<PAGE> 1
As filed with the Securities and Exchange Commission on February 10, 1998.
Registration No. ___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------------
UNITY HOLDINGS, INC.
(Name of Small Business Issuer in Its Charter)
Georgia 6021 58-2350609
----------------------- ---------------------------- ------------------------
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Classification Identification No.)
Incorporation or Code Number)
Organization)
Unity Holdings, Inc.
P.O. Box 200308
Cartersville, Georgia 30120-9006
(770) 606-0555
(Address and Telephone Number of Principal Executive Offices)
-------------------------
Unity Holdings, Inc.
P.O. Box 200308
Cartersville, Georgia 30120-9006
(770) 606-0555
(Address of Principal Place of Business or Intended Principal
Place of Business)
-------------------------
Michael L. McPherson
President
Unity Holdings, Inc.
P.O. Box 200308
Cartersville, Georgia 30120-9006
(770) 606-0555
[email protected]
(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:
Michael L. McPherson Neil E. Grayson, Esq.
President Nelson Mullins Riley & Scarborough, L.L.P.
Unity Holdings, Inc. 999 Peachtree Street, NE, Suite 1400
P.O. Box 200308 First Union Plaza Building
Cartersville, Georgia 30120-9006 Atlanta, Georgia 30309
(770) 606-0555 (404) 817-6000
(770) 606-1855(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- _________________
<PAGE> 2
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================
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... 1,000,000 $10.00 $10,000,000 $2,950
===========================================================================================================
</TABLE>
(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> 3
PROSPECTUS
UNITY HOLDINGS, INC.
A PROPOSED HOLDING COMPANY FOR
UNITY NATIONAL BANK
1,000,000 SHARES OF COMMON STOCK
-------------------------
This Prospectus relates to the offer of a minimum of 740,000 and a
maximum of 1,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"), to be issued by Unity Holdings, Inc., a Georgia corporation
(the "Company"), which has been organized to own all of the capital stock of
Unity National Bank (the "Bank").
Sale of the Common Stock will commence on or about __________,1998.
This is a "best efforts" offering by the Company, and it will be terminated upon
the sale of 1,000,000 shares or May 15, 1998, whichever occurs first, unless the
offering is extended, at the discretion of the Company, for additional periods
ending no later than August 31, 1999. However, the Organizers reserve the right
to terminate the offering at any time after the sale of the minimum offering of
740,000 shares. Subscriptions are binding on subscribers and may not be revoked
by subscribers without the consent of the Company. Proceeds of the offering will
be deposited in an escrow account at First Tennessee Bank, as escrow agent,
pending receipt of subscriptions and subscription proceeds for a minimum of
740,000 shares and satisfaction of certain other conditions of the offering.
PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW THE PROSPECTUS BEFORE
SUBSCRIBING FOR SHARES. INVESTMENT IN THESE SECURITIES INVOLVES SIGNIFICANT RISK
AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 6
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.
<TABLE>
<CAPTION>
==============================================================================================================
Price to Underwriting Discounts Proceeds to the
Public(1) And Commissions (2) Company(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per Share............................ $10.00 $0.50 $10.00
- --------------------------------------------------------------------------------------------------------------
Total (Minimum).................. $ 7,400,000 $300,000 $7,100,000
(Maximum).................. $10,000,000 $508,000 $9,492,000
==============================================================================================================
</TABLE>
(1) The offering price has been arbitrarily established by the Company. See
"Risk Factors -- Offering Price."
(2) The offering will be made on a best-efforts basis by Attkisson, Carter &
Akers as Sales Agent. The Sales Agent's commission for the minimum
offering has been calculated at 5% with respect to all shares sold in the
offering other than shares to be purchased by the Organizers, for which
the Sales Agent will not receive any commission. The Organizers currently
contemplate purchasing at least 140,000 shares in the offering. The Sales
Agent will also receive a 5% commission for shares sold in excess of the
minimum offering (subject to a maximum aggregate commission of $300,000 on
the first 800,000 shares sold by the Sales Agent), except that at the
Company's request the Sales Agent may syndicate the remaining offering, in
which case the commission will be 8%. The commission for the maximum
offering described above reflects the payment of an 8% commission on sales
in excess of the minimum offering. The Company has agreed to indemnify the
Sales Agent against certain civil liabilities, including liabilities under
the Securities Act of 1933. See "The Offering."
(3) Before deducting expenses related to this offering, estimated to be
approximately $65,000. See "Use of Proceeds -- By the Company."
-------------------------
ATTKISSON, CARTER & AKERS
The date of this Prospectus is ____________, 1998.
<PAGE> 4
REPORTS TO SHAREHOLDERS
The Company is not a reporting company as defined by the Securities and
Exchange Commission. 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. The Company will also furnish such other reports as it may
determine appropriate or as otherwise may be required by law.
ADDITIONAL INFORMATION
The Company has filed with the Securities Exchange Commission ("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, reference is hereby made to
the Registration Statement and the exhibits thereto. The Registration Statement
may be examined at, and copies of the Registration Statement may be obtained at
prescribed rates from the Public Reference Section of the SEC, Room 1024, 450
Fifth Street, N.W., Washington, DC 20549. The SEC 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 Federal Deposit Insurance Corporation, the Federal Reserve
Bank of Atlanta, and the OCC. Prospective investors should rely only on
information contained in this Prospectus and in the Company's related
Registration Statement in making an investment decision. To the extent that
other available information not presented in this Prospectus, including
information available from the Company and information in public files and
records maintained by the Federal Deposit Insurance Corporation, the Federal
Reserve Bank of Atlanta, and the OCC, is inconsistent with information presented
in this Prospectus or provides additional information, such other information is
superseded by the information presented in this Prospectus and should not be
relied on. Projections appearing in the applications 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> 5
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.
THE COMPANY
Unity Holdings, Inc. (the "Company") was incorporated under the laws of
the State of Georgia on October 8, 1997, primarily to hold all of the capital
stock of a proposed national bank, Unity National Bank (the "Bank"). The Company
may not acquire the stock of the Bank without the prior approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). Neither
the Company nor the Bank has any history of operations, nor will they commence
any business until after the offering is completed. The Company will file an
application for this approval once it has received preliminary approval from the
OCC to organize the Bank. The Company initially will engage in no business other
than owning and managing the Bank.
THE BANK
The Organizers filed an application with the OCC in October 1997 to
charter the Bank as a national bank. The Organizers have also filed an
application with the Federal Deposit Insurance Corporation (the "FDIC") for
deposit insurance. The Organizers expect to obtain preliminary approval of the
Bank's application for a charter in early 1998. The Bank may not conduct its
banking business until the OCC grants final approval of the Bank's application
and issues the Bank a charter and the FDIC grants deposit insurance to the Bank.
The issuance of a charter will depend, among other things, upon compliance with
certain legal requirements that may be imposed by the OCC, including
capitalization of the Bank with not less than $7,000,000. In order to receive
deposit insurance, the Bank must also comply with certain legal requirements
that may be imposed by the FDIC. Additionally, the Company must obtain the
approval of the Federal Reserve Board to become a bank holding company before
acquiring all the capital stock of the Bank. See "Risk Factors" and "Use of
Proceeds."
The Bank will initially consist of a main office in Cartersville and a
branch office in Adairsville, Georgia. The Bank will engage in a general
commercial and retail banking business, emphasizing the needs of small-to-medium
sized businesses, professional concerns and individuals, primarily in Bartow
County, Georgia as well as surrounding counties. Michael L. McPherson, the
proposed President of the Bank, has over 20 years experience in the commercial
banking industry in Bartow County. The Organizers believe that the combined
banking experience of the Bank's President and the extensive business experience
and contacts of the Organizers in the Bartow County area should create immediate
business opportunities for the Bank. The Organizers presently are engaged in
completing the tasks necessary to open the Bank during the second quarter of
1998 although no assurances can be given that the Bank will open for business or
that the projected opening date can be achieved.
See "Proposed Business."
The principal executive offices of both the Company and the Bank will
be located at 950 Joe Frank Harris Parkway, SE, Cartersville, Georgia 30121. The
address of the Adairsville branch will be 7450 Adairsville Highway, NW (Highway
140), Adairsville, Georgia 30103. The Company's telephone number is (770)
606-0555.
THE ORGANIZERS
The organizers of the Company and the Bank are Kenneth R. Bishop, Jerry
W. Braden, Donald D. George, John S. Lewis, Sam R. McCleskey, Michael L.
McPherson, Stephen A. Taylor, and B. Don Temples (the "Organizers"). 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.
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<PAGE> 6
The Organizers (together with members of their immediate families)
intend to purchase an aggregate of at least 140,000 shares of the Common Stock
to be sold in this offering equal to 19.7% of the minimum number of shares
offered hereby and 14.0% of the maximum number of shares offered 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 740,000
Maximum 1,000,000
Use of Proceeds....... The Company will use the net proceeds of the
offering to capitalize the Bank at $7,000,000 through
the purchase of all of the capital stock of the Bank,
(subject to regulatory approval); to pay the
Company's organizational and pre-opening expenses,
currently estimated to total approximately $562,000;
and to provide working capital. If sufficient
proceeds are available, the Company may choose to
capitalize the Bank at a level in excess of
$7,000,000. If the Company raises in excess of the
minimum offering, the Company plans to retain the
excess sums at the holding company level and
initially invest the sums in United States government
securities or as a deposit at the Bank. The Company
may be required by the OCC or the FDIC to capitalize
the Bank at a level in excess of $7,000,000, in which
case the Company will have to receive net proceeds in
excess of the minimum offering or obtain additional
capital from another source. The Company has not
sought any other source from which to obtain this
capital, and there can be no assurances the Company
would be able to do so.
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 OCC 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 net proceeds received from the sale of
its stock to the Company to pay organizational and
pre-opening expenses of the Bank (currently estimated
to total approximately $150,000 and $350,000
respectively); install and lease a temporary facility
for the main office (currently estimated to total
approximately $48,000 through year-end 1998)
construct and furnish buildings for the Bank's two
offices (which the Organizers currently estimate will
cost approximately $2,545,000); and provide working
capital to be used for business purposes, including
paying officers' and employees' salaries and making
loans and investments. See "Use of Proceeds."
4
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Conditions to Offering... This offering will be terminated and no shares will
be issued and no subscription proceeds will be
released to the Company unless on or before May 15,
1998 (unless extended by the Company for additional
periods not to extend beyond August 31, 1999): (i)
the Company has accepted subscriptions and payment in
full for a minimum of 740,000 shares; (ii) the
Company has obtained regulatory approval to acquire
the stock of the Bank and thereafter to become a bank
holding company; (iii) the Bank has received
preliminary approval of its application for a charter
from the OCC; and (iv) the FDIC has granted
preliminary approval of the Bank's application for
deposit insurance. Subscription proceeds for shares
subscribed will be deposited promptly in an interest
bearing escrow account with First Tennessee Bank and
such proceeds may from time to time be invested in
interest bearing savings accounts or short-term
certificates of deposit issued by a bank.
Subscriptions are binding on subscribers and are
irrevocable. Once the Company has met the conditions
for the offering, the Escrow Agreement with First
Tennessee Bank will be terminated and any
subscription proceeds accepted after satisfaction of
the conditions 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..... The Company has established a minimum investment by
any subscriber (together with his or her affiliates)
of 100 shares and a maximum investment of 5% of the
total number of shares sold in the offering, unless
the Company, in its sole discretion, elects to waive
these limits with respect to any subscriber. Proceeds
of the offering will be deposited in an escrow
account at First Tennessee Bank, as escrow agent,
pending receipt of subscriptions and subscription
proceeds for a minimum of 740,000 shares and
satisfaction of certain other conditions of the
offering. The Company has engaged Attkisson, Carter &
Akers as the Company's exclusive Sales Agent to sell
shares in the offering on a best-efforts basis. The
Sales Agent will receive a 5% commission with respect
to the first 740,000 shares it sells in the offering
(but not including any shares to be purchased by the
Organizers, for which the Sales Agent will not
receive any commission). The Organizers currently
contemplate purchasing at least 140,000 shares in the
offering. However, if the Sales Agent does not sell
at least 740,000 shares within 90 days after the
effective date of this Prospectus, then the Sales
Agent's commission with respect to such 740,000
shares will only be 4%. The Sales Agent will also
receive a 5% commission for shares sold in excess of
such 740,000 shares (subject to a maximum aggregate
commission of $300,000 on the first 800,000 shares
sold by the Sales Agent), except that at the
Company's request the Sales Agent may syndicate the
remaining offering, in which case the commission will
be 8%. The Company will also pay the Sales Agent's
expenses in the offering, up to a maximum of $25,000.
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."
5
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RISK FACTORS
An investment in the shares offered hereby involves significant 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 740,000 shares; (ii) the Company has obtained regulatory approval to
acquire the stock of the Bank and thereafter to become a bank holding company;
(iii) the Bank has received preliminary approval for its application for a
charter from the OCC; and (iv) the FDIC has granted preliminary approval of the
Bank's application for deposit insurance. If these conditions are not met by May
15, 1998, or by such subsequent date, (but not later than August 31, 1999), to
which the offering may be extended by the Company, all subscriptions will be
returned without interest. If these 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 with First Tennessee Bank will be terminated and any
subscription proceeds accepted after satisfaction of the conditions 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 the subscription funds are released to
the Company, the Company will use a portion of the net proceeds to repay the
Organizers for amounts advanced by them for organizational and pre-opening
expenses and to repay a line of credit, guaranteed jointly and severally by the
Organizers, which the Company has obtained to fund organizational and
pre-opening expenses. If the offering is terminated prior to completion,
subscription payments will be promptly returned by the Company to the
subscribers without interest. Any expenses will be paid out of the interest
earned on the subscription funds and to the extent that the interest earned on
the subscription funds is not sufficient to pay such expenses the same will be
paid by the Organizers.
Under the OCC's policies, a newly chartered national bank must open for
business within eighteen months of receipt of preliminary approval of its
application for charter. 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 OCC or the Bank does not
open for any other reason, the Company's board of directors (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.
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 bank holding company, the Company's profitability will depend upon the Bank's
operations. The Bank's proposed operations are subject to the risks inherent in
the establishment of any new business and those special issues which face banks.
New banks incur substantial initial expenses and may not be profitable for
several years after commencing business, if ever.
DEPENDENCE ON KEY EMPLOYEE
As a new enterprise, the Company and the Bank will be materially
dependent on the performance of Michael L. McPherson, who will be President and
Chief Executive Officer of the Company and the Bank. The loss of Mr. McPherson's
services or his failure to perform his management functions in the manner
anticipated by the Organizers
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<PAGE> 9
could have a material adverse effect on the Bank and the Company. See
"Management." The Company has purchased key man life insurance on Mr. McPherson,
the proceeds of which would be payable to the Company.
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 140,000 shares, equal to 18.9% of the minimum number of shares
offered hereby and 14.0% of the maximum number of shares offered hereby.
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, 31.8% 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 24.6% of the Common Stock if the maximum number of shares is sold and the
warrants exercised. Organizers may purchase additional shares in the offering in
order to meet the minimum sales required in the offering. Organizers reserve the
right, subject to regulatory approval, to purchase 100% of the shares of Common
Stock being offered hereunder if necessary to complete the offering. Any such
purchases will be for investment purposes and not for resale. As a result of the
anticipated stock ownership in the Company by the Organizers as described above,
together with the influence which may be exerted by such persons due to their
positions as directors and officers 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 is 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 $7,400,000 and $10,000,000 in this offering
through the sale of a reasonable number of shares, and the price per share is
essentially equivalent to the expected post-offering initial book value per
share before deducting the organizational costs and expenses. No assurance is or
can be given that any of the shares could be resold for the offering price or
any other amount.
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<PAGE> 10
ABSENCE OF TRADING MARKET
There currently is no market for the shares and, although the Company
has filed a Registration Statement with the SEC in order to register the
issuance of the shares under federal securities laws, it is not likely that any
trading market will develop for the shares in the near future. There are no
present plans for the Company's 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 impacted by purchases of large amounts of
shares in this offering by the Organizers since shares purchased by such persons
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 commercial banks, as well as from savings
institutions, mortgage banking firms, consumer finance companies, securities
brokerage firms, insurance companies, money market mutual funds, and other
financial institutions operating in the Bartow County area and elsewhere. A
number of these competitors are well established in the Bartow County area. Most
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 and bank holding companies. These
regulations are primarily intended to protect depositors, not shareholders.
Regulation of the financial institutions industry is undergoing continued
changes, and the ultimate effect of such changes cannot be predicted. In
December 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted, and its effect is still being defined as regulations
mandated by it are adopted by the Company's and the Bank's regulators. FDICIA
and the regulations thereunder have increased the regulatory and supervisory
requirements for financial institutions, which has resulted and will continue to
result in increased operating expenses. Additional statutes affecting financial
institutions have been proposed and may be enacted. Regulations now affecting
the Company and the Bank may be modified at any time, and there is no assurance
that such modifications will not adversely affect the business of the Company
and the Bank. See "Supervision and Regulation."
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 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."
8
<PAGE> 11
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
Under the National Bank Act, 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, 31.8% 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 24.6% of the Common Stock if the maximum number of shares is sold and the
warrants exercised. After the offering, the Company expects (subject to
shareholder approval or ratification) 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 up to 150,000 shares under the stock option
plan. This plan would include the options the Company will be obligated to issue
to Mr. McPherson under the terms of the Employment Agreement. 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
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.
ANTI-TAKEOVER MEASURES
The Company has certain anti-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; (v) the
Company's adoption of the Georgia "Fair Price" statute; (vi) certain nomination
requirements for directors; and (vii) the Company's adoption of the Georgia
"Business Combination" statute. Any of these measures may impede the takeover of
the Company without the approval of the Company's board of directors. See
"Description of Securities -- Certain Anti-Takeover Effects."
9
<PAGE> 12
THE OFFERING
GENERAL
The Company is offering for sale a minimum of 740,000 shares and a
maximum of 1,000,000 shares of its Common Stock at a price of $10.00 per share
to raise gross proceeds of between $7,400,000 and $10,000,000 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 140,000 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 May 15, 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 August 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 has engaged the
Sales Agent 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> 13
CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS
Subscription proceeds accepted by the Company for the initial 740,000
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 740,000 shares;
and (ii) the Company has obtained approval of the Federal Reserve and the
Georgia Department of Banking and Finance to acquire the capital stock of the
Bank and thereafter to become a bank holding company. Any subscription proceeds
accepted after satisfaction of the conditions set forth above but before
termination of this offering will not be deposited in 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 OCC 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
The Company has engaged Attkisson, Carter & Akers as the Company's
exclusive Sales Agent to sell shares in the offering on a best-efforts basis.
The Sales Agent will receive a 5% commission with respect to the first 740,000
shares it sells in the offering (but not including any shares to be purchased by
the Organizers, for which the Sales Agent will not receive any commission). The
Organizers currently contemplate purchasing at least 140,000 shares in the
offering. However, if the Sales Agent does not sell at least 740,000 shares
within 90 days after the effective date of this Prospectus, then the Sales
Agent's commission with respect to such 740,000 shares will only be 4%. The
Sales Agent will also receive a 5% commission for shares sold in excess of such
740,000 shares (subject to a maximum aggregate commission of $300,000 on the
first 800,000 shares sold by the Sales Agent), except that at the Company's
request the Sales Agent may syndicate the remaining offering, in which case the
commission will be 8%. The Company will also pay the Sales Agent's expenses in
the offering, up to a maximum of $25,000.
