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As filed with the SEC on March 1, 1999
Registration No. 333-69555
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------------
FIRST CAPITAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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South Carolina 6021 57-1070990
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(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or Organization) Classification Code Number)
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207 Highway 15/401 Bypass East
Bennettsville, South Carolina 29512
(843) 454-9337
(Address and Telephone Number of Principal Executive Offices and
Intended Principal Place of Business)
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James Aubrey Crosland
President
207 Highway 15/401 Bypass East
Bennettsville, South Carolina 29512
(843) 454-9337
(Name, Address, and Telephone Number of Agent For Service)
----------------------------
Copies of all communications, including copies of all communications
sent to agent for service, should be sent to:
Neil E. Grayson, Esq. A. George Igler, Esq.
C. Russell Pickering, Esq. Igler & Dougherty, P.A.
Nelson Mullins Riley & Scarborough, L.L.P. 1501 Park Avenue East
999 Peachtree Street, N.E., Suite 1400 Tallahassee, Florida 32301
Atlanta, Georgia 30309 (850) 878-2411
(404) 817-6000 (850) 878-1230 (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 this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
[ ] ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
[ ] ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
[ ] ___________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
--------------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE FEE*
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value.... 720,000 $10.00 $7,200,000 $2,002
=========================================================================================================
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* Previously paid.
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The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC
IS EFFECTIVE. THIS PROSEPCTUS IS NOT AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THIS PRELIMINARY PROSPECTUS IS NOT YET COMPLETE. MARCH 1, 1999
FIRST CAPITAL BANCSHARES, INC.
[INSERT COMPANY LOGO HERE]
720,000 Shares of Common Stock
$10.00 per share
-------------------------------
We are offering shares of common stock of First Capital Bancshares,
Inc. to fund the start-up of a new bank named First Capital Bank. We will be
the sole owner of First Capital Bank, which will be headquartered in Marlboro
County, South Carolina. We expect the bank to open in the second quarter of
1999. First Capital Bank will provide a full range of commercial and consumer
banking services to individuals and small- to medium-sized businesses. This is
our first offering of stock to the public and there is no public market for our
shares.
The shares will be sold primarily by our sales agent and our officers
and directors. The sales agent has agreed to use its best efforts to sell the
shares offered, but must sell a minimum of 500,000 shares if it sells any. The
offering is scheduled to end on May 15, 1999, but we may extend the offering
until December 31, 1999, at the latest. The minimum purchase requirement is 100
shares.
We will place all the money we receive in the offering with an
independent escrow agent who will hold the money until we sell at least 500,000
shares and we receive preliminary approval from our bank regulatory agencies
for the new bank. If we do not meet these conditions before the end of the
offering period, we will return all funds to the subscribers with interest
earned.
This table summarizes the offering. It shows the maximum commissions
we expect to pay to the sales agent.
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Per Share Minimum Total Maximum Total
--------- ------------- -------------
(500,000 Shares) (720,000 Shares)
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Public Offering Price................ $10.00 $5,000,000 $7,200,000
Sales Agency Commissions............. 0.70 315,160 469,160
Proceeds to First Capital............ 9.30 4,684,840 6,730,840
=========================================================================================
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THIS IS A RISKY INVESTMENT. IT IS NOT A DEPOSIT OR AN ACCOUNT AND IS
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS YOU CAN AFFORD
TO LOSE YOUR ENTIRE INVESTMENT. SOME OF THE RISKS OF THIS INVESTMENT ARE
DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 7.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[BANC STOCK LOGO HERE]
March ____, 1999
<PAGE> 3
FIRST CAPITAL BANCSHARES, INC.
[A map of South Carolina, highlighting the Bennettsville area, and a picture of
the organizers is included here.]
<PAGE> 4
TABLE OF CONTENTS
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Page
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Summary ............................................................................................................4
Risk Factors........................................................................................................7
The Offering.......................................................................................................11
Market for Common Stock............................................................................................13
Use of Proceeds ...................................................................................................13
Capitalization.....................................................................................................15
Dividend Policy ...................................................................................................15
Proposed Business and Plan of Operation............................................................................16
Supervision and Regulation.........................................................................................22
Management.........................................................................................................29
Description of Capital Stock.......................................................................................34
Legal Matters......................................................................................................36
Experts............................................................................................................36
Additional Information ............................................................................................36
Index to Financial Statements ....................................................................................F-1
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--------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE HAVE NOT
AUTHORIZED ANYONE TO GIVE ANY INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS ILLEGAL. THE
INFORMATION IN THIS PROSPECTUS IS COMPLETE AND ACCURATE AS OF THE DATE ON THE
COVER, BUT THE INFORMATION MAY CHANGE IN THE FUTURE.
UNTIL ____________________, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS.
3
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SUMMARY
This summarizes the information contained in this prospectus. We
encourage you to read the entire prospectus carefully before investing. See
page 6 for instructions on how to subscribe for shares.
GENERAL
First Capital Bancshares is raising capital in this offering to open
First Capital Bank, which will be a new locally owned and operated bank in
Marlboro County, South Carolina. First Capital Bancshares was organized by the
following Marlboro County area business leaders who will also make up its board
of directors:
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Shoukath Ansari Lee Howell
Wylie Cartrette Paul Rush
J. Aubrey Crosland Lee C. Shortt
Glenn Dowdy Dale Hutchins
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Our initial office will be in Bennettsville, South Carolina. We also
plan to open a branch in McColl, South Carolina and are considering a second
branch in the neighboring town of Laurinburg, North Carolina. The bank will be
a federal thrift and its deposits will be insured by the FDIC. We expect to
receive final regulatory approval and open the bank for business in the second
quarter of 1999. Our principal executive offices are located at:
207 Highway 15/401 Bypass East
Bennettsville, South Carolina 29512
Telephone: (843) 454-9337
Fax: (843) 454-9338
MARKET STRATEGY
Most of the banks currently located in the Marlboro County area of
South Carolina are branches of large regional and national banks. We believe
there is demand for a new local bank. To capitalize on this demand, we will
emphasize our local ownership and management and our strong ties to the
community. We plan to concentrate primarily on individuals and small- to
medium-sized businesses. We will offer general commercial and consumer banking
services with a focus on personalized service and on building long-term
customer relationships. As a federal thrift, we will also have the ability to
offer other products and services. Although initially we plan to limit our
activities to traditional banking, we may consider offering products such as
property and casualty insurance in the future.
MANAGEMENT
Our experienced management team consists of the following individuals:
- - Lee C. Shortt will be the chairman and chief executive officer of First
Capital Bancshares. Mr. Shortt has lived in Bennettsville for over 20
years and is the president of Shortt Auction and Realty Co., which he
founded in 1975.
- - James Aubrey Crosland will be president of both First Capital Bancshares
and First Capital Bank. Mr. Crosland is a native of Bennettsville and has
25 years of bank experience. He was most recently the financial manager
for Marlboro Constructors, Inc. before leaving to focus on the
organization of First Capital Bank. Mr. Crosland's other experience
includes serving as the Pee Dee area executive for Carolina First Bank,
community banking director for NationsBank in neighboring Florence, South
Carolina, city executive for Carolina Bank & Trust in Bennettsville,
operations officer and commercial lender for First National Bank of South
Carolina in Bennettsville, and credit manager at Wachovia.
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- - Randy McDonald will be the chief executive officer and chief lending
officer of First Capital Bank. Mr. McDonald has been in banking since
1979, most recently serving as the loan and asset management officer of
the Citizens Bank and the city executive in the Lake City, South Carolina
office of Carolina First Bank.
- - John M. Digby will serve as chief financial officer for both First Capital
Bancshares and First Capital Bank. Mr. Digby has 27 years of banking
experience and 10 years' experience as the chief financial officer of
community banks in Georgia and Clemson, South Carolina. He was most
recently a vice president of Community Capital Corporation in Greenwood,
South Carolina.
OBTAINING REGULATORY APPROVAL AND OPENING THE BANK
In order to open First Capital Bank, we must obtain approval from the
Office of Thrift Supervision. We have submitted an application to this agency
and anticipate receiving conditional approval in the second quarter of 1999. We
have already received conditional approval for deposit insurance from the FDIC.
In order to open for business, we anticipate that these agencies will require
that the bank have at least $4.5 million in starting capital.
OFFERING SUMMARY
Most of the proceeds of this stock offering will be used to provide
the starting capital for First Capital Bank, with the remainder to be available
as general corporate funds for First Capital Bancshares. Our directors have
already purchased 30,000 shares of common stock at $10.00 per share, and intend
to purchase at least 55,200 additional shares in this offering, for a total
investment of $852,000. We hope to raise a total of $5 million to $7.2 million
in this offering, including the additional investments of the directors. The
price per share in this offering is $10.00, the same price paid by our
directors. The offering is scheduled to expire on May 15, 1999, but we may
continue the offering up to December 31, 1999.
The following chart summarizes the offering:
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Minimum Offering Maximum Offering
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Common stock outstanding prior to
this offering.......................... 30,000 shares 30,000 shares
Common stock offered................... 500,000 shares 720,000 shares
Total funds to be raised in the
offering............................... $5,000,000 $7,200,000
=======================================================================================
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USE OF PROCEEDS FROM THE OFFERING
We will use the first $4.5 million raised in the offering, and 25% of
the amount raised in excess of $4.5 million, to provide the initial capital for
First Capital Bank. We will use the remaining proceeds to pay the cost of
organizing First Capital Bancshares, the expenses of this offering, and to
provide general working funds for First Capital Bancshares.
First Capital Bank intends to use the $4.5 million it receives from
First Capital Bancshares for expenses incurred to organize and open the bank,
for purchase, renovation and furnishing of the bank's initial offices, and for
general working funds, including paying the salaries of officers and employees
and making loans and investments.
WE DO NOT PLAN TO PAY DIVIDENDS
We do not plan to pay dividends in the foreseeable future. Because we
are a start-up enterprise, we will use all earnings to fund our ongoing
operation and the growth of the business.
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WE WILL HOLD THE SUBSCRIPTION FUNDS IN ESCROW
Because we cannot open the bank without regulatory approvals, we will
place all the proceeds from outside investors in this offering with an
independent escrow agent. The escrow agent will hold these funds until we raise
a minimum of $5 million and obtain preliminary regulatory approval from the
Office of Thrift Supervision to open the bank. We expect to receive this
approval in the second quarter of 1999. We currently intend to close the
offering on May 15, 1999, but may extend the offering up to December 31, 1999.
If we fail to meet these conditions by the close of the offering, our escrow
agent will promptly refund your subscription in full with interest earned. Even
if we meet these conditions and release the proceeds from escrow, we will
return your subscriptions in full with interest if we fail to open the bank for
any reason. In these events, we will use the investments by our founding
shareholders to pay expenses and liquidate the company.
WE WILL USE A SALES AGENT TO SELL SHARES IN THE OFFERING
We have engaged Banc Stock Financial Services Inc., a subsidiary of
The Banc Stock Group, Inc., as our sales agent to sell shares in the offering.
The sales agent has agreed to use its best efforts to sell the shares offered,
but must sell at least 500,000 shares in order to sell any. We have agreed to
pay the sales agent a 2.5% commission on shares sold in the offering to our
founding directors, a 6.5% commission on shares sold to investors which we
identify (up to 200,000 shares), and a 7.0% commission on shares sold to the
public. This will result in fees and commissions of approximately $315,000 on
the minimum of 500,000 shares and $470,000 on the maximum of 720,000 shares. We
will also reimburse the sales agent for its costs and expenses up to an
additional $60,000.
HOW TO SUBSCRIBE
If you wish to subscribe for shares you should:
1. Complete, date, and execute the stock order form delivered with
this prospectus;
2. Make a check, bank draft, or money order payable to The Banker's
Bank, Escrow Account for First Capital Bancshares, Inc., in the
amount of $10.00 times the number of shares subscribed for; and
3. Deliver the completed subscription agreement and check to the
sales agent at the following address:
Banc Stock Financial Services, Inc.
1105 Schrock Road
Suite 437
Columbus, OH 43229
Attention: Mr. Edward E. Schmidt, Executive Vice President
or to the Escrow Agent at the following address:
The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, GA 30339-4098
Attention: Mr. William R. Burkett, Senior Vice President
If you have any questions about the offering or how to subscribe,
please call Mr. Crosland at (843) 454-9337 or Mr. Schmidt at Banc Stock
Financial Services, Inc. at (800) 733-2265. You should retain a copy of the
completed subscription agreement for your records. The subscription price is
due and payable when the subscription agreement is delivered.
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RISK FACTORS
There are risks involved in investing in First Capital Bancshares
common stock. Our stock is not a deposit or an account and is not insured by
the FDIC or any other government agency. We are a new company and may not
succeed due to many factors. You should not invest in the common stock unless
you can afford to lose your entire investment. Before investing, we encourage
you to read this entire prospectus, including the following risk factors.
WE ARE A NEW BUSINESS WITH NO OPERATING HISTORY
Neither First Capital Bancshares nor First Capital Bank has any
operating history. The operations of new businesses are always risky. Because
First Capital Bank has not yet opened, we do not have historical financial data
and similar information that would be available for a financial institution
that has been operating for several years. We cannot predict whether we will be
successful.
WE EXPECT SIGNIFICANT LOSSES FOR AT LEAST TWO YEARS
In order for us to become profitable, we will need to attract a large
number of customers to deposit and borrow money. It will take time for us to
produce revenue. We expect to incur large initial expenses and therefore incur
losses. We may not be profitable for several years, if ever. Through December
31, 1998, we had incurred a net loss of $163,490. Prior to opening we expect to
incur losses in excess of $300,000. Although we expect to become profitable in
our second year, it is possible that we may never become profitable and that
you will lose part or all of your investment.
WE MUST RECEIVE REGULATORY APPROVALS BEFORE WE MAY OPEN FIRST CAPITAL BANK
We cannot begin operations until we receive all required regulatory
approvals. We will not receive these approvals until we satisfy certain rules
and requirements for new banks imposed by state and federal regulatory
agencies. We believe one requirement will be that we have at least $4.5 million
to capitalize the bank. We expect to satisfy these requirements and obtain all
necessary approvals by the second quarter of 1999, but it may take longer. We
cannot open the bank without regulatory approvals. To reduce the risks to
subscribers in this offering we will place all proceeds from outside investors
with an independent escrow agent as described in the summary above.
WE WILL DEPEND HEAVILY ON MANAGEMENT
We will depend heavily on the senior management to make the bank
successful. In particular, we will depend on Mr. Shortt, Mr. Crosland, Mr.
McDonald, and Mr. Digby. These individuals will provide valuable services to
us, and each would be difficult to replace. The loss of one or more of the
senior management team could impair our ability to succeed. We have an
employment agreement with each of Messrs. Crosland, McDonald, and Digby, and we
carry $1,000,000 of life insurance payable to the bank on Mr. Crosland.
THERE MAY BE FLUCTUATIONS IN THE PRICE OF OUR STOCK AFTER THE OFFERING
Because we are a start-up company and have no historical operations on
which to base the offering price, the market price of the stock after the
offering may be more susceptible to fluctuations than it otherwise might be.
The market price will be affected by our operating results, which could
fluctuate greatly. These fluctuations could result from expenses of operating
and expanding First Capital Bank, trends in the banking industry, economic
conditions in our market area, and other factors which are beyond our control.
If our operating results are below expectations, the market price of the common
stock would probably fall.
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WE EXPECT A VERY LIMITED TRADING MARKET FOR OUR STOCK
There is currently no market for our common stock. We will not be
listed on Nasdaq or any national stock exchange. After the offering, we
anticipate that at least two broker-dealers will match buy and sell orders for
our common stock on the Over-the-Counter Bulletin Board and that bid and ask
quotations on our stock will be displayed on the Electronic Pink Sheet System.
However, we do not expect a liquid market for our common stock to develop for
several years, if at all. A public market having depth and liquidity depends on
having enough buyers and sellers at any given time. Because this a relatively
small offering, we do not expect to have enough shareholders or outstanding
shares to support an active trading market in the foreseeable future.
THE BANKING BUSINESS IS HIGHLY COMPETITIVE AND HEAVILY REGULATED
There is strong competition for customers from existing banks and
other types of financial institutions in the Marlboro County area and
elsewhere. Some of these competitors have been in business for a long time and
have already established their customer base and name recognition. Most are
larger than we will be and have greater financial and personal resources than
we will have. Some are affiliated with large regional and national banks, like
Carolina First and Wachovia, and offer services that we either do not expect to
provide or will not provide for some time, such as extensive and established
branch networks and trust services. Because of this competition we may have to
pay higher rates of interest to attract deposits. This would increase our costs
and make it more difficult to be profitable.
A LOCAL ECONOMIC DOWNTURN WOULD HURT US
We will operate in Marlboro County, South Carolina. An economic
downturn in the area would hurt our business. The county's population has
dropped slightly in the last 7 years, and a continuation or acceleration of
this trend could cause a drop in business opportunities for the bank.
Additionally, the per capita income for the area was generally low at $11,326,
indicating that an economic downturn could affect Marlboro County to a greater
extent than other areas of South Carolina or the United States in general.
OUR PROFITABILITY IS AFFECTED BY INTEREST RATES, WHICH WE CANNOT CONTROL
Our profitability depends on our net interest income and net interest
spread. Net interest income is the difference between the income we earn on
assets and the interest we pay on deposits and other borrowings. Net interest
income is largely determined by our net interest spread, which is the
difference between the rates we receive on loans and investments and the rates
we pay for deposits and other borrowings. Our net interest income and net
interest spread will depend on many factors that we cannot control. These
factors include competition, government economic and monetary policies, and
national and local economic conditions. For example, in a growing economy,
interest rates we earn on loans may drop, while rates we pay on deposits may
remain stable, causing a decrease in our interest rate spread and our net
interest income. Although we will try to minimize our exposure to interest rate
risk, we cannot eliminate it.
WE FACE A RISK OF LOAN DEFAULTS BY OUR BORROWERS
There are risks inherent in making all loans, and the risks of loan
defaults by borrowers is unavoidable in the banking business. These risks
include:
- Risks caused by the length of the loan repayment period.
Longer repayment periods carry higher risk because of
increased uncertainty about the future.
- Risks caused by concentrations in types of loans. For
instance, a high percentage of home mortgage loans would be
susceptible to a risk of a drop in the value of real estate.
- Risks caused by changes in the local or national economy or a
downturn for particular industries.
- Risks of nonpayment by individual borrowers.
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- Risks resulting from uncertainties about the future value of
collateral used to secure our loans.
Because we will be smaller than most of our competitors, our loan
portfolio will not be as diverse, and these risks will be greater. We will try
to limit our exposure to these risks through prudent lending practices and by
carefully monitoring the amount of loans we make within specific industries,
but we cannot eliminate these risks. Substantial credit losses would result in
a decrease of our net income or an increase in our net losses, and could cause
a reduction in the amount of our bank's capital.
OUR LENDING LIMIT WILL BE SIGNIFICANTLY LOWER THAN MOST OF OUR COMPETITORS'
We will be limited in the amount we can loan a single borrower by the
amount of First Capital Bank's capital. The legal lending limit is 15% of the
bank's capital and surplus. We expect that our initial lending limit will be
approximately $675,000 immediately following the offering. Until the bank is
profitable, we will lose money, which will decrease our capital and therefore
our lending limits. Our lending limit will be significantly less than the limit
for most of our competitors and may affect our ability to seek relationships
with larger businesses in our market area. We intend to accommodate larger
loans by selling participations in those loans to other financial institutions,
but we may not be successful.
ANTITAKEOVER PROVISIONS COULD REDUCE THE CHANCES THAT ANOTHER COMPANY WILL
ACQUIRE FIRST CAPITAL
In many cases, shareholders would receive a premium for their shares
if we are purchased by another company. However, state and federal law and our
articles of incorporation and bylaws make it difficult for anyone to purchase
First Capital without approval of our board of directors. These provisions,
which could make it less likely that a change in control will occur, include:
- Provisions relating to meetings of shareholders which limit
who may call meetings and what matters will be voted upon.
- The ability of the board of directors to issue additional
shares of common stock and preferred stock without
shareholder approval. This could dilute any potential
acquirer attempting to gain control by purchasing our stock.
- A staggered board of directors, which limits the ability to
change the members of the board of directors.
- A bylaw provision that individuals affiliated with First
Capital's business competitors may not qualify to serve on
First Capital's board of directors.
In addition, under South Carolina law no other financial institution
may acquire control of First Capital until First Capital has been in existence
for at least five years. For a discussion of some of these provisions, please
see "Description of Capital Stock - Antitakeover Effects" on page 33.
WE FACE RISKS RELATING TO YEAR 2000 READINESS
Like many financial institutions, we will rely upon computers for
conducting our business and for information systems processing. There is
concern among industry experts that on January 1, 2000, computers will be
unable to read or interpret the new year and there may be widespread computer
malfunctions. We will generally rely on software and hardware developed by
independent third parties for our information systems. We will require
warranties about Year 2000 compliance from all third party hardware and
software system providers we use. We believe that our internal systems and
software, including our network connections, will be programmed to comply with
Year 2000 requirements, although there is a risk they may not. Based on
information currently available, we believe that we will not incur significant
expenses in connection with the Year 2000 issue.
The Year 2000 issue may also negatively affect the business of our
customers. We intend to include Year 2000 readiness in our lending criteria to
minimize this risk. However, we cannot be certain that this will address the
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issue and any financial difficulties our customers' experience caused by Year
2000 issues could impair their ability to repay loans to the bank.
FORWARD LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements"
concerning First Capital Bancshares and First Capital Bank and their
operations, performance, financial conditions, and likelihood of success. These
statements are based on many assumptions and estimates. Our actual results will
depend on many factors about which we are unsure, including those discussed
above. Many of these risks and factors are beyond our control. The words "may,"
"would," "could," "will," "expect," "anticipate," "believe," "intend," "plan,"
and "estimate," as well as similar expressions, are meant to identify such
forward-looking statements.
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THE OFFERING
GENERAL
We are offering for sale a minimum of 500,000 shares and a maximum of
720,000 shares of our common stock at a price of $10.00 per share to raise
gross proceeds of between $5 million and $7.2 million. 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 we accept a subscription for more
or less.
Prior to this offering, the organizers purchased 30,000 shares of
common stock at $10.00 per share to fund the organization of First Capital
Bancshares and First Capital Bank. The organizers and their immediate families
intend to purchase at least 55,200 additional shares of common stock in this
offering, for a total investment of 85,200 shares and $852,000. As a result,
the organizers will own approximately 16.1% of the outstanding common stock
based on the minimum number of 530,000 shares and 11.4% of the outstanding
common stock based on the maximum number of 750,000 shares. Although they have
not promised to do so, the organizers and affiliates of the sales agent may
purchase additional shares in the offering, up to 100% of the minimum offering
if necessary to complete the offering. All shares purchased by these
individuals will be for investment and not with the intent to resell. Because
purchases by these organizers and sales agent may be substantial, you should
not assume that the sale of the minimum offering amount indicates the merits of
this offering or that their investment decision is shared by public investors.
We will accept subscriptions to purchase shares until midnight,
eastern standard time, on May 15, 1999, unless we sell all of the shares
earlier or otherwise terminate or extend the offering. See "Conditions to the
Offering and Release of Funds" below. We reserve the right to terminate the
offering at any time, or to extend the expiration date through December 31,
1999. Although we are not required to give you prior written notice of an
extension of the offering period, we expect to communicate quarterly with
subscribers and notify them of extensions. If the offering is extended,
subscriptions we have already accepted will still be binding. Once we become
subject to the reporting requirements of the Securities Exchange Act of 1934,
we will file quarterly reports on Form 10-Q and will make such documents
available to shareholders who request a copy. Extension of the expiration date
may increase our organizational and pre-opening expenses and the expenses of
this offering.
Subscriptions will be binding on subscribers once we accept them and
may not be revoked without our consent. We reserve the right to cancel accepted
subscriptions at any time and for any reason until the proceeds of this
offering are released from escrow. We may reject all or part of any
subscription. We may allocate shares among subscribers if the offering is
oversubscribed. In determining which subscriptions to accept we may take into
account any factors we consider relevant, including:
- the order in which subscriptions are received,
- a subscriber's potential to do business with or to direct
customers to First Capital Bank, and
- our desire to have a broad distribution of stock ownership.
If we reject any subscription, or accept a subscription but subsequently cancel
all or part of it, we will promptly refund the amount remitted for the portion
of the subscription rejected or canceled, with interest earned. We will issue
certificates for shares which have been subscribed, accepted and paid for
promptly upon the satisfaction of the offering conditions and release of the
escrowed funds.
CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS
Initially, we will place all subscription proceeds we receive in an
escrow account handled by an independent escrow agent. The escrow agent will
not release these funds and we will not issue any shares in the offering until
we meet all of the following conditions:
- We have accepted subscriptions and payment in full for a
minimum of 500,000 shares (which will result in gross
offering proceeds in excess of $5 million).
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<PAGE> 13
- We have obtained preliminary approval from the Office of
Thrift Supervision to acquire the stock of First Capital
Bank.
- The bank has received preliminary approval of its application
for a charter from the Office of Thrift Supervision.
If First Capital Bancshares terminates the offering prior to
satisfaction of these conditions or if the conditions are not satisfied prior
to the expiration of the offering, which would be December 31, 1999, at the
latest, then:
- We will cancel all subscription agreements and subscribers
will not receive shares or become shareholders of First
Capital Bancshares.
- The funds held in the escrow account will not be subject to
the claims of any creditor of First Capital Bancshares or
available to defray the expenses of this offering.
- We will return full amount of all subscription funds promptly
with interest earned.
The escrow agent has not investigated or passed upon the merits of an
investment in the shares. The escrow agent will invest subscription funds at
our direction in interest-bearing savings accounts, short-term United States
Treasury securities, FDIC-insured bank deposits, or such other investments as
we agree on with the escrow agent. We do not intend to invest the subscription
proceeds held in escrow in instruments that would mature after the expiration
date of the offering.
Even if the funds are released from escrow, if do not receive final
regulatory approval or do not open the bank for any other reason, we will
return your subscriptions in full, together with any interest actually earned
on the subscriptions while they were held in escrow. We will use the
investments by our founding shareholders to pay expenses and then liquidate the
company.
PLAN OF DISTRIBUTION
We have entered into an sales agency agreement with Banc Stock
Financial Services, Inc., a subsidiary of The Banc Stock Group, Inc. The sales
agent has agreed to use its best efforts to sell between 500,000 and 720,000
shares of common stock to the public at the offering price. The sales agent may
not sell any shares unless it can sell at least 500,000 shares. The sales agent
will receive a 2.5% commission on shares sold in the offering to the
organizers, a 6.5% commission on shares sold in the offering to certain
investors identified by the organizers (up to 200,000 shares), and a 7.0%
commission on other shares sold in the offering. The sales agent did not
receive any commission on the 30,000 shares purchased by the organizers prior
to the offering. First Capital will also pay the sales agent's expenses in the
offering, up to a maximum of $35,000, and its legal fees up to $25,000. The
sales agent may select to sell shares through other dealers who are members of
the National Association of Securities Dealers, Inc.
The sales agent has the right to terminate the sales agency agreement
under some circumstances, for example, if the sales agent believes that there
is not a favorable public market for the sale of the shares. If the sales agent
terminates the sales agency agreement, we may sell the shares ourselves through
our officers and directors, or we may engage one or more other broker/dealers.
We do not currently have arrangements with any other broker/dealers. Until we
have sold the minimum number of shares, we will promptly forward all funds we
receive from the sale of shares to the escrow agent.
The sales agency agreement provides for reciprocal indemnification
between us and the sales agent against certain liabilities in connection with
this offering, including liabilities under the securities laws. The SEC has
advised us that it believes that such indemnification is against public policy
and may be unenforceable. We have also granted the sales agent a right of first
refusal to serve as managing underwriter on any future financing or
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<PAGE> 14
to act as an adviser on any merger or similar transaction occurring within one
year after this offering. In any such transaction, we will agree on
compensation that is reasonable and customary within the industry.
MARKET FOR COMMON STOCK
As of the date of this prospectus, there is no public market for the
shares. Following the offering, we intend that the common stock be quoted on
the OTC Bulletin Board under the trading symbol "_____", and the sales agent
intends to act as a "market maker" in the common stock. However, we do not
anticipate that an active market will develop for the shares anytime soon.
Making a market in securities involves maintaining bid and ask quotations and
being able, as principal, to effect transactions in reasonable quantities at
those quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends on the
existence of an adequate number of willing buyers and sellers. We will have a
relatively small number of shareholders and shares outstanding and therefore
may not have an adequate number of buyers and sellers at any time. Based on our
discussions with the sales agent, we expect that a secondary market may
eventually develop for the shares, but we cannot be sure.
