U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITY OF
SMALL BUSINESS ISSUERS
Under Section 12(b)or (g) of the Securities Exchange Act of 1934
SOUTHERN HERITAGE BANCORP, INC.
(Name of Small Business Issuer in its charter)
Georgia 58-2352014
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3461 Atlanta Highway
P. O. Box 907
Oakwood, Georgia 30566
(Address of principal executive offices)
(770) 531-1240
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title to each class Name of each exchange on which
to be so registered each class is to be registered
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Securities to be registered under Section 12(g) of the Act:
Voting common stock, $5.00 par value per share
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
The information set forth under Item 1 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
The information set forth under Item 6 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 3. DESCRIPTION OF PROPERTY.
The information set forth under Item 2 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information set forth under Item 11 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The information set forth under Item 9 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 6. EXECUTIVE COMPENSATION.
The information set forth under Item 10 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information set forth under Item 12 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 8. LEGAL PROCEEDINGS.
The information set forth under Item 3 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information set forth under Item 5 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
In February, 1998, the Registrant issued to Lowell S. Cagle, in a
private placement one share of the Registrant's Common Stock, $5.00 par value
per share, for an aggregate purchase price of $10 in connection with the
organization of the Registrant. The sale to Mr. Cagle was exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) of such
Act because it was a transaction by an issuer which did not involve a public
offering. Upon completion of the Registrant's public offering, said share of
stock was redeemed by the Registrant for a redemption price of $10.
ITEM 11. DESCRIPTION OF SECURITIES.
General
The Registrant's Articles of Incorporation authorize the Registrant to
issue up to 10,000,000 shares of common stock, par value $5.00 per share, of
which there are 878,344 shares outstanding.
All shares of common stock of the Registrant are entitled to share
equally in dividends from funds legally available therefor, when, as and if
declared by the Board of Directors, and upon liquidation or dissolution of the
Registrant, whether voluntary or involuntary, to share equally in all assets of
the Registrant available for distribution to the shareholders. It is not
anticipated that the Registrant will pay any cash dividends on the common stock
in the near future. Each holder of common stock is entitled to one vote for each
share on all matters submitted to the shareholders. Holders of common stock do
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not have any preemptive right to acquire authorized but unissued capital stock
of the Registrant. There is no cumulative voting, redemption right, sinking fund
provision, or right of conversion in existence with respect to the common stock.
All shares of the common stock presently outstanding are fully-paid and
non-assessable.
The Articles of Incorporation of the Registrant contain certain provisions
which would have the effect of impeding an attempt to change or remove
management of the Registrant or to gain control of the Registrant in a
transaction not supported by its Board of Directors. The Articles of
Incorporation of the Registrant also contain a provision which eliminates the
potential personal liability of directors for monetary damages. The Bylaws of
the Registrant contain certain provisions which provide indemnification for
directors of the Registrant. Each of these provisions is discussed more fully
below.
Change in Number of Directors
Article 7 of the Articles of Incorporation of the Registrant provides
that any change in the number of directors of the Registrant, as set forth in
its Bylaws, would have to be made by the affirmative vote of 2/3 of the entire
Board of Directors or by the affirmative vote of the holders of at least 2/3 of
the outstanding shares of common stock.
Under Georgia law, the number of directors may be increased or
decreased from time to time by amendment to the Bylaws, unless the Articles of
Incorporation provide otherwise or unless the number of directors is otherwise
fixed by the shareholders.
Serial Election of Directors
The Bylaws of the Registrant provide that the Registrant's Board of
Directors is divided into three classes, with each class to be as nearly equal
in number as possible. The directors in each class serve three-year terms of
office. The effect of the Registrant's having a classified Board of Directors is
that only approximately one-third of the members of the Board are elected each
year, which effectively requires two annual meetings for the Registrant's
shareholders to change a majority of the members of the Board.