11
<PAGE> 14
The Agency Agreement provides that the Company will indemnify the Sales
Agent and controlling persons against certain civil liabilities, including
liabilities under the Securities Act of 1933. The Company has the right to
terminate the Agency Agreement after 90 days after execution of the agreement.
In such event, offers and sales may be made on behalf of the Company by certain
of its officers and directors, or the Company may engage one or more other
broker dealers to make sales on its behalf. The Company does not currently have
any other arrangements in place.
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 First Tennessee Bank, Escrow
Account for Unity Holdings, Inc. in the amount of $10.00 multiplied by the
number of shares subscribed for.
12
<PAGE> 15
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 $7,400,000 and $10,000,000. The Company has established a $500,000 line
of credit (the "Note") with First Tennessee Bank. The proceeds of the Note will
be used to defray pre-opening and organizational expenses. The Note is due on
August 15, 1998 and bears an interest rate at the lender's base rate (8.5% at
December 31, 1997). The Organizers have jointly and severally guaranteed the
Note. As of December 31, 1997, the Company had drawn $191,239 against the line
of credit. The money is being used for pre-opening expenses and organizational
and offering costs. Upon the successful completion of the offering, the Company
will use the proceeds to retire the debt. The Company will also use a portion of
the offering proceeds to pay the Sales Agent's 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 $65,000. The Sales Agent's
commission for the minimum offering has been calculated at 5% with respect to
all shares sold in the offering other than shares to be purchased by the
Organizers, for which the Sales Agent will not receive any commission. The
Organizers currently contemplate purchasing at least 140,000 shares in the
offering. The Sales Agent will also receive a 5% commission for shares sold in
excess of the minimum offering (subject to a maximum aggregate commission of
$300,000 on the first 800,000 shares sold by the Sales Agent), except that at
the Company's request the Sales Agent may syndicate the remaining offering, in
which case the commission will be 8%. The commission for the maximum offering
described below reflects the payment of an 8% commission on sales in excess of
the minimum offering. After payment of these expenses, the Company will use
$7,000,000 of the gross proceeds to purchase all of the capital stock of the
Bank. The Company will retain the balance of the proceeds and initially invest
the sums in United States government securities or as a deposit with the Bank.
In the long-term, the Company will use the sums for working capital and other
general corporate purposes, including payment of expenses of the Company and the
provision of additional capital for the Bank, if necessary. The 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 use of the net proceeds of this
offering by the Company if the minimum number of shares are sold in this
offering and if the maximum number of shares are sold in this offering.
<TABLE>
<CAPTION>
Minimum Maximum
Offering (1) Offering (2)
------------ ------------
<S> <C> <C>
Gross proceeds from offering........................... $ 7,400,000 $ 10,000,000
Expenses for organization and issuance and distribution (65,000) (65,000)
of Common Stock........................................
Sales Agent's commission (300,000) (508,000)
Investment in stock of the Bank........................ (7,000,000) (7,000,000)
Remaining proceeds..................................... $ 35,000 $ 2,427,000
============ ============
</TABLE>
- ------------------------
(1) Assumes that 740,000 shares of Common Stock are sold in this offering.
(2) Assumes that 1,000,000 shares of Common Stock are sold in this offering.
BY THE BANK
The Bank will use approximately $425,000 of the proceeds it receives
from the sale of its stock to the Company to reimburse the Company for amounts
advanced by the Company to pay organizational and pre-opening expenses of the
Bank,
13
<PAGE> 16
including amounts funded by the Company with advances from the Organizers,
which the Company will in turn repay to the Organizers. Organizational expenses
of the Bank, estimated at $95,000, include consulting fees, expenses for market
analysis and feasibility studies, and legal fees and expenses. Pre-opening
expenses, estimated at $330,000, include officers' and employees' salaries and
benefits estimated at $210,000 (assuming the Bank opens for business on its
target date of May 1, 1998). The Bank expects to use approximately $20,000 for
set-up and site work at its Cartersville temporary facility and $17,000 the
Adairsville temporary facility, plus approximately $3,800 per month to lease the
Cartersville temporary facility and $2,800 for the Adairsville temporary
facility, (or $52,800 over eight months for both offices). In addition, the Bank
will use approximately $845,000 for the purchase and initial preparation of the
site of the main facility and $300,000 for the branch facility, and
approximately $1,000,000 for construction of the Bank's permanent headquarters
and $400,000 for construction of the branch facility. The Bank will use
approximately $497,200 for furniture, fixtures, and equipment for the Bank's
facilities. The balance of the proceeds to be received by the Bank, estimated at
approximately $3,443,000, will be used for loans to customers, investments and
other general corporate purposes.
The following table depicts the 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 common stock. The initial amount of the Company's
investment will not vary based on the number of shares sold in this offering.
<TABLE>
<S> <C>
Investment by the Company in the Bank's common stock.................................... $ 7,000,000
Reimbursement of the Company for amounts advanced by the (425,000)
Company to the Bank to pay organizational and pre-opening
Expenses of the Bank.................................................................
Installation and lease of the temporary facilities(1)................................... (89,800)
Furniture, fixtures and equipment....................................................... (497,200)
Purchase of Bank sites and initial site preparation..................................... (1,145,000)
Construction of Bank's permanent facilities............................................. (1,400,000)
-----------
Remaining proceeds...................................................................... $ 3,443,000 (2)
===========
</TABLE>
- --------------------------
(1) This amount includes approximately $20,000 for set-up and site work for
the temporary facility, plus approximately $3,800 per month to lease the
Cartersville office temporary facility and $2,800 for the Adairsville
temporary facility (or an aggregate of $52,800 for both facilities from
May 1, 1998 to December 31, 1998).
(2) This amount is to be used by the Bank for loans to customers, investments
and other general corporate purposes.
Although the amounts set forth above provide an indication of the
proposed use of funds based on the Organizers' plans and estimates, actual
expenses may vary from the estimates. These estimates were based on assumptions
that the Organizers believed were reasonable, but as to which no assurances can
be given. The Organizers believe that the estimated minimum net proceeds 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.
14
<PAGE> 17
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 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 740,000
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 such date.
<TABLE>
<CAPTION>
Shareholders' Equity December As
-------------------- 31, 1997 Adjusted
-------- ---------
<S> <C> <C> <C> <C>
Preferred Stock, par value $.01 per share; 10,000,000 $ -- $ --
shares authorized; no shares issued and outstanding
Common Stock, par value $.01 per share: 10,000,000 shares -- 7,400
authorized; 10 shares issued and outstanding(1); 740,000
shares issued and outstanding as adjusted (minimum
offering)
Additional paid-in capital(2) 7,327,600
100
Deficit accumulated during the pre-opening stage(3) (38,767) (330,000)
------------- ------------
Total shareholders' equity (4) $ (38,667) $ 7,005,000
============= ============
</TABLE>
- --------------------
(1) Michael L. McPherson, an Organizer of the Company, was issued ten shares
of Common Stock upon the 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.
Expenses are estimated to be $65,000 and this amount was 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 December 31, 1997, approximately $38,767 of pre-opening expenses and
$74,490 of capitalizable organizational costs had been incurred on behalf
of the Company and the Bank, and the Company's total accumulated
shareholder's deficit was $38,767. The Organizers estimate that a total of
$330,000 of pre-opening expenses, $95,000 of organizational costs, and up
to $497,200 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. This 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.
15
<PAGE> 18
DIVIDEND POLICY
The Board of Directors of the Company expects initially to follow a
policy of retaining any earnings to provide funds to operate and expand the
business. Consequently, it is unlikely that any cash dividends will be paid in
the near future. The Company's ability to pay any cash dividends to its
shareholders in the future will depend primarily on the Bank's ability to pay
dividends to the Company. In order to pay dividends to the Company, the Bank
must comply with the requirements of all applicable laws and regulations. See
"Supervision and Regulation -- The Bank -- Dividends" and "Supervision and
Regulation -- Capital Regulations." In addition to the availability of funds
from the Bank, the future dividend policy of the Company is subject to the
discretion of the Board of Directors and will depend upon a number of factors,
including future earnings, financial condition, cash needs, and general business
conditions.
PROPOSED BUSINESS
GENERAL
The Company was incorporated under the laws of Georgia on October 8,
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. The Organizers have chosen a holding company structure under which the
Company will acquire all of the stock of the Bank because, in the Organizers'
judgment, the holding company structure provides flexibility that would not
otherwise be available.
The holding company structure can assist the Bank in maintaining its
required capital ratios because, subject to compliance with Federal Reserve
Board debt guidelines, the Company may borrow money and contribute the proceeds
to the Bank as primary capital. Moreover, a holding company may engage in
certain non-banking activities that the Federal Reserve Board has deemed to be
closely related to banking. Although the Company has no present intention of
engaging in any of these activities, if circumstances should lead the Company's
management to believe that there is a need for these services in the Bank's
market area and that such activities could be profitably conducted, management
of the Company would have the flexibility of commencing these activities upon
filing a notice or application therefor with the Federal Reserve Board.
The Bank is being organized as a national bank under the laws of the
United States and, subject to regulatory approval, the Bank will engage in a
commercial banking business with deposits insured by the FDIC. The Bank may not
commence business until the OCC issues a charter for the Bank and the FDIC
grants deposit insurance to the Bank. There is no assurance that the Bank will
be successful in receiving regulatory approval and satisfying any conditions
that may be imposed upon the Bank by the OCC or the FDIC prior to the
commencement of its business.
LOCATION AND SERVICE AREA
The Bank plans to conduct a general commercial banking business in its
service area, emphasizing the banking needs of small-to-medium sized businesses,
professional concerns and individuals. The Bank proposes to operate from a main
office in Cartersville, Georgia that will be located at the corner of Joe Frank
Harris Parkway and Market Place Boulevard, S.E. in Cartersville, Georgia and a
branch office to be located at 7450 Adairsville Highway, NW, Adairsville,
Georgia 30103. See "Facilities" below. The Organizers expect that the Bank will
draw most of its customer deposits and conduct most of its lending transactions
from within a primary service area of Bartow County, Georgia, with a secondary
market which includes the cities of Canton, Calhoun, and Rome.
Bartow County is located in northwest Georgia, approximately 40 miles
from the city of Atlanta. Bartow County, which had a population of 64,000 in
1996 and a median effective buying income per household of $32,358, includes the
cities of Cartersville, Adairsville, Emerson, Kingston, Stilesboro, Taylorville
and White. Bartow County is generally rectangular in shape and the main office
of the Bank will be located in Cartersville, which is close to the southeast
corner of the county. To the east and south of Cartersville is Lake Allatoona,
which is a natural barrier to the remainder of that part of the county and to a
portion of adjacent counties. The primary thrust of the new Bank will be the
Cities of Cartersville and Adairsville which are located in the northern and
southern parts of Bartow County and will provide access for residents of the
entire county.
16
<PAGE> 19
According to data provided by the Georgia Department of Labor, which
was compiled in 1995, there are 1,241 businesses in Bartow County subject to
unemployment insurance laws. Bartow County, like many small communities, has
many small businesses that are not subject to unemployment insurance laws and
are not reflected in this data. There are 109 manufacturing companies, 149
construction companies, 285 retail companies, 114 wholesale companies, 74
transportation and public utility companies and 355 service companies in Bartow
County. The largest employers in the county include Shaw Industries, Inc.
(carpet manufacturer) 1,933; Bartow County Board of Education, 1,400; First
Brands Corporation (plastic extruding company), 630; Bartow County Government,
600; Goodyear Tire and Rubber Co. (tire manufacturer), 569; Wal-Mart Stores
(retail sales), 529; and nine other businesses with between 110 employees and
493 employees in industries such as beer manufacturing, steel manufacturing,
medical facility, public utility, and carpet manufacturer.
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, NOW accounts, savings accounts, and
other time deposits of various types, ranging from daily money market accounts
to longer-term certificates of deposit. The transaction accounts and time
certificates will be tailored to the Bank's principal market area at rates
competitive to those offered in the Bartow 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.
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 Bartow County area. Most of these competitors have substantially greater
resources and lending limits than the Bank. As a result, the Bank may have to
charge lower interest rates to attract borrowers. See " -- Competition" below.
The Bank may also originate loans for sale into the secondary market. The Bank
intends to limit interest rate risk and credit risk on these loans by locking
the interest rate for each loan with the secondary investor and receiving the
investor's underwriting approval prior to originating the loan.
Commercial Loans. The Bank will make loans for commercial purposes in
various lines of businesses. 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
Bartow County area. The well-established banks in the Bartow 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.
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<PAGE> 20
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 60 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 Bartow 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. These limits will increase or decrease
as the Bank's capital increases or 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. 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 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 Bartow
County and elsewhere. There are currently eight commercial banks operating in
Bartow County, holding approximately $500 million in deposits. There are also
four credit unions in the county. A number of these competitors are well
established in the Bartow County area. Most of them have substantially greater
resources and lending limits and may have a lower cost of funds than the Bank.
These banks 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 in order to attract deposits. The
Organizers believe that the Bank will be able to compete effectively with these
institutions, but no assurances can be given in this regard.
FACILITIES
Cartersville Office. The Bank's main office will be located in
Cartersville at 950 Joe Frank Harris Parkway, at the corner of Joe Frank Harris
Parkway and Market Place Boulevard. The Bank will initially operate out of a
temporary facility at this location while its permanent facility is under
construction. The Bank will also provide automated teller services to its
customers at the Cartersville office.
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<PAGE> 21
Adairsville Office. The Bank also intends to open a branch office in
Adairsville at 7450 Adairsville Highway, NW (Highway 140), Adairsville, Georgia
30103. The Bank expects to open the Adairsville office in a temporary facility
in the summer of 1998, moving into a permanent facility in early 1999. The Bank
will also provide automated teller services to its customers at the Adairsville
office.
The Company believes that the facilities will adequately serve the
Bank's needs for its first several years of operation. See "Use of Proceeds --
By the Bank."
EMPLOYEES
The Company anticipates that, upon commencement of operations, the Bank
will have 15 full-time employees and 1 part-time employees. The Company will not
have any employees other than its officers, none whom will initially receive any
remuneration for their services to the Company. Michael L. McPherson, the
proposed President of the Bank, is currently employed by the Company to head the
organizational effort for the Bank.
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 the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), numerous
additional regulatory requirements have been placed on the banking industry in
the past five years, and additional changes have been proposed. The banking
industry is also likely to change significantly as a result of the passage of
the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"). The operations of the Company and the Bank may be
affected by legislative changes and the policies of various regulatory
authorities. The Company is unable to predict the nature or the extent of the
effect on its business and earnings that fiscal or monetary policies, economic
control or new federal or state legislation may have in the future.
THE COMPANY
Because it owns the outstanding common stock of the Bank, the Company
is a bank holding company within the meaning of the federal Bank Holding Company
Act of 1956 (the "BHCA"). Under the BHCA, the Company is subject to periodic
examination by the Federal Reserve and is required to file periodic reports of
its operations and such additional information as the Federal Reserve may
require. The Company's and the Bank's activities are limited to banking,
managing or controlling banks, furnishing services to or performing services for
its subsidiaries or engaging in any other activity that the Federal Reserve
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.
Investments, Control and Activities. With certain limited exceptions,
the BHCA requires every bank holding company to obtain the prior approval of the
Federal Reserve before (i) acquiring substantially all the assets of any bank,
(ii) acquiring direct or indirect ownership or control of any voting shares of
any bank if after such acquisition it would own or control more than 5% of the
voting shares of such bank (unless it already owns or controls the majority of
such shares), or (iii) merging or consolidating with another bank holding
company.
In addition, and subject to certain exceptions, the BHCA and the Change
in Bank Control Act, together with regulations thereunder, require Federal
Reserve approval (or, depending on the circumstances, no notice of disapproval)
prior to any person or company acquiring "control" of a bank holding company,
such as the Company. Control is
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<PAGE> 22
conclusively presumed to exist if an individual or company acquires 25% or more
of any class of voting securities of the bank holding company. Control is
rebuttably presumed to exist if a person acquires 10% or more but less than 25%
of any class of voting securities and either the Company has registered
securities under Section 12 of the Exchange Act (which the Company would likely
be required to do with respect to the Common Stock once it has more than 500
shareholders of record) or no other person will own a greater percentage of that
class of voting securities immediately after the transaction. The regulations
provide a procedure for challenge of the rebuttable control presumption.
Under the BHCA, the Company is generally prohibited from engaging in,
or acquiring direct or indirect control of more than 5% of the voting shares of
any company engaged in, nonbanking activities, unless the Federal Reserve, by
order or regulation, has found those activities to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
Some of the activities that the Federal Reserve has determined by regulation to
be proper incidents to the business of banking include making or servicing loans
and certain types of leases, engaging in certain insurance and discount
brokerage activities, performing certain data processing services, acting in
certain circumstances as a fiduciary or investment or financial advisor, owning
savings associations and making investments in certain corporations or projects
designed primarily to promote community welfare.
Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
policy, the Company is expected to act as a source of financial strength to the
Bank and to commit resources to support the Bank in circumstances in which the
Company might not otherwise do so. Under the BHCA, the Federal Reserve may
require a bank holding company to terminate any activity or relinquish control
of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the
Federal Reserve's determination that such activity or control constitutes a
serious risk to the financial soundness or stability of any subsidiary
depository institution of the bank holding company. Further, federal bank
regulatory authorities have additional discretion to require a bank holding
company to divest itself of any bank or nonbank subsidiary if the agency
determines that divestiture may aid the depository institution's financial
condition. The Bank may be required to indemnify, or cross-guarantee, the FDIC
against losses it incurs with respect to any other Bank controlled by the
Company, which in effect makes the Company's equity investments in healthy bank
subsidiaries available to the FDIC to assist any failing or failed bank
subsidiary of the Company.
THE BANK
General. The Bank operates as a national banking association
incorporated under the laws of the United States and is subject to examination
by the Office of the Comptroller of the Currency (the "OCC"). Deposits in the
Bank are insured by the Federal Deposit Insurance Corporation (the "FDIC") up to
a maximum amount (generally $100,000 per depositor, subject to aggregation
rules). The OCC and the FDIC regulate or monitor 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 OCC requires the Bank to maintain certain capital ratios and
imposes limitations on the Bank's aggregate investment in real estate, bank
premises and furniture and fixtures. The Bank is currently required by the OCC
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 OCC.
Under FDICIA, all insured institutions must undergo periodic on-site
examination by their appropriate banking agency. The cost of examinations of
insured depository institutions and any affiliates may be assessed by the
appropriate agency against each institution or affiliate as it deems necessary
or appropriate. Insured institutions are required to submit annual reports to
the FDIC and the appropriate agency (and state supervisor when applicable).
FDICIA also directs the FDIC to develop with other appropriate agencies a method
for insured depository institutions to provide supplemental disclosure of the
estimated fair market value of assets and liabilities, to the extent feasible
and practicable, in any balance sheet, financial statement, report of condition
or other report of any insured depository institution. FDICIA also requires the
federal banking regulatory agencies to prescribe, by regulation, standards for
all insured depository institutions and depository institution holding companies
relating, among other things, to: (i) internal controls, information systems and
audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest
rate risk exposure; and (v) asset quality.
Transactions With Affiliates and Insiders. The Bank is subject to
Section 23A of the Federal Reserve Act, which places limits on the amount of
loans or extensions of credit to, or investments in, or certain other
transactions with, affiliates
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<PAGE> 23
and on the amount of advances to third parties collateralized by the securities
or obligations of affiliates. In addition, most of these loans and certain other
transactions must be secured in prescribed amounts. The Bank is also subject to
Section 23B of the Federal Reserve Act which, among other things, prohibits 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.