In general, if a secondary market does develop, the shares will be
freely transferable and assignable, and nonaffiliate shareholders may sell any
number of shares in such secondary market. Shareholders who are affiliates,
including officers, directors and 10% shareholders, will have certain
restrictions on their ability to resell shares imposed by the securities laws.
See "Description of the Capital Stock of First Capital Bancshares - Shares
Available for Future Sale" on page 34. In addition, we cannot assure you that
the market makers will continue to maintain the secondary market indefinitely.
This will depend on many factors, including those beyond our control such as
the volume of activity in the secondary market.
We have agreed with the sales agent not to sell any shares for a
period of six months after the date of this prospectus without the sales
agent's prior written consent. The sales agent anticipates that its affiliates
will purchase up to 9.9% of shares at the public offering price for their own
accounts.
USE OF PROCEEDS
The two tables on the next page summarize our anticipated use of the
funds, or proceeds, which we receive in this offering. These figures are
estimates and projections based on information currently available. Actual
numbers will vary, possibly quite a bit. We believe that the minimum proceeds
of $5 million from the offering will satisfy the cash requirements for the
first three years for both First Capital Bancshares and First Capital Bank, but
we cannot be sure. Because this is a new enterprise, we cannot predict our
future revenue or cash flow or whether it will be sufficient to sustain
continued operation. Therefore, we do not know how much money we will actually
spend or need. To date our expenses have been funded by the initial $300,000
investment of the organizers and by a line of credit with The Bankers Bank
guaranteed by the organizers.
USE OF FUNDS BY FIRST CAPITAL BANCSHARES
The following table shows the anticipated use of proceeds by First
Capital Bancshares based on the sale of the minimum number and maximum number
of shares in this offering. The investment in First Capital Bank will be $4.5
million plus 25% of the amount by which the net proceeds of the offering exceed
$4.5 million. Net proceeds are the proceeds of the offering less our sales
commissions and offering expenses.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
500,000 Shares 720,000 Shares
-------------- --------------
<S> <C> <C>
Gross proceeds from offering......................... 5,000,000 $ 7,200,000
Sales Agent's commission............................. (315,160) (469,160)
Expense of organizing First Capital Bancshares....... (23,000) (23,000)
Offering expenses.................................... (127,000) (127,000)
Investment in capital stock of First Capital Bank.... $ (4,500,000) $ (5,025,960)
------------ ------------
Remaining proceeds................................... $ 25,840 $ 1,434,340
============ ============
</TABLE>
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<PAGE> 15
BY FIRST CAPITAL BANK
The following table shows the anticipated use of proceeds by First
Capital Bank. All proceeds received by First Capital Bank will be in the form
of an investment by First Capital Bancshares in First Capital Bank's capital
stock. We have already purchased the bank site with a loan from The Bankers
Bank for $350,000. We will use proceeds of the offering to repay such loan.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
500,000 Shares 720,000 Shares
-------------- --------------
<S> <C> <C>
Investment from First Capital Bancshares.................. $ 4,500,000 $ 5,025,960
Organizational and pre-opening expenses of First Capital (300,000) (300,000)
Bank......................................................
Furniture, fixtures and equipment......................... (344,000) (344,000)
Purchase of temporary facilities.......................... (74,000) (74,000)
Purchase of bank site and offices......................... (350,000) (350,000)
Renovation of bank offices................................ $ (475,000) $ (475,000)
------------ -------------
Remaining proceeds...................................... $ 2,957,000 $ 3,482,960
============ =============
</TABLE>
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<PAGE> 16
CAPITALIZATION
The following table shows First Capital Bancshares' capitalization as
of December 31, 1998, and the pro forma consolidated capitalization of First
Capital Bancshares and First Capital Bank, as adjusted to give effect to the
sale of the minimum and maximum number of shares in this offering. The bank has
targeted the second quarter of 1999 for opening First Capital Bank. "Additional
paid-in capital" shown in the "As Adjusted" columns was calculated by
subtracting the estimated expenses of the offering, including sales agent
commissions, and legal, accounting, printing and other expenses. We estimate
these expenses to be approximately $442,160 in the minimum offering and
$596,160 in the maximum offering. The "Deficit accumulated in the pre-opening
stage" reflects actual expenses incurred through December 31, 1998, and the "As
Adjusted" columns reflect expenses estimated to be incurred to organize and
prepare to open First Capital Bancshares and First Capital Bank. Refer to "Use
of Proceeds" above for more information about these expenses. Please note that
you are likely to experience additional dilution due to operating losses
expected to be incurred during the initial years of First Capital Bank's
operations.
<TABLE>
<CAPTION>
As Adjusted As Adjusted
for For
Minimum Maximum
December 31, 1998 Offering Offering
----------------- -------- --------
<S> <C> <C> <C>
SHAREHOLDERS EQUITY:
Common Stock, par value $.01 per share; 10,000,000 shares
authorized; 30,000 shares issued and outstanding; 530,000 shares
issued and outstanding as adjusted (minimum offering); 750,000
shares issued and outstanding (maximum offering).................... 300 5,300 7,500
Preferred Stock, par value $.01 per share; 10,000,000 shares
authorized; no shares issued and outstanding........................ 0 0 0
Additional paid-in capital.......................................... 299,700 4,852,540 6,896,340
Deficit accumulated during the pre-opening stage....................
(163,490) (323,000) (323,000)
---------- ---------- -----------
Total shareholders' equity ...................................... $ 136,510 $4,534,840 $6,580,840
========== ========== ===========
</TABLE>
DIVIDEND POLICY
We do not expect to pay any dividends in the near term, and may never
pay dividends. Initially we plan to retain earnings and use them to operate and
expand the business. As First Capital Bancshares will initially act primarily
as a holding company for First Capital Bank and will not generate any
independent revenue, First Capital Bancshares' ability to pay dividends will
depend on receiving dividends from First Capital Bank. In order to pay
dividends to First Capital Bancshares, First Capital Bank must comply with the
requirements of all applicable laws and regulations. See "Supervision and
Regulation - Dividends" on page 25 and "Supervision and Regulation - Capital
Requirements" on page 23. In addition to the availability of funds from First
Capital Bank, the future dividend policy of First Capital Bancshares 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.
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<PAGE> 17
PROPOSED BUSINESS AND PLAN OF OPERATION
ORGANIZATION AND GENERAL OPERATION
We incorporated First Capital Bancshares as a South Carolina
corporation in June 1998, primarily to own and control all of the capital stock
of First Capital Bank. First Capital Bancshares initially will engage only in
the business of owning and managing First Capital Bank. As discussed below, we
have applied for a federal savings bank, or thrift, charter for the bank. As a
federally chartered savings bank, First Capital Bank will have general
authority to originate and purchase loans secured by real estate, secured or
unsecured loans for commercial, corporate, business, or agricultural purposes,
and loans for personal, family, or household purposes. We will emphasize retail
banking, home mortgages, real estate loans, and consumer lending needs. We will
not be permitted to make non-real estate commercial purpose loans that exceed
20% of the assets of the bank or non-real estate consumer purpose loans that
exceed 35% of the assets of the bank. While not restricted by law, we expect
initially to limit our lending activities primarily to Marlboro County and the
surrounding communities, including the neighboring towns of McColl, South
Carolina and Laurinburg, North Carolina.
The thrift charter will allow First Capital Bank to operate in all 50
states and to branch into any county in the state of South Carolina without any
additional regulatory approval. The thrift charter will also give First Capital
Bancshares more flexibility to pursue strategic opportunities to grow its
customer base and to create cross-selling opportunities to those same
customers.
We have chosen a holding company structure under which First Capital
Bancshares will own all of the capital stock of First Capital Bank. We believe
the holding company structure will provide flexibility that would not otherwise
be available to the bank alone, including the ability to acquire other
financial institutions and the ability to provide other non-banking services
such as insurance. We do not have any current plans to this effect.
REGULATORY APPROVALS REQUIRED TO OPEN THE BANK
We filed an application with the Office of Thrift Supervision on
August 4, 1998 to charter First Capital Bank as a federal savings bank. The
issuance of a charter will depend, among other things, upon compliance with
certain legal requirements that may be imposed by the Office of Thrift
Supervision, including capitalization of the bank with a minimum amount of
capital which we believe will be $4.5 million. Additionally, we must obtain the
approval of the Office of Thrift Supervision for First Capital Bancshares to
become a thrift holding company before acquiring the capital stock of First
Capital Bank. We also filed an application with the FDIC for deposit insurance
for the bank and obtained preliminary approval of this application on February
5, 1999. We expect to receive all other regulatory approvals by the second
quarter of 1999, but cannot be sure that we will receive approval by then, or
ever.
OFFICES, FACILITIES AND SERVICE AREA
Our office is currently located in a modular bank unit at 207 Highway
15/401 Bypass East, in Bennettsville, South Carolina, at the site of a former
Shoney's restaurant. We purchased this property for $350,000 March 1, 1999, with
a loan from The Bankers Bank for $335,000. This loan has a term of one year and
carries interest at the prime rate minus 1%. We intend to repay this loan from
the proceeds of the offering.
We will renovate the existing 5,200 square foot building for use as
our principal office and have budgeted $475,000 for that purpose. We intend to
commence construction in early 1999 and anticipate that the office will be
ready by October 1999. We have contracted with Spectrum Financial Systems, Inc.
to purchase the modular bank unit for approximately $100,000. Upon completion
of the office space, we will move the temporary unit six miles to McColl, South
Carolina to become our first branch. We are also considering opening a branch
in neighboring Laurinburg, North Carolina in the near future. We believe that
these facilities will adequately serve our needs for the first several years of
operation.
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<PAGE> 18
We expect initially to draw virtually all of our business from
Marlboro County and the surrounding areas in South Carolina. The county's
population had a slight drop in population from 29,361 in 1990 to 29,173 in
1997, making it the 32nd largest county in the state. Per capita income in the
county was $11,326 as of 1997.
MARKETING FOCUS
There are currently seven branches of financial institutions operating
in Marlboro County, none of which are locally owned. Most are local branches of
large regional banks. Although size gives the larger banks certain advantages
in competing for business from large corporations, including higher lending
limits and the ability to offer services in other areas of South Carolina and
the Marlboro County area, we believe that these banks cannot provide the
customer service and individual attention of a locally owned bank. We believe
this leaves a void in the market which we hope to fill. As a result, we
generally will not attempt to compete for the banking relationships of large
corporations, but will concentrate our efforts on building relationships with
small- to medium-sized businesses and on individuals.
We plan to emphasize our local ownership, community based nature, and
ability to provide more personalized service than our competition. Our
directors, as long-time residents and businessmen in the Marlboro County area,
have determined the credit needs of the area through personal experience and
communications with their business colleagues. We believe that the proposed
focus on the community is likely to succeed in the market and that the area
will react favorably to our emphasis on service to small businesses,
individuals, and professional concerns.
DEPOSITS
We intend to offer a full range of deposit services that are typically
available in most banks and savings and loan associations, including:
- checking accounts,
- commercial accounts,
- savings accounts, and
- other time deposits of various types, ranging from daily
money market accounts to longer-term certificates of deposit.
We will tailor accounts and time certificates to our principal market area at
rates competitive to those offered in the Marlboro County area. In addition, we
intend to offer certain retirement account services, such as IRAs. We will
solicit these accounts from individuals, businesses, associations,
organizations, and governmental authorities.
CAPITALIZATION AND EXPENSES
As of December 31, 1998, we had total assets of $145,510, consisting
of $103,293 in cash, an option on real estate valued at $15,000, and $27,217 in
prepaid organizational costs. We incurred a net loss of $163,490 for the period
from inception December 19, 1997 through December 31, 1998.
After we complete the offering and open the bank, we expect we will
have incurred the following expenses:
- $32,000 in expenses to organize First Capital Bancshares.
- $155,000 in expenses to organize First Capital Bank,
including legal fees for incorporation and legal and
consulting fees for obtaining regulatory approval.
- $145,000 in expenses to open First Capital Bank, including
salaries, overhead and other operating expenses.
- $127,000 in expenses of the offering.
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<PAGE> 19
All expenses will be charged against operating results, except expenses of the
offering which will be deducted from the funds received in the offering.
LENDING ACTIVITIES
General. We intend to offer a range of lending services, including
real estate, commercial and consumer loans. We will target individuals and
small- to medium-sized businesses and professional concerns that are located in
or conduct a substantial portion of their business in our market area. We will
initially emphasize retail banking, home mortgages, real estate, and consumer
lending needs. We will not be permitted to make non-real estate commercial
purpose loans that exceed 20% of the bank's assets or non-real estate consumer
purpose loans that exceed 35% of the bank's assets.
Real Estate Loans. We expect that loan secured by first or second
mortgages on real estate will make up a significant portion of the bank's loan
portfolio. These loans will generally fall into one of three categories:
commercial real estate loans, construction and development loans, or
residential real estate loans. Each of these categories is discussed in more
detail below, including their specific risks. Home equity loans are not
included because they are classified as consumer loans, which are discussed
below under a separate heading. Interest rates for all categories may be fixed
or adjustable, and will more likely be fixed for shorter term loans. The bank
will generally charge an origination fee for each loan.
The principal economic risk associated with real estate loans is the
creditworthiness of the borrowers. Other risks associated with real estate
loans vary with many economic factors, including employment levels, strength of
local and national economy and fluctuations in the value of real estate. We
will compete for these loans with competitors who are well established in the
Marlboro County area and have greater resources and lending limits. As a
result, we may have to charge lower interest rates to attract borrowers.
We will require a valid mortgage lien on all real property loans along
with a title lien policy which insures the validity and priority of the lien.
We will also require borrowers to obtain hazard insurance policies and flood
insurance if applicable.
We will have the ability to originate real estate loans for sale into
the secondary market. We may be able to limit our interest rate 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 Real Estate Loans. Commercial real estate loans will
generally have terms of five years or less, although payments may be structured
on a longer amortization basis. The primary risk associated with commercial
real estate loans include the general risk of the failure of each commercial
borrower, which will be different for each type of business and commercial
entity. We will evaluate each business on an individual basis and attempt to
determine its business risks and credit profile. We may or may not be
successful. We 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%. We will also generally require that debtor cash flow exceed 120% of
monthly debt service obligations. We will typically review of the personal
financial statements of the principal owners of each borrower and require their
personal guarantees. Such reviews generally reveal secondary sources of payment
and liquidity to support a loan request.
Construction and Development Real Estate Loans. We will offer
adjustable and fixed rate residential and commercial construction loans to
builders and developers and to consumers who wish to build their own homes. The
term of construction and development loans will generally be limited to one
year, although payments may be structured on a longer amortization basis. These
loans are generally interim loans and are refinanced as general commercial real
estate loans upon completion of the project or paid off on the sale of the
property. Construction and development loans generally carry a higher degree of
risk than long term financing of existing properties.
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<PAGE> 20
Repayment depends on the ultimate completion of the project and usually on the
sale of the property. Risks include:
- cost overruns,
- mismanaged construction,
- inferior or improper construction techniques,
- economic changes or downturns during construction,
- a downturn in the real estate market,
- rising interest rates which may prevent sale of the property,
and
- failure to sell completed projects in a timely manner.
We will attempt to reduce risk by obtaining personal guarantees where possible,
and by keeping the loan to value ratio of the completed project below specified
percentages. We may also reduce risk by selling participations in larger loans
to other institutions when possible.
Residential Real Estate Loans. Residential real estate loans will
generally have longer terms up to 30 years. We will offer fixed and adjustable
rate mortgages. Adjustable rate mortgages offer more protection against
interest rate fluctuation, but carry other risks because as interest rates
increase, the borrower's payments increase, increasing the risk of default.
Risks associated with residential real estate loans include:
- the inability to resell foreclosed real estate in a down
market or economy,
- shifts in the demographics of a given market from residential
zonings to commercial,
- displacement of individual borrowers due to corporate
downsizing/loss of income,
- loss of borrowers jobs due to an overall economic downturn or
an economic downturn in a specific industry, and
- drops in the real estate market in general.
We will attempt to limit risk by requiring loan to value ratios of 80% or
higher, co-signers when we believe it is necessary, and by generally assessing
the credit worthiness of each borrower on an individual basis.
Commercial Loans. We will make loans for commercial purposes in
various lines of businesses. Equipment loans will typically have a term of five
years or less at fixed or variable rates, be fully amortized over the term,
secured by the financed equipment, an have a loan-to-value ratio of 80% or
less. Working capital loans will typically have terms of one year or less and
will usually be secured by accounts receivable, inventory, or personal
guarantees of the principals of the business. Loans secured by accounts
receivable or inventory will typically require repayment 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 borrowers. The risks associated with commercial loans vary with many
economic factors, including the economy in the Marlboro County area. The risks
associated with commercial loans are generally higher than the risks associated
with residential or commercial real estate loans. The well-established banks in
the Marlboro County area will make proportionately more loans to medium- to
large-sized businesses than we will. Many of our anticipated commercial loans
will likely be made to small- to medium-sized businesses which may be less able
to withstand competitive, economic, and financial conditions than larger
borrowers.
Consumer Loans. We 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 will typically carry balances of less
than $25,000 and, in the case of non-revolving loans, will either be amortized
over a period of 48 months or structured as 90-day term loans. In each case
loans will have a fixed interest rate. 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 for first mortgage loans, 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 our borrowers, and the principal competitors for consumer loans will be the
established banks in the Marlboro County area.
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<PAGE> 21
Loan Approval and Review. The bank's loan approval policies will
provide for various levels of lending authority. Each officer will have an
individual lending limit. When the amount of aggregate loans to a single
borrower exceeds that individual officer's lending authority, we will escalate
the loan request for approval to an officer with a higher lending limit. We
anticipate that the lending limit of the chief executive officer of First
Capital Bank will initially be set at $100,000. We will establish an officers'
loan committee for loans which exceed the authorization of any individual
officer, and a director's loan committee for loans which exceed the lending
limit of the officer's committee. The bank will not be allowed to make any
loans to any of its directors, officers, or employees unless the loan is
approved by the bank's board of directors and has terms no more favorable than
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. 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 limits on the amount it can loan to any one borrower. Since the
enactment of the Financial Institution Reform Recovery and Enforcement Act in
1989, a savings association generally may not make loans to one borrower and
related entities in an amount which exceeds 15% of its unimpaired capital and
surplus, although loans in an amount equal to an additional 10% of unimpaired
capital and surplus may be made to a borrower if the loans are fully secured by
readily marketable securities. Unless the bank is able to sell participations
in its loans to other financial institutions, the bank will not be able to meet
all of the lending needs of loan customers requiring aggregate extensions of
credit above these limits. We do not anticipate that the bank will have an
initial loan loss reserve when it commences operations.
OTHER BANKING SERVICES
We anticipate that the bank will provide other bank services
including:
- cash management services,
- safe deposit boxes,
- travelers checks,
- direct deposit of payroll,
- social security checks, and
- automatic drafts for various accounts.
We plan to become associated with a shared network of automated teller
machines that our customers may use throughout Marlboro County and other
regions. We believe that an association with a shared ATM network will enable
us to better serve our customers and attract customers who are accustomed to
the convenience of ATMs. We do not believe that maintaining this association
will be critical to our success. We intend to begin offering these services
shortly after we open the bank. We also plan to offer MasterCard and VISA
credit card services through a correspondent bank as agent. We do not expect
the bank to exercise trust powers during its initial years of operation.
COMPETITION
The banking business is highly competitive. The bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, and money market mutual funds operating in the
Marlboro County area and elsewhere. In 1997, there were more than seven
branches of financial institutions operating in Marlboro County, holding over
$154,163,000 in deposits. These include branches of Wachovia, First Citizens
Bank, Carolina First Bank, and Carolina Bank & Trust. A number of these
competitors are well established in the Marlboro County area and throughout the
state. Most of them have substantially greater resources and lending limits and
offer certain services, such as extensive and established branch networks and
trust services, that the we do not expect to provide or do not expect to
provide initially. As a result of these competitive factors, the bank may have
to pay higher rates of interest to attract deposits.
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<PAGE> 22
EMPLOYEES
We anticipate that, upon opening, the bank will have approximately 10
full-time employees in the modular unit. We estimate that we will increase the
number of employees to 14 once the bank moves into its permanent facilities.
First Capital Bancshares will not have any employees other than its officers.
LEGAL PROCEEDINGS
Neither First Capital Bancshares nor First Capital Bank or any of
their properties are subject to any material legal proceedings.
YEAR 2000 CONCERNS
Like many financial institutions, we will rely upon computers for the
daily conduct of our business and for information systems processing. There is
concern among industry experts that on January 1, 2000, computers will be
unable to "read" the new year and there may be widespread computer
malfunctions. We will be generally relying on software and hardware developed
by independent third parties for our information systems.
We have entered into an agreement with Fiserv Solutions, Inc. to
provide our hardware and software, and to perform all overnight processing and
reconciliation of our daily transaction data. We have received and reviewed
Fiserv's Year 2000 test results. Based on such review we do not believe that
the Fiserv system has any material Year 2000 issues. Our agreements with Fiserv
include warranties that their system is Year 2000 compliant in all respects,
although the remedies available under such agreements are limited and
specifically exclude special, incidental, indirect, and consequential damages.
We will require all other vendors to provide similar warranties
regarding Year 2000 compliance. We believe that the information systems and
software we have agreed to acquire, and the network connections we will
maintain, will be programmed to comply with Year 2000 requirements. However,
there is a risk that they will not. Based on information currently available,
we believe that we will not incur any significant expenses in connection with
the Year 2000 issue. We have hired our accountants to assist us in developing a
Year 2000 contingency plan if Fiserv or any of our other vendors encounter
material problems related to the Year 2000. However, we cannot be sure that
such plan will mitigate any losses we might have or resolve Year 2000 issues
which may arise.
We may also incur losses if our loan customers encounter Year 2000
problems which would prevent them from repaying loans. We intend to require
certification from each commercial borrower that their systems are Year 2000
compliant and that they do not expect to be adversely affected by the year
change. Although these certifications will be helpful, it would be very
difficult for us to accurately assess the Year 2000 readiness of any borrower.
We may therefore suffer loan losses from customers who have significant Year
2000 problems.
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<PAGE> 23
SUPERVISION AND REGULATION
First Capital Bancshares and First Capital Bank are subject to state
and federal banking laws and regulations which impose requirements and
restrictions on virtually all aspects of operations. These regulations also
provide for regulatory oversight of the bank and its operations. These laws and
regulations are generally intended to protect depositors, not shareholders. The
following summary briefly describes certain statutory and regulatory
provisions. These regulations are very complex and we refer you to the
particular statutory and regulatory provisions for a thorough understanding.
Changes in applicable laws or regulations may have a material effect on our
business and prospects. With the enactment of the Financial Institution Report
Recovery and Enforcement Act in 1989 and the FDIC Improvement Act in 1991,
numerous additional regulatory requirements have been placed on the banking
industry in the past several years, and additional changes have been proposed.
The banking industry is also likely to change significantly as a result of the
passage of the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994. We cannot predict the nature or the extent of the effect on our business
and earnings of fiscal or monetary policies, economic controls, or new federal
or state legislation.
SUPERVISION OF FIRST CAPITAL BANCSHARES
We will be a registered holding company under the Savings and Loan
Holding Company Act set forth in Section 10 of the Home Owners Loan Act of
1933. We will be regulated under such acts by the Office of Thrift Supervision.
As a savings and loan holding company, First Capital Bancshares will be
required to file an annual report with the Office of Thrift Supervision and
such additional information as they may require from time to time. The Office
of Thrift Supervision will also conduct periodic examinations of First Capital
Bancshares and each of its subsidiaries, including First Capital Bank.
As a savings and loan holding company owning only one savings
institution, First Capital Bancshares will generally be allowed to engage and
invest in a broad range of business activities not permitted to commercial bank
holding companies or multiple savings and loans holding companies, provided
that First Capital Bank continues to qualify as a "qualified thrift lender."
See "Qualified Thrift Lender Requirements" on page 25.
The Savings and Loan Holding Company Act will prohibit First Capital
Bancshares from acquiring control of another savings association or another
savings and loan holding company without prior approval from the Office of
Thrift Supervision. However, savings and loan holding companies are allowed to
acquire or to retain as much as 5% of the voting shares of another savings
institution or savings and loan holding company without regulatory approval.
The Office of Thrift Supervision may not approve an acquisition that
would result in the formation of certain types of interstate holding company
networks. For instance, the Office of Thrift Supervision may not approve an
acquisition that would result in the formation of multiple holding companies
controlling institutions in more than one state unless each acquisition in each
additional state is authorized under Section 13(k) of the Federal Deposit
Insurance Act or by the statutes of each state in which the target institutions
are located.
SUPERVISION OF FIRST CAPITAL BANK
General. Subject to receipt of the necessary approvals of its pending
applications, First Capital Bank will operate as a federal savings bank
incorporated under the laws of the United States. It will be subject to
periodic examination by the Office of Thrift Supervision. The Office of Thrift
Supervision will regulate or monitor virtually all areas of First Capital
Bank's operations, including:
- security devices and procedures,
- adequacy of capitalization and loss reserves,
- loans,
- investments,
- borrowings,
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<PAGE> 24
- 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 Office of Thrift Supervision will require First Capital Bank to
maintain certain capital ratios and will impose limitations on the bank's
aggregate investment in real estate, bank premises, and furniture and fixtures.
The Office of Thrift Supervision will require the bank to prepare quarterly
reports on its financial condition and to conduct an annual audit of its
financial affairs in compliance with their minimum standards and procedures.
Office of Thrift Supervision regulations generally provides that each federal
savings bank must be examined at least every 18 months. The bank is also
subject to assessments by the Office of Thrift Supervision to cover the costs
of such examinations.
As a federally-chartered savings institution, First Capital Bank
generally will not be subject to the provisions of South Carolina law governing
state chartered financial institutions or to the jurisdiction of the South
Carolina Board which governs banking.
Various state usury laws will apply to loans made by the bank,
generally depending on the state where each borrower is located. South Carolina
law establishes a ceiling of 6% on interest rates except in transactions
involving written agreements which may establish any interest rate.
As a subsidiary of a savings and loan holding company, First Capital
Bank will be subject to certain restrictions imposed by the Federal Reserve Act
on extensions of credit to First Capital Bancshares or any of its subsidiaries,
on investments in the stock or other securities of First Capital Bancshares,
and on taking any stock or securities of First Capital Bancshares as collateral
for any loan. In addition, First Capital Bancshares and First Capital Bank will
be prohibited from engaging in tying arrangements in connection with extensions
of credit or provision of any property or services.
Capital Requirements. Office of Thrift Supervision regulations will
require that First Capital Bank maintain:
"Tangible capital" in an amount of not less than 1.5% of total assets.
"Tangible capital" generally is defined as:
- core capital
- less intangible assets and investments in certain
subsidiaries
- excluding purchased mortgage servicing rights.
"Core capital" in an amount not less than 3.0% of total assets. "Core capital"
generally includes:
- common stockholders' equity,
- noncumulative perpetual preferred stock and related surplus,
- minority interests in the equity accounts of consolidated
subsidiaries less unidentifiable intangible assets (other
than certain amounts of supervisory goodwill)
- certain investments in certain subsidiaries, and
- 90% of the fair market value of readily marketable purchased
mortgage servicing rights and purchased credit card
relationships.
23
<PAGE> 25
"Risk-based capital" equal to 8.0% of "risk-weighted assets". In determining
total risk-weighted assets for purposes of the risk-based requirement:
- each off-balance sheet asset must be converted to its
on-balance sheet credit equivalent amount by multiplying the
face amount of each such item by a credit conversion factor
ranging from 0% to 100% (depending upon the nature of the
asset);
- the credit equivalent amount of each off-balance sheet asset
and each on-balance sheet asset must be multiplied by a risk
factor ranging from 0% to 200% (again depending upon the
nature of the asset); and
- the resulting amounts are added together and constitute total
risk-weighted assets.
"Total capital" - risk-based capital requirement equals the sum of core capital
plus supplementary capital (which, as defined, includes the sum of, among other
items, perpetual preferred stock not counted as core capital, limited life
preferred stock, subordinated debt, and general loan and lease loss allowances
up to 1.25% of risk-weighted assets) less certain deductions. The amount of
supplementary capital that may be counted towards satisfaction of the total
capital requirement may not exceed 100% of core capital, and Office of Thrift
Supervision regulations require the maintenance of a minimum ratio of core
capital to total risk-weighted assets of 4%.