Removal of Directors
Article 8 of the Articles of Incorporation of the Registrant provides
that directors of the Registrant may be removed during their terms with or
without cause by the affirmative vote of the holders of a majority of the
outstanding shares of common stock. "Cause" for this purpose is defined as final
conviction of a felony, request or demand for removal by any bank regulatory
authority having jurisdiction over the Registrant, or determination
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by at least 2/3 of the incumbent directors of the Registrant that the conduct of
the director to be removed has been inimical to the best interests of the
Registrant.
Under Georgia law, any or all of the directors of a corporation may be
removed with or without cause by the affirmative vote of a majority of the
shares represented at a meeting at which a quorum is represented and entitled to
vote thereon, unless the Articles of Incorporation provide otherwise.
Limitation of Liability
Article 10 of the Registrant's Article of Incorporation, subject to certain
exceptions, eliminates the potential personal liability of a director for
monetary damages to the Registrant and to the shareholders of the Registrant for
breach of a duty as a director. There is no elimination of liability for (a) a
breach of duty involving appropriation of a business opportunity of the
Registrant, (b) an act or omission not in good faith or involving intentional
misconduct or a knowing violation of law, (c) a transaction from which the
director derives an improper material tangible personal benefit, or (d) as to
any payment of a dividend or approval of a stock repurchase that is illegal
under the Georgia Business Corporation Code. Article 10 does not eliminate or
limit the right of the Registrant or its shareholders to seek injunctive or
other equitable relief not involving monetary damages.
Article 10 was adopted by the Registrant pursuant to the Georgia
Business Corporation Code which allows Georgia corporations, with the approval
of their shareholders, to include in their Articles of Incorporation a provision
eliminating or limiting the liability of directors, except in the circumstances
described above. Article 10 was included in the Registrant's Articles of
Incorporation to encourage qualified individuals to serve and remain as
directors of the Registrant. While the Registrant has not experienced any
problems in locating directors, it could experience difficulty in the future as
the Registrant's business activities increase and diversify. Article 10 was also
included to enhance the Registrant's ability to secure liability insurance for
its directors at a reasonable cost. While the Registrant intends to obtain
liability insurance covering actions taken by its directors in their capacities
as directors, the Board of Directors believes that the current director's
liability insurance environment, and the environment for the foreseeable future,
is characterized by increasing premiums, reduced coverage and an increasing risk
of litigation and liability. The Board of Directors believes that Article 10
will enable the Registrant to secure such insurance on terms more favorable than
if such a provision were not included in the Articles of Incorporation.
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Supermajority Voting on Certain Transactions
Under Article 12 of the Articles of Incorporation of the Registrant,
with certain exceptions, any merger or consolidation involving the Registrant or
any sale or other disposition of all or substantially all of its assets will
require the affirmative vote of the holders of at least 2/3 of the outstanding
shares of Common stock. However, if the Board of Directors of the Registrant has
approved the particular transaction by the affirmative vote of 2/3 of the entire
Board, then the applicable provisions of Georgia law would govern and
shareholder approval of the transaction would require the affirmative vote of
the holders of only a majority of the outstanding shares of common stock
entitled to vote thereon.
The primary purpose of this Article is to discourage any party from
attempting to acquire control of the Registrant through the acquisition of a
substantial number of shares of common stock followed by a forced merger or sale
of assets without negotiation with management. Such a merger or sale might not
be in the best interests of the Registrant or its shareholders. This provision
may also serve to reduce the risk of a potential conflict of interest between a
substantial shareholder on the one hand and the Registrant and its other
shareholders on the other.
The foregoing provision could enable a minority of the Registrant
shareholders to prevent a transaction favored by the majority of the
shareholders. Also, in some, circumstances, the directors could cause a 2/3 vote
to be required to approve the transaction by withholding their consent to such a
transaction, thereby enhancing their positions with the Registrant and the Bank.
However, of the eleven persons who are directors of the Registrant, only one
will be affiliated with the Registrant and the Bank in a full-time management
position.
