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As filed with the SEC on July 27, 1999
Registration No. ___________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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GREENVILLE FIRST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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South Carolina 6021 58-2459561
<S> <C> <C>
(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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1805 Laurens Road
Greenville, South Carolina 29607
(864) 241-7806
(Address and Telephone Number of Intended Principal Place of Business)
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R. Arthur Seaver, Jr.
Chief Executive Officer
1805 Laurens Road
Greenville, South Carolina 29607
(864) 241-7806
(Name, Address, and Telephone Number of Agent For Service)
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Copies of all communications, including copies of all communications sent to
agent for service, should be sent to:
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Neil E. Grayson, Esq. Boyd C. Campbell, Jr., Esq.
C. Russell Pickering, Esq. Smith Helms Mulliss & Moore, L.L.P.
J. Brennan Ryan, Esq. 201 North Tryon Street
Nelson Mullins Riley & Scarborough, L.L.P. 30th Floor
999 Peachtree Street, N.E., Suite 1400 Charlotte, North Carolina 28202
Atlanta, Georgia 30309 (704) 343-2000
(404) 817-6000 (704) 334-8467 (Fax)
(404) 817-6225 (Fax)
</TABLE>
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 of 1933, check the following
box and list the Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 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.... 1,380,000 $10.00 $13,800,000 $3,836
=========================================================================================================
</TABLE>
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which 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.
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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 prospectus is not an offer to buy these securities in any state
where the offer or sale is not permitted.
THIS IS A PRELIMINARY PROSPECTUS AND IS NOT YET COMPLETE. JULY 27, 1999
GREENVILLE FIRST BANCSHARES, INC.
A proposed bank holding company for
[BANK LOGO HERE]
GREENVILLE FIRST BANK (PROPOSED)
1,200,000 Shares of Common Stock
$10.00 per share
-------------------------------
We are offering shares of common stock of Greenville First Bancshares,
Inc. to fund the start-up of a new community bank, Greenville First Bank, N.A.,
proposed. Greenville First Bancshares, Inc. will be the holding company and sole
owner of the bank. The bank will be headquartered in Greenville County, South
Carolina, and we expect to open the bank in the fourth quarter of 1999 or the
first quarter of 2000. This is our first offering of stock to the public, and
there is no public market for our shares. This a firm commitment underwriting.
The maximum purchase is 5% of the offering, although we may at our discretion
accept subscriptions for more. We will request that quotations for the common
shares be reported on the Nasdaq OTC Bulletin Board under the symbol "GVBK" or
"GVFB".
THIS IS A NEW BUSINESS. AS WITH ALL NEW BUSINESSES, AN INVESTMENT WILL
INVOLVE RISKS. IT IS NOT A DEPOSIT OR AN ACCOUNT AND IS NOT INSURED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS
YOU CAN AFFORD TO LOSE SOME OR ALL OF YOUR INVESTMENT. SOME OF THE RISKS OF THIS
INVESTMENT ARE DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 6.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<CAPTION>
PER SHARE TOTAL
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Public Offering Price................ $10.00 $12,000,000
Underwriter's Discount............... $ .63 $ 756,000
Proceeds to Greenville First
Bancshares .......................... $ 9.37 $11,244,000
</TABLE>
We will pay an underwriter's discount of $.35 on shares sold to our
officers and directors and certain other investors, up to 30% of the offering,
and $.75 on all other shares sold. The underwriter's discount shown in the table
reflects a blended rate based on the assumption that 30% of the shares will have
the lower discount. Wachovia Securities has the right to purchase up to an
additional 180,000 shares at $10.00 per share, less the underwriter's discount
of $.75 per share, within 30 days from the date of this prospectus to cover
over-allotments.
THE UNDERWRITER EXPECTS TO DELIVER THE SHARES OF COMMON STOCK ON
__________, 1999.
[WACHOVIA LOGO HERE]
___________ ____, 1999
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GREENVILLE FIRST BANCSHARES, INC.
GREENVILLE FIRST BANK
PROPOSED MARKET AREA
[INSERT MAP OF SOUTH CAROLINA AND GREENVILLE COUNTY SHOWING MARKET AREA]
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SUMMARY
We encourage you to read the entire prospectus carefully before
investing. Unless otherwise stated, all information in this prospectus assumes
that the underwriter will not exercise its over-allotment option.
GREENVILLE FIRST BANCSHARES AND GREENVILLE FIRST BANK
We incorporated Greenville First Bancshares, Inc. in March of 1999 to
organize and serve as the holding company for Greenville First Bank, a new
national bank proposed to be located in Greenville County. The bank will focus
on the local community, emphasizing personal service to individuals and
businesses in Greenville County. We have filed for regulatory approval to open
the new bank with the Office of the Comptroller of the Currency and for deposit
insurance for the bank with the FDIC. We have also filed for approval of the
Federal Reserve Board to become a bank holding company and acquire all of the
stock of the new bank. We expect to receive all final regulatory approvals in
the fourth quarter of 1999 and to open for business in the fourth quarter of
1999 or the first quarter of 2000.
WHY WE ARE ORGANIZING A NEW BANK IN GREENVILLE COUNTY
Greenville County has a growing and dynamic economic environment that
we believe will support Greenville First Bank. It is South Carolina's most
populous county with over 340,000 residents, and its growth in median household
income and population have consistently outpaced that of the rest of South
Carolina. The county and surrounding area is home to several large manufacturing
and engineering concerns which provide a stable business foundation and a
skilled labor force. In February of 1999, the unemployment rate was
approximately 3%. One factor in this growth is Greenville County's strategic
location on I-85 between Atlanta and Charlotte. Within 12 months, the Southern
Connector toll road should be completed. That road will connect I-85 and I-385
through the bank's service area, and should promote additional growth and
commercial development.
We believe that there is an opportunity in Greenville County for a new
locally managed bank focused on the community and personalized service to
individuals and local businesses. The county's bank and thrift deposits grew
over the last five years at an average annual rate of 6.8%, and should continue
to grow with the community and its economy. The current trend of consolidation
in the banking industry has led to the acquisition of several locally owned
community banks in the Greenville County area by large regional and
super-regional banks, and caused a decrease over the last two years in the
number of financial institutions in the area. Despite the consolidation trend
and growth of deposits in the area, excluding the effect of recent acquisitions,
deposits at the large banks actually fell from 1997 to 1998. We believe that
this indicates many residents in the area prefer the community bank experience
to that provided by the larger and more impersonal regional and super-regional
banks. We believe that the combination of fewer financial institutions, positive
deposit growth rate, good economic conditions, and the consolidation of existing
community banks into larger banks creates an excellent environment for a new
community oriented bank.
Taking advantage of this opportunity, Greenville First Bank will be the
first independent bank organized in the City of Greenville in over ten years. We
will emphasize personal service and the client relationship. We will foster
client relationships by establishing "relationship teams" composed of senior
officers who will work directly with individual clients to match specific loan
and deposit specialties with their needs. We will emphasize our local ownership
and management and our strong ties to the Greenville County community. Our
target market will be primarily individuals and small- to medium-sized
businesses who desire a consistent and professional relationship with a local
banker. We believe our client oriented approach will appeal to the individuals
and small businesses in Greenville County and will stand in contrast to the "one
size fits all" philosophies of our larger competitors.
OUR BOARD OF DIRECTORS AND MANAGEMENT
Greenville First Bancshares was founded by ten local business leaders
who have lived in Greenville for many years. They are also community leaders and
serve on numerous charitable and service organizations
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throughout Greenville County. We believe our directors' long-standing ties to
the community and their significant business experience will provide Greenville
First Bank with the ability to effectively assess and address the needs of our
proposed market area.
Our Board of Directors consists of the following:
- - Andrew B. Cajka, Jr. - Rudolph G. Johnstone, III
- - Mark A. Cothran - Keith J. Marrero
- - Leighton M. Cubbage - James B. Orders, III
- - Fred Gilmer, Jr. - R. Arthur "Art" Seaver, Jr.
- - Tecumseh Hooper, Jr. - William B. Sturgis
We have attracted a strong management team with many years of banking
experience and service to the Greenville area. Our management team currently
consists of the following individuals:
- Art Seaver will serve as the president and chief executive
officer for the holding company and the bank. He has over 13
years of banking experience in the Greenville area. Until he
began preparations to open Greenville First Bank, he served as
an executive officer at Greenville National Bank, which was
acquired by Regions Bank in 1998.
- Fred Gilmer, Jr. will serve as our senior vice president. Mr.
Gilmer has over 40 years of experience in the financial
services industry in the Greenville area. He was most recently
the executive officer in charge of client relations for
Greenville National Bank.
- Jim Austin will serve as our senior vice president and chief
financial officer. Mr. Austin has 20 years of experience in
the financial services industry in the Greenville area
including 12 years as senior vice president and controller of
American Federal Bank.
We are in the process of assembling our management team. We are looking
for individuals who reside in the Greenville area and have significant local
banking experience and a history of service to the community. Because of the
recent merger and acquisition activity in the market, we believe there is an
abundance of local experienced banking executives who would be interested in
joining our community banking effort.
PRODUCTS AND SERVICES
We plan to offer most of the products and services offered by larger
banks by utilizing modern delivery systems coupled with personalized service.
Our lending services will include consumer loans and lines of credit, commercial
and business loans and lines of credit, residential and commercial real estate
loans, and construction loans. We will competitively price our deposit products
which will include checking accounts, savings accounts, money market accounts,
certificates of deposit, commercial checking accounts, and IRAs. We will also
provide cashier's checks, credit cards, cash management services, safe deposit
boxes, travelers checks, direct deposit, automatic drafts, and U.S. Savings
Bonds. We intend to deliver our services though a variety of methods, including
ATMs, banking by mail, telephone banking, internet banking, drive through
banking, and courier services for commercial customers throughout Greenville
County.
THE OFFERING AND OWNERSHIP BY MANAGEMENT
We are offering 1,200,000 shares of our common stock for $10.00 per
share. Our organizers and executive officers intend to purchase 181,500 shares,
which represents 15.1% of the shares outstanding after the offering. To
compensate them for their financial risk and efforts in organizing the bank, our
organizers will receive warrants to purchase one share of common stock for
$10.00 per share for every two shares they purchase in this offering. We hope to
sell the remaining shares to individuals and businesses in Greenville County who
share our desire to support a new local community bank. The number of shares of
common stock offered does
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not include the exercise of the underwriter's over-allotment option to purchase
up to 180,000 shares of our common stock.
USE OF PROCEEDS
We will use the first $8,500,000 we raise in this offering to
capitalize Greenville First Bank. This is the amount of capital we believe our
banking regulators will require for us to open the bank. We will use the
remaining net proceeds of the offering to pay our expenses of this offering and
of organizing the holding company and the bank, and to provide general working
capital for the holding company. The bank will use the funds it receives from
Greenville First Bancshares to pay expenses, lease and furnish its offices, and
provide working capital to operate the bank. For more detailed information see
"Use of Proceeds" on page 10.
WE DO NOT INITIALLY PLAN TO PAY DIVIDENDS
Because we are a new business, we will not pay dividends in the
foreseeable future. We intend to use all available earnings to fund the
continued operation and growth of the bank.
LOCATION OF OFFICES
Our temporary executive offices are located at 1805 Laurens Road,
Greenville, South Carolina 29607. Our telephone number is (864) 679-9000. Our
permanent office will be located at the corner of Haywood Road and Halton Road
in Greenville, South Carolina. During construction of our main office, we will
utilize a modular bank facility located on the same site. We plan to open for
business in this temporary modular office in the fourth quarter of 1999 or the
first quarter of 2000. Within the first four years of operation, we also plan to
open two "service centers" located strategically in our primary service area.
These service centers will perform limited bank functions including deposit and
ATM services. We believe these service centers will expand our market presence
and provide additional convenience to our customers. We will need to obtain
regulatory approval before we can open these centers. We believe that these
facilities will adequately serve the bank's needs for its first four years of
operation.
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RISK FACTORS
The following is a summary of some of the risks which we will encounter
in starting and operating the new bank. We may face other risks as well, which
we have not anticipated. An investment in our common stock involves a
significant degree of risk and you should not invest in the offering unless you
can afford to lose some or all of your investment. Please read the entire
prospectus for a more thorough discussion of the risks of an investment in our
common stock.
SOUTH CAROLINA STATE LAW AND ANTI-TAKEOVER DEVICES WE HAVE ADOPTED WILL
SIGNIFICANTLY LIMIT THE ABILITY OF OTHERS TO ACQUIRE US.
In many cases, shareholders receive a premium for their shares when a
company is purchased by another. However, under South Carolina law no other
financial institution may acquire control of Greenville First Bancshares until
we have been in existence for five years. In addition, state and federal law and
our articles of incorporation and bylaws make it difficult for anyone to
purchase Greenville First Bancshares without approval of our board of directors.
For a discussion of some of these provisions, please see "Description of Capital
Stock - Anti-takeover Effects" on page 36.
WE ARE A NEW BUSINESS AND CANNOT BE SURE WHETHER WE WILL BE SUCCESSFUL.
Neither Greenville First Bancshares nor Greenville First Bank has any
operating history. The operations of new businesses are always risky. Because
Greenville First Bank has not yet opened, we do not have historical financial
data and similar information which would be available for a financial
institution that has been operating for several years.
WE EXPECT TO INCUR CUMULATIVE LOSSES FOR AT LEAST TWO YEARS AND THERE IS A RISK
WE MAY NEVER BECOME PROFITABLE.
In order for us to become profitable, we will need to attract a large
number of customers to deposit and borrow money. This will take time. We expect
to incur large initial expenses and may not be profitable for several years.
Although we expect to become profitable in our second year, there is a risk that
we may never become profitable and that you will lose part or all of your
investment.
WE CANNOT OPEN THE BANK FOR BUSINESS UNTIL WE RECEIVE REGULATORY APPROVALS,
WHICH ARE AT THE DISCRETION OF OUR REGULATORY AGENCIES.
We cannot begin operations until we receive all required regulatory
approvals. We will not receive these approvals until we satisfy all requirements
for new banks imposed by state and federal regulatory agencies. We have already
filed applications with the FDIC and the Office of the Comptroller of the
Currency, and we will file an application with the Federal Reserve prior to
opening the bank. We do not expect to receive our preliminary regulatory
approvals until late September or early October 1999. We expect to receive final
approvals by the fourth quarter of 1999 or the first quarter of 2000, but it may
take longer. If we ultimately do not open, we anticipate that we will dissolve
the company, and return to our investors all funds remaining after paying the
expenses incurred through such time.
ANY DELAY IN OPENING GREENVILLE FIRST BANK WILL RESULT IN ADDITIONAL LOSSES.
We intend to open the bank in the fourth quarter of 1999 or the first
quarter of 2000. If we do not receive all necessary regulatory approvals as
planned, the bank's opening will be delayed or may not occur at all. If the
bank's opening is delayed, our organizational and pre-opening expenses will
increase. Because the bank would not be open and generating revenue, these
additional expenses would cause our accumulated losses to increase.
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WE WILL DEPEND HEAVILY ON ART SEAVER, AND OUR BUSINESS WOULD SUFFER IF SOMETHING
WERE TO HAPPEN TO HIM OR IF HE WERE TO LEAVE.
Art Seaver will be our president and chief executive officer. He will
provide valuable services to us, and he would be difficult to replace. We have
an employment agreement with Mr. Seaver and carry $600,000 of insurance on his
life payable to the bank. Nevertheless, if he were to leave, our business would
suffer.
THE OFFERING PRICE OF $10.00 WAS DETERMINED ARBITRARILY AND IT WILL FLUCTUATE
ONCE THE SHARES BECOME FREELY TRADED AFTER THE OFFERING.
Because we do not have any history of operations, we determined the
price arbitrarily. The offering price is essentially the book value of the
shares prior to deduction for expenses of the offering and the organization of
the bank. The offering price may not be indicative of the present or future
value of the common stock. As a result, 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 the 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.
WE WILL NOT HAVE A LARGE NUMBER OF SHAREHOLDERS OR A LARGE NUMBER OF SHARES
OUTSTANDING AFTER THE OFFERING, WHICH MAY LIMIT YOUR ABILITY TO SELL OR TRADE
THE SHARES AFTER THE OFFERING.
Initially, there will be no established market for our common stock.
After the offering, we will encourage broker-dealers to match buy and sell
orders for our common stock on the Over-the-Counter Bulletin Board. However, the
trading markets on the OTC Bulletin Board lack the depth, liquidity, and
orderliness necessary to maintain a liquid market. 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. Accordingly, investors should consider the potential illiquid and
long-term nature of an investment in our common stock.
WE WILL FACE STRONG COMPETITION FOR CUSTOMERS FROM LARGER AND MORE ESTABLISHED
BANKS WHICH COULD PREVENT US FROM OBTAINING CUSTOMERS AND MAY CAUSE US TO HAVE
TO PAY HIGHER INTEREST RATES TO ATTRACT CUSTOMERS.
We will encounter strong competition from existing banks and other
types of financial institutions operating in the Greenville 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 personnel resources than
we will have. Some are large super-regional and regional banks, like First Union
Bank, BB&T, Carolina First, Bank of America, and Wachovia. These institutions
offer services, such as extensive and established branch networks and trust
services, that we either do not expect to provide or will not provide for some
time. Due to this competition, we may have to pay higher rates of interest to
attract deposits. In addition, competitors that are not depository institutions
are generally not subject to the extensive regulations that will apply to our
bank. See "Proposed Business - Marketing Opportunities - Competition" on page 16
and "Supervision and Regulation" starting on page 23.
AN ECONOMIC DOWNTURN, ESPECIALLY ONE AFFECTING GREENVILLE COUNTY, SOUTH
CAROLINA, COULD REDUCE OUR CUSTOMER BASE, OUR LEVEL OF DEPOSITS, AND DEMAND FOR
FINANCIAL PRODUCTS SUCH AS LOANS.
As a holding company for a community bank, our ultimate success will be
dependent on the economy of the community. We will operate in Greenville County,
South Carolina, and in particular the central area of the county, which includes
the City of Greenville. While the economy in this area has been strong in recent
years, an economic downturn in the area would hurt our business.
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AS A BANK, OUR PROFITABILITY DEPENDS ON THE INTEREST RATES WHICH WE PAY ON
DEPOSITS AND COLLECT ON LOANS. INTEREST RATES HAVE HISTORICALLY VARIED GREATLY
AND WE CANNOT PREDICT OR CONTROL THEM.
Our profitability depends, in large part, on the difference in large
part between the income we earn on loans and other assets and the interest we
pay on deposits and other borrowings. This difference is largely determined by
interest rates. Interest rates will be affected by the local, national, and
international economies and by the credit policies of monetary authorities,
particularly the Federal Reserve Board of Governors. Interest rates have
historically varied widely and we cannot control or predict them. Large moves in
interest rates may decrease or eliminate our profitability.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CUSTOMERS
BECAUSE OUR LENDING LIMITS WILL BE LOWER THAN THEIRS.
We will be limited in the amount we can loan a single borrower by the
amount of the bank's capital. The legal lending limit is 15% of the bank's
capital and surplus. We expect that our initial legal lending limit will be
approximately $1,275,000 immediately following the offering, but we intend to
impose an internal limit on the bank of 80% of this amount, or approximately
$1,000,000. Until the bank is profitable, our capital will continue to decline
and therefore our lending limit. 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.
WE ARE AUTHORIZED TO ISSUE PREFERRED STOCK WHICH, IF ISSUED, MAY ADVERSELY
AFFECT YOUR VOTING RIGHTS AND REDUCE THE MARKET PRICE OF OUR COMMON STOCK.
We are authorized by our articles of incorporation to issue shares of
preferred stock without the consent of our shareholders. Preferred stock, when
issued, may rank senior to common stock with respect to voting rights, payment
of dividends, and amounts received by shareholders upon liquidation,
dissolution, or winding up. The existence of rights which are senior to common
stock may reduce the price of our shares. We do not have any plans to issue any
shares of preferred stock at this time.
GOVERNMENT REGULATION MAY HAVE AN ADVERSE EFFECT ON OUR PROFITABILITY AND
GROWTH.
We will be subject to extensive federal and state government
supervision and regulation. Our ability to grow and achieve profitability may be
adversely affected by state and federal laws and regulations that limit a bank's
right to make loans, purchase securities, and pay dividends. These laws are
intended primarily to protect Greenville First Bank's depositors and are not for
the benefit of shareholders. In addition, the burdens and restrictions imposed
by federal and state banking regulations may place us at a competitive
disadvantage to competitors who are less regulated. Future legislation or
governmental policy could also adversely affect the banking industry and
Greenville First Bank's operations. See "Supervision and Regulation" on page 23.
THE EXERCISE OF WARRANTS AND STOCK OPTIONS WILL CAUSE STOCK DILUTION AND MAY
ADVERSELY AFFECT THE VALUE OF OUR COMMON STOCK.
The organizers and officers may exercise warrants and options to
purchase common stock, which would result in the dilution of your proportionate
interests in Greenville First Bancshares. Upon completion of the offering, we
will issue to the organizers warrants to purchase one share of common stock at
$10.00 per share for every two shares they purchase in the offering. If the
organizers purchase 175,500 shares in the offering, we will issue warrants to
purchase an additional 87,750 shares of common stock to them. In addition, after
the offering, we expect to adopt a stock option plan which will permit us to
grant options to our officers, directors, and employees. We anticipate that we
will initially authorize the issuance of a number of shares under the stock
option plan equal to 15% of the shares outstanding after the offering. We do not
intend to issue stock options with an exercise price less than the fair market
value of the common stock on the date of grant.
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WE MAY NEED TO RAISE ADDITIONAL CAPITAL WHICH COULD DILUTE YOUR OWNERSHIP.
Although we do not believe we will need additional capital during the
next twelve months to start and maintain our planned business activities, we may
need additional capital in the future to support our business, expand our
operations, or maintain our minimum net capital requirements as set forth by our
applicable bank regulatory agencies. There is no assurance that we will be able
to sell additional shares to raise that capital. If we do sell additional shares
of common stock in the future to raise capital, the sale could significantly
dilute your ownership interest.
WE MAY NOT ALLOCATE ALL OF THE NET PROCEEDS IN THE MOST PROFITABLE MANNER.
After capitalizing Greenville First Bank with $8,500,000, we will have
broad discretion in allocating a total of approximately $2,600,000, or 22% of
the proceeds of the offering. Initially we plan to invest these proceeds in
United States government securities or deposit them with the bank, and in the
long term we intend to use them for general corporate purposes. We cannot
predict the extent we will allocate these funds to income-generating assets,
capital assets, or liquidity. Although we intend to utilize these funds to serve
Greenville First Bancshares' best interest, we cannot assure you that our
allocation will ultimately reflect the most profitable application of these
proceeds.
IT IS POSSIBLE THAT OUR COMPUTER SYSTEMS OR THOSE OF OUR PROCESSING VENDORS OR
LOAN CUSTOMERS COULD FAIL TO OPERATE ON JANUARY 1, 2000.
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 to provide our information systems. We will request warranties about
Year 2000 compliance from the primary third party hardware and software system
providers we use. We believe that our other 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 comply. 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 eliminate the
issue, and any financial difficulties our customers experience as a result of
Year 2000 issues could impair their ability to repay loans to the bank.
There is a possibility that we may not open the bank until after
January 1, 2000, at which time we believe that most of the uncertainty
surrounding the Year 2000 issue should be resolved. In this event, our risks
associated with computer malfunctions should be greatly reduced, but we will
still seek to ensure that our computer systems and our major vendors' and
clients' computer systems are in compliance and functioning properly. For more
information on Year 2000 issues, please refer to page 14.
FORWARD-LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements"
concerning Greenville First Bancshares and Greenville First 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," and similar expressions identify such forward-looking
statements. The most significant of these risks, uncertainties, and other
factors are discussed under the heading "Risk Factors" beginning on page 6 of
this prospectus. We urge you to carefully consider these factors prior to making
an investment.
9
<PAGE> 11
USE OF PROCEEDS
We estimate that we will receive net proceeds of $11,038,000 from the
sale of 1,200,000 shares of common stock in the offering, after deducting
underwriting discounts and commissions and estimated organizational and offering
expenses. If the underwriter exercises its over-allotment option in full, we
will receive $1,665,000 in additional proceeds. We have established a line of
credit in the amount of $600,000 at the prime rate to pay pre-opening expenses
of the holding company and the bank prior to the completion of the offering. We
intend to pay off this line of credit with proceeds that we receive from this
offering. The following two paragraphs describe our proposed use of proceeds
based on our present plans and business conditions.
USE OF PROCEEDS BY GREENVILLE FIRST BANCSHARES
The following table shows the anticipated use of the proceeds by
Greenville First Bancshares. We describe the bank's anticipated use of proceeds
in the following section. As shown, we will use $8,500,000 to capitalize the
bank. We will initially invest the remaining proceeds in United States
government securities or deposit them with Greenville First Bank. In the
long-term, we will use these funds for operational expenses and other general
corporate purposes, including the provision of additional capital to the bank,
if necessary. We may also use the proceeds to expand, for example by opening
additional facilities or acquiring other financial institutions. We currently
plan to open two limited operation "service centers" in the Greenville area in
the next four years. We do not have any other definitive plans for expansion.