Office of Thrift Supervision regulations also include an interest-rate
risk component in the risk-based capital requirement. Under this regulation, an
institution is considered to have excess interest rate-risk if, based upon a
200-basis point change in market interest rates, the market value of an
institution's capital changes by more than 2%. The Office of Thrift Supervision
risk-based capital standards also provide for concentration of credit risk,
risk from nontraditional activities and actual performance, and expected risk
of loss on multi-family mortgages.
The Office of Thrift Supervision may impose capital requirements which
are higher than the generally applicable minimum requirement if it determines
that our capital is or may become inadequate.
Deposit Insurance. Deposits at First Capital Bank are insured by the
FDIC up to $100,000 for each insured depositor. The FDIC establishes rates for
the payment of premiums by federally insured commercial banks and savings
banks, or thrifts, for deposit insurance. The FDIC maintains a separate Bank
Insurance Fund for banks and Savings Association Insurance Fund for savings
banks and thrifts. Insurance premiums are charged to financial institutions in
each category and are used to offset losses from insurance payouts when banks
and thrifts fail. Since 1993, insured banks and thrifts have paid for deposit
insurance under a risk-based premium system, with higher risk institutions
paying higher premiums. Risk is determined by each institution's federal
regulator on a semi-annual basis and based on its capital reserves and other
factors. Until mid-1995 deposit institutions paid the Bank Insurance Fund or
Savings Association Insurance Fund from $0.23 to $0.31 per $100 of insured
deposits depending on its risk profile. Once the Bank Insurance Fund reached
its legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for
well-capitalized banks, eventually to $.00 per $100, with a minimum semiannual
assessment of $1,000. Most recently Congress enacted the Deposit Insurance
Funds Act of 1996, which eliminated even the minimum assessment. It also
separated the Financial Corporation (FICO) assessment to service the interest
on its bond obligations. The amount assessed on individual institutions by FICO
is in addition to the amount paid for deposit insurance according to the
risk-related assessment rate schedule. Increases in deposit insurance premiums
or changes in risk classification will increase First Capital Bank's cost of
funds, and we cannot be sure that we can pass such cost on to our customers.
As an insurer, the FDIC issues regulations, conducts examinations and
generally supervises the operations of its insured institutions. The FDIC has
the power to sanction any insured institution which does not operate in
accordance with or conform to FDIC regulations, policies and directives. The
FDIC may suspend or terminate deposit insurance if it finds that an institution
has engaged in unsafe or unsound practices, is operating in an unsafe or
unsound condition, or has violated any applicable law, regulation, rule, order,
or condition imposed by the FDIC. The FDIC continues to insure deposits for two
years following termination. The FDIC requires an annual audit by independent
accountants and also periodically makes its own examinations of insured
institutions.
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<PAGE> 26
In addition to deposit insurance premiums, First Capital Bank as a
savings institution must bear a portion of the administrative costs of the
Office of Thrift Supervision through an assessment based on its total assets
and based on whether it is classified as a troubled or nontroubled savings
institutions. Additionally, the Office of Thrift Supervision assesses fees for
the processing of various applications.
Transactions With Affiliates and Insiders. The bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which place limits on
transactions with officers, directors, large shareholders, subsidiaries and
other insiders on the amount of loans or credit to and investments in such
persons. They also limit the amount of advances to third parties collateralized
by the securities or obligations of such persons. The aggregate of all covered
transactions is limited in amount, as to any one affiliate, to 10% of a bank's
capital and surplus and, as to all affiliates combined, to 20% of a bank's
capital and surplus. Furthermore, within the foregoing limitations as to
amount, each covered transaction must meet specified collateral requirements.
We must also comply with certain provisions designed to prevent us from taking
low quality assets.
First Capital Bank will also be subject to the provisions of Section
23B of the Federal Reserve Act which, among other things, prohibits an
institution from engaging in transactions with affiliates unless the
transactions are on substantially on the same terms, or at least as favorable
to such institution, 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
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 must not involve more than the normal risk of repayment or
present other unfavorable features.
Dividends. The bank will be subject to regulatory restrictions on the
payment of dividends, including a prohibition on payment of dividends from its
capital. All dividends may only be paid out of the bank's currently available
profits less expenses, including losses and bad debts. The bank must notify the
Office of Thrift Supervision prior to the payment of any dividends. In
addition, under the FDIC Improvement Act, the bank may not pay a dividend if it
would cause the bank to become undercapitalized.
Branching. Because we will be a federal savings bank, we will not have
any regulatory restrictions on our ability to branch within or outside the
State of South Carolina, except that we must first obtain the approval of the
Office of Thrift Supervision.
Community Reinvestment Act. The Community Reinvestment Act requires
the Office of Thrift Supervision to evaluate our record of meeting the credit
needs of our local community, including low and moderate income neighborhoods.
The Office of Thrift supervision must also consider these factors when it
evaluates mergers, acquisitions, and applications to open a branch or facility.
Failure to meet these standards could result in restrictions on our operations.
Liquidity. Under applicable federal regulations, we will be required
to maintain an average daily balance of liquid assets equal to a monthly
average of not less than a specified percentage of the average daily balance of
the savings association's net withdrawable deposits plus short-term borrowings.
Liquid assets include cash, certain time deposits, certain bankers'
acceptances, certain corporate debt securities and highly rated commercial
paper, securities of certain mutual funds and specified United States
government, state or federal agency obligations. Under HOLA, this liquidity
requirement may be changed from time to time by the Office of Thrift
Supervision to any amount from 4% to 10% depending upon economic conditions and
the deposit flows of member institutions. The current number is 5%. We will
also be required to maintain an average daily balance of short-term liquid
assets at a specified percentage (currently 1%) of the total of the average
daily balance of its net withdrawable deposits and short-term borrowings.
Equity Investments. The Office of Thrift Supervision has revised its
risk-based capital regulations to modify the treatment of certain equity
investments and to clarify the treatment of other equity investments. They will
no longer deduct permissible equity investments from our calculations of total
capital over a five-year period. Instead, permissible equity investments will
be placed in the 100% risk-weight category, mirroring the capital
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<PAGE> 27
treatment prescribed for those investments when made by national banks under
the regulations of the Office of the Comptroller of the Currency. Equity
investments held by savings associations that are not permissible for national
banks must still be deducted from assets and total capital.
Qualified Thrift Lender Requirement. We will qualify as a "qualified
thrift lender" as long as our "qualified thrift investments" equal or exceed
65% of our "portfolio assets" on a monthly average basis in 9 out of every 12
months. Qualified thrift investments generally consist of various housing
related loans and investments such as residential construction and mortgage
loans, home improvement loans, mobile home loans, home equity loans and
mortgage-backed securities, certain obligations of the FDIC, and shares of
stock issued by any Federal Home Loan Board, the FHLMC or the FNMA. Qualified
thrift investments also include certain other specified investments, subject to
a percentage of portfolio assets limitation. For purposes of the qualified
thrift lender test, the term "portfolio assets" means the savings institution's
total assets minus goodwill and other intangible assets, the value of property
used by the savings institution to conduct its business, and liquid assets held
by the savings institution in an amount up to 20% of its total assets.
Office of Thrift Supervision regulations provide that any savings
association that fails to meet the definition of a qualified thrift lender must
either convert to a national bank charter or limit its future investments and
activities (including branching and payments of dividends) to those permitted
for both savings associations and national banks. Further, within one year of
the loss of qualified thrift lender status, a holding company of a savings
association that does not convert to a bank charter must register as a bank
holding company and will be subject to all statutes applicable to bank holding
companies. In order to exercise the powers granted to federally chartered
savings associations and maintain full access to Federal Home Loan Board
advances, First Capital Bank must meet the definition of a qualified thrift
lender.
Loans to One Borrower Limitations. The Home Owners Loan Act will
generally require that we comply with the limitations on loans to a single
borrower applicable to national banks. National banks generally may make loans
to a single borrower in amounts up to 15% of their unimpaired capital and
surplus, plus an additional 10% of capital and surplus for loans secured by
readily marketable collateral. The Home Owners Loan Act provides exceptions
under which a savings association may make loans to one borrower in excess of
the generally applicable national bank limits. A savings association may make
loans to one borrower in excess of such limits under one of the following
circumstances: for any purpose, in any amount less than to exceed $500,000; or
to develop domestic residential housing units, in an amount less than the
lesser of $30 million or 30% of the savings association's unimpaired capital
and unimpaired surplus, provided other conditions are satisfied. We anticipate
that First Capital Bank's lending limit would be approximately $500,000.
Commercial Real Property Loans. The Home Owners Loan Act limits the
aggregate amount of commercial real estate loans that a federal savings
association may make to an amount not in excess of 400% of the savings
association's capital.
Elimination of Federal Savings Association Charter. In 1998, Congress
considered legislation that would eliminate the federal savings association
charter. Although such legislation did not pass, similar legislation may be
proposed again in 1999. If such legislation is enacted, First Capital Bank
would be required to convert its federal savings bank charter to either a
national bank charter or to a state depository institution charter. Such
conversion could prevent First Capital Bank from opening or operating any
branches in another state, including the branch planned for North Carolina. If
First Capital Bank opens a branch in North Carolina prior to such legislation,
it may or may not be allowed to continue to operate in North Carolina,
depending on the provisions of such legislation. Various legislative proposals
may also result in the restructuring of federal regulatory oversight,
including, for example, consolidation of the Office of Thrift Supervision into
another agency, or creation of a new Federal banking agency to replace the
various agencies which presently exist. We cannot predict whether such
legislation will be enacted or what the effect of such legislation might be.
Federal Home Loan Bank System. The Federal Home Loan Board System
consists of 12 regional Federal Home Loan Boards, each subject to supervision
and regulation by the Federal Housing Finance Board. The Federal Home Loan
Boards provide a central credit facility for member savings associations. The
maximum
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<PAGE> 28
amount that the Federal Home Loan Board of Atlanta will advance fluctuates from
time to time in accordance with changes in policies of the Federal Home Finance
Board and the Federal Home Loan Board of Atlanta. Borrowings from any other
source will generally reduce the maximum amount. In addition, the amount of
Federal Home Loan Board advances becomes restricted if an institution fails to
qualify as a qualified lender.
Federal Reserve System. The Federal Reserve Board has adopted
regulations that require savings associations to maintain nonearning reserves
against their transaction accounts, primarily NOW and regular checking
accounts. These reserves may be used to satisfy liquidity requirements imposed
by the Office of Thrift Supervision. Because required reserves must be
maintained in the form of cash or a non-interest-bearing account at a Federal
Reserve Bank, this reserve requirement will reduce the amount of the bank's
interest-earning assets.
Savings institutions also have the authority to borrow from the
Federal Reserve "discount window." Federal Reserve Board regulations, however,
require savings associations to exhaust all Federal Home Loan Board sources
before borrowing from a Federal Reserve bank.
Other Regulations. Interest and certain other charges collected or
contracted for by First Capital 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,
including the following:
- the federal Truth-In-Lending Act, governing disclosures of
credit terms to consumer borrowers;
- the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution
will be fulfilling its obligation to help meet the housing
needs of the community it serves;
- the Equal Credit Opportunity Act, prohibiting discrimination
on the basis of race, creed or other prohibited factors in
extending credit;
- the Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
- the Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
- the rules and regulations of the various federal agencies
charged with the responsibility of implementing such federal
laws.
The deposit operations of First Capital Bank are also subject to
- the Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative
subpoenas of financial records, and
- the Electronic Funds Transfer Act and Regulation E issued by
the Federal Reserve Board to implement that act, which
governs automatic deposits to and withdrawals from deposit
accounts and customers' rights and liabilities arising from
the use of automated teller machines and other electronic
banking services.
Enforcement Powers. The Financial Institution Report Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties". Institution-affiliated parties
primarily include management, employees, and agents of a financial institution,
as well as independent contractors such as attorneys and accountants and others
who participate in the conduct of the financial institution's affairs. These
practices can include the failure of an institution to timely file required
reports or the filing of false or misleading information or the submission of
inaccurate reports. Civil penalties may be as high as $1,000,000 a day for such
violations. Criminal penalties for some financial institution crimes have been
increased to twenty years. In addition, regulators have greater flexibility to
commence enforcement actions against institutions and institution-affiliated
parties. Possible enforcement actions include the termination of deposit
insurance. Furthermore, the Financial Institution Report Recovery and
Enforcement Act expanded the appropriate banking agencies' power to issue
cease-and-desist orders that may, among other things, require affirmative
action to correct any harm resulting
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<PAGE> 29
from a violation or practice, including restitution, reimbursement,
indemnifications or guarantees against loss. The banking agencies may also
order a financial institution to restrict its growth, dispose of certain
assets, rescind agreements or contracts, or take other actions as such agency
determines are appropriate.
RECENT LEGISLATIVE DEVELOPMENTS
From time to time, various bills are introduced in the United States
Congress with respect to the regulation of financial institutions. Certain of
these proposals, if adopted, could significantly change the regulation of banks
and the financial services industry. We cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect
First Capital Bancshares or first Capital Bank.
EFFECT OF GOVERNMENTAL MONETARY POLICIES
Our earnings will be affected by domestic economic conditions and the
monetary and fiscal policies of the United States government and its agencies.
The Federal Reserve Board's monetary policies have had, and will likely
continue to have, an important impact on the operating results of commercial
banks through its power to implement national monetary policy in order, among
other things, to curb inflation or combat a recession. The monetary policies of
the Federal Reserve Board have major effects upon the levels of bank loans,
investments and deposits through its open market operations in United States
government securities and through its regulation of the discount rate on
borrowings of member banks and the reserve requirements against member bank
deposits. It is not possible to predict the nature or impact of future changes
in monetary and fiscal policies.
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MANAGEMENT
GENERAL
The following table shows the number and percentage of outstanding
shares of common stock beneficially owned as of the date of this prospectus by
the organizers of First Capital Bancshares. Beneficial ownership of common
stock is based upon "beneficial ownership" concepts set forth in rules of the
SEC under Section 13(d) of the Securities Exchange Act of 1934. Under these
rules a person is a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or direct the voting of
each security, or "investment power," which includes the power to dispose or to
direct the disposition of such security. A person is also a beneficial owner of
any security of which that person has the right to acquire beneficial ownership
within 60 days, including, without limitation, shares of common stock subject
to currently exercisable options. Under the rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he has no beneficial
interest. For instance, beneficial ownership includes spouses, minor children,
and other relatives residing in the same household, and trusts, partnerships,
corporations or deferred compensation plans which are affiliated with the
principal. This table also reflects the anticipated purchases by the organizers
in the offering. The organizers purchased shares prior to the offering at a
price of $10.00 per share, the same price at which shares are being offered to
the public.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES ANTICIPATED TO BE OWNED FOLLOWING
PRIOR TO THE OFFERING THE OFFERING
------------------------- ----------------------------------------
PERCENTAGE OF PERCENTAGE
MINIMUM OF MAXIMUM
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE NUMBER OFFERING OFFERING
- ------------------------ ------ ---------- ------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Shoukath Ansari, M.D 4,000 13.3% 12,500 2.36% 1.67%
Wylie F. Cartrette 4,000 13.3% 10,000 1.89% 1.33%
James Aubrey Crosland* 4,000 13.3% 10,000 1.89% 1.33%
Robert G. Dowdy 1,600 5.3% 10,000 1.89% 1.33%
Harry L. Howell, Jr 4,200 14.0% 12,700 2.40% 1.69%
Luther D. Hutchins 4,000 13.3% 10,000 1.89% 1.33%
Paul F. Rush, M.D 4,200 14.0% 10,000 1.89% 1.33%
Lee C. Shortt 4,000 13.3% 10,000 1.89% 1.33%
Total 30,000 100% 85,200 16.10% 11.34%
</TABLE>
* These numbers do not reflect options to be granted to Mr. Crosland under
the terms of his employment agreement to purchase up to 8,000 shares of
common stock.
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<PAGE> 31
EXECUTIVE OFFICERS AND DIRECTORS OF FIRST CAPITAL BANCSHARES
Below we provide information about our officers and directors as of
the date of this prospectus. Our articles of incorporation provide for a
classified board of directors, so that, as nearly as possible, one-third of the
directors are elected each year to serve three-year terms. The terms of office
of the classes of directors expire as follows: Class I at the 1999 annual
meeting of shareholders, Class II at the 2000 annual meeting of shareholders,
and Class III at the 2001 annual meeting of shareholders. Executive officers of
First Capital Bancshares serve at the discretion of First Capital Bancshares's
board of directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH FIRST CAPITAL BANCSHARES
- ---- --- --------------------------------------
<S> <C> <C>
Shoukath Ansari, M.D 50 Director, Class I
Wylie F. Cartrette 45 Director, Class II
James Aubrey Crosland, Sr 48 Director, Class III, President
Robert G. Dowdy 37 Director, Class I
John M. Digby 52 Chief Financial Officer
Harry L. Howell, Jr 29 Director, Class II
Luther D. Hutchins 38 Director, Class III
J. Randy McDonald 51 Chief Executive Officer, First Capital Bank
Paul F. Rush, M.D. 43 Director, Class I
Lee C. Shortt 55 Director, Class II, Chief Executive Officer, First
Capital Bancshares
</TABLE>
Shoukath Ansari, M.D., Class I director, has been the president and a
physician of Marlboro Gastroenterology Association, P.A. in Bennettsville,
South Carolina since 1983. He served as chief of staff of Marlboro Park
Hospital. He graduated in 1964 from SRI Parama Kalyani College in Alwarkurichi,
Tamilnadu, India and earned an M.D. degree from Tirunelveli Medical College in
Tirunelveli, Tamilnadu, India in 1971. He is a certified internist and
gastroenterologist and has practiced gastroenterology for approximately 18
years, having opened his own practice in 1983. Dr. Ansari was born in 1948 in
India and has been a resident and citizen of the United States since 1981.
Wylie F. Cartrette, Class II director, is currently a resident in
McColl, South Carolina. Since 1986, he has been the owner and operator of Wylie
Enterprises in McColl, South Carolina, a laundry and coin operated machine
business, and he has also handled some real estate rentals. Mr. Cartrette is a
member of the Masonic lodge of McColl. Mr. Cartrette holds a South Carolina
constable's commission, and is a former member of the McColl City Council. He
was born in 1953 in Laurinburg, North Carolina.
James Aubrey Crosland, Sr., class III director, is the president of
First Capital and will be the president of First Capital Bank. Mr. Crosland, a
native of Bennettsville, South Carolina, received a B.A. degree from Pembroke
State University in 1972. He is also a graduate of both the South Carolina
Bankers School at the University of South Carolina and Louisiana State
University's Graduate School of Banking. From May 1997 until he joined First
Capital Bancshares in June 1998, Mr. Crosland served as the financial manager
for Marlboro Constructors, Inc. From August 1993 through May 1997, he served as
the Pee Dee Area executive for Carolina First Bank, where he was responsible
for Carolina First branches located in Bennettsville, McColl, and Lake City,
South Carolina. From 1988 until 1993, Mr. Crosland was the community banking
director of NationsBank in Florence, South Carolina, from 1984 until 1988, he
was the city executive of Carolina Bank & Trust in Bennettsville, and from 1977
to 1984 he served as an operations officer and commercial lender for First
National Bank of South Carolina in Bennettsville. Mr. Crosland began his
banking career with Wachovia Bank, serving as a credit manager in Wachovia's
Laurinburg, North Carolina office from 1973 to 1977. Mr. Crosland is a member
of Saint Paul's Episcopal Church in Bennettsville and the Bennettsville Rotary
Club. He was also the chairman of the Marlboro County Department of Social
Services and a board member of the Marlboro County Chamber of Commerce. Mr.
Crosland was born in 1950 in Bennettsville, South Carolina.
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<PAGE> 32
John M. Digby will serve as the Chief Financial Officer for First
Capital Bancshares and First Capital Bank. He graduated from Georgia College in
Milledgeville, Georgia in 1970, and he received his certificates from the
Georgia Banker's School in 1984 and from the Georgia Banker's Commercial
Lending School in 1987. Mr. Digby has ten years of experience as a chief
financial officer from his employment with a community bank in Georgia. He also
served as the chief financial officer for Clemson Bank & Trust, a start-up de
novo bank, in Clemson, South Carolina, from 1995 to 1997. Mr. Digby recently
served as vice president for Community Capital Corporation in Greenwood, South
Carolina. Mr. Digby was born in 1946 in Hawkinsville, Georgia.
Robert G. Dowdy, Class I director, graduated with a Pre-Pharmacy
degree from Francis Marion University in 1982. He then graduated from the
Medical University of South Carolina with a B.S. in Pharmacy in 1985. Mr. Dowdy
obtained his license as a registered pharmacist in 1985 from the South Carolina
Board of Pharmacy. He served as the director of pharmacy at Marlboro Park
Hospital from 1986 to December 1994 when he left to work as director of
pharmacy for Grim-Smith Hospital in Missouri from 1994 to April 1996. Mr. Dowdy
moved back to Marlboro Park Hospital in April 1996 and is currently director of
pharmacy. He was born in 1961 in Bennettsville, South Carolina.
Harry L. Howell, Jr., Class II director, graduated from Flora McDonald
Academy in North Carolina in 1987. He is majority owner and has served as
president of Scotland Motors, Inc. in Laurinburg, North Carolina since December
1984. Mr. Howell owns Scotland Leasing & Rental, Inc., an auto rental business
as well as Lee Howell, Inc., a real estate rental business in Laurinburg. Mr.
Howell is a member of the First Baptist Church in Laurinburg. He was born in
1969 in Laurinburg, North Carolina.
Luther D. Hutchins, Class III director, graduated from Bennettsville
High School in 1979 and attended Wake Forest University in North Carolina. Mr.
Hutchins has been the sole owner of Marlboro Appliance Center and Marlboro Frame
Shoppe. He also owns a farm and a farm implement services company. Mr. Hutchins
was born in 1960 in Winston-Salem, North Carolina.
J. Randy McDonald will be the chief executive officer of First Capital
Bank. Mr. McDonald has been in banking since 1979. He most recently served as
the loan and asset management officer of The Citizens Bank and as the city
executive of the Lake City, South Carolina office of Carolina First Bank. Mr.
McDonald has also served as the office manager of the Florence, South Carolina
office of Southern National Bank and the vice president and city executive of
the Lake City, South Carolina office of Security Federal Savings Bank. Mr.
McDonald was a director of the Lake City Tobacco Festival, the Lake City
Chamber, the Florence County Progress Committee, and Florence County Economic
Development. He was born in 1947 in Lake City, South Carolina.
Paul F. Rush, M.D., Class I director, graduated with a B.S. in Biology
from Presbyterian College in South Carolina in 1978. He received his M.D. from
the University of South Carolina School of Medicine in 1982 and received his
physician's license from the state of North Carolina in 1982 and from the State
of South Carolina in 1987. Dr. Rush has held the position of senior physician at
Scotland Orthopedic, P.A. in Laurinburg, South Carolina, since August 1987. He
has been a 25% owner of Scotland Orthopedic, P.A. since 1987, as well as
Scotland Orthopedic Properties since 1989. Dr. Rush served as an advisory board
member of BB&T in Laurinburg from 1989 to May 1998, is the chairman of the
Scotland County Board of Education, serves on the board of trustees of Scotland
Memorial Hospital, and the board of trustees of Scotia Village. Dr. Rush is also
a fellow of the American Academy of Orthopedic Surgeons and a member of the
First United Methodist Church in Laurinburg, North Carolina. Dr. Rush was born
in 1956 in Charleston, South Carolina.
Lee C. Shortt, Class II director, is the chairman and chief executive
officer of First Capital Bancshares. Mr. Shortt has been in the auction business
since 1975 and has served as president and owner of Shortt Auction and Realty
Co., Inc. since 1976. Mr. Shortt holds real estate brokers licenses and
auctioneer licenses in each of South Carolina, North Carolina, and Virginia. He
is a member of the Bennettsville Rotary Club. Mr. Shortt was born in 1943 in
Pitsylvania County, Virginia.
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<PAGE> 33
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with Mr. McDonald, Mr.
Crosland, and Mr. Digby. Each is summarized below.
Employment Agreement with J. Aubrey Crosland. Mr. Crosland's
employment agreement has a three-year term, pursuant to which Mr. Crosland will
serve as the president of First Capital Bancshares and First Capital Bank. Mr.
Crosland will be paid a salary of $85,000, plus his yearly medical insurance
premium. Mr. Crosland will be eligible to participate in any management
incentive program of First Capital 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 First Capital Bancshares), Mr.
Crosland will be granted an option to purchase 8,000 shares of common stock at
$10.00 per share. The options will vest over a six-year period and will have a
term of ten years. Additionally, Mr. Crosland will participate in First Capital
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 agreement
also provides that following termination of his employment with First Capital
Bank and for a period of twelve months thereafter, Mr. Crosland may not compete
with First Capital Bancshares, the bank, or any of its affiliates by, directly
or indirectly, forming, serving as an organizer, director or officer of, or
consultant to, or acquiring or maintaining more than 1% passive investment in,
a depository financial institution or holding company thereof if such
depository institution or holding company has one or more offices or branches
in the territory, solicit major customers of First Capital Bank for the purpose
of providing financial services, or solicit employees of First Capital Bank for
employment. If Mr. Crosland's employment is terminated other than for cause,
First Capital Bancshares will be obligated to pay Mr. Crosland six months'
severance plus bonus earned through such date.
Employment Agreement with J. Randy McDonald. Mr. McDonald's employment
agreement provides that he will serve as the chief executive officer and chief
lending officer of First Capital Bank. He will be paid a consulting fee of
$4,000 per month by First Capital Bancshares until the bank opens. Thereafter
the bank will pay him an annual salary of $60,000 per year, plus a bonus to
gross up his salary prior to the opening of the bank as if he had been paid
$60,000 from the date of hire on January 4, 1999. Mr. McDonald will also
participate in any other benefit programs offered by the bank to its employees
in general, and will have an officer's liability insurance policy and two
week's vacation. The agreement also provides that following termination of his
employment with First Capital Bank and for a period of twelve months
thereafter, Mr. McDonald may not compete with First Capital Bancshares, the
bank, or any of its affiliates by, directly or indirectly, forming, serving as
an organizer, director or officer of, or consultant to, or acquiring or
maintaining more than 1% passive investment in, a depository financial
institution or holding company thereof if such depository institution or
holding company has one or more offices or branches in the territory, solicit
major customers of First Capital Bank for the purpose of providing financial
services, or solicit employees of First Capital Bank for employment.
Employment Agreement with John M. Digby. Mr. Digby's employment
agreement is essentially the same as Mr. McDonald's, except that his title is
chief financial officer of First Capital Bancshares and First Capital Bank.
DIRECTOR COMPENSATION
Initially, neither First Capital Bancshares nor First Capital Bank
will pay directors' fees. After the offering, First Capital Bancshares expects
to adopt a stock option plan which will permit First Capital Bancshares to
grant options to officers, directors, and employees of First Capital
Bancshares. We anticipate that the plan will initially authorize the issuance
of a number of shares equal to 15% of the shares outstanding after the
offering. The option plan will provide that the exercise price for an option
cannot be less than the common stock's fair market value on the date of grant.
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<PAGE> 34
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
We expect that First Capital Bancshares and First Capital Bank will
have banking and other transactions in the ordinary course of business with
their organizers, directors, and officers, including members of their families
or corporations, partnerships, or other organizations in which such organizers,
officers, or directors have a controlling interest. We do not expect that such
transactions will involve more than the normal risk of collectibility nor
present other unfavorable features. 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. Transactions with organizers
and other related parties will be on terms no less favorable than transactions
with unaffiliated third parties and will be approved by a majority of our
disinterested directors.
The bank's property was purchased through Shortt Auction and Realty.
Lee C. Shortt is the chief executive officer and the chairman of First Capital
Bancshares and the president and owner of Shortt Auction and Realty. Mr. Shortt
will receive a commission as the listing agent to be paid by the seller of the
property, and therefore removed himself from the vote in the selection of the
site. All of the other directors approved the purchase and its terms. The
purchase price for the site and building was less than the most recent tax
assessment for the property.
EXCULPATION AND INDEMNIFICATION
Our articles of incorporation contain a provision which, subject to
certain limited exceptions, limits the liability of a director to First Capital
Bancshares or its shareholders for any breach of duty as a director. There is
no limitation of liability for any of the following:
- - a breach of duty involving appropriation of a business opportunity of
First Capital Bancshares;
- - 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 33-8-330 of the South Carolina Business
Corporation Act of 1988.