Community Reinvestment Act. The Community Reinvestment Act requires
that each insured depository institution shall be evaluated by its primary
federal regulator with respect to its record in meeting the credit needs of its
local community, including low and moderate income neighborhoods, consistent
with the safe and sound operation of those institutions. These factors are also
considered in evaluating mergers, acquisitions and applications to open a branch
or facility.
Other Regulations. Interest and certain other charges collected or
contracted for by the Bank are subject to state usury laws and certain federal
laws concerning interest rates. The Bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as 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 is 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.
DEPOSIT INSURANCE
The deposits of the Bank are currently insured to a maximum of $100,000
per depositor, subject to certain aggregation rules. The FDIC establishes rates
for the payment of premiums by federally insured banks and thrifts for deposit
insurance. Separate insurance funds (BIF and SAIF) are maintained for commercial
banks and thrifts, 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 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 depository 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. Once the BIF reached its legally mandated reserve ratio
in mid-1995, the FDIC lowered premiums for well capitalized banks to $0.04 per
$100. Subsequently, the FDIC revised the range of premiums from $.00 to $0.31
per $100, subject to a statutory minimum assessment of $2,000 per year. However,
the Deposit Insurance Funds Act of 1996 eliminated the minimum assessment
required by statute. It also separated, effective January 1, 1997, the Financial
Corporation (FICO) assessment to service the interest on its bond obligations.
The amount assessed on individual institutions, including the Bank, by FICO will
be in addition to the amount paid for deposit insurance according to the
risk-related assessment rate schedule. Initially, FICO semiannual assessment
rates were set at 1.30 basis points annually for BIF deposits. Increases in
deposit insurance premiums or changes in risk classification will increase the
Bank's cost of funds, and there can be no assurance that such cost can be passed
on the Bank's customers.
Increases in deposit insurance premiums or changes in risk
classification will increase the Bank's cost of funds, and there can be no
assurance that such cost can be passed on the Bank's customers.
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<PAGE> 24
DIVIDENDS
The principal source of the Company's cash revenues comes from
dividends and interest income on its investments. In addition, the Company may
receive cash revenues from dividends paid by the Bank. The amount of dividends
that may be paid by the Bank to the Company depends on the Bank's earnings and
capital position and is limited by federal and state law, regulations and
policies. In addition, the Board of Governors has stated that bank holding
companies should refrain from or limit dividend increases or reduce or eliminate
dividends under circumstances in which the bank holding company fails to meet
minimum capital requirements or in which its earnings are impaired.
As a national bank, the Bank may not pay dividends from its
paid-in-capital. All dividends must be paid out of undivided profits then on
hand, after deducting expenses, including reserves for losses and bad debts. In
addition, a national bank is prohibited from declaring a dividend on its shares
of common stock until its surplus equals its stated capital, unless there has
been transferred to surplus no less than one-tenth of the bank's net profits of
the preceding two consecutive half-year periods (in the case of an annual
dividend). The approval of the OCC is required if the total of all dividends
declared by a national bank in any calendar year exceeds the total of its net
profits for that year combined with its retained net profits for the preceding
two years, less any required transfers to surplus. Under FDICIA, the Bank may
not pay a dividend if, after paying the dividend, the Bank would be
undercapitalized. See "Capital Regulations" below.
In addition to the availability of funds from the Bank, the future
dividend policy of the Company is subject to the discretion of the Board of
Directors and will depend upon a number of factors, including future earnings,
financial condition, cash needs and general business conditions. If dividends
should be declared in the future, the amount of such dividends presently cannot
be estimated and it cannot be known whether such dividends would continue for
future periods.
CAPITAL REGULATIONS
The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make
regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies, account for off-balance sheet exposure
and minimize disincentives for holding liquid assets. The resulting capital
ratios represent qualifying capital as a percentage of total risk-weighted
assets and off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios well in excess of the minimums. The
current guidelines require all bank holding companies and federally-regulated
banks to maintain a minimum risk-based total capital ratio equal to 8%, of which
at least 4% must be Tier 1 capital. Tier 1 capital includes common shareholders'
equity, qualifying perpetual preferred stock and minority interests in equity
accounts of consolidated subsidiaries, but excludes goodwill and most other
intangibles and excludes the allowance for loan and lease losses. Tier 2 capital
includes the excess of any preferred stock not included in Tier 1 capital,
mandatory convertible securities, hybrid capital instruments, subordinated debt
and intermediate term-preferred stock and general reserves for loan and lease
losses up to 1.25% of risk-weighted assets.
Under the guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50% and 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight will apply. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.
The federal bank regulatory authorities have also implemented a
leverage ratio, which is Tier 1 capital as a percentage of average total assets
less intangibles, to be used as a supplement to the risk-based guidelines. The
principal objective of the leverage ratio is to place a constraint on the
maximum degree to which a bank holding company may leverage its equity capital
base. The minimum required leverage ratio for top-rated institutions is 3%, but
most institutions are required to maintain an additional cushion of at least 100
to 200 basis points.
FDICIA established a new capital-based regulatory scheme designed to
promote early intervention for troubled
22
<PAGE> 25
banks and requires the FDIC to choose the least expensive resolution of bank
failures. The new capital-based regulatory framework contains five categories of
compliance with regulatory capital requirements, including "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized,"
and "critically undercapitalized." To qualify as a "well capitalized"
institution, a bank must have a leverage ratio of no less than 5%, a Tier 1
risk-based ratio of no less than 6%, and a total risk-based capital ratio of no
less than 10%, and the bank must not be under any order or directive from the
appropriate regulatory agency to meet and maintain a specific capital level. The
Company and the Bank expect initially to be qualified as "well capitalized."
Under the FDICIA regulations, the applicable agency can treat an
institution as if it were in the next lower category if the agency determines
(after notice and an opportunity for hearing) that the institution is in an
unsafe or unsound condition or is engaging in an unsafe or unsound practice. The
degree of regulatory scrutiny of a financial institution will increase, and the
permissible activities of the institution will decrease, as it moves downward
through the capital categories. Institutions that fall into one of the three
undercapitalized categories may be required to (i) submit a capital restoration
plan; (ii) raise additional capital; (iii) restrict their growth, deposit
interest rates and other activities; (iv) improve their management; (v)
eliminate management fees; or (vi) divest themselves of all or part of their
operations. Bank holding companies controlling financial institutions can be
called upon to boost the institutions' capital and to partially guarantee the
institutions' performance under their capital restoration plans.
These capital guidelines can affect the Company in several ways. If the
Bank begins to grow at a rapid pace, a premature "squeeze" on capital could
occur making a capital infusion necessary. The requirements could impact the
Company's ability to pay dividends. The Company's capital levels will initially
be more than adequate; however, rapid growth, poor loan portfolio performance or
poor earnings performance or a combination of these factors could change the
Bank's capital position in a relatively short period of time.
INTERSTATE BANKING AND BRANCHING RESTRICTIONS
On September 29, 1994, the federal government enacted the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
Act"). This Act became effective on September 29, 1995, and permits eligible
bank holding companies in any state, with regulatory approval, to acquire
banking organizations in any other state. Effective June 1, 1997, the Interstate
Banking Act allows banks with different home states to merge, unless a
particular state opts out of the statute. Consistent with the Interstate Banking
Act, Georgia adopted legislation in 1996 which has permitted interstate bank
mergers since June 1, 1997.
In addition, beginning June 1, 1997, the Interstate Banking Act has
permitted national and state banks to establish de novo branches in another
state if there is a law in that state which applies equally to all banks and
expressly permits all out-of-state banks to establish de novo branches. However,
in 1996, Georgia adopted legislation which opts out of this provision. The
Georgia legislation provides that, with the prior approval of the Department of
Banking and Finance, after July 1, 1996, a bank may establish three new or
additional de novo branch banks anywhere in Georgia and, beginning July 1, 1998,
a bank may establish new or additional branch banks anywhere in the state with
prior regulatory approval.
RECENT LEGISLATIVE DEVELOPMENTS
From time to time, various bills are introduced in the United States
Congress and at the state legislative level 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.
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<PAGE> 26
MANAGEMENT
GENERAL
The following table sets forth the respective names, ages, positions
with the Company and 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 (Age) Company/Bank(1) Shares (2) Offering (3) Offering (4)
- ---------- --------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Kenneth R. Bishop(34) Director 17,500 2.37% 1.75%
Jerry W. Braden(53) Director 17,500 2.37% 1.75%
Donald D. George(57) Director 17,500 2.37% 1.75%
John S. Lewis(54) Director 17,500 2.37% 1.75%
Sam R. McCleskey(57) Director 17,500 2.37% 1.75%
Michael L. McPherson Director, President and 17,500 2.37% 1.75%
(48) Chief Executive Officer
Stephen A. Taylor(42) Director 17,500 2.37% 1.75%
B. Don Temples(46) Director 17,500 2.37% 1.75%
TOTALS 140,000 18.92% 14.0%
======= ====== =====
</TABLE>
- -------------------
(1) All of the Organizers will serve as directors of the Company and the Bank.
(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, 31.8% 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
24.6% 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 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 740,000 shares are sold in this
offering.
(4) Assumes that the maximum number of 1,000,000 shares are sold in this
offering.
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<PAGE> 27
Biographical information concerning the Officers and Directors is set
forth below.
Kenneth R. Bishop was born in Jacksonville, Florida on August 31, 1963.
He received a Bachelors Degree in Business Administration - Marketing from the
University of Georgia. Mr. Bishop is the owner of Daddy Pam's Coffeehouse which
he opened in March 1997. Mr. Bishop was previously employed as a Vice President
of Southern Color & Chemical Co., Inc. He has been an active member and
supporter of the Sam Jones Methodist Church for many years. In addition, he has
been active in a number of local charities, both financially and in service.
Jerry W. Braden was born in Rome, Georgia on November 6, 1944. He
received a Bachelor of Science Degree and a Masters Degree in Agricultural
Economics from the University of Georgia. He is owner of a real estate
management and development company styled The Braden Group. The Braden Group is
a trade name used to develop real estate, to sell real estate, and to own and
manage rental houses and apartment complexes. He has owned and operated The
Braden Group since 1981. Mr. Braden has been actively involved in many civic
endeavors in Bartow County, including past Chairman of the Market Analysis
Research Committee for the Washington based Council for Affordable and Rural
Housing; Board of Directors, Bartow County Habitat for Humanity; Board of
Directors, Bartow County Home Builders Association; Board Member of Trustees,
Sam Jones Historic Home and Museum; Member of Board of Directors of the
Cartersville-Bartow County Opera; and Chairman of the Finance Committee of
Trinity United Methodist Church.
Donald D. George was born in Wardtown, Virginia on April 9, 1940. He
attended several colleges including Virginia State University, ICBO Business
School of Manhattan, and St. Francis of Xavier College of Labor Relations. Mr.
George has been in the transportation industry for the past 32 years. In 1990,
Mr. George formed his own company, Free Enterprise of Atlanta, Inc. d/b/a
George's Motor Coach, which provides trip and shuttle services through the
Atlanta area as well as out of state charter trips. He was also President of the
223rd Street Block Association and Scout Master of Boy Scout Troop 676. Mr.
George is a member of the Cobb County Chamber of Commerce, the City of Atlanta
Chamber of Commerce, the Atlanta Business League, the City of Conyers Chamber of
Commerce and the Board of Directors of National Key Women of America.
John S. Lewis was born in Cartersville, Georgia on August 10, 1943. He
received a Bachelor of Business Administration from the University of Georgia.
He received a LLB in Law from Mercer University. Mr. Lewis is in the property
management business and manages jointly and independently owned income-producing
real estate and farm land. He has been in the real estate sales and management
business since 1986. He was a practicing attorney in Cartersville from 1970 to
1985.
Sam R. McCleskey was born in Woodstock, Georgia on May 1, 1940. Since
1979, Mr. McCleskey has been a supervisor in the tool and die area of Lockheed
Martin Corporation and also the owner of McCleskey Builders, Inc, a residential
home builder.
Michael L. McPherson, was born in Cartersville, Georgia on June 29,
1949. He received a Bachelors Degree in Business Administration, Cum Laude, from
Brenau College, Gainesville, Georgia. He graduated from several American Bankers
association schools on credit and lending. He received the professional
designation of Certified Lender-Business Banking (CLBB) from the Institute of
Certified Bankers. He graduated from the Georgia Bankers School at the
University of Georgia. Mr. McPherson has been a banker since 1977, when he began
his career at Bartow County Bank, Cartersville, Georgia. He worked in all phases
of banking from bookkeeping to Senior Vice President in charge of lending. He
was employed by Bartow County Bank from 1977 to 1990. In 1990, Mr. McPherson
moved to First Community Bank & Trust, Cartersville, Georgia as Executive Vice
President and Chief Lending Officer. He remained with First Community Bank &
Trust until September 1997, at which time he resigned to lead the formation of
the proposed bank. Mr. McPherson is a past Director of the Alumni Board of
Governors of Reinhardt College; past Director of the Georgia Chapter of bank
Administration Institute; past President of Young Bankers Section of Community
Bankers Association; past Member of the Board of Directors of Bartow County
Advocates for Children; a member of Center Baptist Church, Cartersville; and he
is active in various local charitable and civic organizations.
Stephen A. Taylor was born in Fairmont, Georgia on October 26, 1955. Mr. Taylor
is the owner of Taylor Farm Supply, Cartersville, Georgia. This is a forty-eight
year old company and Mr. Taylor bought out a partner and became sole owner on
December 31, 1996. Mr. Taylor has attended Reinhardt College and Floyd College
and is a supporter of both these
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<PAGE> 28
institutions. He is a past member of the Purina Corporation Advisory Board. Mr.
Taylor also coached several years in the Bartow County Recreation Department.
B. Don Temples was born in Cartersville, Georgia on December 6, 1951.
Mr. Temples received an Associate of Arts from Reinhardt College and a Bachelor
of Business Administration from the University of Georgia. He is a licensed real
estate broker in the State of Georgia and co-owner of Temple's Construction, a
residential real estate development and construction company.
LEGAL PROCEEDINGS
There are no material legal proceedings to which any of the directors
or officers are subject.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. McPherson
for a five year term pursuant to which Mr. McPherson will serve as the President
and Chief Executive Officer of the Bank. Mr. McPherson will be paid an annual
salary of $90,700 until the Bank opens and $110,000 thereafter, plus his yearly
medical insurance premium. Mr. McPherson 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. McPherson will be
granted an option to purchase 5% of the shares of Common Stock (less any
warrants received) at $10.00 per share. The options will vest over a five-year
period and will have a term of ten years. Additionally, Mr. McPherson 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 employment agreement with Mr. McPherson also provides that
following termination of his employment with the Bank and for a period of twelve
months thereafter, Mr. McPherson, may not (i) be employed in the banking
business as a director, officer at the vice-president level or higher, or
organizer or promoter of, or provide executive management services to, any
financial institution within 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 150,000 shares.
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 OCC 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,
26
<PAGE> 29
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 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 Securities
Act of 1933 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.
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<PAGE> 30
DESCRIPTION OF SECURITIES
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.
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.
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<PAGE> 31
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 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.
"Fair Price" Statute. The Company has elected to adopt Georgia's "Fair
Price" statute as set forth in sections 14-2-1110 through 14-2-1113 of the
Georgia Business Corporation Code. Subject to certain exclusions summarized
below, Section 14-2-1111 of the Georgia Business Corporation Code ("Section
14-2-1111") requires that a" Business Combination" with an "Interested
Shareholder" shall be (a) unanimously approved by the continuing directors who
must constitute at least three members of the board of directors at the time of
such approval, or (b) recommended by at least two-thirds of the continuing
directors and approved by a majority of the shareholders excluding the
Interested Shareholder.
"Interested Shareholder" generally includes: (a)(i) any person who is
the beneficial owner of 10% or more of the voting power of the outstanding
voting shares of the corporation; or (ii) any person who is an affiliate of the
corporation and who was the beneficial owner of 10% or more of the voting power
of the outstanding shares of the corporation at any time within two years before
the date on which such person's status as an Interested Shareholder is
determined; and (b) the affiliates of such person. For the purpose of
determining whether a person is an Interested Shareholder, the number of
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<PAGE> 32
voting shares deemed to be outstanding shall not include any unissued voting
shares which may be issuable pursuant to any agreement, arrangement, or
understanding, or upon exercise of conversion rights, warrants, options, or
otherwise. Subject to certain exceptions, a "Business Combination" includes: (i)
any merger or consolidation of the corporation or a subsidiary of the
corporation; (ii) any share exchange; (iii) any sale, lease, transfer, or other
disposition of assets of the corporation or its subsidiary occurring within a 12
month period and having an aggregate book value equal to 10% or more of the net
assets of the corporation; (iv) any transaction that results in the issuance or
transfer by the corporation or a subsidiary of the corporation of any stock of
the corporation or the subsidiary representing 5% or more of the total market
value of the outstanding stock of the corporation to any Interested Shareholder
within a 12 month period, except pursuant to a transaction that effects a pro
rata distribution to all shareholders of the corporation; (v) the adoption of
any plan or proposal for the liquidation or dissolution of the corporation in
which anything other than cash will be received by an Interested Shareholder;
and (vi) any transaction occurring within a 12 month period involving the
corporation or a subsidiary of the corporation that has the effect of increasing
by 5% or more the proportionate share of the stock of any class or series of the
corporation or the subsidiary that is directly or beneficially owned by the
Interested Shareholder. A "Continuing Director" includes any director who is not
an affiliate or associate of an Interested Shareholder or any board approved
successor of such a director who is not an affiliate or associate of an
Interested Shareholder.
Section 14-2-1111 will not apply to a Business Combination if: (a) the
aggregate amount of the cash, and fair market value five days before the
consummation date if payment is to be made in other than cash, to be received
per share by the shareholders is at least equal to the highest of: (i) the
highest per share price, including brokerage commissions, transfer taxes, and
soliciting dealers' fees, paid by the Interested Shareholder for any shares of
the same class or series acquired by it within two years preceding the
announcement date or in the transaction in which it became an Interested
Shareholder; (ii) the higher of the fair market value per share as determined on
the announcement date or the determination date; or (iii) in the case of shares
other than common shares, the highest amount per share to which preferred
shareholders are entitled in the event of liquidation, dissolution, or winding
up of the corporation, provided that subparagraph (iii) shall only be applicable
if the Interested Shareholder acquired the shares within the two years period
immediately preceding the announcement date; and (b) shareholders receive cash
or the form of consideration used in the past by the Interested Shareholder to
purchase the largest number of shares of such class or series. Further, subject
to exceptions, prior to the time the Business Combination with the Interested
Shareholder takes place, without the approval of the board of directors, there
shall have been: (i) no failure to declare and pay full dividends on the
corporation's outstanding preferred shares; (ii) no reduction in the annual rate
of dividends paid on common shares except as to reflect any subdivision of the
shares; (iii) an increase in the annual rate of dividends to reflect any
reclassification of shares; and (iv) not more than a 1% increase in the
Interested Shareholder's ownership of any of the corporation's stock in any 12
month period. An Interested Shareholder may not receive a direct or indirect
benefit, except proportionately as a shareholder, of any loans, advances,
guarantees, pledges, or other financial assistance or any tax credits or other
tax advantages provided by the corporation or its subsidiaries, either in
anticipation of or in connection with such Business Combination or otherwise.
"Business Combination" Statute. The Company has elected to adopt
Georgia's "Business Combination" statute as set forth in sections 14-2-1131
through 14-2-1133 of the Georgia Business Corporation Code. Subject to certain
exclusions summarized below, Section 14-2-1132 of the Georgia Business
Corporation Code ("Section 14-2-1132") prohibits any "Interested Shareholder"
from engaging in a "Business Combination" with a Georgia corporation for five
years following the date such person became an Interested Shareholder.