Evaluation of an Acquisition Proposal
Article 13 of the Registrant's Articles of Incorporation provides that
the response of the Registrant to any acquisition proposal made by another party
will be based on the Board's evaluation of the best interests of the Registrant
and its shareholders. As used herein, the term "acquisition proposal" refers to
any offer of another party (a) to make a tender offer or exchange offer for any
equity security of the Registrant, (b) to merge or consolidate the Registrant
with another corporation, or (c) to purchase or otherwise acquire all or
substantially all of the properties and assets owned by the Registrant.
Article 13 charges the Board, in evaluating an acquisition proposal, to
consider all relevant factors, including (a) the expected social and economic
effects of the transaction on the employees, customers and other constituents
(e.g., suppliers of goods and services) of the Registrant and the Bank, (b) the
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expected social and economic effects on the communities within which the
Registrant and the Bank operate, and (c) the consideration being offered by the
other corporation in relation (i) to the then current value of the Registrant as
determined by a freely negotiated transaction and (ii) to the Board of
Directors' then estimate of the Registrant's future value as an independent
entity. The enumerated factors are not exclusive, and the Board may consider
other relevant factors.
This Article has been included in the Registrant's Articles of
Incorporation because the Bank is charged with providing support to and being
involved with the communities it serves, and the Board believes its obligations
in evaluating an acquisition proposal extend beyond evaluating merely the
consideration being offered in relation to the then market or book value of the
common stock. No provisions of Georgia law specifically enumerate the factors a
corporation's board of directors should consider in the event the corporation is
presented with an acquisition proposal.
While the value of the consideration offered to shareholders is the
main factor when weighing the benefits of an acquisition proposal, the Board
believes it appropriate also to consider all other relevant factors. For
example, this Article directs the Board to evaluate the consideration being
offered in relation to the then current value of the Registrant determined in a
freely negotiated transaction and in relation to the Board's then estimate of
the future value of the Registrant as an independent concern. A takeover bid
often places the target corporation virtually in the position of making a forced
sale, sometimes when the market price of its stock may be depressed. The Board
believes that frequently the consideration offered in such a situation, even
though it may be in excess of the then market value (i.e., the value at which
shares are then currently trading), it is less than that which could be obtained
in a freely negotiated transaction. In a freely negotiated transaction,
management would have the opportunity to seek a suitable partner at a time of
its choosing and to negotiate for the most favorable price and terms which
reflect not only the current value, but also the future value of the Registrant.
One effect of this Article may be to discourage a tender offer in
advance. Often an offeror consults the Board of a target corporation prior to or
after commencing a tender offer in an attempt to prevent a contest from
developing. In the opinion of the Board, this provision will strengthen its
position in dealing with any potential offeror which might attempt to acquire
the Registrant through a hostile tender offer. Another effect of this Article
may be to dissuade shareholders who might be displeased with the Board's
response to an acquisition proposal from engaging the Registrant in costly
litigation. This provision, however, does not affect the right of a shareholder
displeased with the Board's response to an acquisition proposal to institute
litigation against the Registrant and to allege that the Board breached an
obligation
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to shareholders by not limiting its evaluation of an acquisition proposal to the
value of the consideration being offered in relation to the then market or book
value of the common stock.
Article 13 would not make an acquisition proposal regarded by the Board
as being in the best interests of the Registrant more difficult to accomplish.
It would, however, permit the Board to determine that an acquisition proposal
was not in the best interests of the Registrant (and thus to oppose it) on the
basis of the various factors deemed relevant. In some cases, such opposition by
the Board might have the effect of maintaining the positions of incumbent
management.
Amendment of Provisions
Any amendment of Articles 7, 8, 10, 12, and 13 of the Registrant's
Articles of Incorporation requires the affirmative vote of the holders of at
least 2/3 of the outstanding shares of common stock, unless 2/3 of the entire
Board of Directors approves the amendment. If 2/3 of the Board approves the
amendment, the applicable provisions of Georgia law would govern, and the
approval of only a majority of the outstanding shares of common stock would be
required.
Indemnification
The Bylaws of the Registrant contain certain indemnification provisions
which provide that directors, officers, employees or agents of the Registrant
will be indemnified against expenses actually and reasonably incurred by them if
they are successful on the merits of a claim or proceedings.