If the laws governing officers and directors indemnification are amended to
authorize further elimination or limitation of the liability of directors, then
the liability of each director of First Capital Bancshares will be eliminated
or limited to the fullest extent permitted by such provisions. We will not seek
shareholder consent for such expanded obligations unless it is required. The
provisions do not limit the right of First Capital Bancshares or its
shareholders to seek injunctive or other equitable relief against officers and
directors not involving monetary payments.
Our bylaws contain certain provisions which provide indemnification to
directors of First Capital Bancshares that is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the South Carolina
Business Corporation Act. To the extent that a director or officer of First
Capital Bancshares has been successful, on the merits or otherwise, in the
defense of any action or proceeding brought against such person because he or
she is or was a director or officer of First Capital Bancshares, Sections
33-8-510 and 33-8-520 would require First Capital Bancshares to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred. The Corporation Act expressly allows First Capital Bancshares to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval.
The board of directors also has the authority to extend the same
indemnification rights held by directors to officers, employees, and agents,
subject to all of the accompanying conditions and obligations. The board of
directors intends to extend indemnification rights to all of its executive
officers.
The SEC has advised us that it believes that indemnification for
directors, officers, and controlling persons of First Capital Bancshares and
First Capital Bank is against public policy and may be unenforceable.
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<PAGE> 35
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of First Capital Bancshares 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 following summary
describes the material terms of First Capital Bancshares's capital stock.
Please refer to the articles of incorporation of First Capital Bancshares for a
detailed description of the provisions summarized below. The articles were
filed as an exhibit to the Registration Statement of which this prospectus is a
part.
COMMON STOCK
The board of directors may choose to pay dividends to the holders of
common stock. We do not plan to declare any dividends in the foreseeable
future. Holders of common stock are entitled to one vote per share on all
matters on which they are entitled to vote. Voting rights are not cumulative.
Shareholders have no preemptive, conversion, redemption or sinking fund rights.
In the event of a liquidation, dissolution or winding-up of First Capital
Bancshares, holders of common stock are entitled to share equally and ratably
in the assets of First Capital Bancshares, if any, remaining after the payment
of all debts and liabilities of First Capital Bancshares. If preferred stock is
outstanding at the time of liquidation, it may have preferential rights to
receive liquidation funds. The rights of the common stock holders will be
subject to such preferred rights. All shares of common stock currently
outstanding are and all shares issuable in this offering 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 First
Capital Bancshares may issue in the future.
Prior to this offering there has been no market for the common stock.
The common stock will be quoted on the OTC Bulletin Board under the symbol
"____". However, we cannot be sure that a liquid market will develop for the
common stock, or that the holders of common stock will be able to freely sell
or trade their shares. The public offering price of the shares offered hereby
has been determined solely by negotiations between First Capital Bank and Banc
Stock Financial Services, Inc. and may bear no relationship to the market price
of the common stock after this offering. See "The Offering - Plan of
Distribution."
PREFERRED STOCK
The articles provide that the board of directors is authorized,
without further action by the holders of the common stock, to issue any number
of shares of one or more classes or series of preferred stock, up to 10,000,000
shares. The director may fix the designations, powers, preferences, and
relative, participating, optional and other rights, qualifications,
limitations, and restrictions of such shares, including the dividend rate,
conversion rights, voting rights, redemption price, and liquidation preference.
Such preferred stock may be 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. Issuance of preferred stock, while providing First Capital
Bancshares 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. By way of example, preferred
stock with voting or conversion rights may adversely affect the voting power of
the holders of common stock. Upon completion of this offering, First Capital
Bancshares will not have any shares of preferred stock outstanding and we do
not have any plans to issue preferred stock. We will not issue preferred stock
to organizers on terms more favorable than terms offered to other shareholders.
ANTITAKEOVER EFFECTS
The provisions of First Capital Bancshares's articles, bylaws and
South Carolina law summarized in the following paragraphs may have
anti-takeover effects. They may delay, defer, or prevent a tender offer or
other attempt to takeover or purchase First Capital Bancshares, even though you
may believe that such a takeover or
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<PAGE> 36
purchase might be in your best interest, including those attempts that might
result in a premium over the market price for our stock. Such provisions may
also make removal of management more difficult.
Authorized but Unissued Stock. Authorized but unissued shares of
common stock and preferred stock are 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 make it more difficult or discourage any
attempt to obtain control of First Capital Bancshares by means of a proxy
contest, tender offer, merger or otherwise. This ability thereby acts to
entrench First Capital Bancshares's management.
Number of Directors. The bylaws provide that the number of directors
shall be fixed from time to time by a majority of the directors then in office.
The number of directors may not be fewer than five nor more than fifteen.
Individuals affiliated with competitors may not serve on our board of
directors.
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 First Capital Bancshares and its shareholders and
whether or not a majority of First Capital Bancshares's desire to make such a
change.
Removal of Directors and Filling Vacancies. The bylaws 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 for shareholders to
make proposals and to nominate candidates for directors. All notices of
shareholder proposals and shareholder nominations for the election of directors
at a shareholders meeting must be in writing and be received by each director
not later than twenty-four hours prior to the meeting when delivered personally
or by telecopy or at least two days prior thereto when delivered by mail. We
may reject a shareholder proposal or nomination that is not made in accordance
with such procedures.
Nomination Requirements. The bylaws establish requirements for
nominating directors. The nominating party must provide First Capital
Bancshares within a specified time prior to the meeting: (i) notice that such
party intends to nominate a proposed director; (ii) the name of and certain
biographical information about the nominee; and (iii) a statement that the
nominee has consented to the nomination. The chairman of any shareholders'
meeting may waive these provisions. These provisions could reduce the
likelihood that a third party would nominate and elect individuals to serve on
the board of directors.
SHARES ELIGIBLE FOR FUTURE SALE
The shares sold in this offering will be freely tradable, without
restriction or registration under the Securities Act, except for shares
purchased by "affiliates" of First Capital Bancshares. Shares held by
affiliates will be subject to resale restrictions under the Securities Act. An
affiliate of the issuer is defined in Rule 144 under the Securities Act as a
person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the issuer. Rule
405 under the Securities Act defines the term "control" to mean the possession,
direct or indirect, of the power to direct or cause the direction of the
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<PAGE> 37
management and policies of the person whether through the ownership of voting
securities, by contract or otherwise. Officers and directors of First Capital
Bancshares and First Capital Bank are affiliates under these rules.
Affiliates may sell securities without registration only in accordance
with Rule 144 or another exemption from registration. Rule 144 requires persons
holding restricted securities to hold the shares for at least one year prior to
sale. Thereafter, Rule 144 provides that an affiliate or other person holding
restricted shares may sell, within any three-month period, a number of shares
no greater than 1% of the then outstanding shares of the common stock or the
average weekly trading volume of the common stock during the four calendar
weeks preceding the sale, whichever is greater. Rule 144 also requires that the
securities be sold in "brokers' transactions," as defined in the Securities
Act, and that 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. These
requirements may make it difficult for affiliates to sell their shares after
the offering if no trading market develops in the common stock.
LEGAL MATTERS
Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia will pass
upon the validity of the common stock offered hereby. Igler & Dougherty, P.A.,
Tallahassee, Florida will pass upon certain legal matters in connection with
the offering by the sales agent.
EXPERTS
The financial statements of First Capital Bancshares dated December
31, 1998 and for the period from December 17, 1997 (inception) until December
31, 1998 have been audited by Tourville, Simpson & Henderson, L.L.P., as stated
in their report appearing elsewhere herein. These financial statements have
been included in reliance on the report of such firm given upon their authority
as an expert in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the SEC (the "Commission") a registration statement
on Form SB-2 under the Securities Act of 1933 for the registration of the
common stock offered hereby. This prospectus forms a part of the Registration
Statement and does not contain all of the information set forth in the
Registration Statement. For further information with respect to First Capital
Bancshares and the common stock, you should refer 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 Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC also maintains a Web site at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding First Capital Bancshares and other registrants that file
electronically with the Commission.
We have filed applications with the Office of Thrift Supervision and
the Federal Deposit Insurance Corporation which may contain similar information
to that in this prospectus. Prospective investors should rely only on
information contained in this prospectus and in First Capital Bancshares'
related Registration Statement in making an investment decision. This
prospectus supercedes all other available information, including information
available from First Capital Bancshares and information in public files and
records maintained by the Office of Thrift Supervision and the Federal Deposit
Insurance Corporation. Projections appearing in our applications were estimates
based on assumptions that we believed to be reasonable at the time. We
specifically disaffirm those projections for purposes of this prospectus and
cautions prospective investors against placing reliance on them for making an
investment decision. Statements contained in this prospectus as to the contents
of any contract or other document referred to herein are not necessarily
complete. If such contract or document is an exhibit to the Registration
Statement, please refer to that document for a complete disclosure of its
contents.
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<PAGE> 38
As a result of this offering, First Capital Bancshares will become a
reporting company subject to the full informational requirements of the
Securities Exchange Act of 1934. We will fulfill our obligations with respect
to such requirements by filing periodic reports and other information with the
Commission. We will furnish our 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. Our fiscal year ends on December 31.
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<PAGE> 39
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Independent Accountants' Report F-2
Financial Statements:
Balance Sheet as of December 31, 1998 F-3
Statement of Operations and Accumulated Deficit For the Period
December 19, 1997 to December 31, 1998 F-4
Statement of Changes in Stockholders' Equity For the Period
December 19, 1997 to December 31, 1998 F-5
Statement of Cash Flows For the Period December 19, 1997
to December 31, 1998 F-6
Notes to Financial Statements F-7
</TABLE>
F-1
<PAGE> 40
INDEPENDENT ACCOUNTANTS' REPORT
To the Organizers
First Capital Bancshares, Inc.
We have audited the accompanying balance sheet of First Capital Bancshares,
Inc., (a Company in the development stage) as of December 31, 1998 and related
statements of operations and accumulated deficit, stockholders' equity and cash
flows for the period from inception December 19, 1997 to December 31, 1998.
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 First Capital Bancshares,
Inc., (a Company in the development stage) as of December 31, 1998, and the
results of its operations and its cash flows for the period from inception
December 19, 1997 to December 31, 1998 in conformity with generally accepted
accounting principles.
Tourville, Simpson & Henderson, L.L.P.
Columbia, South Carolina
February 18, 1999
F-2
<PAGE> 41
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 103,293
Option on real estate 15,000
Prepaid stock issuance costs 8,145
Other prepaid costs 19,072
---------
Total assets $ 145,510
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES -
Accounts payable $ 9,000
---------
STOCKHOLDERS' EQUITY--
Common stock, par value $.01 per share; 10,000,000 shares authorized;
30,000 shares issued and outstanding 300
Preferred stock - 10,000,000 shares authorized and unissued,
par value $.01 per share --
Paid-in-capital 299,700
Deficit accumulated in the development stage (163,490)
---------
Total stockholders' equity 136,510
Total liabilities and stockholders' equity $ 145,510
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 42
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD DECEMBER 19, 1997 (INCEPTION) TO DECEMBER 31, 1998
<TABLE>
<S> <C>
Income $ --
---------
Expenses:
Management fees 65,500
Consultant fees 51,404
Professional fees 22,975
Other 23,611
---------
Total expenses 163,490
Net loss and accumulated deficit $(163,490)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 43
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 19, 1997 (INCEPTION) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated In
----------------- Paid-In The Development
Shares Amount Capital Stage Total
------ ------ --------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Issuance of common stock 30,000 $ 300 $ 299,700 $ $ 300,000
Net loss for the period
December 19, 1997
to December 31, 1998 (163,490) (163,490)
------ ------ --------- --------------- ---------
Balance, December 31, 1998 30,000 $ 300 $ 299,700 $ (163,490) $ 136,510
====== ====== ========= =============== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 44
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
FOR THE PERIOD DECEMBER 19, 1997 (INCEPTION) TO DECEMBER 31, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES --
Net loss and accumulated deficit $(163,490)
Adjustments to reconcile net loss and accumulated deficit to
cash provided by operating activities --
Increase in accounts payable 9,000
Cash used by operating activities (154,490)
CASH FLOWS FROM INVESTING ACTIVITIES --
Option on real estate (15,000)
Other prepaid costs (19,072)
Cash used by investing activities (34,072)
CASH FLOWS FROM FINANCING ACTIVITIES --
Prepaid stock issuance costs (8,145)
Issuance of common stock 300,000
Cash provided by financing activities 291,855
CASH BALANCE AT END OF PERIOD $ 103,293
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 45
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
First Capital Bancshares, Inc. was formed to organize and own all of the
capital stock of First Capital Bank. The organizers of First Capital Bancshares
filed an application with the Office of Thrift Supervision to charter First
Capital Bank as a savings bank. Provided the necessary capital is raised and
the necessary regulatory approvals are received, it is expected that operations
will commence in the second quarter of 1999.
First Capital Bancshares plans to raise a minimum of $5,000,000 by offering for
sale 500,000 shares of its common stock. The organizers, directors, and members
of their immediate families expect to purchase a total of 85,200 shares at an
aggregate purchase price of approximately $852,000.
Upon the completion of the sale of common stock and the opening of First
Capital Bank, incurred organization and pre-opening costs will be charged
against the initial period's operating results. It is estimated that First
Capital Bancshares will incur approximately $23,000 in organizational expenses,
and First Capital Bank will incur approximately $300,000 in organizational and
pre-opening expenses.
The expenses related to the stock offering will be deducted from the proceeds
of the offering. These expenses are estimated to be approximately $442,160,
consisting principally of commissions and other directly related expenses of
the stock offering.
NOTE 2 - LIQUIDITY
First Capital Bancshares incurred a net loss of $163,490 the period from
December 19, 1997 to December 31, 1998. Activities since inception have
consisted of organizational activities necessary to obtain regulatory approvals
and to otherwise prepare to commence business as a financial institution.
At December 31, 1998, First Capital Bancshares had been primarily funded by the
$300,000 received from the issuance of 30,000 shares of its common stock to the
organizers.
Management believes that the level of expenditures is well within the financial
capabilities of the organizers and is adequate to meet existing obligations and
fund current operations, but commencement banking operations is dependent upon
the successful completion of the stock offering and receipt of regulatory
approval.
To provide for permanent funding, First Capital Bancshares is currently
anticipating offering for sale a minimum of 500,000 and a maximum of 720,000
shares of its common stock at a sales price of $10 per share. Costs related to
the organization and registration of First Capital Bancshares common stock will
be paid from the gross proceeds of the offering. Should subscriptions for the
minimum offering not be obtained, amounts paid by subscribers with their
subscriptions will be returned, net of expenses, and the offer will be
withdrawn.
F-7
<PAGE> 46
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - INCOME TAXES
As of December 31, 1998, First Capital Bancshares had a net operating loss
carryforward of $163,490.
There was no provision (benefit) for income taxes for the period from December
19, 1997 to December 31, 1998, since a 100% valuation reserve is being
maintained for the net operating loss carryforward.
NOTE 4 - EMPLOYMENT CONTRACT AND STOCK OPTIONS
First Capital Bancshares has entered into a three-year employment contract with
its President beginning June 4, 1998. The contract provides that the President
will receive an initial annual salary of $60,000, which shall be increased to
not less than $85,000 per annum on the date the First Capital Bank opens. This
contract may be extended for additional time periods by mutual agreement of the
President and First Capital Bancshares.
Upon completion of the sale of its common stock, First Capital Bancshares shall
grant to the President an option to purchase 8,000 shares of common stock. The
stock option agreement will provide that the option will have a ten-year term
and will vest over a six-year period provided that the President is still
employed by First Capital Bancshares on each anniversary and that certain
performance goals for each year are met.
Annually, the Board of Directors agrees to set performance goals for First
Capital Bancshares and may grant to the President a cash bonus at the end of
each fiscal year in which such performance goals are met. The amount of any
such bonus will be determined by the Board.
Beginning on the date First Capital Bank opens, First Capital Bank shall
provide the President with a leased automobile with a lease rate not to exceed
$400 per month.
NOTE 5 - OPTION ON REAL ESTATE
As of December 31, 1998, First Capital Bancshares had paid $15,000 for an
option to purchase real estate in Bennettsville, South Carolina for the purpose
of building its main banking office. The option provides for a purchase price
of $350,000 payable in cash and expires March 1, 1999.
F-8
<PAGE> 47
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - STOCKHOLDERS' EQUITY
COMMON STOCK - First Capital Bancshares has the authority to issue up to
10,000,000 shares of voting common stock, par value $.01 per share.
PREFERRED STOCK - First Capital Bancshares has the authority to issue up to
10,000,000 shares of preferred stock, par value $.01 per share. Also, First
Capital Bancshares has the right to establish and designate from time to time
any part or all of the shares by filing an amendment to First Capital
Bancshares's articles of incorporation, which is effective without shareholder
action, 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 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.
CUMULATIVE VOTING RIGHTS - First Capital Bancshares has elected not to have
cumulative voting, and no shares issued by First Capital Bancshares may be
cumulatively voted.
PREEMPTIVE RIGHTS - The stockholders of First Capital Bancshares shall not have
any preemptive rights regarding any issuance of First Capital Bancshares's
capital stock.
NOTE 7 - DATA PROCESSING
As of December 31, 1998 First Capital Bancshares has entered into an agreement
with Fiserv Solutions, Inc. ("Fiserv") to electronically process First Capital
Bancshares's daily transactions. Upon receiving regulatory approval to open
First Capital Bank, First Capital Bancshares will have to pay Fiserv
approximately $226,000 for computer hardware and software.
Like many financial institutions, First Capital Bancshares will rely upon
computers for the daily conduct of its business and for information processing.
There is concern among industry experts that on January 1, 2000 computers will
be unable to "read" the new year and there may be widespread computer
malfunctions. Generally, First Capital Bancshares will be relying on software
and hardware developed by independent third parties for its information
systems.
The agreement with Fiserv includes a warranty that its system is Year 2000
compliant in all respects. While management believes that the information
systems they agreed to acquire and the network connections that will be
maintained will comply with the Year 2000 requirements, there is a risk that
they will not comply as they have been developed by others.
F-9
<PAGE> 48
720,000 SHARES
COMMON STOCK
FIRST CAPITAL BANCSHARES, INC.
A PROPOSED HOLDING COMPANY FOR
FIRST CAPITAL BANK (PROPOSED)
[INSERT LOGO HERE]
PROSPECTUS
[BANK STOCK LOGO HERE]
[DATE OF OFFER]
<PAGE> 49
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Item 24. Indemnification of Directors and Officers
Our articles of incorporation contain a provision which, subject to
certain limited exceptions, limits the liability of a director to First Capital
Bancshares 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 First Capital Bancshares; 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 33-8-330 of the South Carolina Business Corporation Act of 1988 (The
"Corporation Act"). In addition, if at any time the Corporation Act shall have
been amended to authorize further elimination or limitation of the liability of
director, then the liability of each director of First Capital Bancshares 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 Corporation Act require such action. The provision does not limit the
right of First Capital Bancshares or its shareholders to seek injunctive or
other equitable relief not involving payments in the nature of monetary
damages.
Our bylaws contain certain provisions which provide indemnification to
directors of First Capital Bancshares that is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the Corporation Act. To
the extent that a director or officer of First Capital Bancshares 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 First Capital Bancshares, Sections 33-8-510 and 33-8-520 of the
Corporation Act would require First Capital Bancshares to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith. The Corporation Act expressly allows First
Capital Bancshares to provide for greater indemnification rights to its
officers and directors, subject to shareholder approval.
Insofar as indemnification for liabilities arising under the
Corporation Act may be permitted to directors, officers, and controlling
persons of First Capital Bancshares and First Capital Bank pursuant to the
articles of incorporation or bylaws, or otherwise, First Capital Bancshares and
First Capital Bank have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Corporation Act
and is, therefore, unenforceable.
The board of directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The board of directors
has extended or intends to extend indemnification rights to all of its
executive officers.
We have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of First Capital
Bancshares against any liability asserted against him or incurred by him in any
such capacity, whether or not First Capital Bancshares would have the power to
indemnify him against such liability under the bylaws.
II-1
<PAGE> 50
Item 25. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting commissions) of the sale
of the shares of common stock are:
<TABLE>
<S> <C>
Registration Fee $ 2,000
Printing and Engraving 15,000
Legal Fees and Expenses 30,000
Accounting Fees 5,000
Blue Sky Fees and Expenses 10,000
Underwriter's expenses and legal fees 60,000
Miscellaneous Disbursements 5,000
---------
TOTAL $ 127,000
=========
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
The issuance of these securities was made in reliance on an exemption
from registration provided by Section 4(2) of the Securities Act. All of the
purchasers of these securities are directors of First Capital. These
individuals represented their intention to acquire the securities for
investment purposes only and not with a view to or for the sale in connection
with any distribution thereof. These individuals also had adequate access,
through their relationships with First Capital, to information about First
Capital. The purchases by these individuals were completed prior to the filing
of this registration statement.
Item 27. Exhibits.
<TABLE>
<S> <C>
3.1. Articles of Incorporation and all amendments*
3.2. Bylaws*
4.1. See Exhibits 3.1 and 3.2 for provisions in First Capital Bancshares's
Articles of Incorporation and bylaws defining the rights of holders
of the common stock*
4.2. Form of certificate of common stock*
5.1. Opinion Regarding Legality*
10.1. Revised and Restated Letter of Employment dated February 24, 1999,
between First Capital Bancshares and J. Aubrey Crosland
10.2. Letter of Employment dated November 2, 1998, between First Capital
Bancshares and John M. Digby*
10.3 Purchase Agreement dated April 20, 1998, between First Capital
Bancshares, as buyer, and James B. Connelly, as seller*
10.4 Form of escrow agreement among First Capital Bancshares, Banc Stock
Financial Services, Inc. and The Banker's Bank
10.5 Sales Agency Agreement among First Capital Bancshares and Banc Stock
Financial Services, Inc.*
10.6 An agreement for software and account processing services dated
December 7, 1998 with Fiserv Solutions, Inc.
10.7 Revised and Restated Letter of Employment dated February 24, 1999,
between J. Randy McDonald and First Capital Bancshares
10.8 Form of Stock Order Form
23.1. Consent of Independent Public Accountants
</TABLE>
II-2
<PAGE> 51
<TABLE>
<S> <C>
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)*
24.1. Power of Attorney (previously filed as part of signature page to the
Registration Statement)*
27.1. Financial Data Schedule (for electronic filing purposes)**
</TABLE>
* Previously filed.
** To be filed by amendment.
Item 28. Undertakings.
The undersigned Company will:
(a)(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of First Capital Bancshares pursuant to the provisions
described in Item 24 above, or otherwise, First Capital Bancshares has been
advised that in the opinion of the SEC 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 First Capital Bancshares of expenses incurred or paid
by a director, officer or controlling person of First Capital Bancshares 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, First Capital Bancshares 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> 52
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of
Bennettsville, State of South Carolina, on March 1, 1999.
FIRST CAPITAL BANCSHARES, INC.
By: /s/ J. Aubrey Crosland
---------------------------------------
J. Aubrey Crosland
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* /s/ Glenn Dowdy
- ------------------------------------
Glenn Dowdy Director March 1, 1999
* /s/ Wylie Cartrette
- ------------------------------------
Wylie Cartrette Director March 1, 1999
* /s/ Dale Hutchins
- ------------------------------------
Dale Hutchins Director March 1, 1999
* /s/ Shoukath Ansari
- ------------------------------------
Shoukath Ansari Director March 1, 1999
* /s/ Paul F. Rush
- ------------------------------------
Paul F. Rush Director March 1, 1999
* /s/ Lee Howell
- ------------------------------------
Lee Howell Director March 1, 1999
* /s/ Lee C. Shortt
- ------------------------------------
Lee C. Shortt Director March 1, 1999
/s/ J. Aubrey Crosland
- ------------------------------------
J. Aubrey Crosland Director and President March 1, 1999
(principal executive officer)
/s/ John M. Digby
- ------------------------------------
John M. Digby Chief Financial Officer March 1, 1999
(principal accounting and
financial officer)
*By: /s/ J. Aubrey Crosland
-------------------------------
J. Aubrey Crosland
Attorney-in-Fact
</TABLE>
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
Item 27. Exhibits.
<S> <C>
3.1. Articles of Incorporation and all amendments*
3.2. Bylaws*
4.1. See Exhibits 3.1 and 3.2 for provisions in First Capital Bancshares's
Articles of Incorporation and bylaws defining the rights of holders of
the common stock*
4.2. Form of certificate of common stock*
5.1. Opinion Regarding Legality*
10.1. Revised and Restated Letter of Employment dated February 24, 1999,
between First Capital Bancshares and J. Aubrey Crosland
10.2. Letter of Employment dated November 2, 1998, between First Capital
Bancshares and John M. Digby*
10.3 Purchase Agreement dated April 20, 1998, between First Capital
Bancshares, as buyer, and James B. Connelly, as seller*
10.4 Form of escrow agreement among First Capital Bancshares, Banc Stock
Financial Services, Inc. and The Banker's Bank
10.5 Sales Agency Agreement among First Capital Bancshares and Banc Stock
Financial Services, Inc.*
10.6 An agreement for software and account processing services dated
December 7, 1998 with Fiserv Solutions, Inc.
10.7 Revised and Restated Letter of Employment dated February 24, 1999,
between J. Randy McDonald and First Capital Bancshares
10.8 Form of Stock Order Form
23.1. Consent of Independent Public Accountants
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)*
24.1. Power of Attorney (previously filed as part of the signature page to
Registration Statement)*
27.1. Financial Data Schedule (for electronic filing purposes)**
</TABLE>
- -------------------
* Previously filed.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 10.1
FIRST CAPITAL BANCSHARES, INC.
P.O. BOX 1353
BENNETTSVILLE, SOUTH CAROLINA
February 24, 1999
Mr. Aubrey Crosland
Bennettsville, South Carolina
Dear Aubrey:
We are pleased to propose this Amended and Restated Letter of Agreement
(this "Agreement") to be entered into among First Capital Bancshares, Inc., a
South Carolina corporation (the "Company"), First Capital Bank (Proposed), a
proposed thrift (the "Thrift" and, together with the Company, the "Employer")
and Aubrey Crosland, an individual resident of South Carolina (the "Executive").
This letter supersedes the previous letter of June 4, 1998.
The Company is the proposed holding company for the Thrift and is in
the process of organizing the Thrift. The Executive has agreed to serve as
President of the Company and the Thrift. The Employer recognizes that the
Executive's contribution to the growth and success of the Company and the Thrift
during organization and the initial years of operations will be a significant
factor in the success of the Company and the Thrift. The Employer desires to
provide for the employment of the Executive in a manner which will reinforce and
encourage the dedication of the Executive to the Company and the Thrift and
promote the best interests of the Thrift and the Company. The Executive is
willing to serve the Employer on the terms and conditions herein provided.
Certain terms used in this Agreement are defined in Section 14 hereof.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment. The Employer shall employ the Executive, and the
Executive shall serve the Employer, as President of the Company and the Thrift
upon the terms and conditions set forth herein. The Executive shall have such
authority and responsibilities consistent with his position as are set forth in
the Company's and the Thrift's Bylaws or assigned by the Company's and the
Thrift's respective Boards of Directors (the "Boards") from time to time. The
Executive shall devote his full business time, attention, skill and efforts to
the performance of his duties hereunder, except during periods of illness or
periods of vacation and leaves of absence consistent with Employer policy. The
Executive may devote reasonable periods to service as a director or advisor to
other organizations, to charitable and community activities, and to managing his
personal investments, provided that such activities do not materially interfere
with the performance of his duties hereunder and are not in conflict or
competitive with, or adverse to, the interests of the Company or the Thrift.
<PAGE> 2
2. Term. Unless earlier terminated as provided herein, the Executive's
employment under this Agreement shall commence on the date hereof and be for a
term (the "Term") of three years, with an annual review of Executive's
performance and written approval by the Boards for renewal, which may be
extended for additional time periods by mutual agreement of the Executive and
the Employer.
3. Compensation and Benefits.
(a) The Employer shall pay the Executive a salary at a rate of not less
than $60,000 per annum, which shall be increased to not less than $85,000 per
annum on the date the Bank opens, in accordance with the salary payment
practices of the Employer.
(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, provided that the Employer
shall pay 100% of the cost of health insurance benefits for the Executive and
his immediate family. The Employer shall provide to the Executive, at no cost to
the Executive, term life insurance in an amount equal to at least two times the
Executive's then-current base salary. If the Executive retires with the consent
of the Employer's board of directors before the age of 65, the Employer shall
continue to provide the health and life insurance benefits provided for in this
paragraph, at no cost to the Executive, at least until the Executive reaches the
age of 65.
