorneys' fees, costs of any settlement or judgment and
claims of any and every kind whatsoever paid, incurred or suffered by, or
asserted against, Landlord by any person, entity or governmental agency for,
with respect to, or as direct or indirect result of Tenant's failure to comply
with the provisions of this Lease and applicable Environmental Laws in
connection with its use and occupancy of the Premises or the presence in, or
the escape, leakage, spillage, discharge, emission, or release from, the
Premises of any Hazardous Substance (including, without limitation, any losses,
liabilities, including strict liability, damages, injuries, expenses, including
reasonable attorneys' fees, costs of any settlement or judgment or claims
asserted or arising under the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called federal, State or local
"Superfund" or "Superlien" laws or any other Environmental Laws); provided,
however, that the foregoing indemnity is limited to matters arising solely from
Tenant's violation of the covenant contained in Subsection 8.3(a) above, and
shall not cover any such liability to the extent caused by the acts of
Landlord, Landlord's employees or agents, or other tenants of the Building.
(c) In the event Landlord suspects, in its reasonable
opinion, that Tenant has violated any of the covenants contained in this
Section 8 or that the Premises or Complex are
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not in compliance with the Environmental Laws for any reason as to which Tenant
is responsible hereunder, or that the Premises or Complex are not free of
Hazardous Substances for any reasons as to which Tenant is responsible
hereunder, Tenant shall take steps as Landlord requires by written notice to
Tenant in order to confirm or deny such occurrences, including without
limitation, the preparation of environmental studies, audits, surveys or
reports. In the event that Tenant fails to take such action, Landlord may take
such action and shall have such access to the Premises as Landlord deems
necessary and the costs and expenses of all such actions taken by Landlord,
including, without limitation, Landlord's attorneys' fees, shall be due and
payable by Tenant upon demand therefor from Landlord as additional rent
hereunder. If any lender or governmental agency shall ever require testing to
ascertain whether or not there has been any release of Hazardous Substances,
then the reasonable costs thereof shall be reimbursed by Tenant to Landlord
upon demand as Additional Rent if any Hazardous Substances are determined by
Landlord to exist or be present as a result of Tenant failing to comply with
the covenants contained in this Subsection 8.3. In addition, Tenant shall
execute affidavits, representations and the like from time to time at
Landlord's request concerning Tenant's best knowledge and belief concerning the
presence of Hazardous Substances in, on or about the Premises. Further,
Landlord reserves the right at any time and from time to time to enter the
Premises following reasonable advance notice thereof to Tenant (except in cases
of emergency) in order to perform periodic environmental studies, audits,
surveys and reports and in order to determine whether Tenant is in compliance
with the terms of this Section 8.3.
8.4. CARDING AND ADVERTISING. Landlord may card the
Premises and/or advertise the Premises as being "For Rent" at any time
following a default by Tenant which remains uncured and at any time within one
hundred eighty (180) days prior to the expiration, cancellation or termination
of this Lease for any reason and during any such periods may exhibit the
Premises to prospective tenants.
8.5. REMOVAL OF FIXTURES. If Tenant is not in default
hereunder, Tenant may, prior to the expiration of the Term of this Lease, or
any extension thereof, remove any fixtures and equipment which it has placed in
the Premises after the Commencement Date which can be removed without
significant damage to the Premises, provided Tenant repairs all damages to the
Premises caused by such removal.
8.6. ENTERING PREMISES. Landlord may enter the Premises at
reasonable hours provided that Landlord's entry shall not unreasonably
interrupt Tenant's business operations and that prior notice is given (and, if
in the opinion of Landlord any emergency exists, at any time and without
notice): (a) to perform any construction, renovation or repairs which Landlord
is obligated or authorized to make to the Premises or the Building pursuant to
the terms of this Lease or to the other premises within the Building pursuant
to the leases of other tenants or in connection with any construction,
renovation or repairs to the Building which Landlord deems necessary or
desirable; (b) to inspect the Premises to see that Tenant is complying with all
of the terms and conditions hereof and with the rules and regulations hereof;
(c) to remove from the Premises any articles or signs kept or exhibited herein
in violation of the terms hereof; an d(d) to exercise any other right or
perform any other obligation that Landlord has under this Lease. Landlord shall
be allowed to take all material into and upon the Premises that may be required
to make any repairs, improvements and additions, or any alterations, without in
any way being deemed or held guilty of improvements and additions, or any
alterations, without in any way being deemed or held guilty of improvements and
additions, or any alterations, without in any way being deemed or held guilty
of trespass and without constituting a constructive eviction of Tenant. The
Rent reserved herein shall in no wise abate while said repairs, alterations or
additions are being made and Tenant shall not be entitled to maintain a set-off
or counterclaim for damages against Landlord by reason of loss from
interruption to the business of Tenant because of the prosecution of any such
work. All such repairs, decorations, additions and improvements shall be done
during ordinary business hours, or, if any such work is at the request Tenant
to be done during any other hours, the Tenant shall pay all overtime and other
extra costs.
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9. TENANT'S INSURANCE; WAIVERS AND INDEMNITIES
9.1. INSURANCE COVERAGES. From and after the date of
delivery of the Premises from Landlord to Tenant, Tenant will carry and
maintain, at its sole cost and expense, the following types of insurance, in
the amounts specified and in the form hereinafter provided for:
(a) Liability Insurance in the Commercial General
Liability form (or reasonable equivalent thereto) covering the Premises and
Tenant's use thereof against claims for personal injury, bodily injury or
death, property damage and product liability occurring upon, in or about the
Premises, such insurance to be written on an occurrence basis (not a claims
made basis), to be in combined single limits amounts not less than $3,000,000
and to have general aggregate limits of not less than $5,000,000 for each
policy year. The insurance coverage required under this Section 9.1 shall, in
addition, extend to any liability of Tenant arising out of the indemnities
provided for in Section 9.5 and, if necessary, the policy shall contain a
contractual endorsement to that effect. The general aggregate limits under the
Commercial General Liability insurance policy or policies must apply separately
to the Premises and to Tenant's use thereof (and not to any other location or
use of Tenant) and such policy shall contain an endorsement to that effect. The
certificate of insurance evidencing the Commercial General Liability form of
policy shall specify all endorsements required herein and shall specify on the
face thereof that the limits of such policy applies separately to die Premises.
(b) Boiler and machinery insurance in adequate amounts on
all fired objects and other fired pressure vessels and systems maintained by
Tenant which serve the Premises only (if any); and if the said objects and the
damage that may be caused by them or result from them are not covered by
Tenant's extended coverage insurance, then such insurance shall be in an amount
not less than $250,000 and be issued on a replacement cost basis.
(c) Insurance covering all of the items included in
Tenant's leasehold improvements and heating, ventilating and air conditioning
equipment maintained by Tenant under the terms of this Lease, trade mixtures,
merchandise and personal property from time to time in, on or upon the
Premises, and alterations, additions or changes made by Tenant in an amount not
less than one hundred percent (100%) of their full replacement value from-time
to time during the Term, providing protection against perils included within
the standard form of "all-risks' fire and casualty insurance policy, together
with insurance against sprinkler damage, vandalism and malicious mischief. Any
policy proceeds relating to the Premises from such insurance shall be paid to
Landlord and such proceeds shall- be used for the repair, construction and
restoration or replacement of the property damaged or destroyed unless this
Lease shall cease and terminate under the provisions of Section 11 of this
Lease.
(d) Workers' Compensation and Employees Liability
insurance affording statutory coverage and containing statutory limits with the
Employees Liability portion thereof to have minimum limits of $500,000.00.
(e) Business Interruption Insurance equal to not less than
fifty percent (50%) of the estimated gross earnings (as defined in the standard
form of business interruption insurance policy) of Tenant at the Premises which
insurance shall be issued on an "all risks" basis (or its equivalent).
(f) Any other form or forms of insurance or any changes or
endorsements to the insurance required herein as Landlord, or any mortgagees or
lessors of Landlord may require, from time to time, provided such forms of
insurance, changes or endorsements are reasonably necessitated by Tenant's
particular use of the Premises or reasonable business practices.
9.2. INSURANCE POLICY REQUIREMENTS. All policies of the
insurance provided for in this Section 9 shall be issued in form reasonably
acceptable to Landlord by insurance companies with a rating and financial size
of not less than A-X in the most current available
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"Best's Insurance Reports", and licensed to do business in the states in which
Landlord's Building is located. Each and every such policy:
(a) shall name Landlord as an additional insured (as well
as any mortgages of Landlord of which Tenant has received written notice and
any other party reasonably designated by Landlord to Tenant in writing) and the
coverage in (b), (c) and (e) shall also name Landlord as loss payee.
(b) shall (and a certificate thereof shall be delivered
to Landlord at or prior to the execution of the Lease) be delivered to each of
Landlord and any such other parties in interest within thirty (30) days after
delivery of possession of the Premises to Tenant and thereafter within thirty
(30) days prior to the expiration of each such policy, and, as often as any
such policy shall expire or terminate. Renewal or additional policies shall be
procured and maintained by Tenant in like manner and to like extent;
(c) shall be endorsed to contain a provision that the
insurer will give to Landlord, and any ground lessor or Holder (as hereinafter
defined) of which Tenant has received written notice at least thirty (30) days
notice in writing in advance of any material change, cancellation, termination
or lapse, or the effective date of any reduction in the amounts of insurance;
and
(d) shall be written as a primary policy which does not
contribute to and is not in excess of coverage which Landlord may carry.
9.3. BLANKET INSURANCE POLICIES. Any insurance provided
for in this Section 9 may be maintained by means of a policy or policies of
blanket insurance, covering additional items or locations or insureds,
provided, however, that:
(a) Landlord and any other parties in interest from time
to time designated by Landlord to Tenant shall be named as an additional
insured thereunder as their interests may appear;
(b) the coverage afforded Landlord and any such other
parties in interest will not be reduced or diminished by reason of the use of
such blanket policy of insurance;
(c) any such policy or policies shall specify therein (or
Tenant shall furnish Landlord with a written statement from the insurers under
such policy specifying) the amount of the total insurance allocated to the
Tenant's improvements and property; and
(d) the requirements set forth in this Section 9 are
otherwise satisfied.
9.4. WAIVERS. Notwithstanding anything to the contrary
set forth hereinabove, Landlord and Tenant do hereby waive any and all claims
against one another for damage to or destruction of real or personal property
to the extent such damage or destruction can be covered by "all risks" property
insurance of the type described in Section 9.1(c) above. Each party shall also
be responsible for the payment of any deductible amounts required to be paid
under the applicable "all risks' fire and casualty insurance carried by the
party whose property is damaged. These waivers shall apply if the damage would
have been covered by a customary "all risks' insurance policy, even if the
party fails to obtain such coverage. The intent of this provision is that each
,shall look solely to its insurance with respect to property damage or
destruction which can be covered by "all risks" insurance of the type described
in Section 9.1(c). To further effectuate the provisions of this Section 9.4,
Landlord and Tenant both agree to provide copies of this Lease (and in
particular, these waivers) to their respective insurance carriers and to
require such insurance carriers to waive all rights of subrogation against the
other party with respect to property damage covered by the applicable "all
risks" fire and casualty insurance policy.