"Interested Shareholder" generally includes: (a)(i) any person who is the
beneficial owner of 10% or more of the voting power of the outstanding voting
shares of the corporation; or (ii) any person who is an affiliate of the
corporation and who was the beneficial owner of 10% or more of the voting power
of the outstanding shares of the corporation at any time within two years before
the date on which such person's status as an Interested Shareholder is
determined; and (b) the affiliates of such person. For the purpose of
determining whether a person is an Interested Shareholder, the number of voting
shares deemed to be outstanding shall not include any unissued voting shares
which may be issuable pursuant to any agreement, arrangement, or understanding,
or upon exercise of conversion rights, warrants, or options, or otherwise.
Subject to certain exceptions, a "Business Combination" includes: (i) any merger
or consolidation of the corporation or a subsidiary of the corporation; (ii) any
sale, lease, transfer, or other disposition of assets of the corporation or its
subsidiary having an aggregate book value equal to 10% or more of the net assets
of the corporation; (iii) any transaction that results in the issuance or
transfer by the corporation or a subsidiary of the corporation of any stock of
the corporation or the subsidiary representing 5% or more of the total market
value of the outstanding stock of the corporation to any Interested Shareholder,
except pursuant to a transaction that effects a pro rata distribution to all
shareholders of the corporation; (iv) the adoption of any plan or proposal for
the liquidation or dissolution of the corporation; (v) any transaction involving
the corporation or a subsidiary of the corporation that has the effect of
increasing
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<PAGE> 33
by 5% or more the proportionate share of the stock of any class or series of the
corporation or the subsidiary that is directly or beneficially owned by the
Interested Shareholder; (vi) any receipt by the Interested Shareholder of the
benefit (except proportionately as a shareholder) of any loans, advances,
guarantees, pledges or other financial benefits or assistance or any tax credits
or other tax advantages provided by or through the corporation or a subsidiary
of the corporation; and (vii) any share exchange.
Section 14-2-1132 does not apply to a Business Combination if: (i)
before a person became an Interested Shareholder, the board of directors of the
corporation approved either the transaction in which the Interested Shareholder
became an Interested Shareholder or the Business Combination; (ii) upon
consummation of the transaction that resulted in the person becoming an
Interested Shareholder, the Interested Shareholder owned at least 90% of the
voting stock of the corporation outstanding at the time the transaction
commenced (other than certain excluded shares); or (iii) following a transaction
in which the person became an Interested Shareholder, the Business Combination
is approved by the holders of a majority of the voting stock of the corporation
not owned by the Interested Shareholder and other excluded shares.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have a minimum of
740,000 and a maximum of 1,000,000 shares of Common Stock outstanding. The
shares sold in this offering will be freely tradable, without restriction or
registration under the Securities Act of 1933 (the "Act"), except for shares
purchased by "affiliates" of the Company, which will be subject to resale
restrictions under the Act. An affiliate of the issuer is defined in Rule 144
under the 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 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 in all probability will be deemed to be affiliates. These securities held
by affiliates may be eligible for sale in the open market without registration
in accordance with the provisions of Rule 144.
In general, under Rule 144 an affiliate of the Company may sell, within
any three-month period, a number of restricted shares no greater than 1% of the
then outstanding shares of the Company's 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 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.
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.
EXPERTS
The financial statements of the Company at December 31, 1997, and for
the period from October 8, 1997 (inception) until December 31, 1997, set forth
herein have been so included in reliance on the report of Mauldin & Jenkins,
independent certified public accountants, given on the authority of that firm as
experts in accounting and auditing.
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Unity Holdings, Inc.
(A Development Stage Enterprise)
Index to Financial Statements
<TABLE>
<S> <C>
Independent Auditor's Report....................................................................................F-2
Financial Statements:
Balance Sheet as of December 31, 1997...........................................................................F-3
Statement of Operations for the Period from October 8, 1997 (inception) to
December 31, 1997......................................................................................F-4
Statement of Changes in Stockholder's Equity for the Period from October 8, 1997
(inception) to December 31, 1997................................................................................F-5
Statement of Cash Flows for the Period October 8, 1997 (inception) to
December 31, 1997...............................................................................................F-6
Notes to Financial Statements...................................................................................F-7
</TABLE>
F-1
<PAGE> 35
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS
UNITY HOLDINGS, INC.
CARTERSVILLE, GEORGIA
We have audited the accompanying balance sheets of UNITY
HOLDINGS, INC., a development stage company, as of December 31, 1997, and the
related statements of loss, stockholders' deficit and cash flows for the period
from October 8, 1997, date of inception, to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Unity
Holdings, Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the period from October 8, 1997, date of inception, to
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 30, 1998
F-2
<PAGE> 36
UNITY HOLDINGS, INC.
(A DEVELOPMENT STATE COMPANY)
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 186
Office equipment 3,785
Other assets 78,439
Deferred organization costs 74,490
----------------------
$ 156,900
======================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Note payable $ 191,239
Accrued expenses 4,328
----------------------
195,567
----------------------
COMMITMENTS
STOCKHOLDERS' DEFICIT
Preferred Stock, $.01 par value; 10,000,000 shares authorized none issued $ --
Common stock, $.01 par value; 10,000,000 shares authorized; 10 shares --
issued and outstanding
Capital surplus 100
Deficit accumulated during the development stage (38,767)
----------------------
(38,667)
----------------------
$ 156,900
======================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-3
<PAGE> 37
UNITY HOLDINGS, INC.
(A DEVELOPMENT STATE COMPANY)
STATEMENT OF LOSS
PERIOD FROM OCTOBER 8, 1997, DATE OF INCEPTION,
DECEMBER 31, 1997
<TABLE>
<S> <C>
EXPENSES
Salaries and employee benefits 28,557
Other expenses 10,210
-----------------
38,767
-----------------
Net loss $ (38,767)
=================
Losses per share $ (12,922)
=================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-4
<PAGE> 38
UNITY HOLDINGS, INC.
(A DEVELOPMENT STATE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
PERIOD FROM OCTOBER 8, 1997, DATE OF INCEPTION,
DECEMBER 31, 1997
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
PREFERRED STOCK PREFERRED STOCK DURING THE TOTAL
------------------------- --------------------------- CAPITAL DEVELOPMEN STOCKHOLDERS'
SHARES PAR VALUE SHARES PAR VALUE SURPLUS STAGE DEFICIT
----------- ------------ ------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 8, 1997 - $ - - $ - $ - $ - $ -
(DATE OF INCEPTION)
Common stock subscription - - 10 - 100 - 100
Net loss - - - - - (38,767) (37,767)
----------- ----------- ------------ -------------- ---------- ----------- -------------
BALANCE, DECEMBER 31, 1997 - $ - 10 $ - $ 100 $ (38,767) $ (38,667)
=========== =========== ============ ============== ========== =========== =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-5
<PAGE> 39
UNITY HOLDINGS, INC.
(A DEVELOPMENT STATE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM OCTOBER 8, 1997, DATE OF INCEPTION,
DECEMBER 31, 1997
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (38,767)
Adjustment to reconcile net loss to net cash used in
operating activities:
Increasing in other assets (78,339)
Increase in accrued expenses 4,328
---------------
Net cash used in operating activities (112,778)
---------------
INVESTING ACTIVITIES
Increase in deferred organization costs (74,490)
Purchase of office equipment (3,785)
---------------
Net cash used in investing activities (78,275)
---------------
FINANCING ACTIVITIES
Proceeds from note payable 191,239
---------------
Net cash provided by financing activities 191,239
---------------
Net Increase in cash 186
Cash at beginning of period --
---------------
$ 186
===============
NONCASH TRANSACTIONS
Common stock subscriptions $ 100
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
F-6
<PAGE> 40
UNITY HOLDINGS, INC.
(A DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Unity Holdings, Inc. (the "Company") was incorporated to
operate as a bank holding company pursuant to the Federal
Bank Holding Company Act of 1956, as amended, and the
Georgia Bank Holding Company Act, and to purchase 100% of
the issued and outstanding capital stock of Unity National
Bank (the "Bank"), an association to be organized under the
laws of the United States, which will conduct a general
banking business in Cartersville, Georgia. The Organizers
have filed a joint application with the Office of the
Comptroller of the Currency (the "OCC") and the Federal
Deposit Insurance Corporation (the "FDIC") to charter the
proposed Bank and for FDIC insurance of the Bank's deposits.
The Company has received preliminary approval from the OCC,
and is in process of filing an application to become a bank
holding company with the Federal Reserve Board (the "FRB")
and the Georgia Department of Banking and Finance (the
"DBF"). Upon obtaining regulatory approval, the Company will
be a registered bank holding company subject to regulation
by the FRB and the DBF.
Activities since inception have consisted of the Company's
and the Bank's organizers engaging in organizational and
preopening activities necessary to obtain regulatory
approvals and to prepare to commence business as a financial
institution.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on the accrual
basis in accordance with generally accepted accounting
principles.
F-7
<PAGE> 41
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred Organization and Stock Offering Costs
Deferred organization costs will be amortized in accordance
with applicable regulations and accounting policies over a
period not to exceed five years from the commencement of
operations. Stock offering costs will be charged to capital
surplus upon completion of the stock offering. Additional
costs are expected to be incurred for organization costs and
stock offering costs.
Following is a summary of these costs:
<TABLE>
<CAPTION>
STOCK
ORGANIZATION OFFERING
COSTS COSTS TOTAL
------------ ----------- ---------
<S> <C> <C> <C>
Consulting $ 40,000 $ - $ 40,000
Legal 6,390 - 6,390
Filing Fees 18,100 - 18,100
Other 10,000 - 10,000
-------- ----------- --------
$ 74,490 $ - $ 74,490
======== =========== ========
</TABLE>
INCOME TAXES
The Company will be subject to Federal and state income
taxes when taxable income is generated. No income taxes have
been accrued because of operating losses incurred during the
preopening period.
LOSSES PER SHARE
Losses per share are computed by dividing net loss by the
weighted average number of common shares outstanding. The
weighted average shares outstanding for the period ended
December 31, 1997 was three.
FISCAL YEAR
The Company will adopt a calendar year for both financial
reporting and tax reporting purposes.
F-8
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS
NOTE 3. COMMITMENTS (CONTINUED)
The Company has entered into a sales contract for land upon
which the Bank's office will be constructed. The contract
required earnest money to be paid at the effective date of the
contract in the amount of $50,000, which will be applied to
the purchase price of the land in the amount of $841,000. The
contract allows the Company to extend the initial closing date
from November 10, 1997 through June 10, 1998 by purchasing an
option on the 10th of each month for $5,000. As of December
31, 1997 the company had paid $50,000 of earnest money and
$10,000 in purchase options. In addition, the Company has
purchased options in the amount of $10,000 and $4,000 for the
purchase of land in the amount of $225,000 and $70,000,
respectively.
9
<PAGE> 43
Exhibit A to Part I
UNITY HOLDINGS, INC. SUBSCRIPTION AGREEMENT
TO: Unity Holdings, Inc.
P.O. Box 200308
Cartersville, Georgia 30120-9006
(770) 606-0555
Ladies and Gentlemen:
You have informed me that Unity Holdings, Inc., a Georgia corporation
(the "Company"), is offering up to 1,000,000 shares of its $.01 par value per
share Common Stock (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 to the undersigned herewith (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 "First Tennessee
Bank as Escrow Agent for Unity Holdings, Inc." (the "Funds") indicated below,
representing the payment of $10.00 per share for the number of shares of the
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 authority 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 by him 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 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>
- ------------------------------------ ------------------------------------------------------------
Number of Shares Subscribed Name or Names of Subscribers (Please Print)
for (minimum 100 shares)
$
----------------------------------- ------------------------------------------------------------
Total Subscription Price at Please indicate form of ownership desired (individual,
$10.00 per share (funds enclosed) joint tenants with right of survivorship, tenants in common,
trust corporation, partnership, custodian, etc.)
Date: (L.S.)
-------------------------------- --------------------------------------------------------
Signature of Subscriber(s)*
(L.S.)
- ------------------------------------ --------------------------------------------------------
Social Security Number or Federal Signature of Subscriber(s)*
Taxpayer Identification Number
Street (Residence) Address:
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
City, State and Zip Code
</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.
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.
A-2
<PAGE> 45
SUBSTITUTE FORM W-9
Under penalties of perjury, I certify that: (1) 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 (2) 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 (2) 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 no longer subject to backup withholding, do not cross out
item (2).
Each subscriber should complete this section.
- ----------------------------------- ----------------------------------
Signature of Subscriber Signature of Subscriber
- ----------------------------------- ----------------------------------
Printed Name Printed Name
- ----------------------------------- ----------------------------------
Social Security or Employer Social Security or Employer
Identification No. Identification No.
TO BE COMPLETED BY THE COMPANY:
Accepted as of_______, 199__, as to_______shares.
UNITY HOLDINGS, INC.
BY:
-----------------------------------
<PAGE> 46
<TABLE>
<S> <C>
========================================================= ======================================
No dealer, salesperson or other person has been
authorized to give any information or to make any 1,000,000 SHARES
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 UNITY HOLDINGS, INC.
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 A PROPOSED HOLDING COMPANY FOR
circumstances create any implication that the information
herein is correct at any time after the date hereof. UNITY NATIONAL BANK
- ------------------------- (PROPOSED)
TABLE OF CONTENTS
Page
Reports to Shareholders................................2 COMMON STOCK
Additional Information.................................2
Summary ...............................................3
Risk Factors...........................................6
Control Of The Company.................................7
The Offering..........................................10 ------------------------
Use of Proceeds.......................................13
Capitalization........................................15 PROSPECTUS
Dividend Policy ......................................16 -------------------------
Proposed Business.....................................16
General...............................................25
Description of Securities.............................29 ATTKISSON, CARTER & AKERS
Common Stock..........................................29
Certain Relationships and Related Transactions........35 ____________, 1998
Legal Matters.........................................32
Experts...............................................32
Financial Statements ................................F-1
Subscription Agreement...............................A-1
- -------------------------
UNTIL __________, 1998, 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.
========================================================= ======================================
</TABLE>
<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.
The indemnification provisions in the Company's bylaws require the
Company to indemnify and hold harmless any director 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
(including any action or suit by or in the right of the Company) because he is
or was a director of the Company, against expenses (including, but in no way
limited to, attorney's fees and disbursements, court costs and expert witness
fees), and against judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or proceeding.
Indemnification would be disallowed under any circumstances where
indemnification may not be authorized by action of the board of directors, the
shareholders or otherwise. The board of directors of the Company also has the
authority to extend to officers, employees and agents the same indemnification
rights held by directors, subject to all the accompanying conditions and
obligations. Indemnified persons would also be entitled to have the Company
advance expenses prior to the final disposition of the proceeding. If it is
ultimately determined that they are not entitled to indemnification, however,
such amounts would be repaid. Insofar as indemnification for liability rising
under the Act may be permitted to officers and directors of the Company pursuant
to the foregoing provisions, the Company has been informed 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.
As permitted under the Financial Institutions Code of Georgia, the
Bylaws of the Bank provide for the indemnification by the Bank of its officers
and directors for certain liabilities and expenses that may be incurred by them
in connection with legal actions in which they may become involved by reason of
their being or having been officers or directors of the Bank. Insofar as
indemnification for liability arising under the Act may be permitted to the
officers and directors of the Bank pursuant to the foregoing provisions, the
Bank has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in that
Act and is, therefore, unenforceable.
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:
Registration Fee............................ $ 2,950
Blue Sky Fees and Expenses.................. 3,000
Printing and Engraving...................... 6,000
Legal Fees and Expenses..................... 25,000
Accounting Fees and Expenses................ 2,000
Sales Agent's Expenses...................... 25,000
Miscellaneous Disbursements................. 1,050
--------
TOTAL:...................................... $65,000.00
==========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
On October 9, 1997, the Company issued ten shares of its Common Stock
to one of the Organizers, Mr. Michael L. McPherson, 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. McPherson's
stock at the original purchase price of $100.00 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 of Company's Articles of Incorporation and Bylaws defining
the rights of shareholders
4.2 Form of Common Stock Certificate
5.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P.
10.1 Employment Agreement dated as of December 12, 1997 between the Company and Michael L. McPherson
10.2 Option to Purchase Property
10.3 Escrow Agreement between Company and First Tennessee Bank**
10.4 Line of Credit Note
10.5 Subscription Agreement*
10.6 Agency Agreement dated February 6, 1998 between the Company and Attkisson, Carter & Akers
23.1 Consent of Accountants
23.2 Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed as part of Exhibit 5.1)
24.1 Power of Attorney (part of signature page to Registration Statement)
</TABLE>
- -------------------
* Filed as Exhibit A to Part I.
** To be filed.
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-2
<PAGE> 49
(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.
II-3
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this amendment to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cartersville, State of Georgia, on February 2,
1998.
NITY HOLDINGS, INC.
By: /s/ Michael L. McPherson
-------------------------------------
Michael L. McPherson
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael L. McPherson 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 persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Kenneth R. Bishop Director February 2, 1998
Kenneth R. Bishop
/s/ Jerry W. Braden Director February 2, 1998
Jerry W. Braden
/s/ Donald D. George Director February 2, 1998
Donald D. George
/s/ John S. Lewis Director February 2, 1998
John S. Lewis
/s/ Sam R. McCleskey Director February 2, 1998
Sam R. McCleskey
</TABLE>
II-4
<PAGE> 51
<TABLE>
<S> <C> <C>
/s/ Michael L. McPherson Director, President and Chief February 2, 1998
Michael L. McPherson Executive Officer (principal
executive officer, principal
financial officer, and
principal accounting officer)
/s/ Stephen A. Taylor Director February 2, 1998
Stephen A. Taylor
/s/ B. Don Temples Director February 2, 1998
B. Don Temples
By: /s/ Michael L. McPherson February 2, 1998
Michael L. McPherson
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 52
EXHIBIT INDEX
<TABLE>
<S> <C>
3.1 Articles of Incorporation
3.2 Bylaws
4.1 See exhibits 3.1 and 3.2 for provisions of Company's Articles of
Incorporation and Bylaws Defining the Rights of Shareholders
4.2 Form of Stock Certificate
5.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P.
10.1 Employment Agreement dated as of December 12, 1997 between
the Company and Michael L. McPherson
10.2 Option to Purchase Property
10.3 Escrow Agreement between the Company and First Tennessee
Bank**
10.4 Line of Credit Note
10.5 Subscription Agreement*
10.6 Agency Agreement dated February 6, 1998 between the Company
and Attkisson, Carter & Akers
23.1 Consent of Accountants
23.2 Consent of Nelson Mullins Riley & Scarborough, L.L.P.
(filed as part of Exhibit 5.1)
24.1 Power of Attorney (part of signature page to Registration
Statement)
</TABLE>
- ----------------
*Filed as Exhibit A to Part I
** To be filed
II-6
<PAGE> 1
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
UNITY HOLDINGS, INC.
ARTICLE ONE
NAME
The name of the corporation is Unity Holdings, Inc. (the "Corporation").
ARTICLE TWO
INITIAL REGISTERED OFFICE AND AGENT
The street address and county of the initial registered office of the
corporation shall be at 19 South Public Square, Suite 103, Cartersville, Bartow
County, Georgia 30120. The initial registered agent of the corporation at such
address shall be Michael L. McPherson.