<TABLE>
<CAPTION>
Total
--------------
<S> <C>
Gross proceeds from offering.................................. $ 12,000,000
Underwriter's discount........................................ $ 756,000
Expense of organizing Greenville First Bancshares............. $ 25,000
Expense of offering........................................... $ 106,000
Investment in capital stock of the bank....................... $ 8,500,000
--------------
Remaining proceeds............................................ $ 2,613,000
</TABLE>
10
<PAGE> 12
USE OF PROCEEDS BY GREENVILLE FIRST BANK
The following table shows the anticipated use of the proceeds by
Greenville First Bank. All proceeds received by the bank will be in the form of
an investment in the bank's capital stock by Greenville First Bancshares as
described above. During the 10 month period between the opening of the bank and
the completion of our permanent facilities, we will conduct operations from a
modular facility. This facility will require an initial payment of $13,050, a
monthly lease payment for the modular unit of $5,880, and a monthly lease
payment for the land of $500. When completed, we will then move into our
permanent facility at an initial monthly lease payment of $16,667 per month. We
expect our main office to be completed by August 2000. The table shows the cost
of the temporary and permanent facilities for a period of twelve months from the
completion of the offering. Furniture, fixtures, and equipment will be
capitalized and amortized over the life of the lease or over the estimated
useful life of the asset. The bank will use the remaining proceeds to make
loans, purchase securities, and otherwise conduct the business of the bank.
<TABLE>
<CAPTION>
Total
--------------
<S> <C>
Investment by Greenville First Bancshares in the
bank's capital stock................................. $ 8,500,000
Organizational and pre-opening expenses of the bank..... $ 500,000
Furniture, fixtures and equipment....................... $ 247,000
Initial payment and lease of temporary facilities and $ 76,850
land (10 months)........................................
Lease of permanent facilities (2 months)................ $ 33,330
Construction of leasehold improvements.................. $ 65,000
--------------
Remaining proceeds...................................... $ 7,644,380
</TABLE>
11
<PAGE> 13
CAPITALIZATION
The following table shows Greenville First Bancshares' capitalization
as of June 30, 1999, and the pro forma consolidated capitalization of Greenville
First Bancshares' and the bank as adjusted to give effect to the sale of
1,200,000 shares in this offering, after deducting the underwriter's discount
and expenses of the offering. Greenville First Bancshares' capitalization as of
June 30, 1999 reflects the purchase of 10 shares by Art Seaver for $10.00 per
share. These shares will be redeemed after the offering. After the offering, we
will have 1,200,000 shares outstanding. The "As Adjusted" column reflects the
estimated cost of organizing Greenville First Bancshares and organizing and
preparing to open Greenville First Bank through the expected opening date, which
should be in the fourth quarter of 1999 or the first quarter of 2000. See "Use
of Proceeds" above.
<TABLE>
<CAPTION>
As Adjusted
For
June 30, 1999 The Offering
------------- --------------
<S> <C> <C>
SHAREHOLDERS' EQUITY:
Common Stock, par value $.01 per share; 10,000,000
shares authorized; 10 shares issued and
outstanding; 1,200,000 shares issued and
outstanding as adjusted........................... $ 0.10 $ 12,000
Preferred Stock, par value $.01 per share; 10,000,000
shares authorized; no shares issued and outstanding.. 0 0
Additional paid-in capital............................. $ 99.90 $ 11,232,000
Deficit accumulated during the pre-opening stage....... $ (631,000) $ (631,000)
------------- --------------
Total shareholders' equity (deficit)................... $ (630,900) $ 10,613,000
============= ==============
Book value per share $ N/A $ 8.84
============= ==============
</TABLE>
DIVIDEND POLICY
We expect initially to retain all earnings to operate and expand the
business. It is unlikely that we will pay any cash dividends in the near future.
Our ability to pay any cash dividends will depend primarily on Greenville First
Bank's ability to pay dividends to Greenville First Bancshares, which depends on
the profitability of the bank. In order to pay dividends, the bank must comply
with the requirements of all applicable laws and regulations. See "Supervision
and Regulation - The Bank - Dividends" on page 26 and "Supervision and
Regulation - The Bank - Capital Regulations" on page 27. In addition to the
availability of funds from the bank, our dividend policy is subject to the
discretion of our board of directors and will depend upon a number of factors,
including future earnings, financial condition, cash needs, and general business
conditions.
12
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION
GENERAL
Greenville First Bancshares was formed to organize and own all of the
capital stock of Greenville First Bank. In May 1999, the organizers filed
applications with the Office of the Comptroller of the Currency to charter the
bank as a national bank and with the FDIC to receive federal deposit insurance.
Whether the charter is issued and deposit insurance is granted will depend upon,
among other things, compliance with legal requirements imposed by the Office of
the Comptroller of the Currency and the FDIC, including capitalization of the
bank with at least a specified minimum amount of capital which we believe will
be $8,500,000. Upon approval from the Office of the Comptroller of the Currency
and the FDIC, we will file an application with the Federal Reserve to become a
bank holding company, which must be approved before we can acquire the capital
stock of the bank. We expect to receive all regulatory approvals by the fourth
quarter of 1999.
FINANCIAL RESULTS
As of June 30, 1999, Greenville First Bancshares had total assets of
$56,440, consisting primarily of cash and deferred organization and offering
costs. Greenville First Bancshares incurred a net loss of $152,109 for the
period from its inception in February of 1999 through June 30, 1999.
EXPENSES
On completion of the offering and opening of the bank, we expect we
will have incurred the following expenses:
- $756,000 in commissions to the underwriter, which will be
deducted from the proceeds of the offering.
- $106,000 in other expenses of the offering, which will be
subtracted from the proceeds of the offering.
- $100,000 in expenses of organizing Greenville First
Bancshares, which will be charged against the income of
Greenville First Bancshares.
- $500,000 in expenses to organize and prepare to open
Greenville First Bank, consisting principally of salaries,
overhead and other operating costs, which will be charged
against the income of Greenville First Bank.
Prior to our completion of this offering, these expenses will be funded
by a $600,000 line of credit at the prime rate. We will use the proceeds of this
offering to repay amounts due under our line of credit. We anticipate that the
proceeds of the offering will be sufficient to satisfy the corporation's
financial needs for at least the next twelve months.
OFFICES AND FACILITIES
Our main office will be located on a 1.3 acre site at the corner of
Haywood Road and Halton Road in Greenville, South Carolina. We intend to
construct a 10,000 square foot building there to serve as our main office.
Cothran Properties, Inc., a company owned by one of the organizers and directors
of Greenville First Bancshares, will finance the purchase of the site and the
construction of the main building at a total expected cost of approximately
$1,623,000. Upon completion of the main office, which we expect to occur in the
third quarter of 2000, we will lease the land and building for 20 years at an
initial base rent of $16,667 per month. Prior to the completion of our main
office, we will utilize a temporary modular bank facility located on the same
site. During this period, we will lease the site from Cothran Properties for
$500 per month and the modular facility from a third party lessor for $5,880 per
month. We plan to open the temporary office in the fourth quarter of 1999 or the
first quarter of 2000. Within the first four years of operation, we also plan to
open two "service centers" located strategically in our primary service area.
These service centers will perform limited bank functions.
13
<PAGE> 15
They will expand our market presence and provide additional convenience to our
customers. We believe that these facilities will adequately serve the bank's
needs for its first four years of operation.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Greenville First Bank, like most banks, will depend on its net interest
income for its primary source of earnings. Net interest income is roughly the
difference between the interest we charge on our loans and receive from our
investments (our assets), and the interest we pay on deposits (our liabilities).
Movements in interest rates will cause our earnings to fluctuate. To lessen the
impact of these margin swings, we intend to structure our balance sheets so that
we can reprice the rates applicable to our assets and liabilities in roughly
equal amounts at approximately the same time. We will manage the bank's asset
mix by regularly evaluating the yield, credit quality, funding sources, and
liquidity of its assets. We will manage the bank's liability mix by expanding
our deposit base and converting assets to cash as necessary. If there is an
imbalance in our ability to reprice assets and liabilities at any point in time,
our earnings may increase or decrease with changes in the interest rate,
creating interest rate sensitivity.
Liquidity refers to our ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient
funds to cover deposit withdrawals and payment of debt and operating
obligations. We will manage our liquidity by actively monitoring the bank's
sources and uses of funds to meet cash flow requirements and maximize profits.
Other than this offering, we know of no trends, demands, commitments,
events, or uncertainties that should result in, or are reasonably likely to
result in, Greenville First Bancshares' or the bank's liquidity increasing or
decreasing in any material way in the foreseeable future. However, if the bank
is open before January 1, 2000, we expect to increase our cash on hand because
consumer uncertainty about the year 2000 may cause a higher than normal rate of
deposit withdrawal.
CAPITAL ADEQUACY
Capital adequacy for banks and bank holding companies is regulated by
the Office of the Comptroller of the Currency, the Federal Reserve Board of
Governors, and the FDIC. The primary measures of capital adequacy are (i)
risk-based capital guidelines and (ii) the leverage ratio. Changes in these
guidelines or in our levels of capital can affect our ability to expand and pay
dividends. Please see "Capital Regulations" on page 27 for a more detailed
discussion.
YEAR 2000 ISSUES
Like most 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 some computers will be
unable to "read" the new year resulting in computer malfunctions.
We will be generally relying on independent third parties for our
information processing needs. We have entered into an agreement with The
InterCept Group, Inc. to process our daily account and transactional data; to
provide our teller, accounting, and internet computer systems; and to provide
our ATM switching and processing services. We plan to request and review year
2000 testing protocols and results from The Intercept Group and each of our
primary vendors. We have budgeted $__________ for Year 2000 testing and vendor
monitoring. We will receive Year 2000 warranties from each vendor confirming
their Year 2000 compliance, although the remedies available under such
agreements generally include standard disclaimers of and limitations of
liability and specifically exclude special, incidental, indirect, and
consequential damages. The Intercept Group is an established provider of bank
processing and software services to more than 100 financial institutions. The
products and services we will receive from The Intercept Group will not
materially differ from the products and services provided to these other
institutions. Most of these other institutions have or are in the process of
investigating the Year 2000 compliance of The Intercept Group in accordance with
regulatory mandates. Because of this scrutiny, we do not believe that The
Intercept Group will have any material Year 2000 issues related to the products
or services we will receive from them.
14
<PAGE> 16
Our customers may also have Year 2000 issues. We may incur losses if
these issues affect our loan customer's ability to repay their loans or if they
suffer material harm to their businesses as a result. Prior to January 1, 2000,
we intend to request 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.
There is a possibility that we may not open the bank until after
January 1, 2000, at which time we believe that most of the uncertainty
surrounding the Year 2000 issue should be clarified. In this event, our risks
associated with computer malfunctions should be greatly reduced, but we will
still seek to ensure that our computer systems and our major vendors' and
clients' computer systems are in compliance and functioning properly.
15
<PAGE> 17
PROPOSED BUSINESS
GENERAL
We initiated activity to form Greenville First Bank in February of 1999
and incorporated Greenville First Bancshares as a South Carolina corporation on
March 29, 1999, to function as a holding company to own and control all of the
capital stock of Greenville First Bank. We initially will engage in no business
other than owning and managing the bank.
We have chosen this holding company structure because we believe it
will provide flexibility that would not otherwise be available. Subject to
Federal Reserve Board debt guidelines, the holding company structure can assist
the bank in maintaining its required capital ratios by borrowing money and
contributing the proceeds to the bank as primary capital. Additionally, a
holding company may engage in certain non-banking activities that the Federal
Reserve Board has deemed to be closely related to banking. Although we do not
presently intend to engage in other activities, we will be able to do so with a
proper notice or filing to the Federal Reserve if we believe that there is a
need for these services in our market area and that such activities could be
profitable.
We filed an application with the Office of the Comptroller of the
Currency on May 25, 1999, to organize the bank as a national bank under the laws
of the United States. We have also filed an application with the FDIC for
deposit insurance and with the Board of Governors of the Federal Reserve System
for approval to become a bank holding company. Subject to receiving regulatory
approval from these agencies, we plan to open the bank in the last quarter of
1999 or the first quarter of 2000, and will engage in a general commercial and
consumer banking business as described below. Final approvals will depend on
compliance with regulatory requirements, including our capitalization of the
bank with at least $8.5 million from the proceeds of this offering.
MARKETING OPPORTUNITIES
Service Area. Our primary service area will consist of Greenville
County, South Carolina. We expect initially to draw a large percentage of our
business from the central portion of Greenville County, within a 10 mile radius
of our main office. This principal service area is bounded by Rutherford Road to
the north, Poinsett Highway to the west, Mauldin Road and Butler Road to the
south, and Highway 14 and Batesville Road to the east. Included in this area is
the highest per capita income tract in the county. Our expansion plans include
the development of two "service centers" located along the periphery of our
service area. These service centers will extend the market reach of our bank,
and they will increase our personal service delivery capabilities to all of our
customers. This area will also benefit from the construction of the Southern
Connector, a toll road connecting I-85 and I-385 through southwestern Greenville
County, which is predicted to open within the next twelve months. Completion of
this road is expected to promote rapid commercial development along the
corridor. We plan to take advantage of existing contacts and relationships with
individuals and companies in this area to more effectively market the services
of the bank.
Economic and Demographic Factors. Greenville County's median household
income, household growth, and population growth trends have consistently
outpaced growth trends in the rest of South Carolina. Greenville County is South
Carolina's most populous county. Between 2000 and 2010, Greenville County's
population is expected to increase by 10.2% to almost 400,000 people. The five
county metropolitan area, which includes Greenville, Spartanburg, Anderson,
Cherokee, and Pickens counties, is a business and high technology manufacturing
center, and it boasts a large engineering firm presence. Major employers in the
metropolitan area include: BMW, Michelin, Bi-Lo, Kemet Electronics, and Fluor
Daniel, one of the largest engineering firms in the world. Greenville County has
more engineers per capita than any other county in the United States. In
February 1999, the unemployment rate in the area was 3.04%.
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, finance companies, and money market mutual
funds operating in the Greenville County area and elsewhere. In 1998, there were
more than 130 banking offices, representing 18 financial institutions, operating
in Greenville County and holding over
16
<PAGE> 18
$5 billion in deposits. Many of these competitors are well established in the
Greenville County area. Most of them have substantially greater resources and
lending limits than the bank will have and many of these competitors offer
services, such as extensive and established branch networks and trust services,
that we either do not expect to provide or will not provide initially. Our
competitors include large super-regional financial institutions like First Union
Bank, Bank of America, BB&T, and Wachovia, large regional financial institutions
like Carolina First Bank, and local community banks like Summit National Bank,
First Savers Bank, Palmetto Bank, and New Commerce Bank, a new community bank
which recently opened an office in Simpsonville, South Carolina and plans to
open another office in Mauldin in the third quarter of 1999. We believe that the
opportunity created by recent mergers, our management team, and the economic and
demographic dynamics of our service area combined with our business strategy
will allow us to gain a meaningful share of the area's $5 billion in deposits.
BUSINESS STRATEGY
Management Philosophy. Greenville First Bank will be the first
independent bank organized in the city of Greenville in over ten years. Because
there are few locally owned banks left in Greenville, we believe we can offer a
unique banking alternative for the market by offering a higher level of customer
service and a management team more focused on the needs of the community than
most of our competitors. We believe that this approach will be enthusiastically
supported by the community. The bank will use the theme "Welcome to Hometown
Banking," and it will actively promote it in our target market. While the bank
will have the ability to offer a breadth of products similar to large banks, we
will emphasize the client relationship. We believe that the proposed community
focus of the bank will succeed in this market, and that the area will react
favorably to the bank's emphasis on service to small businesses, individuals,
and professional concerns.
Operating Strategy. In order to achieve the level of prompt, responsive
service that we believe will be necessary to attract customers and to develop
Greenville First Bank's image as a local bank with an individual focus, we will
employ the following operating strategies:
- Experienced Senior Management. We have retained senior
management with many years of experience in the financial
services industry within our primary market area. Our senior
management team currently consists of the following
individuals:
- Art Seaver will lead the management teams as the
president and chief executive officer for both
Greenville First Bancshares and Greenville First
Bank. He has lived in Greenville for over 25 years
and has over 13 years of banking experience in the
Greenville area. Mr. Seaver began his banking career
in 1986 with C&S National Bank and in 1992 joined
Greenville National Bank. As senior vice president
and executive officer, he was primarily responsible
for business development, deposit product offerings,
communication systems, and strategic planning. Mr.
Seaver left Greenville National Bank in February 1999
following its acquisition by Regions Bank.
- Fred Gilmer, Jr. will be a senior vice president for
both Greenville First Bancshares and Greenville First
Bank. Mr. Gilmer has over 40 years of experience in
the financial services industry in the Greenville
area. Mr. Gilmer was one of the original thirteen
employees of Southern Bank and Trust Company in 1961.
His career also includes management positions with
South Carolina Federal and First Savings Bank. He was
most recently the executive officer in charge of
client relations for Greenville National Bank.
- Jim Austin will be chief financial officer and senior
vice president for both Greenville First Bancshares
and Greenville First Bank. He has lived in Greenville
for over 21 years and has over 20 years of experience
in the financial services industry in the Greenville
area. Mr. Austin was with KPMG Peat Marwick for 5
years specializing in bank audits, then for 12 years
with American Federal Bank as Senior Vice President
and Controller. His career also includes management
positions with Regional Management Corporation and
Homegold Financial, Inc.
17
<PAGE> 19
- Other Executives. We are in the process of assembling a
management team with significant banking experience. We expect
these officers to be individuals who reside in the Greenville
area and have local banking experience and a history of
service to the community. Because of the recent merger and
acquisition activity in the market, we believe there is an
abundance of local experienced banking executives who would be
interested in joining our community banking effort.
- Community-Oriented Board of Directors. Our management team
will operate under the direction of our board of directors. As
described in the Management Section beginning on page 30, our
directors are long time residents and businessmen in the
Greenville area, with significant community involvement. These
directors are dedicated to the success of the bank, and will
play a key part in marketing the new bank in the community.
- Client Relationship Management. Greenville First Bank will use
a client-based philosophy. This philosophy is the basis of our
relationship management initiative. We will focus on the
overall relationship with each client as opposed to the
general product "push" approach used by larger banks. To
implement this strategy, we will establish "relationship
teams" consisting of a senior vice president team
leader/primary lender, and another senior officer who
specializes in matching deposit specialties with clients'
needs. With administrative assistance, our relationship teams
will be able to provide clients with specific and consistent
bankers who are responsible for managing their entire
relationship. Executive officers' performance will be measured
in part by their ability to maintain and cultivate client
relationships. We believe this structure will ensure effective
responsiveness to our clients' financial needs, a hallmark of
the community approach to banking.
- Convenience Oriented Service Centers and ATMs. Within the
first four years of operation, we plan to open two
non-traditional "service centers" located strategically in our
primary service area. These "service centers" will provide
limited bank functions, including deposit and ATM services.
Loan production services will remain concentrated in our main
office. We believe these "service centers" will expand our
market presence and provide additional convenience to our
customers. The bank will provide additional convenience
through strategically placed ATM's.
- Local Services and Decision Making. Clients will enjoy a
professional bank environment with access to their specific
bank officer and relationship team. We will emphasize local
decision-making with experienced bankers, attention to lower
employee turnover, and professional and responsive service.
- Capitalize on Need for Community Banks. The current trend of
consolidation in the banking industry has led to the recent
acquisition of three locally owned community banks in the
Greenville County area of South Carolina by large national and
regional banks headquartered outside of Greenville County. In
1998, over 90% of the total deposits were controlled by
financial institutions headquartered outside of the area.
Despite the market-share dominance of larger super-regional
and regional banks, excluding the acquisition of local banks
in the area, total deposits for these large banks actually
fell from 1997 to 1998, while total deposits during the same
period increased 3%. We believe these numbers reflect the
desire of the residents of this area for a community bank
relationship, and that they will support our new local bank as
a result.
- Focus on Under-Serviced Market Sector. Although size gives
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
Greenville County, we believe that there is a void in the
community banking market in the Greenville County area and
that we can successfully fill this void. We will not compete
with large institutions for the primary banking relationships
of large corporations, but will compete for niches in this
business and for the consumer business of their employees. We
will also focus on small- to medium-sized businesses and their
employees.
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<PAGE> 20
This includes retail, service, wholesale distribution,
manufacturing, and international businesses. We intend to
attract such businesses based on relationships and contacts
which the bank's directors and management have outside our
core service area.
LENDING ACTIVITIES
General. We intend to emphasize a range of lending services, including
real estate, commercial, and equity-line and consumer loans to individuals and
small- to medium-sized businesses and professional concerns that are located in
or conduct a substantial portion of their business in the bank's market area. We
will compete for these loans with competitors who are well established in the
Greenville County area and have greater resources and lending limits. As a
result, we may have to charge lower interest rates to attract borrowers.
The well established banks in the Greenville County area will make
proportionately more loans to medium- to large-sized businesses than we will.
Many of the bank's anticipated commercial loans will likely be made to small- to
medium-sized businesses which may be less able to withstand competitive,
economic, and financial conditions than larger borrowers.
Loan Approval and Review. The bank's loan approval policies will
provide for various levels of officer lending authority. When the amount of
aggregate loans to a single borrower exceeds that individual officer's lending
authority, the loan request will be considered and approved by an officer with a
higher lending limit or the officers' loan committee. The bank will establish an
officers' loan committee that has lending limits, and any loan in excess of this
lending limit will be approved by the directors' loan committee. The bank will
not make any loans to any director, officer, or employee of the bank unless the
loan is approved by the board of directors of the bank and is made on terms not
more favorable to such person than would be available to a person not affiliated
with the bank. The bank currently intends to adhere to Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation guidelines in its
mortgage loan review process, but may choose to alter this policy in the future.
The bank expects to sell residential mortgage loans that it originates on the
secondary market.
Loan Distribution. We estimate that our initial percentage distribution
of our loans for the first year will be as follows:
<TABLE>
<S> <C>
Real Estate 50%
Commercial Loans 35%
Equity Line and Consumer Loans 15%
</TABLE>
These are estimates only. Our actual deposit and loan distribution will depend
on our customers and vary initially and over time.
Allowance for Loan Losses. We will maintain an allowance for loan
losses, which we will establish through a provision for loan losses charged
against income. We will charge loans against this allowance when we believe that
the collectibility of the principle is unlikely. The allowance will be an
estimated amount that we believe will be adequate to absorb losses inherent in
the loan portfolio based on evaluations of its collectibility. We anticipate
that initially our allowance for loan losses will equal approximately 1% of the
average outstanding balance of our loans. Over time, we will base the loan loss
reserves on our evaluation of factors such as changes in the nature and volume
of the loan portfolio, overall portfolio quality, specific problem loans and
commitments, and current anticipated economic conditions that may affect the
borrower's ability to pay.
Lending Limits. The bank's lending activities will be subject to a
variety of lending limits imposed by federal law. In general, the bank will be
subject to a legal limit on loans to a single borrower equal to 15% of the
bank's capital and unimpaired surplus. Different limits may apply in certain
circumstances based on the type of loan or the nature of the borrower, including
the borrower's relationship to the bank. These limits will increase or decrease
as the bank's capital increases or decreases. The bank will initially have a
self-imposed loan limit of $1,000,000, which represents approximately 80% of our
legal lending limit of $1,275,000. 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.
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<PAGE> 21
Credit Risk. The principal credit risk associated with each category of
loans is the creditworthiness of the borrower. Borrower creditworthiness is
affected by general economic conditions and the strength of the manufacturing,
services, and retail market segments. General economic factors affecting a
borrower's ability to repay include interest, inflation, and employment rates
and the strength of local and national economy, as well as other factors
affecting a borrower's customers, suppliers, and employees.
Real Estate Loans. We expect that loans secured by first or second
mortgages on real estate will make up 50% 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. 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.
Real estate loans are subject to the same general risks as other loans.
They are particularly sensitive to fluctuations in the value of real estate,
which is generally the underlying security for real estate loans. On first and
second mortgage loans we would typically not advance more than 80% of the lesser
of the cost or appraised value of the property. 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 some real estate loans for sale
into the secondary market. We can 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. We
will evaluate each borrower on an individual basis and attempt
to determine its business risks and credit profile. 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 115% of monthly
debt service obligations. We will typically review all of the
personal financial statements of the principal owners and
require their personal guarantees. These 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 home. The term of construction and
development loans will generally be limited to eighteen
months, although payments may be structured on a longer
amortization basis. Most loans will mature and require payment
in full upon the sale of the property. Construction and
development loans generally carry a higher degree of risk than
long term financing of existing properties. Repayment depends
on the ultimate completion of the project and usually on the
sale of the property. Specific 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
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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, and we intend to sell
some or all of the residential real estate loans that we
generate in the secondary market. By selling these loans in
the secondary market, we can significantly reduce our exposure
to credit risk because the loans will be underwritten through
a third party agent without any recourse against the bank.
Commercial Loans. The bank will make loans for commercial purposes in
various lines of businesses. Equipment loans will typically be made for a term
of five years or less at fixed or variable rates, with the loan fully amortized
over the term and secured by the financed equipment and with a loan-to-value
ratio of 80% or less. We will focus our efforts on commercial loans of less than
$500,000. Working capital loans will typically have terms not exceeding one year
and will usually be secured by accounts receivable, inventory, or personal
guarantees of the principals of the business. For loans secured by accounts
receivable or inventory, principal will typically be repaid as the assets
securing the loan are converted into cash, and in other cases principal will
typically be due at maturity. Trade letters of credit, standby letters of
credit, and foreign exchange will be handled through a correspondent bank as
agent for the bank.