9.5. INDEMNITIES. Tenant does hereby indemnify and save
harmless Landlord against all claims for damages to persons or property which
are caused anywhere in the
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Premises, the Building or the Common Areas caused by the acts of Tenant, its
agents, officers, directors, managers, members, employees contractors, invitees
or guests or which occur in the Premises (or arise out of actions taking place
in the Premises) except to the extent such damage is caused by the negligence
or willful misconduct of Landlord, its agents, or employees. The foregoing
indemnity obligations of Tenant shall include attorney's fees, investigation
costs and all other costs and expenses incurred by Landlord from the first
notice that any claim or demand has been made or may be made. The provisions of
this Section 9.5 shall survive the termination of this Lease with respect to
any damage, injury or death occurring, before such termination. If Landlord is
made a party to any litigation commenced by or against Tenant or relating to
this Lease or to the Premises, and provided that in any such litigation
Landlord is not finally adjudicated to be at fault, then Tenant shall pay all
reasonable costs and expenses, including reasonable attorney's fees and court
costs, incurred by or imposed upon Landlord because of such litigation, and the
amount of all such reasonable costs and expenses shall be a demand obligation
owing by Tenant to Landlord.
10. DEFAULT AND REMEDIES.
10.1. DEFAULT. If Tenant shall:
(a) fail to pay any Rent herein reserved for more than
five (5) days from the date when due; or
(b) fail to perform any of the terms or provisions of
this Lease other than the provisions requiring the payment of Rent, and shall
not cure such failure within thirty (30) days after written notice is given to
'Tenant by Landlord; or
(c) be adjudicated a bankrupt; or
(d) have a permanent receiver appointed for Tenant's
Property and such receiver is not removed within sixty (60) days after written
notice from Landlord to Tenant to obtain such removal; or
(e) whether voluntarily or involuntarily, take advantage
of any debtor relief proceedings under any present or future law, whereby the
Rent or any part thereof, is, or is proposed to be, reduced or payment thereof
deferred; or
(f) have its effects levied upon or attached under
process against Tenant, not satisfied or dissolved within thirty (30) days
after written notice from Landlord to Tenant to obtain satisfaction thereof,
or,
(g) be an individual, in the event of the death of the
individual and the failure of the executor, administrator or personal
representative of the estate of the deceased individual to have assigned the
Lease within three (3) months after the death to an assignee approved by
Landlord; then, and in any of said events (each a "default' or an "event of
default"), Landlord, at its option, may exercise any or all of the remedies set
forth in Section 10.2 below.
10.2. REMEDIES. Upon the occurrence of any default set
forth in Section 10.1 above which is not cured by Tenant within the applicable
cure period provided therein, if any, Landlord may exercise all or any of the
following remedies:
(a) terminate this Lease by giving Tenant written notice
of termination, in which event this Lease shall terminate on the date specified
in such notice and all rights of Tenant under this Lease shall expire and
terminate as of such date, Tenant shall remain liable for all obligations under
this Lease up to the date of such termination and Tenant shall surrender the
Premises to Landlord on the date specified in such notice, and if Tenant fails
to so surrender, Landlord shall have the right, without notice, to enter upon
and take possession of the Premises and to expel and remove Tenant and its
effects without being liable for prosecution or any claim of damages therefor;
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(b) terminate this Lease as provided in the immediately
preceding subsection and recover from Tenant all damages Landlord may incur by
reason of Tenant's default, including without limitation, the then present
value (using a discount rate of the lower of the prime rate published in the
Wall Street Journal immediately prior to such default, and if the Wall Street
Journal or the prime rate therein shall not be published, a comparable index
selected by Landlord shall be used, or the rate of interest then payable on
currently-issued United States Treasury Bills or Notes having a maturity at the
time of the event of default, closest to the scheduled Expiration Date of the
Term) of (i) the total Rent which would have been payable hereunder by Tenant
for the period beginning with the day following the date of such termination
and ending with the Expiration Date of the current Term (or any extended Term
if Tenant shall have exercised an extension option), minus (ii) the aggregate
reasonable rental value of the Premises for the same period, plus (iii) the
costs of recovering the Premises, and all other expenses incurred by Landlord
due to Tenant's default, including without limitation, reasonable attorneys'
fees, plus (iv) the unpaid Rent earned as of the date of termination, plus
interest, all of which sum shall be immediately due and payable by Tenant to
Landlord. In determining the aggregate reasonable rental value pursuant to item
(ii) above, the parties hereby agree that all relevant factors shall be
considered as of the time Landlord seeks to enforce such remedy, including, but
not limited to, (A) the length of time remaining in the then current term, (B)
the then current market conditions in the general area in which the Building is
located, (C) the likelihood of re-letting the Premises for a period of time
equal to the remainder of the current Term, (D) the net effective rental rates
(taking into account all concessions) then being obtained for space of similar
type and size in similar type buildings in the general area in which the
Building is located, (E) the vacancy levels in comparable quality buildings in
the general area in which the Building is located, and (F) current levels of
new construction that will be completed during the remainder of the current
Term and the degree to which such new construction will likely affect vacancy
rates and rental rates in comparable quality buildings in the general area in
which the Building is located. Tenant agrees to pay the aforesaid amount at
once, together with all Rent and all charges and assessments theretofore due to
Landlord;
(c) without terminating this Lease, declare immediately
due and payable the present value (using a discount rate of five percent (5%)
per annum or the rate of interest then payable on currently-issued United
States Treasury Bills or Notes having a maturity at the time of the event of
default closest to the scheduled Expiration Date of the Term) of all Rent due
under this Lease for the entire remaining current Term of this Lease, together
with the costs of recovering and reletting the Premises and all other expenses
incurred by Landlord in connection with Tenant's default plus the unpaid Rent
earned as of the date of termination, plus interest thereon; and Landlord may
immediately proceed to distrain, collect, or bring action for such sum, or may
file a proof of claim in any bankruptcy or insolvency proceedings to enforce
payment thereof; provided, however, that such payment shall not be deemed a
penalty or liquidated damages, but shall merely constitute payment in advance
of all Rent payable hereunder throughout the current Term. and provided
further, however, that upon Landlord receiving such payment, Tenant shall be
entitled either to remain in possession of the Premises or to receive front
Landlord all rents received by Landlord from other assignees, tenants and
subtenants on account of said Premises during the remainder of the current Term
(provided that the monies to which Tenant shall so become entitled shall in no
event exceed the entire amount actually paid by Tenant to Landlord pursuant to
this item (c)), less all costs, expenses and attorneys' fees of Landlord
incurred in connection with the reletting of the Promises;
(d) without terminating this Lease, and without notice to
Tenant, Landlord may in its own name, but as agent for Tenant enter into and
take possession of the Premises and re-let the Premises, or a portion thereof,
as agent of Tenant, upon any terms and conditions as Landlord may deem
necessary or desirable (but Landlord shall have no obligation to attempt to
re-let the Premises or any part thereof). Upon any such re-letting, all rentals
received by Landlord from such re-letting shall be applied first to the costs
incurred by Landlord in accomplishing any such re-letting, and thereafter shall
be applied to the Rent owed by Tenant to Landlord during the remainder of the
term of this Lease and Tenant shall pay any
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deficiency between the remaining Rent due hereunder and the amount received by
such re-letting as and when due hereunder;
(e) allow the Premises to remain unoccupied and collect
Rent from Tenant as it becomes due;
(f) pursue such other remedies as are set forth in this
Lease or are available at law or in equity; or
(g) If Landlord exercises any of the remedies set forth
in Section 10.2, in addition to all other costs and expenses Landlord shall be
entitled to recover under this Lease, Landlord shall also be entitled to
recover:
(h) the cost of performing any other covenants which
would have otherwise been performed by Tenant;
(i) the amount of any rental abatement or other rental
concession provided by Landlord to Tenant; provided, however, that in no event
shall Tenant's liability hereunder exceed the total of all Rent due under this
Lease;
(j) all sums expended by Landlord, and not previously
reimbursed to Landlord by Tenant, in connection with improving or repairing the
Premises to Tenant's specifications; and
(k) all costs and expenses incurred by Landlord in
connection with the termination of this Lease and eviction of Tenant.
11. DESTRUCTION OR DAMAGE; CONDEMNATION.
11.1. DESTRUCTION OR DAMAGE. If the Building or the
Premises are (i) totally destroyed by storm, fire, earthquake, or other
casualty, (ii) damaged or destroyed by any casualty to the extent that in
Landlord's reasonable judgment, repair of such damage or destruction would not
be economically feasible, or (iii) damaged to the extent that, in Landlord's
reasonable opinion the damage cannot be restored within one hundred eighty
(180) days of the date the damage occurred, or if the damage is not covered by
standard "all risks" property insurance, or if the Landlord's lender requires
that the insurance proceeds be applied to its loan, Landlord shall have the
right to terminate this Lease effective as of the date of such destruction or
damage by written notice to Tenant on or before sixty (60) days following the
date of such damage and Rent shall be accounted for as between Landlord and
Tenant as of the date of such casualty. Under no circumstances shall Landlord
be liable to Tenant for inconvenience, annoyance, loss of profits, expenses or
any other type of injury or damage resulting from the repair of any such damage
or from any repair, modification, arranging or rearranging of any portion of
the Premises or any part or all of the Building or for termination of the Lease
as provided above. Tenant assumes the risk of any and all damage to its
personal property in or on the Premises and from any casualty whatsoever. If
the Premises are damaged by any such casualty or casualties but Landlord is not
entitled to or does not terminate this Lease as provided above, this Lease
shall remain in full force and effect, Landlord shall notify Tenant in writing
within sixty (60) days of the date of the damage that the damage will be
restored (and will include Landlord's good faith estimate of the date the
restoration will be complete), in which case Rent shall abate from the date of
such casualty as to any portion of the Premises which is not usable, and
Landlord shall restore the Premises to substantially the same condition as
before the damage occurred as soon as practicable, whereupon full Rent shall
recommence.
11.2. CONDEMNATION. If the whole of the Property, the
Building or the Premises, or such portion thereof as will make the Property,
the Building or the Premises unusable for the purposes contemplated hereby in
the reasonable judgment of Landlord for their intended purposes, is condemned
or taken by any legally constituted authority for any public or quasi-public
use or purpose, or by private purchase in lieu thereof, then in either of
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said events, Landlord may terminate this Lease by written notice to Tenant and
the Term hereby granted shall cease from that time when possession thereof is
taken by the condemning authorities, and Rent shall be accounted for as between
Landlord and Tenant as of that date. If a portion of the Building or Premises
is so taken, but not such amount as will make the Premises unusable in the
reasonable judgment of Landlord for the purposes herein leased, or if Landlord
elects not to terminate this Lease, this Lease shall continue in full force and
effect and the Rent shall be reduced pro rata in proportion to the amount of
the Promises so taken. Tenant shall have no right or claim to any part of any
award made to or received by Landlord for such condemnation or taking, and all
awards for such condemnation or taking shall be made solely to Landlord.
12. ADDITIONAL PROVISIONS.
12.1. SERVICE OF NOTICE. From and after the Commencement
Date, and except as otherwise provided by law, notices required or permitted to
be given to Tenant under this Lease shall be sent to Tenant's Address for
Notice After Commencement Date as set forth in the Summary of Lease Terms Prior
to the Commencement Date, all notices required or permitted to be given to
Tenant under this Lease shall be sent to Tenant's Address for Notice Prior to
Commencement Date set forth in the Summary of Lease Terms. Notices to Landlord
shall be sent to Landlord's Address for Notice as set forth in the Summary of
Lease Terms.