ARTICLE THREE
CAPITALIZATION
The Corporation shall have the authority, exercisable by its
board of directors (the "Board of Directors"), to issue up to 10,000,000 shares
of voting common stock, par value $.01 per share (the "Common Stock").
The Corporation shall have the authority, exercisable by its Board of
Directors, to issue up to 10,000,000 shares of preferred stock, par value $.01
per share (the "Preferred Stock"), any part or all of which 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 (a
"Preferred Stock Designation"), which is effective without shareholder action,
in accordance with the appropriate provisions of the Georgia Business
Corporation Code (the "Code") 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 the holders of the majority of the shares of 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 FOUR
INCORPORATOR
The name and address of the incorporator is as follows:
Neil E. Grayson, Esq.
999 Peachtree Street, N.E.
First Union Plaza, 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:
19 South Public Square, Suite 103
Cartersville, Georgia 30120
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 Code; and
(iv) any transaction from which the director received an improper
personal benefit.
If at any time the Code shall have been amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of each director of the corporation shall be eliminated or limited to
the fullest extent permitted by the Code, as so amended, without further action
by the shareholders, unless the provisions of the Code, as amended, require
further action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article
Six shall not adversely affect the elimination or limitation of liability or
alleged liability pursuant hereto of any director of the corporation for or with
respect to any alleged act or omission of the director occurring prior to such a
repeal or modification.
ARTICLE SEVEN
INITIAL DIRECTORS
The name and address of the initial director of the corporation is:
Michael L. McPherson
19 South Public Square, Suite 103
Cartersville, Georgia 30120
2
<PAGE> 3
ARTICLE EIGHT
CONSIDERATION OF OTHER CONSTITUENCIES
In discharging the duties of their respective positions and in
determining what is in the best interests of the Corporation, the Board of
Directors, committees of the Board of Directors, and individual directors, in
addition to considering the effects of any actions on the Corporation and its
shareholders, may consider the interests of the employees, customers, suppliers,
creditors, and other constituencies of the Corporation and its subsidiaries, the
communities and geographical areas in which the Corporation and its subsidiaries
operate or are located, and all other factors such directors consider pertinent.
This provision solely grants discretionary authority to the directors and shall
not be deemed to provide to any other constituency any right to be considered.
ARTICLE NINE
NAME AND ADDRESS OF THE SOLE INCORPORATOR
The sole incorporator is Neil E. Grayson, whose address is 999
Peachtree Street, N.E., Suite 1400, First Union Plaza, Atlanta, Georgia 30309.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Incorporation
as of the date indicated below.
/s/ Neil E. Grayson
-------------------
Neil E. Grayson
Sole Incorporator
Date: October 6, 1997
------------------
3
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
UNITY HOLDINGS, INC.
<PAGE> 2
BYLAWS
OF
UNITY HOLDINGS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I.........................................................................................................1
1.1 REGISTERED OFFICE AND AGENT..............................................................................1
1.2 PRINCIPAL OFFICE.........................................................................................1
1.3 OTHER OFFICES............................................................................................1
ARTICLE II........................................................................................................1
2.1 PLACE OF MEETINGS........................................................................................1
2.2 ANNUAL MEETINGS..........................................................................................1
2.3 SPECIAL MEETINGS.........................................................................................1
2.4 NOTICE OF MEETINGS.......................................................................................2
2.5 WAIVER OF NOTICE.........................................................................................2
2.6 VOTING GROUP; QUORUM; VOTE REQUIRED TO ACT...............................................................2
2.7 VOTING OF SHARES.........................................................................................3
2.8 PROXIES..................................................................................................3
2.9 PRESIDING OFFICER........................................................................................3
2.10 ADJOURNMENTS..........................................................................................3
2.11 CONDUCT OF THE MEETING................................................................................4
2.12 ACTION OF SHAREHOLDERS WITHOUT A MEETING..............................................................4
2.13 MATTERS CONSIDERED AT ANNUAL MEETINGS.................................................................4
ARTICLE III.......................................................................................................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 QUALIFICATIONS OF DIRECTORS..............................................................................6
3.8 CERTAIN NOMINATION REQUIREMENTS..........................................................................7
3.9 ADDITIONAL NOMINATION REQUIREMENTS.......................................................................7
ARTICLE IV........................................................................................................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
4.9 ADJOURNMENTS.............................................................................................9
4.10 WAIVER OF NOTICE......................................................................................9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V.........................................................................................................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 VI.......................................................................................................11
ARTICLE VII......................................................................................................11
7.1 SHARE CERTIFICATES......................................................................................11
7.2 RIGHTS OF CORPORATION WITH REGISTERED TO 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
7.6 FIXING OF RECORD DATE...................................................................................12
7.7 RECORD DATE IF NONE FIXED...............................................................................13
ARTICLE VIII.....................................................................................................13
8.1 INDEMNIFICATION OF DIRECTORS............................................................................13
8.2 INDEMNIFICATION OF OTHERS...............................................................................13
8.3 OTHER ORGANIZATIONS.....................................................................................13
8.4 ADVANCES................................................................................................14
8.5 NON-EXCLUSIVITY.........................................................................................14
8.6 INSURANCE...............................................................................................14
8.7 NOTICE..................................................................................................14
8.8 SECURITY................................................................................................15
8.9 AMENDMENT...............................................................................................15
8.10 AGREEMENTS...........................................................................................15
8.11 CONTINUING BENEFITS..................................................................................15
8.12 SUCCESSORS...........................................................................................15
8.13 SEVERABILITY.........................................................................................15
8.14 ADDITIONAL INDEMNIFICATION...........................................................................16
ARTICLE IX.......................................................................................................16
9.1 INSPECTION OF BOOKS AND RECORDS.........................................................................16
9.2 FISCAL YEAR.............................................................................................16
9.3 CORPORATE SEAL..........................................................................................16
9.4 ANNUAL STATEMENTS.......................................................................................16
9.5 NOTICE..................................................................................................17
9.6 FAIR PRICE STATUTE......................................................................................17
9.7 BUSINESS COMBINATION STATUTE............................................................................17
ARTICLE X........................................................................................................17
</TABLE>
ii
<PAGE> 4
BYLAWS
OF
UNITY HOLDINGS, INC.
References in these Bylaws to "Articles of Incorporation" are to the
Articles of Incorporation of Unity Holdings, 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 I
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 II
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 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
<PAGE> 5
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 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
2
<PAGE> 6
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 II 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.
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
3
<PAGE> 7
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 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
4
<PAGE> 8
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 III
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. Unless otherwise provided in
the Articles of Incorporation, the number of directors of the Corporation shall
be that number as may be fixed from time to time by resolution of the Board of
Directors, but in no event shall the number be less than five or greater than
twenty-five. The initial number of directors shall be eight. 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. In addition, unless
provided otherwise by resolution of 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. At any time
that the Board has six or more members, 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 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
5
<PAGE> 9
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 Qualifications 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 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,
6
<PAGE> 10
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 Bartow 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 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,
7
<PAGE> 11
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 IV
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 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.
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<PAGE> 12
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 V
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 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
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<PAGE> 13
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 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.
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<PAGE> 14
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 VI
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 VII
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 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.
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<PAGE> 15
7.2 Rights of Corporation with Registered to 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 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
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<PAGE> 16
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 VIII
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 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. 1 0 of this Article Eight (subject to the
conditions, limitations, and obligations specified in those
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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 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 indemnities 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-
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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.
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,
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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 IX
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.
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.
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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.
9.6 Fair Price Statute. The Corporation elects to be governed by
the "Fair Price" statute as set forth in section 14-2-1110 through 14-2-1113 of
the Code.
9.7 Business Combination Statute. The Corporation elects to be
governed by the "Business Combination" statute as set forth in sections
14-2-1131 through 14-2-1133 of the Code.
ARTICLE X
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.
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<PAGE> 1
Exhibit 4.2
[FORM OF FACE OF CERTIFICATE]
UNITY HOLDINGS, INC.
INCORPORATED UNDER THE LAWS OF GEORGIA
THE CORPORATION IS TO ISSUE 10,000,000 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.
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
survivorship and not as tenants Gifts to Minors
in common Act_________ __
(State)
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
negLAW OFFICES
Nelson Mullins Riley & Scarborough, L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP
<TABLE>
<S> <C> <C>
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>
Exhibit 5.1
February 7, 1998
Unity Holdings, Inc.
19 South Public Square, Suite 103
Cartersville, Georgia 30120
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to Unity Holdings, Inc. (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
1,000,000 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
By: /s/ Neil E. Grayson
-------------------------
Neil E. Grayson
<PAGE> 1
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of December 12,
1997, is made by and between Unity Holdings, Inc., a Georgia corporation (the
"Employer" or the "Company") which is the proposed bank holding company for
Unity National Bank (Proposed), a proposed national bank (the "Bank"), and
Michael L. McPherson, an individual resident of Georgia (the "Executive").
The Employer is in the process of organizing the Bank, and the
Executive has agreed to serve as President and Chief Executive Officer of the
Company and the Bank. Upon organization of the Bank, the Employer and the
Executive contemplate that this Agreement will be assigned by the Employer to
the Bank and that the Bank will assume the duties of the Company hereunder
(except pursuant to Section 3). Following such assignment, the term "Employer"
as used herein from time to time shall refer to the Bank.
The Employer recognizes that the Executive's contribution to the growth
and success of the Bank during its obligation and initial years of operations
will be a significant factor in the success of the Bank. The Employer desires to
provide for the employment of the Executive in a manner which will reinforce and
encourage the dedication of the Executive to the Bank and promote the best
interests of the Bank and its shareholders. The Executive is willing to serve
the Employer (and, after assignment of this Agreement, the Bank) on the terms
and conditions herein provided. Certain terms used in this agreement are defined
in Section 17 hereof.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment. The Employer shall employ the Executive, and the
Executive shall serve the Employer, as President and Chief Executive Officer of
the Bank and the Company upon the terms and conditions set forth herein. The
Executive shall have such authority and responsibilities consistent with his
position as are set forth in the Company's or the Bank's Bylaws or assigned by
the Company's or the Bank's Board of Directors (the "Board") from time to time.
The Executive shall devote his full business time, attention, skill and efforts
to the performance of his duties hereunder, except during periods of vacation
and leaves of absence consistent with Bank policy. The Executive may devote
reasonable periods to service as a director or advisor to other organizations,
to charitable and community activities, 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
Bank.
<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 five years.
3. Compensation and Benefits.
(a) The Employer shall pay the Executive a salary at a rate of not
less than $90,700 per annum in accordance with the salary payment practices of
the Employer. Subsequent to the bank opening, it will be $110,000 per annum. The
Board shall review the Executive's salary at least annually and may increase the
Executive's base salary if it determines in its sole discretion that an increase
is appropriate.
(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 and as established by by-laws
or Board action.
(c) The Executive shall participate in the Bank's long-term equity
incentive program and be eligible for the grant of stock options, restricted
stock, and other awards thereunder or under any similar plan adopted by the
Company. On the date of the closing of the stock offering for the initial
capitalization of the Bank, or as soon thereafter as an appropriate stock option
plan is adopted by the Board, the Company shall grant to the Executive an option
(the "Performance Option") to purchase a number of shares of Common Stock equal
to 5.0% of the number of shares sold in the offering less any warrants received.
The award agreement for the Performance Option shall provide that one-fifth of
the shares subject to the Performance Option will vest on each of the first
anniversaries of the Opening Date, but only if the Executive remains employed by
the Company on such date and the Bank has met the performance goals set forth
hereof for such year.
For each twelve month period beginning on the Opening Date, and as a
condition to the vesting of the shares subject to the Performance Option in such
year (except in the event of a Change in Control), the Bank must meet the
following performance criteria:
(i) the Bank shall meet or exceed 100% of the pro forma
projections contained in the application of the Bank filed with the
Office of the Comptroller of the Currency (the "OCC") for each year
of operations of the Bank;
(ii) the Bank shall maintain a regulatory examination rating of
Camel 1 or 2; provided, however, that if the Bank does not meet the
performance criteria for any year, the shares subject to the
Performance Option for such year may vest on the following
anniversary date, in the sole discretion of the Board, if the Bank
meets or exceeds the performance criteria for such year in the
following year. The Board shall notify the Executive of any shares
subject to the Performance Option vested hereunder within a
reasonable period
<PAGE> 3
of time after the anniversary date to which such options pertain.
The good faith determination of the Board regarding whether the Bank
met its yearly performance levels shall be conclusive.
In addition, the award agreement for the Performance Option will
provide that (i) the Executive's option shall be qualified as an incentive stock
option under the Internal Revenue Code of 1986, as amended (the "Code"); (ii)
all options shall be exercisable at any time during the ten years following the
date of initial public offering at a price per share equal to the public
offering price in the offering (subject to standard antidilution adjustments in
the event of stock splits, dividends or combinations), which the parties agree
is the fair market value of the Common Stock as of the date of grant; and (iii)
all options shall be nontransferrable and nonassignable by the Executive or by
any other person entitled hereunder to exercise any such rights; provided,
however, that upon the death of the Executive any rights granted hereunder shall
be transferable by the Executive's will or by the applicable laws of descent and
distribution: Nothing herein shall be deemed to preclude the granting to the
Executive of warrants or options under a director option plan in addition to the
options granted hereunder.
(d) The Executive may be eligible to receive a cash bonus in an
amount determined by the Board. Specifically, the executive shall receive a
$15,000 cash bonus upon the opening of the bank. The Executive shall receive a
cash bonus of 15% of his base salary prorated for the remainder of the months
remaining from the date of opening until December 31 of the year. Subsequently,
the Executive and other key personnel, as agreed by the Board, will receive a
bonus as set by the Board. The aforementioned bonuses, except for the initial
$15,000 bonus paid when the bank opens, will be based upon certain performance
levels or criteria as set by the Board.
(e) Beginning upon the opening of the Bank for business, the Company
shall provide the Executive with an automobile owned or leased by the Company of
a make and model appropriate to the Executive's status. The automobile will be
used primarily for business purposes and the bank will pay operating,
maintenance and related expenses for the automobile.
(f) In addition, the Employer shall obtain a membership in, and pay
the dues pertaining to, an area country club and shall designate the Executive
as the authorized user of such membership for so long as the Executive remains
the President and Chief Executive Officer of the Employer and this Agreement
remains in force.
(g) 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.
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<PAGE> 4
(a) The Executive's employment under this Agreement may be
terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) upon the disability of the Executive for a period of 90
days in any consecutive 120 day period which, in the opinion of the
Board of Directors, renders him unable to perform the essential
functions of his job and for which reasonable accommodation is
unavailable. For purposes of this Agreement, a "disability" is
defined as a physical or mental impairment that substantially limits
one or more major life activities, and a "reasonable accommodation"
is one that does not impose an undue hardship on the Employer;
(iii) by the Employer for Cause upon delivery of a Notice of
Termination to the Executive;
(iv) by the Executive for Good Reason upon delivery of a Notice
of Termination to the Employer within a 90-day period beginning on
the 30th day after the occurrence of a Change in Control or within a
90-day period beginning on the one year anniversary of the
occurrence of a Change in Control;
(v) by the Employer if its effort to organize the Bank is
abandoned; and
(vi) by the Executive effective upon the 30th day after
delivery of a Notice of Termination. If this occurs, all bonuses
not paid shall be canceled. The board shall have the authority to
dismiss him immediately upon receipt of the executive's resignation
and pay will cease immediately.
(b) 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 through the end of the month during
which death occurred, plus any bonus earned or accrued under the Bonus Plan
through the date of death and a pro rata share of any bonus with respect to the
current fiscal year which had been earned as of the date of the Executive's
death.
(c) During the period of any incapacity leading up to the
termination of the Executive's employment as a result of disability, the
Employer shall continue to pay the Executive his full base salary at the rate
then in effect and all other benefits (other than any bonus) until the Executive
becomes eligible for benefits under any long-term disability plan or insurance
program maintained by the Employer, provided that the amount of any such
payments to the Executive shall be reduced by the sum of the amounts, if any,
payable to the Executive for the same period under any disability benefit or
pension plan of the Employer or
4
<PAGE> 5
any of its subsidiaries. Furthermore, the Executive shall receive any bonus
earned or accrued under the Bonus Plan through the date of incapacity.
(d) If the Executive's employment is terminated for Cause as
provided above, or if the Executive resigns (except for a termination of
employment pursuant to Section 4(e)), the Executive shall receive any sums due
him as base salary and/or reimbursement of expenses through the date of such
termination. In such an event, all vested stock options must be exercised within
30 days of termination or be forfeited.
(e) If the Executive's employment is terminated by the
Executive pursuant to clause (iv) of Section 4(a), in addition to other rights
and remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Employer shall pay the Executive in cash within
fifteen days of the Termination Date severance compensation in an
amount equal to 100% of his then current monthly base salary each
month for twelve months from the Termination Date, plus any bonus
earned or accrued under the Bonus Plan through the Termination Date
and a pro rata share of any bonus with respect to the current
fiscal year which had been earned as of the Termination Date.
(ii) All stock options (including the Performance Option)
and stock appreciation rights granted to the Executive shall become
immediately exercisable and shall become 100% vested. All options
shall be exercisable at any time during the ten years following the
date of initial public offering at a price per share equal to the
public offering price in the offering (subject to standard
antidilution adjustments in the event of stock splits, dividends or
combinations), which the parties agree is the fair market value of
the Common Stock as of the date of the grant.
(f) If the Executive's employment is terminated pursuant to
clause (v) of Section 4(a), 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 six months from the date of termination, plus any bonus earned or
accrued under the Bonus Plan through the date of termination.
(g) 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).
(h) 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.
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<PAGE> 6
(i) The parties intend that the severance payments and other
compensation provided for herein are reasonable compensation for the Executive's
services to the Employer and shall not constitute "excess parachute payments"
within the meaning of Section 280G of the Internal Revenue Service Code of 1986
and any regulations thereunder.
5. Ownership of Work Product. The Employer shall own all Work Product
arising during the course of the Executive's employment (prior, present or
future). For purposes hereof, "Work Product" shall mean all intellectual
property rights, including all Trade Secrets, U.S. and international copyrights,
patentable inventions, and other intellectual property rights in any
programming, documentation, technology or other work product that relates to the
employer, its business or its customers and that employee conceives, develops,
or delivers to the Employer at any time during his employment, during or outside
normal working hours, in or away from the facilities of the Employer, and
whether or not requested by the Employer. If the Work Product contains any
materials, programming or intellectual property rights that the Executive
conceived or developed prior to, and independent of, the Executive's work for
the Employer, the Executive agrees to point out the pre-existing items to the
Employer and the Executive grants the Employer a worldwide, unrestricted,
royalty-free right, including the right to sublicense such items. The Executive
agrees to take such actions and execute such further acknowledgments and
assignments as the Employer may reasonably request to give effect to this
provision.
6. 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 statues, "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.
7. 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 6 and 7 above shall also apply to protect Trade Secrets
and Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.
6
<PAGE> 7
8. 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, 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.
9. 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 any interest 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.
10. Independent Provisions. The provisions in each of the above
Sections 9(a), 9(b), and 9(c) are independent, and the unenforceability of any
one provision shall not affect the enforceability of any other provision.
11. 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
7
<PAGE> 8
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.
12. 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 Corporate Secretary of the Employer. All notices and
communications shall be deemed to have been received on the date of delivery
thereof.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Geogia 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.
14. Non-Waiver. 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.
15. Enforcement. The Executive, agrees that in the event of any breach
of any covenant contained in Section 9(a), 9(b) or 9(c), 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, including
but not limited to monitory damages. 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
that the Employer prevails in its enforcement action.