(c) On the date of the closing of the stock offering for the initial
capitalization of the Thrift, or as soon thereafter as an appropriate stock
option plan is adopted by the Board, the Company shall grant to the Executive an
option to purchase 8,000 shares of Common Stock. The option will be represented
by a separate stock option agreement which will provide that the option will
have a ten-year term, will vest over a six-year period (1,000 shares on each of
the first three anniversaries of the opening date of the Bank, 1,667 shares on
the fourth and fifth anniversaries, and 1,666 shares on the sixth anniversary,
so long as the Executive is still employed by the Employer on each anniversary
and provided that the performance goals for such year described in Section 3(d)
are achieved).
(d) The Board of Directors agrees to set performance goals for the
Company and the Thrift for each fiscal year, and the Board may, in its
discretion, grant to the Executive a cash bonus, in an amount to be determined
by the Board, at the end of each fiscal year in which the Company and the Thrift
achieve such performance goals.
(e) Beginning on the date the Bank opens, the Company shall provide the
Executive with a leased automobile of the Executive's choice, with a lease rate
not to exceed $400 per month, provided that the Executive shall be responsible
for all fuel costs and any maintenance costs that are not covered by warranty.
The Employer shall fully insure the automobile at no cost to the Executive. In
addition, the Employer shall pay the dues for the Executive's
2
<PAGE> 3
membership in the Rotary Club and an area country club in an amount to be agreed
upon by the parties.
(f) Beginning on the date of this Agreement, the Employer shall
reimburse the Executive for reasonable travel and other expenses related to the
Executive's duties which are incurred and accounted for in accordance with the
normal practices of the Employer.
(g) The Employer shall provide the Executive with appropriate
directors' and officers' liability insurance coverage at no cost to the
Executive.
(h) The Executive shall be entitled to three weeks of paid vacation per
year.
4. Termination.
(a) Notwithstanding the Term of this Agreement, the Employer has the
right to terminate this Agreement at any time in accordance with this Section 4.
(b) If the Employer terminates the Executive's employment under this
Agreement prior to the end of the Term for any reason other than (i) Cause or
(ii) because the Bank fails to open, 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 through the date of termination, and shall also continue
providing the health insurance benefits for the Executive and his immediate
family described in Section 3(b). The Employer may terminate this Agreement at
any time, but any termination by the Employer other than termination for Cause
or because the Bank fails to open shall not prejudice the Executive's right to
severance compensation or other benefits under this Agreement.
(c) If the Executive's employment is terminated because of the
Executive's death, the Executive's estate shall receive any sums due him as base
salary and reimbursement of expenses through the end of the month during which
death occurred, plus any bonus earned or accrued under the through the date of
death.
(d) If the Executive's employment is terminated for Cause or because
the Bank fails to open, or if the Executive resigns, the Executive shall receive
any sums due him as base salary and reimbursement of expenses through the date
of such termination. The Executive shall have no right to receive severance
compensation or other benefits for any period after termination for Cause or if
the Bank fails to open. For purposes of this Agreement, termination for Cause
shall include termination because of the Executive's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material uncured breach of any provision of
this Agreement.
3
<PAGE> 4
(e) If the Executive is suspended or temporarily prohibited from
participating in the conduct of the Employer's affairs by a notice served under
section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C. 1818
(e)(3) and (g)(1)), the Employer's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Employer may in its discretion (i)
pay the Executive all or part of the compensation withheld while the obligations
under this Agreement were suspended and (ii) reinstate (in whole or in part) any
of such obligations which were suspended.
(f) If the Executive is removed or permanently prohibited from
participating in the conduct of the Employer's affairs by an order issued under
section 8 (e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818
(e)(4) or (g)(1)), all obligations of the Executive under this Agreement shall
terminate as of the effective date of the order, but any vested rights of the
parties hereto shall not be affected.
(g) If the Employer is in default (as defined in section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph (4)(g) shall not affect
any vested rights of the parties hereto.
(h) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary of the
continued operation of the Employer, in the following cases:
(i) By the Director of the Office of Thrift Supervision (the
"Director") or his or her designee, at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to
or on behalf of the Employer under the authority contained in 13(c) of
the Federal Deposit Insurance Act; or
(ii) By the Director or his or her designee, at the time the
Director or his or her designee approves a supervisory merger to
resolve problems related to operation of the Employer or when the
Employer is determined by the Director to be in an unsafe or unsound
condition.
(i) With the exceptions of the provisions of this Section 4, and the
express terms of any benefit plan under which the Executive is a participant, it
is agreed that, upon termination of the Executive's employment, the Employer
shall have no obligation to the Executive for, and the Executive waives and
relinquishes, any further compensation or benefits (exclusive of COBRA
benefits). At the time of termination of employment, the Employer and the
Executive shall enter into a mutually satisfactory form of release acknowledging
such remaining obligations and discharging both parties, as well as the
Employer's officers, directors and employees with respect to their actions for
or on behalf of the Employer, from any other claims or obligations arising out
of or in connection with the Executive's employment by the Employer, including
the circumstances of such termination.
4
<PAGE> 5
(j) In the event that the Executive's employment is terminated for any
reason, if requested by the Board the Executive shall (and does hereby) tender
his resignation as a director of the Company and the Thrift, effective as of the
date of termination.
(k) Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
5. Protection of Trade Secrets. The Executive agrees to maintain in
strict confidence and, except as necessary to perform his duties for the
Employer, the Executive agrees not to use or disclose any Trade Secrets of the
Employer during or at any time after his employment. As provided by South
Carolina statutes, "Trade Secret" means information, including a formula,
pattern, compilation, program, device, method, technique, process, drawing, cost
data or customer list, that: (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use; and (ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
6. Protection of Other Confidential Information. In addition, the
Executive agrees to maintain in strict confidence and, except as necessary to
perform his duties for the Employer, not to use or disclose any Confidential
Business Information of the Employer during his employment and for a period of
24 months following termination of the Executive's employment. "Confidential
Business Information" shall mean any internal, non-public information (other
than Trade Secrets already addressed above) concerning the Employer's financial
position and results of operations (including revenues, assets, net income,
etc.); annual and long-range business plans; product or service plans; marketing
plans and methods; training, educational and administrative manuals; customer
and supplier information and purchase histories; and employee lists. The
provisions of Sections 5 and 6 above shall also apply to protect Trade Secrets
and Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.
7. Return of Materials. The Executive shall surrender to the Employer,
promptly upon its request and in any event upon termination of the Executive's
employment, all media, documents, notebooks, computer programs, handbooks, data
files, models, samples, price lists, drawings, customer lists, prospect data, or
other material of any nature whatsoever (in tangible or electronic form) in the
Executive's possession or control, including all copies thereof, relating to the
Employer, its business, or its customers. Upon the request of the Employer,
employee shall certify in writing compliance with the foregoing requirement.
8. Restrictive Covenants.
(a) No Solicitation of Customers. During the Executive's employment
with the Employer and for a period of 12 months thereafter, the Executive shall
not (except on behalf of or with the prior written consent of the Employer),
either directly or indirectly, on the Executive's own behalf or in the service
or on behalf of others, (A) solicit, divert, or appropriate to or for a
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<PAGE> 6
Competing Business, or (B) attempt to solicit, divert, or appropriate to or for
a Competing Business, any person or entity that was a customer of the Employer
or any of its Affiliates on the date of termination and is located in the
Territory and with whom the Executive has had material contact.
(b) No Recruitment of Personnel. During the Executive's employment with
the Employer and for a period of 12 months thereafter, the Executive shall not,
either directly or indirectly, on the Executive's own behalf or in the service
or on behalf of others, (A) solicit, divert, or hire away, or (B) attempt to
solicit, divert, or hire away, to any Competing Business located in the
Territory, any employee of or consultant to the Employer or any of its
Affiliates engaged or experienced in the Business, regardless of whether the
employee or consultant is full-time or temporary, the employment or engagement
is pursuant to written agreement, or the employment is for a determined period
or is at will.
(c) Non-Competition Agreement. During the Executive's employment with
the Employer and for a period of 12 months thereafter, the Executive shall not
(without the prior written consent of the Employer) compete with the Employer or
any of its Affiliates by, directly or indirectly, forming, serving as an
organizer, director or officer of, or consultant to, or acquiring or maintaining
more than a 1% passive investment in, a depository financial institution or
holding company therefor if such depository institution or holding company has
one or more offices or branches located in the Territory. Notwithstanding the
foregoing, the Executive may serve as an officer of or consultant to a
depository institution or holding company therefor even though such institution
operates one or more offices or branches in the Territory, if the Executive's
employment does not directly involve, in whole or in part, the depository
financial institution's or holding company's operations in the Territory.
9. Independent Provisions. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision or clause of this Agreement, or portion thereof, shall be held by any
court or other tribunal of competent jurisdiction to be illegal, void, or
unenforceable in such jurisdiction, the remainder of such provision shall not be
thereby affected and shall be given full effect, without regard to the invalid
portion. It is the intention of the parties that, if any court construes any
provision or clause of this Agreement, or any portion thereof, to be illegal,
void, or unenforceable because of the duration of such provision or the area or
matter covered thereby, such court shall reduce the duration, area, or matter of
such provision, and, in its reduced form, such provision shall then be
enforceable and shall be enforced. The Executive and the Employer hereby agree
that they will negotiate in good faith to amend this Agreement from time to time
to modify the terms of Sections 8(a), 8(b), and 8(c), the definition of the term
"Territory," and the definition of the term "Business," to reflect changes in
the Employer's business and affairs so that the scope of the limitations placed
on the Executive's activities by Section 8 accomplishes the parties' intent in
relation to the then current facts and circumstances. Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Employer.
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<PAGE> 7
10. Successors; Binding Agreement. The rights and obligations of this
Agreement shall bind and inure to the benefit of the surviving corporation in
any merger or consolidation in which the Employer is a party, or any assignee of
all or substantially all of the Employer's business and properties. The
Executive's rights and obligations under this Agreement may not be assigned by
him, except that his right to receive accrued but unpaid compensation,
unreimbursed expenses and other rights, if any, provided under this Agreement
which survive termination of this Agreement shall pass after death to the
personal representatives of his estate.
11. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, however, that all
notices to the Employer shall be directed to the attention of the Employer with
a copy to the Secretary of the Employer. All notices and communications shall be
deemed to have been received on the date of delivery thereof.
12. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of South Carolina 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 South Carolina.
13. Enforcement. The Executive agrees that in the event of any breach
or threatened breach by the Executive of any covenant contained in Section 8(a),
8(b), or 8(c) hereof, the resulting injuries to the Employer would be difficult
or impossible to estimate accurately, even though irreparable injury or damages
would certainly result. Accordingly, an award of legal damages, if without other
relief, would be inadequate to protect the Employer. The Executive, therefore,
agrees that in the event of any such breach, the Employer shall be entitled to
obtain from a court of competent jurisdiction an injunction to restrain the
breach or anticipated breach of any such covenant, and to obtain any other
available legal, equitable, statutory, or contractual relief. Should the
Employer have cause to seek such relief, no bond shall be required from the
Employer, and the Executive shall pay all attorney's fees and court costs which
the Employer may incur to the extent the Employer prevails in its enforcement
action.
14. Certain Definitions.
(a) "Affiliate" shall mean any business entity controlled by,
controlling or under common control with the Employer.
(b) "Business" shall mean the operation of a depository financial
institution, including, without limitation, the solicitation and acceptance of
deposits of money and commercial paper, the solicitation and funding of loans
and the provision of other banking services, and any other related business
engaged in by the Employer or any of its Affiliates as of the date of
termination.
(c) "Competing Business" shall mean any business that, in whole or in
part, is the same or substantially the same as the Business.
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(d) "Territory" shall mean (a) during the Executive's employment with
the Employer and for a period of six months thereafter, a radius of (i) 50 miles
from the main office of the Employer or (ii) 25 miles from any branch office of
the Employer, and (b) for a period commencing six months after termination of
the Executive's employment and continuing an additional six months, Marlboro
County, South Carolina.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. Failure of the Employer to enforce
any of the provisions of this Agreement or any rights with respect thereto shall
in no way be considered to be a waiver of such provisions or rights, or in any
way affect the validity of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17. No Conflict with Laws. In the event there are any discrepancies
herein with any federal law or regulation, the federal law or regulation shall
control.
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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.
FIRST CAPITAL BANCSHARES, INC.
\s\ Lee C. Shortt
- -----------------------------------
Name: Lee C. Shortt
Title: Chairman
FIRST CAPITAL BANK (PROPOSED)
\s\ J. Randy McDonald
- -----------------------------------
Name: J. Randy McDonald
Title: CEO
EXECUTIVE
\s\ Aubrey Crosland
- -----------------------------------
Name: Aubrey Crosland
<PAGE> 1
EXHIBIT 10.4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into as of February
____, 1999, by and among First Capital Bancshares, Inc., a South Carolina
corporation (the "Company"), Banc Stock Financial Services, Inc.
("BSFS"), and The Bankers Bank (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company proposes to offer and sell (the "Offering") up to
7,200,000 shares of Common Stock, par value $.01 per share (the "Shares"), to
investors at $10.00 per Share pursuant to a registered public offering;
WHEREAS, BSFS intends to sell the Shares as the Company's agent on a
best efforts, all-or-none basis for 500,000 shares and on a best efforts basis
for the remaining Shares; and
WHEREAS, the Company desires to establish an escrow for funds forwarded
by subscribers for the Shares, and the Escrow Agent is willing to serve as
Escrow Agent upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEPOSIT WITH ESCROW AGENT.
(a) The Escrow Agent agrees that it will from time to time accept,
in its capacity as escrow agent, subscription funds for the Shares (the
"Escrowed Funds") received by it from subscribers, BSFS, or the Company when it
has received checks from subscribers. All checks shall be made payable to the
Escrow Agent. If any check does not clear normal banking channels in due course,
the Escrow Agent will promptly notify BSFS. Any check which does not clear
normal banking channels and is returned by the drawer's bank to Escrow Agent
will be promptly turned over to BSFS, along with all other subscription
documents relating to such check. Any check received that is made payable to a
party other than the Escrow Agent shall be returned to BSFS for return to the
proper party. The Company in its sole and absolute discretion may reject any
subscription for Shares for any reason and upon such rejection it shall notify
and instruct the Escrow Agent in writing to return the Escrowed Funds by check
made payable to the subscriber, with interest earned, if any.
(b) Subscription agreements for the Shares shall be reviewed for
accuracy by BSFS and, immediately thereafter, BSFS shall deliver to the Escrow
Agent the following information: (i) the name and address of the subscriber;
(ii) the number of Shares subscribed for by such subscriber; (iii) the
subscription price paid by such subscriber; (iv) the subscriber's tax
identification number certified by such subscriber; and (v) a copy of the
subscription
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agreement.
2. INVESTMENT OF ESCROWED FUNDS. Upon collection of each check by
the Escrow Agent, the Escrow Agent shall invest the funds in deposit accounts or
short-term certificates of deposit which are fully insured by the Federal
Deposit Insurance Corporation or another agency of the United States government,
short-term securities issued or fully guaranteed by the United States
government, federal funds, or such other investments as the Escrow Agent and the
Company shall agree. The Company shall provide the Escrow Agent with
instructions from time to time concerning in which of the specific investment
instruments described above the Escrowed Funds shall be invested, and the Escrow
Agent shall adhere to such instructions. Unless and until otherwise instructed
by the Company, the Escrow Agent shall by means of a "sweep" or other automatic
investment program invest the Escrowed Funds in blocks of $10,000 in federal
funds. Interest and other earnings shall start accruing on such funds as soon as
such funds would be deemed to be available for access under applicable banking
laws and pursuant to the Escrow Agent's own banking policies.
3. DISTRIBUTION OF ESCROWED FUNDS. The Escrow Agent shall
distribute the Escrowed Funds in the amounts, at the times, and upon the
conditions hereinafter set forth in this Agreement.
(a) If at any time on or prior to the expiration date of the
offering as described in the prospectus relating to the offering, (the "Closing
Date"), (i) the Escrow Agent has certified to the Company and BSFS in writing
that the Escrow Agent has received at least $5,000,000 in Escrowed Funds, and
(ii) the Escrow Agent has received a certificate signed by the President or
another authorized representative of the Company and an authorized
representative of BSFS that all other conditions to the release of funds as
described in the Company's Registration Statement filed with the Securities and
Exchange Commission pertaining to the public offering have been met, then the
Escrow Agent shall deliver the Escrowed Funds to BSFS and the Company in
accordance with such notice to the extent such Escrowed Funds are collected
funds. If any portion of the Escrowed Funds are not collected funds, then the
Escrow Agent shall notify BSFS of such facts and shall distribute such funds
only after such funds become collected funds. For purposes of this Agreement,
"collected funds" shall mean all funds received by the Escrow Agent which have
cleared normal banking channels. In all events, the Escrow Agent shall deliver
not less than $5,000,000 in collected funds to the Company, except as provided
in Paragraphs 3(b) and 3(c) hereof.
(b) In lieu of collected funds, the organizers of the Company may
pay for subscriptions by assigning to the Company any portion of any obligation
of the Company to repay any advances made by such organizers to the Company to
fund organizational or other expenses and delivering such assignment to the
Escrow Agent to be held hereunder.
(c) If the Escrowed Funds do not, on or prior to the Closing Date,
become deliverable to the Company based on failure to meet the conditions
described in Paragraph 3(a), or if the Company terminates the offering at any
time prior to the Closing Date and delivers written notice to the Escrow Agent
of such termination (the "Termination Notice"),
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the Escrow Agent shall return the Escrowed Funds which are collected funds as
directed in writing BSFS to the respective subscribers in amounts equal to the
subscription amount paid by each of them, plus interest earned thereon divided
amongst the subscribers according to the number of shares subscribed for and the
amount of time each subscriber's funds have been in escrow. All uncleared checks
representing Escrowed Funds which are not collected funds as of the Initial
Closing Date shall be collected by the Escrow Agent, and together with all
related subscription documents thereof shall be delivered to BSFS by the Escrow
Agent, unless the Escrow Agent is otherwise specifically directed in writing by
BSFS. The Company is aware and understands that, until it becomes entitled to
receive the Escrowed Funds as described in Paragraph 3(a), it is not entitled to
any Escrowed Funds and that no amounts deposited in the Escrow Account shall
become the property of the Company or any other entity or be subject to the
debts of the Company or any other entity.
(d) Upon receipt by the Escrow Agent of written notice from the
Company that it has rejected all or any part of any subscription, the Escrow
Agent shall return the Escrowed Funds for such subscription to the subscriber,
with interest earned.
4. FEES OF ESCROW AGENT. The escrow account will accrue a service
charge of $15.00 per month. In addition, a $20.00 per check fee will be charged
if the escrow account has to be refunded due to a failure to complete the
subscription. All of these fees are payable upon the release of the Escrowed
Funds, and the Escrow Agent is hereby authorized to deduct such fees from the
Escrowed Funds prior to any release thereof pursuant to Section 3 hereof.
5. LIABILITY OF ESCROW AGENT.
(a) In performing any of its duties under this Agreement, or upon
the claimed failure to perform its duties hereunder, the Escrow Agent shall not
be liable to anyone for any damages, losses or expenses which it may incur as a
result of the Escrow Agent so acting, or failing to act; provided, however, the
Escrow Agent shall be liable for damages arising out of its willful default or
misconduct or its gross negligence under this Agreement. Accordingly, the Escrow
Agent shall not incur any such liability with respect to (i) any action taken or
omitted to be taken in good faith upon advice of its counsel or counsel for the
Company which is given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder; or (ii) any action taken or
omitted to be taken in reliance upon any document, including any written notice
or instructions provided for this Escrow Agreement, not only as to its due
execution and to the validity and effectiveness of its provisions but also as to
the truth and accuracy of any information contained therein, if the Escrow Agent
shall in good faith believe such document to be genuine, to have been signed or
presented by a proper person or persons, and to conform with the provisions of
this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow
Agent against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and counsel
fees and disbursements which may be imposed by the Escrow Agent or incurred by
it in connection with its acceptance of this appointment as Escrow Agent
hereunder or the performance of its duties hereunder, including, without
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limitation, any litigation arising from this Escrow Agreement or involving the
subject matter thereof; except, that if the Escrow Agent shall be found guilty
of willful misconduct or gross negligence under this Agreement, then, in that
event, the Escrow Agent shall bear all such losses, claims, damages and
expenses.
(c) If a dispute ensues between any of the parties hereto which,
in the opinion of the Escrow Agent, is sufficient to justify its doing so, the
Escrow Agent shall retain legal counsel of its choice as it reasonably may deem
necessary to advise it concerning its obligations hereunder and to represent it
in any litigation to which it may be a part by reason of this Agreement. The
Escrow Agent shall be entitled to tender into the registry or custody of any
court of competent jurisdiction all money or property in its hands under the
terms of this Agreement, and to file such legal proceedings as it deems
appropriate, and shall thereupon be discharged from all further duties under
this Agreement. Any such legal action may be brought in any such court as the
Escrow Agent shall determine to have jurisdiction thereof. In connection with
such dispute, the Company shall indemnify the Escrow Agent against its court
costs and reasonable attorney's fees incurred.
(d) The Escrow Agent may resign at any time upon giving 30 days
written notice to the Company and BSFS. If a successor escrow agent is not
appointed by Company within 30 days after notice of resignation, the Escrow
Agent may petition any court of competent jurisdiction to name a successor
escrow agent and the Escrow Agent herein shall be fully relieved of all
liability under this Agreement to any and all parties upon the transfer of the
Escrowed Funds and all related documentation thereto, including appropriate
information to assist the successor escrow agent with the reporting of earnings
of the Escrowed Funds to the appropriate state and federal agencies in
accordance with the applicable state and federal income tax laws, to the
successor escrow agent designated by the Company appointed by the court.
6. APPOINTMENT OF SUCCESSOR. The Company and BSFS may, upon the
delivery of 30 days written notice appointing a successor escrow agent to the
Escrow Agent, terminate the services of the Escrow Agent hereunder. In the event
of such termination, the Escrow Agent shall immediately deliver to the successor
escrow agent selected by the Company all documentation and Escrowed Funds
including interest earnings thereon in its possession, less any fees and
expenses due to the Escrow Agent or required to be paid by the Escrow Agent to a
third party pursuant to this Agreement.
7. NOTICE. All notices, requests, demands and other
communications or deliveries required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given three days after
having been deposited for mailing if sent by registered mail, or certified mail
return receipt requested, or delivery by courier, to the respective addresses
set forth below:
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If to the subscribers for Shares: To their respective addresses as specified
in their Subscription Agreements.
The Company:
First Capital Bancshares, Inc.
830 Highway 38 South
Bennettsville, South Carolina 29512
Attention: Mr. Aubrey Crosland
With a copy to: Nelson Mullins Riley & Scarborough, LLP
Suite 1400
999 Peachtree Street, NE
Atlanta, Georgia 30309
Attention: Neil E. Grayson, Esq.
The Escrow Agent: The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, Georgia 30339
Attention: Mr. William R. Burkett
Senior Vice President
BSFS: Banc Stock Financial Services, Inc.
1105 Schrock Road, Suite 437
Columbus, Ohio 43229
Attention: Mr. Edward E. Schmidt
With a copy to: Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
Attention: A. George Igler, Esq.
8. REPRESENTATIONS OF THE COMPANY. The Company hereby
acknowledges that the status of the Escrow Agent with respect to the offering of
the Shares is that of agent only for the limited purposes herein set forth, and
hereby agrees it will not represent or imply that the Escrow Agent, by serving
as the Escrow Agent hereunder or otherwise, has investigated the desirability or
advisability in an investment in the Shares, or has approved, endorsed or passed
upon the merits of the Shares, nor shall the Company use the name of the Escrow
Agent in any manner whatsoever in connection with the offer or sale of the
Shares, other than by acknowledgment that it has agreed to serve as Escrow Agent
for the limited purposes herein set forth.
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9. GENERAL.
(a) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Georgia.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
(c) This Agreement sets forth the entire agreement and
understanding of the parties with regard to this escrow transaction and
supersedes all prior agreements, arrangements and understandings relating to the
subject matter hereof.
(d) This Agreement may be amended, modified, superseded or
canceled, and any of the terms or conditions hereof may be waived, only by a
written instrument executed by each party hereto or, in the case of a waiver, by
the party waiving compliance. The failure of any part at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver in any one or more instances by
any part of any condition, or of the breach of any term contained in this
Agreement, whether by conduct or otherwise, shall be deemed to be, or construed
as, a further or continuing waiver of any such condition or breach, or a waiver
of any other condition or of the breach of any other terms of this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties
hereto and their respective administrators, successors and assigns. The Escrow
Agent shall be bound only by the terms of this Escrow Agreement and shall not be
bound by or incur any liability with respect to any other agreement or
understanding between the parties except as herein expressly provided. The
Escrow Agent shall not have any duties hereunder except those specifically set
forth herein.
(g) No interest in any part to this Agreement shall be assignable
in the absence of a written agreement by and between all the parties to this
Agreement, executed with the same formalities as this original Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
the date first written above.
COMPANY: ESCROW AGENT:
FIRST CAPITAL BANCSHARES, INC. THE BANKERS BANK
By: By:
------------------------------------------- -----------------------------
Name: J. Aubrey Crosland Name: William R. Burkett
Title: Chairman and Chief Executive Officer Title: Senior Vice President
BSFS:
BANC STOCK FINANCIAL SERVICES, INC.
By:
-------------------------------------------
Name: Edward E. Schmidt
Title: Executive Vice President
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<PAGE> 1
EXHIBIT 10.6
Agreement Number:
AGREEMENT
between
FISERV SOLUTIONS, INC.
255 Fiserv Drive
Brookfield, WI 53045-5815
and
FIRST FEDERAL BANK
Bennettsville, South Carolina
c/o Marlboro Construction
830 Highway 38 South
Bennettsville, South Carolina 29512
Date: December 1998
FISERV(R)
<PAGE> 2
AGREEMENT dated as of December 7, 1998 ("Agreement") between FISERV SOLUTIONS,
INC., a Wisconsin corporation ("Fiserve"), and First Federal Bank, a South
Carolina Financial Institution ("Client").
================================================================================
Fiserv and Client hereby agree as follows:
1. Term. The initial term of this Agreement shall be 5 years and,
unless written notice of non-renewal is provided by either party at least 180
days prior to expiration of the initial term or any renewal term, this Agreement
shall automatically renew for a renewal term of 5 years. This Agreement shall
commence on the earliest of the day Fiserv Services (as defined below) are first
used by Client or _________________________. This contract shall be void if
Client fails to receive approval from either the OTS or Federal Reserve, or if
Client fails to open for business within one year of this Agreement date. The
organizers accept full responsibility for all purchases or orders that Fiserv
makes on Client's behalf. This would include any expenses incurred by Fiserv.
2. Services.
(a) Services Generally. Fiserv, itself and through its affiliates,
agrees to provide Client, and Client agrees to obtain from Fiserv services
("Services") and products ("Products") (collectively, "Fiserv Services")
described in the attached Exhibits:
Exhibit A - Accounting Processing Services
Exhibit B - Item Processing Services
Exhibit H - Additional Services (Disaster Recovery)
The Exhibits set forth specific terms and conditions applicable to the
Services and/or Products, and, where applicable, the Fiserv affiliate so
performing. Client may select additional services and products from time to time
by incorporating an appropriate Exhibit to this Agreement.
(b) Conversion Services. Fiserv will convert Client's existing
applicable data and/or information to the Fiserv Services. Those activities
designed to transfer the processing from Client's present servicer to the Fiserv
Services are referred to as "Conversion Services". Client agrees to cooperate
with Fiserv in connection with Fiserv's provision of Conversion Services and to
provide all necessary information and assistance to facilitate the conversion.
Client is responsible for all out-of-pocket expenses associated with the
Conversion Services. Fiserv will provide Conversion Services as required in
connection with Fiserv Services.
(c) Training Services. Fiserv shall provide training, training
aids, user manuals, and other documentation for Client's use to enable Client
personnel to become familiar with Fiserv Services. If requested by Client,
classroom training in the use and operation of Fiserv Services will be provided
at a training facility designated by Fiserv. All such training aids and manuals
remain Fiserv's property.
3. Fees for Fiserv Services.
(a) General. Client agrees to pay Fiserv:
(i) estimated fees for Fiserv Services for the following month as
specified in the Exhibits;
(ii) estimated out-of-pocket charges for the following month
payable by Fiserv for the account of Client; and
(iii) estimated Taxes (as defined below) thereon (collectively,
"Estimated Fees").