All notices given hereunder may be given by certified mail, hand delivery or by
surface or air-express courier service and shall be deemed given when deposited
for delivery by an approved method; provided, however, that the time period for
any response to such notice shall begin to run only upon actual receipt or when
delivery is refused or cannot be accomplished because the party has moved and
has not provided the other party with notice of its new address by notice as
provided herein. Landlord and Tenant may change their address for notice or
appoint up to two (2) additional persons to receive notices hereunder on ten
(10) days prior notice to the other party.
12.2. MORTGAGEE'S RIGHTS.
(a) Tenant agrees that this Lease shall be subject and
subordinate (i) to ally mortgage, deed to secure debt or other security
interest now encumbering the Property and to all advances which may be
hereafter made, to the full extent of all debts and charges secured thereby and
to all renewals or extensions of any part thereof, and to any mortgage, deed to
secure debt or other security interest which any owner of the Property may
hereafter, at any time, elect to place on the Property; (ii) to any assignment
or Landlord's interest in the leases and rents from the Building or Property
which includes the Lease which now exists or which any owner of the Property
may hereafter, at any time, elect to place on the Property; and (iii) to any
Uniform Commercial Code Financing Statement covering the personal property
rights of Landlord or any owner of the Property which now exists or any owner
of the Property may hereafter, at any time, elect to place on the foregoing
personal property (all of the foregoing instruments set forth in (i), (ii) and
(iii) above being hereafter collectively referred to as "Security Documents").
Tenant agrees upon request of the holder of any Security Documents ("Holder")
to hereafter execute any documents which the counsel for Landlord or Holder may
deem necessary to evidence die subordination of the Lease to the Security
Documents. In default of Tenant so doing, Landlord or Holder is hereby
empowered to execute any documents in the name of Tenant evidencing such
subordination, as the act and deed of Tenant, and this authority is hereby
declared to be coupled with an interest and not revocable.
(b) In the event of a foreclosure pursuant to any
Security Documents, Tenant shall at the election of the Landlord, thereafter
remain bound pursuant to the terms of this Lease as if a now and identical
Lease between the purchaser at such foreclosure.("Purchaser'), as landlord, and
Tenant, as tenant, had been entered into for the remainder of the Term hereof
and Tenant shall attorn to the Purchaser upon such foreclosure sale and shall
recognize such Purchaser as the Landlord under the Lease. Such attornment shall
be effective and self-operative without the execution of any further instrument
on the part of any of the parties hereto. Tenant agrees, however, to execute
and deliver at any time and from time to time,
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upon the request of Landlord or of Holder, any instrument or certificate that
may be necessary or appropriate in any such foreclosure proceeding or otherwise
to evidence such attornment.
(c) If the Holder of any Security Document or the
Purchaser upon the foreclosure of any of the Security Documents shall succeed
to the interest of Landlord under the Lease, such Holder or Purchaser shall
have the same remedies, by entry, action or otherwise for the non-performance
of any agreement contained in the Lease, for the recovery of Rent or for any
other default or event of default hereunder that Landlord had or would have had
if any such Holder or Purchaser had not succeeded to the interest of Landlord.
Any such Holder or Purchaser which succeeds to the interest of Landlord
hereunder, shall not be (a) liable for any act or omission or any prior
Landlord (including Landlord); or (b) subject to any offsets or defenses which
Tenant might have against any prior Landlord (including Landlord); or (c) bound
by any Rent which Tenant might have paid for more than the current month to any
prior Landlord (including Landlord); or (d) bound by any amendment or
modification of the Lease made without its consent. Nothing herein contained
shall be construed to permit any Holder to terminate the enjoyment by Tenant of
the Premises so long as the Tenant is not in default under the Lease, provided
the Holder of the Security Documents has approved the Lease.
(d) Tenant hereby acknowledges that if the interest of
Landlord hereunder is covered by an assignment of Landlord's interest in Lease,
Tenant shall pay all Rent due and payable under the Lease directly to the
holder of the assignment of Landlord's interest in Lease upon notification of
the exercise of the rights thereunder by the Holder thereof.
(e) Notwithstanding anything to the contrary set forth
in this Section 12.2, the Holder of any Security Documents shall have the
right, at any time, to elect to make this Lease superior and prior to its
Security Document. No documentation, other than written notice to Tenant, shall
be required to evidence that the Lease has been made superior and prior to such
Security Documents, but Tenant hereby agrees to execute any documents
reasonably requested by Landlord or Holder to acknowledge that the Lease has
been made superior and prior to the Security Documents.
12.3. GOVERNMENTAL REGULATIONS.
(a) Tenant shall, at its own expense, promptly comply
with all requirements of any legally constituted governmental or public
authority made necessary by reason of Tenant's occupancy of the Premises.
(b) Tenant waives the benefits of all existing and
future rent control legislation and statutes and similar governmental rules and
regulations, whether in time of war or not, to the full extent permitted by
law.
(c) Except as provided in paragraph (d) of this Section
12.3, if, in order to maintain the Building as an office building, or
the Premises for the use stipulated herein, Landlord shall be required by any
governmental authority to repair, alter, remove, construct, reconstruct, or
improve any part or all of the Premises or the Building, such action shall be
performed by Landlord but shall in no way affect Tenant's obligations under
this Lease. Tenant waives all claim for injury, damage or abatement of Rent
because of such repair, alteration, removal, construction, reconstruction, or
improvement; provided, however, that if such action by Landlord renders the
Premises untenantable, and if Landlord cannot reasonably complete such acts
within one hundred eighty (180) days after notice to it to perform such acts by
the governmental authority, either Landlord of Tenant, by written notice to the
other delivered not later than seventy (70) days after the date of notice to
Landlord by such governmental authority, may terminate this Lease, in which
event Rent shall be apportioned and paid up to and including the date the
Premises become untenantable if terminated by Landlord, but up to and including
the date of termination if terminated by Tenant.
(d) Without limiting the provisions of Section 12.3(d)
Tenant shall, at Tenant's sole cost and expense but subject to Landlord's prior
written approval, which
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approval shall not be unreasonably withheld, make each and every alteration or
addition to the Premises required to bring the Premises into compliance with
the requirements imposed by the Americans with Disabilities Act, (42 U.S.C.
Section 12101 et. seq.) and any regulations promulgated pursuant thereto ("ADA
Requirements") effective from time to time during the Term, and any period of
holding over by Tenant if:
(i) the requirement for such alteration
or addition arises as a result of:
(1) any alteration of addition by
tenant; or
(2) any violation by Tenant of any ADA
Requirements; or
(3) a special use of the Premises or
any part thereof by Tenant or any assignee or subtenant of Tenant or any
employee, officer, director, member, manager, invitee or guest (including, but
not limited to, use for a facility which constitutes, or, if open to the public
generally, would constitute, a "place of public accommodation" under the ADA
Requirements); or
(4) the special needs of the
employee(s) of Tenant or any assignee or subtenant of Tenant; or
(ii) the ADA Requirements would otherwise make
Tenant, rather than Landlord, primarily responsible for making such alteration
or addition.
12.4. ABANDONMENT OF PREMISES. Tenant agrees not to
abandon or vacate the Premises during the term of the Lease and to use said
Premises for the purpose herein leased until the expiration hereof.
12.5. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not, without the prior written consent
of Landlord, assign, hypothecate, or otherwise transfer this Lease or any
interest hereunder, or sublet the Premises or any part thereof, or permit the
use of the Premises by any party other than Tenant. Landlord's consent or
refusal to consent to a proposed assignment or sublease must be an action which
is taken reasonably and in good faith. For the purposes of the immediately
preceding sentence, Landlord shall be deemed to be acting reasonably and in
good faith in determining whether to consent to a proposed assignment or
sublease when Landlord considers such factors as, without limitation, the
identity and business reputation of the proposed assignee or subtenant, the
relationship of the proposed assignee or subtenant's business, the
creditworthiness of the proposed assignee or subtenant, and any agreement or
leasing restrictions with existing tenants or other third parties that prohibit
or restrict Landlord from leasing to the proposed assignee or subtenant. Tenant
agrees to pay to Landlord as Additional Rent, on demand, a Five Hundred Dollar
($500.00) administrative processing fee in connection with any request by
Tenant for consent to a proposed assignment or subletting and, in addition,
reasonable out-of-pocket costs incurred by Landlord (including without
limitation, attorneys' fees) in connection with any request by Tenant for
Landlord to consent to any assignment or subletting by Tenant. All monies so
paid shall be non-refundable in any event, regardless of whether Landlord
consents to the proposed assignment or subletting. Any assignment or sublease
shall not nullify these provisions, and all later assignments or subleases
shall be made likewise only after the prior written consent of Landlord is
obtained in each instance.
(b) No sublease or assignment by Tenant shall relieve
Tenant of any liability hereunder. Without limiting the foregoing, if, with
consent of Landlord, this Lease is assigned or the Premises or any part thereof
is sublet or occupied by any party other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, subtenant or occupant, and
apply the net amount collected to the Rent herein reserved, but no such
assignment, subletting, occupancy, or collection shall be deemed (i) a waiver
of any of Tenant's covenants
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contained in this Lease, (ii) the acceptance by Landlord of the assignee,
subtenant, or occupancy as Tenant hereunder, or (iii) the release of Tenant
from further performance by Tenant of its covenants under this Lease.
(c) The assignment or transfer of a controlling interest
in Tenant or the occupancy of the Premises by any successor firm or entity of
the Tenant or by any firm or entity into which or with which the Tenant may
become merged or consolidated shall be deemed an assignment of this Lease
requiring the prior written consent of Landlord.
(d) Notwithstanding the giving by Landlord of its
consent to any assignment or sublease with respect to the Premises, no such
assignee or sublessee may exercise any expansion option, right of first refusal
option, or renewal option under this Lease, nor shall any such party have the
benefit of any specific signage or other similar privileges or rights which may
be provided to Tenant under this Lease except in accordance with a separate
written agreement entered into directly between such assignee or sublessee and
Landlord. After a permitted assignment or subletting, the original Tenant shall
have no right to exercise on behalf of a permitted assignee or sublessee as to
the space assigned or sublet any expansion option, right of first refusal
option or renewal or extension option.
(e) Should Landlord permit any assignment or subletting
by Tenant and should the monies received as a result of such assignment or
subletting (when compared to the monies still payable by Tenant to Landlord) be
greater than Landlord would have received hereunder had not Landlord permitted
such assignment or subletting, then fifty percent (50%) of the "Gross Profit"
shall be payable by Tenant to Landlord, it being the parties' intention that
Landlord, in consideration of Landlord's permitting such assignment or
subletting, shall receive fifty percent (50%) of any Gross Profit from any such
assignment or subletting. Further, should the assignment or subletting giving
rise to the Gross Profit be arranged by Landlord (or its Manager) on Tenant's
behalf (if being understood that neither Landlord nor its Manager shall have
any obligation to arrange for same), one hundred percent (100%) of the Gross
Profit shall be paid to Landlord.