We expect to also offer small business loans utilizing government
enhancements such as the Small Business Administration's 7(a) program and SBA's
504 programs, and Appalachian Development Council. These loans will typically be
partially guaranteed by the government which may help to reduce the bank's risk.
Government guarantees of SBA loans will not exceed 80% of the loan value, and
will generally be less.
Consumer Loans. The bank will make a variety of loans to individuals
for personal and household purposes, including secured and unsecured installment
loans and revolving lines of credit such as credit cards. Installment loans
typically will carry balances of less than $50,000 and be amortized over periods
up to 60 months. Consumer loans may be offered on a single maturity basis where
a specific source of repayment is available. Revolving loan products will
typically require monthly payments of interest and a portion of the principal.
Consumer loans are generally considered to have greater risk than first or
second mortgages on real estate.
We will also offer home equity loans. Our underwriting criteria for
and the risks associated with home equity loans and lines of credit will
generally be the same as those for first mortgage loans. Home equity lines of
credit will typically have terms of 15 years or less, will typically carry
balances less than $125,000, and may extend up to 100% of the available equity
of each property.
DEPOSIT SERVICES
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. The transaction accounts and time certificates will be
tailored to our principal market area at rates competitive to those offered in
the Greenville County area. In addition, we intend to offer certain retirement
account services, such as Individual Retirement Accounts (IRAs). We intend to
solicit these accounts from individuals, businesses, and other organizations.
Deposit Distribution. We estimate that our initial percentage
distribution of our deposits for the first year will be as follows:
<TABLE>
<S> <C>
Demand Deposit 12%
Savings & Money Market 32%
Time and Savings Deposits 5%
CD's under $100,000 34%
CD's over $100,000 17%
</TABLE>
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OTHER BANKING SERVICES
We anticipate that the bank will offer other bank services including
cash management services such as sweep accounts for commercial businesses. In
addition, lines of credit, 24-hour telephone banking and PC/ internet delivery
are being developed. We will offer drive up ATMs, safe deposit boxes, direct
deposit of payroll and social security checks, U.S. Savings Bonds, travelers
checks, and automatic drafts for various accounts. We plan for the bank to
become associated with the Honor and Cirrus ATM networks that may be used by the
bank's customers throughout the country. We believe that by being associated
with a shared network of ATMs, we will be better able to serve our clients and
will be able to attract clients who are accustomed to the convenience of using
ATMs, although we do not believe that maintaining this association will be
critical to our success. We intend to begin offering these services shortly
after opening the bank. We also plan to offer a debit card and VISA credit card
services through a correspondent bank as an agent for the bank. We do not expect
the bank to exercise trust powers during its initial years of operation.
MARKET SHARE
In 1998, deposits in Greenville County exceeded $5 billion. The average
annual growth rate in deposits in Greenville County over the last five years was
6.8%. Based on a growth rate of 4%, the deposits in Greenville County will grow
to approximately $6.2 billion by 2004. Our plan over the next five years is to
reach a 1.7% market share with deposits in excess of $100 million. Of course,
there can be no assurances that we will accomplish these objectives.
EMPLOYEES
We anticipate that, upon commencement of operations, the bank will have
approximately 14 full time employees and 1 part time employee. By the end of
2000, we anticipate that it will have approximately 22 full time employees and 1
part time employee operating out of the bank's permanent facility. Greenville
First Bancshares, as the holding company for the bank, will not have any
employees other than its officers.
LEGAL PROCEEDINGS
Neither Greenville First Bancshares, Greenville First Bank, nor any of
their properties are subject to any material legal proceedings.
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SUPERVISION AND REGULATION
Both Greenville First Bancshares and Greenville First Bank are subject
to extensive state and federal banking laws and regulations which impose
specific requirements or restrictions on and provide for general regulatory
oversight of virtually all aspects of operations. These laws and regulations are
generally intended to protect depositors, not shareholders. The following
summary is qualified by reference to the statutory and regulatory provisions
discussed. Changes in applicable laws or regulations may have a material effect
on our business and prospects. Beginning with the enactment of the Financial
Institution Report Recovery and Enforcement Act in 1989 and following with 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. Our operations may be affected by legislative
changes and the policies of various regulatory authorities. We cannot predict
the effect that fiscal or monetary policies, economic control, or new federal or
state legislation may have in the future on our business and earnings.
GREENVILLE FIRST BANCSHARES
Because it will own the outstanding capital stock of the bank,
Greenville First Bancshares will be a bank holding company under the federal
Bank Holding Company Act of 1956 and the South Carolina Bank Holding Company
Act. Our activities will also be governed by the Glass-Steagall Act of 1933.
The Bank Holding Company Act. Under the Bank Holding Company Act,
Greenville First Bancshares will be subject to periodic examination by the
Federal Reserve and required to file periodic reports of its operations and any
additional information that the Federal Reserve may require. Our activities at
the bank and holding company level will be limited to:
- banking, managing, or controlling banks;
- furnishing services to or performing services for its
subsidiaries; and
- engaging in other activities that the Federal Reserve
determines to be so closely related to banking, managing, or
controlling banks as to be a proper incident thereto.
Investments, Control, and Activities. With certain limited exceptions,
the Bank Holding Company Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before:
- acquiring substantially all the assets of any bank;
- acquiring direct or indirect ownership or control of any
voting shares of any bank if after such acquisition it would
own or control more than 5% of the voting shares of such bank
(unless it already owns or controls the majority of such
shares); or
- merging or consolidating with another bank holding company.
In addition, and subject to certain exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with regulations
thereunder, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person acquires 10% or more, but less than 25%, of any class of voting
securities and either Greenville First Bancshares has registered securities
under Section 12 of the Securities Exchange Act of 1934 or no other person owns
a greater percentage of that class of voting securities immediately after the
transaction. We will register our common stock under the Securities Exchange Act
of 1934. The regulations provide a procedure for challenge of the rebuttable
control presumption.
Under the Bank Holding Company Act, a bank holding company is generally
prohibited from engaging in, or acquiring direct or indirect control of more
than 5% of the voting shares of any company engaged in nonbanking activities
unless the Federal Reserve Board, by order or regulation, has found those
activities to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. Some of the
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activities that the Federal Reserve Board has determined by regulation to be
proper incidents to the business of a bank holding company include:
- making or servicing loans and certain types of leases;
- engaging in certain insurance and discount brokerage
activities;
- performing certain data processing services;
- acting in certain circumstances as a fiduciary or investment
or financial adviser;
- owning savings associations; and
- making investments in certain corporations or projects
designed primarily to promote community welfare.
The Federal Reserve Board imposes certain capital requirements on
Greenville First Bancshares under the Bank Holding Company Act, including a
minimum leverage ratio and a minimum ratio of "qualifying" capital to
risk-weighted assets. These requirements are described below under "Capital
Regulations." Subject to its capital requirements and certain other
restrictions, Greenville First Bancshares is able to borrow money to make a
capital contribution to the bank, and these loans may be repaid from dividends
paid from the bank to Greenville First Bancshares. Our ability to pay dividends
will be subject to regulatory restrictions as described below in "The Bank -
Dividends." Greenville First Bancshares is also able to raise capital for
contribution to the bank by issuing securities without having to receive
regulatory approval, subject to compliance with federal and state securities
laws.
Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board policy, Greenville First Bancshares will be expected to act as a source of
financial strength to the bank and to commit resources to support the bank in
circumstances in which Greenville First Bancshares might not otherwise do so.
Under the Bank Holding Company Act, the Federal Reserve Board may require a bank
holding company to terminate any activity or relinquish control of a nonbank
subsidiary, other than a nonbank subsidiary of a bank, upon the Federal Reserve
Board's determination that such activity or control constitutes a serious risk
to the financial soundness or stability of any subsidiary depository institution
of the bank holding company. Further, federal bank regulatory authorities have
additional discretion to require a bank holding company to divest itself of any
bank or nonbank subsidiary if the agency determines that divestiture may aid the
depository institution's financial condition.
Glass-Steagall Act. We will also be restricted by the provisions of the
Glass-Steagall Act, which prohibits Greenville First Bancshares from owning
subsidiaries that are engaged principally in the issue, flotation, underwriting,
public sale, or distribution of securities. The interpretation, scope, and
application of the provisions of the Glass-Steagall Act currently are being
considered and reviewed by regulators and legislators, and the interpretation
and application of those provisions have been challenged in the federal courts.
South Carolina State Regulation. As a bank holding company registered
under the South Carolina Bank Holding Company Act, we are subject to limitations
on sale or merger and to regulation by the South Carolina Board of Financial
Institutions. Consequently, we must receive their approval prior to engaging in
the acquisition of banking or nonbanking institutions or assets. We must also
file periodic reports with respect to our financial condition and operations,
management, and intercompany relationships between Greenville First Bancshares
and its subsidiaries.
THE BANK
The bank will operate as a national banking association incorporated
under the laws of the United States and subject to examination by the Office of
the Comptroller of the Currency. Deposits in the bank will be insured by the
FDIC up to a maximum amount, which is generally $100,000 per depositor subject
to aggregation rules.
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The Office of the Comptroller of the Currency and the FDIC will
regulate or monitor virtually all areas of the bank's operations, including:
- security devices and procedures;
- adequacy of capitalization and loss reserves;
- loans;
- investments;
- borrowings;
- deposits;
- mergers;
- issuances of securities;
- payment of dividends;
- interest rates payable on deposits;
- interest rates or fees chargeable on loans;
- establishment of branches;
- corporate reorganizations;
- maintenance of books and records; and
- adequacy of staff training to carry on safe lending and
deposit gathering practices.
The Office of the Comptroller of the Currency requires the bank to
maintain specified capital ratios and imposes limitations on the bank's
aggregate investment in real estate, bank premises, and furniture and fixtures.
The Office of the Comptroller of the Currency will also require the bank to
prepare quarterly reports on the bank's financial condition and to conduct an
annual audit of its financial affairs in compliance with its minimum standards
and procedures.
Under the FDIC Improvement Act, all insured institutions must undergo
regular on site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the appropriate agency against each institution or affiliate as it
deems necessary or appropriate. Insured institutions are required to submit
annual reports to the FDIC, their federal regulatory agency, and state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. The FDIC
Improvement Act also requires the federal banking regulatory agencies to
prescribe, by regulation, standards for all insured depository institutions and
depository institution holding companies relating, among other things, to the
following:
- internal controls;
- information systems and audit systems;
- loan documentation;
- credit underwriting;
- interest rate risk exposure; and
- asset quality.
National banks and their holding companies which have been chartered or
registered or have undergone a change in control within the past two years or
which have been deemed by the Office of the Comptroller of the Currency or the
Federal Reserve Board to be troubled institutions must give the Office of the
Comptroller of the Currency or the Federal Reserve Board thirty days prior
notice of the appointment of any senior executive officer or director. Within
the thirty day period, the Office of the Comptroller of the Currency or the
Federal Reserve Board, as the case may be, may approve or disapprove any such
appointment.
Deposit Insurance. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund and Savings Association Insurance Fund are
maintained for commercial banks and savings associations with insurance premiums
from the industry used to
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offset losses from insurance payouts when banks and thrifts fail. In 1993, the
FDIC adopted a rule which establishes a risk-based deposit insurance premium
system for all insured depository institutions. Under this system, until
mid-1995 depository institutions paid to Bank Insurance Fund or Savings
Association Insurance Fund from $0.23 to $0.31 per $100 of insured deposits
depending on its capital levels and risk profile, as determined by its primary
federal regulator on a semiannual basis. Once the Bank Insurance Fund reached
its legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for
well-capitalized banks, eventually eliminating premiums for well-capitalized
banks, with a minimum semiannual assessment of $1,000. However, in 1996 Congress
enacted the Deposit Insurance Funds Act of 1996, which eliminated even this
minimum assessment. It also separated the Financial Corporation (FICO)
assessment to service the interest on its bond obligations. The amount assessed
on individual institutions, including the bank, 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 the bank's cost of funds, and we may not be able to
pass these costs on to our customers.
Transactions With Affiliates and Insiders. The bank will be subject to
the provisions of Section 23A of the Federal Reserve Act, which places limits on
the amount of loans or extensions of credit to, or investments in, or certain
other transactions with, affiliates and on the amount of advances to third
parties collateralized by the securities or obligations of affiliates. The
aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of the bank's capital and surplus and, as to all affiliates
combined, to 20% of the bank's capital and surplus. Furthermore, within the
foregoing limitations as to amount, each covered transaction must meet specified
collateral requirements. Compliance is also required with certain provisions
designed to avoid the taking of low quality assets.
The bank 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 certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with nonaffiliated companies. The bank will be subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit
(i) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.
Dividends. A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts. In addition, a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus equals its stated capital, unless there has been transferred to
surplus no less than one-tenth of the bank's net profits of the preceding two
consecutive half-year periods (in the case of an annual dividend). The approval
of the Office of the Comptroller of the Currency is required if the total of all
dividends declared by a national bank in any calendar year exceeds the total of
its net profits for that year combined with its retained net profits for the
preceding two years, less any required transfers to surplus.
Branching. National banks are required by the National Bank Act to
adhere to branch office banking laws applicable to state banks in the states in
which they are located. Under current South Carolina law, the bank may open
branch offices throughout South Carolina with the prior approval of the Office
of the Comptroller of the Currency. In addition, with prior regulatory approval,
the bank will be able to acquire existing banking operations in South Carolina.
Furthermore, federal legislation has recently been passed which permits
interstate branching. The new law permits out-of-state acquisitions by bank
holding companies, interstate branching by banks if allowed by state law, and
interstate merging by banks.
Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the
Comptroller of the Currency, shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low
and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose additional requirements
and limitations on the bank.
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Other Regulations. Interest and other charges collected or contracted
for by the bank are subject to state usury laws and federal laws concerning
interest rates. The bank's loan operations are also subject to federal laws
applicable to credit transactions, such as:
- the federal Truth-In-Lending Act, governing disclosures of
credit terms to consumer borrowers;
- the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution
is fulfilling its obligation to help meet the housing needs of
the community it serves;
- the Equal Credit Opportunity Act, prohibiting discrimination
on the basis of race, creed or other prohibited factors in
extending credit;
- the Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
- the Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
- the rules and regulations of the various federal agencies
charged with the responsibility of implementing such federal
laws.
The deposit operations of the bank also are subject to:
- the Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative
subpoenas of financial records; and
- the Electronic Funds Transfer Act and Regulation E issued by
the Federal Reserve Board to implement that act, which governs
automatic deposits to and withdrawals from deposit accounts
and customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking
services.
Capital Regulations. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios in excess of the minimums. We have not
received any notice indicating that either Greenville First Bancshares or
Greenville First Bank is subject to higher capital requirements. The current
guidelines require all bank holding companies and federally-regulated banks to
maintain a minimum risk-based total capital ratio equal to 8%, of which at least
4% must be Tier 1 capital. Tier 1 capital includes common shareholders' equity,
qualifying perpetual preferred stock, and minority interests in equity accounts
of consolidated subsidiaries, but excludes goodwill and most other intangibles
and excludes the allowance for loan and lease losses. Tier 2 capital includes
the excess of any preferred stock not included in Tier 1 capital, mandatory
convertible securities, hybrid capital instruments, subordinated debt and
intermediate term-preferred stock, and general reserves for loan and lease
losses up to 1% of risk-weighted assets.
Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.
The federal bank regulatory authorities have also implemented a
leverage ratio, which is equal to Tier 1 capital as a percentage of average
total assets less intangibles, to be used as a supplement to the risk-based
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guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which a bank holding company may leverage
its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.
The FDIC Improvement Act established a new capital-based regulatory
scheme designed to promote early intervention for troubled banks which requires
the FDIC to choose the least expensive resolution of bank failures. The new
capital-based regulatory framework contains five categories of compliance with
regulatory capital requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total risk-based capital ratio of no less than 10%, and
the bank must not be under any order or directive from the appropriate
regulatory agency to meet and maintain a specific capital level. Initially, we
will qualify as "well capitalized."
Under the FDIC Improvement Act regulations, the applicable agency can
treat an institution as if it were in the next lower category if the agency
determines (after notice and an opportunity for hearing) that the institution is
in an unsafe or unsound condition or is engaging in an unsafe or unsound
practice. The degree of regulatory scrutiny of a financial institution
increases, and the permissible activities of the institution decreases, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to do some or all of
the following:
- submit a capital restoration plan;
- raise additional capital;
- restrict their growth, deposit interest rates, and other
activities;
- improve their management;
- eliminate management fees; or
- divest themselves of all or a part of their operations.
Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans.
These capital guidelines can affect us in several ways. If we grow at a
rapid pace, a premature "squeeze" on capital could occur making a capital
infusion necessary. The requirements could impact our ability to pay dividends.
Our capital levels will initially be more than adequate; however, rapid growth,
poor loan portfolio performance, poor earnings performance, or a combination of
these factors could change our capital position in a relatively short period of
time.
The FDIC Improvement Act requires the federal banking regulators to
revise the risk-based capital standards to provide for explicit consideration of
interest-rate risk, concentration of credit risk, and the risks of untraditional
activities. We are uncertain what effect these regulations would have.
Failure to meet these capital requirements would mean that a bank would
be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving the minimum capital
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger application, unless the bank could demonstrate a
reasonable plan to meet the capital requirement within a reasonable period of
time.
Enforcement Powers. The Financial Institution Reform 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 and consultants 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
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violations. Criminal penalties for some financial institution crimes have been
increased to twenty years. In addition, regulators are provided with greater
flexibility to commence enforcement actions against institutions and
institution-affiliated parties. Possible enforcement actions include the
termination of deposit insurance. Furthermore, banking agencies' power to issue
cease-and-desist orders were expanded. Such orders may, among other things,
require affirmative action to correct any harm resulting from a violation or
practice, including restitution, reimbursement, indemnification's or guarantees
against loss. A financial institution may also be ordered to restrict its
growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.
Recent Legislative Developments. From time to time, various bills are
introduced in the United States Congress with respect to the regulation of
financial institutions. Some 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, what
effect these would have.
Effect of Governmental Monetary Policies. Our earnings are affected by
domestic economic conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had, and are likely to 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 sets forth the number and percentage of outstanding
shares of common stock we expect to be beneficially owned by the organizers and
executive officers after the completion of this offering. All of our organizers
will serve as directors. The addresses of our organizers are the same as the
address of the bank. Prior to the offering, Art Seaver purchased 10 shares of
common stock for $10.00 per share. We will redeem this stock after the offering.
This table includes shares based on the "beneficial ownership" concepts as
defined by the SEC. 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 does not reflect warrants that will be granted to each
organizer to purchase one share of common stock for every two shares of common
stock purchased by the organizers during the offering because these warrants
will not be exercisable within 60 days of the date of this prospectus.
<TABLE>
<CAPTION>
SHARES ANTICIPATED TO BE OWNED
FOLLOWING THE OFFERING
--------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ------ -------
DIRECTORS AND EXECUTIVE OFFICERS
<S> <C> <C>
James M. Austin, III 6,000 0.50%
Andrew B. Cajka, Jr. 5,000 0.42%
Mark A. Cothran 25,000 2.08%
Leighton M. Cubbage 60,000 5.00%
Fred Gilmer, Jr. 16,000 1.33%
Tecumseh Hooper, Jr. 10,000 0.83%
Rudolph G. Johnstone, III 5,000 0.42%
Keith J. Marrero 2,500 0.21%
James B. Orders, III 20,000 1.67%
R. Arthur Seaver, Jr. 12,000 1.00%
William B. Sturgis 20,000 1.67%
------ -----
All directors and executive officers as a 181,500 15.13%
group (11 persons)
</TABLE>
EXECUTIVE OFFICERS AND DIRECTORS OF GREENVILLE FIRST BANCSHARES
The following table sets forth certain information about our executive
officers and directors. The CEO and president, senior vice presidents, chief
financial officer, and directors of Greenville First Bancshares will also hold
these same positions with Greenville First Bank. Greenville First Bancshares'
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 2000 annual meeting of shareholders, Class II at the
2001 annual meeting of shareholders, and Class III at the 2002 annual meeting of
shareholders. Executive officers serve at the discretion of the board of
directors.
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<PAGE> 32
<TABLE>
<CAPTION>
POSITION WITH
NAME AGE GREENVILLE FIRST BANCSHARES
---- --- ---------------------------
<S> <C> <C>
James M. Austin, III 42 Senior Vice President, CFO
Andrew B. Cajka, Jr. 40 Director
Mark A. Cothran 41 Director
Leighton M. Cubbage 46 Director
Fred Gilmer, Jr. 63 Director, Senior Vice President
Tecumseh Hooper, Jr. 52 Director
Rudolph G. Johnstone, III , M.D. 39 Director
Keith J. Marrero 39 Director
James B. Orders, III 46 Director, Chair
R. Arthur Seaver, Jr. 35 Director, CEO, President
William B. Sturgis 64 Director
</TABLE>
James "Jim" M. Austin, III is the proposed senior vice president and chief
financial officer of Greenville First Bank. He has over 20 years of experience
in the financial services industry. From 1978 to 1983, Mr. Austin was employed
by KPMG Peat Marwick specializing in bank audits. Mr. Austin was employed for 12
years with American Federal Bank as controller and senior vice president
responsible for the financial accounting and budgeting. From 1995 until 1997,
Mr. Austin was the senior vice president and chief financial officer of Regional
Management Corporation, a 58-office consumer finance company where he was
responsible for the finance and operations area of the company. From 1997 until
July 1999, he was the director of corporate finance for Homegold Financial, a
national sub-prime financial service company that specializes in mortgage loan
originations. Mr. Austin is a 1978 graduate of the University of South Carolina
with degrees in accounting and finance. He is also a Certified Public Accountant
and graduate of the University of Georgia's Executive Management's Savings Bank
program. He is a graduate of Leadership Greenville and is active in the First
Presbyterian Church. He has served on the community boards of River Place
Festival, Junior Achievement, and Pendleton Place, and he is the past president
of the Financial Manager's Society of South Carolina and former board member of
the Young Manager's Division of the Community of Financial Institutions of South
Carolina.
Andrew B. Cajka , Class III Director, is the founder and president of Southern
Hospitality Group, LLC, a hotel management and development company in
Greenville, South Carolina. Prior to starting his own business, Mr. Cajka was a
managing member of Hyatt Hotels Corporation from 1986 until 1998. He is a
graduate of Bowling Green State University in 1982. Mr. Cajka is currently on
the board of directors for the Greenville Chamber of Commerce and past president
of the downtown area council. He is a member of the Greenville Hospital
Foundation Board, past chairman of the Children's Hospital, Board of Trustee
member and chairman of the Foundation at St. Joseph High School, past chairman
of the Greenville Tech Hospitality Board, board member of the Urban League, and
past chairman of the Greenville Convention and Visitors Bureau.
Mark A. Cothran, Class I Director, is the president and principal owner of
Cothran Company, Inc., a real estate construction and development company in
Greenville, South Carolina. He has been with Cothran Company, Inc. since 1986.
Mr. Cothran received his bachelors degree in finance and banking from the
University of South Carolina in 1980 and is a licensed real estate broker in the
State of South Carolina. He is currently on the board of directors of the
Greenville Chamber of Commerce and member of their economic development board.
He is past president of the state chapter of NAIOP and past member of the
Advisory Board of Greenville National Bank.
Leighton M. Cubbage, Class II Director, was the co-founder, president, and chief
operating officer of Corporate Telemanagement Group in Greenville, South
Carolina from 1989 until 1995, when the company was acquired by LCI
International. Since 1995, Mr. Cubbage has been a private investor maintaining
investment interests in a telecommunications company, a car dealership, and a
trucking company. He is a 1977 graduate of Clemson University with a bachelors
degree in political science. Mr. Cubbage is on the board of directors for the
Greenville United Way, a member of the Greenville Technical College Foundation
Board, and a member of the Clemson University Entrepreneurial Board.
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<PAGE> 33
Fred Gilmer, Jr, Class III Director, is the proposed senior vice president of
Greenville First Bancshares and Greenville First Bank, is a seasoned banker with
over 40 years of experience in the financial industry. He was the executive
officer in charge of client relations for Greenville National Bank from 1994
until April 1999, when he resigned to help organize Greenville First Bank. Mr.
Gilmer has held executive positions with three other banks in the Greenville
area between 1959 and 1995. He graduated from the University of Georgia in 1958,
and the LSU Graduate School of Banking of the South in Baton Rouge, Louisiana in
1970. Mr. Gilmer is very active in the Greenville community. He is a graduate of
Leadership Greenville and presently serves numerous organizations, including the
Greenville Rotary Club, Greenville Chamber of Commerce, YMCA, and the First
Presbyterian Church. He is a past board member of Family Children Service,
Goodwill Industries, Downtown Area Council, Greenville Little Theater,
Greenville Cancer Society, South Carolina Arthritis Foundation, Freedom Weekend
Aloft, and the Greenville Chamber of Commerce.
Tecumseh "Tee" Hooper, Jr., Class III Director, is the president of IKON Office
Solutions in Greenville, South Carolina. He is also a director of Homegold,
Inc., a sub-prime mortgage lender and a director of Peregrine Energy, Inc., an
energy management company. From 1994 until 1997, he served as a director of
Carolina Investors, a savings and loan institution. Mr. Hooper graduated from
The Citadel in 1969 with a degree in business administration, and he received a
Masters in Business Administration from the University of South Carolina in
1971. Mr. Hooper has served the community as a member of the Greenville County
Development Board, the Greenville Chamber of Commerce, and the board of
directors for Camp Greenville, as well as the vice chairman of communications
for the United Way. Mr. Hooper also serves on the board of directors for
Leadership Greenville, Leadership South Carolina, and the YMCA Metropolitan.