Fiserv shall timely reconcile Estimated Fees paid by Client for the Fiserv
Services for the month and the fees and charges actually due Fiserv based on
Client's actual use of Fiserv Services for such month. Fiserv shall either issue
a credit to Client or provide Client with an invoice for any additional fees or
other charges owed. Fiserv may change the amount of Estimated Fees billed to
reflect appropriate changes in actual use of Fiserv Services. Estimated Fees may
be increased from time to time as set forth in the Exhibits. Upon notification
to and acceptance by Client, Fiserv may increase its fees in excess of amounts
listed in the Exhibits in the event that Fiserv implements major system
enhancements to comply with changes in law, government regulation, or industry
practices. Fiserv shall attempt to provide Client with 180 days notice prior to
such change.
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<PAGE> 3
(b) Additional Charges. Feeds for out-of-pocket expenses, such as
telephone, microfiche, courier, and other charges incurred by Fiserv for goods
or services obtained by Fiserv on Client's behalf shall be billed to Client at
cost plus the applicable Fiserv administrative fee. Such out-of-pocket expenses
may be changed from time to time upon notification of a fee change from a
vendor/provider.
(c) Taxes. Fiserv shall add to each invoice any sales, use,
excise, value added, and other taxes and duties however designated that are
levied by any taxing authority relating to the Fiserv Services ("Taxes"). In no
event shall "Taxes" include taxes based upon the net income of Fiserv.
(d) Exclusions. The Estimated Fees do not include, and Client
shall be responsible for, furnishing transportation or transmission of
information between Fiserv's service center(s), Client's site(s), and any
applicable clearing house, regulatory agency, or Federal Reserve Bank.
(e) Payment Terms. Estimated Fees are due and payable monthly upon
receipt of invoice. Client shall pay Fiserv through the Automated Clearing
House. In the event any amounts due remain unpaid beyond the 30th day after
payment is due, Client shall pay a late charge of 1.5% per month. Client agrees
that it shall neither make nor assert any right of deduction or set-off from
Estimated Fees on invoices submitted by Fiserv for Fiserv Services.
4. Access to Fiserv Services. (a) Procedures. Client agrees to
comply with applicable regulatory requirements and procedures for use of
Services established by Fiserv.
(b) Changes. Fiserv continually reviews and modifies Fiserv
systems used in the delivery of Services (the "Fiserv System") to improve
service and comply with government regulations, if any, applicable to the data
and information utilized in providing Services. Fiserv reserves the right to
make changes in Services, including but not limited to operating procedures,
type of equipment or software resident at, and the location of Fiserv's service
center(s). Fiserv will notify Client of any material change that affects
Client's normal operating procedures, reporting, or service costs prior to
implementation of such change.
(c) Communications Lines. Fiserv shall order the installation of
appropriate communication lines and equipment to facilitate Client's access to
Services. Client understands and agrees to pay charges relating to the
installation and use of such lines and equipment used by Client.
(d) Terminals and Related Equipment. Client shall obtain necessary
and sufficient terminals and other equipment, approved by Fiserv and compatible
with the Fiserv System, to transmit and receive data and information between
Client's location(s), Fiserv's service center(s), and/or other necessary
location(s). Fiserv and Client may mutually agree to change the type(s) of
terminal and equipment used by Client.
5. Client Obligations.(a) Input. Client shall be solely
responsible for the input, transmission, or delivery to and from Fiserv of all
information and data required by Fiserv to perform Services unless Client has
retained Fiserv to handle such responsibilities, as specifically set forth in
the Exhibits. The information and data shall be provided in a format and manner
approved by Fiserv. Client will provide at its own expense or procure from
Fiserv all equipment, computer software, communication lines, and interface
devices required to access the Fiserv System. If Client has elected to provide
such items itself, Fiserv shall provide Client with a list of compatible
equipment and software; Client agrees to pay Fiserv's standard fee for
recertification of the Fiserv System resulting therefrom.
(b) Client Personnel. Client shall designate appropriate Client
personnel for training in the use of the Fiserv System, shall supply Fiserv with
reasonable access to Client's site during normal business hours for Conversion
Services and shall cooperate with Fiserv personnel in their performance of
Services, including Conversion Services.
(c) Use of Fiserv System. Client shall (i) comply with any
operating instructions on the use of the Fiserv System provided by Fiserv; (ii)
review all reports furnished by Fiserv for accuracy; and (iii) work with Fiserv
to reconcile any out of balance conditions. Client shall determine and be
responsible for the authenticity and accuracy of all information and data
submitted to Fiserv.
(d) Client's Systems. Client shall be responsible for ensuring
that its systems are Year 2000 complaint and capable of passing and/or accepting
date formats from and/or to the Fiserv System.
6. Ownership and Confidentiality. (a) Definition.
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(i) Client Information. "Client Information" means: (A)
confidential plans, customer lists, information, and other proprietary
material of Client that is marked with a restrictive legend, or if not
so marked with such legend or is disclosed orally, is identified as
confidential at the time of disclosure (and written confirmation
thereof is promptly provided to Fiserv); and (B) any information and
data concerning the business and financial records of Client's
customers prepared by or for Fiserv, or used in any way by Fiserv in
connection with the provision of Fiserv Services (whether or not any
such information is marked with a restrictive legend).
(ii) Fiserv Information. "Fiserv Information" means: (A)
confidential plans, information, research, development, trade secrets,
business affairs (including that of any Fiserv client, supplier, or
affiliate), and other proprietary material of Fiserv that is marked
with a restrictive legend, or if not so marked with such legend or is
disclosed orally, is identified as confidential at the time of
disclosure (and written confirmation thereof is promptly provided to
Client); and (B) Fiserv's proprietary computer programs, including
custom software modifications, software documentation and training
aids, and all data, code, techniques, algorithms, methods, logic,
architecture, and designs embodied or incorporated therein (whether or
not any such information is marked with a restrictive legend).
(iii) Information. "Information" means Client Information and Fiserv
Information. No obligation of confidentiality applies to any
information that the receiving party ("Recipient") (A) already
possesses without obligation of confidentiality; (B) develops
independently; or (C) rightfully receives without obligation of
confidentiality from a third party. No obligation of confidentiality
applies to any Information that is, or becomes, publicly available
without breach of this Agreement.
(b) Obligations. Recipient agrees to hold as confidential all
Information it receives from the disclosing party ("Disclosure"). All
Information shall remain the property of Disclosure or its suppliers and
licensors. Information will be returned to Disclosure at the termination or
expiration of this Agreement. Recipient will use the same care and discretion to
avoid disclosure of Information as it uses with its own similar information that
it does not wish disclosed, but in no event less than a reasonable standard of
care. Recipient may use Information for any purpose that does not violate such
obligation of confidentiality. Recipient may disclose Information to (i)
employees and employees of affiliates who have a need to know; and (ii) any
other party with Discloser's written consent. Before disclosure to any of the
above parties, Recipient will have a written agreement with such party
sufficient to require that party to treat Information in accordance with this
Agreement. Recipient may disclose Information to the extent required by law.
However, Recipient agrees to give Discloser prompt notice so that it may seek a
protective order. The provisions of this sub-section survive any termination or
expiration of this Agreement.
(c) Residuals. Nothing contained in this Agreement shall restrict
Recipient from the use of any ideas, concepts, know-how, or techniques contained
in Information that are related to Recipient's business activities
("Residuals"), provided that in so doing, Recipient does not breach its
obligations under this Section. However, this does not give Recipient the right
to disclose the Residuals except as set forth elsewhere in this Agreement.
(d) Fiserv System. The Fiserv System contains information and
computer software that are proprietary and confidential information of Fiserv,
its suppliers, and licensors. Client agrees not to attempt to circumvent the
devices employed by Fiserv to prevent unauthorized access to the Fiserv System,
including, but not limited to, alterations, decompiling, disassembling,
modifications, and reverse engineering thereof.
(e) Confidentiality of this Agreement. Fiserv and Client agree to
keep confidential the prices, terms and conditions of this Agreement, without
disclosure to third parties.
7. Regulatory Agencies, Regulations and Legal Requirements. (a)
Client Files. Records maintained and produced for Client ("Client Files") may be
subject to examination by such Federal, State, or other governmental regulatory
agencies as may have jurisdiction over Client's business to the same extent as
such records would be subject if maintained by Client on its own premises.
Client agrees that Fiserv is authorized to give all reports, summaries, or
information contained in or derived from the data or information in Fiserv's
possession relating to Client when formally requested to do so by an authorized
regulatory or government agency. Fiserv agrees to provide all such information
as requested by such agencies.
(b) Compliance with Regulatory Requirements. Client agrees to
comply with applicable regulatory and legal requirements, including without
limitation;
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(i) submitting a copy of this Agreement to the appropriate
regulatory agencies prior to the date Services commence;
(ii) providing adequate notice to the appropriate regulatory
agencies of the termination of this Agreement or any material changes
in Services;
(iii) retaining records of its accounts as required by regulatory
authorities;
(iv) obtaining and maintaining, at its own expense, any Fidelity
Bond required by any regulatory or governmental agency; and
(v) maintaining, at its own expense, such casualty and business
interruption insurance coverage for loss of records from fire,
disaster, or other causes, and taking such precautions regarding the
same, as may be required by regulatory authorities.
8. Warranties. (a) Fiserv Warranties. Fiserv represents and
warrants that:
(i) (A) Products and Services will conform to the specifications
set forth in the Exhibits; (B) Fiserv will perform Client's work
accurately provided that Client supplies accurate data and information,
and follows the procedures described in all Fiserv documentation,
notices, and advices; (C) Fiserv personnel will exercise due care in
provision of Services; (D) the Fiserv System will comply in all
material respects with all applicable Federal and State regulations
governing Services; and (E) the Fiserv System is or will be Year 2000
complaint in all respects. In the event of an error or other default
caused by Fiserv personnel, systems, or equipment, Fiserv shall correct
the data or information and/or reprocess the affected item or report at
no additional cost to Client within a reasonable time frame following
such request. Client agrees to supply Fiserv with a written request for
correction of the error within 30 days after Client's receipt of the
work containing the error. Work reprocessed due to errors in data
supplied by Client, on Client's behalf by a third party, or by Client's
failure to follow procedures set forth by Fiserv shall be billed to
Client at Fiserv's then current time and material rates; and
(ii) it owns or has a license to furnish all equipment or software
comprising the Fiserv System. Fiserv shall indemnify Client and hold it
harmless against any claim or action that alleges that the Fiserv
System use infringes a United States patent, copyright, or other
proprietary right of a third party. Client agrees to notify Fiserv
promptly of any such claim and grants Fiserv the sole right to control
the defense and disposition of all such claims. Client s hall provide
Fiserv with reasonable cooperation and assistance in the defense of any
such claim.
THE WARRANTIES STATED ABOVE ARE LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES
MADE BY FISERV. FISERV DOES NOT MAKE, AND CLIENT HEREBY EXPRESSLY WAIVES, ALL
OTHER WARRANTIES, INCLUDING WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. THE STATED EXPRESS WARRANTIES ARE IN LIEU OF ALL LIABILITIES
OR OBLIGATIONS OF FISERV FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
DELIVERY, USE, OR PERFORMANCE OF FISERV SERVICES.
(b) Client Warranties. Client represents and warrants that: (A) no
contractual obligations exist that would prevent Client from entering into this
Agreement; (B) it has complied with all applicable regulatory requirements; and
(C) Client has requisite authority to execute, deliver, and perform this
Agreement. Client shall indemnify and hold harmless Fiserv, its officers,
directors, employees, and affiliates against any claims or actions arising out
of (X) the use by Client of the Fiserv System in a manner other than that
provided in this Agreement; and (Y) any and all claims by third parties through
Client arising out of the performance and non-performance of Fiserv Services by
Fiserv; provided that the indemnity listed in clause (Y) hereof shall not
preclude Client's recovery of direct damages pursuant to the terms and subject
to the limitations of this Agreement.
9. Limitation of Liability. (a) General. IN NO EVENT SHALL FISERV
BE LIABLE FOR LOSS OF GOODWILL, OR FOR SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES ARISING FROM CLIENT'S USE OF FISERV SERVICES, OR FISERV'S
SUPPLY OF EQUIPMENT OR SOFTWARE, REGARDLESS OF WHETHER SUCH CLAIM ARISES IN TORT
OR IN CONTRACT. CLIENT MAY NOT ASSERT ANY CLAIM AGAINST FISERV MORE THAN 2 YEARS
AFTER SUCH CLAIM ACCRUED. FISERV'S AGGREGATE LIABILITY FOR ANY AND ALL CAUSES OF
ACTION RELATING TO SERVICES SHALL BE LIMITED TO THE TOTAL FEES PAID BY CLIENT TO
FISERV FOR SERVICES RESULTING IN SUCH LIABILITY IN THE 4 MONTH PERIOD PRECEDING
THE DATE THE CLAIM ACCRUED. FISERV'S AGGREGATE LIABILITY FOR A DEFAULT RELATING
TO EQUIPMENT OR SOFTWARE SHALL BE LIMITED TO THE AMOUNT PAID BY CLIENT FOR THE
EQUIPMENT OR SOFTWARE.
(b) Lost Records. If Client's records or other data submitted for
processing are lost or damaged as a result of any failure by Fiserv, its
employees, or agents to exercise reasonable care to prevent such loss or damage,
Fiserv's liability on account of such loss or damages shall not exceed the
reasonable cost of reproducing such records or data from exact duplicates
thereof in Client's possession.
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10. Disaster Recovery. (a) General. Fiserv maintains a disaster
recovery plan ("Disaster Recovery Plan") for each Service. A "Disaster" shall
mean any unplanned interruption of the operations of or inaccessibility to
Fiserv's service center in which Fiserv, using reasonable judgment, requires
relocation of processing to a recovery location. Fiserv shall notify Client as
soon as possible after Fiserv deems a service outage to be a Disaster. Fiserv
shall move the processing of Client's standard services to a recovery location
as expeditiously as possible and shall coordinate the cut-over to back-up
telecommunication facilities with the appropriate carriers. Client shall
maintain adequate records of all transactions during the period of service
interruption and shall have personnel available to assist Fiserv in implementing
the switchover to the recovery location. During a Disaster, optional or
on-request services shall be provided by Fiserv only to the extent adequate
capacity exists at the recovery location and only after stabilizing the
provision of base services.
(b) Communications. Fiserv shall work with Client to establish a
plan for alternative communications in the event of a Disaster.
(c) Disaster Recovery Test. Fiserv shall test the Disaster
Recovery Plan periodically. Client agrees to participate in and assist Fiserv
with such test, if requested by Fiserv. Upon Client request, test results will
be made available to Client's management, regulators, auditors, and insurance
underwriters.
(d) Client Plans. Fiserv agrees to release information necessary
to allow Client's development of a disaster recovery plan that operates in
concert with the Disaster Recovery Plan.
(e) No Warranty. Client understands and agrees that the Disaster
Recovery Plan is designed to minimize, but not eliminate, risks associated with
a Disaster affecting Fiserv's service center(s). Fiserv does not warrant that
Fiserv Services will be uninterrupted or error free in the event of a Disaster;
no performance standards shall be applicable for the duration of a Disaster.
Client maintains responsibility for adopting a disaster recovery plan relating
to disasters affecting Client's facilities and for securing business
interruption insurance or other insurance necessary for Client's protection.
11. Termination.
(a) Material Breach. Except as provided elsewhere in this Section
11, either party may terminate this Agreement in the event of a material breach
by the other party not cured within 90 days following written notice stating,
with particularity and in reasonable detail, the nature of the claimed breach.
(b) Failure to Pay. In the event any invoice remains unpaid by
Client 30 days after due, or Client deconverts any data or information from the
Fiserv System without prior written consent of Fiserv, Fiserv, at its sole
option, may terminate this Agreement and/or Client's access to and use of Fiserv
Services. Any invoice submitted by Fiserv shall be deemed correct unless Client
provides written notice to Fiserv within 15 days of the invoice data specifying
the nature of the disagreement.
(c) Remedies. Remedies contained in this Section 11 are cumulative
and are in addition to the other rights and remedies available to Fiserv under
this Agreement, by law or otherwise.
(d) Defaults. If Client:
(i) defaults in the payment of any sum of money due;
(ii) breaches this Agreement in any material respect or otherwise
defaults in any material respect in the performance of any of its
obligations; or
(iii) commits an act of bankruptcy or becomes the subject of any
proceeding under the Bankruptcy Code or becomes insolvent or if any
substantial part of Client's property becomes subject to any levy,
seizure, assignment, application, or sale for or by any creditor or
governmental agency;
then, in any such event, Fiserv may, upon written notice, terminate this
Agreement and be entitled to recover from Client as liquidated damages an amount
equal to the present value of all payments remaining to be made hereunder for
the remainder of the initial term or any renewal term of this Agreement. For
purposes of the preceding sentence, present value shall be computed using the
"prime" rate (as published in The Wall Street Journal) in effect at the date of
termination and "all payments remaining to be made" shall be calculated based on
the average bills for the 3 months immediately preceding the date of
termination. Client agrees to reimburse Fiserv for any expenses Fiserv may
incur, including reasonable attorneys' fees, in taking any of the foregoing
actions.
If Fiserv:
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(i) breaches this Agreement in any material respect or otherwise
defaults in any material respect in the performance of any of its
obligations; or
(ii) commits an act of bankruptcy or becomes the subject of any
proceeding under the Bankruptcy Code or become insolvent or if any
substantial part of Fiserv's property becomes subject to any levy,
seizure, assignment, application, or sale for or by any creditor or
governmental agency;
then, in any such event, Client may, upon written notice, terminate
this Agreement, without penalty.
(e) Convenience. Client may terminate this Agreement during any
term by paying a termination fee based on the remaining unused term of this
Agreement, the amount to be determined by multiplying Client's largest monthly
invoice for each Fiserv Service received by Client during the term (or if no
monthly invoice has been received, the sum of the estimated monthly billing for
each Fiserv Service to be received hereunder) by 80% times the remaining months
of the term, plus any unamortized conversion fees or third party costs existing
on Fiserv's books on the date of termination. Client understands and agrees that
Fiserv losses incurred as a result of early termination of the Agreement would
be difficult or impossible to calculate as of the effective date of termination
since they will vary based on, among other things, the number of clients using
the Fiserv System on the date the Agreement terminates. Accordingly, the amount
set forth in the first sentence of this subsection represents Client's agreement
to pay and Fiserv's agreement to accept as liquidated damages (and not as a
penalty) such amount for any such Client termination.
(f) Merger. In the event of a merger between Client and another
organization in which Client is not the surviving organization and where the
other organization was not previously a user of Fiserv services similar to the
Services, Fiserv will allow an early termination of this Agreement upon the
following terms and conditions:
(i) written notice must be given 3 months in advance, specifying
the termination date;
(ii) Fiserv may specify a deconversion date based on its previous
commitments and work loads; and
(iii) Fiserv may charge a termination fee in accordance with
subsection (e) above.
(g) Return of Data Files. Upon expiration or termination of this
Agreement, Fiserv shall furnish to Client such copies of Client Files as Client
may request in Fiserv's standard machine readable format along with such
information and assistance as is reasonable and customary to enable Client to
deconvert from the Fiserv System, provided, however, that Client consents and
agrees and authorizes Fiserv to retain Client Files until (i) Fiserv is paid in
full for (A) all Services provided through the date such Client Files are
returned to Client; and (B) any and all other amounts that are due or will
become due under this Agreement; (ii) Fiserv is paid its then standard rates for
the services necessary to return such Client Files; (iii) if this Agreement is
being terminated, Fiserv is paid any applicable termination fee pursuant to
subsection (d), (e), or (f) above; and (iv) Client has returned to Fiserv all
Fiserv Information. Unless directed by Client in writing to the contrary, Fiserv
shall be permitted to destroy Client Files any time after 30 days from the final
use of Client Files for processing.
(h) Miscellaneous. Client understands and agrees that Client is
responsible for the deinstallation and return shipping of any Fiserv-owned
equipment located on Client's premises.
12. Arbitration.
(a) General. Except with respect to disputes arising from a
misappropriation or misuse of either party's proprietary rights, any dispute or
controversy arising out of this Agreement, or its interpretation, shall be
submitted to and resolved exclusively by arbitration under the rules then
prevailing of the American Arbitration Association, upon written notice of
demand for arbitration by the party seeking arbitration, setting forth the
specifics of the matter in controversy or the claim being made. The arbitration
shall be heard before an arbitrator mutually agreeable to the parties; provided,
that if the parties cannot agree on the choice or arbitrator within 10 days
after the first party seeking arbitration has given written notice, then the
arbitration shall be heard by three arbitrators, one chosen by each party, and
the third chosen by those two arbitrators. The arbitrators will be selected from
a panel of persons having experience with and knowledge of information
technology and at least one of the arbitrators selected will be an attorney. A
hearing on the merits of all claims for which arbitration is sought by either
party shall be commenced not later than 60 days from the date demand for
arbitration is made by the first party seeking arbitration. The arbitrator(s)
must render a decision within 10 days after the conclusion of such hearing. Any
award in such arbitration shall be final and binding upon the parties and the
judgment thereon may be entered in any court of competent jurisdiction.
(b) Applicable Law. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. 1-16. The arbitrators shall apply the
substantive law of the State of Georgia, without reference to provisions
relating to conflict
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of laws. The arbitrators shall not have the power to alter, modify, amend, add
to, or subtract from any term or provision of this Agreement, nor to rule upon
or grant any extension, renewal, or continuance of this Agreement. The
arbitrators shall have the authority to grant any legal remedy available had the
parties submitted the dispute to a judicial proceeding.
(c) Situs. If arbitration is required to resolve any disputes
between the parties, all the proceedings to resolve any such dispute shall be
held in Atlanta, Georgia.
13. Insurance. Fiserv carries the following types of insurance
policies:
(i) Comprehensive General Liability in an amount not less than $1
million per occurrence for claims arising out of bodily injury and
property damage;
(ii) Commercial Crime covering employee dishonesty in an amount not
less than $5 million;
(iii) All-risk property coverage including Extra Expense and
Business Income coverage; and
(iv) Workers Compensation as mandated or allowed by the laws of the
state in which Services are being performed, including $500,000
coverage for Employer's Liability.
14. Audit. Fiserv employs an internal auditor responsible for
ensuring the integrity of its processing environments and internal controls. In
addition, Fiserv provides for periodic independent audits of its operations.
Fiserv shall provide Client with a copy of the audit of the Fiserv service
center providing Services within a reasonable time after its completion and
shall charge each client a fee based on the pro rata cost of such audit. Fiserv
shall also provide a copy of such audit to the appropriate regulatory agencies,
if any, having jurisdiction over Fiserv's provision of Services.
15. General. (a) Binding Agreement. This Agreement is binding upon
the parties and their respective successors and permitted assigns. Neither this
Agreement nor any interest may be sold, assigned, transferred, pledged, or
otherwise disposed of by Client, whether pursuant to change of control or
otherwise, without Fiserv's prior written consent. Client agrees that Fiserv may
subcontract any Services to be performed hereunder. Any such subcontractors
shall be required to comply with all applicable terms and conditions.
(b) Entire Agreement. This Agreement, including its Exhibits,
which are expressly incorporated herein by reference, constitutes the complete
and exclusive statement of the agreement between the parties as to the subject
matter hereof and supersedes all previous agreements with respect thereto.
Modifications of this Agreement must be in writing and signed by duly authorized
representatives of the parties. Each party hereby acknowledges that it has not
entered into this Agreement in reliance upon any representation made by the
other party not embodied herein. In the event any of the provisions of any
Exhibit are in conflict with any of the provisions of this Agreement, the terms
and provisions of this Agreement shall control unless the Exhibit in question
expressly provides that its terms and provisions shall control.
(c) Severability. If any provision of this Agreement is held to be
unenforceable or invalid, the other provisions shall continue in full force and
effect.
(d) Governing Law. This Agreement will be governed by the
substantive laws of the State of Wisconsin, without reference to provisions
relating to conflict of laws. The United Nations Convention of Contracts for the
International Sale of Goods shall not apply to this Agreement.
(e) Force Majeure. Neither party shall be responsible for delays
or failures in performance resulting from acts reasonably beyond the control of
that party.
(f) Notices. Any written notice required or permitted to be given
hereunder shall be given by: (i) Registered or Certified Mail, Return Receipt
Requested, postage prepaid; (ii) confirmed facsimile; or (iii) nationally
recognized courier service to the other party at the addresses listed on the
cover page or to such other address or person as a party may designate in
writing. All such notices shall be effective upon receipt.
(g) No Waiver. The failure of either party to insist on strict
performance of any of the provisions hereunder shall not be construed as the
waiver of any subsequent default of a similar nature.
(h) Financial Statements. Fiserv shall provide Client and the
appropriate regulatory agencies so requiring a copy of Fiserv, Inc.'s audited
consolidated financial statements.
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(i) Prevailing Party. The prevailing party in any arbitration,
suit, or action brought against the other party to enforce the terms of this
Agreement or any rights or obligations hereunder, shall be entitled to receive
its reasonable costs, expenses, and attorneys' fees of bringing such
arbitration, suit, or action.
(j) Survival. All rights and obligations of the parties under this
Agreement that, by their nature, do not terminate with the expiration or
termination of this Agreement shall survive the expiration or termination of
this Agreement.
(k) Exclusivity. Client agrees that Fiserv shall be the sole and
exclusive provider of the services that are the subject matter of this
Agreement. For purposes of the foregoing, the term "Client" shall include Client
affiliates. During the term of this Agreement, Client agrees not to enter into
an agreement with any other entity to provide these services (or similar
services) without Fiserv's prior written consent. If Client acquires another
entity, the exclusivity provided to Fiserv hereunder shall take effect with
respect to such acquired entity as soon as practicable after termination of such
acquired entity's previously existing arrangement for these services. If Client
is acquired by another entity, the exclusivity provided to Fiserv hereunder
shall apply with respect to the level or volume of these services provided
immediately prior to the signing of the definitive acquisition agreement
relating to such acquisition and shall continue with respect to the level or
volume of these services until any termination or expiration of this Agreement.
(i) Recruitment of Employees. Client agrees not to hire Fiserv's
employees during the term of this Agreement and for a period of 6 months after
any termination or expiration thereof, except with Fiserv's prior written
consent.
================================================================================
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date indicated
below.
For Client: For Fiserv:
FIRST FEDERAL BANK FISERV SOLUTIONS, INC.
By: \s\ J. Aubrey Crosland By: \s\ William L. Kenney
---------------------------------- -------------------------------
Name: J. Aubrey Crosland Name: William L. Kenney
-------------------------------- -----------------------------
Title: Pres. & C.E.O. Title: President Fiserv Atlanta
------------------------------- ----------------------------
Date: Dec. 08, 1998 Date: 12/14/98
-------------------------------- -----------------------------
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Exhibit A
Account Processing Services
Client agrees with Fiserv as follows:
1. Services. Fiserv will provide Client the Account Processing
Services ("Account Processing Services") specified in Exhibit A-1.
2. Fees. Client shall pay Fiserv fees and other charges for
Account Processing Services specified in Exhibit A-2.
3. Responsibility for Accounts. Client shall be responsible for
balancing its accounts each business day and notifying Fiserv immediately of any
errors or discrepancies. Provided that Client immediately notifies Fiserv of any
discrepancy in Client's accounts, Fiserv shall, at its expense, promptly
recompute accounts affected by discrepancies solely caused by the Fiserv Systems
or provide for another mutually agreeable resolution. Fiserv will use its
commercially reasonable efforts to correct errors attributable to Client or
Client's other third party servicers. Reconstruction of error conditions
attributable to Client or to third parties acting on Client's behalf will be
done at prevailing rates as set forth in Exhibit A-2.
4. Annual Histories. Fiserv currently maintains annual histories,
where applicable, for its clients. These histories can be used to reconstruct
Client Files in an emergency. However, in order to permit prompt and accurate
reconstruction of accounts, Client agrees to retain at all times and make
available to Fiserv upon request the most recent data printout(s) received from
Fiserv, together with copies or other accurate and retrievable records of all
transactions to be reflected on the next consecutive printout(s).
5. Hours of Operation. Account Processing Services will be
available for use by Client during standard Fiserv business hours, excluding
holidays, as specified in Exhibit A-3. Account Processing Services may be
available during additional hours, during which time Client may use Services at
its option and subject to additional charges.
6. Protection of Data.
(a) For the purpose of compliance with applicable government
regulations, Fiserv has an operations backup center, for which Client agrees to
pay the charges indicated in Exhibit A-2. Copies of transaction files are
maintained by Fiserv off premises in secured vaults.