12.6. TENANT'S ESTOPPEL. Tenant shall, from time to time,
upon not less than ten (10) days prior written request by Landlord, execute,
acknowledge and deliver to Landlord a certificate substantially in the same
form as the Estoppel Certificate which is attached hereto as Exhibit G. Each
certificate delivered pursuant to this Section may be relied upon by any
prospective purchase or transferee of Landlord's interest hereunder or of any
part of Landlord's property or any holder or prospective Holder of any Security
Documents.
12.7. ATTORNEY'S FEES AND HOMESTEAD. If any Rent owing
under this Lease is collected by or through an Attorney at Law, Tenant agrees
to pay fifteen percent (15%) thereof as attorney's fees. Tenant waives all
homestead rights and exemptions which he may have under any law against any
obligations owing under this Lease and Tenant hereby assigns to Landlord his
homestead and exemption.
12.8. PARKING. Tenant shall be entitled to use up to the
maximum number of parking spaces stipulated in the Summary of Lease Terms in
the parking facilities located on the Property in common with and on the same
basis as the other tenants in the Building. Parking spaces shall be unassigned
and shall be leased at the posted monthly rental rates in effective therefor
from time tot time. If less than the maximum number of spaces allowed hereunder
are leased by Tenant as of the Commencement Date or any time thereafter, Tenant
shall forfeit permanently any rights to spaces not so leased. Landlord and
Tenant agree and Tenant acknowledges that rates for spaces in parking
facilities of the Complex may vary according to the location of the spaces in
the facilities and according to whether or not spaces are reserved or
unreserved. Tenant further acknowledges and agrees that landlord may designate
certain spaces within the parking facilities of the complex as reserved or
assigned spaces for the benefit of Landlord, visitors to the Complex or tenants
therein, other tenants, couriers and delivery services and other persons.
Tenant shall comply and cause its employees to comply with all rules and
regulations established by Landlord and/or the operator of the parking
facilities including, without limitation, any card, sticker or other
identification system
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whether now or hereafter in affect and agrees to pay to Landlord a deposit for
each parking card issued in the amount of Fifteen Dollars ($15.00), which rate
is subject to change from time to time. All parking privileges granted pursuant
to this Section 12.8 are non-assignable and non-transferable by Tenant,
provided, however, that parking privileges may be assigned or transferred by
Tenant in conjunction with a transfer, assignment or subletting allowed by
Section 12.5 of this Lease. Tenant agrees to pay, as additional rent, the sum
of $14.00 (which rate is subject to change from time to time) for any parking
card, sticker or other identification instrument which becomes lost, mutilated
or destroyed. Tenant's invitees shall be entitled to use such parking
facilities on a first-come, first-served basis by paying the posted hourly
rate. Landlord reserves the right to build improvements upon, reduce the size
of, relocate, reconfigure, eliminate, and/or make alterations or additions to
such parking facilities at any time.
12.9. STORAGE. If Landlord makes available to Tenant any
storage space, anything stored therein shall be wholly at the risk of Tenant,
and Landlord shall have no responsibility of any character in respect thereto.
12.10. WASTE DISPOSAL.
(a) All normal trash and waste ( i.e., waste that does
not require special handling pursuant to subparagraph (b) below) shall be
disposed of through the janitorial service.
(b) Tenant shall be responsible for the removal and
disposal of any waste deemed by any governmental authority having jurisdiction
over the matter to be hazardous or infectious waste or waste requiring special
handling, such removal and disposal to be in accordance with any and all
applicable governmental rules, regulations, codes, orders or requirements.
Tenant agrees to separate and mark appropriately all waste to be removed and
disposed of through the janitorial service pursuant to (a) above and hazardous,
infectious or special waste to be removed and disposed of by Tenant pursuant to
this subparagraph (b). Tenant hereby indemnifies and holds harmless Landlord
from and against any loss, claims, demands, damage or injury Landlord may
suffer or sustain as a result of Tenant's failure to comply with the provisions
of this subparagraph (b).
12.11. BROKERS. Except with respect to Landlord's Broker
(whose commission Landlord shall pay) and Tenant's Broker (if any) (to whom
Landlord's Broker is obligated to pay a portion of such commission in
accordance with a separate written agreement between Landlords' Broker and
Tenant's Broker), Tenant and Landlord each represent and warrant to the other
that no Broker, agent, commission, salesman or other person has represented the
warranting party in the negotiations for and procurement of this Lease and of
the Premises, and that no commissions, fees or compensation of any kind are due
and payable in connection therewith to any such person or entity. The
individual(s) executing this Lease on behalf of Tenant hereby swear to and for
the benefit of Landlord and any lender of Landlord holding a lien or security
title interest in and to all or any portion of the Property, any attorneys
certifying title to the Property and any title insurance company insuring title
to all or any portion of the Property that (a) except for Tenant's Broker, if
any, (ii) all fees, commission, compensation or other amounts payable to any
real estate brokers engaged by Tenant in connection with the Lease have been
paid in full or (ii) the rights of any and all real estate brokers engaged by
Tenant to file any lien, notice of lien or claim of lien under O.C.G.A. Section
44-14-600 et. seq. have been waived in writing by such broker and (b) except
for the commission payable by Landlord to Tenant's Broker, in accordance with a
separate written agreement between Landlord's Broker and Tenant's Broker, if
any, all fees, commissions, compensation or other amounts payable to Tenant's
Broker in connection with this Lease have been paid in full. Each party further
warrants that any compensation arrangement with the parties excepted from the
foregoing warranty have been reduced to writing in its entirety and a separate
agreement signed simultaneously with or before this Lease by the party against
whom commission or compensation is charged. Each party agrees to indemnify and
hold the other harmless from and against any claim for any such commissions,
fees or other form of compensation by any such third party claiming through the
indemnifying party, including,
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without limitation, any and all claims, causes of action, damages, costs and
expenses (including attorneys' fees and expenses) associated therewith.
12.12. SALE OF BUILDING. In the event of any sale or sales
of the Building (and the property on which same is situated) or of any ground
lease thereof, the Landlord named herein above shall be and hereby is entirely
freed and relieved of all covenants and obligations of Landlord hereunder
during the period such party has possession of the Building. Should the entire
Building and the property on which same is situated be severed as to ownership
by sale and/or lease, then the owner of the entire Building or the lessee of
the entire Building that has the right to lease space in the Building to
tenants shall be deemed the "Landlord." Tenant shall be bound to any succeeding
Landlord for all the terms, covenants and conditions hereof and shall execute
any attornment agreement not in conflict herewith at the request of any
succeeding Landlord. The provisions of this Section 12.2 shall apply to each
and every sale, lease or other transfer of the Building or the property on
which same is situated, or both during the Lease Term.
12.13. TRANSFER OF TENANTS. Landlord hereby reserves the
right at its sole option and upon giving at least sixty (60) calendar days
written notice in advance to Tenant, to transfer and remove Tenant from the
Premises from time to time to any other available space in the Complex of
substantially equal area, which space shall, once Tenant has been relocated
therein, be deemed "Premises" for purposes of this Lease. Landlord hereby
agrees to bear the expense of such transfer and removal, as well as the expense
of renovations or alterations which are necessary to make the new space conform
substantially in layout and appointment with the Premises. Failure of Tenant to
cooperate with Landlord pursuant to this provision and to remove itself from
the Premises shall permit Landlord to enter the Premises and to remove Tenant
and its property therefrom and to relocate Tenant and its property in the new
space provided by landlord pursuant to this provision, all without being liable
to Tenant in any manner whatsoever for such acts, except for the expenses which
are expressly provided in this Section 12.13 to be paid by Landlord.
12.14. ALTERATION OF COMMON AREAS. Landlord reserves the
right in its sole discretion to redesign, change, rearrange, alter,
reconstruct, modify, expand, reduce or supplement any and all of the facilities
designed for the common use and convenience of the tenants of the Complex
and/or the Building, including without limitation, parking areas, driveways and
other Common Areas, so long as access to the Premises is not materially and
adversely affected thereby. In furtherance, and no in limitation, of the
foregoing, Landlord shall have the right to erect additional buildings or other
improvements in the Complex or to add to or otherwise modify buildings and
facilities now or hereafter existing in the Complex and in connection with any
such activity and reconstruction, to erect temporary scaffolds and other aids
to construction on the exterior of the Premises, provided that access to the
Premises shall not be denied Tenant and that there shall be no encroachment
upon the interior of the Premises. Landlord shall have the right to close the
Common Areas or any portion thereof (including without limitation, all
roadways, driveways, accessways, sidewalks and parking areas and facilities now
or hereafter within the Complex) at such time and in such manner as is
necessary or appropriate, in Landlord's sole opinion, to prevent their
dedication as public rights-of-way or streets and to do and perform such other
acts in, to and with respect to the Common Areas as at the time in question are
within good and generally accepted standards of operation of mixed-use
developments. Any elimination or shutting off of light, air or view by any
structure which may be erected on lands adjacent to the Building shall in no
way affect this Lease and Landlord shall have no liability to Tenant with
respect thereto.
12.15. NO ESTATE IN LAND. This contract shall create the
relationship of landlord and tenant between Landlord and Tenant; no estate
shall pass out of Landlord; Tenant has only a usufruct, not subject to levy or
sale, and not assignable by Tenant except with Landlord's consent or as
otherwise expressly provided herein.
12.16. CUMULATIVE RIGHTS. All rights, powers and
privileges conferred hereunder upon the parties hereto shall be cumulative but
not restrictive to those given by law.
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12.17. PARAGRAPH TITLES. The paragraph titles used herein
are not to be considered a substantive part of this Lease, but merely
descriptive aids to identify the paragraph to which they refer. Use of the
masculine gender includes the feminine and neuter, and vice versa, where
necessary to impart contextual continuity.
12.18. SEVERABILITY; INTERPRETATION. Each clause and
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by applicable law; however, if any clause or provision of this Lease
is or becomes illegal, invalid or enforceable because of present or future laws
or any rule or regulation of any governmental body or entity, effective during
the Term, the intention of the parties hereto is that the remaining terms and
provisions of this Lease and the application of such terms and provisions to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, unless the amount of Rent payable
hereunder is thereby decreased, in which event Landlord may terminate this
Lease. Should any of the provisions of this Lease require judicial
interpretation, it is agreed that the court interpreting or construing same
shall not apply a presumption that the terms of any such provisions shall be
more strictly construed against one party by reason of any rule of construction
that a document is to be construed more strictly against the party who itself
of through its agent prepared the same, it being agreed that the agents of all
parties have participated in the negotiation and preparation of this Lease.
12.19. DAMAGE OR THEFT OF PERSONAL PROPERTY. All personal
property brought into the Premises shall be at the risk of the Tenant only and
Landlord shall not be liable for theft thereof or any damage thereto occasioned
by any acts of co-tenants, or other occupants of the Building, or any other
person.
12.20. HOLDING OVER. In the event Tenant remains in
possession of the premises after the expiration of the Term hereof, or of any
renewal term, with Landlord's written consent, Tenant shall be a tenant at will
and such tenancy shall be subject to all the provisions hereof, except that the
monthly rental shall be at the higher of double the monthly Base Rent payable
hereunder upon such expiration of the Term hereof, or of any renewal term, or
double the then current fair market rental value of the Premises. In the event
Tenant remains in possession of the Premises after the expiration of the Term
hereof, or any renewal term, without Landlord's written consent, Tenant shall
be a tenant at sufferance and may be evicted by Landlord without any notice,
but Tenant shall be obligated to pay rent for such period that Tenant holds
over without written consent at the same rate provided in the previous sentence
and shall also be liable for any and all other damages Landlord suffers as a
result of such holdover including, without limitation, the loss of a
prospective tenant for such space or claims made by other or prospective
tenants resulting from delay by Landlord in delivering possession of the
Premises to such other or prospective tenants. There shall be no renewal of
this Lease by operation of law or otherwise. Nothing in this Section shall be
construed as a consent by Landlord for any holding over by Tenant after the
expiration of the Term hereof, or any renewal term.