Rudolph "Trip" G. Johnstone, III, M.D., Class I Director, is a physician
practicing with the Cross Creek Asthma, Allergy and Immunology medical clinic.
He graduated from Washington & Lee University in 1982 with a degree in biology
and from the Medical University of South Carolina in 1986. Mr. Johnstone is
active with the Greenville Art Museum and served on the consulting board to
Greenville National Bank from 1995 until 1998, when it was acquired by Regions
Bank.
Keith J. Marrero, Class I Director, is the principal and owner of AMI
Architects, an architectural firm located in Greenville, South Carolina that was
founded in 1988. He is a registered architect with the South Carolina and
Louisiana Boards of Architectural Examiners and the National Council of
Architectural Registration Boards. Mr. Marrero is a previous advisory board
member of BB&T. He graduated from the University of Notre Dame with a bachelors
degree in Architecture in 1983. Mr. Marrero was appointed by former Governor
David Beasley to the board of directors of the South Carolina Legacy Trust Fund.
He is also an executive committee member of the Greenville Chamber of Commerce,
serving as vice chairman of Minority Business. Mr. Marrero is also an advisory
board member of the Bi-Lo Center and serves on the Historic Architecture Review
Board for the City of Greenville.
James B. Orders, III, Class II Director, is the Chairman of the Board for
Greenville First Bancshares. He is the president of Park Place Corporation, a
company engaged in the manufacture and sale of bedding and other furniture to
the wholesale market. Mr. Orders is chairman of Comfortaire Corporation and a
director of Orders Realty Co., Inc., a real estate development and management
company that is a wholly owned subsidiary of Park Place Corporation. He attended
Clemson University from 1970 until 1974. Mr. Orders is the past president of the
Downtown Rotary Club, a past member of the advisory board of Greenville National
Bank, and a past member of the advisory board of Carolina First Bank. In
addition, he is a member of the Lay Christian Association Board and the Downtown
Soccer Association Board.
R. Arthur "Art" Seaver, Jr., Class I Director, is the proposed president and
chief executive officer of Greenville First Bank. He has over 13 years of
banking experience. From 1987 until 1992, Mr. Seaver held various positions with
The Citizens & Southern National Bank of South Carolina, including assistant
vice president of corporate banking. From 1992 until February 1999, he was with
Greenville National Bank, which was acquired by Regions Bank in 1998. He was the
senior vice president in charge of Greenville National Bank's liability portion
of the balance sheet prior to leaving to form the proposed Greenville First
Bank. Mr. Seaver is a 1986 graduate of Clemson University with a bachelors
degree in Finance and a 1999 graduate of the BAI Graduate School of Community
Bank Management. He is very active in the Greenville community, where he works
with
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<PAGE> 34
numerous organizations, including Leadership Greenville, the South Carolina
Network of Business and Education Partnership, Junior Achievement, the
Greenville Convention and Visitors Bureau, the United Way, and the First
Presbyterian Church.
William B. Sturgis, Class II Director, held various executive positions with
W.R. Grace & Co. from 1984 until his retirement in 1997, including executive
vice president of W.R. Grace's worldwide packaging operations and president of
its North American Cryovac Division. Mr. Sturgis graduated from Clemson
University in 1957 with a degree in chemical engineering and is a graduate of
the Advanced Management Program at Harvard. He is active with Clemson
University, serving on the Foundation Board, the President's Advisory Council,
and the Engineering Advisory Board. He is also an advisory board member of the
Peace Center and a member of the Downtown Rotary Club and Presbyterian
Foundation Board.
Family Relationships. Dr. Johnstone is Mr. Gilmer's stepson. No other director
has a family relationship with any other director or executive officer of
Greenville First Bancshares closer than first cousin.
EMPLOYMENT AGREEMENTS
We have entered into an employment agreement with Art Seaver for a
three-year term, pursuant to which he will serve as the president, the chief
executive officer, and a director of Greenville First Bancshares and Greenville
First Bank. Mr. Seaver will be paid an initial salary of $123,000, plus his
yearly medical insurance premium. He shall receive an annual increase in his
salary equal to the previous year's salary times the increase in the Consumer
Price Index during the previous year. The board of directors may increase Mr.
Seaver's salary above this level, but not below it. He is entitled to receive a
bonus of $10,000 upon the opening of the bank and will be eligible to receive an
annual bonus of up to 5% of the net pre-tax income of the bank, if the bank
meets performance goals set by the board. He will be eligible to participate in
any management incentive program of the bank or any long-term equity incentive
program and will be eligible for grants of stock options and other awards
thereunder. Upon the closing of the offering (or as soon thereafter as an
appropriate stock option plan is adopted by the company), Mr. Seaver will be
granted options to purchase a number of shares of common stock equal to 5% of
the number of shares sold in this offering. These options will vest over a
five-year period and will have a term of ten years. Additionally, Mr. Seaver
will participate in the bank's retirement, welfare, and other benefit programs
and is entitled to a life insurance policy and an accident liability policy and
reimbursement for automobile expenses, club dues, and travel and business
expenses.
Mr. Seaver's employment agreement also provides that following
termination of his employment and for a period of twelve months thereafter, he
may not (a) compete with the company, 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 within radius of thirty miles from the main office of the company or
any branch office of the company, (b) solicit major customers of the bank for
the purpose of providing financial services, or (c) solicit employees of the
bank for employment. If Mr. Seaver terminates his employment for good cause as
that term is defined in the employment agreement or if he is terminated
following a change in control of Greenville First Bancshares as defined in the
agreement, he will be entitled to severance compensation of his then current
monthly salary for a period of 12 months, plus accrued bonus, and all
outstanding options and incentives shall vest immediately.
DIRECTOR COMPENSATION
We intend to pay each of our ten directors $200 for each meeting they
attend and $50 for each committee meeting they attend. During the first year we
expect to have 12 directors meetings. We expect 9 directors to attend each
meeting for total directors' fees for the year of $21,600. We also expect to
hold 64 committee meetings during the first year. We expect 4 directors to
attend each committee meeting for total fees for the year of $12,800.
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<PAGE> 35
STOCK OPTION PLAN
After the offering, we expect to adopt a stock option plan which will
permit Greenville First Bancshares to grant options to its officers, directors,
and employees. We anticipate that we will initially authorize the issuance of a
number of shares under the stock option plan equal to 15% of the shares
outstanding after the offering. We do not intend to issue stock options at less
than the fair market value of the common stock on the date of grant.
STOCK WARRANTS
The organizers have invested significant time and effort to form
Greenville First Bancshares and Greenville First Bank, and they have
individually guaranteed a $600,000 line of credit to the bank to cover
organizational expenses. In recognition of the financial risk and efforts they
have undertaken in organizing the bank, each organizer will also receive, for no
additional consideration, a warrant to purchase one share of common stock at a
purchase price of $10.00 per share for every two shares purchased by that
organizer in the offering. The warrants, which will be represented by separate
warrant agreements, will become exercisable on the later of the date that the
bank opens for business or one year from the date of this prospectus and will be
exercisable in whole or in part during the ten year period following that date.
The warrants and shares issued pursuant to the exercise of such warrants will be
transferable, subject to compliance with applicable securities laws. If the
Office of the Comptroller of the Currency issues a capital directive or other
order requiring the bank to obtain additional capital, the warrants will be
forfeited if not immediately exercised.
The organizers plan to purchase approximately 175,500 shares of common
stock for a total investment of $1,755,000. As a result, the organizers will own
approximately 14.6% of the common stock outstanding upon completion of the
offering. If each organizer exercises his warrant in full, the organizers'
ownership of Greenville First Bancshares will increase to 20.4% of the
outstanding common stock. Although they have not promised to do so, the
organizers may purchase additional shares in the offering, including up to 100%
of the offering. All shares purchased by the organizers will be for investment
and not intended for resale. Because purchases by the organizers may be
substantial, you should not assume that the sale of a specified offering amount
indicates the merits of this offering.
EXCULPATION AND INDEMNIFICATION
Greenville First Bancshares's articles of incorporation contain a
provision which, subject to certain limited exceptions, limits the liability of
a director 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;
- 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.
In addition, if such act is amended to authorize further elimination or
limitation of the liability of director, then the liability of each director
shall be eliminated or limited to the fullest extent permitted by such
provisions, as so amended, without further action by the shareholders, unless
the law requires such action. The provision does not limit the right of the
company or its shareholders to seek injunctive or other equitable relief not
involving payments in the nature of monetary damages.
Greenville First Bancshares's bylaws contain certain provisions which
provide indemnification to directors 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 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, Sections 33-8-510 and 33-8-520 would require Greenville First
Bancshares to indemnify these persons
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<PAGE> 36
against expenses, including attorney's fees, actually and reasonably incurred in
connection with the matter. The South Carolina Business Corporation Act
expressly allows Greenville First Bancshares to provide for greater
indemnification rights to its officers and directors, subject to shareholder
approval.
Our board of directors also has the authority to extend to officers,
employees, and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The board of directors
intends to extend indemnification rights to all of its executive officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Greenville First Bancshares pursuant to the foregoing provisions, or otherwise,
Greenville First Bancshares has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
We expect to have banking and other transactions in the ordinary course
of business with the organizers, directors, and officers and their affiliates,
including members of their families or corporations, partnerships, or other
organizations in which such organizers, officers, or directors have a
controlling interest, on substantially the same terms, including price, or
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated parties. These transactions are also restricted by
our regulatory agencies, including the Federal Reserve Board. For a discussion
of the Federal Reserve Board regulations, please see "Transactions with
Affiliates and Insiders" on page 26. These transactions are not expected to
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, regulatory restrictions, and statutory
lending limits, and directors with a personal interest in any loan application
will be excluded from the consideration of such loan application. We intend for
all of our transactions with organizers or other affiliates to be on terms no
less favorable than could be obtained from an unaffiliated third party and to be
approved by a majority of our disinterested directors.
LEASE AND CONSTRUCTION OF MAIN OFFICE
We expect to lease our bank's main facility from Cothran Properties,
LLC for a term of 20 years at an initial rental rate of $16,667 per month. Mark
A. Cothran, one of our directors, is a 50% owner of Cothran Properties, LLC. One
of our other directors, Keith J. Marrero, is an architect and is designing the
facility. Mr. Marrero will be paid approximately $70,000 for his architectural
services. Cothran Properties, LLC is purchasing the land and building the bank
facility on the land to our specifications. We expect to complete construction
of our main facility by August 2000, at which time we will begin to pay rent in
the amount of $16,667 per month. Prior to completion of the permanent bank
facility, we will lease a modular bank facility on a month to month basis for an
initial payment of $13,050 and a monthly lease rate of $5,880. The modular
facility will be located on the same site as out future main office, and we will
pay $500 per month in rent to Cothran Properties, LLC for the use of this site
prior to completion of the main office. We have conducted two separate
appraisals of the lease and the property, which includes Mr. Marrero's
architectural services, to ensure that the terms of the proposed lease are on
substantially the same terms as those prevailing at the time for comparable
transactions with unrelated parties.
LOAN GUARANTEE
Each of the directors has guaranteed the $600,000 line of credit used
to pay organizing expenses for the bank and holding company.
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<PAGE> 37
DESCRIPTION OF CAPITAL STOCK OF GREENVILLE FIRST BANCSHARES
GENERAL
The authorized capital stock of Greenville First Bancshares consists of
10,000,000 shares of common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share. The following summary
describes the material terms of Greenville First Bancshares's capital stock.
Reference is made to the articles of incorporation of Greenville First
Bancshares which is filed as an exhibit to the Registration Statement of which
this prospectus forms a part, for a detailed description of the provisions
summarized below.
COMMON STOCK
Holders of shares of the common stock are entitled to receive such
dividends as may from time to time be declared by the board of directors out of
funds legally available for distribution. We do not plan to declare any
dividends in the immediate future. See "Dividend Policy" on page 12. Holders
of common stock are entitled to one vote per share on all matters on which the
holders of common stock are entitled to vote and do not have any cumulative
voting rights. Shareholders have no preemptive, conversion, redemption, or
sinking fund rights. In the event of a liquidation, dissolution, or winding-up
of the company, holders of common stock are entitled to share equally and
ratably in the assets of the company, if any, remaining after the payment of all
debts and liabilities of the company and the liquidation preference of any
outstanding preferred stock. The outstanding shares of common stock are, and the
shares of common stock offered by the company hereby when issued will be, fully
paid and nonassessable. The rights, preferences and privileges of holders of
common stock are subject to any classes or series of preferred stock that the
company may issue in the future.
PREFERRED STOCK
Greenville First Bancshares' articles of incorporation provide that the
board of directors is authorized, without further action by the holders of the
common stock, to provide for the issuance of shares of preferred stock in one or
more classes or series and to fix the designations, powers, preferences, and
relative, participating, optional and other rights, qualifications, limitations,
and restrictions thereof, including the dividend rate, conversion rights, voting
rights, redemption price, and liquidation preference, and to fix the number of
shares to be included in any such classes or series. Any preferred stock so
issued may rank senior to the common stock with respect to the payment of
dividends or amounts upon liquidation, dissolution or winding-up, or both. In
addition, any such shares of preferred stock may have class or series voting
rights. Upon completion of this offering, we will not have any shares of
preferred stock outstanding. Issuances of preferred stock, while providing the
company with flexibility in connection with general corporate purposes, may,
among other things, have an adverse effect on the rights of holders of common
stock (for example, the issuance of any preferred stock with voting or
conversion rights may adversely affect the voting power of the holders of common
stock), and in certain circumstances such issuances could have the effect of
decreasing the market price of the common stock. We do not plan to issue any
shares of preferred stock, and will not issue preferred stock to organizers on
terms more favorable than those on which it issues preferred stock to
shareholders other than organizers.
ANTI-TAKEOVER EFFECTS
The provisions of the articles, the bylaws, and South Carolina law
summarized in the following paragraphs may have anti-takeover effects and may
delay, defer, or prevent a tender offer or takeover attempt that a shareholder
might consider to be in such shareholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by shareholders, and may make removal of management more difficult.
Restriction on Acquisition. Sections 34-25-50 and 34-25-240 of the Code
of Laws of South Carolina prohibit a company from "acquiring" Greenville First
Bancshares or Greenville First Bank until the bank has been in existence and
continuous operation for five years.
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<PAGE> 38
Control Share Act. Greenville First Bancshares has specifically elected
to opt out of a provision of South Carolina law which may deter or frustrate
unsolicited attempts to acquire certain South Carolina corporations. This
statute, commonly referred to as the "Control Share Act" applies to public
corporations organized in South Carolina, unless the corporation specifically
elects to opt out. The Control Share Act generally provides that shares of a
public corporation acquired in excess of certain specific thresholds will not
possess any voting rights unless such voting rights are approved by a majority
vote of the corporation's disinterested shareholders.
Authorized but Unissued Stock. The authorized but unissued shares of
common stock and preferred stock will be available for future issuance without
shareholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of common stock and preferred
stock may enable the board of directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of Greenville First Bancshares by means of a proxy contest,
tender offer, merger or otherwise, and thereby protect the continuity of the
company's management.
Number of Directors. The bylaws provide that the number of directors
shall be fixed from time to time by resolution by at least a majority of the
directors then in office, but may not consist of fewer than five nor more than
twenty-five members. Initially we will have 10 directors.
Classified Board of Directors. Our 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
and whether or not a majority of shareholders believe that such a change would
be desirable.
Number, Term, and Removal of Directors. We currently have ten
directors, but our bylaws authorize this number to be increased or decreased by
our board of directors. Our directors are elected to three year terms by a
plurality vote of our shareholders. Our bylaws provide that our shareholders, by
a majority vote of those entitled to vote in an election of directors, or our
board of directors, by a unanimous vote, excluding the director in question, may
remove a director with or without cause. Our bylaws provide that all vacancies
on our board may be filled by a majority of the remaining directors for the
unexpired term.
Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The bylaws establish advance notice procedures with regard to
shareholder proposals and the nomination, other than by or at the direction of
the board of directors or a committee thereof, of candidates for election as
directors. These procedures provide that the notice of shareholder proposals
must be in writing and delivered to the secretary of the company no earlier than
30 days and no later than 60 days in advance of the annual meeting. Shareholder
nominations for the election of directors must be made in writing and delivered
to the secretary of the company no later than 90 days prior to the annual
meeting, and in the case of election to be held at a special meeting of
shareholders for the election of directors, the close of business on the 7th day
following the date on which notice of the meeting is first given to
shareholders. We may reject a shareholder proposal or nomination that is not
made in accordance with such procedures.
Nomination Requirements. Pursuant to the bylaws, we have established
certain nomination requirements for an individual to be elected as a director,
including that the nominating party provide (i) notice that such party intends
to nominate the proposed director; (ii) the name of and certain biographical
information on the nominee; and (iii) a statement that the nominee has consented
to the nomination. The chairman of any shareholders' meeting may, for good cause
shown, waive the operation of these provisions. These provisions could reduce
the likelihood that a third party would nominate and elect individuals to serve
on the board of directors.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 1,200,000 shares of
common stock outstanding. The shares sold in this offering will be freely
tradable, without restriction or registration under the Securities Act of 1933,
except for shares purchased by "affiliates" of Greenville First Bancshares,
which will be subject to resale restrictions under the Securities Act of 1933.
An affiliate of the issuer is defined in Rule 144 under the Securities Act of
1933 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 of 1933 defines the term "control" to
mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the person whether through the
ownership of voting securities, by contract or otherwise. Directors will likely
be deemed to be affiliates. These securities held by affiliates may be sold
without registration in accordance with the provisions of Rule 144 or another
exemption from registration.
In general, under Rule 144, an affiliate of the company or a person
holding restricted shares may sell, within any three-month period, a number of
shares no greater than 1% of the then outstanding shares of the common stock or
the average weekly trading volume of the common stock during the four calendar
weeks preceding the sale, whichever is greater. Rule 144 also requires that the
securities must be sold in "brokers' transactions," as defined in the Securities
Act of 1933, and the person selling the securities may not solicit orders or
make any payment in connection with the offer or sale of securities to any
person other than the broker who executes the order to sell the securities. This
requirement may make the sale of the common stock by affiliates of Greenville
First Bancshares pursuant to Rule 144 difficult if no trading market develops in
the common stock. Rule 144 also requires persons holding restricted securities
to hold the shares for at least one year prior to sale.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement among
us and the underwriter named below, the underwriter has agreed to purchase from
us, and we have agreed to sell to the underwriter, the number of shares of
common stock listed opposite the underwriter's name below.
<TABLE>
<CAPTION>
Number of Firms Number of Over-
Underwriter Share Allotment Shares
----------- ----- ----------------
<S> <C> <C>
Wachovia Securities, Inc...................................
</TABLE>
The underwriting agreement provides that the underwriter's obligations
are subject to approval of certain legal matters by counsel and to various other
conditions customary in a firm commitment underwritten public offering. The
underwriter is required to purchase and pay for the shares offered by this
prospectus other than those covered by the over-allotment option described
below.
The underwriting discount that will apply to shares not purchased by
our directors and executive officers in this offering will equal 7.5% of the
public offering price listed on the cover page of this prospectus, or $.75 per
share. The underwriting discount that will apply to shares purchased in this
offering by our directors and executive officers and certain other investors
recommended by our directors and executive officers, up to 30% of the offering,
will equal 3.5% of the public offering price, or $.35 per share.
The underwriter proposes to offer the common stock directly to the
public at the public offering price of $10.00 per share and to certain
securities dealers at the price less a concession not in excess of $____ per
share. The underwriter may allow, and the selected dealers may reallow, a
concession not in excess of $___ per share to certain other broker and dealers.
We expect that the shares of common stock will be ready for delivery on or about
________, 1999. After the offering, the offering price and other selling terms
may change.
The public offering price was determined by negotiations between us and
the underwriter based on several factors. These factors included prevailing
market conditions, the price to earnings and price to book value multiples of
comparable publicity traded companies and Greenville First Bank's growth
potential and cash flow and earnings prospects.
38
<PAGE> 40
We have granted the underwriter an option, exercisable within 30 days
after the date of this prospectus, to purchase up to 180,000 additional shares
of common stock to cover over-allotments, if any, at the public offering price
listed on the cover page of this prospectus, less the 7.5% underwriting
discount. The underwriter may purchase these shares only to cover
over-allotments made in connection with this offering.
The underwriter does not intend to sell shares of common stock to any
account over which it exercises discretionary authority.
We, and our directors and executive officers, have each agreed with the
underwriter that we will not sell, contract to sell, or otherwise dispose of any
shares of common stock or any securities that can be converted into or exchanged
for shares of common stock for a period of 180 days from the date of this
prospectus without the underwriter's prior written consent, except in limited
circumstances. The underwriter may on occasion be a customer of, engage in
transactions with, and perform services for us and Greenville First Bank in the
ordinary course of business.
We have agreed to indemnify the underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
currently in effect, or to contribute to payments that the underwriter may be
required to make in connection with these liabilities.
In connection with this offering, the underwriter may purchase and sell
common stock in the open market. These transactions may include over-allotment
and stabilizing transactions, and purchases to cover syndicate short positions
created in connection with this offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the common stock, and syndicate short positions involve
the underwriter's sale of a greater number of shares of common stock than it is
required to purchase from us in the offering. These activities may stabilize,
maintain or otherwise affect the market price of the common stock, which may be
higher than the price that might otherwise prevail in the open market. The
underwriter may effect these transactions on the Nasdaq OTC Bulletin Board or
otherwise and may discontinue them at any time.
39
<PAGE> 41
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Greenville First Bancshares by Nelson Mullins Riley & Scarborough, L.L.P.,
Atlanta, Georgia. Certain legal matters related to this offering will be passed
upon for Wachovia Securities by Smith Helms Mulliss & Moore, L.L.P., Charlotte,
North Carolina.
EXPERTS
Greenville First Bancshares's financial statements dated June 30, 1999
and for the period from February 1999 (inception), until June 30, 1999 have been
audited by Elliott Davis & Company, L.L.P., as stated in their report appearing
elsewhere herein, and have been so included in reliance on the report of this
firm given upon their authority as an expert in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form SB-2
(together with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement"), under the Securities Act of 1933 and the rules and
regulations thereunder, for the registration of the common stock offered hereby.
This prospectus, which forms a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement. For
further information with respect to Greenville First Bancshares, Greenville
First Bank, and the common stock, you should refer to the Registration Statement
and the exhibits thereto.
You can examine and obtain copies of the Registration Statement at the
Public Reference Section of the SEC, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web site at http://www.sec.gov that contains all of the reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC using the EDGAR filing system, including
Greenville First Bancshares.
We have filed or will file various applications with the Office of the
Comptroller of the Currency and the FDIC. You should only rely on information in
this prospectus and in our related Registration Statement in making an
investment decision. If other available information is inconsistent with
information in this prospectus, including information in public files or
provided by the Office of the Comptroller of the Currency and the FDIC, such
other information is superseded by the information in this prospectus.
Projections appearing in the applications to such agencies were based on
assumptions that the organizers believed were reasonable at the time, but which
may have changed or otherwise be wrong. Greenville First Bancshares and
Greenville First Bank specifically disclaim all projections for purposes of this
prospectus and caution prospective investors against placing reliance on them
for purposes of making an investment decision. Statements contained in this
prospectus regarding the contents of any contract or other document referred to
are not necessarily complete. If such contract or document is an exhibit to the
Registration Statement, you may obtain and read such document or contract for
more information.
As a result of this offering, Greenville First 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 SEC.
We will furnish our shareholders with annual reports containing audited
financial statements and with quarterly reports for the first three quarters of
each fiscal year containing unaudited summary financial information. Our fiscal
year ends on December 31.
40
<PAGE> 42
GREENVILLE FIRST BANCSHARES, INC
(A DEVELOPMENT STAGE ENTERPRISE)
GREENVILLE, SOUTH CAROLINA
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT F-2
FINANCIAL STATEMENTS
Balance sheet F-3
Statement of operations F-4
Statement of changes in owners' equity F-5
Statement of cash flows F-6
NOTES TO FINANCIAL STATEMENTS F-7
</TABLE>
F-1
<PAGE> 43
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Directors
GREENVILLE FIRST BANCSHARES, INC.
Greenville, South Carolina
We have audited the accompanying balance sheet of GREENVILLE FIRST
BANCSHARES, INC. (a development stage enterprise) as of June 30, 1999 and the
related statements of operations, changes in organizers' deficit and cash flows
for the period from February 22, 1999 (date of inception) through June 30, 1999.
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 GREENVILLE FIRST
BANCSHARES, INC. (a development stage enterprise) as of June 30, 1999 and the
results of its operations and its cash flows for the period from February 22,
1999 through June 30, 1999 in conformity with generally accepted accounting
principles.