(b) Fiserv provides "on-line" security via utilization of leased
lines with poll/select protocol.
(c) Upon Client providing access to Client Files through Client's
customers' personal computers or voice response system, Client agrees to
indemnify and hold harmless Fiserv, its officers, directors, employees, and
affiliates against any claims or actions arising out of such access to Client
Files or any Fiserv files (including the files of other Fiserv clients) or the
Fiserv System or other Fiserv systems.
7. Processing Priority. Fiserv does not subscribe to any
processing priority; all users receive equal processing consideration.
8. Forms and Supplies. Client assumes and will pay the charges
for all customized forms, supplies, and delivery charges. Custom forms ordered
through Fiserv will be subject to a 15% administrative fee for warehousing and
inventory control. Forms ordered by Client and warehoused at Fiserv will be
subject to the administrative fee set forth in Exhibit A-2.
9. Regulatory Supervision. By entering into this Agreement,
Fiserv agrees that the Office of Thrift Supervision, FDIC, or other regulatory
agencies having authority over Client's operations shall have the authority and
responsibility provided to the regulatory agencies pursuant to the Bank Service
Corporation Act, 12 U.S.C. 1867(C) relating to services performed by contract or
otherwise.
<PAGE> 11
================================================================================
IN WITNESS WHEREOF, the parties have caused this Exhibit A to be
executed by their duly authorized representatives as of the date indicated
below.
FIRST FEDERAL BANK FISERV SOLUTIONS, INC.
By: \s\ J. Aubrey Crosland By: \s\ William L. Kenney
----------------------------------- ------------------------------
Name: J. Aubrey Crosland Name: William L. Kenney
--------------------------------- ----------------------------
Title: Pres. & C.E.O. Title: President Fiserv Atlanta
-------------------------------- ---------------------------
Date: Dec. 08, 1998 Date: 12/14/98
--------------------------------- ----------------------------
<PAGE> 12
Exhibit A-1
Account Processing Services
Fiserv will provide Client with the following Account Processing Services:
I. Services and/or functions to be performed by Fiserv:
A. Maintain the necessary computer equipment in order to provide
Client with complete electronic bookkeeping service for
Deposit Accounts, Certificate Accounts, Loan Accounts, Central
Information System, Account Analysis, ACH (Receiving), General
Ledger, and On-Line Documentation five (5) days per week. The
Information Technology, Inc. (ITI) Premier II Banking System
will be used for Client's application processing.
B. Provide necessary assistance to Client for the initial set-up
to convert to the Fiserv system. Customer Service is provided
by toll-free telephone as follows:
(1) Full Customer Service specialists for all applications, Monday
through Friday - 8:00 a.m to 5:00 p.m. (EST)
(2) Limited telephone coverage, Monday through Friday - 5:00 p.m.
to 7:00 p.m. (EST)
(3) Emergency after hours Customer Service, via Beeper - 24
hours/day, 7 day/week
C. Receive transmitted transaction data from Client at Fiserv by
7:00 p.m. (EST) daily or receive transaction input at a Fiserv
center at mutually agreed time. If transaction data is not
received by this appropriate time, assurance cannot be made
for meeting the Client's scheduled needs the following day.
D. Reconcile Client's balancing totals.
E. Exercise reasonable care in handling data submitted to Fiserv
and hold all information received by Fiserv in strictest
confidence.
F. Calculate and provide figures for the daily accrual of
interest earned, late charges due, and service charges.
G. Transmit selected reports to Client's remote print facility or
Fiserv facility for printing.
II. Services, functions and requirements to be performed by Client for
participation in this agreement:
A. Purchase/lease all equipment required in the bank to utilize
the services provided by Fiserv.
B. Provide transmitted data to Fiserv's Computer Center daily by
7:00 p.m. EST, or provide input data to a Fiserv center by
mutually agreed times, records containing the necessary
information to process the applications.
C. Provide information on new accounts, change of address,
changes of title and status change through the on-line data
entry system.
D. Repair and re-enter for reprocessing all rejected items,
handle return items and reconcile controls.
E. Verify signatures and stop payments, cancel and file checks,
microfilm, assemble and mail statements, handle return items
and reconcile controls.
F. Balance work daily to General Ledger Controls, verify new and
re-issued coupon books, and mail notices.
<PAGE> 13
G. Print and distribute reports selected by Client.
H. Provide necessary transportation and Content Insurance
coverage To and From Fiserv facility.
III. Fiserv will provide the following ancillary support services included
in the monthly processing fee.
Refer to Ancillary Module Current Fees Schedule, Exhibit A-5.
<PAGE> 14
Exhibit A-3
Exhibit A-2
Account Processing Services
Fiserv will provide Client with the following Account Processing Services at the
fees and prices indicated:
<TABLE>
<S> <C> <C> <C> <C>
1. Fees to be paid monthly by Client to Fiserv for performance of the
services outlined in Section 1:
A. Monthly Processing Fees
The Client will be charged a monthly fee of $ .70 per account
on file (Deposit, Loan). The Client will be charged a monthly
fee of $ .15 per account on file (General Ledger). The Client
will be charged a minimum fee of $2,500.00 for Deposit, Loan,
General Ledger.
B. Loan Coupon Books* $ 2.05 Each (Postage Additional)
C. Furnished by Client*
Postage/Courier Fees
Telephone Lines
Modems and Annual Modem Maintenance
In-Bank Terminal Equipment/Software
In-Bank Equipment/Software Maintenance
D. Conversion/Installation Fees $ 5,000.00
An implementation fee of $ 5,000.00 will be charged to convert
to Premier II plus travel and related expenses.
E. Supplies
All forms necessary to the daily operations of Fiserv's System
can be purchased through Fiserv at prices quoted at the time
of purchase.
F. Miscellaneous Services
10 Smart Reports will be provided and included in Base
Monthly Processing Fee. Additional services provided per
Exhibit A-4.
G. Platform/Teller Interfaces
$ 0.00 Each Per Function (i.e.
Deposit/Loan/Teller)
H. ATM/EFT Service
Installation Fees:
One-Time Charge $ 5,000.00
Per ATM Connect Fee $ 500.00
Per Network $ 500.00
Surcharge Set-Up $ 1,000.00
Surcharge Set-Up per ATM $ 150.00
Communication Install Fee Pass Through
</TABLE>
<PAGE> 15
Exhibit A-3
<TABLE>
<S> <C> <C> <C>
Fiserv Support $ 400.00
Network Support per Network $ 100.00
Card Base Record $ 0.06 Per Card
$ 100.00 Minimum
Per ATM Connect Fee $ 150.00 Per Device
Per ATM 7 X 24 Monitoring Fee $ 15.00 Per Device
Communication Line Cost Pass Through
Per Transaction Fees
ON/US Transaction Fees $ 0.10
Per ATM 7 X 24 Monitoring Fee $ 0.10
Communication Line Cost $ 0.15 In Addition to Above
Transaction Fees
ATM Cards
Plastic Stock Pass Through
New Card Order $ 1.75 Per Card
PIN Mailer $ 0.35 Per Mailer
Postage Pass Through
Non-Atlanta Host Authorization
One-Time Set-Up $ 1,500.00
Monthly Charge $ 500.00 Base Plus $.06 Per Card
Record on File
Positive Balance File (PBF)
One-Time Set-Up $ 1,500.00
Monthly Charge $ 600.00
Communications Charges Pass Through
Visa Debit Processing Per Separate Quote
I. End of Year Processing
Per fee schedule published annually
J. On-Line Terminal Support
Client will be charged a fee of $15.00 per on-line device per
month. Converting workstations will be included in Monthly
Processing Fee.
K. Special Processing $ 85.00 Per Quarter Hour
L. Programming/Consulting $ 85.00 Per Hour
M. On-Site Support/Training $ 900.00 Per Person Per Day Plus
Travel and Related Expenses
N.
</TABLE>
<PAGE> 16
Exhibit A-3
N. Deconversion Fees
File formats and magnetic tapes in Fiserv format will be provided to
designated processor as requested in writing providing the Client has
no outstanding payments to Fiserv. Charges for the creation and
delivery of these files will be computer run time or $2,500 per
application per request, whichever is greater. All consulting
interpretation and computer time required for the deconversion will be
billed at per hour current rates.
O. Charges for Services
The monthly processing fees defined may be changed annually after the
first anniversary of this Agreement. Each change shall be limited to
the greater of five percent (5%) or the change in the U.S. Department
of Labor, Consumer Price Index for the twelve (12) month period
preceding the anniversary date.
P. Year 2000 Testing
Fiserv shall make available to Client evidence of a Year 2000 proxy
test of the Fiserv System, including test procedures and results.
Fiserv shall make available to Client additional testing capabilities
as may be required.
* All third party fees are subject to change without notice.
<PAGE> 17
Exhibit A-3
Hours of Operation
The Fiserv Account Processing Center will be in operation for On-Line
Accounting Processing Services in accordance with the following:
Monday 8:00 A.M. - 7:00 P.M.
Tuesday 8:00 A.M. - 7:00 P.M.
Wednesday 8:00 A.M. - 7:00 P.M.
Thursday 8:00 A.M. - 7:00 P.M.
Friday 8:00 A.M. - 7:00 P.M.
Saturday 8:00 A.M. - 4:00 P.M.
All times stated are in accordance with prevailing local times for the
Fiserv Account Processing Center. The Fiserv Account Processing Center will
observe national holidays, and will be closed for on-line operations.
<PAGE> 18
Exhibit A-4
<TABLE>
<CAPTION>
- ------------------------------------------------------ ---------- -----------------------------------------
REQUEST FEE
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
<S> <C> <C>
BDS050-SMART Reports & Pull Files $50 Per Report/File
(10 Included in Monthly Processing Fee)
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS061/BDS062 $50 Per Month
Safe Deposit Box Billing
Safe Deposit Box Trial and Past Due Reports
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS071 $50 Per Request
Debit Card Reference Journal
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS072 $50 Per Request
Debit Card Billing
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS200 $85 Per Request
"On-Demand" Statement Cycles
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS221 $340 Per Request*
DDA Month End Account Profitability Analysis *One execution of this program is
included with month end processing.
Charge would only apply to requests
other than month end.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS 252 $170 Per Request *
DDA Balance Range Report *One execution of this program is
included with month end processing.
Charge would only apply to requests
other than month end.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS253 $100 Plus $.35 per Confirmation
Audit Confirmations - DDA
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS255 $85 Per Request
Account Code/Cycle Distribution Report
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS258 Standard at month end only. Other
DDA Hold Report requests $85.00
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS262 $85 Per Request
Report Errors Concerning DDA Stmts.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS352 $170 Per Request*
SAV Balance Range Report *One execution of this program is
included with month end processing.
Charge would only apply to requests
other than month end.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS353 $100 Plus $.35 per Confirmation
Audit Confirmations - SAV
- ------------------------------------------------------ ---------- -----------------------------------------
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
- ------------------------------------------------------ ---------- -----------------------------------------
REQUEST FEE
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
<S> <C> <C>
BDS365 $85 Per Request
Account Code/Cycle Distribution Report
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS358 Standard at month end only. Other
Report of SAV Holds requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS360 Standard at month end only. Other
Automatic Transfers to DDA Report requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS361 Standard at month end only. Other
Savings Balances Subject to Rate Change requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS452 $170 Per Request*
CD Analysis Reports *One execution of this program is
included with month end processing.
Charge would only apply to requests
other than month end.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS453 $100 Plus $.35 per Confirmation
Audit Confirmations - CD
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS455 $85 Per Request
Account Code/Cycle Distribution Report
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS458 $85 Per Request
Report of CD Holds
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS531 Standard at month end only. Other
Loan Status Report - Reports by Product requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS534 Standard at month end only. Other
FHA Title I Home Improvement Loan Reporting requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS544 Standard at month end only. Other
Escrow Addenda Reference Journal requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS545 Standard at month end only. Other
Escrow Review Conversion requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS552 $170 Per Request*
Loan Analysis Report *One execution of this program is
included with month end processing.
Charge would only apply to requests
other than month end.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS553 $100 Plus $.35 per Confirmation
Audit Confirmations - Loans
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS554 Standard at month end only. Other
Deal, Source or Participated Report requests $85.
- ------------------------------------------------------ ---------- -----------------------------------------
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
- ------------------------------------------------------ ---------- -----------------------------------------
REQUEST FEE
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
<S> <C> <C>
BDS555 $85 Per Request
Line Transcript Statement Report
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS556 $85 Per Request
Note Transcript Statement Report
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS557 $85 Per Request
Note Statement
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS560 $170 Per Request*
Direct/Indirect Liability Reporting *One execution of this program is
included with month end processing.
Charge would only apply to requests
other than month end.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS564 $85 Per Request
Extracts Source ID Numbers
Updates Market Prices
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS566 $85 Per Request*
HMDA Reporting Code Analysis Reports *One execution of this program is
included with month-end processing.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS652 $25 Per application plus $.15 per account.
Cross Application Processing SMART Weekend processing only.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
BDS952 $50 Per Request
Specifications Reports
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
FMS642 $50 Per Request
Move Projected Budget to Current Budget
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
ADS003 $100 Per Applications $.01 Per Account on
Mass Maintenance File.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
Specification Changes $25 Per Quarter Hour.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
Special Programming or Consulting $85 Per Hour.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
Computer Time for Special Client Request $85 Per Quarter Hour.
- ------------------------------------------------------ ---------- -----------------------------------------
- ------------------------------------------------------ ---------- -----------------------------------------
Reshipping of Print Files $20 Per File
- ------------------------------------------------------ ---------- -----------------------------------------
$100 Minimum
- ------------------------------------------------------ ---------- -----------------------------------------
$500 Maximum per Processing Day
- ------------------------------------------------------ ---------- -----------------------------------------
</TABLE>
<PAGE> 21
- --------------------------------------------------------------------------------
Fiserv will provide PIM Services per the fees outlined below:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
ACH Formatted File Input Service
- ------------------------------------------- ---------- -------------------------
Implementation Fee $85.00 Per Hour
- ------------------------------------------- ---------- -------------------------
$225.00 Minimum
- ------------------------------------------- ---------- -------------------------
Per Input Formatted File $.01 Per Transaction
- ------------------------------------------- ---------- -------------------------
$30.00 Minimum Per File
- ------------------------------------------- ---------- -------------------------
- ------------------------------------------- ---------- -------------------------
- ------------------------------------------- ---------- -------------------------
ACH Origination Service
- ------------------------------------------- ---------- -------------------------
Implementation Fee $150.00
- ------------------------------------------- ---------- -------------------------
Per Monthly Fee $50.00 Plus $.01 Per Transaction
- ------------------------------------------- ---------- -------------------------
$100.00 Monthly Minimum
- ------------------------------------------- ---------- -------------------------
</TABLE>
Miscellaneous Service Fees subject to change.
<PAGE> 22
Exhibit A-5
ANCILLARY MODULES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------- ------------- ----------------------------------
ONE-TIME
DESCRIPTION FEE MONTHLY FEE
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
<S> <C> <C>
General Ledger Accounting System with Cost Center Accounting $4,000 $100 per Center/500 Minimum
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Asset Liability Management System $4,000 $325
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Bond Account System $1,500 $200
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Check Reconciliation $1,500 $200 Base/$35.00 per Input File
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Fixed Asset System N/A Included
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Stockholder Accounting System N/A Included
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Accounts Payable System N/A Included
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Loan Custodial Module $1,500 $200
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Automated Collateral Insurance Reporting Module N/A $65 Per Tape
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Automated Credit Reporting Insurance Reporting Module N/A $65 Per Tape
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Holding Company Reporting Module $3,000 $300
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Federal Call Reporting Module N/A Included
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Safe Deposit Box Accounting System N/A Included
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
On-Line Loan Collection Module $4,000 $350
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Telebanc $10,000 Base $400 plus $.03 per Total
Accounts on File
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Execubanc Banking Module $5,000 Base $400 plus $.03 per Total
(Client based hardware per separate quote) Accounts on File
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
PC Banc $5,000 Base $400 plus $.03 per Total
(Client based Hardware per separate quote) Accounts on File
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Director Interface $5,000 $500
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Prime Data Warehousing $5,000 Base $400 Plus $.03 per Total
Hardware/Software Per Separate Quote Accounts on File
Third Party Training Additional
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ------------------------------------------------------------------------------------------------------------------------
NetBanc (Internet Banking) Per Separate Quote
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 23
Exhibit A-5
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------- ------------- ----------------------------------
ONE-TIME
DESCRIPTION FEE MONTHLY FEE
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
<S> <C> <C>
PLUS N/A Included
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Sharp 6500 $2,500 $250
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ----------------------------------------------------------------------- ------------- ----------------------------------
Platform Transfer CFI Loan/CFI Deposit/Bankers System $2,500 $250 per Function
Deposit/Bankers System Loan/Formation Technologies Loan
- ----------------------------------------------------------------------- ------------- ----------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Ancillary Module One-Time Fees and Monthly Fees subject to change.
Implementation travel and related expenses additional.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
EXHIBIT A-6
TABLE I
PERFORMANCE STANDARDS
<TABLE>
<CAPTION>
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
SCHEDULE CRITICAL WT. MINIMUM SERVICE LEVEL PERFORMANCE STANDARD
AVAILABILITY APPLICATION
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
<S> <C> <C> <C> <C>
07:00-19:00 M-F Online Uptime 5 98% 99.7%
07:00-16:00 Sat. All Applications
(Within 15 Minutes)
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
07:00-1900 M-F Online Uptime 20 98% 99.7%
07:00-16:00 sat. All Applications
(Exceeding 15 Minutes)
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
07:00-19:00 M-F Online Response 5 3 Seconds 1.5 Seconds
07:00-16:00 Sat. Time Backoffice **
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
07:00-19:00 M-F Online Response 10 5 Seconds 3 Seconds
07:00-16:00 Sat. Time Platform **
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
07:00-19:00 M-F Online Response 10 3 Seconds 1.5 Seconds
07:00-16:00 Sat. Time Teller **
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
7:30 T-Sat. Batch Reports* 5 98% 99.7%
Remote Print
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
7:30 T-Sat. Optical Reports 5 98% 99.7%
- ---------------------------- --------------------------- --------- ------------------------- ---------------------
</TABLE>
DEFINITIONS:
Uptime: The specified hour in which the Critical Application
is actually available for use by End Users.
Response Time: The Time that is measured by stopwatch between
the instant and End User transmits data (hits the
Enter key) and the time the same End User receives a
response at the originating workstation.
Minimum Service Level: The lowest level of service which is maintained
during any month before penalties are assessed.
Performance Standard: The expected level of service to be maintained in any
month.
* Excludes SMART Reports, Special Requests and Statements
** Provided Client Has Sufficient Capacity at Client Locations
<PAGE> 25
1. Services. Fiserv will provide the Client the Item Processing
Services (the "Item processing Services") specified in Exhibit B-1. client
agrees that Fiserv shall be the sole provider of Item Processing or similar
services. Client shall not contract with another vendor or attempt to provide
in-house any such Item Processing Services or similar services without Fiserv's
prior written consent.
2. Fees. Client shall pay Fiserv the fees and other charges for
the Item Processing Services specified in Exhibit B-2. Fiserv agrees to give at
least thirty (30) days' notice to Client of any changes in the rules and
procedures established for processing items in the Exhibit of costs, fees, and
charges, unless such changes are caused by changes made by the Federal Reserve
System or otherwise beyond the control of Fiserv, not permitting Fiserv to give
such advance notice. Fiserv reserves the right to make such changes without
notice to the Exhibits as may be necessary to cover any increases in the costs
and charges of the Federal Reserve System or in other costs and charges beyond
the Fiserv's control, including changes required by applicable law or regulatory
activity. The fees listed in Exhibit B-2 may be changed annually on the
anniversary date of this Exhibit upon 30 days notice to Client. Each change
shall be limited to the change in the U.S. Department of Labor, Consumer Price
Index for All Urban Households ("CPI") for the 12-month period preceding the
anniversary date. Fiserv will deliver a revised Exhibit B-2 to the Client with
the notification of the fee change.
3. No Fiduciary Relationship. Fiserv shall perform such Item
processing Services for which Fiserv shall subscribe as agent of Client, and
Fiserv shall not have by reason of this Agreement a fiduciary relationship with
respect to Client.
4. Lost, Destroyed, and Misplaced Items. Fiserv assumes no
liability for any item lost, destroyed, or misplaced while in transit before the
item physically arrives at the premises of Fiserv and is received by Fiserv. In
the event any items are lost, destroyed, or misplaced, and such event is not due
to gross negligence or intentional misconduct by Fiserv, Client shall be solely
responsible for the costs and expenses incurred by Fiserv in reconstructing any
such items and for any damages or other losses that may be incurred by Fiserv
due to the collection of such items. In the event Fiserv negligently loses,
destroys, or misplaces deposited items after acceptance of said deposit, Fiserv
shall be liable only for the reasonable reconstruction costs of the deposit.
Reasonable reconstruction costs shall be only those costs that arise from the
reconstruction of a microfilmed deposit. Fiserv shall not be liable for the
reconstruction costs associated with a deposit for which Client can provide a
microfilmed record of such item(s) contained in the deposit. In no event shall
Fiserv be liable for the face value of any lost of missing deposit item(s).
5. Governmental Regulation. This Exhibit shall be governed by and
is subject to: the applicable laws, regulations, rules, terms and conditions, as
presently in effect of hereafter amended or adopted, of the United States of
America, the State of Wisconsin, the Federal Reserve Board, the Federal Reserve
Banks, the Federal Housing Finance Board, and any other governmental agency or
instrumentality having jurisdiction over the subject matter of this Exhibit.
client agrees to abide by such requirements and to execute and deliver such
agreements, documents, or other forms as may be necessary to comply with the
provisions hereof, including, without limitation, agreements to establish Fiserv
as Client's Agent for purposes of delivery of items processed hereunder from or
to the Federal Reserve Banks. Any such agreements shall be made a part of this
Agreement and are incorporated herein. A change or termination of such laws,
regulations, rules, terms, conditions, and agreements shall constitute,
respectively, a change or termination as to this Exhibit.
6. Client Responsibilities. Client shall maintain adequate
supporting materials (i.e. exact copies of the items, records, and other data
supplied to Fiserv) in connection with the provision of Item Processing
Services. client shall provide written notice of confirmation and/or
verification of any instructions given by Client, its agents, employees,
officers, or directors to Fiserv in connection with Fiserv's provision of Item
Processing Services.
7. Regulatory Authority. Client data and records shall be subject
to regulation and examination by government supervisory agencies to the same
extent as if such information were on Client's premises.
8. Forms and Supplies. client assumes and will pay the charges
for all customized forms, supplies, and delivery charges. Custom forms ordered
through Fiserv will be subject to the administrative fee set forth in Exhibit
B-2.
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit B to
the Agreement to be executed by their duly authorized representatives as of the
date indicated below.
FIRST FEDERAL BANK FISERV SOLUTIONS, INC.
By: \s\ J. Aubrey Crosland By: \s\ Charles E. Gantt
--------------------------------- ---------------------------------
Name: J. Aubrey Crosland Name: Charles E. Gantt
------------------------------- -------------------------------
Title: President & CEO Title: SVP FISERV ATA.
------------------------------ ------------------------------
Date: Date: 1-4-99
------------------------------- -------------------------------
<PAGE> 27
Exhibit B-1
Item Processing Services
Fiserv will provide Client the following Item Processing Services:
1. INCLEARING: Client authorizes Fiserv to receive Client's inclearing
items each business from the Federal Reserve Bank, local clearinghouse, and, in
the case of same day settlement, from presenting banks.
(a) Fiserv will balance the inclearing items to Client's cash letters,
capture the items on magnetic media, microfilm, and transmit the
account information to Client's account processing servicer.
(b) Based on the agreement of Fiserv and Client, all inclearing items
shall be: (i) stored by Fiserv and returned to Client at each
statement cycle date; (ii) stored by Fiserv for future statement
rendering; or (iii) returned to Client.
(c) Unless otherwise agreed in writing, Fiserv will not check
signatures.
2. PROOF: On each business day (excluding Saturdays, Sundays, and
holidays), Client will deliver to the Fiserv Processing Center checks and other
items deposited to accounts with client, checks and other items drawn on Client
accounts presented for encashment, and transactional entries generated by
Client, such as tellers' cash tickets, general ledger entries, and loan entries.
(a) Client agrees to MICR encode documents to meet Fiserv
specifications (ABA and Account Numbers and Transaction Codes).
(b) Client agrees to microfilm all items submitted to Fiserv.
(c) Client agrees that all transactional entries involving tellers'
cash tickets, general ledger entries, or loan entries shall be in
balance, and that Fiserv may return to Client unprocessed any
transactional entries that are not in balance.
(d) Client agrees to segregate all items into batches not to exceed 3"
in depth and to identify each such batch with a batch header
meeting Fiserv specifications.
(e) From the items submitted to Fiserv, Fiserv shall retrieve such
"on-us" information as may be necessary for the proper accounting
of the items and shall transmit this information to Client's
account processing servicer through telephone lines or by such
other means as Fiserv may from time to time deem appropriate.
(f) Client authorizes Fiserv to create ledger suspense entries,
deposit corrections, or other such entries to balance
transactions, except for those transactions outlined in
sub-paragraph (c) above, as may be necessary to the efficient
processing of the items.
(g) Unless otherwise agreed in writing, Fiserv will not check
signatures.
(h) After Fiserv has completed the process of retrieving and
transmitting to Client's account processing servicer the
information necessary for processing, all items not drawn against
client shall be forwarded for collection to the Federal Reserve
Bank or to such correspondent banks as Client may reasonably
designate in writing to Fiserv.
(i) As agreed by Fiserv and Client, all items drawn against client
shall be: (i) stored by Fiserv and returned to Client at each
statement cycle date; (ii) stored by Fiserv for future statement
rendering; or (iii) returned to client.
(j) All internally generated items shall be returned to Client or held
by Fiserv in accordance with Client's written instructions.
3. ENCODING: Fiserv will encode the dollar amount on all items needing
encoding and presented to Fiserv as part of the PROOF function described above.
(a) Fiserv may encode additional fields, such as account numbers, deposit
ticket totals or other items as specified by client. Any such encoding
will be according to terms agreed to by Fiserv.
4. EXCEPTION ITEM PROCESSING: One day after receipt of items, Fiserv
will perform an automated exception item pull for all items identified by
Client's account processing system for exception pull (NSF's, holds, large
dollars, or other criteria mutually agreed to by Client and Fiserv).
(a) Client's account processing servicer will provide an exception
item file to Fiserv after posting and updating of customer
accounts and on a mutually agreed schedule.
(b) Fiserv will either reject or pay exception items in accordance
with instructions, either written or oral, from client's
authorized officer(s) or employee(s).
<PAGE> 28
(c) In the event no instructions are received, Fiserv will follow
Client's standing orders for exceptions, which will be provided in
writing by Client.
(d) For items to be returned, Fiserv will: (i) stamp and qualify the
items and return them to the Federal Reserve Bank; or (ii) provide
other services as agreed by Fiserv and Client.
5. STATEMENT RENDERING: Fiserv will store all checks, drafts, and other
orders for the payment of money drawn against accounts at Client. At each Client
account cycle date, Fiserv will sort the items by account, match them with the
monthly account statement, and mail to the statement address.
(a) client will arrange for delivery of account statements to Fiserv at
Client's cost.
(b) Fiserv will add inserts to statements upon instructions from
Client.
(c) Fiserv will apply proper postage, which will be pre-paid monthly
on an estimated basis.
(d) Fiserv may, at its expense, arrange for statements to be pre-sorted
to reduce postage costs. In such event, client will be billed
standard postage charges.
6. COURIER SERVICES: Client is responsible for the provision of all
courier services except as noted below.
(a) Fiserv will provide, at its cost, standard scheduled trips between
Fiserv and: (i) the Federal Reserve bank; and (ii) local
clearinghouse.
(b) client will provide, at its cost, all other courier services,
including delivery of items from its branches to Fiserv and the
delivery of all items from Fiserv to Client.
(c) client will either provide necessary courier services or contract
with a third party for these courier services. Client will be
invoiced directly for any such third party services.
(d) If requested by Client and agreed to in writing by Fiserv, Fiserv
may provide courier services, either with Fiserv personnel or
through a third party provider under contract to Fiserv. In the
event Fiserv provides courier services:
(i) Client shall pay Fiserv for such courier services at a
rate agreed to by the parties; and
(ii)Client agrees that Fiserv shall have no liability or
responsibility for items being transported under such
courier services until such items have reached Fiserv
premises.