12.21. RULES AND REGULATIONS. The rules and regulations in
regard to the Building, annexed hereto, and all reasonable rules and
regulations which Landlord may hereafter, from time to time, adopt and
promulgate for the government and management of the Building and the Complex,
are hereby made a part of this Lease and shall, during the said term, be in all
things observed and performed by Tenant, his agents, employees and invitees.
12.22. QUIET ENJOYMENT. Tenant, upon payment in full of
the Required Rent and full performance of the terms, conditions, covenants and
agreements contained in this Lease, shall peaceably and quietly have, hold and
enjoy the Premises during the Term; subject, however, to all ground leases,
restrictive covenants, easements and other encumbrances now or hereafter
affecting the Premises, the Building or the Complex (if applicable). Landlord
shall not be responsible for the acts or omissions of any other tenant, Tenant
or third party that may interfere with Tenant's use and enjoyment of the
Premises.
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12.23. ENTIRE AGREEMENT. This Lease contains the entire
agreement of the parties and no representations, inducements, promises or
agreements, oral or otherwise, between the parties not embodied herein shall be
of any force or effect.
12.24. LIMITATION OF LIABILITY. Landlord's obligations and
liability with respect to this Lease shall be limited solely to Landlord's
interest in the Building, as such interest is constituted from time to time,
and neither Landlord nor any partner of Landlord, shall have any personal
liability whatsoever with respect to this Lease.
12.25. SUBMISSION OF AGREEMENT. Submission of this Lease
to Tenant for signature does not constitute a reservation of space or an option
to acquire a right of entry. This Lease is not binding or effective until
execution by and delivery to both Landlord and Tenant.
12.26. AUTHORITY. If Tenant executes this Lease as a
corporation or a limited liability company, each of the persons executing this
Lease on behalf of Tenant does hereby represent and warrant that Tenant is a
duly organized and validly existing corporation or limited liability company
(as the case may be), that Tenant is qualified to do business in the State of
Georgia, that Tenant has full right, power and authority to enter into this
Lease, and that each person signing on behalf of Tenant is authorized to do so.
If Tenant executes this Lease as a partnership, trust or other legal entity,
execution hereof shall constitute a representation and warranty by Tenant that
Tenant has complied with all applicable laws, rules and governmental
regulations relative to Tenant's right to do business in the State of Georgia,
that such entity has the full right and authority to enter into this Lease and
that all persons signing on behalf of Tenant were authorized to do so by any
and all necessary and appropriate partnership, trust or other action. In the
event any such representation and warranty is false, all persons who execute
this Lease shall be individually, jointly and severally, liable as Tenant. Upon
Landlord's request, Tenant shall provide Landlord with evidence reasonably
satisfactory to Tenant confirming the foregoing representations and warranties.
12.27. FORCE MAJEURE. Landlord shall be excused from the
performance of any of its obligations for the period of any delay resulting
from any cause beyond its control, including without limitation, all labor
disputes, governmental regulations or controls, fires or other casualties,
inability to obtain any materials or services or acts of God.
12.28. MULTIPLE TENANTS. If Tenant is composed of more
than one individual or entity, then all such individuals and entities shall be
jointly and severally liable for the due and property performance of Tenant's
duties and obligations arising from or in connection with this Lease.
12.29. TIME IS OF THE ESSENCE. Except as otherwise
specifically provided herein, time is of the essence of this Lease.
12.30. GOVERNING LAW. The laws of the State of Georgia
shall govern the interpretation, validity, performance and enforcement of this
Lease.
12.31. WAIVER OF RIGHTS. No failure or delay by Landlord
to exercise any right or power given it or to insist upon strict compliance by
Tenant with any obligation imposed on it, and no custom or practice of either
party hereto at variance with the terms hereof shall constitute a waiver or
modification of the terms hereof by Landlord or any right it has herein to
demand strict compliance with the terms hereof by Tenant. This Lease contains
the sole and entire agreement of Landlord and Tenant with respect to the
Premises and no prior or contemporaneous oral or written representations or
agreements between the parties and affecting the Premises shall have legal
effect. No representative, agent or employee of Landlord has or shall have any
authority to waive any provision of this Lease unless such waiver is expressly
made in writing and signed by an authorized representative of Landlord.
12.32. SPECIAL STIPULATIONS. The Special Stipulations, if
conflicting, if any, attached hereto are modifications to the terms of this
Lease and such Special Stipulation shall
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control in the event of any conflict with the other provisions of this Lease or
any exhibits hereto.
12.33. LANDLORD'S TRADENAMES. Tenant acknowledges and
agrees that the names "Paces Summit," "Regent Partners, Inc." and "Regent Paces
Ferry Office I, Inc." are registered tradenames of Landlord or affiliates of
Landlord (the "Tradenames") and that Landlord or affiliates of Landlord operate
under the Tradenames. Tenant acknowledges the superior rights of Landlord and
its affiliates to use the Tradenames, and agrees that it will not make use of
the Tradenames or authorize or allow their publication in any materials or
publications generated by Tenant or any affiliates of Tenant without Landlord's
prior written consent.
IN WITNESS WHEREOF, the duly authorized representatives of the parties
herein have hereunto set their hands and seals, the day and year first above
written.
<TABLE>
<S> <C>
Signed, sealed, delivered and sworn LANDLORD:
to in the presence of: --------
REGENT PACES FERRY OFFICE I,
INC., a Georgia corporation
/s/ Jennifer Terrell
- --------------------------------------
Notary Public
By: /s/ David B. Allman
----------------------------------------------
Name: David B. Allman
My Commission Expires: Title: President
-----------------------------------
December 20, 1997
- --------------------------------------
Attest: /s/ William E. Diffenderfer
------------------------------------------
[Notary Seal] Name: William E. Diffenderfer
Title: Asst. Secretary/Asst. Treasurer
-----------------------------------
(CORPORATE SEAL)
Signed, sealed, delivered and sworn TENANT:
to in the presence of:
Southeast Commerce Holding Co., a
-------------------------------------------------
/s/ Mary C. Blacker Georgia corporation
- --------------------------------------
- --------------------------------------
Notary Public
By: /s/ Richard A. Parlontieri
---------------------------------------------
Name: Richard A. Parlontieri
My Commission Expires: Title: Chairman/CEO
-----------------------------------
February 5, 2001
- --------------------------------------
Attest: /s/ Martha Cavaiani
[Notary Seal] ------------------------------------------
Name: Martha Cavaiani
Title: Director of Marketing
-----------------------------------
(CORPORATE SEAL)
</TABLE>
29
<PAGE> 37
SPECIAL STIPULATIONS
These Special Stipulations are attached to and made a part of that
certain Lease Agreement (the "Lease") dated October 14, 1997, by and between
REGENT PACES FERRY OFFICE 1, INC., a Georgia corporation ("Landlord") and
Southeast Commerce Holding Company, a Georgia Corporation ("Tenant"). The
capitalized terms contained in these Special Stipulations have the meaning
attributed to them in the Lease unless otherwise set forth herein. To the
extent there is any conflict or inconsistency between these Special
Stipulations and the Lease, these Special Stipulations shall supersede and
control over any such conflicting provisions.
1. Charter. Tenant is currently in the process of applying to the Office
of Thrift Supervision (the "OTS") to obtain a charter to operate as a federally
insured, federal savings association (the "Charter"). Tenant is also in the
process of raising funds to Meet the capital requirements which will be imposed
on Tenant as a condition to the issuance of the Charter. Landlord shall not be
obligated to incur any costs or expenses or perform any of Landlord's Work
until Tenant shall: have had its Charter finally approved and issued so that
Tenant has full authority to open and conduct a banking business (the
"Chartered Association"). Without limiting the foregoing, Tenant shall provide
to Landlord (i) a copy of its preliminary and final Charter approval from the
OTS, (ii)evidence that the FDIC has approved said Chartered Association for
FDIC provided insurance and (iii) evidence that Tenant has raised all funds
required by the OTS and the FDIC to capitalized the Chartered Association, and
in any event not lea than $5,000,000 (the "Chartered Evidence"), prior to
undertaking Landlord's Work. If Tenant shall not have created a Chartered
Association, and provided to Landlord evidence of same, including without
limitation, the Chartered Evidence prior to April 1, 1998, or if the OTS shall
earlier deny the application for the Charter or the Tenant shall withdraw its
application for the Charter, Landlord shall have the right to terminate this
Lease by providing written notice to Tenant.
2. Tenant Space Plans. Notwithstanding the provisions of Special
Stipulation 1, Landlord and Tenant shall promptly proceed with the preparation
of the Tenant Space Plans as set forth in the Work Letter, but Tenant agrees
that it shall be solely responsible for and pay, on demand, all costs and
expenses related to the preparation of the Tenant Space Plans as incurred. If
the Charter is issued, Tenant will thereafter be reimbursed for the costs and
expenses incurred by Tenant to have the Tenant Space Plans prepared up to the
amount set forth in Section 3 of the Work Letter. If Landlord examines its
right to terminate the Lease set forth in Special Stipulation No. 1, Landlord
shall not be responsible for any costs or expenses related to the Tenant Space
Plans.
3. Assignment to Chartered Association. Once the Charter has been issued,
Tenant may assign the Lease or Landlord may require that the Lease be assigned
to the Chartered Association in accordance with the assignment provisions of
the Lease.
4. Vault and Automatic Teller Machine. The Premises are or will be
comprised of approximately 5,400 rentable square feet of space in the lobby of
the Building, which will include, without limitation, a vault, (the "Vault")
and an automatic taller machine (the "ATM"). The ATM will be affixed to the
exterior of the Building through the Premises. The Tenant Space Plans shall
include plans and specifications for installation of the Vault and the ATM,
which shall be reviewed and approved by Landlord as provided in the Work
Letter. Tenant agrees to keep the ATM in good condition and repair and to
operate the ATM continuously throughout the term of the Lease. In the event
that the ATM is not continuously and actively operated and used (excluding
non-use during periods of ordinary maintenance or repair), Tenant at Landlord's
request and in any event prior to the end of the Term shall remove the ATM and
restore the exterior of the Building to the condition the Building was in prior
to the installation of the ATM, including the replacement or restoration of the
Building facade. Prior to the end of the Term, Tenant shall also remove the
Vault from the Premises, and return the portion of the Premises previously
occupied by the Vault to the condition the Premises were in prior to the
installation of the Vault. Tenant agrees to maintain the area surrounding the
ATM in good order, providing cleaning services to the area at regular intervals
each day to ensure that the area remains free of debris and trash. Tenant
agrees to undertake any and all security measures
<PAGE> 38
necessary to keep its Premises and the area surrounding the ATM safe and free
of crime, including, but not limited to, the installation of surveillance
cameras and exterior lighting and the posting of security guards as shall be
reasonably necessary or customary in the industry. Tenant agrees to defend,
indemnify and hold harmless Landlord, its partners, agents, officers, managers,
members, directors, employees and representatives as well as their
predecessors, heirs, executors, administrators, legal representatives,
successors and assigns, jointly and individually, of and from and against any
and all actions (civil and criminal) all claims, damages, demands, loss
(including death), liabilities and expenses (including, without limitations,
reasonable attorneys' fees) suffered, asserted against or incurred by Landlord
as a result of use or operation of the ATM or the operation of the Premises as
a Chartered Association.