Greenville, South Carolina
July 8, 1999
F-2
<PAGE> 44
GREENVILLE FIRST BANCSHARES, INC
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
JUNE 30, 1999
ASSETS
<TABLE>
<S> <C>
Cash and cash equivalents $ 31,625
Computer equipment 1,855
Deferred stock offering costs 22,960
---------------
Total assets $ 56,440
===============
LIABILITIES AND ORGANIZERS' DEFICIT
LIABILITIES
Line of credit $ 200,000
Interest payable 3,249
Salaries payable 5,200
---------------
208,449
COMMITMENTS AND CONTINGENCIES - Notes 2 and 3
ORGANIZERS' DEFICIT
Preferred stock, par value $.01 per share, 10,000,000 shares
authorized, no shares issued
Common stock, par value $.01 per share, 20,000,000 shares
authorized
Additional paid-in capital 100
Retained deficit accumulated during the development stage (152,109)
Total liabilities and organizers' deficit $ 56,440
===============
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-3
<PAGE> 45
GREENVILLE FIRST BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 22, 1999 (DATE OF INCEPTION)
THROUGH JUNE 30, 1999
EXPENSES
<TABLE>
<S> <C>
Salaries and payroll taxes $ 68,966
Professional fees 38,000
Marketing 24,523
Insurance 4,721
Rent 2,400
Telephone and supplies 4,174
Interest 3,248
Other 6,077
---------------
Loss before provision for income taxes (152,109)
PROVISION FOR INCOME TAXES -
---------------
Net loss $ (152,109)
================
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-4
<PAGE> 46
GREENVILLE FIRST BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN ORGANIZERS' DEFICIT
FOR THE PERIOD FROM FEBRUARY 22, 1999 (DATE OF INCEPTION)
THROUGH JUNE 30, 1999
<TABLE>
<CAPTION>
RETAINED
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
PROCEEDS FROM THE SALE OF
STOCK TO ORGANIZERS 100 $ -- $ 100 $ -- $ 100
NET LOSS -- -- -- $ (152,109) $ (152,109)
---------- ----------- ------------ -------------- --------------
BALANCE, JUNE 30, 1999 100 $ -- $ 100 $ (152,109) $ (152,009)
========== =========== ============ ============== =============
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-5
<PAGE> 47
GREENVILLE FIRST BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 22,1999 (DATE OF INCEPTION)
THROUGH JUNE 30, 1999
NET CASH USED FOR PRE-OPERATING ACTIVITIES
<TABLE>
<S> <C>
Net loss $(152,109)
Deferred stock offering costs (22,960)
Interest payable 3,249
Salaries payable 5,200
---------
Net cash used for pre-operating activities (166,620)
---------
INVESTING ACTIVITIES
Purchase of computer equipment (1,855)
---------
FINANCING ACTIVITIES
Proceeds from borrowings on line of credit 200,000
Proceeds from issuance of stock to organizer 100
---------
Net cash provided by financing activities 200,100
---------
Net increase in cash 31,625
CASH AND CASH EQUIVALENTS, FEBRUARY 22, 1999
(DATE OF INCEPTION) --
---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,625
=========
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-6
<PAGE> 48
GREENVILLE FIRST BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES
GREENVILLE FIRST BANCSHARES, INC. (the "Company") is a South Carolina
corporation organized for the purpose of owning and controlling all of the
capital stock of GREENVILLE FIRST BANK (in organization) (the "Bank"). The Bank
is being organized as a national bank under the laws of the United States with
the purpose of becoming a new bank to be located in Greenville County, South
Carolina. The Company has filed a charter application with the OCC and an
application for deposit insurance with the FDIC. Provided that the applications
are timely approved and the necessary capital is raised, it is expected that
banking operations will commence in January 2000.
The Company is a development stage enterprise as defined by Statement
of Financial Accounting Standard No. 7, "Accounting and Reporting by Development
Stage Enterprises", as it devotes substantially all its efforts to establishing
a new business. The Company's planned principal operations have not commenced
and revenue has not been recognized from the planned principal operations.
The Company intends to sell 1,200,000 shares of its common stock at $10
per share. The offering will raise $11,113,000 net of estimated underwriting
discounts and commissions and offering expenses. The directors and executive
offices of the Company plan to purchase 181,500 shares of common stock at $10
per share, for a total of $1,815,000. Upon purchase of these shares, the Company
will issue stock warrants to the organizers to purchase up to an additional
87,750 shares of common stock. Additionally, the underwriter may exercise the
over-allotment option and purchase up to 180,000 additional shares of common
stock. The remaining shares will be sold through a public offering. The Company
will use $8.5 million of the proceeds to capitalize the proposed Bank.
YEAR-END
The Company has adopted a fiscal year ending on December 31, effective for
the period ending December 31, 1999. A minimal amount of transactions
occurred prior to the Company's incorporation have been combined in these
financial statements for ease of presentation.
ESTIMATES
The financial statements include estimates and assumptions that effect the
Company's financial position and results of operations and disclosure of
contingent assets and liabilities. Actual results could differ from these
estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. The Company places its
temporary cash investments with high credit quality financial institutions.
At times such investments may be in excess of the FDIC insurance limits.
DEFERRED STOCK OFFERING COSTS
Deferred stock offering costs are expenses incurred by the Company in
connection with the offering and issuance of its stock. The deferred stock
offering costs will be deducted from the Company's additional paid-in capital
after the stock offering. If the stock offering is deemed unsuccessful, all
deferred stock offering costs will be charged to operations during the period
in which the offering is deemed unsuccessful.
ORGANIZATION COSTS
Organization costs include incorporation, legal and consulting fees incurred
in connection with establishing the Company. In accordance with Statement of
Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities,"
organization costs are expensed when incurred.
F-7
<PAGE> 49
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, CONTINUED
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the financial reporting and income
tax bases of assets and liabilities. At June 30, 1999, no taxable income has
been generated and therefore, no tax provision has been included in these
financial statements.
NOTE 2 - LINE OF CREDIT
The Company has established a $600,000 line of credit with an
individual to fund operating expenses of the Company during the development
stage. The line is uncollateralized and is guaranteed by the organizers. The
line bears interest at the prime rate and expires February 28, 2000. As of June
30, 1999, $200,000 is outstanding on this line of credit.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company has engaged a law firm to assist in preparing and filing
all organizational, incorporation, and bank applications and to assist in
preparing stock offering documents and consummating the Company's initial
offering. The aggregate cost of the services is expected to approximate $40,000.
The Company leases temporary office space under a month-to-month
operating lease requiring monthly payments of $800. Additionally, the Company
has entered into a 12-month operating lease for a modular unit to temporarily
serve as its first commercial bank office. The lease requires monthly payments
of approximately $5,880.
The Company has also entered into an operating lease for the property
of its first commercial bank office for $500 a month. Future plans are to
construct its main building on this site and to lease the building and property
for $16,667 per month for 20 years.
The Company has engaged a bank consultant to assist in establishing the
Bank and bank holding company. The aggregate cost of the services is expected to
approximate $45,000.
The Company has entered into an employment agreement with its president
and chief executive officer that includes a three year compensation term, annual
bonus, incentive program, stock option plan and a one-year non-compete agreement
upon early termination.
The Company has entered into an agreement with a data processor to
provide ATM services, item processing and general ledger processing. Components
of this contract include minimum charges based on volume and include initial
setup costs of approximately $56,200.
NOTE 4 - RELATED PARTY TRANSACTIONS
One of the organizers of the Company owns the land where the Company
will lease the land and building for use as its main office (Note 3).
F-8
<PAGE> 50
=============================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Summary ..........................................3
Risk Factors......................................6
Use of Proceeds .................................10
Capitalization...................................12
Dividend Policy .................................12
Plan of Operation................................13
Proposed Business................................16
Supervision and Regulation.......................23
Management's Discussion and Analysis of
Financial Condition and Plan of Operation........30
Certain Relationships and Related Transactions...35
Description of Capital Stock.....................35
Underwriting.....................................38
Legal Matters....................................40
Experts..........................................40
Additional Information ..........................40
Index to Financial Statements ..................F-1
</TABLE>
--------------------------
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
[WACHOVIA LOGO HERE] OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED. 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. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITER, AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
=============================================================
1,200,000 SHARES
COMMON STOCK
GREENVILLE FIRST BANCSHARES, INC.
A PROPOSED BANK HOLDING COMPANY FOR
[BANK LOGO HERE]
GREENVILLE FIRST BANK
(PROPOSED)
PROSPECTUS
[WACHOVIA LOGO HERE]
AUGUST ___, 1999
===========================================================
<PAGE> 51
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Item 24. Indemnification of Directors and Officers
Greenville First Bancshares' articles of incorporation contain a
provision which, subject to certain limited exceptions, limits the liability of
a director to Greenville First 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 Greenville First
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 Greenville First 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 Greenville First
Bancshares or its shareholders to seek injunctive or other equitable relief not
involving payments in the nature of monetary damages.
Greenville First Bancshares' bylaws contain certain provisions which
provide indemnification to directors 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 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, Sections 33-8-510 and 33-8-520
of the Corporation Act would require Greenville First Bancshares to indemnify
those persons against expenses (including attorney's fees) actually and
reasonably incurred in connection with that action or proceeding. The
Corporation Act expressly allows Greenville First 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
in the articles of incorporation or bylaws, or otherwise, we have been advised
that in the opinion of the SEC for matters under the securities laws, 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 against any
liability asserted against him or incurred by him in any such capacity, whether
or not we would have the power to indemnify him against such liability under the
bylaws.
II-1
<PAGE> 52
Item 25. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting commissions) of the sale of
the shares of common stock are as follows:
<TABLE>
<S> <C>
Registration Fee $ 3,836
NASD Filing Fee 1,880
Printing and Engraving 25,000
Legal Fees and Expenses 40,000
Accounting Fees 5,000
Blue Sky Fees and Expenses 15,000
Miscellaneous Disbursements 15,284
----------
TOTAL $ 106,000
==========
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
From inception, Greenville First Bancshares has issued a total of 10
shares of its common stock to one of its organizers. The price per share was
$10.00 for a total purchase price of $100.00. There were no underwriting
discounts or commissions paid with respect to these transactions. These shares
will be redeemed at $10.00 per share after the offering. All sales were exempt
under Section 4(2) of the Securities Act of 1933.
Item 27. Exhibits.
1. *Form of Underwriting Agreement dated _______, 1999 between Greenville
First Bancshares and Wachovia Securities
3.1. Articles of Incorporation, as amended
3.2. Bylaws
4.1. See Exhibits 3.1 and 3.2 for provisions in Greenville First
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. *Employment Agreement dated _______, 1999 between Greenville First
Bancshares and Art Seaver
10.2. *Lease Agreement dated ________, 1999 between Greenville First Bank and
Cothran Properties, LLC
10.3 Data Processing Services Agreement dated June 28, 1999 between
Greenville First Bancshares and the Intercept Group
10.4 Form of Stock Warrant Agreement
10.5 Promissory note dated February 22, 1999 from Greenville First
Bancshares, Inc. in favor of John J. Meindl, Jr.
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)
II-2
<PAGE> 53
24.1. Power of Attorney (filed as part of the signature page to the
Registration Statement)
27.1. *Financial Data Schedule (for electronic filing purposes)
* 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 of 1933;
(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 of 1933, 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 Greenville First Bancshares pursuant to the provisions
described in Item 24 above, or otherwise, Greenville First Bancshares has been
advised that in the opinion of the SEC for matters under the securities laws,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
If a claim for indemnification against such liabilities (other than the
payment by Greenville First Bancshares of expenses incurred or paid by a
director, officer or controlling person of Greenville First 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, Greenville First 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 of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 54
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 Greenville,
State of South Carolina, on July 21, 1999.
GREENVILLE FIRST BANCSHARES, INC.
By: /s/ R. Arthur Seaver, Jr.
--------------------------------
R. Arthur Seaver, Jr.
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints R. Arthur Seaver, Jr. and he is the true
and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that such attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ------- ----
<S> <C> <C>
/s/ Andrew B. Cajka
- ---------------------------------------
Andrew B. Cajka Director July 27, 1999
------------------------
/s/ Mark A. Cothran
- ---------------------------------------
Mark A. Cothran Director July 27, 1999
------------------------
/s/ Leighton M. Cubbage
- ---------------------------------------
Leighton M. Cubbage Director July 27, 1999
------------------------
/s/ Tecumseh Hooper, Jr.
- ---------------------------------------
Tecumseh Hooper, Jr. Director July 27, 1999
------------------------
/s/ Rudolph G. Johnstone, III, M.D.
- ---------------------------------------
Rudolph G. Johnstone, III, M.D. Director July 27, 1999
------------------------
/s/ Keith J. Marrero
- ---------------------------------------
Keith J. Marrero Director July 27, 1999
------------------------
</TABLE>
<PAGE> 55
<TABLE>
<S> <C> <C>
/s/ James B. Orders, III
- ---------------------------------------
James B. Orders, III Director, Chairman July 27, 1999
------------------------
/s/ William B, Sturgis
- ---------------------------------------
William B. Sturgis Director July 27, 1999
------------------------
/s/ R. Arthur Seaver, Jr.
- ---------------------------------------
R. Arthur Seaver, Jr. Director, Chief Executive July 27, 1999
Officer and President ------------------------
(principal executive officer)
(principal financial
and accounting officer)
/s/ Fred Gilmer, Jr.
- ---------------------------------------
Fred Gilmer, Jr. Director, Senior Vice President July 27, 1999
------------------------
</TABLE>
<PAGE> 56
EXHIBIT INDEX
EXHIBIT DESCRIPTION
1. *Form of Underwriting Agreement dated _______, 1999 between Greenville
First Bancshares and Wachovia Securities
3.1. Articles of Incorporation, as amended
3.2. Bylaws
4.1. See Exhibits 3.1 and 3.2 for provisions in Greenville First
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. *Employment Agreement dated ______, 1999 between Greenville First
Bancshares and Art Seaver
10.2. *Lease Agreement dated ________, 1999 between Greenville First Bank and
Cothran Properties, LLC
10.3 Data Processing Services Agreement dated June 28, 1999 between
Greenville First Bancshares and the Intercept Group
10.4 Form of Stock Warrant Agreement
10.5 Promissory Note dated February 22, 1999 from Greenville First
Bancshares, Inc. in favor of John J. Meindl, Jr.
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 (filed as part of the signature page to the
Registration Statement)
27.1 *Financial Data Schedule (for electronic filing purposes)
* To be filed by Amendment
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
TO THE
ARTICLES OF INCORPORATION
OF
GREENVILLE FIRST BANCSHARES, INC.
FILED MARCH 29, 1999
ARTICLE ONE
NAME
The name of the corporation is Greenville First Bancshares, Inc. (the
"Corporation").
ARTICLE TWO
ADDRESS AND REGISTERED AGENT
The street address of the initial registered office of the Corporation
shall be 301 North Main Street, Greenville, South Carolina 29601. The name of
the Corporation's initial registered agent at such address shall be R. Arthur
Seaver, Jr.
ARTICLE THREE
CAPITALIZATION
The Corporation shall have the authority, exercisable by its board of
directors, to issue up to 10,000,000 shares of voting common stock, par value
$.01 per share, and to issue up to 10,000,000 shares of preferred stock, par
value $.01 per share. The board of directors shall have the authority to specify
the preferences, limitations and relative rights of each class of preferred
stock.
ARTICLE FOUR
PREEMPTIVE RIGHTS
The shareholders shall not have any preemptive rights to acquire
additional stock in the Corporation.
ARTICLE FIVE
NO CUMULATIVE VOTING RIGHTS
The Corporation elects not to have cumulative voting, and no shares
issued by this Corporation may be cumulatively voted for directors of the
Corporation (or for any other decision).
<PAGE> 2
ARTICLE SIX
LIMITATION ON DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of the duty of
care or any other duty as a director, except that such liability shall not be
eliminated for:
(i) any breach of the director's duty of loyalty to the
Corporation or its shareholders;
(ii) acts or omissions not in good faith or which involve
gross negligence, intentional misconduct, or a knowing violation of
law;
(iii) liability imposed under Section 33-8-330 (or any
successor provision or redesignation thereof) of the Act; and
(iv) any transaction from which the director derived an
improper personal benefit.
If at any time the Act shall have been amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
each director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Act, as so amended, without further action by the
shareholders, unless the provisions of the Act, as amended, require further
action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article
Six shall not adversely affect the elimination or limitation of liability or
alleged liability pursuant hereto of any director of the Corporation for or with
respect to any alleged act or omission of the director occurring prior to such a
repeal or modification.
ARTICLE SEVEN
CONTROL SHARE ACQUISITIONS
The provisions of Title 35, Chapter 2, Article 1 of the Code of Laws of
South Carolina shall not apply to control share acquisitions of shares of the
Corporation.
ARTICLE EIGHT
CLASSIFIED BOARD OF DIRECTORS
At any time that the Board has six or more members the terms of office
of directors will be staggered by dividing the total number of directors into
three classes, with each class accounting for one-third, as near as may be, of
the total. The terms of directors in the first class expire at the first annual
shareholders' meeting after their election, the terms of the second class expire
at the second annual shareholders' meeting after their election, and the terms
of the third class expire at the third annual shareholders' meeting after their
election. At each annual shareholders' meeting held thereafter, directors shall
be chosen for a term of three years to succeed those whose terms expire. If the
number of directors is changed, any increase or decrease shall be so apportioned
among the classes as to make all classes as nearly equal in number as possible,
and when the number of directors is increased and any newly created
directorships are filled by the board, the terms of the additional directors
shall expire at the next election of directors by the shareholders. Each
director, except in the case of his earlier death, written resignation,
2
<PAGE> 3
retirement, disqualification or removal, shall serve for the duration of his
term, as staggered, and thereafter until his successor shall have been elected
and qualified.
ARTICLE NINE
CONSIDERATION OF OTHER CONSTITUENCIES
In discharging the duties of their respective positions and in
determining what is in the best interests of the Corporation, the board of
directors, committees of the board of directors, and individual directors, in
addition to considering the effects of any actions on the Corporation and its
shareholders, may consider the interests of the employees, customers, suppliers,
creditors, and other constituencies of the Corporation and its subsidiaries, the
communities and geographical areas in which the Corporation and its subsidiaries
operate or are located, and all other factors such directors consider pertinent.
This provision solely grants discretionary authority to the board of directors
and shall not be deemed to provide to any other constituency any right to be
considered.
ARTICLE TEN
NAME AND ADDRESS OF THE SOLE INCORPORATOR
The sole incorporator is R. Arthur Seaver, Jr., whose address is 301
North Main Street, Greenville, South Carolina 29601
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation as of the date indicated below.
Date: July 14, 1999 /s/ R. Arthur Seaver, Jr.
--------------------- -----------------------------------------
R. Arthur Seaver, Jr.
Chief Executive Officer
3
<PAGE> 4
CERTIFICATE ACCOMPANYING THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
GREENVILLE FIRST BANCSHARES, INC.
Check either A or B, whichever is applicable; and if B applies, complete the
additional information requested:
A. [ ] The attached restated articles of incorporation do not contain
any amendments to the corporation's articles of incorporation and have been duly
approved by the corporation's board of directors as authorized by
ss.33-10-107(a).
B. [x] The attached restated articles of incorporation contain one or
more amendments to the corporation's articles of incorporation. Pursuant to
Section 33-10-107(d)(2), the following information concerning the amendment(s)
is hereby submitted:
1. On July 14, 1999, the corporation adopted the following amendments(s)
to its articles of incorporation: (Type or Attach the Complete Text of
Each Amendment):
At any time that the Board has six or more members, unless provided
otherwise by the Articles of Incorporation, the terms of office of
directors will be staggered by dividing the total number of directors
into three classes, with each class accounting for one-third, as near
as may be, of the total. The terms of directors in the first class
expire at the first annual shareholders' meeting after their election,
the terms of the second class expire at the second annual shareholders'
meeting after their election, and the terms of the third class expire
at the third annual shareholders' meeting after their election. At each
annual shareholders' meeting held thereafter, directors shall be chosen
for a term of three years to succeed those whose terms expire. If the
number of directors is changed, any increase or decrease shall be so
apportioned among the classes as to make all classes as nearly equal in
number as possible, and when the number of directors is increased and
any newly created directorships are filled by the board, the terms of
the additional directors shall expire at the next election of directors
by the shareholders. Each director, except in the case of his earlier
death, written resignation, retirement, disqualification or removal,
shall serve for the duration of his term, as staggered, and thereafter
until his successor shall have been elected and qualified.
The Restated Articles of Incorporation, the form of which are attached
in this Consent, are hereby adopted as the Articles of Incorporation of
the Corporation, with all amendments to the original Articles of
Incorporation of the Corporation reflected therein.
2. The manner, if not set forth in the amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
Amendment shall be effected, is as follows: (if not applicable, insert
"not applicable" or "NA"). Not Applicable
3. Complete either a or b, whichever is applicable.
a. [x] Amendment(s) adopted by shareholder action.
4
<PAGE> 5
At the date of adoption of the Amendment, the number of outstanding
shares of each voting group entitled to vote separately on the
Amendment, and vote of such shares was:
<TABLE>
<CAPTION>
Number of Number of Number of Votes Number of Undisputed*
Voting Outstanding Votes Entitled Represented At Shares Voted
Group Shares to be Cast the meeting For Against
------ ----------- -------------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Common 10 10 10 10 -0-
</TABLE>
b. [ ] The amendment(s) was duly adopted by the Incorporators or
board of directors without shareholder approval pursuant to
ss.33-6-102(d), 33-10-102 and 33-10-105 of the 1976 South
Carolina Code as amended, and shareholder action was not
required.
Date: July 14, 1999 Greenville First Bancshares, Inc.
----------------
By: /s/ R. Arthur Seaver, Jr.
-----------------------------------------
R. Arthur Seaver, Jr.
Chief Executive Officer
*NOTE: Pursuant to Section 33-10-106(6)(i), the corporation can alternatively
State the total number of undisputed shares cast for the amendment by
each voting group together with a statement that the number of cast for
the amendment by each voting group was sufficient for approval by that
voting group.
5
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
GREENVILLE FIRST BANCSHARES, INC.
<PAGE> 2
GREENVILLE FIRST BANCSHARES, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1
OFFICES ............................................................................................1
Section 1: Registered Office and Agent.....................................................1
Section 2: Other Offices...................................................................1
ARTICLE 2
SHAREHOLDERS........................................................................................1
Section 1: Place of Meetings...............................................................1
Section 2: Annual Meetings.................................................................1
Section 3: Special Meetings................................................................1
Section 4: Notice..........................................................................2
Section 5: Quorum..........................................................................2
Section 6: Majority Vote; Withdrawal of Quorum.............................................3
Section 7: Method of Voting................................................................3
Section 8: Record Date.....................................................................3
Section 9: Shareholder Proposals...........................................................3
ARTICLE 3
DIRECTORS...........................................................................................4
Section 1: Management......................................................................4
Section 2: Number, Classification and Terms of Office
of Directors.......................................................................4
Section 3: Qualifications of Directors.....................................................5
Section 4: Election of Directors...........................................................5
Section 5: Nomination of Directors.........................................................5
Section 6: Retirement of Directors.........................................................6
Section 7: Emeritus Directors..............................................................6
Section 8: Vacancies.......................................................................6
Section 9: Removal of Directors............................................................7
Section 10: Place of Meetings..............................................................7
Section 11: Regular Meetings...............................................................7
Section 12: Special Meetings...............................................................7
Section 13: Telephone and Similar Meetings.................................................7
Section 14: Quorum; Majority Vote..........................................................7
Section 15: Compensation...................................................................7
Section 16: Procedure......................................................................8
Section 17: Action Without Meeting.........................................................8
ARTICLE 4
BOARD COMMITTEES....................................................................................8
Section 1: Designation.....................................................................8
Section 2: Meetings........................................................................8
Section 3: Quorum; Majority Vote...........................................................8
Section 4: Procedure.......................................................................9
Section 5: Action Without Meeting..........................................................9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 6: Telephone and Similar Meetings..................................................9
ARTICLE 5
OFFICERS ...........................................................................................9
Section 1: Offices.........................................................................9
Section 2: Term............................................................................9
Section 3: Vacancies.......................................................................9
Section 4: Compensation...................................................................10
Section 5: Removal........................................................................10
Section 6: Chairman of the Board..........................................................10
Section 7: Chief Executive Officer........................................................10
Section 8: President......................................................................10
Section 9: Vice Presidents................................................................10
Section 10: Secretary.....................................................................10
Section 11: Assistant Secretary...........................................................11
Section 12: Treasurer.....................................................................11
ARTICLE 6
INDEMNIFICATION....................................................................................11
Section 1: Indemnification of Directors...................................................11
Section 2: Advancement of Expenses........................................................12
Section 3: Indemnification of Officers, Employees and Agents..............................13
Section 4: Insurance......................................................................13
Section 5: Nonexclusivity of Rights; Agreements...........................................13
Section 6: Continuing Benefits; Successors................................................13
Section 7: Interpretation; Construction...................................................14
Section 8: Amendment......................................................................14
Section 9: Severability...................................................................14
ARTICLE 7
CERTIFICATES AND SHAREHOLDERS......................................................................14
Section 1: Certificates...................................................................14
Section 2: Issuance of Shares.............................................................15
Section 3: Rights of Corporation with Respect to
Registered Owners.................................................................15
Section 4: Transfers of Shares............................................................15
Section 5: Registration of Transfer.......................................................15
Section 6: Lost, Stolen or Destroyed Certificates.........................................15
Section 7: Restrictions on Shares.........................................................16
Section 8: Control Share Acquisitions Statute.............................................16
Section 9: Voting of Stock Held...........................................................16
ARTICLE 8
GENERAL PROVISIONS.................................................................................17
Section 1: Distributions..................................................................17
Section 2: Books and Records..............................................................17
Section 3: Execution of Documents.........................................................17
Section 4: Fiscal Year....................................................................17
Section 5: Seal...........................................................................17
Section 6: Resignation....................................................................17
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 7: Computation of Days............................................................17
Section 8: Amendment of Bylaws............................................................17
Section 9: Construction...................................................................18
Section 10: Headings......................................................................18
</TABLE>
<PAGE> 5
BYLAWS
OF
GREENVILLE FIRST BANCSHARES, INC.