16. Saving Clause. 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.
8
<PAGE> 9
17. Certain Definitions.
(a) "Affiliate" shall mean any business entity conrolled 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 or any other conduct or action by a lending institution as
permitted by Federal or State law now or in the future.
(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 or (G) not
meeting performance standards as set by the Board for consecutive years.
(d) "Change in Control" shall mean the occurrence during the
Term of any of the following events, unless such event is a result of a
Non-Control Transaction:
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<PAGE> 10
(i) The individuals who, as of the date of this
Agreement, are members of the Board of Directors of the Employer
(the "Incumbent Board") cease for any reason to constitute at
least two-thirds of the Board of Directors of the Employer;
provided, however, that if the election, or nomination for
election by the Employer's shareholders, of any new director was
approved in advance by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board;
provided, further, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"), or other actual or
threatened solicitation of proxies or consents by or on behalf of
any person other than the Board of Directors of the Employer (a
"Proxy Contest"), including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest.
(ii) An acquisition (other than directly from the
Employer) of any voting securities of the Employer (the "Voting
Securities") by any "Person" (as the term "person" is used for
purposes of Section 13(d) or 14(d) of the Exchange Act)
immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the combined voting power of the Employer's
then outstanding Voting Securities; provided, however, that in
determining whether a Change in Control has occurred, Voting
Securities which are acquired in a Non-Control Acquisition shall
not constitute an acquisition which would cause a Change in
Control.
(iii) Approval by the shareholders of the Employer
of: (i) a merger, consolidation, or reorganization involving the
Employer; (ii) a complete liquidation or dissolution of the
Employer; or (iii) an agreement for the sale or other disposition
of all or substantially all of the assets of the Employer to any
Person (other than a transfer to a Subsidiary).
(iv) A notice of an application is filed with the
Federal Reserve Board (the "FRB") pursuant to Regulation "Y" of
the FRB under the Change in Bank Control Act or the Bank Holding
Company Act or any other bank regulatory approval (or notice of no
disapproval) is granted by the Federal Reserve, the OCC, the
Federal Deposit Insurance Corporation, or any other regulatory
authority for permission to acquire control of the Employer or any
of its banking subsidiaries.
(e) "Competing Business" shall mean any business that,
in whole or in part, is the same or substantially the same as the Business.
(f) "Good Reason" shall mean the occurrence after a
Change in Control of any of the events or conditions described in subsections
(i) through (viii) hereof:
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<PAGE> 11
(i) a negative change in the Executive's status,
title, position or responsibilities;
(ii) a reduction in the Executive's base salary or
any failure to pay the Executive any compensation or benefits to
which he is entitled within five days of the date due;
(iii) the Employer's requiring the Executive to be
based at any place outside a 30-mile radius from the executive
offices occupied by the Executive immediately prior to the Change
in Control, except for reasonably required travel on the
Employer's business which is not materially greater than such
travel requirements prior to the Change in Control;
(iv) the failure by the Employer to (A) continue in
effect (without reduction in benefit level and/or reward
opportunities) any material compensation or employee benefit plan
in which the Executive was participating at any time within ninety
days preceding the date of a Change in Control;
(v) Any material breach by the Employer of any
material provision of this agreement.
(g) "Territory" shall mean a radius of ten miles from
(i) the main office of the Employer or (ii) any branch office of the Employer.
18. 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.
19. 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> 12
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.
UNITY HOLDINGS, INC.
ATTEST:
By: By: /s/ Jerry W. Braden
---------------------------------- --------------------------
Name: Jerry W. Braden
Title: Director
(CORPORATE SEAL)
By: /s/ Steve Taylor
--------------------------
Steve Taylor
Director
By: /s/ Don Temples
--------------------------
Don Temples
Director
By: /s/ John Lewis
--------------------------
John Lewis
Director
EXECUTIVE By: /s/ Michael L. McPherson
--------------------------
Name: Michael L. McPherson
12
<PAGE> 1
Exhibit 10.2
OPTION AGREEMENTS FOR MAIN OFFICE SITE AND BRANCH OFFICE SITE
SALES CONTRACT
September 18, 1997
The undersigned Purchaser agrees to buy and the Seller agrees to sell
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 96 & 121
of the 4th District and 3rd Section of Bartow County, Georgia; and
being 1.939 acres, more or less, located at the intersection of the
north right of way of U.S. Highway 41 with the east right of way of the
access road which leads to the Lowe's / Super Wal-Mart Shopping Center
(the exact legal description of which will be determined by a survey
agreed upon by Purchaser and Seller).
The Purchase Price of the said Property shall be the amount equal to
the total number of square feet of the Property, as determined from the
referenced current survey, multiplied by $10.00, to be paid by Purchaser all
cash at closing.
Purchaser has paid to CORWIN, TILLEY & DEEMS, P.C., as escrow agent,
FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00), as earnest money, which earnest
money is to be applied as part payment of the purchase price of said property at
the time the sale is consummated. The parties to this Agreement understand and
agree that the disbursement of Earnest Money held by the escrow agent can occur
only (A) at closing; (B) upon written agreement signed by all parties having an
interest in the funds; (C) upon court order; (D) upon the failure of any
contingency or failure of either party to fulfill its obligations as set forth
in this Agreement; or (E) as otherwise set out herein. In the event of a dispute
between Purchaser and Seller, sufficient in the discretion of escrow agent to
justify its doing so, escrow agent shall be entitled to interplead all or any
disputed part of the Earnest Money into court, and thereupon be discharged from
all further duties and liabilities hereunder. In such disputed cases, if escrow
agent decides not to
______ _________
SELLER PURCHASER 1
<PAGE> 2
interplead, escrow agent may make a disbursal of the Earnest Money upon a
reasonable interpretation of this Agreement. If escrow agent decides to make a
disbursal to which all parties to this Agreement do not expressly agree, escrow
agent shall give all parties fifteen (15) days notice in writing of escrow
agent's intent to disburse. Such notice shall be delivered by certified mail to
the parties last known addresses and must recite to whom and when the disbursal
will be made. After disbursement, escrow agent shall notify all parties by
certified mail of such disbursement. Any such disbursal made by escrow agent
upon advice of counsel shall conclusively be deemed to have been made upon a
reasonable interpretation.
Seller warrants that it presently has title to said property and at the
time the sale is consummated, it agrees to convey good and marketable title to
said property to Purchaser by general Warranty Deed subject only to (1) zoning
ordinances affecting said property (2) general utility easements serving said
property (3) restrictions of record.
The Purchaser shall have until the end of the inspection period set
forth in Special Stipulation 5, below, in which to examine title and in which to
furnish Seller with a written statement of objections affecting the
marketability of said title. Seller shall have a reasonable time after receipt
of such objections to satisfy all valid objections. It is understood and agreed
that the title herein required to be furnished by the Seller shall be good and
marketable and that marketability shall be determined in accordance with Georgia
law as supplemented by the Title Standards of the State Bar of Georgia. It is
also agreed that any defect in the title which comes within the scope of any of
said Title Standards shall not constitute a valid objection on the part of the
Purchaser provided the Seller furnishes the affidavits or other title papers, if
any, required in the applicable Standard to cure such defect. And if Seller
fails to satisfy such valid objections within a reasonable time, then at the
option of the Purchaser, evidenced by written notice to Seller, this contract
shall be null and void.
Seller and purchaser agree that such documents as may be legally
necessary to carry out the terms of this contract shall be executed and
delivered by such parties at time sale is consummated.
TIME IS OF THE ESSENCE OF THIS CONTRACT.
This contract constitutes the sole and entire agreement between the
parties hereto and no modification of this contract shall be binding unless
attached hereto and signed by all parties to this agreement. No representation,
promise, or inducement, not included in this contract shall be binding upon any
party hereto.
The following Special Stipulation shall, if conflicting with any
above-stated provision, control:
1. Real Estate taxes on said property shall be prorated as of the date
of closing. Purchaser and Seller agree that if such proration is not
based on actual tax bills for such calendar year, then there shall be a
subsequent adjustment and accounting between Purchaser and Seller as to
such proration when the actual tax bills are rendered. The
______ _________
SELLER PURCHASER 2
<PAGE> 3
obligations of Purchaser and Seller to make an adjustment and
accounting as to said tax proration as between themselves shall survive
the Closing.
2. Possession of the Property shall be granted to Purchaser on the day
of closing.
3. Seller shall pay the Georgia Transfer Tax.
4. All closing costs shall be paid by Purchaser, except that Seller
will pay its own attorney fees.
5. Purchaser shall have the right to review all aspects of the
Property, including, without limitation, suitability of the Property
for an 8,000 square foot bank building with four drive-throughs,
adequacy of curb-cuts, all governmental, environmental, zoning, soil,
drainage, storm water detention and utility service matters related
thereto. If Purchaser notifies Seller in writing on or before November
10, 1997 that Purchaser is not satisfied with the results of such
review, then in such event this Agreement shall automatically terminate
and Escrow Agent shall forthwith refund the Earnest Money to Purchaser.
Seller acknowledges and agrees that Purchaser and/or its agents and
employees may have free access during normal business hours to visit
the Property for the purpose of (1) inspection thereof; and (2)
conducting surveys, engineering work and such soil and other tests
thereon as are deemed necessary by Purchaser. Purchaser hereby agrees
to indemnify and hold Seller harmless from and against any and all
loss, injury, cost, or expense associated with Purchaser's inspections
and entry upon Property; this indemnity agreement shall survive the
expiration, termination or closing of this contract. If Purchaser fails
to provide said notice to Seller within the time specified, then the
earnest money shall be non-refundable except as provided hereinafter,
or except that it shall be applied towards the purchase price at the
time of closing.
6. Closing shall take place on or before November 10, 1997. Purchaser
shall have the option to extend the date of closing as follows:
a) to December 10, 1997, upon the payment to Seller of the sum
of $5,000.00 as a non-refundable option money, which money
shall not be applied to the purchase price;
b) to January 10, 1988, upon the payment to Seller of the sum
of $5,000.00 as non-refundable option money, which money shall
not be applied to the purchase price;
c) to February 10, 1988, upon the payment to Seller of the sum
of $5,000.00 as non-refundable option money, which money shall
not be applied to the purchase price;
d) to March 10, 1998, upon the payment to Seller of the sum of
$5,000.00 as non-refundable option money, which money shall
not be applied to the purchase price;
e) to April 10, 1998, upon the payment to Seller of the sum of
$10,000.00, $5,000.00 of which shall be as non-refundable
option money, which money shall not be applied to the purchase
price, and $5,000.00 of which shall be as additional
______ _________
SELLER PURCHASER 3
<PAGE> 4
earnest money to be applied in the same manner as the original
earnest money payment;
f) to May 10, 1998, upon the payment to Seller of the sum of
$10,000.00, $5,000.00 of which shall be as non-refundable
option money, which money shall not be applied to the purchase
price, and $5,000.00 of which shall be as additional earnest
money to be applied in the same manner as the original earnest
money payment;
g) to June 10, 1998, upon the payment to Seller of the sum of
$10,000.00, $5,000.00 of which shall be as non-refundable
option money, which money shall not be applied to the purchase
price, and $5,000.00 of which shall be as additional earnest
money to be applied in the same manner as the original earnest
money payment.
The aforementioned payments shall be made prior to the
expiration of the immediately preceding period. Payment shall be
considered to have been made either a) on the day of hand delivery to
Seller, or b) on the postmark date of payment deposited into the United
States mail, with proper postage affixed, addressed to Seller at 771
Joe Frank Harris Parkway, Cartersville, GA 30120. If the contract has
not closed or been terminated and Purchaser has exercised and paid for
each of the preceding extension options, then Purchaser shall have
until July 10, 1998 in which to close on this contract.
7. Seller has been made aware the Purchasers are acting in this
contract on behalf of themselves and others engaged in the formation of
a new bank. Seller and Purchaser agree that a) this contract is freely
assignable to such bank, and b) Purchaser's obligations hereunder are
expressly contingent upon the group obtaining a bank charter from the
State of Georgia for this Property. If, at any time prior to closing,
it is determined that Purchaser cannot obtain the bank charter for this
Property, then this contract shall terminate and all earnest money
which has been paid shall be refunded to Purchaser.
In the event Purchaser does obtain its charter but is unable to sell
the requisite stock, then Purchaser shall be released from the terms
and conditions of this contract, except those which survive the
expiration or termination hereof. However, in addition to the option
money which has been paid and which Seller shall retain, Seller shall
also be entitled to keep all earnest money as full, liquidated damages
for Purchaser's failure to fulfill its ultimate obligation under the
terms of this contract.
8. Purchaser shall have the Property surveyed, at Purchaser's expense,
in order that the exact sales price can be determined. The survey shall
be completed prior to November 10, 1997, and a copy thereof shall be
supplied to Seller.
9. Purchaser is aware that Seller may wish to structure this
transaction as a tax deferred exchange of like-kind property within the
meaning of Section 1031 of the Internal Revenue Code.
Purchaser agrees to cooperate with Seller to effect such exchange.
10. In negotiating this Agreement, purchaser and Seller warrant to the
other that neither has employed nor relied on the services of any real
estate broker, and that no commission
______ _________
SELLER PURCHASER 4
<PAGE> 5
is owed to anyone as a result of this contract. Each party hereby
agrees to indemnify and hold harmless the other from any liability
which may arise from this warranty. Each party is aware that Don
Temples and Beth Tilley are real estate brokers licensed to do business
in the State of Georgia.
This instrument shall be regarded as an offer by the purchaser to
Seller, and shall be open for acceptance by Seller until 4 o'clock
p.m., on the ____ day of _________________, by which time written
acceptance of such offer must have been received.
PURCHASER:
/s/ Don Temples
---------------------------------
Don Temples
/s/ John S. Lewis
---------------------------------
John S. Lewis
The above proposition is
hereby accepted this _____
day of September, 1997, at
_______ o'clock, p.m.
SELLER:
/s/ Beth L. Tilley (SEAL)
---------------------------------
Tilley Properties, Inc.
By: Beth L. Tilley
Its: Vice President
/s/ George E. Shropshire (SEAL)
---------------------------------
George E. Shropshire, Jr.
ESCROW AGENT:
/s/ Stanley D. Tilley (SEAL)
---------------------------------
Corwin, Tilley & Deems, P.C.
By: Stanley D. Tilley
Its: Secretary
______ _________
SELLER PURCHASER 5
<PAGE> 6
OPTION AGREEMENT
GEORGIA, BARTOW COUNTY
This agreement made and entered into this 2nd day of October, 1997,
between J.B. MOORE, hereinafter called first party or seller, and JERRY. W.
BRADEN acting as agent for Unity National Bank hereinafter called second party
or buyer, witnesseth:
For and in consideration of Ten Thousand and no/100 Dollars
($10,000.00) paid to seller by buyer, the receipt and sufficiency of which is
hereby acknowledged, seller does hereby grant and convey unto buyer an option,
irrevocable for a period of six (6) months from the date hereof, to purchase
from seller that certain tract or parcel of land described as follows:
All that tract or parcel of land lying and being in land
lot 169 of the 15th District, 3rd Section, Bartow County,
Georgia and being more particularly described as a portion of
a tract shown as fronting on Cass Street and State Route 140,
being 240 feet in width and 225 feet in depth as shown on the
attached Exhibit A. Said tract contains approximately 1.23 acres,
with the exact amount of property to be determined by a new survey.
The purchase price of this property, if this option is exercised by
second party, shall be Two Thousand Twenty-Five Thousand and no/100 Dollars
($225,000.00), to be paid all cash at closing with the Ten Thousand and no/100
($10,000.00) option money described above to be credited toward the purchase
price.
The option granted herein shall be irrevocable for the period described
above. Purchaser has the right to have this option automatically extend for an
additional six months upon payment of an additional $10,000 earnest money at any
time prior tot he end of the first six-month period. If the option is extended,
the payment of the additional option monies and the original option monies will
be credited toward the purchase price.
This option may be exercised by second party at any time during the
periods above stated, or any extension thereof, by notice, in writing, of the
election to exercise said option, delivered to first party in person or mailed
to first party at the address stated below the signature of first party. The
exercise of this option will ripen this Agreement into a contract to sell and
buy without the necessity of any further instrument in writing.
Closing shall be within a reasonable time after delivery of notice of
intent to exercise the option.
First party agrees that upon the exercise of this option by second
party, and upon the payment of the agreed purchase price as herein provided,
first party will convey and cause to be conveyed unto second party unencumbered
marketable fee simple title to said property by
______ _________
SELLER PURCHASER 1
<PAGE> 7
general covenants of warranty against the lawful claims and demands of all
persons whomsoever, subject only to the lien of ad valorem taxes for the year in
which the sale is closed, it being understood and agreed that ad valorem taxes
for the year in which said sale is closed shall be prorated into the closing of
the sale as of the date of closing.
If this option is not exercised within the time limited described above, it will
automatically become null and void.
Special Stipulations:
1. Seller warrants that water and sewer are available to the property in
an amount sufficient to support use by a bank.
2. Seller warrants that said property is property zoned for commercial
improvements including a Bank and that the zoning will not change during
the period of this option.
3. Seller agrees to allow buyer to conduct soil testing or any other such
tests relating to building a bank and that he will disclose any
environmental concerns relating to said property before signing this
agreement.
4. At the time of closing, the buyer and seller agree that a mutual road
entrance easement of the northeast portion of the property and other
properties of the seller will be established. This will consist of a 50
foot right-of-way with 25 feet of easement of the subject tract and 25 feet
on other lands owned by the seller. This easement will be no longer than is
necessary to gain entrance into the property from State Route 140. The
length from State Route 140 is expected to be no more than 60 feet. There
is no requirement to cut this entrance but either party has a right, at
their expense, to establish the entrance from State Route 140.
______ _________
SELLER PURCHASER 2
<PAGE> 8
Witness the hands and seals of the parties, this 2nd day of October, 1997.
Signed, sealed and delivered
in the presence of:
First Party (Seller)
/s/ Janice Montgomery Sparks
------------------------------------
NOTARY PUBLIC,
BARTOW COUNTY, GA
/s/ Cheryl Braden /s/ J.B. Moore
- ----------------------------------------- ---------------------------
Witness J.B. Moore
8 Wood Street
Adairsville, Georgia
Second Party (Seller)
/s/ Cheryl Braden /s/ Jerry W. Braden
- ----------------------------------------- ---------------------------
Witness Buyer, Unity National Bank
c/o Jerry W. Braden, Agent
1341 Cassville Road
Cartersville, Georgia 30120
______ _________
SELLER PURCHASER 3
<PAGE> 1
Exhibit 10.4 MASTER NOTE
<TABLE>
<S> <C>
-------------------------------------
Approval
Chattanooga, Tennessee
-----------
August 13 ,1997
----------------
</TABLE>
FOR VALUE RECEIVED, the undersigned (jointly and severally, if more than one)
promise(s) to pay to the order of First Tennessee Bank National Association
(hereinafter referred to as the "Bank") at any lending office in the state
mentioned above or at such other place as the holder hereof may designate in
writing, in current local funds, the sum of up to FIVE HUNDRED THOUSAND AND NO
Dollars ($500,000.00), or so much thereof as may be advanced hereunder prior to
maturity, together with interest on the unpaid principal balance from day-to-day
remaining, computed from the day of advance until maturity at the following
rate:
[ ] FIXED RATE: ______% per annum,
[X] VARIABLE RATE: A variable rate per annum ("Variable Rate") which
shall be equal to the lesser of (a) the maximum rate of interest
("Maximum Rate") which Bank may lawfully charge, or (b) a rate which is
0% per annum higher than the base commercial rate of interest ("Base
Rate") established from time to time by Bank. Each change in the
Variable Rate which results from a change in the Maximum Rate shall
become effective, without notice to the undersigned, on the same date
that the Maximum Rate changes. Each change in the Variable Rate which
results from a change in the Base Rate shall become effective, without
notice to the undersigned, on |_| the same date that the Base Rate
changes; |_| the first day of the calendar month following any change
in the Base Rate; |_| the first day of the calendar quarter following
any change in the Base Rate; |_| other _________________. The Base Rate
is one of several interest rate indices employed by the Bank. The
undersigned acknowledge(s) that the Bank has made, and may hereafter
make, loans bearing interest at rates which are higher or lower than
the Base Rate.