5. Notwithstanding anything in Section 3 or Exhibit D to the contrary,
the Commencement Date of the Lease shall be April 1, 1998.
6. Provided that the granting of such signage approval shall not after,
or diminish Landlord's right or ability to erec4 the maximum amount of signage
now permitted on the Property, and the property (the "Option Property")
adjacent and to the east of the Property which Landlord currently has an option
to purchase, Tenant may make application to the local governmental authorities
for a variance, special use permit or other appropriate approval or authority
(the "Signage Approval") to allow Tenant to erect separate, free-standing
signage on the Property exterior to the Building along Paces Ferry Road between
the main driveway for the Building and Hillcrest Road ("Tenant's Signage").
Provided Tenant can obtain the Signage Approval without so diminishing
Landlord's sign rights, Landlord will assist Tenant in its pursuit of the
Signage Approval, at Tenant's sole cost and expense, and if obtained, allow
Tenant at Tenant's sole cost and expense to erect Tenant's Signage on the
Property in the area aforesaid. Within 60 days of the execution of the Lease,
Tenant shall submit to Landlord, for Landlord's review and approval, plans and
specifications for Tenant's Signage, including all information regarding the
dimensions, lettering, color, design and structure of Tenant's Signage, which
shall be subject to Landlord's approval. Tenant's rights to Tenant's Signage am
not transferable, except in the event of an assignment of this Lease to the
Chartered Association. In the event that Tenant assigns or sublets the
Premises, other than an assignment of the Lease to the Chartered Association,
which Chartered Association shall have the same rights as Tenant with respect
to the construction and maintenance of Tenant's Signage, Tenant shall
immediately remove Tenant's Signage at Tenant's sole cost and expense, and
repair any damage caused to the Building or the Property resulting from such
removal.
7. Section 12.13 TRANSFER OF TENANTS is hereby deleted.
2
<PAGE> 39
EXHIBIT A
Legal Description of Property
ALL THAT TRACTOR PARCEL OF LAND lying and being in Land Lots 769 and 816 of the
17th District, 2nd Section of Cobb County, Georgia, being more particularly
described as follows:
That certain 4.167-acre tract of land more particularly depicted as "Tract 1"
on that certain subdivision plat dated September 17, 1996, last revised October
24, 1996, recorded in Plat Book 164 at page 77, and rerecorded in Plat Book 164
at page 79, Cobb County, Georgia records (the "Plat"); the Plat is incorporated
herein by this reference.
TOGETHER WITH all right, title and interest of the owner of said Tract 1 in and
to the easements described in that certain Limited Warranty Deed and Agreement
dated October 31, 1996 between The Bankers Bank and Regent Paces Ferry Office
1, Inc. recorded at Deed Book 9964, Page 133 of the aforesaid records.
<PAGE> 40
EXHIBIT B
Premises
<PAGE> 41
EXHBIIT C
RULES AND REGULATIONS
1. The sidewalks, entry passages, corridors, halls, elevators and
stairways shall not be obstructed by Tenants or used by them for any purpose
other than those of ingress and egress. The floors, skylights and windows that
reflect or admit light into any place in said building shall not be covered or
obstructed by Tenants. The water closets and other water apparatus shall not be
used for any other purpose than those for which they were constructed and no
sweepings, rubbish or other obstructing substances shall be thrown therein.
2. No advertisement or other notice shall be inscribed, painted or
affixed on any part of the outside or inside of said building, except upon the
doors, and of such order, size and style, and at such places, as shall be
designated by Landlord. Interior signs on doors will be ordered for Tenants by
Landlord, the cost thereof to be charged to and paid for by Tenants.
3. No Tenant shall do or permit to be done in its Premises. or
bring or keep anything therein, which shall in any way increase the rate of
fire insurance on the Building. or on Property kept therein, or obstruct or
interfere with the rights of other Tenants in any way injure or annoy them, or
conflict with the laws relating to fires, or with the regulations of the Fire
Department, or any part thereof, or conflict with any of the rules and
ordinances of the Board of Health. Tenants, their clerks and servants, shall
maintain order in the Premises and the Building shall not make or permit any
improper noise in (lie Premises or the Building or interfere in any way with
other Tenants, tenants or those having business with them. Nothing shall be
thrown by Tenants, their clerks or servants, out of the windows or doors, or
down the passages or skylights of the Building. No rooms shall be occupied or
used as sleeping or lodging apartments at any time. No part of the Building
shall be used or in any way appropriated for gambling, immoral or other
unlawful practices, and no intoxicating liquor or liquors shall be sold in the
Building.
4. Tenants shall not employ any persons other than the janitors of
Landlord (who will be provided with pass-keys into the offices) for the purpose
of cleaning or taking charge of the Premises, except as may be specifically
provided otherwise in the Lease.
5. No animals, birds, bicycles or other vehicles shall be allowed
in the offices, halls, corridors, elevators or elsewhere in the Building,
without the approval of Landlord, except for animals for visually impaired
persons or other disabilities for which animals are utilized.
6. No painting shall be done, nor shall any alterations be made to
any part of the Building or the Promises by putting up or changing any
partitions, doors or windows, nor shall there be any nailing. boring or
screwing into the woodwork or plastering, nor shall any connection be made in
the electric wires or gas or electric mixture without the consent in writing on
each occasion of Landlord; provided however, the Tenant shall have the right to
hang pictures and other decorative art on the interior walls of the Premises.
All glass, locks and trimmings in or upon the doors and windows of the Building
shall be kept whole and, when any part thereof shall be broken by Tenant or
Tenant's agent, the same shall be immediately replaced or repaired. by Tenant
and put in order under the direction and to the satisfaction of Landlord, or
its agents, and shall be kept whole and in good repair. Tenants shall not
injure, overload, or deface the Building, the woodwork or the walls of the
Promises, nor carry on upon the Premises any noxious, noisy or offensive
business.
7. Two keys will be furnished Tenants without charge. No additional
locks or latches shall be put upon any door without the written consent of
Landlord. Tenants, at the termination of their Lease, shall return to Landlord
all keys to doors in the Building.
8. Landlord in all cases retains the power to prescribe the weight
and position of iron safes or other heavy articles. Tenants must make
arrangements with the superintendent of the
<PAGE> 42
Building when the elevator is required for the purpose of the carrying of any
kind of freight.
9. The use of burning fluid, camphene, benzene, kerosene or
anything except gas or electricity, for lighting the Premises, is prohibited.
No offensive gases or liquids will be permitted.
10. If Tenants desire blinds, coverings or drapes over the windows,
they must be of such shape, color and material as may be prescribed by
Landlord, and shall be erected only with Landlord's consent and at the expense
of the Tenant desiring them. No awnings shall be placed on the Building.
11. If Tenants require wiring for a bell or buzz system, such wiring
shall be done by the electrician of the Building only, and no outside wiring
man shall be allowed to do work of this kind unless by the written permission
of Landlord, or its agent. If telegraphic or telephonic service is desired, the
wiring for same shall be done as directed by the electrician of the Building or
by some other employee of Landlord who may be instructed by the superintendent
of the Building to supervise same, and no boring or cutting for wiring shall be
done unless approved by Landlord or its representatives, as stated.
12. At Landlord's discretion, the Building may be in charge of a
night watchman, and every person entering or leaving the Building may be
questioned by the watchman as to the visitoe3 business in the Building and
shall sign his or her name on a form provided by the Building for so
registering such persons. Landlord shall have no liability with respect to
breaches of the Building security, if any.
2
<PAGE> 43
EXHIBIT D
WORK LETTER
To induce Tenant to enter into the Lease (to which this Exhibit D is
attached) and in consideration of the mutual covenants hereinafter contained,
Landlord and Tenant agree as follows:
1. Leased Premises "As-Is." Tenant and Landlord agree and Tenant
acknowledges that the Premises are in all respects being leased by Landlord to
Tenant and shall be accepted by Tenant, in their current "As-Is"/"Where-Is"
condition and that Landlord has and shall have no obligation or duty whatsoever
to make any alterations, repairs or improvements of any kind or nature in or to
the Premises in order to prepare same for Tenant's occupancy, except for such
alterations, repairs or improvements, if any, as may be expressly provided-in
Paragraph 2 below.
2. Landlord's Work. Landlord shall construct or cause to be
construct4 the Premises (the "Work") in accordance with the Tenant Space Plans
(as hereinafter defined). Such construction shall be performed by Metric
Constructors, Inc., as general contractor, or such other general contractor as
Landlord may select (the "Landlord's Contractor"). Tenant shall cause
Landlord's Architect to prepare a preliminary layout, working drawings, plans
and specifications necessary for the build-out of the improvements which will
comprise Tenant's Premises, adequate in detail for Landlord to perform or cause
to be performed the Work, including without limitation, mechanical (sprinkler,
air conditioning, hearings electrical and plumbing) drawings covering
mechanical elements of the Work (such drawings are referred to as the "Tenant
Space Plans"), which Tenant Space Plans shall cover the construction of the
Premises beyond the finish level for the Building described in Exhibit F. The
Tenant Space Plans shall be completed and submitted by Tenant to Landlord
within sixty (60) days of the date of this Lease. The Tenant Space Plans (and
any modifications thereof) shall comply with all governmental standards,
regulations and requirements and shall be subject to Landlord's approval (which
approval shall not be unreasonably withhold, conditioned or delayed).
3. Build-Out Allowance. Landlord will provide to Tenant an
allowance of up to $19.00 per rentable square foot contained within the
Premises for the actual build-out of the Premises pursuant to the Tenant Space
Plans (the "Buildout Allowance") and up to $1.00 per rentable square foot
contained within the Premises for the actual costs of preparation of the Tenant
Space Plans and any changes thereto and any costs necessary to file such plans
with, and obtain the necessary permits and approvals of any governmental
authority having jurisdiction (the "Design Fee Allowance') inclusive,, of a
three percent (3%) construction management fee Tenant and Landlord agree that
the costs for tenant finishes and improvements, and the costs of preparing the
Tenant Space Plans and any modifications thereto in excess of such allowances
set forth above for each shall be paid by. Tenant to Landlord as follows: fifty
percent (50%) of Tenants estimated costs prior to commencement of the Work;
twenty-rive percent (25%) of Tenant's estimated costs within five (5) business
days of Landlord's notice to Tenant that fifty percent (50%) of the
construction is complete and the balance of actual costs upon completion of the
Work and prior to Tenant's occupancy of the Premises. Any additional amounts
which later become due which were not within Landlord's estimate shall be
payable on demand. Should Tenant fail to pay for such excess Tenant finishes as
herein provided, such amount due shall accrue interest at the Interest Rate and
the failure to pay such amount when due shall be an Event of Default.