ARTICLE 1: OFFICES
Section 1: Registered Office and Agent. The registered office of the
Corporation shall be at 301 North Main Street, Greenville, South Carolina 29601.
The registered agent shall be R. Arthur Seaver, Jr.
Section 2: Other Offices. The Corporation may also have offices at such
other places within and without the State of South Carolina as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE 2: SHAREHOLDERS
Section 1: Place of Meetings. Meetings of shareholders shall be held at
the time and place, within or without the State of South Carolina, stated in the
notice of the meeting or in a waiver of notice.
Section 2: Annual Meetings. An annual meeting of the shareholders shall
be held each year on the third Thursday of April, if not a legal holiday, but if
a legal holiday, then on the next Thursday not a legal holiday, or on such other
date and at a time to be set by the Board of Directors in accordance with all
applicable notice requirements. At the meeting, the shareholders shall elect
directors and transact such other business as may properly be brought before the
meeting.
Section 3: Special Meetings.
(a) Special meetings of the shareholders, for any purpose or
purposes, unless otherwise required by the South Carolina Business Corporation
Act of 1988, as amended from time to time (the "Act"), the Articles of
Incorporation of the Corporation (the "Articles"), or these Bylaws, may be
called by the chief executive officer, the president, the chairman of the Board
of Directors or a majority of the Board of Directors.
(b) In addition to a special meeting called in accordance with
subsection 3(a) of this Article 2, the Corporation shall, if and to the extent
that it is required by applicable law, hold a special meeting of shareholders if
the holders of at least ten percent of all the votes entitled to be cast on any
issue proposed to be considered at such special meeting sign, date and deliver
to the secretary of the Corporation one or more written demands for the meeting.
Such written demands shall be delivered to the secretary by certified mail,
return receipt
1
<PAGE> 6
requested. Such written demands sent to the secretary of the Corporation shall
set forth as to each matter the shareholder or shareholders propose to be
presented at the special meeting (i) a description of the purpose or purposes
for which the meeting is to be held (including the specific proposal(s) to be
presented); (ii) the name and record address of the shareholder or shareholders
proposing such business; (iii) the class and number of shares of the Corporation
that are owned of record by the shareholder or shareholders as of a date within
ten days of the delivery of the demand; (iv) the class and number of shares of
the Corporation that are held beneficially, but not held of record, by the
shareholder or shareholders as of a date within ten days of the delivery of the
demand; and (v) any interest of the shareholder or shareholders in such
business. Any such special shareholders' meeting shall be held at a location
designated by the Board of Directors. The Board of Directors may set such rules
for any such meeting as it may deem appropriate, including when the meeting will
be held (subject to any requirements of the Act), the agenda for the meeting
(which may include any proposals made by the Board of Directors), who may attend
the meeting in addition to shareholders of record and other such matters.
(c) Business transacted at any special meeting shall be
confined to the specific purpose or purposes stated in the notice of the
meeting.
Section 4: Notice.
(a) Written or printed notice stating the place, day and hour
of the meeting and, in the case of a special meeting, the specific purpose or
purposes for which the meeting is called, shall be delivered by the Corporation
not less than ten nor more than sixty days before the date of the meeting,
either personally or by mail, to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed effective when deposited
with postage prepaid in the United States mail, addressed to the shareholder at
the address appearing on the stock transfer books of the Corporation. Except as
may be expressly provided by law, no failure or irregularity of notice of any
regular meeting shall invalidate the same or any proceeding thereat.
(b) The notice of each special shareholders meeting shall
include a description of the specific purpose or purposes for which the meeting
is called. Except as provided by law, the Articles or these Bylaws, the notice
of an annual shareholders meeting need not include a description of the purpose
or purposes for which the meeting is called.
Section 5: Quorum. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at meetings of the
shareholders for the transaction of business except as otherwise provided by
statute, by the Articles or by these Bylaws. If a quorum is not present or
represented at a meeting of the shareholders, the shareholders entitled to vote,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At an adjourned meeting at
which a quorum is present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. Once a share
is represented for any purpose at a meeting it is deemed present for quorum
purposes.
2
<PAGE> 7
Section 6: Majority Vote; Withdrawal of Quorum. Except in regards to
the election of directors, when a quorum is present at a meeting, the vote of
the holders of a majority of the shares having voting power, present in person
or represented by proxy, shall decide any question brought before the meeting,
unless the question is one on which, by express provision of the statutes, the
Articles or these Bylaws, a higher vote is required in which case the express
provision shall govern. Directors shall be elected by a plurality vote of the
shareholders. The shareholders present at a duly constituted meeting may
continue to transact business until adjournment, despite the withdrawal of
enough shareholders to leave less than a quorum.
Section 7: Method of Voting. Each outstanding share of common stock
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. Each outstanding share of other classes of stock, if any, shall
have such voting rights as may be prescribed by the Board of Directors. Proxies
delivered by facsimile to the Corporation, if otherwise in order, shall be
valid. Votes shall be taken by voice, by hand or in writing, as directed by the
chairman of the meeting. Voting for directors shall be in accordance with
Article 3, Section 3 of these Bylaws.
Section 8: Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, including any
special meeting, or shareholders entitled to receive payment of dividends, or in
order to make a determination of shareholders for any other purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not less than ten nor
more than seventy days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. Except as
otherwise provided by law, if no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders, or
of shareholders entitled to receive payment of dividends, the date on which
notice of the meeting is mailed, or the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be, shall
be the record date.
Section 9: Shareholder Proposals.
(a) To the extent required by applicable law, a shareholder
may bring a proposal before an annual meeting of shareholders as set forth in
this Section 9. To be properly brought before an annual meeting of shareholders,
business must be (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors; (ii) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors; or (iii) otherwise properly brought before the meeting by a
shareholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the secretary of the
Corporation. To be timely, a shareholder's notice must be given, either by
personal delivery or by United States mail, postage prepaid, return receipt
requested, to the secretary of the Corporation not less than 30 nor more than 60
days in advance of the annual meeting (provided, however, that if less than 31
days' notice of the meeting is given to shareholders, such written notice shall
be delivered or mailed, as prescribed, to the Secretary of Corporation not later
than the close of the tenth day following the day on which notice of the meeting
was mailed to shareholders). A shareholder's notice to the secretary of the
Corporation shall set forth for each
3
<PAGE> 8
matter the shareholder proposes to bring before the annual meeting (i) a
description of the business desired to be brought before the annual meeting
(including the specific proposal(s) to be presented) and the reasons for
conducting such business at the annual meeting; (ii) the name and record address
of the shareholder proposing such business; (iii) the class and number of shares
of the Corporation that are owned of record, and the class and number of shares
of the Corporation that are held beneficially, but not held of record, by the
shareholder as of the record date for the meeting, if such date has been made
publicly available, or as of a date within ten days of the effective date of the
notice by the shareholder if the record date has not been made publicly
available; and (iv) any interest of the shareholder in such business. In the
event that a shareholder attempts to bring business before an annual meeting
without complying with the provisions of this Section 9, the chairman of the
meeting shall declare to the meeting that the business was not properly brought
before the meeting in accordance with the foregoing procedures, and such
business shall not be transacted. The chairman of any annual meeting, for good
cause shown and with proper regard for the orderly conduct of business at the
meeting, may waive in whole or in part the operation of this Section 9.
(b) If any shareholder of the Corporation notifies the
Corporation that such shareholder intends to present a proposal for action at a
forthcoming meeting of the Corporation's shareholders and requests that the
Corporation include the proposal in its proxy statement and such shareholder
complies with all the requirements of Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, the Corporation shall consider inclusion of
such proposal in the proxy statement unless it determines that the proposal is
inappropriate for consideration by the shareholders at the meeting.
ARTICLE 3: DIRECTORS
Section 1: Management. The business and affairs of the Corporation
shall be managed by the Board of Directors who may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by law, the
Articles or these Bylaws directed or required to be done or exercised by the
shareholders.
Section 2: Number, Classification and Terms of Office of Directors.
Unless otherwise provided in the Articles of Incorporation, the number of
directors of the Corporation shall be that number as may be fixed from time to
time by resolution of the Board of Directors, but in no event shall the number
be less than five or greater than 25. The initial number of directors shall be
ten. The number of members of the Board of Directors can be increased or
decreased within the foregoing range at any time by the Board of Directors. In
addition, unless provided otherwise by resolution of the Board of Directors, if,
in any case after proxy materials for an annual meeting of shareholders have
been mailed to shareholders, any person named therein to be nominated at the
direction of the Board of Directors becomes unable or unwilling to serve, the
number of authorized directors shall be automatically reduced by a number equal
to the number of such persons.
4
<PAGE> 9
Section 3: Qualifications of Directors. No individual who is or becomes
a Business Competitor (as defined below) or who is or becomes affiliated with,
employed by or a representative of any individual, corporation, association,
partnership, firm, business enterprise or other entity or organization which the
Board of Directors, after having such matter formally brought to its attention,
determines to be in competition with the Corporation or any of its subsidiaries
(any such individual, corporation, association, partnership, firm, business
enterprise or other entity or organization being hereinafter referred to as a
"Business Competitor") shall be eligible to serve as a director if the Board of
Directors determines that it would not be in the Corporation's best interests
for such individual to serve as a director of the Corporation. Such affiliation,
employment or representation may include, without limitation, service or status
as an owner, partner, shareholder, trustee, director, officer, consultant,
employee, agent, or counsel, or the existence of any relationship which results
in the affected person having an express or implied obligation to act on behalf
of a Business Competitor; provided, however, that passive ownership of a debt or
equity interest not exceeding 1% of the outstanding debt or equity, as the case
may be, in any Business Competitor shall not constitute such affiliation,
employment or representation. Any financial institution having branches or
affiliates in Greenville County, South Carolina, shall be presumed to be a
Business Competitor unless the Board of Directors determines otherwise.
Section 4: Election of Directors. Directors shall be elected by a
plurality vote.
Section 5: Nomination of Directors.
(a) Nomination of persons to serve as directors of the
Corporation, other than those made by or on behalf of the Board of Directors of
the Corporation, shall be made in writing and shall be delivered either by
personal delivery or by United States mail, postage prepaid, return receipt
requested, to the secretary of the Corporation no later than (i) with respect to
an election to be held at an annual meeting of shareholders, ninety days in
advance of such meeting; and (ii) with respect to an election to be held at a
special meeting of shareholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to shareholders. Each notice shall set forth: (i) the name and
address of the shareholder who intends to make the nomination and of the person
or persons to be nominated; (ii) a representation that the shareholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (iii) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (iv) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (v) the consent of each
nominee to serve as a director of the Corporation if so elected. The chairman of
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure. The chairman of any such meeting, for
good cause shown and with proper regard for the orderly conduct of business at
the meeting, may waive in whole or in part the operation of this Section 4.
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(b) Notwithstanding subsection (a) of this Section 4, if the
Corporation or any banking subsidiary of the Corporation is subject to the
requirements of Section 914 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, then no person may be nominated by a shareholder for
election as a director at any meeting of shareholders unless the shareholder
furnishes the written notice required by subsection (a) of this Section 4 to the
secretary of the Corporation at least ninety days prior to the date of the
meeting and the nominee has received regulatory approval to serve as a director
prior to the date of the meeting.
Section 6: Retirement of Directors. No person shall be elected or
reelected a director of the Corporation after attaining the age of 70, provided
that this provision shall not apply to any initial director who shall have
attained the age of 70 prior to the date of the initial adoption of these
Bylaws.
Section 7: Emeritus Directors. The Board of Directors may, from time to
time, appoint individuals (including individuals who have retired from the Board
of Directors) to serve as members of the Emeritus Board of Directors of the
Corporation. Each member of the Emeritus Board of Directors of the Corporation,
except in the case of his earlier death, resignation, retirement,
disqualification or removal, shall serve until the next succeeding annual
meeting of the Board of Directors of the Corporation. Members of the Emeritus
Board of Directors may be removed without cause by a vote of the members of the
Board of Directors. Any individual appointed as a member of the Emeritus Board
of Directors of the Corporation may, but shall not be required to, attend
meetings of the Board of Directors of the Corporation and may participate in any
discussions at such meetings, but such individual may not vote or be counted in
determining a quorum at any meeting of the Board of Directors of the
Corporation. It shall be the duty of the members of the Emeritus Board of
Directors of the Corporation to serve as goodwill ambassadors of the
Corporation, but such individuals shall not have any responsibility or be
subject to any liability imposed upon a member of the Board of Directors of the
Corporation or in any manner otherwise be deemed to be a member of the Board of
Directors of the Corporation. Each member of the Emeritus Board of Directors of
the Corporation shall be paid such compensation as may be set from time to time
by the Chairman of the Board of Directors of the Corporation and shall remain
eligible to participate in any stock option plan in which directors are eligible
to participate which is maintained by, or participated in, from time to time by
the Corporation, according to the terms and conditions thereof.
Section 8: Vacancies. Except as otherwise provided by law, in the
Articles of Incorporation, or in these Bylaws (a) the office of a director shall
become vacant if he dies, resigns, or is removed from office, and (b) the Board
of Directors may declare vacant the office of a director if (i) he is
interdicted or adjudicated an incompetent, (ii) an action is filed by or against
him, or any entity of which he is employed as his principal business activity,
under the bankruptcy laws of the United States, (iii) in the sole opinion of the
Board of Directors he becomes incapacitated by illness or other infirmity so
that he is unable to perform his duties for a period of six months or longer, or
(iv) he ceases at any time to have the qualifications required by law, the
Articles of Incorporation or these Bylaws. The remaining directors may, by a
majority vote, fill any vacancy on the Board of Directors (including any vacancy
resulting from an increase in the authorized number of directors, or from the
failure of the shareholders to elect the full number of authorized directors)
for an unexpired term; provided that the shareholders shall have
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the right at any special meeting called for such purpose prior to action by the
Board of Directors to fill the vacancy.
Section 9: Removal of Directors. Unless provided otherwise by the
Articles of Incorporation, directors may be removed with or without cause by
unanimous vote of the Board of Directors (with the abstention of any director
who is the subject of such vote) or the affirmative vote of the holders of at
least a majority of the shares entitled to vote at an election of directors,
such vote being taken at a meeting of the shareholders called for that purpose
at which a quorum is present.
Section 10: Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of South
Carolina.
Section 11: Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place as shall from time
to time be determined by the Board of Directors.
Section 12: Special Meetings. Special meetings of the Board of
Directors may be called by the chairman, the chief executive officer, or the
president of the Corporation, on not less than twenty-four hours notice. Notice
of a special meeting may be given by personal notice, telephone, facsimile,
electronic communication, overnight courier or United States mail to each
director. Any such special meeting shall be held at such time and place as shall
be stated in the notice of the meeting. The notice need not describe the purpose
or purposes of the special meeting.
Section 13: Telephone and Similar Meetings. Directors may participate
in and hold a meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in person
at the meeting, except where a person participates in the meeting for the
express purpose of objecting to the holding of the meeting or the transacting of
any business at the meeting on the ground that the meeting is not lawfully
called or convened, and does not thereafter vote for or assent to action taken
at the meeting.
Section 14: Quorum; Majority Vote. At meetings of the Board of
Directors a majority of the number of directors then in office shall constitute
a quorum for the transaction of business. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, except as otherwise specifically provided by law, the Articles or
these Bylaws. If a quorum is not present at a meeting of the Board of Directors,
the directors present may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present.
Section 15: Compensation. Each director shall be entitled to receive
such reasonable compensation as may be determined by resolution of the Board of
Directors. By resolution of the Board of Directors, the directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors. No such payment shall preclude any director from
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serving the Corporation in any other capacity and receiving compensation
therefor. Members of committees may, by resolution of the Board of Directors, be
allowed compensation for attending committee meetings.
Section 16: Procedure. The Board of Directors shall keep regular
minutes of its proceedings. The minutes shall be placed in the minute book of
the Corporation.
Section 17: Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors may be taken without a meeting
if the action is assented to by all the members of the Board. Such consent shall
have the same force and effect as a meeting vote and may be described as such in
any document.
ARTICLE 4: BOARD COMMITTEES
Section 1: Designation. The Board of Directors may, by resolution
adopted by a majority of the full Board, designate one or more committees. Each
committee must have two or more members who serve at the pleasure of the Board
of Directors. To the extent specified by the Board of Directors, in the Articles
or in these Bylaws, each committee may exercise the authority of the Board of
Directors. So long as prohibited by law, however, a committee of the Board may
not (a) authorize distributions; (b) approve or propose to shareholders action
required by the Act to be approved by shareholders; (c) fill vacancies on the
Board of Directors or on any of its committees; (d) amend the Articles; (e)
adopt, amend or repeal these Bylaws; (f) approve a plan of merger not requiring
shareholder approval; (g) authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the Board of Directors; or (h)
authorize or approve the issuance or sale or contract for sale of shares, or
determine the designation and relative rights, preferences and limitations of a
class or series of shares, except that the Board of Directors may authorize a
committee (or a senior executive officer of the Corporation) to do so within
limits specifically prescribed by the Board of Directors. Any director may serve
one or more committee. Any committee appointed under this Section 1 shall
perform such duties and assume such responsibility as may from time to time be
placed upon it by the Board of Directors.
Section 2: Meetings. Time, place and notice of all committee meetings
shall be as called and specified by the chief executive officer, the committee
chairman or any two members of each committee.
Section 3: Quorum; Majority Vote. At meetings of committees, a majority
of the number of members designated by the Board of Directors shall constitute a
quorum for the transaction of business. The act of a majority of the members
present at any meeting at which a quorum is present shall be the act of such
committee, except as otherwise specifically provided by the Act, the Articles or
these Bylaws. If a quorum is not present at a meeting of the committee, the
members present may adjourn the meeting from time to time, without notice other
than an announcement at the meeting, until a quorum is present.
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Section 4: Procedure. Committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors at its next regular
meeting. The minutes of the proceedings of the committee shall be placed in the
minute book of the Corporation.
Section 5: Action Without Meeting. Any action required or permitted to
be taken at a meeting of any committee may be taken without a meeting if the
action is assented to by all the members of the committee. Such consent shall
have the same force and effect as a meeting vote and may be described as such in
any document.
Section 6: Telephone and Similar Meetings. Committee members may
participate in and hold a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the holding of the meeting or
the transacting of any business at the meeting on the ground that the meeting is
not lawfully called or convened, and does not thereafter vote for or assent to
action taken at the meeting.
ARTICLE 5: OFFICERS
OFFICERS
Section 1: Offices. The officers of the Corporation shall consist of a
chief executive officer, president and secretary, each of whom shall be elected
by the Board of Directors. The Board of Directors may also create and establish
the duties of other offices as it deems appropriate. The Board of Directors
shall also elect a chairman of the Board and may elect a vice chairman of the
Board from among its members. The Board of Directors from time to time may
appoint, or may authorize the president to appoint or authorize specific
officers to appoint, the persons who shall hold such other offices as may be
established by the Board of Directors, including one or more vice presidents
(including executive vice presidents, senior vice presidents, assistant vice
presidents), one or more assistant secretaries, and one or more assistant
treasurers. Any two or more offices may be held by the same person.
Section 2: Term. Each officer shall serve at the pleasure of the Board
of Directors (or, if appointed pursuant to this Article, at the pleasure of the
Board of Directors, the president, or the officer authorized to have appointed
the officer) until his or her death, resignation, or removal, or until his or
her replacement is elected or appointed in accordance with this Article.
Section 3: Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors. Any vacancy in an office
which was filled by the president or another officer may also be filled by the
president or by any officer authorized to have filled the office vacant.
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Section 4: Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors or by a committee or
officer appointed by the Board of Directors. Officers may serve without
compensation.
Section 5: Removal. All officers (regardless of how elected or
appointed) may be removed, with or without cause, by the Board of Directors. Any
officer appointed by the president or another officer may also be removed, with
or without cause, by the president or by any officer authorized to have
appointed the officer to be removed. Removal will be without prejudice to the
contract rights, if any, of the person removed, but shall be effective
notwithstanding any damage claim that may result from infringement of such
contract rights.
Section 6: Chairman of the Board. The office of the chairman of the
board may be filled by the Board at its pleasure by the election of one of its
members to the office. The chairman shall preside at all meetings of the Board
and meetings of the shareholders and shall perform such other duties as may be
assigned to him by the Board of Directors.
Section 7: Chief Executive Officer. The chief executive officer shall
be responsible for the general and active management of the business and affairs
of the Corporation, and shall see that all orders and resolutions of the Board
are carried into effect. He shall perform such other duties and have such other
authority and powers as the Board of Directors may from time to time prescribe.
Section 8: President. The president shall be responsible for the
general and active management of the business and affairs of the Corporation,
and shall see that all orders and resolutions of the Board are carried into
effect. He shall perform such other duties and have such other authority and
powers as the Board of Directors may from time to time prescribe. The president
shall preside as chairman of the Board of Directors during the absence of the
Board chairman.
Section 9: Vice Presidents. The vice presidents (executive, senior, or
assistant), as such offices are appointed by the Board of Directors, in the
order of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the president, perform the duties and
have the authority and exercise the powers of the president. They shall perform
such other duties and have such other authority and powers as the Board of
Directors may from time to time prescribe or as the president may from time to
time delegate.
Section 10: Secretary.
(a) The secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all votes, actions and
the minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the executive and other committees when required.
(b) The secretary shall give, or cause to be given, notice of
all meetings of the shareholders and special meetings of the Board of Directors.
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(c) The secretary shall keep in safe custody the seal of the
Corporation and, when authorized by the Board of Directors or the executive
committee, affix it to any instrument requiring it. When so affixed, it shall be
attested by the secretary's signature or by the signature of the treasurer or an
assistant secretary.
(d) The secretary shall be under the supervision of the
president and shall perform such other duties and have such other authority and
powers as the Board of Directors may from time to time prescribe or as the
president may from time to time delegate.
Section 11: Assistant Secretary. The assistant secretaries, as such
offices are created by the Board of Directors, in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence or
disability of the secretary, perform the duties and have the authority and
exercise the powers of the secretary. They shall perform such other duties and
have such other powers as the Board of Directors may from time to time prescribe
or as the president may from time to time delegate.
Section 12: Treasurer.
(a) The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements of the Corporation and shall deposit all moneys and other
valuables in the name and to the credit of the Corporation in appropriate
depositories.
(b) The treasurer shall disburse the funds of the Corporation
ordered by the Board of Directors and prepare financial statements as they
direct.
(c) The treasurer shall perform such other duties and have
such other authority and powers as the Board of Directors may from time to time
prescribe or as the president may from time to time delegate.
(d) The treasurer's books and accounts shall be opened at any
time during business hours to the inspection of any directors of the
Corporation.
ARTICLE 6: INDEMNIFICATION
Section 1: Indemnification of Directors.
(a) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law, any person (an "Indemnified Person")
who was or is a party or is threatened to be made a party to or is otherwise
involved in any threatened, pending or completed action, suit or other
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal, by reason of the fact that he, or a person for whom he is a
legal representative (or other similar representative), is or was a director of
the Corporation or is or was serving at the Corporation's request as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
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against expenses (including attorneys' fees), judgments, fines, amounts paid in
settlement or other similar costs actually and reasonably incurred in connection
with such action, suit or proceeding. For purposes of this Article 6, all terms
used herein that are defined in Section 33-8-500 of the Act or any successor
provision or provisions shall have the meanings so prescribed in such Section.
(b) Without limiting the provisions of Section 1(a) of this
Article 6, the Corporation shall indemnify a director who was wholly successful,
on the merits or otherwise, in the defense of any proceeding to which he was a
party because he is or was a director of the Corporation against reasonable
expenses incurred by him in connection with the proceeding. In addition, the
Corporation shall indemnify an individual made a party to a proceeding because
he is or was a director against liability incurred in the proceeding if: (i) he
conducted himself in good faith; (ii) he reasonably believed: (A) in the case of
conduct in his official capacity with the Corporation, that his conduct was in
its best interest; and (B) in all other cases, that his conduct was at least not
opposed to its best interest; and (iii) in the case of any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful. The termination
of a proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent is not, of itself, determinative that the
director did not meet the standard of conduct described in this subsection (b).
The determination of whether the director met the standard of conduct described
in this subsection (b) shall be made in accordance with Section 33-8-550 of the
Act or any successor provision or provisions.
Section 2: Advancement of Expenses.
(a) With respect to any proceeding to which an Indemnified
Person is a party because he is or was a director of the Corporation, the
Corporation shall, to the fullest extent permitted by applicable law, pay for or
reimburse the Indemnified Person's reasonable expenses (including, but not
limited to, attorneys' fees and disbursements, court costs, and expert witness
fees) incurred by the Indemnified Person in advance of final disposition of the
proceeding.