<PAGE> 29
Exhibit H
Item processing Service Fees
<TABLE>
<S> <C> <C> <C>
- ------------------------------------- ---------------------------- ------------------ --------------------
One-Time Implementation Fee $5,000.00
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Inclearing Capture 0 - 250,000 $.015 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
250,001 - 500,000 $.014 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
500,001 - 1,000,000 $.013 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
Over 1,000,000 $.012 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
Minimum $250.00 Per Month
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Reject Re-Entry $.025 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Microfilming $.005 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
Minimum $15.00 Per Day
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Fine Sorting $.006 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Serial Sorts $.025 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
Minimum $8.00 Per Account
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
POD/Transit Capture 0 - 250,000 $.020 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
250,001 - 500,000 $.018 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
500,001 - 1,000,000 $.016 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
Over 1,000,000 $.014 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
Minimum $250.00 Per Month
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Proof Encoding $.025 Per Field
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Deposit Corrections $1.00 Per Correction
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Exception Item Pull 0 - 250,000 $.006 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
250,001 - 500,000 $.005 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
500,001 - 1,000,000 $.004 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
Over 1,000,000 $.003 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Returns Qualification $.400 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Return Items $2.00 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Late Return Items $3.00 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Large Dollar Fax $1.00 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Large Dollar Notification $4.50 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Research Work $20.00 Per Hour
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Photo Copy $2.50 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Original Item Retrieval $3.00 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
</TABLE>
<PAGE> 30
<TABLE>
<S> <C> <C> <C>
- ------------------------------------- ---------------------------- ------------------ --------------------
Fed Adjustments $10.00 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Item Storage $.0045 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Statement Rendering $.10 Per Account
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Statement Items Inserted $.01 Per Item
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Other Mailings $.07 Per Account
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Programming $85.00 Per Hour
1 Hour Minimum
- ------------------------------------- ---------------------------- ------------------ --------------------
- ------------------------------------- ---------------------------- ------------------ --------------------
Transmissions $15.00 Per File
- ------------------------------------- ---------------------------- ------------------ --------------------
</TABLE>
PASS-THRU CHARGES
Postage and Express Mail
Couriers
Envelopes and Statements
Custom and Special Forms
<PAGE> 31
Exhibit H
IMAGE PROCESSING SERVICES FEES
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------- ------------------- ----------------------------------
INSTALLATION AND ONE TIME CHARGES
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Image Library Software
- ----------------------------------------------------------------------- ------------------- ----------------------------------
PC Platform (First User) $995.00
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Additional Users $500.00 Each
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Annual License Agreement 15% Per year/User
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
One Time Set-Up Charges
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Estimated On-Site Two (2) Days $5,000.00* Plus Travel/Expenses
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Additional charge for interfaces will be priced separate with your core
processing provider.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
MONTHLY RECURRING CHARGES
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Inclearing Capture $0.015 Per Item
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Item Image Scan (Front & Rear) $0.008 Per Item
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Physical Item Storage & Destruction (45 Day Retention) $0.001 Per Item
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Image Inquiry to Fiserv LAN $0.900 Per Inquiry
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Customer Laser Printed Image Statements
(Includes Statement/Envelope stock, Custom Orders
quoted on request)
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Retail Customer $0.600 Per Account
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Up to 5 Sides, Front Image Only, additional $.030
if EOM Cycle, additional sides @ $.08 each.
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Commercial Customer $1.600 Per Account
Up to 9 Sides, Front & Back Image
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Monthly Minimum Processing $1,000.00 or 20% of DDA Retail
Volume (whichever is
the greater)
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
OTHER SERVICES/CONSIDERATIONS
- ----------------------------------------------------------------------- ------------------- ----------------------------------
- ----------------------------------------------------------------------- ------------------- ----------------------------------
CD-ROM Image Distribution $25.00 Plus Shipping
- ----------------------------------------------------------------------- ------------------- ----------------------------------
Archive Options Available Upon Request
- ----------------------------------------------------------------------- ------------------- ----------------------------------
</TABLE>
Dial Up Communications compatible modems and phone toll charges responsibility
of Client or Customer.
Other Statement Rendering and Back Office Services at then current fees.
Future services may be provided by Fiserv as developed and priced separately.
* One-time set-up charges of $5,000.00 will be reduced by $2,500.00 if Image
Processing Services are elected in conjunction with traditional Item Processing.
<PAGE> 32
Exhibit H
FISERV ATLANTA DISASTER RECOVERY AGREEMENT
ON-LINE SERVICES
I. A Disaster shall mean any unplanned interruption of the operations of
or inaccessibility to Fiserv's data center which appears in Fiserv's
reasonable judgment to require relocation of processing to a primary
recovery location. Fiserv shall notify client as soon as possible after
it deems a service outage to be a Disaster. Fiserv shall move the
processing of Client's standard on-line services to a primary recovery
location as expeditiously as possible and shall coordinate the cut-over
to back-up data lines with the appropriate carriers. Client shall
maintain adequate records of all transactions during the period of
service interruption and shall have personnel available to assist
Fiserv in implementing the switchover to the primary recovery location.
during a Disaster, optional or on-request services shall be provided by
Fiserv only to the extent that there is adequate capacity at the
primary recovery location and only after stabilizing the provision of
base on-line services.
II. Fiserv shall work with Client to establish a plan for alternative data
communications in the event of a Disaster.
III. Fiserv shall test its Disaster Recovery Services Plan by conducting an
annual test. Client agrees to participate in and assist Fiserv with
such testing. Test results will be made available to Client's
management, regulators, internal and external auditors, and (upon
request) to Client's insurance underwriters.
IV. client understands and agrees that the Fiserv Disaster Recovery Plan is
designed to minimize but not eliminate risks associated with a Disaster
affecting Fiserv's data center. Fiserv does not warrant that service
will be uninterrupted or error free in the event of a Disaster. Client
maintains responsibility for adopting a disaster recovery plan relating
to disasters affecting Client's facilities and for securing business
interruption insurance or other insurance as necessary to properly
protect Client's revenues in the event of a disaster.
V. Monthly subscription fee $100.00.
ACCEPTED BY:
FIRST FEDERAL BANK FISERV SOLUTIONS, INC.
\s\ J. Aubrey Crosland \s\ William L. Kenney
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Printed Name: J. Aubrey Crosland Printed Name: William L. Kenney
Title: President & CEO Title: President Fiserv Atlanta
Dec. 08, 1998 12/14/98
- ---------------------------------- -----------------------------------
Date Date
<PAGE> 33
Exhibit H
FISERV ATLANTA DISASTER RECOVERY AGREEMENT
ITEM PROCESSING SERVICES
I. A Disaster shall mean any unplanned interruption of the operations of
item processing equipment and/or communications capabilities for
transmission of captured documents. Fiserv will provide facilities for
source document Capture, fine sort or bulk file, and Exception Item
Pull processing at the nearest Fiserv Atlanta Item Processing facility.
II. Fiserv shall work with the Client in arranging mutually agreed upon
processing schedules and delivery times. It will be the responsibility
of the Client for all transportation to and from the Fiserv processing
facility. client shall assume total responsibility for source documents
in transit to and from the Fiserv facility.
III. Fiserv shall test its Disaster Recovery Services Plan annually with the
participation and assistance of the Client. Test results will be made
available to Client's management, regulators, internal and external
auditors, and (upon request) to Client's insurance underwriters.
IV. Client maintains responsibility for securing business interruption
insurance or other insurance as necessary to properly protect Client's
revenues in the event of a disaster.
V. Item Processing Service Fees:
$250.00 One-Time Set-Up Fee
$250.00 Annual Testing Fee
$100.00 Monthly Subscription Fee
$100.00 Plus $.01 per Item Processed upon Activation
Microfilms @ $20.00 per roll (includes film and development)
Transportation costs the responsibility of Client.
ACCEPTED BY:
FIRST FEDERAL BANK FISERV SOLUTIONS, INC.
\s\ J. Aubrey Crosland Charles E. Gantt
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Printed Name: J. Aubrey Crosland Printed Name:
Title: Pres. & CEO Title:
Dec. 08, 1998 1-4-99
- ---------------------------------- -----------------------------------
Date Date
<PAGE> 34
Exhibit H
FISERV SOLUTIONS, INC. DISASTER RECOVERY AGREEMENT
EFT/ATM SERVICES
(Atlanta Stratus Support Only)
I. A Disaster shall mean any unplanned interruption of the operations of
or inaccessibility to Fiserv's data center which appears in Fiserv's
reasonable judgment to require relocation of processing to a primary
recovery location. Fiserv shall notify Client as soon as possible after
it deems a service outage to be a Disaster. Fiserv shall move the
processing of Client's standard on-line services to a primary recovery
location as expeditiously as possible and shall coordinate the cut-over
to back-up data lines with the appropriate carriers. Client shall
maintain adequate records of all transactions during the period of
service interruption and shall have personnel available to assist
Fiserv in implementing the switchover to the primary recovery location.
During a Disaster, optional or on-request services shall be provided by
Fiserv only to the extent that there is adequate capacity at the
primary recovery location and only after stabilizing the provision of
base on-line services.
II. Fiserv shall work with Client to establish a plan for alternative data
communications in the event of a Disaster.
III. Fiserv shall test its Disaster Recovery Services Plan by conducting an
annual test. Client agrees to participate in and assist Fiserv with
such testing. Test results will be made available to Client's
management, regulators, internal and external auditors, and (upon
request) to Client's insurance underwriters.
IV. Client understands and agrees that the Fiserv Disaster Recovery Plan is
designed to minimize but not eliminate risks associated with a Disaster
affecting Fiserv's data center. Fiserv does not warrant that service
will be uninterrupted or error free in the event of a Disaster. Client
maintains responsibility for adopting a disaster recovery plan relating
to disasters affecting Client's facilities and for securing business
interruption insurance or other insurance as necessary to properly
protect Client's revenues in the event of a disaster.
V. Monthly subscription fee $100.00.
ACCEPTED BY:
FIRST FEDERAL BANK FISERV SOLUTIONS, INC.
\s\ J. Aubrey Crosland \s\ William L. Kenney
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Printed Name: J. Aubrey Crosland Printed Name: William L. Kenney
Title: Pres. & CEO Title: President Fiserv Atlanta
Dec. 08, 1998 12/14/98
- ---------------------------------- -----------------------------------
Date Date
<PAGE> 1
EXHIBIT 10.7
FIRST CAPITAL BANCSHARES, INC.
207 HIGHWAY 15/401 BYPASS EAST
BENNETTSVILLE, SOUTH CAROLINA
February 24, 1999
Mr. J. Randy McDonald
Bennettsville, South Carolina
Dear Randy:
We are pleased to offer you the position of Chief Executive Officer and
Chief Lending Officer of First Capital Bank (Proposed), a proposed thrift (the
"Bank"), on the following terms and conditions. This letter supersedes the
previous letter of January 4, 1999.
1. Independent Contractor. Beginning on January 4, 1999, you agree to
serve First Capital Bancshares, Inc., the holding company for the Bank (the
"Company"), as an independent contractor at the rate of $4,000 per month until
such time as the Bank has received all necessary approvals and receives its
charter. During such period you shall not receive any benefits, and no
employment taxes shall be withheld. You shall perform such duties as may be
requested by the Chief Executive Officer and Board of Directors of the Company,
primarily assisting in the formation of the Bank.
2. Employment. Once the Bank receives its charter, you shall be
employed as Chief Executive Officer and Chief Lending Officer of the Bank upon
the terms and conditions set forth herein. You shall have such authority and
responsibilities consistent with your position as are set forth in the Bank's
Bylaws or assigned by the Bank's Board of Directors (the "Board") from time to
time. You shall devote your full business time, attention, skill and efforts to
the performance of your duties hereunder, except during periods of illness or
periods of vacation and leaves of absence consistent with the Bank's policies.
You may devote reasonable periods to service as a director or advisor to other
organizations, to charitable and community activities, and to managing your
personal investments, provided that such activities do not materially interfere
with the performance of your duties hereunder and are not in conflict with,
competitive with, or adverse to, the interests of the Company or the Bank.
3. Compensation and Benefits. Beginning on the date of this Agreement,
the Employer shall reimburse you for reasonable travel and other expenses
related to your duties which are incurred and accounted for in accordance with
the normal practices of the Employer. Beginning on the date of your full-time
employment as set forth in Section 2:
(a) You shall receive a salary of $60,000 per year, payable in
accordance with the Bank's payroll policy. Additionally, you shall receive a
one-time payment equal to the number of days between the date of this Agreement
and the date of your full-time employment with the
<PAGE> 2
Bank, divided by 30 and multiplied by $1,000. The purpose of this payment is to
gross up your pre-charter pay to equal your post-charter pay, once the Bank
receives its charter.
(b) You shall participate in any retirement, welfare, deferred
compensation, life and health insurance, and other benefit plans or programs of
the Bank available to its employees in general.
(c) The Employer shall provide you with appropriate officers' liability
insurance coverage at no cost to you.
(d) You shall be entitled to two weeks of paid vacation per year.
4. Protection of Trade Secrets. You agree to maintain in strict
confidence and, except as necessary to perform your duties for the Employer, not
to use or disclose any Trade Secrets of the Employer during or at any time after
your employment. As provided by South Carolina statutes, "Trade Secret" means
information, including, but not limited to, a formula, pattern, compilation,
program, device, method, technique, product, system, or process, design,
prototype, procedure, or code that: (i) derives independent economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by the public or any other person 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.
5. Protection of Other Confidential Information. In addition, you agree
to maintain in strict confidence and, except as necessary to perform your duties
for the Employer, not to use or disclose any Confidential Business Information
of the Employer during your employment and for a period of 24 months following
termination of your employment. "Confidential Business Information" shall mean
any internal, non-public information (other than Trade Secrets already addressed
above) concerning the Employer's financial position and results of operations
(including revenues, assets, net income, etc.); annual and long-range business
plans; product or service plans; marketing plans and methods; training,
educational and administrative manuals; customer and supplier information and
purchase histories; and employee lists. The provisions of Sections 5 and 6 above
shall also apply to protect Trade Secrets and Confidential Business Information
of customers and other third parties provided to the Employer under an
obligation of secrecy.
6. Return of Materials. You shall surrender to the Employer, promptly
upon its request and in any event upon termination of your 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 your possession or
control, including all copies thereof, relating to the Employer, its business,
or its customers. Upon the request of the Employer, you shall certify in writing
compliance with the foregoing requirement.
2
<PAGE> 3
7. Restrictive Covenants.
(a) No Solicitation of Customers. During your employment with the
Employer and for a period of 12 months thereafter, you shall not (except on
behalf of or with the prior written consent of the Employer), either directly or
indirectly, on your 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 you had material
contact.
(b) No Recruitment of Personnel. During your employment with the
Employer and for a period of 12 months thereafter, you shall not, either
directly or indirectly, on your 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 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 your employment with the Employer
and for a period of 12 months thereafter, you shall not (without the prior
written consent of the Employer) compete with the Employer or any of its
Affiliates by, directly or indirectly, forming, serving as an organizer,
director or officer of, or consultant to, or acquiring or maintaining more than
a 1% passive investment in, a depository financial institution or holding
company thereof if such depository institution or holding company has one or
more offices or branches located in the Territory. Notwithstanding the
foregoing, you may serve as an officer of or consultant to a depository
institution or holding company thereof even though such institution operates one
or more offices or branches in the Territory, if your employment does not
directly involve, in whole or in part, the depository financial institution's or
holding company's operations in the Territory.
8. Independent Provisions. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision or clause of this Agreement, or portion thereof, shall be held by any
court or other tribunal of competent jurisdiction to be illegal, void, or
unenforceable in such jurisdiction, the remainder of such provision shall not be
thereby affected and shall be given full effect, without regard to the invalid
portion. It is the intention of the parties that, if any court construes any
provision or clause of this Agreement, or any portion thereof, to be illegal,
void, or unenforceable because of the duration of such provision or the area or
matter covered thereby, such court shall reduce the duration, area, or matter of
such provision, and, in its reduced form, such provision shall then be
enforceable and shall be enforced. You and the Employer hereby agree that they
will negotiate in good faith to amend this Agreement from time to time to modify
the terms of Sections 8(a), 8(b), and 8(c), the definition of the term
"Territory," and the definition of the term "Business," to reflect changes in
the Employer's business and affairs so that the scope of the limitations placed
on your activities by Section 8 accomplishes the parties' intent in relation to
the then current facts and circumstances. Any such amendment shall be effective
only when completed in writing and signed by you and the Employer.
3
<PAGE> 4
9. 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. Your rights
and obligations under this Agreement may not be assigned by you, except that
your 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 your
estate.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, however, that all
notices to the Employer shall be directed to the attention of the Employer with
a copy to the Secretary of the Employer. All notices and communications shall be
deemed to have been received on the date of delivery thereof.
11. Employment "At Will". Nothing in this Agreement shall be construed
to create an employment relationship for a fixed or renewable term. You
acknowledges that, unless otherwise provided in a written agreement signed by
you and approved by the Board of the Company, your employment shall be "at will"
and terminable by either party upon two weeks notice.
12. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of South Carolina 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 South Carolina.
13. Enforcement. You agree that in the event of any breach or
threatened breach by you of any covenant contained in Section 8(a), 8(b), or
8(c) hereof, the resulting injuries to the Employer would be difficult or
impossible to estimate accurately, even though irreparable injury or damages
would certainly result. Accordingly, an award of legal damages, if without other
relief, would be inadequate to protect the Employer. You, therefore, agree that
in the event of any such breach, the Employer shall be entitled to obtain from a
court of competent jurisdiction an injunction to restrain the breach or
anticipated breach of any such covenant, and to obtain any other available
legal, equitable, statutory, or contractual relief. Should the Employer have
cause to seek such relief, no bond shall be required from the Employer, and you
shall pay all attorney's fees and court costs which the Employer may incur to
the extent the Employer prevails in its enforcement action.
14. Certain Definitions.
(a) "Affiliate" shall mean any business entity controlled by,
controlling or under common control with the Employer.
4
<PAGE> 5
(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.
(c) "Competing Business" shall mean any business that, in whole or in
part, is the same or substantially the same as the Business.
(d) "Territory" shall mean a radius of (i) 30 miles from the main
office of the Employer or (ii) 15 miles from any branch office of the Employer.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. Failure of the Employer to enforce
any of the provisions of this Agreement or any rights with respect thereto shall
in no way be considered to be a waiver of such provisions or rights, or in any
way affect the validity of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17. No Conflict with Laws. In the event there are any discrepancies
herein with any federal law or regulation, the federal law or regulation shall
control.
5
<PAGE> 6
If you agree with the foregoing, please countersign this letter below and return
a copy to me.
FIRST CAPITAL BANCSHARES, INC.
\s\ Aubrey Crosland
--------------------------------------
Aubrey Crosland
President
FIRST CAPITAL BANK (PROPOSED)
\s\ J. Aubrey Crosland
--------------------------------------
J. Aubrey Crosland
President
Agreed and accepted:
\s\ J. Randy McDonald
- --------------------------------------
J. Randy McDonald
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
the date first written above.
COMPANY: ESCROW AGENT:
FIRST CAPITAL BANCSHARES, INC. THE BANKERS BANK
By: By:
-------------------------------- -------------------------------
Name: J. Aubrey Crosland Name: William R. Burkett
Title: Chairman and Chief Executive Officer Title: Senior Vice President
BSFS:
BANC STOCK FINANCIAL SERVICES, INC.
By:
--------------------------------
Name: Edward E. Schmidt
Title: Executive Vice President
7
<PAGE> 1
EXHIBIT 10.8
STOCK ORDER FORM FOR FIRST CAPITAL BANCSHARES, INC.
Note: Before completing this form please read the Prospectus and the
accompanying Stock Order Form Guide and Instructions.
- --------------------------------------------------------------------------------
NUMBER OF SHARES
- --------------------------------------------------------------------------------
(1) Number of Shares Price Per Share (2) Total Amount Due
------------------------- -------------------------
X $10.00 =
------------------------- -------------------------
The minimum number of shares that may be subscribed for is 100. The maximum any
individual may subscribe for is 5% of the offering (25,000 shares based on the
minimum offering of 500,000 shares).
- --------------------------------------------------------------------------------
METHOD OF PAYMENT
- --------------------------------------------------------------------------------
(3) Please enclose a check, bank draft, or money order payable to THE
BANKERS BANK, ESCROW AGENT FOR FIRST CAPITAL BANCSHARES, INC. for the
total amount due.
- --------------------------------------------------------------------------------
BROKER DEALER NAME AND ADDRESS
- --------------------------------------------------------------------------------
(4) If purchased through a broker/dealer, please list the name, address,
and phone number of the broker dealer in the space provided.
<TABLE>
<S> <C>
Company Name: City:
---------------------------------- -------------------------------------------
Broker Name: State: Zip Code:
----------------------------------- ----------------- --------------
Street Address: Phone Number:
-------------------------------- -----------------------------------
</TABLE>
- --------------------------------------------------------------------------------
STOCK REGISTRATION ONE OWNERSHIP PER STOCK ORDER FORM
- --------------------------------------------------------------------------------
(5) Form of stock ownership:
<TABLE>
<S> <C> <C>
[ ] Individual [ ] *Uniform Transfer to Minors [ ] Partnership
[ ] Joint Tenants [ ] *Uniform Gift to Minors [ ] IRA (Custodian Name and Signature Required)
[ ] Tenants in Common [ ] Corporation [ ] Fiduciary Trust (Under Agreement Dated _______)
</TABLE>
*Minor's Social Security Number Required
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- -----------------------------------------------------------------------------------------------------------------------------------
Name Daytime Telephone
- -----------------------------------------------------------------------------------------------------------------------------------
Street Address Evening Telephone
- -----------------------------------------------------------------------------------------------------------------------------------
City State Zip Code State of Residence
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
OFFICE USE: Date Received _______ Check # _______ Amount $_______ Order # _______ Category _______ Initials_______
</TABLE>
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NASD AFFILIATION (This section only applies to those individuals who meet the
delineated criteria.)
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[ ] Check here if you are a member of the National Association of
Securities Dealers, Inc. ("NASD"), a person associated with an NASD member, a
member of the immediate family of any such person to whose support such person
contributes, directly or indirectly, or the holder of an account in which an
NASD member or person associated with an NASD member has a beneficial interest.
To comply with conditions under which an exemption from the NASD's
Interpretation with Respect to Free-Riding and Withholding is available, you
agree, if you have checked the NASD affiliation box: (1) not to sell, transfer
or hypothecate the shares subscribed for herein for a period of three months
following the issuance, and (2) to report this subscription in writing to the
applicable NASD member within one day of the payment therefor.
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ACKNOWLEDGEMENTS
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By signing below:
1. I acknowledge receipt of the Prospectus dated __________________, 1999. I
understand that I may not change or revoke my order once it is received
by the Company and that my order shall survive my death or disability. I
also certify that this stock order is for my account.
2. I certify that:
(i) the social security number or taxpayer identification number
given herein is correct; and
(ii) I am not subject to backup withholding;
[If you have been notified by the Internal Revenue Service
that you are subject to backup withholding because of
under-reporting interest or dividends on your tax return, you
must cross out Item (ii) above.]
3. I acknowledge that I have not waived any rights under the Securities Act
of 1933 and the Securities Exchange Act of 1934.
4. I acknowledge that the Company has the right to accept or reject this
order form in whole or in part, for any reason whatsoever.
5. I certify that I am a bona fide resident of the State indicated on the
reverse side of this order form.
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THIS FORM MUST BE SIGNED AND DATED. YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH
THE PROVISIONS OF THE PROSPECTUS.
When purchasing as a custodian, corporate officer, etc.; include your full
title.
<TABLE>
<S> <C> <C>
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Signature Title (if applicable) Date
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1.
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2.
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3.
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</TABLE>
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, OR ANY OTHER GOVERNMENTAL AGENCY.
RETURN THIS FORM TO: The Bankers Bank
ATTN: William R. Burkett, Senior Vice President
2410 Paces Ferry Rd.
600 Paces Summit
Atlanta, Georgia 30339
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<PAGE> 3
STOCK ORDER FORM GUIDE AND INSTRUCTIONS
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INSTRUCTIONS
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ITEMS 1 AND 2 - Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares by the Subscription Price of $10.00 per share. The minimum purchase is
100 shares.
The Company has reserved the right to reject any subscription received in the
Offering, in whole or in part.
ITEM 3 - Payment for shares may be made by check, bank draft or money order made
payable to "THE BANKERS BANK, ESCROW AGENT FOR FIRST CAPITAL BANCSHARES, INC."
DO NOT MAIL CASH. Your funds will be returned promptly if the offering is
terminated.
ITEM 4 - If purchasing through a broker/dealer please list the name, address,
and phone number in this box.
ITEM 5 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of the Company's
common stock. Print the name(s) in which you want the shares registered and the
mailing address of the registration. Include the first name, middle initial, and
last name of the shareholder. Avoid the use of two initials. Please omit words
that do not affect ownership rights, such as "Mrs.," "Mr.," "Dr.," "special
account," etc.
SEE YOUR LEGAL OR FINANCIAL ADVISER IF YOU ARE UNSURE ABOUT THE CORRECT
REGISTRATION OF YOUR STOCK.
INDIVIDUAL - The shares are to be registered in an individual's name only. You
may not list beneficiaries for this ownership.
JOINT TENANTS - Joint tenants with right of survivorship identifies two or more
owners. When shares are held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
TENANTS IN COMMON - Tenants in common may identify two or more owners. When
shares are held by tenants in common, upon the death of one co-tenant, ownership
of the shares will be held by the surviving co-tenant(s) and by the heirs of the
deceased co-tenant. All parties must agree to the transfer or sale of shares
held by tenants in common. You may not list beneficiaries for this ownership.
INDIVIDUAL RETIREMENT ACCOUNT - Individual Retirement Account ("IRA") holders
may make share purchases from their deposits through a pre-arranged
"trustee-to-trustee" transfer. Shares may only be held in a self-directed IRA.
The Company will not offer a self-directed IRA. The Subscription Agreement must
be completed and executed by the IRA Custodian. Please contact the Sales Agent
if you have any questions about your IRA account.
UNIFORM GIFT TO MINORS - For resident of many states, shares may be held in the
name of a custodian for the benefit of a minor under the Uniform Transfers to
Minors Act. For residents in other states, shares may be held in a similar type
of ownership under the Uniform Gift to Minors Act of the individual states. For
either type of ownership, the minor is the actual owner of the shares with the
adult custodian being responsible for the investment until the child reaches
legal age.
On the first line, print the first name, middle initial, and last name of the
custodian, with the abbreviation "CUST" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial, and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the
3
<PAGE> 4
appropriate state. For example, shares held by John Doe as custodian for Susan
Doe under the Ohio Transfer to Minors Act will be abbreviated John Doe, CUST
Susan Doe Unif Tran Min Act. OH. USE THE MINOR'S SOCIAL SECURITY NUMBER. Only
one custodian and one minor may be designated.
CORPORATION/PARTNERSHIP - Corporations/Partnerships may purchase shares. Please
provide the Corporation's/Partnership's legal name and Tax I.D.
FIDUCIARY/TRUST - Generally, fiduciary relationships (such as trusts, estates,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your shares may not be registered in a fiduciary capacity.
On the first "NAME" line, print the first name, middle initial, and last name of
the fiduciary if the fiduciary is an individual. If the fiduciary is a
corporation, list the corporate title on the first "NAME" line. Following the
name, print the fiduciary "title" such as trustee, executor, personal
representative, etc.
On the second "NAME" line, print either the name of the maker, donor, or
testator OR the name of the beneficiary. Following the name, indicate the type
of legal document establishing the fiduciary relationship (agreement, court
order, etc.). In the blank after "Under Agreement Dated," fill in the date of
the document governing the relationship. The date of the document need not be
provided for a trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: "John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated June 9, 1987."
4
<PAGE> 1
EXHIBIT 23.1
TOURVILLE, SIMPSON & HENDERSON
CERTIFIED PUBLIC ACCOUNTANTS
1615 Pickens Street
Columbia, South Carolina 29202
(803) 252-3000
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the inclusion of my report dated February 18, 1999, on the
financial statements of First Capital Bancshares, Inc., at December 31, 1998
and for the period then ended in the Form SB-2 Registration Statement as filed
by First Capital Bancshares, Inc., under the Securities Act of 1933 and the
reference to us under the caption "Experts" in the same Form SB-2 Registration
Statement.
\s\ Tourville, Simpson & Henderson, L.L.P.
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Tourville, Simpson & Henderson, L.L.P.
Columbia, South Carolina
February 26, 1999