4. Tenant's Access Prior to Commencement Date. Landlord, at
Landlord's discretion, shall permit Tenant and Tenant's agents to enter the
Premises prior to the Commencement Date of the term of the Lease in order that
Tenant may do such other work as may be required by Tenant to make the Premises
ready for Tenant's use and occupancy. If Landlord permits such entry prior to
such Commencement Date, such permission is conditioned upon Tenant and its
agents, contractors, employees and invitees working in harmony and not
interfering with Landlord and its agents, contractors and employees in doing
the Work or other
2
<PAGE> 44
tenants and occupants of the Building. If at any time such entry shall cause or
threaten to cause disharmony or interference, Landlord shall have the right to
withdraw such permission upon twenty-four (24) hours notice to Tenant. Tenant
agrees that any such entry into and occupation of the Premises shall be deemed
to be under all of the terms, covenants, conditions and provisions of the Lease
except as to the covenant to pay the rent and Tenant's acceptance or occupancy
of the Premises for the purposes of determining the Commencement Date, and
further agrees Landlord shall not be liable in any way for any injury, loss or
damage which may occur to any of Tenant's work and installations made in the
Premises or to properties placed therein prior to the Commencement Date of the
term of the Lease, the same being at Tenant's sole risk.
5. Delays in Occupancy. If for any reason, other than Tenant Delays
described below, Landlord cannot or is unable to deliver possession of the
Premises to Tenant on or before the Anticipated Commencement Date in accordance
with and in the condition required by this Work Letter and (lie Lease, the
Least shall not be void or voidable except as provided in the following
sentence, Landlord shall not be liable to Tenant for any loss or damage
resulting from Landlord's failure or delay in so delivering possession of the
Premises, but in such case the Commencement Date shall not occur until Landlord
is able to substantially complete the Work and deliver the Premises to Tenant
in the condition required by this Lease. Further, if for any reason (i)
Landlord shall not have delivered Possession of the Premises to Tenant or (ii)
if the Tenant Delay Completion Date (as hereinafter deemed) shall not have
occurred on or before the date which is six (6) months after the Anticipated
Commencement Date, then this Lease shall be voidable by either party upon
thirty (30) days written notice to the other given at any time prior to
delivery of possession in accordance with this Work Letter and the Lease,
provided that such notice shall be void if possession is delivered within said
thirty (30) day period. If the Lease is voided pursuant to this provision, then
any moneys advanced by Tenant to Landlord shall be returned and the parties
hereto shall have no further rights, claims or obligations under this Lease.
6. Tenant Delays. If the Anticipated Commencement Date occurs, but
Landlord is unable to deliver the Premises to Tenant in accordance with and in
the condition required by this Work Letter and the Lease due to any act,
emission, delay or default by Tenant, including any delays by Tenant in the
submission of plans, drawings, specifications or other information or in
approving any drawings or estimates or in giving any authorization or .approval
("Tenant Delay"), then Landlord shall be deemed to have substantially completed
the Premises on the date the Premises would have been substantially completed
but for such Tenant Delay (the "Tenant Delay Completion Date") and Tenant's
obligation under this Lease, including without limitation, the obligation to
pay Rent shall nonetheless commence on the date which is thirty (30) days after
the Tenant Delay Completion Date (which shall in such case be the Commencement
Date).
2
<PAGE> 45
EXHIBIT E
ACKNOWLEDGMENT, ACCEPTANCE AND AMENDMENT
Tenant hereby acknowledges that the Premises demised pursuant to the
Lease to which this Exhibit G is attached (the "Lease"), and all tenant
finish items to be completed by the Landlord, or Landlord's Contractors have
been satisfactorily completed in every respect, except for the punchlist
items set forth below, and Tenant hereby accepts said Premises as
substantially complete and ready for the uses intended as set forth in the
Lease. Landlord shall complete the punchlist items, if any, as soon as is
reasonably possible. Possession of the Premises is hereby delivered to Tonan4
and any damages to walls, ceilings, floors or existing work, except for any
damages caused by Landlord or Landlord's contractors in completing any
punchlist items, shall be the sole responsibility of Tenant.
Tenant and Landlord hereby further acknowledge and agree as follows:
1. The Commencement Date (as defined in the Lease) is 199__ and the
Expiration Date (as defined in the Lease) is _______________, 199__.
2. The exact rentable square feet contained within the Premises is _____
square feet; and if differing from Exhibit A-1 attached to the Lease, the
Premises are as shown and outlined in red on Exhibit C-1 attached hereto.
3. Tenant's Share is ________%.
4. The initial Base Rent payable under die Lease is $__________,
payable in equal monthly installments as provided in the Lease.
5. Rent under the Lease will commence as of ________________________.
6. Tenant intends to occupy the Premises on ___________________________.
7. _____________ (No.) keys to the Premises have been delivered to
Tenant or Tenant's representative.
8. The following punch list items are all that remain to be completed by
Landlord or Landlords contractor:
9. This Acknowledgment, Acceptance and Amendment, when executed by
Landlord and Tenant, shall be attached to and shall become a part of the Lease.
If any provision contained herein conflicts with any provision of the Lease,
the provisions hereof shall supersede and control, and the Lease shall be
deemed modified and amended to conform with the Provisions hereof.
10. Other agreements or modifications:
IN WITNESS WHEREOF, Landlord and Tenant leave Hereunto set their
hands and seals, this ____ day of _______________, 19___.
TENANT: LANDLORD:
- ------ --------
REGENT PACES FERRY OFFICE I, INC.
- ---------------------------------
By: By:
------------------------------ -------------------------------
Title: Title:
------------------------ -------------------------
By: By:
------------------------------ -------------------------------
Title: Title:
------------------------ -------------------------
[CORPORATE SEAL] [CORPORATE SEAL]
<PAGE> 46
EXHIBIT F
BUILDING SHELL CONSTRUCTION
Landlord shall complete the following improvements to the Building in
order for the Building to be considered substantially complete. The Tenant
Space Plans shall cover any additional improvements necessary to complete the
Promises.
(a) Perimeter walls and core walls on the floor on which the
Premises are located completed, taped, bedded and ready for paint finish;
(b) Unfinished concrete floors throughout the Premises broom
clean and ready for Building Standard carpet;
(c) Building Standard 110 Volt 20 amp. power supplied to the
Building core, together with Building Standard power grid installed in coiling;
(d) Men's and Women's restroom facilities including drinking
fountain with Building. Standard finishes (or with such temporary finishes as
to allow the facilities to be used) located oft each floor-on which the
Promises am located;
(e) Building Standard. voice communication speakers, exit
lights, fire extinguishers. and cabinets within the core, and smoke detectors
in accordance with applicable building codes and based on an open office floor
plan on each floor on which the Promises are located;
(f) Telephone distribution room installed with mounting board;
(g) Building Standard 4'x4' ceiling grid system installed
throughout with Building Standard ceiling tile and grid materials to complete
the 2'x2' ceiling grid stocked on floor;
(h) Building Standard sprinkler distribution from main loop to
brass upright sprinkler heads installed at a ratio of one head for each 225
square fed of Usable Area of the Premises based on an open office floor plan;
(i) Thin line (1') aluminum horizontal mini-blinds to cover all
exterior windows;
(j) Building Standard 2' x 4' three inch parabolic light
fixtures stacked on the floor on the basis of 1 fixture for every 80 usable
square feet;
(k) A variable air volume HVAC distribution system with 1
powered induction unit per 1,000 square foot for exterior zones and I variable
air volume unit per 1,500 square foot for interior zones based on a full floor
open office plan, I thermostat connection in the ceiling is provided for each
zone. Low pressure duct work downstream from exterior zone mixing boxes
connected to perimeter diffusers.
<PAGE> 47
EXHIBIT G
STATEMENT OF TENANT IN RE: LEASE
[Tenant's Letterhead]
Date: ______________________________
- ---------------------------------
- ---------------------------------
- ---------------------------------
- ---------------------------------
[Mortgage #/Describe Contract]_____________
Prooperty Name ____________________________
Address (including ZIP CODE)_______________
Tenant's Floor and Suite # ________________
Ladies and Gentlemen:
It is our understanding that you have committed to [place a mortgage
upon/acquire an interest in) the subject promises and as a condition precedent
thereof have required this certification of the undersigned:
The undersigned, as Tenant under that certain lease dated
_______________________, made with ______________________, as Landlord, hereby
ratifies the said Lease and certifies that:
1. The "Commencement Date" of said lease is ______________; and
2. the undersigned is presently solvent and free from reorganization
and/or bankruptcy and is in occupancy, open and conducting
business in the premises; and
3. the current base rental payable pursuant to the terms of said
lease is $____________ per annum; and further, additional rental
pursuant to said lease is payable as follows:___________________
_______________________; and
4. said lease is in full force and effect and has not been
assigned, modified, supplemented or amended in any way (except
by agreement(s) dated ____________________), and neither party
thereto is in default thereunder, and
5. the lease described above represents the entire agreement
between the parties as to the leasing of the premises; and
6. the term of said lease expires on ____________________; and
7. all conditions under said lease to be performed by the lessor
have been satisfied, including without limitation, all
co-tenancy requirements thereunder, if any (or state unperformed
conditions); and
8. all required contributions by lessor to lessee on account of
lessee's improvements have been received; and
9. on this date there are no existing defenses or offsets, claims
or counterclaims which the undersigned has against the
enforcement of said lease by the lessor; and
<PAGE> 48
10. no rental has been paid in advance and no security (except the
security deposit in the amount of $______________) has been
deposited with lessor; and
11. lessee's floor area is ____________ square feet; and
12. the most recent payment of current basis rental was for the
payment due on ________________, 19___, and all basic rental and
additional rental payable pursuant to the terms of the lease
have been paid up to said date; and
13. the undersigned acknowledges notice that lessor's interest under
the lease and the rent and all other sums due thereunder will be
assigned to you [as part of the security for the mortgage loan
by you to lessor in connection with said transfer]. [In the
event the __________________________, as lender, notified die
undersigned of a default under the mortgage and demands that the
undersigned pay its rent and all other sums due under the lease
to lender, lessee agrees that it shall pay its rent and all such
other sums to lender.]
Very truly yours,
---------------------------------
(Lessee)
By:
------------------------------
Its:
-----------------------------
2
<PAGE> 49
EXHIBIT H
All that tract or parcel of land situated, lying and being in Land
Lots 769 and 816 in the 17th District, 2nd Section, Cobb County, Georgia and
being Tract 2 containing 4.223 acres on that certain subdivision plat for The
Banker's Bank prepared by Armstrong Land Surveying, Inc. dated September 17,
1996, last revised October 24, 1996 recorded in Plat Book 164, page 77, Cobb
County, Georgia, records and rerecorded in Plat Book 164, page 79, aforesaid
records.
TOGETHER WITH easement rights as conveyed in that certain Limited Warranty Deed
and Agreement from The Banker's Bank to Regent Paces Ferry Office 1, Inc. Dated
October 31, 1996 and recorded on or about such date in the Cobb County, Georgia
records.