(b) Without limiting the provisions of Section 2(a) of this
Article 6, the Corporation shall, to the fullest extent permitted by applicable
law, pay for or reimburse the reasonable expenses (including, but not limited
to, attorneys' fees and disbursements, court costs and expert witness fees)
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if: (a) the director furnishes the Corporation a
written affirmation of his good faith belief that he has met the standard of
conduct described in Section 1(b) of this Article 6; (b) the director furnishes
the Corporation a written undertaking, executed personally or on his behalf, to
repay the advance if it is ultimately determined that he did not meet such
standard of conduct; and (c) a determination is made that the facts then known
to those making the determination would not preclude indemnification under this
Article 6. The Corporation shall expeditiously pay the amount of such expenses
to the director following the director's delivery to the Corporation of a
written request for an advance pursuant to this Section 2 together with a
reasonable accounting of such expenses. The undertaking required by this Section
2 shall be an unlimited general obligation of the director but need not be
secured and may be accepted without reference to financial ability to make
repayment. Determinations and authorizations of payments
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under this Section 2 shall be made in the manner specified in Section 33-8-550
of the Act or any successor provision or provisions.
Section 3: Indemnification of Officers, Employees and Agents. An
officer of the Corporation who is not a director is entitled to the same
indemnification rights which are provided to directors of the Corporation in
Section 1 of this Article 6 and the Corporation shall advance expenses to
officers of the Corporation who are not directors to the same extent and in the
same manner as to directors as provided in Section 2 of this Article 6. In
addition, the Board of Directors shall have the power to cause the Corporation
to indemnify, hold harmless and advance expenses to any officer, employee or
agent of the Corporation who is not a director to the fullest extent permitted
by public policy, by adopting a resolution to that effect identifying such
officers, employees or agents (by position and name) and specifying the
particular rights provided, which may be different for each of the persons
identified. Any officer entitled to indemnification pursuant to the first
sentence of this Section 3 and any officer, employee or agent granted
indemnification by the Board of Directors in accordance with the second sentence
of this Section 3 shall, to the extent specified herein or by the Board of
Directors, be an "Indemnified Party" for the purposes of the provisions of this
Article 6.
Section 4: Insurance. The Corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer, employee
or agent of the Corporation, or who, while a director, officer, employee or
agent of the Corporation, is or was serving at the request of the Corporation as
a director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, against liability asserted against or incurred by him in
that capacity or arising from his status as a director, officer, employee or
agent, whether or not the Corporation would have the power to indemnify him
against the same liability under this Article 6.
Section 5: Nonexclusivity of Rights; Agreements. The rights conferred
on any person by this Article 6 shall neither limit nor be exclusive of any
other rights which such person may have or hereafter acquire under any statute,
agreement, provision of the Articles, these Bylaws, vote of shareholders or
otherwise. The provisions of this Article 6 shall be deemed to constitute an
agreement between the Corporation and each person entitled to indemnification
hereunder. In addition to the rights provided in this Article 6, the Corporation
shall have the power, upon authorization by the Board of Directors, to enter
into an agreement or agreements providing to any person who is or was a
director, officer, employee or agent of the Corporation certain indemnification
rights. Any such agreement between the Corporation and any director, officer,
employee or agent of the Corporation concerning indemnification shall be given
full force and effect, to the fullest extent permitted by applicable law, even
if it provides rights to such director, officer, employee or agent more
favorable than, or in addition to, those rights provided under this Article 6.
Section 6: Continuing Benefits; Successors. The indemnification and
advancement of expenses provided by or granted pursuant to this Article 6 shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person. For
purposes of this Article 6, the term "Corporation" shall include any
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corporation, joint venture, trust, partnership or unincorporated business
association that is the successor to all or substantially all of the business or
assets of this Corporation, as a result of merger, consolidation, sale,
liquidation or otherwise, and any such successor shall be liable to the persons
indemnified under this Article 6 on the same terms and conditions and to the
same extent as this Corporation.
Section 7: Interpretation; Construction. This Article 6 is intended to
provide indemnification to the directors and permit indemnification to the
officers of the Corporation to the fullest extent permitted by applicable law as
it may presently exist or may hereafter be amended and shall be construed in
order to accomplish this result. To the extent that a provision herein prevents
a director or officer from receiving indemnification to the fullest extent
intended, such provision shall be of no effect in such situation. If at any time
the Act is amended so as to permit broader indemnification rights to the
directors and officers of this Corporation, then these Bylaws shall be deemed to
automatically incorporate these broader provisions so that the directors and
officers of the Corporation shall continue to receive the intended
indemnification to the fullest extent permitted by applicable law.
Section 8: Amendment. Any amendment to this Article 6 that limits or
otherwise adversely affects the right of indemnification, advancement of
expenses or other rights of any Indemnified Person hereunder shall, as to such
Indemnified Person, apply only to claims, actions, suits or proceedings based on
actions, events or omissions (collectively, "Post Amendment Events") occurring
after such amendment and after delivery of notice of such amendment to the
Indemnified Person so affected. Any Indemnified Person shall, as to any claim,
action, suit or proceeding based on actions, events or omissions occurring prior
to the date of receipt of such notice, be entitled to the right of
indemnification, advancement of expenses and other rights under this Article 6
to the same extent as if such provisions had continued as part of the Bylaws of
the Corporation without such amendment. This Section 8 cannot be altered,
amended or repealed in a manner effective as to any Indemnified Person (except
as to Post Amendment Events) without the prior written consent of such
Indemnified Person.
Section 9: Severability. Each of the Sections of this Article 6, and
each of the clauses set forth herein, shall be deemed separate and independent,
and should any part of any such Section or clause be declared invalid or
unenforceable by any court of competent jurisdiction, such invalidity or
unenforceability shall in no way render invalid or unenforceable any other part
thereof or any separate Section or clause of this Article 6 that is not declared
invalid or unenforceable.
ARTICLE 7: CERTIFICATES AND SHAREHOLDERS
Section 1: Certificates. Certificates in the form determined by the
Board of Directors shall be delivered representing all shares of which
shareholders are entitled. Certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued. At a
minimum, each share certificate must state on its face: (a) the name of the
Corporation and that it is organized under the laws of South Carolina; (b) the
name of the
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person to whom the certificate is issued; and (c) the number and class of shares
and the designation of the series, if any, the certificate represents. Each
share certificate (a) must be signed (either manually or in facsimile) by at
least two officers, including the president, the secretary, or such other
officer or officers as the Board of Directors shall designate; and (b) may bear
the corporate seal or its facsimile. If the person who signed (either manually
or in facsimile) a share certificate no longer holds office when the certificate
is issued, the certificate is nevertheless valid.
Section 2: Issuance of Shares. The Board of Directors may authorize
shares to be issued for consideration consisting of any tangible or intangible
property or benefit to the Corporation, including cash, promissory notes,
services performed, written contracts for services to be performed or other
securities of the Corporation. Before the Corporation issues shares, the Board
of Directors must determine that the consideration received or to be received
for shares to be issued is adequate. That determination by the Board of
Directors is conclusive insofar as the adequacy of consideration for the
issuance of shares relates to whether the shares are validly issued, fully paid
and nonassessable. When the Corporation receives the consideration for which the
Board of Directors authorized the issuance of shares, the shares issued therefor
are fully paid and nonassessable.
Section 3: Rights of Corporation with Respect to Registered Owners.
Prior to due presentation for transfer of registration of its shares, the
Corporation may treat the registered owner of the shares as the person
exclusively entitled to vote the shares, to receive any dividend or other
distribution with respect to the shares, and for all other purposes; and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in the shares on the part of any other person, whether or not it has
express or other notice of such a claim or interest, except as otherwise
provided by law.
Section 4: Transfers of Shares. Transfers of shares shall be made upon
the books of the Corporation kept by the Corporation or by the transfer agent
designated to transfer the shares, only upon direction of the person named in
the certificate or by an attorney lawfully constituted in writing. Before a new
certificate is issued, the old certificate shall be surrendered for cancellation
or, in the case of a certificate alleged to have been lost, stolen or destroyed,
the provisions of these Bylaws shall have been complied with.
Section 5: Registration of Transfer. The Corporation shall register the
transfer of a certificate for shares presented to it for transfer if: (a) the
certificate is properly endorsed by the registered owner or by his duly
authorized attorney; (b) the signature of such person has been guaranteed by a
commercial bank or brokerage firm that is a member of the National Association
of Securities Dealers and reasonable assurance is given that such endorsements
are effective; (c) the Corporation has no notice of an adverse claim or has
discharged any duty to inquire into such a claim; (d) any applicable law
relating to the collection of taxes has been complied with; and (e) the transfer
is in compliance with applicable provisions of any transfer restrictions of
which the Corporation shall have notice.
Section 6: Lost, Stolen or Destroyed Certificates. The Corporation
shall issue a new certificate in place of any certificate for shares previously
issued if the registered owner of
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the certificate: (a) makes proof in affidavit form that the certificate has been
lost, destroyed or wrongfully taken; (b) requests the issuance of a new
certificate before the Corporation has notice that the certificate has been
acquired by a purchaser for value in good faith and without notice of an adverse
claim; (c) gives a bond in such form, and with such surety or sureties, with
fixed or open penalty, as the Corporation may direct, to indemnify the
Corporation (and its transfer agent and registrar, if any) against any claim
that may be made on account of the alleged loss, destruction or theft of the
certificate; and (d) satisfies any other reasonable requirements imposed by the
Corporation. When a certificate has been lost, apparently destroyed or
wrongfully taken, and the holder of record fails to notify the Corporation
within a reasonable time after he has notice of it, and the Corporation
registers a transfer of the shares represented by the certificate before
receiving such notification, the holder of record is precluded from making any
claim against the Corporation for the transfer or for a new certificate.
Section 7: Restrictions on Shares. The Board of Directors, on behalf of
the Corporation, or the shareholders may impose restrictions on the transfer of
shares (including any security convertible into, or carrying a right to
subscribe for or acquire shares) to the maximum extent permitted by law. A
restriction does not affect shares issued before the restriction was adopted
unless the holders of the shares are parties to the restriction agreement or
voted in favor of the restriction. A restriction on the transfer of shares is
valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this Section 7 and its existence is noted
conspicuously on the front or back of the certificate.
Section 8: Control Share Acquisitions Statute. The Corporation elects
not to be subject to or governed by the South Carolina Control Share
Acquisitions Statute contained in Sections 35-2-101 to 35-2-111 of the South
Carolina Code, or any successor provision or provisions.
Section 9: Voting of Stock Held. Unless otherwise provided by
resolution of the Board of Directors, the president or any executive vice
president shall from time to time appoint an attorney or attorneys or agent or
agents of this Corporation, in the name and on behalf of this Corporation, to
cast the vote which this Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose stock or securities may be held
by this Corporation, at meetings of the holders of the stock or other securities
of such other corporation, or to consent in writing to any action by any of such
other corporation, and shall instruct the person or persons so appointed as to
the manner of casting such votes or giving such consent and may execute or cause
to be executed on behalf of this Corporation and under its corporate seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper; or, in lieu of such appointment, the president or any
executive vice president may attend in person any meetings of the holders of
stock or other securities of any such other corporation and their vote or
exercise any or all power of this Corporation as the holder of such stock or
other securities of such other corporation.
16
<PAGE> 21
ARTICLE 8: GENERAL PROVISIONS
Section 1: Distributions. The Board of Directors may authorize, and the
Corporation may make, distributions (including dividends on its outstanding
shares) in the manner and upon the terms and conditions provided by applicable
law and the Articles.
Section 2: Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of its shareholders and Board of Directors.
Section 3: Execution of Documents. The Board of Directors or these
Bylaws shall designate the officers, employees and agents of the Corporation who
shall have the power to execute and deliver deeds, contracts, mortgages, bonds,
debentures, checks and other documents for and in the name of the Corporation,
and may authorize such officers, employees and agents to delegate such power
(including authority to redelegate) to other officers, employees or agents of
the Corporation. Unless so designated or expressly authorized by these Bylaws,
no officer, employee or agent shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable pecuniarily for any purpose or any amount.
Section 4: Fiscal Year. The fiscal year of the Corporation shall be the
same as the calendar year.
Section 5: Seal. The Corporation may provide a seal which contains the
name of the Corporation and the name of the state of incorporation. The seal may
be used by impressing it or reproducing a facsimile of it or otherwise.
Section 6: Resignation. A director may resign by delivering written
notice to the Board of Directors, the chairman or the Corporation. Such
resignation of a director is effective when the notice is delivered unless the
notice specifies a later effective date. An officer may resign at any time by
delivering notice to the Corporation. Such resignation of an officer is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation of an officer is made effective at a later date
and the Corporation accepts the future effective date, the Board of Directors
may fill the pending vacancy before the effective date if the Board of Directors
provides that the successor does not take office until the effective date.
Section 7: Computation of Days. In computing any period of days
prescribed hereunder the day of the act after which the designated period of
days begins to run is not to be included. The last day of the period so computed
is to be included.
Section 8: Amendment of Bylaws.
(a) Except to the extent required otherwise by law, these
Bylaws, or the Articles of Incorporation, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted at any meeting of the Board of
Directors at which a quorum is present, by the
17
<PAGE> 22
affirmative vote of a majority of the directors then in office, provided notice
of the proposed alteration, amendment or repeal is contained in the notice of
the meeting.
(b) Except to the extent required otherwise by law, these
Bylaws, or the Articles of Incorporation, these Bylaws may also be altered,
amended or repealed or new Bylaws may be adopted at any meeting of the
shareholders at which a quorum is present or represented by proxy, by the
affirmative vote of the holders of a majority of each class of shares entitled
to vote thereon, provided notice of the proposed alteration, amendment or repeal
is contained in the notice of the meeting.
(c) Upon adoption of any new bylaw by the shareholders, the
shareholders may provide expressly that the Board of Directors may not adopt,
amend or repeal that bylaw or any bylaw on that subject.
Section 9: Construction. If any portion of these Bylaws shall be
invalid or inoperative, then, so far as is reasonable and possible: (a) the
remainder of these Bylaws shall be considered valid and operative and (b) effect
shall be given to the intent manifested by the portion held invalid or
inoperative.
Section 10: Headings. The headings are for convenience of reference
only and shall not affect in any way the meaning or interpretation of these
Bylaws.
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<PAGE> 23
The undersigned, as President of the Corporation, hereby certifies that
the bylaws contained herein are the true and correct bylaws adopted by the
Corporation's board of directors in compliance with any procedural requirements
of the Corporation's Articles of Incorporation and the laws of the State of
South Carolina, and the rules and regulations promulgated thereunder.
/s/ R. Arthur Seaver, Jr.
-----------------------------------------
R. Arthur Seaver, Jr.
President
Date: July 9, 1999
------------------------------------
19
<PAGE> 1
EXHIBIT 4.2
[FORM OF FACE OF CERTIFICATE]
GREENVILLE FIRST BANCSHARES, INC.
INCORPORATED UNDER THE LAWS OF SOUTH CAROLINA.
THE CORPORATION IS TO ISSUE 1,200,000 SHARES OF COMMON STOCK - PAR VALUE $.01
EACH
This certifies that _______________________________is the registered holder of
_______________________________ Shares of Common Stock which are fully paid and
non-assessable and transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ______________ day of _______________ A.D. 19____
- ---------------------------------- ----------------------------------
SECRETARY PRESIDENT
<PAGE> 2
[FORM OF BACK OF CERTIFICATE]
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
TEN COM --as tenants in common UNIF GIFT MIN ACT--_____Custodian
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- --------------------------------------------------------------------------------
__________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ____________________ Attorney to transfer the said shares on the books
of the within-named Corporation with full power of substitution in the premises.
Dated, _____________________
In presence of
- ----------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 5.1
[Nelson Mullins Riley & Scarborough, L.L.P. Letterhead]
July 26, 1999
Greenville First Bancshares, Inc.
1805 Laurens Road
Greenville, South Carolina 29601
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to Greenville First Bancshares, Inc. (the
"Company") in connection with the filing of a Registration Statement on Form
SB-2 (the "Registration Statement"), under the Securities Act of 1933, covering
the offering of up to 1,200,000 shares (the "Shares") of the Company's Common
Stock, par value $.01 per share. In connection therewith, we have examined such
corporate records, certificates of public officials, and other documents and
records as we have considered necessary or proper for the purpose of this
opinion.
The opinions set forth herein are limited to the laws of the State of
South Carolina and applicable federal laws.
Based on the foregoing, and having regard to legal considerations which
we deem relevant, we are of the opinion that the Shares, when issued and
delivered as subscribed in the Registration Statement, will be legally issued,
fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
NELSON MULLINS RILEY & SCARBOROUGH
By: /s/ Neil E. Grayson
-------------------------------
Neil E. Grayson, Esq.
<PAGE> 1
Exhibit 10.3
[The InterCept(sm) Group Letterhead] Data Processing
Agreement
This DATA PROCESSING AGREEMENT is made and entered into as of June 28, 1999, by
and between, Greenville First (In Organization), located at 1805 Laurens Road,
Greenville, SC 29607 and its successors (herein referred to as the
"Participating Bank"), and The InterCept Group, located at 3150 Holcomb Bridge
Rd. Suite 200, Norcross, Georgia 30071 (herein referred to as the "Computer
Center").
In consideration of the mutual promises and covenants contained herein, the
parties hereto agree as follows:
1. DATA PROCESSING SERVICES. Computer Center agrees to render to
Participating Bank the data processing services described on Exhibit "A"
(the "Services") for the term of this Agreement, and Participating Bank
agrees to purchase the Services. This Agreement describes the general
nature of the Services and the terms under which the Computer Center is to
provide or make the Services available to the Participating Bank. In the
event of any conflict between the language of this Agreement and any
brochures, verbal representations, or other materials describing the
Services, the language of this Agreement shall control.
YEAR 2000 COMPLIANCE. Computer Center warrants and represents to
Participating Bank that all hardware, software and firmware delivered
under this Agreement shall be able to accurately process date related data
(including, but not limited to calculating, comparing and sequencing
before, on and after January 1, 2000, including leap year calculations,
when used in accordance with the product documentation delivered under
this Agreement.
2. CONVERSION OF PARTICIPATING BANK'S INFORMATION.
a) Within a reasonable time following execution of this Agreement,
Computer Center will undertake the programming required to convert
Participating Bank's information files into a format compatible with
the Computer Center systems. Participating Bank agrees to cooperate
with Computer Center in this endeavor and to provide all information
and assistance required for Computer Center to successfully convert
Participating Bank's information files to a form compatible with
Computer Center's systems and equipment so that Computer Center can
provide the Services. Among other things, Participating Bank shall
deliver conversion input information, in its entirety, in a mutually
acceptable medium, as and when the parties agree.
b) Computer Center shall determine, in accordance with its normal
acceptance procedures, when Participating Bank's information files
have been successfully converted and when the Services to be provided
by Computer Center to Participating Bank are operational and
available for Participating Bank's use. Participating Bank agrees to
review and check the information converted by Computer Center within
ten (10) days after notice to Participating Bank of Computer Center's
completion of conversion. Computer Center reserves the right to
postpone conversion of Participating Bank's information files if
Participating Bank is late in delivering its conversion input
information or if any other circumstances arise that might jeopardize
the successful completion of Participating Bank's information
conversion or the processing of the Participating Bank's following
day's transactions for any other customers of Computer Center.
c) In the event the conversion process is stopped, cancelled, or
suspended by Participating Bank, Participating Bank agrees to pay
Computer Center all labor costs, expenses, and charges incurred by
Computer Center in preparing to perform under this Agreement.
Computer Center shall submit to Participating Bank an itemized
statement of all
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<PAGE> 2
such charges and Participating Bank agrees to pay said statement
prior to the return to Participating Bank of any conversion input
information or data provided to Computer Center and, in any event,
within thirty (30) days after receipt.
d) Computer Center shall provide to Participating Bank training so that
Participating Bank may fully utilize the Services provided by
Computer Center at the time of conversion of Participating Bank's
information.
3. INPUT AND OUTPUT DATA. Participating Bank shall be responsible for
providing to Computer Center all input data and other information
necessary for Computer Center to perform the Services. The input data
shall be transmitted by Participating Bank to Computer Center in a format
acceptable to Computer Center via an approved telecommunication method and
system. Participating Bank is solely responsible for the accuracy and
delivery of all information to be provided to Computer Center for
processing. Computer Center agrees to provide Participating Bank with
Reports, provided, however, that in any event Computer Center shall have a
reasonable amount of time after receipt of the input data from
Participating Bank to process such data. All Reports shall be delivered by
Computer Center to Participating Bank by telecommunications to a remote
printer designated by Participating Bank. The design and format of any
Reports or forms to be prepared by Computer Center must be approved by
Computer Center.
4. TERM. This Agreement shall begin on the date hereof and shall remain in
effect for a period of Five (5) years (the "Term") following the first
full calendar month subsequent to the date hereof in which any Services
commonly known as processing services are provided by Computer Center to
Participating Bank, as evidenced by the billing records of Computer
Center. This Agreement shall automatically renew for the same Term unless
written notice of termination is delivered by either party to the other at
least one hundred eighty (180) days prior to the original expiration date
or subsequent renewal expiration dates of the Agreement.
5. ASSISTANCE FROM PARTICIPATING BANK. In addition to the input data to be
delivered by Participating Bank pursuant to paragraph 3 above, Computer
Center's performance of the Services may, from time to time, require data,
documents, descriptions or acts to be furnished by, or to be qualified or
processed in part by, the Participating Bank or its personnel. Computer
Center agrees to give prompt notice of such requirements to Participating
Bank, and Participating Bank agrees to furnish such data, documents,
descriptions or acts and to make such personnel, records and facilities
available within such time or times after its receipt of such notice and
in such manner as shall be reasonably necessary to enable the Computer
Center to perform the Services.
6. COMMUNICATIONS. Participating Bank shall bear all risk of loss or damage
to items, records, other input data, or Reports and other output data
during communication or delivery of such data between the Participating
Bank's office and the Computer Center. Participating Bank shall be
responsible for and shall pay all charges related to communications
between Participating Bank and Computer Center.
7. EQUIPMENT.
a) Participating Bank agrees that it is responsible for all
communications between Participating Bank and Computer Center. When
communicating with, or transferring data to, or receiving data from,
Computer Center, Participating Bank shall, at its own cost and
expense, use and maintain only such terminals, modems and other
hardware, firmware and software (hereinafter collectively referred to
as the "Equipment") as may be compatible with the systems and
communications networks of Computer Center. The Participating Bank's
Equipment must be completely compatible with the systems and
communications networks of Computer Center and, if requested by
Computer Center, Participating Bank shall be responsible for
providing sufficient information about the Equipment to Computer
Center and for performing adequate tests to demonstrate that the
Equipment is in good working order and completely compatible with the
systems and communications networks of Computer Center. In the event
Computer Center believes it is in its and its clients' best interest
to upgrade Computer Center's systems to more efficient and capable
equipment or to keep Computer Center competitive, Participating Bank
agrees to acquire any Equipment necessary to keep Participating Bank
and Computer Center fully compatible.
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<PAGE> 3
b) Unless otherwise agreed by the parties, Computer Center shall schedule
and arrange for the communications services, including communications
equipment installation, with the communication provider. Participating
Bank shall be responsible for paying all charges imposed by the
provider of the communications equipment, such as the telephone
company, for the Equipment installation, as well as for any charges
for additional connections or changes to locations or future services.
Computer Center shall not be responsible for the reliability or
continued availability of the telephone lines, communications
facilities, or electrical power used by Participating Bank in
utilizing the Services provided by Computer Center hereunder. Computer
Center will cooperate with communications vendors as appropriate so
that communications between Participating Bank and Computer Center
facilities function properly.
8. LIMITATION OF LIABILITY.
a) Computer shall not be responsible for any failure in providing the
Services, any delays in processing, or any failure or delay in the
delivery of any Reports that may be caused, in whole or in part, by
strikes, lockouts, riots, epidemics, governmental actions or
regulations, natural disaster, fire, inclement weather, acts of God,
computer breakdown or failure, communications failure, interruptions
in telephone or electrical service, courier's failure to timely
deliver, or any other causes beyond its reasonable control. In the
event such delays exist without interruption for a period of more than
thirty (30) days, Participating Bank or Computer Center may elect to
terminate this Agreement without breach. Participating Bank is under
no duty to make any payments to Computer Center for any period
exceeding five (5) consecutive business days in which the Services are
not performed by Computer Center as a result of a natural disaster or
other phenomenon mentioned above.
b) Computer Center's obligation to Participating Bank hereunder in
performing the Services is to exercise the same degree of care and
diligence used in processing information and compiling reports for its
own use. Computer Center's sole responsibility to Participating Bank
or any third party for any claims, notwithstanding the form of such
claims (e.g., contract, negligence or otherwise), arising out of
errors or omissions in the Services or Reports provided or to be
provided hereunder and caused by Computer Center (provided that
Participating Bank shall have promptly notified Computer Center of any
such errors or omissions), shall be to furnish at Computer Center's
costs the correct Services or Report and/or to correct the applicable
Participating Bank files.
c) Computer Center will make every reasonable effort to be available to
provide Services during the hours referred to in paragraph 20 below.