[X] SINGLE PRINCIPAL PAYMENT: One single principal payment of the balance,
due on August 15, 1998 plus interest payable.
[ ] at maturity.
[X] beginning November 15, 1997 and continuing on the same day of
each successive quarterly calendar period, except that the
final interest installment shall be payable on the on the date
the principal is due.
[ ] OTHER:________________________________________________________________
______________________________________________________________________
SECURITY: Except as otherwise provided herein, as of the date hereof,
[ ] This Note is secured by a mortgage(s) or dead(s) of trust dated
COMMITMENT FEE: The undersigned agrees to pay an annual loan commitment fee
of $0.00, due and payable at the time of execution of this Note, and each
year thereafter on the anniversary date thereof.
OTHER TERMS AND CONDITIONS: Unless otherwise provided herein, all payments shall
be applied first to pay the accrued interest to date on the unpaid balance and
next to the unpaid principal of the indebtedness.
As used herein, "other parties liable hereon" shall include, but not be
limited to, any and all guarantors, endorsers, sureties and co-makers.
Any payment not made when due hereunder (whether by acceleration or
otherwise) shall bear interest after maturity at the maximum effective contract
rate of interest which the Bank may lawfully charge on the date such payment
became due.
The undersigned acknowledges and agrees that any commitment fees payable
hereunder are bona fide commitment fees and are intended as reasonable
compensation to Bank for committing to make funds available to undersigned and
for no other purpose.
Subject to the terms and conditions herein set forth, Bank agrees to advance
funds upon the request of and as directed by the undersigned from time to time
beginning on the date hereof and terminating upon maturity. Within the limits
set forth herein, the undersigned may borrow, repay and reborrow each advance.
Notwithstanding the principal amount of this Note, as stated on the face hereof,
the amount of principal actually owing at any given time shall be the aggregate
of all advances made, less all payments of principal actually received by Bank.
Bank's obligation to make advances hereunder shall be subject to the
following conditions: (a) there has been no material adverse change in the
undersigned's financial condition, or the financial condition of any other
parties liable hereon, since execution of this Note; (b) each advance shall
constitute a representation and warranty by the undersigned and other parties
liable hereon that all representations and warranties contained herein or any
other document pertaining to this credit facility are true and correct on and as
of the date of the advance, and that the undersigned and other parties liable
hereon are in strict compliance with all terms and conditions herein and
pertaining hereto; (c) the undersigned and other parties liable hereon will
furnish, from time to time, at Bank's option and at Bank's request, statements
of financial condition in a form satisfactory to Bank including independently
certified and audited statements prepared in accordance with generally accepted
accounting principals and auditing standards. The undersigned and others parties
liable hereon hereby authorizes Bank to charge an interest rate equal to
one-half percent (.5%) per annum higher than interest rate agreed to herein, or
as modified hereafter, should the undersigned or other parties liable hereon
fail to deliver a financial statement in the form requested by Bank within 10
days of Bank's request; (d) the undersigned and other parties liable hereon will
execute and deliver to Bank all other instruments and take such other actions as
Bank may reasonably request during the term hereon in order to carry out the
provisions and intent hereof.
If this Note is place in the hands of an attorney for collection, by suit or
otherwise, or to protect any security given for its payment, or to enforce its
collection, the Undersign will pay all the costs of collection and litigation,
together with a reasonable attorney's fee, or of which shall be secured by any
collateral pledged as security herefor. The undersigned also agrees to pay any
and all actual expenses including reasonable attorney's fees incurred by the
Bank in (i) successfully defending any action or inaction in connection with any
aspect of the transaction evidenced by this instrument, or (ii) any action,
whether or not successful, taken to protect or enforce Bank's rights in any
collateral related to the transaction evidenced by this instrument.
The undersigned and all other parties liable hereon waive protest, demand,
presentment, and notice of dishonor, and agree that this Note may be extended,
in whole or in part, without limit as to the number of such extensions, or the
period or periods thereof, and without note to or further assent from them, all
of whom will remain bound upon this Note notwithstanding any such extension(s);
and further agree that all and any collateral given, now or hereafter, as
security herefor may be released (with or without substitution) without notice
and without affecting their liability thereon; and that additional makers,
endorsors, guarantors, or sureties may become parties hereto, and that any
present or future party may be released from liability hereunder, without
notice, and without affecting the liability of any other maker, or other parties
liable hereon.
In the event of any default in the prompt and punctual payment, when due, of
this Note (or any installment hereof), or any bankruptcy, insolvency,
receivership, or similar proceeding instituted by or against the undersigned or
other parties liable hereon or his/her or their property or assets, or in the
event that the undersigned or other parties liable hereon become insolvent,
however defined, or make an assignment for the benefit of creditors, or if a
judgment be entered against the undersigned, or other parties liable hereon, or
upon the issuance of any writ, levy or process, valid or invalid, which Bank, or
upon the death or dissolution of the undersigned or other parties liable hereon,
or in the event of any default in the prompt and punctual payment when due, of
any other indebtedness or obligation to the Bank owed, now or hereafter, by the
undersigned or other parties liable hereon, or upon any default in any deed of
trust, mortgage, security agreement, assignment or other security document
given, now or hereafter, to secure the indebtedness evidenced hereby, or if any
representation or warranty may by the undersigned or other parties liable
pertaining to this credit shall prove to be false, untrue, or materially
misleading, or in the event of termination of any guaranty executed in
connection with the Note, or in the event that the Bank shall deem itself
insecure, then and in any of such events, this Note shall, at Bank's option,
without notice or demand for payment (the same being expressly waived), be and
become immediately due, payable and enforceable for all purposes and Bank shall
be under no obligation to make further advances.
Any money or other property at any time in possession of the Bank belonging
to the undersigned or any other party liable hereon, and any deposits or other
sums at any time credited by or due from the Bank to the undersigned or any
other parties liable hereon, may at all times, at the option of the Bank, be
held and treated as collateral security for the payment of this Note or any
other liability of any of the undersigned, or any other party liable hereon to
the Bank, whether due or not due. The Bank may, at any time, at its option, and
without notice, set off the amount due or to become due hereon against the claim
of any of the said parties against the Bank. To effect these rights, the
undersigned and all other parties liable hereon agree, upon request by the Bank,
immediately to endorse, sign, and execute all necessary instruments, and do
hereby appoint the Bank (action through any then officer thereon) as
attorney-in-fact for them with authority to endorse any instrument requiring
endorsement and to effect any transfer, and this appointment shall be
irrevocable as long as the undersigned, or any other party liable hereon shall
be indebted to the Bank.
In the event of any renewal or extension of the loan indebtedness evidenced
hereby, unless the parties otherwise agree to a lower rate, the Bank shall have
the right to charge interest at the highest of the following rates: (i) the
maximum rate permissible at the time the contract to make the loan was executed;
or (ii) the maximum rate permissible at the time the loan made; or (iii) the
maximum rate permissible at the time of such renewal or extension; or (iv) the
maximum rate permitted by applicable federal law; it being intended that those
statutes and laws, state or federal, from time to time in effect, which permit
the charging of the higher rate of interest shall govern the maximum rate which
may be charged hereunder. In the event that for any reason the foregoing
provisions hereof shall not contain a valid, enforceable designation of a rate
of interest prior to maturity or method of determining the same, then the
indebtedness hereby evidenced shall bear interest prior to maturity at the
maximum effective rate which may be lawfully charged by the Bank under
applicable law.
Regardless of any provision herein, or in any other document executed in
connection herewith, the holder hereof shall never be entitled to receive,
collect, or acquire, as interest hereon, any amount in excess of the maximum
contract rate which may be lawfully charged by the holder hereof under
applicable law; and in the event the holder hereof ever receives, collects, or
applies as interest, any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of the principal and treated
hereunder as such; and, if the principal hereof is paid in full, any remaining
excess shall forthwith be paid to the undersigned. In determining whether or not
the interest paid or payable, under any specific contingency, exceeds the
maximum lawful contract rate, the undersigned and the holder hereof shall, to
the maximum extent permitted by applicable law, (a) characterize any
non-principal payment as a reasonable loan charge rather than as interest; (b)
exclude voluntary prepayment and the effect thereof; (c) amortize, prorate,
allocate, and spread, in equal parts, the total amount of interest throughout
the entire contemplated term hereof so that the interest to accrue throughout
the entire term contemplated hereby shall at no time exceed the maximum lawful
contract rate.
THE UNDERSIGNED JOINTLY AND SEVERALLY WAIVE(S) ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT
OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED (OR WHICH
MAY IN THE FUTURE BE DELIVERED) IN CONNECTION HEREWITH OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT. THE UNDERSIGNED
AGREE(S) THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT A JURY.
UNITY NATIONAL BANK (IN ORGANIZATION)
/s/ Donald D. George /s/ Jerry W. Braden
-------------------- -------------------
/s/ Sam R. McCleskey /s/ B. Don Temples /s/ Stephen A. Taylor
-------------------- ------------------ ---------------------
/s/ John S. Lewis /s/ Kenneth R. Bishop
----------------- ---------------------
<PAGE> 1
Exhibit 10.6
UNITY HOLDINGS, INC.
1,000,000 Shares of Common Stock
(Par Value .01 Per Share)
Agency Agreement
February 5, 1998
ATTKISSON, CARTER & AKERS
3060 Peachtree Road, NW
Suite 1475
Atlanta, Georgia 30305
Dear Sirs:
Unity Holdings, Inc., a Georgia corporation (the "Company"), hereby confirms its
agreement with ATTKISSON CARTER & AKERS (the "Agent"), as follows:
1. General. The Company proposes to offer, through the Agent on a "best
efforts basis", up to 1,000,000 shares (the "Maximum Offering") of the
common stock, $.01 par value, of the Company (the "Shares") at a price
of $10 per Share in an offering to the public (the "Offering").
The Company has filed a Registration Statement on Form SB-2 (the
"Registration Statement") with the Securities and Exchange Commission
(the "SEC") pursuant to which the Company will register the Shares for
sale to the public.
On terms and conditions specified in this Agency Agreement (the
"Agreement"), the Agent, for the compensation specified below, will
provide the services specified in this Agreement to assist the Company
in the Offering.
2. The Offering.
2.1 Services to be Rendered. Subject to the terms and conditions
hereof and upon the basis of the representations, warranties
and agreements herein set forth, the Company hereby appoints
the Agent as its agent to sell the Shares on a best efforts
basis. The Agent hereby accepts such appointment and agrees to
use its best efforts to find purchasers for the Shares. The
Company and the Agent agree that the Shares shall be offered
to the investing public in Georgia and any other state or
states where the Company deems it appropriate to offer the
Shares, all in compliance with the Securities Act of 1933 (the
"Securities Act"), the Securities Exchange Act of 1934 (the
"Exchange Act"), and the securities or "blue sky" laws of any
applicable jurisdiction.
2.2 Exclusive Engagement. The Company shall not engage any other
person other than the Agent to solicit offers or sales of
Shares during the Offering Period (as such term is herein
defined). However the Company may in its sole discretion
terminate this Agreement after 90 days from the date hereof.
2.3 Compensation. The Company agrees to pay to the Agent for the
Agent's services in connection with the Offering a commission
on all Shares sold in the Offering (but not including Shares
purchased by the organizing directors of the Company named in
the Registration Statement) as follows: (a) in the event that
the Agent sells 740,000 Shares (the "Minimum Offering") on or
before the date which is 90 days from and after the Effective
Date (herein defined), the sum of $.50 per Share, or (b) in
the event that the Minimum Offering is not achieved within
such 90 day period, the sum of $.40 per share. The commission
to be paid by the Company on the first 800,000 shares sold by
the Sales
<PAGE> 2
Agent shall not exceed $300,000 in any event. If the Company
elects to continue the Offering beyond such 800,000 shares the
Company shall pay a commission on all Shares sold in the
continued Offering of $.50 per Share. At any time after the
Minimum Offering has been achieved, and upon the Company's
written approval, the Agent may engage other agents to sell
the Shares pursuant to an agreement acceptable to the Agent
and providing for a commission payable by the Company of up to
$.80 per share. Notwithstanding the foregoing, the failure of
the Agent to engage an agent or agents shall not constitute a
failure to perform or discharge the duties of the Agent under
this Agreement.
2.4 Affiliated Agent. The Company acknowledges and agrees that
Banc Services Corporation ("BSC") is an affiliate of Agent and
is currently acting as investment banker to the Company and
will participate as an agent in the Offering hereunder. The
Company has agreed to pay BSC for its services the sum of
$20,000, payable as follows: (a) $10,000 (which has been
paid), and (b) $10,000 upon completion of certain marketing
materials, which shall be filed with the SEC and National
Association of Securities Dealers ("NASD"). The compensation
payable to BSC pursuant to subparagraphs (a) and (b) above
shall be deducted from the gross commission payable to the
Agent at the Initial Closing hereunder.
2.5 Payment of Expenses. The Company will pay all expenses in
connection with the Offering including, but not limited to,
the Company's attorneys' fees, expenses for auditing and
accounting services, advertising fees, all securities
registration and NASD filing fees, postage, and document
reproduction expenses, and the engraving, issuance, transfer
and delivery of certificates for the Stock. The Company shall
pay BSC a monthly expense allowance payable in increments of
$5,000 each commencing on the Effective Date of the Offering
and every 30 days thereafter, provided however, that such
monthly expense allowance shall be limited to 5 months or a
maximum of $25,000. At Closing, the sum of (a) the aggregate
sum of the monthly expense allowance paid to the BSC to the
date of Closing, minus (b) BSC's and the Agent's accountable
out-of-pocket expenses, shall be deducted from the commission
otherwise payable to the Agent hereunder.
2.6 Blue Sky. The Company contemplates that the Offering will be
made in those states listed in Exhibit A attached hereto. The
Company shall, at its sole expense, take or cause to be taken
all necessary action and shall furnish to whomever the Agent
may direct such information as may be required to qualify the
Shares for sale under the laws of such jurisdictions and any
other jurisdictions where the Company may hereafter elect that
Shares shall be offered and shall continue such qualifications
in effect for as long as may be necessary for the distribution
of the Shares. At the request of the Agent the Company shall
cause its counsel to prepare and furnish to the Agent "Blue
Sky" memoranda concerning the requirements for qualification
of the Shares for sale under the law of such jurisdictions,
and the Agent shall be entitled to rely on such memoranda in
carrying out its obligations under this Agreement.
2.7 Offering Period. The Shares will be offered for sale during
the period (the "Offering Period") commencing with the date
that the Registration Statement is declared effective by the
SEC (the "Effective Date" of the Offering) until the earlier
to occur of (a) the date the Minimum Offering is achieved, or
(b) ___ days from and after the Effective Date, or (c) the
termination of the Offering by the Company. The Company may,
upon written notice to the Agent, elect to extend the Offering
Period, and as used herein, the term "Offering Period" shall
include any such extension.
2.8 Escrow Agreement. During the period of the Offering, the
proceeds form the sale of Shares shall, upon receipt by the
Agent, be promptly placed in a special account with First
Tennessee Bank (the "Escrow Agent"), subject to an escrow
agreement substantially in the form of the Escrow Agreement
which is attached hereto as Exhibit B and incorporated herein
by this reference (the "Escrow Agreement"). Each of the
parties hereto agrees that this Agreement shall be
automatically terminated and the entire proceeds received from
subscriptions for the Shares shall be returned to the
subscribers for such Shares, without interest, upon the
failure of the Minimum Offering to be achieved on or before
the date which is 90 days from and after the Effective Date,
unless the Offering is extended by the Company.
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<PAGE> 3
2.9 Delivery of and Payment for the Shares. Provided that the
Escrow Agent is authorized and empowered in accordance with
the terms of the Escrow Agreement to release the proceeds of
the Offering from escrow as described in the Escrow Agreement,
and provided further that this Agreement shall not have been
terminated pursuant to the terms hereof, payment for the
Shares shall be made at a closing (the "Closing") to be held
at the offices of the Company's counsel (or such other place
as the parties hereto may agree), as provided herein. The date
of a Closing hereunder is sometimes referred to as the
"Closing Date". Payment for the Shares sold on behalf of the
Company by the Agent shall be made to the Company or to the
order of the Company by the Escrow Agent acting upon
instructions from the Company and the Agent pursuant to the
terms and conditions of the Escrow Agreement, and payment
shall be delivered to the Company by the Escrow Agent by one
or more certified or official bank checks in next-day funds.
Such payment shall be made upon delivery by the Company of the
certificates for the Shares to the Agent, for the respective
accounts of the several purchasers of the Shares against
receipt therefor signed by the Agent. The certificates for the
Shares to be delivered at any Closing will be registered in
such name or names, and shall be in such denominations, as the
Agent may request; provided, however, that such request shall
be made no sooner than three (3) business days prior to the
Closing Date. The certificates representing the Shares will be
made available to the Agent for inspection, checking and
packaging at the office of the Company's transfer agent and
registrar (the "Transfer Agent"), not less than one (1)
business day prior to the Closing Date.
2.10 Closings.
(a) As soon as practicable after the Agent has
determined that the Minimum Offering has been
achieved, the Agent shall notify the Company in
writing thereof. The Agent's notice to the Company
hereunder shall set forth the number of shares of
Common Stock to be delivered to the Agent by the
Company against payment therefor by the Escrow Agent.
The initial Closing hereunder (the "Initial Closing")
shall take place at 10:00 a.m., Atlanta time on the
fifth (5th) business day after the date on which the
Agent notifies the Company as provided herein or on
such other date and time as agreed to in writing by
the parties hereto; provided, however, that the
Initial Closing must occur no later than the tenth
(10th) business day after such notice is given by the
Agent.
(b) By notice given in writing at each Closing hereunder,
the Company may elect to continue this Agreement
until such time as the maximum number of Shares as
provided herein has been sold, or until August 31,
1999, whichever is earlier; provided, however, that
such Shares may be sold only in compliance with the
terms and conditions of this Agreement and the
Registration Statement.
(c) Closing with respect to Shares sold pursuant to a
continuation of this Agreement pursuant to Section
2.10(b) hereof will occur on such date(s) and time(s)
as the parties may agree in writing from time to
time.
3. Representations, Warranties and Agreements of the Company. The Company
hereby represents and warrants to, and agrees with, the Agent that:
(a) The prospectus, including any amendments or supplements
thereto (the "Prospectus") when made available to prospective
purchasers throughout the Offering Period, will comply in all
material respects with federal statutes, regulations and
policy statements applicable thereto, including, without
limitation, the applicable rules, regulations and policy
statements of the SEC. At all times during the Offering
Period, the Prospectus will contain all information including
financial statements that are required to be included therein
in accordance with applicable regulations (including
interpretations thereof), and policy statements of the SEC and
the Prospectus will not include any untrue statement of
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not
misleading; provided, however, that no representations or
warranties are made to the Agent with respect to statements or
omissions made in reliance upon, or in conformity with,
written information furnished
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<PAGE> 4
to the Company with respect to the Agent, by the Agent, or on
its behalf expressly for use in the Prospectus.