<PAGE> 50
EXHIBIT I
INDEMNIFICATION AND RELEASE AGREEMENT
THIS INDEMNIFICATION AND RELEASE AGREEMENT (the "Agreement") is made
as of this _______ day of _____________, ______, by and between REGENT PACES
FERRY OFFICE I, INC., a Georgia corporation (the "Landlord") and
_________________ _______________, a _________________________ ("Tenant").
WITNESSETH:
WHEREAS, Tenant has entered into a lease agreement dated as of
_______________, 1997 (the "Lease"), with Landlord for the lease of certain
premises located at 2410 Paces Ferry Road, Atlanta, Georgia 30339 in Cobb
County, Georgia, as Tenant's said premises are more particularly described in
the Lease (the "Premises");
WHEREAS, in consideration for the use by Tenant of certain exercise
facilities located at the Premises (the "Facilities"), Tenant has agreed to
enter into this Agreement for the benefit of Landlord.
NOW, THEREFORE, for and in consideration of the promises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Use of Facilities. In connection with the use of the Facilities, Tenant
acknowledges and agrees to the following:
(a) Tenant, its agents, employees or authorized invitees may use the Facilities
only in accordance with the Rules and Regulations promulgated by Landlord, a
copy of which is attached hereto as Schedule A and made a part hereof, as
Landlord may amend the same from time to time;
(b) The Facilities may be used only by Tenant and the agents, employees and
authorized invitees of the Tenant and only under the terms and conditions
provided herein;
(c) To induce Landlord to allow Tenant to use the Facilities free of charge,
Tenant recognizes and agrees that the condition, operation and use of the
Facilities will be unsupervised by Landlord, and its respective agents,
employees and representatives, and Tenant hereby agrees to indemnify and hold
harmless the Landlord, as set forth below;
(d) All use of the Facilities by Tenant, its agents, invitees or employees is
at the sole risk of each such party using the same, and Landlord shall have no
liability therefor;
(e) Prior to using the Facilities, each person requesting the privilege of
using the Facilities will execute and acknowledge (the "Acknowledgment") of
their assumption of risk and release of Landlord for the use of the Facilities,
a copy of which is attached hereto and made a part hereof as Schedule B; and
(f) Each party using the Facilities has sole responsibility for being aware of
(I) the proper use of the Facilities; (II) the condition of the Facilities;
(III) the limitations of such party in the use of the Facilities; and (IV) the
physical and medical condition of such party, as determined by such party after
consulting with their physician as to the use of the Facilities.
2. Agreement of Tenant. Tenant agrees that only those employees or agents of
Tenant who are designated by Tenant in writing to Landlord and who have
executed an original Acknowledgment and delivered same to Landlord shall have a
security code or be provided with an access card which allows them access to
the Facilities; provided, however, that the Landlord shall not be responsible
for monitoring the identity of the security code holder or
<PAGE> 51
access card holder. A disclaimer of liability in the form attached hereto as
Schedule C shall be posted at appropriate and noticeable locations in the
Facilities and Tenant's use and any use by Tenant's agents, employees and
authorized invitees of the Facilities shall be subject thereto. Landlord shall
not provide, and shall be under no obligation, express or implied, to provide,
personnel on site to supervise the Facilities.
3. Indemnification. Tenant shall and does hereby agree to indemnify, defend and
hold harmless Landlord, its partners, agents, officers, directors, employees
and representatives as well as their predecessors, heirs, executors,
administrators, legal representatives, successors and assigns, jointly and
individually, of and from any and all actions (civil and criminal), claims,
damages, demands, loss (including death), liabilities and express (including,
without limitations, reasonable attorneys' fees), except for those arising from
or as a result of any gross negligence or willful misconduct of or material
breach of this Agreement by Landlord or any of its partners, agents, officers,
directors, employees, or authorized representatives, which action, claim,
damage, demand, loss or expense is asserted against Landlord as a result of the
use of the Facilities by Tenant, by the agents, employees or invitees of
Tenant, or by others permitted in the Facilities by Tenant or its agents or
employees.
4. Release. Tenant hereby irrevocably and unconditionally releases, remises,
acquits and forever discharges Landlord, its partners, agents, officers,
managers, members, directors, employees and representatives, as well as their
predecessors, heirs, executors, administrators, legal representatives,
successor and assigns, jointly and individually, of and from any and all
claims, demands, causes of action, obligations, damages, cost, attorneys' fees
and liabilities, whether known or unknown and whether direct, indirect, or
derivative, of whatever kind or nature, except for those arising from or as a
result of any gross negligence or willful misconduct or material breach of this
Agreement by Landlord or any of its partners, agents, officers, managers,
members, directors, employees or authorized representatives, which claims,
demands, causes of action, obligations, damages, costs, attorneys' fees or
liabilities could be asserted in any lawsuit now, or which may accrue at any
time in the future, as a result of the use to the Facilities by Tenant, by the
employees or by others permitted on the Facilities by Tenant, its employees,
agents or invitees.
5. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors, heirs,
and assigns.
6. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Georgia.
7. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto. This Agreement may not be enlarged, modified or altered
except in writing and signed by the parties hereto.
IN WITNESS WHEREOF, the duly authorized representatives of Tenant, Landlord
have executed this Agreement as of the day and year above written.
TENANT:
- -------------------------------------
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
[CORPORATE SEAL]
2
<PAGE> 52
SCHEDULE TO HEALTH FACILITY INDEMNIFICATION AND RELEASE
AGREEMENT
RULES AND REGULATIONS REGARDING
THE HEALTH FACILITY
1. Only authorized tenants and their personnel may enter this Facility. All
persons must be 18 years of age or older.
2. Anyone using the Facility uses it at HIS OR HER OWN RISK AND ASSUMES FULL
AND COMPLETE RESPONSIBILITY for any injury or loss that might be suffered as a
result of such use.
3. ALL EQUIPMENT AND FACILITIES MUST BE USED IN ACCORDANCE WITH THEIR
INSTRUCTIONS.
4. NO SMOKING ALLOWED in Facility.
5. NO ALCOHOLIC BEVERAGES ALLOWED in Facility.
6. Proper attire must be worn at all times.
7. No equipment shall be removed from the Facility.
8. No permanent locks are to be left on the lockers.
9. No clothes, towels or personal effects are to be left in the Facility.
10. Please keep the Facility SAFE AND CLEAN.
11. Conditions are subject to change without prior notice.
12. Membership can be revoked due to undesirable behavior, abuse of equipment,
or abuse of the Rules and Regulations, and such undesirable behavior is not
limited to the items listed above.
Operating Hours:
Monday through Friday - ______ a.m. through ______ p.m.
<PAGE> 53
SCHEDULE B TO HEALTH FACILITY INDEMNIFICATION AND RELEASE
AGREEMENT
RELEASE AGREEMENT
In consideration for the use of the exercise and related facilities
including but not limited to any and all exercise equipment located at the
health facility at 2410 Paces Ferry Road, Atlanta, Georgia 30339 (the
"Facilities") in connection with the leasing of certain premises by
_______________________________, a _____________________ (the "Tenant"), the
undersigned acknowledges and agrees with REGENT PACES FERRY OFFICE I, INC., a
Georgia corporation (the "Landlord") as follows:
1. The undersigned shall have the right to use the Facilities only in
accordance with the Rules and Regulations promulgated by Landlord from time to
time. With his/her signature below, the undersigned acknowledges that he/she
has read, understands and agrees to abide by and comply with all the current
Rules and Regulations and any other Rules and Regulations now or hereafter
promulgated by Landlord.
2. The Facilities may be used only by Tenant, the agents, employees and
authorized invitees of Tenant.
3. In order that the Facilities may be used free of charge, the undersigned
recognizes that the condition, operation and use of the Facilities will be
unsupervised by Landlord, its respective agents, and employees and the
undersigned shall be responsible for any personal injury and any loss of
personal property.
4. All use of the Facilities by Tenant, its agents, employees, authorized
invitees or others is at the sole risk of each such party, and Landlord shall
have no liability therefor, and the undersigned hereby expressly and
unconditionally releases Landlord from all liability, loss cost and expense for
the use by the undersigned of the Facilities.
5. The undersigned acknowledges and agrees that he/she has sole
responsibility for being aware of (i) the proper use of the Facilities, (ii)
the condition of the Facilities; (iii) his/her limitations in the use of the
Facilities, and (iv) the physical and medical condition of such party, as
determined by such party after consulting with their physical as to the use of
the Facilities.
6. Tenant hereby irrevocably and unconditionally releases, remises, acquits
and forever discharges Landlord, its partners, agents, officers, managers,
members, directors, employees and representatives, as well as their
predecessors, heirs, executors, administrators, legal representatives,
successor and assigns, jointly and individually, of and from any and all
claims, demands, causes of action, obligations, damages, cost, attorneys' fees
and liabilities, whether known or unknown and whether direct, indirect, or
derivative, of whatever kind or nature, except for those arising from or as a
result of any gross negligence or willful misconduct or material breach of this
Agreement by Landlord or any of its partners, agents, officers, managers,
members, directors, employees or authorized representatives, which could be
asserted in any lawsuit now, or which may accrue at any time in the future, as
a result of the use to the Facilities by Tenant, by the employees or by others
permitted on the Facilities by Tenant, its employees, agents or invitees.
<PAGE> 54
This Release is executed by the undersigned, with full knowledge of
its contents, including, but not limited to, the assumption of risk by the
undersigned for his/her use of the Facilities and the complete and
unconditional release of Landlord from Liability for the use by the undersigned
of the Facilities.
WITNESS: BY:
- -------------------------------(SEAL) ----------------------------------
Print Name: Print Name:
-------------------------- -----------------------
Date: Date:
-------------------------------- -----------------------------
2
<PAGE> 55
SCHEDULE C
NOTICE
HEALTH FACILITY
PLEASE NOTE:
The equipment in this Health Facility is intended for private use only
by Paces Summit tenants and their employees who have offices located at 2410
Paces Ferry Road, Atlanta, Georgia 30339. Regent Paces Ferry Office I, Inc.
("Landlord") expressly denies liability for the use of these exercise
facilities, which use shall be at the user's own risk. All tenants and
employees assume full responsibility for the unsupervised use of these exercise
facilities owned and made available by the Landlord and shall hold the Landlord
harmless from any and all loss, claims, injury, damage or liability sustained
or incurred by them resulting therefrom.
If a person has any history of health or medical problems, he or she
should consult a physician before using this Health Facility. All persons
should consult an exercise professional before undertaking a program of
strenuous exercise.
<PAGE> 1
EXHIBIT 23.1
[B&M LOGO]
BRICKER & MELTON, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
3700 CRESTWOOD PARKWAY
SUITE 590
DULUTH, GEORGIA 30136
(770) 717-1175
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the incorporation by reference of our report dated
November 30, 1997, relating to the financial statements of Southeast Commerce
Holding Company, in the Registration on Form SB-2 and Prospectus, and to the
reference to our firm therein under the caption "Experts."
BRICKER & MELTON, P.A.
Duluth, Georgia
December 1, 1997
FAX (770) 717-8354
MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
SEC PRACTICE SECTION
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SOUTHEAST COMMERCE FOR THE THREE MONTHS ENDED NOVEMBER
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> AUG-22-1997
<PERIOD-END> NOV-30-1997
<CASH> 24,444
<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> 112,027
<DEPOSITS> 0
<SHORT-TERM> 149,523
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 37,496
<TOTAL-LIABILITIES-AND-EQUITY> 112,027
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 240
<INTEREST-INCOME-NET> (240)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> (3,703)
<INCOME-PRETAX> (37,596)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,596)
<EPS-PRIMARY> (3,760)
<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>