When a case or dispute is not ultimately determined on its merits
(i.e., it is settled), the indemnification provisions provide that the
Registrant will indemnify directors when they meet the applicable standard of
conduct. The applicable standard of conduct is met if the director acted in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Registrant and, with respect to any criminal action or
proceeding, if the director had no reasonable cause to believe his or her
conduct was unlawful. Whether the applicable standard of conduct has been met is
determined by the Board of Directors, the shareholders or independent legal
counsel in each specific case.
The Bylaws of the Registrant also provide that the indemnification
rights set forth therein are not exclusive of other indemnification rights to
which a director may be entitled under any bylaw, resolution or agreement either
specifically or in general terms approved by the affirmative vote of the holders
of a majority of the shares entitled to vote thereon. The Registrant can also
provide for greater indemnification than that set forth in the Bylaws if it
chooses to do so, subject to approval by the
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Registrant's shareholders. The Registrant may not, however, indemnify a director
for liability arising out of circumstances which constitute exceptions to
limitation of a director's liability for monetary damages.
The indemnification provisions of the Bylaws specifically provide that
the Registrant may purchase and maintain insurance on behalf of any director
against any liability asserted against such person and incurred by him in any
such capacity, whether or not the Registrant would have had the power to
indemnify against such liability.
The Registrant is not aware of any pending or threatened action, suit
or proceeding involving any of its directors or officers for which
indemnification from the Registrant may be sought.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "1933 Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities other than the payment by the Registrant of expenses incurred
or paid by the director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceedings is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Consistent with the pertinent provisions of the laws of Georgia, the
Registrant's Articles of Incorporation provide that the Registrant shall have
the power to indemnify its directors and officers against expenses (including
attorney's fees) and liabilities arising from actual or threatened actions,
suits or proceedings, whether or not settled, to which they become subject by
reason of having served in such role if such director or officer acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Registrant and, with respect to a criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Advances against expenses shall be made so long as the person seeking
indemnification agrees to refund the advances if it is ultimately determined
that he or she is not entitled to
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indemnification. A determination of whether indemnification of a director or
officer is proper because he or she met the applicable standard of conduct shall
be made (a) by the Board of Directors of the Registrant, (b) in certain
circumstances, by independent legal counsel in a written opinion, or (c) by the
affirmative vote of a majority of the shares entitled to vote.
ITEM 13. FINANCIAL STATEMENTS.
The consolidated financial statements, notes thereto and independent
auditors' report thereon, all attached as Exhibit 13.1 to the Registrant's
Annual Report on Form 10-KSB for its fiscal year ended December 31, 1999, are
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The information set forth under Item 8 of the Registrant's Annual
Report on Form 10-KSB for its fiscal year ended December 31, 1999 is
incorporated by reference in this Form 10-SB Registration Statement.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
The consolidated financial statements of the Registrant for
its fiscal year ended December 31, 1999, notes thereto and
independent auditors' report thereon, incorporated herein by
reference from the Company's 1999 annual report on Form
10-KSB, have been filed as Item 13 of this report.
(b) Exhibits:
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Sequential
Page Number
3.1* Articles of Incorporation --
3.2* Bylaws --
21.1 Subsidiaries of the Company. The
sole subsidiary of the Company is
Southern Heritage Bank,
Oakwood, Georgia, which is
wholly-owned by the Company --
of the Company --
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*Items 3.1 and 3.2, as listed above, were previously filed by
the Company as Exhibits (with the same respective Exhibit
Numbers as indicated herein) to the Company's Registration
Statement on Form SB-2 (Registration No. 333-47291) filed on
March 4, 1998 and such documents are incorporated herein by
reference.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf by
the undersigned thereunto duly authorized.
SOUTHERN HERITAGE BANCORP, INC.
(Registrant)
Date: April 27, 2000 s/John Evans
John Evans, Treasurer, C.A.O.
and C.F.O.
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