(b) The Company is, and at all times during the Offering Period
will be, a corporation duly incorporated and organized and is,
and will be, validly existing and in good standing under the
laws of the State of Georgia. The Company has, and at all
times during the Offering Period will have, full power and
authority to own or lease all of its properties and conduct
all of its business as described in the Prospectus.
(c) The Company is, and at all times during the Offering Period
will be, duly qualified to do business and in good standing as
a foreign corporation in each jurisdiction where the ownership
or leasing of its properties or the conduct of its business
required such qualification.
(d) The financial statements contained in the Prospectus present
fairly and accurately the financial position of the Company as
the respective dates thereof and the results of operations of
the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles
applied on a consistent basis throughout the entire periods
involved.
(e) At all times during the Offering Period except as set forth in
or contemplated by the Prospectus: (i) the Company will not
have incurred and will not incur any material liabilities or
obligations, direct or contingent, except for liabilities or
obligations entered into in the ordinary course of business,
and will not have entered into and will not enter into any
material transactions; and (ii) there will have been no, and
there will be no, material adverse change, or any development
relating to the Company which the Company has cause to believe
would involve a prospective material adverse change in or
affecting the business, business prospects, general affairs,
management, financial position, net worth, results of
operations, or properties of the Company, or the value of the
assets of the Company.
(f) Except as set forth in or contemplated by the Prospectus, to
the best of its knowledge, the Company does not have and will
not have during the Offering Period any material contingent
liabilities or obligations.
(g) There are no actions, suits or proceedings pending or, to the
best of its knowledge, threatened against or affecting the
Company or its business, business prospects, financial
condition, results of operations or properties, or against or
affecting any of its principal officers, before or by any
federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling or decision or finding
would materially and adversely affect the business, business
prospects, financial condition, results of operations, or
properties of the Company.
(h) At all times during the offering Period, the Company will have
title to all properties and assets described in the Prospectus
as being owned by the Company, free and clear of all liens,
charges, encumbrances or restrictions, except such as are
described in the Prospectus or which are not material to the
business of the Company. At all times during the Offering
Period, the Company will have valid, existing and enforceable
leases to the properties and equipment described in the
Prospectus as being leased by the Company, with such
exceptions as are not material and do not materially interfere
with the uses made, and proposed to be made, of such
properties by the Company.
(i) The Company has filed all federal and state income tax returns
which are required to be filed by it and has paid all taxes
shown on such returns and on all assessments received by it to
the extent such taxes have become due. To the best of its
knowledge, all taxes with respect to which the Company is
obligated have been paid or adequate accruals have been
established to cover any such unpaid taxes.
(j) The Company is not, and at all times during the Offering
Period will not be, in violation of its articles of
incorporation or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of
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<PAGE> 5
indebtedness or in any contract, indenture, mortgage, loan
agreement or other agreement or instrument to which the
Company is a party or by which it or any of its properties is
bound, and the Company is not, and at all times during the
Offering Period will not be, in violation of any law, order,
rule, regulation, writ, injunction or decree of any
government, governmental instrumentality or court, domestic or
foreign, of which it has knowledge. Neither the Company, nor
any employee or agent thereof, has made any payment of funds
of the Company or received or retained any funds in violation
of any law, rule or regulation which payment, receipt or
retention of funds is not fully disclosed in the Prospectus.
(k) At all times during the Offering Period, there will be no
document or contract of the character required to be described
in the Prospectus which is not described as required, and the
descriptions in the Prospectus are accurate and complete and
fairly present the information required to be shown.
(l) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the
Agent was or will be, when made, inaccurate, untrue or
incorrect in any material respect.
(m) The Company has full right, power and authority to enter into
this Agreement and this Agreement has been duly authorized,
executed and delivered by the Company and will be, upon
acceptance by the Agent, a valid and binding agreement of the
Company enforceable in accordance with its terms. The
performance of this Agreement and the consummation of the
transactions contemplated herein will not result in a breach
or violation of any of the terms or provision of, or
constitute a default under the articles of incorporation or
the bylaws of the Company, any obligation, agreement, covenant
or condition contained in any bond, debenture, note or other
evidence or indebtedness or in any contract, indenture,
mortgage, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their
respective properties is bound, or any law, order, rule,
regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign,
and will not result in the creation or imposition of any lien,
charge claim or encumbrance upon any property or asset of the
Company. No consent, approval, authorization or order of any
government, governmental instrumentality or court is required
in connection with the execution of this Agreement or the
consummation of the transactions contemplated by this
Agreement except such as may be required by the NASD or by
state regulatory authorities under state securities or blue
sky laws in connection with the distribution of the Shares or
in connection with the Agent's services hereunder.
(n) For purposes of the Agent's obligation to file certain
documents and make certain representations to the NASD in
connection with the Offering: (i) the Company has not placed
any securities within the last eighteen months; (ii) there
have been no material dealings within the last twelve months
between the Company and any NASD member or any person related
to or associated with any such member; (iii) except as
contemplated by this Agreement, no financial or management
consulting contracts are outstanding with any other person;
(iv) there has been no intermediary between the Agent and the
Company in connection with the Offering and (other than BSC)
no person is being compensated in any manner for providing
such service.
4. Representations, Warranties and Agreements of the Agent. The Agent
represents and warrants to, and agrees with the Company that:
(a) Any and all information furnished to the Company by the Agent
in writing expressly for use in the Prospectus will not
contain any untrue statement of material fact or omit to state
any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(b) The Agent is registered with the Securities and Exchange
Commission as a broker-dealer and is a member in good standing
with the National Association of Securities Dealers, Inc. (the
"NASD"), and the Agent and all its agents and representatives
have or will have required licenses and registrations to
perform its obligations under this Agreement; and such
registrations, membership
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<PAGE> 6
and licenses will remain in effect during the term of this
Agreement. The Agent agrees that, in performing its
obligations under this Agreement, the Agent will comply with
all applicable statutes and the rules and regulations of the
NASD and any other federal or state governmental agency which
are applicable to it. This Agreement has been duly and validly
authorized, executed and delivered by the agent and is its
valid and binding agreement and obligation.
(c) All checks and funds received by the Agent with respect to the
subscription price from prospective purchasers in the Offering
shall be made payable to the escrow agent and transmitted
directly to the escrow agent by noon of the next business day
after receipt by the Agent. If the Offering is terminated
prior to the end of the Offering Period by the Company, then
subscription funds received after any such termination shall
be promptly returned to the subscribers for the Shares,
without interest.
(d) The Agent will deliver to the Company the original copies of
all subscription documents of prospective purchasers received
by the Agent in the Offering, and the Agent will promptly
inform the Company of any facts which come to the Agent's
attention which would cause a reasonable person to believe
that such subscription documents contain any material
misstatement or omission.
5. Covenants of the Company. The Company further agrees with and
covenants to the Agent as follows:
(a) To comply with the "Blue Sky" and other securities laws and
regulations of each state in which subscriptions are solicited
in the Offering pursuant to the mutual agreement of the Agent
and the Company and to assist the Agent in any necessary
registration or filings that may be required of the Agent with
respect to the Offering, in the states mutually agreed upon by
the Agent and the Company. The Company will advise the Agent
promptly of the issuance by any state regulatory authority of
any stop order or other order suspending the registrations or
exemptions therefrom of the Prospectus or of the institution
of any proceedings for that purpose, will use its best efforts
to prevent the issuance of any stop order or other such order,
and should a stop order or other such order be issued, to
obtain as soon as possible the lifting thereof.
(b) To furnish the Agent with such numbers of printed copies of
the Prospectus, with all amendments, supplements and exhibits
thereto, together with subscription materials, as the Agent
may reasonable request, and similarly, to furnish the Agent
and others designated by the Agent with as many copies of
additional sales literature or other materials approved by the
Company for use in connection with the Offering as the Agent
may reasonably request.
(c) Promptly to furnish such information and execute and file such
documents as may be necessary for the Company to offer and
sell the Shares in full compliance with applicable state and
federal statutes, regulations and policy statements.
(d) To advise the Agent promptly if any event known to the Company
shall have occurred as a result of which the Prospectus in its
then current form (including any amendments or supplements
thereto) would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading.
(e) To utilize or furnish no sales literature in connection with
the Offering, other than the Prospectus, unless such other
sales literature has been approved by the SEC and the NASD, if
necessary, and furnished to the Agent at least ten (10) days
prior to its first use and the Agent has failed to object to
the contents of, or the proposed use of, such other sales
literature.
6. Conditions of the Agent's Obligations. The Agent's obligation to effect
the transactions contemplated by this Agreement shall be subject to the
continuing accuracy throughout the Offering Period of the
representations, warranties and agreements of the Company, the
performance by the Company of all of its obligations under this
Agreement, and the following further terms and conditions:
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<PAGE> 7
(a) The Agent shall have received on any Closing Date hereunder
the opinion of Nelson Mullins Riley & Scarborough LLP, counsel
for the Company, dated as of such Closing Date. Such opinion
may be given subject to the January 1, 1992 edition of the
Interpretive Standards applicable to Legal Opinions to Third
Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the
State Bar of Georgia (the "Interpretive Standards"), and shall
be substantially to the effect that:
(i) the Company is a corporation duly organized, validly
existing and in good standing, under the laws of the
State of Georgia.
(ii) the Shares to be sold by the Company have been duly
authorized and will be, upon issuance and delivery
against payment therefor in accordance with the terms
of this Agreement, validly issued, fully paid and
non-assessable and will not be subject to any
preemptive or other rights to subscribe for or purchase
Shares pursuant to the organizational documents of the
Company or, to the best of such counsel's knowledge,
otherwise.
(iii) the Company's authorized shares consist of 10,000,000
shares of common stock, $.01 par value, of which ten
shares are outstanding and 10,000,000 shares of
preferred stock, none of which are outstanding. The
outstanding shares of the Company's stock have been
duly authorized and validly issued, were not issued in
violation of any statutory preemptive rights of
shareholders, and are fully paid and nonassessable.
Except as described in the Registration Statement,
there are no options, subscriptions, warrants, calls,
rights or commitments obligating the Company to issue
equity securities or acquire its equity securities.
(iv) the amounts, terms and designations of the capital
stock of the Company conform as to legal matters in all
material respects to the description thereof contained
in the Registration Statement under the caption
"Description of Capital Stock".
(v) this Agreement has been duly authorized, executed and
delivered by the Company and, when so executed and
delivered, constitutes the legal, valid and binding
obligation of the Company, enforceable against the
Company.
(vi) the execution and delivery by Company of this Agreement
do not, and if Company were now to perform its
obligation under this Agreement such performance would
not, result in any: (1) violation of Company's articles
or incorporation or bylaws; (2) violation of any
existing federal or state constitution, statute,
regulation, rule, order, or law to which Company or its
assets are subject; (3) breach of or default under any
Material Agreements; (4) creation or imposition of a
contractual lien or security interest in, on or against
its assets under any Material Agreements; or (5)
violation of any judicial or administrative decree,
writ, judgment or order to which, to our knowledge,
Company or its assets are subject.
(vii) to the knowledge of such counsel, the Company has all
necessary consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all
declarations and filings with, all federal, state,
local and other governmental authorities, all
self-regulatory organizations, all courts and other
tribunals, to own, lease, license and use its
properties and assets and to conduct its business in
the manner described in the Registration Statement,
except to the extent that the failure to obtain or file
would not have a material adverse effect on the
Company.
(viii) to the knowledge of such counsel, no authorization,
consent, approval of or qualification with any federal
or state governmental authority is required for the
execution, delivery or performance by the Company of
this Agreement, except such as have been previously
made or obtained, in connection with the distribution
of the Shares by the Agent, and except those which, if
not made or obtained, will not, individually or in the
aggregate, have a material adverse effect on the
Company.
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<PAGE> 8
(ix) nothing has come to the attention of such counsel to
cause such counsel to believe that (except for
financial statements, projections, schedules and other
financial and statistical information included or
incorporated by reference in the Registration Statement
as to which such counsel need not express any opinion)
the Registration Statement contained any untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading, or that the Registration Statement as of
the Closing Date, contained any untrue statement of a
material fact or omitted to state a material fact
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading.
(x) to such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which
the Company is a party or to which any of the
properties of the Company is subject that are not
fairly summarized in all material respects in the
Registration Statement.
(xi) to such counsel's knowledge, after due inquiry, all
contracts, indentures, mortgages, loan agreements,
leases or other documents to which the Company is a
party or to which its business or properties are
subject are fairly summarized in all material respects
in the Registration Statement; and
(xii) after due inquiry, such counsel does not know of any
pending or threatened proceeding relating to the
revocation or modification of any consent,
authorization, approval, order, certificate or permit
necessary to the conduct of the business of the
Company.
As to questions of fact material to such opinion, counsel may
rely on (without independent verification of the accuracy or
completeness thereof), the representations and warranties of
the Company contained in this Agreement as well as the
Material Agreements. The term "Material Agreement", for
purposes of such opinion, shall mean each of the agreements
which has been filed with the Securities and Exchange
Commission as an exhibit (including any document which in lieu
of being filed as an exhibit, is incorporate by reference or
which the Company agrees or has agreed to provide to the
Securities and Exchange Commission upon request) to the
Company's most recently-filed Annual Report on Form 10-KSB or
any subsequently filed report on Form 10-QSB of Form 8-K,
pursuant to the requirements of Item 601(b)(10) of SEC
Regulation S-B, 17 CFR 228.601(b)(10), as amended.
(b) On the Closing Date of any Closing hereunder, the Agent shall
have received from the President of the Company a letter dated
as of such Closing Date, in form and substance satisfactory to
the Agent in all respects, concerning the accuracy, to his
best knowledge and belief, of the financial information
included in the Prospectus.
(c) At the Closing Date of any Closing hereunder, there shall be
furnished to the Agent a certificate, dated as of such Closing
Date, signed by the President and Secretary of the Company
(collectively the "Officers") in form and substance
satisfactory to the Agent (the "Certificate") to the effect
that, to their best knowledge and belief:
(i) The Officers of the Company have carefully examined the
Prospectus, and as of the date of such Certificate, the
statements in the Prospectus are true and correct, and
the Prospectus does not misstate or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not untrue or
misleading.
(ii) The Company has complied with all conditions precedent
to the performance of the Agent's obligations under
this Agreement.
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<PAGE> 9
(iii) Each of the representations and warranties of the
Company contained in this Agreement was when originally
made and is as of the date of such Certificate true and
correct.
(iv) No order from any regulatory body has been issued and
no proceedings have been instituted, or to the
knowledge of such Officers contemplated, to prevent the
consummation of the Offering.
7. Indemnification.
(a) The Company will indemnify and hold harmless the Agent, its
officers, directors, counsel, representatives and persons who
control the Agent within the meaning of the Exchange Act, from
and against all losses, claims, damages and liabilities, joint
and several, to which any of the aforesaid parties, including
the Agent (collectively, the "Agent Parties"), may become
subject, under federal or state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus, or in any Blue Sky
application or other document executed by the Company or on
its behalf for the purpose of qualifying any or all of the
Stock for sale under the securities laws of any jurisdiction,
or based upon written information furnished by the Company
under the securities laws thereof (any such application,
document, or information being hereinafter referred to as a
"Blue Sky Application") or (ii) the omission to state in the
Prospectus, or in any Blue Sky Application, a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The Company will further
reimburse the Agent Parties, and each and every one of them,
for any legal or other expenses reasonably incurred by any one
or more of the Agent Parties in connection with investigating
and defending such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any
case to the extent that the subject loss, claim, damage or
liability arises out of, or is based upon, an untrue statement
or alleged untrue statement or omission or alleged omission
made in reliance upon and unconformity with written
information furnished to the Company by the Agent specifically
for use in the preparation of the subject Prospectus, Blue Sky
Application, or any amendment or supplement thereto. The
indemnity provided for in this Section 7(a) will be in
addition to any liability which the Company may otherwise
have.
(b) The Agent will indemnify and hold harmless the Company, its
officers, directors, counsel, representatives and persons who
control the Company which the meaning of the Securities
Exchange Act of 1934, from and against all losses, claims,
damages and liabilities, joint and several, to which any of
the aforesaid parties, including the Company (collectively,
the "Company Parties"), may become subject, under federal or
state securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon: (i) any untrue statement of
material fact contained in the Prospects, any Blue Sky
Application, or any amendment or supplement thereto; (ii) the
omission to state in the Prospectus, any Blue Sky Application,
or any amendment or supplement to any of the foregoing, a
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, in the
case of Sections (7)(b)(i) and (7)(b)(ii) to the extent, but
only to the extent, that such untrue statement or omission was
made in reliance upon or in conformity with written
information furnished to the Company by the Agent specifically
for use with reference to the Agent in preparation of the
Prospectus, any Blue Sky Application, or any supplement or
amendment thereto; or (iii) arising out of any
misrepresentation by the Agent in this Agreement or any breach
of warranty by the Agent with respect to this Agreement. The
Agent will further reimburse the Company Parties for legal or
other expenses reasonably incurred by the Company Parties in
connection with investigating or defending any loss, claim,
damage, liability or action under this Section (7)(b). The
indemnification provided for in this Section 7(b) shall be in
addition to any liability which the Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under Section
(7)(a) or (7)(b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under
such Section, notify the indemnifying party in writing of the
commencement of the action; but the omission so to notify the
indemnified part shall not relieve
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<PAGE> 10
it from any liability which it may have to an indemnified
party otherwise and under such Section. In any case any such
action shall be brought against any indemnified person, then
it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to
participate therein, and, to the extent it shall wish, jointly
with any other indemnifying party similarly notified, the
indemnifying party may assume the defense thereof, with
counsel satisfactory to such indemnified party (who may also
be counsel to the indemnifying party only if the
representation of both parties does not constitute a conflict)
and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party under such Section for any legal expenses of
other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation.
8. Survival Clause. The respective indemnities, agreements (including,
without limitation, the agreement set forth in Section 7 hereof),
representations, warranties and other statements of the Company and the
Agent as set forth in this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the
results thereof) made by or behalf of the Agent, any officer or
director of the Agent, or counsel therefor, or the Company or any
officer or director of the Company, or counsel therefor, and shall
survive any termination of this Agreement and the receipt of any
payment for the Shares.
9. Notices. All notices under this Agreement shall be in writing and if
sent to the Agent shall be mailed, delivered or telecopied to the Agent
at the address first provided above, and if sent to the Company shall
be mailed or delivered to the Company at its present headquarters
address, 19 South Public Square, Suite 103, Cartersville, Georgia
30120, Attention: President or to such other address as may be
delivered to the Agent from time to time. Any notice shall be deemed to
have given when it is received by the party to whom it is addressed.
10. Governing Law. Except to the extent governed by preemptive federal law,
this Agreement shall be governed by and construed in accordance with
the substantive laws of the State of Georgia.
11. 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 Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first above written.
UNITY HOLDINGS, INC.
By: /s/ Michael L. McPherson
--------------------------
Michael L. McPherson
President and CEO
ACCEPTED AND AGREED TO this 6th day of February, 1998.
ATTKISSON CARTER & AKERS
By: /s/ Ronald Attkisson
--------------------------
Title: President
-----------------------
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<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement of our
report, dated January 30, 1998, relating to the financial statements of Unity
Holdings, Inc. (a development stage company) and to the reference to our Firm
under the caption "Experts" in the Prospectus.
MAULDIN & JENKINS, LLC
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
February 6, 1998