Accordingly, Computer Center's liability to Participating Bank or any
third party for claims, notwithstanding the form of such claims (e.g.,
contract, negligence or otherwise) arising out of the unavailability
or inaccessibility of Computer Center's system, or the interruption in
or delay of Services provided or to be provided by Computer Center
hereunder, shall be to use reasonable efforts to resume the Services
as promptly as practicable, provided, however, that Computer Center
shall not be responsible for communication failures caused, in whole
or in part, by the incompatibility or failure of Participating Bank's
Equipment or by third party telecommunication or electric lines or
equipment.
d) Computer Center shall not be liable to Participating Bank for errors
resulting from defects in, or malfunctions of, the mechanical or
electronic equipment used by Participating Bank or Computer Center in
performing the duties and obligations contemplated in and covered by
this Agreement.
e) Computer Center shall not be liable for damages arising under this
Agreement, regardless of the claim, unless such damages result from
gross negligence or willful misconduct on the part of Computer
Center's officers or employees, in which case Computer Center's
liability will be limited to actual damages directly resulting from
such gross negligence or willful misconduct. In any event, any damages
for which Computer Center may be liable shall be limited to the
service charges received by Computer Center from Participating Bank
for Services during the twelve (12) months prior to the alleged
damage. If Participating Bank desires to obtain insurance protection
against any such losses, or to cover fidelity losses through an
endorsement to its own blanket bond coverage, Computer Center agrees
to cooperate with Participating Bank in obtaining such insurance. In
the event Participating Bank recovers insurance proceeds pursuant to
such insurance, such proceeds shall constitute a setoff against actual
damages claimed by Participating Bank that directly result from gross
negligence or willful misconduct of Computer Center. It is understood
that all costs and expenses of such insurance shall be paid by
Participating Bank. Computer Center agrees to maintain, with coverage
amounts determined by Computer Center, fidelity bondcoverage with
respect to any dishonest acts which may be committed by Computer
Center personnel, and insurance in policy amounts and
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<PAGE> 4
types determined by Computer Center, with respect to hazards,
including losses by Computer Center from fire, disaster, and other
events which may interrupt normal service.
(f) IN NO EVENT WILL COMPUTER CENTER BE RESPONSIBLE FOR SPECIAL,
RELIANCE, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES ARISING OUT
OF ANY ACT OR OMISSION BY COMPUTER CENTER IN CONNECTION WITH THIS
AGREEMENT, EVEN IF COMPUTER CENTER HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, WHETHER SUCH DAMAGES ARISE IN AN ACTION
AT LAW OR IN EQUITY, FOR BREACH OF CONTRACT, BREACH OF WARRANTY,
PRODUCT LIABILITY, BREACH OF UCC PROVISIONS, NEGLIGENCE OR
INTENTIONAL TORT. FURTHERMORE, COMPUTER CENTER SHALL NOT BE LIABLE
FOR PARTICIPATING BANK'S LOST PROFITS, LOSS OF BUSINESS
OPPORTUNITIES, OR FOR EXEMPLARY DAMAGES. THE PROVISIONS HEREOF ARE IN
LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, WHETHER OF
MERCHANTABILITY, FITNESS OR OTHERWISE.
9. COMPLIANCE WITH FEDERAL REGULATIONS. Computer Center warrants that it
maintains a formal agreement with a suitable processing center to provide
backup facilities capable of processing Participating Bank's data and
satisfying all requirements of this Agreement. Further, Computer Center
shall comply with all federal rules and regulations applicable to it
relating to the conduct of its business. Computer Center also insures that
the services provided under this agreement shall properly process
Participating Bank's data into and beyond the year 2000.
10. REVIEW OF REPORTS. It will be the responsibility of Participating Bank to
maintain audit controls and/or procedures which may be required by
supervisory authorities under regulations to which the Participating Bank
is subject. Balancing of input totals to computer generated output totals
will be the responsibility of Participating Bank, and Computer Center
accepts no responsibility for the correctness of these totals. Computer
Center will exercise reasonable care and diligence in maintaining controls
over the Services rendered Pursuant to this Agreement.
11. THIRD PARTY AUDIT. Computer Center shall provide to Participating Bank a
copy of the most recent third party service audit of the records of
Computer Center upon request by Participating Bank and payment by
Participating Bank of a reasonable and customary charge. If requested,
Computer Center shall also provide to Participating Bank annual audited
financial information regarding Computer Center at no charge.
12. FEES. In consideration of the Services provided by Computer Center,
Participating Bank shall pay to Computer Center each month, in advance
based upon the prior month's activity, those fees described on attached
Exhibit "B." The fees set forth on Exhibit "B" are exclusive of any
applicable taxes or assessments, however designated, which may be levied
or assessed by any government or other taxing authority having
jurisdiction to levy such tax upon the Services. Participating Bank agrees
to pay Computer Center the amount of such taxes or assessments, whenever
requested by Computer Center. The fees described on Exhibit "B" may be
changed from time to time by Computer Center upon thirty (30) days prior
notice to Participating Bank, provided, however, that the maximum annual
increase in any fee described in Exhibit "B" shall not exceed six percent
(6%).
In the event the Participating Bank acquires another financial institution
or branch of a financial institution, the Computer Center reserves the
right to review volume growth (assets and account volume) and make
necessary adjustments in pricing as may more accurately reflect the
Computer Center's standard account pricing as described in Exhibit "B".
13. OTHER FEES. In the event Participating Bank requests that Computer Center
procure forms that are to be supplied by, Participating Bank shall pay to
Computer Center the cost of such forms plus Computer Center's reasonable
and customary markup when billed. If overtime and/or special handling is
requested by Participating Bank or is required because of delays not the
fault of Computer Center, Participating Bank agrees to pay Computer Center
at the established rates then in effect for overtime and/or special
handling for production operations and for any other out-of-pocket expense
related thereto. If it is necessary for Computer Center to return the
finished products to Participating Bank by special carrier or special
messenger, Computer Center shall notify Participating Bank by telephone
and Participating Bank shall be charged with out-of-pocket expenses
incurred by Computer Center as a result of such special handling, unless
Participating Bank objects to such special handling at the time it
receives such notice. In the event Computer Center agrees to develop any
special programs for or in behalf of Participating Bank, Participating
Bank agrees to pay Computer Center development costs plus a reasonable
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<PAGE> 5
markup. In addition, Participating Bank may be required to pay a license
fee as agreed by the parties for such special software.
14. CONFIDENTIALITY.
a) Computer Center agrees to hold in confidence all information relating
to the assets, liabilities or other business affairs of Participating
Bank, or any customers of Participating Bank, which are received by
Computer Center pursuant to this Agreement or in the course of
rendering the Services. It is expressly agreed and understood,
however, that performance of the Services will be subject to
examination by regulatory authorities, including, but not limited to,
(i) the Comptroller of Currency, (ii) the Board of Governors of the
Federal Reserve System, (iii) the Board of Directors of the Federal
Deposit Insurance Corporation, and (iv) the State Banking Department,
and that as part of the performance of Services hereunder, Computer
Center shall submit or furnish to the regulatory agencies reports,
information, assurances or other data as may be required under
applicable laws and regulations to which either party is subject.
b) Participating Bank acknowledges and agrees that all computer
programs, codes, and information regarding Computer Center's business
operations, pricing, the terms and conditions of this Agreement, the
Computer Center pricing manual and any other contract documents, the
Computer Center systems, and related matters (hereinafter
collectively referred to as "Proprietary Information"), are the
exclusive and confidential property of Computer Center, or the third
parties from whom Computer Center has secured the right to use
computer programs. Participating Bank understands that the harm that
could be caused to Computer Center should the Proprietary Information
be disclosed to its competitors and others having no need to know of
the Proprietary Information. Therefore, Participating Bank agrees to
hold all such Proprietary Information in strictest confidence.
Participating Bank will instruct its employees who have access to or
who use the Proprietary Information to keep same confidential by
using no less than the same degree of care and discretion that
Participating Bank uses with respect to its own confidential and
proprietary information. On termination of this Agreement,
Participating Bank shall return all Proprietary Information to
Computer Center and shall cease to use the same for any purpose
whatsoever. This paragraph shall not apply to any information
furnished by Computer Center which is already in the public domain at
the time of disclosure to Participating Bank or to any information
independently developed by Participating Bank outside this
Agreement. This provision shall survive termination of this
Agreement, regardless of cause, for a period of five (5) years from
date of termination.
15. DECONVERSION.
a) Upon termination of this Agreement, Computer Center will dispose of
all Participating Bank files still in the Computer Center's system in
such manner deemed appropriate by Computer Center unless
Participating Bank, prior to the date of termination, furnishes to
Computer Center written instructions for the disposal of
Participating Bank files, which instructions Computer Center will,
if reasonable and feasible, comply with at Participating Bank's
expense. Participating Bank's master file data will be maintained by
Computer Center for a period of thirty (30) days subsequent to
termination, after which time it may, at the option of Computer
Center, be destroyed.
b) Deconversion information or data shall not be made available to
Participating Bank until Participating Bank has first paid, in a form
acceptable to Computer Center, all sums due Computer Center,
including all monthly charges that might be due if deconversion
occurs prior to normal expiration of this Agreement, all accrued and
unpaid information processing and other charges, and all deconversion
charges. Participating Bank understands that it will be billed and
agrees to pay such bills for any additional services or reports
provided by Computer Center after deconversion at the request of
Participating Bank for audit verification or other purposes, at
Computer Center's normal rates for such services or reports.
Participating Bank agrees that Computer Center shall have a lien on
Participating Bank's information and data until all sums due are
paid in full. Release of said lien by surrender of possession by
Computer Center shall not affect any claim Computer Center might
have for payments due it from Participating Bank.
16. INSPECTION. Computer Center agrees that all records relating to
Participating Bank at all times shall be subject to inspection and
review by Participating Bank or its auditors, designees, accountants and
appropriate examiners from the applicable state and federal bank
regulatory agencies, upon reasonable notice to Computer Center. Computer
Center further agrees to prepare such reports, grant computer usage and
permit programming examination as may be necessary to meet the audit
requirements of Participating Bank. Reasonable charges shall be made to
and be payable by Participating Bank for all
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<PAGE> 6
special programming and other computer usage in excess of any programming
or usage to which Participating Bank may be entitled pursuant to Exhibit
"B."
17. TITLE TO SOFTWARE. All right, title and interest in and to any and all
computer programs, and the source codes therefor, used by Computer Center
in the performance of Services, including any special programs written
specifically for Participating Bank, shall be and remain the property of
Computer Center.
18. PRIORITY. Computer Center shall advise Participating Bank by letter of
any system changes that would affect procedures or Reports. Computer
Center also agrees that Participating Bank's data shall have priority for
processing over any data of entities, other than banks, savings and loans,
credit unions and other financial institutions.
19. BINDING EFFECT AND ASSIGNMENT. This Agreement and all the provisions
hereof shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights or obligations of either party hereunder
shall be assigned or delegated by such party to any other person without
Prior written consent of the other party hereto, except that Computer
Center (or any successor to Computer Center) may, at any time during the
Term hereof, assign its rights and delegate its obligations hereunder to
any subsidiary or division of Computer Center or any other entity which
controls, is controlled by, or is under common control with Computer
Center.
20. AVAILABILITY OF SERVICES. Computer Center's system will be available for
communication between Participating Bank and Computer Center from 8:00 AM
to 5:00 PM (5 days per week). Participating Bank's daily cut off time for
items capture, file maintenance and data transmissions will be no later
than 6:30 PM each day.
21. TERMINATION BY PARTICIPATING BANK. The parties further agree and
acknowledge that there may be certain circumstances in which Participating
Bank desires to discontinue Computer Center's provision of one or more of
the Services prior to the expiration date of this Agreement. In such
event, Computer Center will suffer substantial loss or injury that is
difficult or impossible to accurately estimate. Accordingly, in an effort
to liquidate in advance the sum that should represent the loss or damages
which would be actually sustained by Computer Center as a result of such
early termination by Participating Bank of any Services provided
hereunder, the parties have agreed on the amount specified below as a
reasonable pre-estimate of Computer Center's probable loss. If
Participating Bank desires to discontinue any Services hereunder,
Participating Bank shall give Computer Center one hundred eighty (180)
days advance written notice and shall pay Computer Center an amount equal
to 75% of the "estimated remaining service fees" with respect to the
Services being discontinued or the monthly "minimum charge," whichever is
greater, for the remainder of the Term beginning on the effective date of
termination. The "estimated remaining service fees" for the Services being
discontinued shall be calculated by multiplying the average monthly
service fees billed for the Services being discontinued for the six (6)
months immediately preceding notice of early termination by the number of
months remaining under the Term of this Agreement. The "minimum charge"
will be determined by Exhibit "B" of this Agreement. This amount is due
per the provisions of paragraph 15(b).
22. TERMINATION BY COMPUTER CENTER. In the event that Computer Center desires
to cancel this Agreement or discontinue Services hereunder, it shall give
Participating Bank one hundred eighty (180) days advance written notice
and this Agreement or any Service hereunder shall be cancelled in full.
23. ENTIRE AGREEMENT. This instrument, along with the appendices and schedules
incorporated herein by reference, constitutes the entire agreement and
understanding between the parties with respect to the subject matter
hereof. Representations and agreement not expressly contained or
incorporated by reference herein shall not be binding upon either party as
warranties or otherwise. Modifications of this Agreement must be in
writing and signed by duly authorized representative of the parties.
24. SEVERABILITY. In the event that one or more of the provisions of this
Agreement is for any reason held to be invalid or unenforceable, such
holdings shall not affect the remaining provisions of this Agreement.
25. APPLICABLE LAW. This Agreement is made and entered into in Norcross,
Georgia, and shall be governed by the laws of the State of Georgia.
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<PAGE> 7
COMPUTER CENTER PARTICIPATING BANK:
THE INTERCEPT GROUP GREENVILLE FIRST (IN ORGANIZATION)
By: By: /s/ R. Arthur Seaver Jr.
------------------------------ --------------------------------
(Signature) (Signature)
Name: Name: R. Arthur Seaver Jr.
--------------------------- ------------------------------
(Please Print or Type) (Please Print or Type)
Title: Title: President/CEO
--------------------------- -----------------------------
Date: Date: 7-9-99
--------------------------- -----------------------------
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<PAGE> 1
EXHIBIT 10.4
THE WARRANTS EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED OR SOLD IN RELIANCE
ON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER SUCH ACT AND STATE LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND STATE LAWS.
GREENVILLE FIRST BANCSHARES, INC.
STOCK WARRANT AGREEMENT
__________, 1999 __________ Shares
Warrants (the "Warrants") to purchase one share of common stock of
Greenville First Bancshares, Inc., (the "Company") a South Carolina corporation
and the holding company for Greenville First Bank, N.A. (proposed), (the
"Bank"), for every two shares of common stock purchased in the offering by
__________________ (the "Warrant Holder"), are hereby granted to the Warrant
Holder in consideration of the financial risk associated with Warrant Holder's
investment in the Company during its organizational stage and the time,
expertise, and continuing involvement of the Warrant Holder in the management of
the Bank. Such Warrants are granted on the following terms and conditions:
1. EXERCISE OF WARRANTS. One-third of the shares (the "Shares") subject to
the Warrants granted in this Agreement shall vest on each of the first three
anniversaries of the date of the Company's incorporation (the "Incorporation
Date"). Exercise of the Warrants is subject to the following:
(a) EXERCISE PRICE. The exercise price (the "Exercise Price")
shall be $10.00 per Share, subject to adjustment pursuant to
Section 2 below.
(b) EXPIRATION OF WARRANT TERM. The Warrants will expire at 5:00
p.m. Eastern Standard Time on the tenth anniversary of the
Incorporation Date, and may not be exercised thereafter (the
"Expiration Date").
(c) PAYMENT. The purchase price for Shares as to which the
Warrants are being exercised shall be paid in cash, by wire
transfer, by certified or bank cashier's check, or by personal
check drawn on funds on deposit with the Bank.
(d) METHOD OF EXERCISE. The Warrants shall be exercisable by a
written notice delivered to the President or Secretary of the
Company which shall:
(i) State the owner's election to exercise the Warrants,
the number of Shares with respect to which it is
being exercised, the person in whose name the stock
certificate for such Shares is to be registered, and
such person's
<PAGE> 2
address and tax identification number (or, if more
than one, the names, addresses and tax identification
numbers of such persons);
(ii) Be signed by the person or persons entitled to
exercise the Warrants and, if the Warrants are being
exercised by any person or persons other than the
original holder thereof, be accompanied by proof
satisfactory to counsel for the Bank of the right of
such person or persons to exercise the Warrants; and
(iii) Be accompanied by the originally executed copy of
this Stock Warrant Agreement.
(e) PARTIAL EXERCISE. In the event of a partial exercise of the
Warrants, the Company shall either issue a new agreement for
the balance of the Shares subject to this Stock Warrant
Agreement after such partial exercise, or it shall
conspicuously note hereon the date and number of Shares
purchased pursuant to such exercise and the number of Shares
remaining covered by this Stock Warrant Agreement.
(f) RESTRICTIONS ON EXERCISE. The Warrants may not be exercised
(i) if the issuance of the Shares upon such exercise would
constitute a violation of any applicable federal or state
securities or banking laws or other law or regulation or (ii)
unless the Bank or the holder hereof, as applicable, obtains
any approval or other clearance which the Bank determines to
be necessary or advisable from the Federal Reserve Board, the
Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation or any other state or federal banking
regulatory agency with regulatory authority over the operation
of Company or the Bank (collectively the "Regulatory
Agencies"). The Company may require representations and
warranties from the Warranty Holder as required to comply with
applicable laws or regulations, including the Securities Act
of 1933 and state securities laws.
2. ANTI-DILUTION; MERGER. If, prior to the exercise of Warrants
hereunder, the Company (i) declares, makes or issues, or fixes a record date for
the determination of holders of common stock entitled to receive, a dividend or
other distribution payable on the Shares in shares of its capital stock, (ii)
subdivides the outstanding Shares, (iii) combines the outstanding Shares, (iv)
issues any shares of its capital stock by reclassification of the Shares,
capital reorganization or otherwise (including any such reclassification or
reorganization in connection with a consolidation or merger or and sale of all
or substantially all of the Company's assets to any person), then the Exercise
Price, and the number and kind of shares receivable upon exercise, in effect at
the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of shares which, if such Warrant had been
exercised immediately prior to such time, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination, reclassification, reorganization, consideration,
merger or sale.
3. VALID ISSUANCE OF COMMON STOCK. The Company possesses the full
authority and legal right to issue, sell, transfer, and assign this Warrant and
the Shares issuable pursuant to this Warrant. The issuance of this Warrant vests
in the holder the entire legal and beneficial
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<PAGE> 3
interests in this Warrant, free and clear of any liens, claims, and
encumbrances and subject to no legal or equitable restrictions of any kind
except as described herein. The Shares that are issuable upon exercise of this
Warrant, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, and non-assessable, and will be free of restrictions on
transfer other than restrictions under applicable state and federal securities.
4. COMPLIANCE WITH SECURITIES LAWS. This Agreement and the Warrants
represented hereby were issued in reliance on an exemption from registration
under the Securities Act of 1933 (the "Act") for financial institutions, and
other applicable exemptions under state securities laws. The Company's reliance
on such exemption is predicated in part on the Warrant Holder's representations
set forth herein. Warrant Holder understands that the Warrants and the Shares
issuable upon exercise of the Warrants may not be sold, transferred or otherwise
disposed of without registration under the Securities Act of 1933, or an
exemption therefrom, and that in the absence of an effective registration
statement covering such shares or an available exemption from registration under
the Securities Act, such Shares must be held indefinitely.
5. RESTRICTIONS ON TRANSFERABILITY. This the Agreement and the Warrants
may not be assigned, transferred (except as provided above), pledged, or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of these
Warrants contrary to the provisions hereof shall be without legal effect. The
Shares issuable on exercise of the Warrants may not be assigned or transferred
by the Warrant Holder without the Company's prior written consent and, if so
requested by the Company, the delivery by the Warrant Holder to the Company of
an opinion of counsel in form and substance satisfactory to the Company stating
that such transfer or assignment is in compliance with the Securities Act of
1933 and applicable state securities laws.
6. RESTRICTIVE LEGEND. Each certificate for Shares issued upon exercise
of the Warrant shall bear a legend stating that they have not been registered
under the Securities Act of 1933 or any state securities laws and referring to
the restrictions on transferability and sale herein.
7. MANDATORY EXERCISE; TERMINATION.
(a) Warrant Holder shall exercise all of Warrant Holder's then
exercisable Warrants within 120 days of the date that Warrant
Holder ceases to serve the Company as an executive officer,
employee, or director. Warrant Holder agrees to exercise any
Warrants that are not exercisable on the date in which Warrant
Holder ceases to serve the Company within 120 days of the date
that those Warrants become exercisable.
(b) The Company may be required to increase its capital to meet
capital requirements imposed by statute, rule, regulation, or
guideline. In order to achieve such capital increase, the
Regulatory Agencies may direct the Company to require the
Warrant Holders to either (i) exercise all part of their
Warrants or (ii) allow the Warrants to be terminated. If the
Regulatory Agencies so direct the Company, then the Warrant
Holder must exercise or forfeit the Warrants as set forth
below.
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<PAGE> 4
(c) When the Company is required to increase its capital as
described in subsection (a) above, the Company shall send a
notice (the "Notice") to the Warrant Holder (i) specifying the
number of Shares relating to the Warrants for which the
Warrants must be exercised (the "Number") (if less than all
shares relating to warrants held by all holders of warrants of
the Company under agreements substantially similar to this one
are required by the Company to be exercised or cancelled, the
Number for the Warrant Holder shall reflect a proportionate
allocation based on the number of Shares subject to this
Agreement as compared to the total number of shares subject to
warrants held by all such warrant holders as a group); (ii)
specifying the date prior to which the Warrants must be
totally or partially exercised, as the case may be (the
"Deadline"); (iii) specifying the Exercise Price for the
Shares to be purchased pursuant to the Warrants (such Exercise
Price not to be less than current book value per share); and
(iv) stating that the failure of the Warrant holder to
exercise the Warrants shall result in their automatic
termination.
(d) If the Warrant holder does not exercise the Warrants pursuant
to the terms of the Notice, this Agreement shall be
automatically terminated on the Deadline, without further act
or action by the Warrant Holder or the Company, and the
Warrant Holder shall deliver this Agreement to the Company for
cancellation. If the Number is less than the total number of
Shares that are then subject to exercise under this Agreement,
the Company shall issue a new Stock Warrant Agreement in
compliance with Section 1(e) hereof.
8. COVENANTS OF THE COMPANY. During the term of the Warrants,
the Company shall:
(a) at all times authorize, reserve and keep available, solely for
issuance upon exercise of this Warrant, sufficient shares of
common stock from time to time issuable upon exercise of this
Warrant;
(b) on receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft, or destruction, on delivery
of any indemnity agreement or bond reasonably satisfactory in
form and amount to the Company or, in the case of mutilation,
on surrender and cancellation of this Warrant, at its expense
execute and deliver, in lieu of this Warrant, a new Warrant of
like tenor; and
(c) on surrender for exchange of this Warrant or any Warrant
substituted therefor pursuant hereto, properly endorsed, to
the Company, at its expense, issue and deliver to or on the
order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (on
payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof
for the issuances of the number of shares of common stock
issuable pursuant to the terms of the Warrant or Warrants so
surrendered.
9. NO DILUTION OR IMPAIRMENT. The Company shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or
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<PAGE> 5
performed hereunder by the Company, but will at all times in good faith assist
in carrying out all such action as may be reasonably necessary in order to
protect the exercise rights of the holder against improper dilution or other
impairment.
10. AMENDMENT. Neither this Agreement nor the rights granted hereunder
may be amended, changed or waived except in writing signed by each party hereto.
IN WITNESS WHEREOF, the Company has executed and the holder has
accepted this Stock Warrant Agreement as of the date and year first above
written.
GREENVILLE FIRST BANCSHARES, INC.
By:
------------------------------
President
(CORPORATE SEAL)
Attest:
--------------------------
Secretary
WARRANT HOLDER:
By:
------------------------------
Signature
---------------------------------
Print Name
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<PAGE> 1
EXHIBIT 10.5
PROMISSORY NOTE
Borrower: Greenville First Bancshares Inc.
Lender: John J. Meindl Jr.
Date: February 22, 1999
Loan Amount: $600,000
LOAN PURPOSE AND DESCRIPTION: Greenville First Bancshares Inc. is an entity
formed for the purpose of starting a new community bank in Greenville, South
Carolina. Greenville First Bank is the intended name of the new bank and the
organizing group plans on capitalizing the bank with approximately $8 million to
$10 million. As the organizing group will not have access to the capital until
the bank opens for business, all organizing expenses will have to be borrowed.
John J. Meindl who intends to invest in the new bank has offered to lend the
organizing group funds based on the terms of this promissory note. The lender
will have the right to purchase up to 5% of the initial stock offering by the
proposed bank.
Borrower agrees to pay Lender the amount of $600,000, plus finance charges
including interest at the rate of the Wall Street Journal Prime Rate per annum,
accrued from the date of disbursement on the outstanding balance based on a 365
day year. The interest rate on this loan is subject to change with any change in
the Wall Street Journal Prime Rate. The interest rate as of the date of this
loan is 7.75%.
REVOLVING CREDIT: This loan is being made on a revolving basis, and payments
made hereunder shall not prevent subsequent advances up to the full amount of
the note. PAYMENTS: Borrower may pay lender monthly interest payments based on
the amount outstanding. Payments will be due on the 5th of each month and the
entire principal balance is due at maturity. Borrower has the option of
deferring interest payments until maturity. MATURITY: This loan will mature on
February 28, 2000. As a practical matter, this loan will be repaid from capital
funds, which will be available when the bank opens. GUARANTY: This loan will
carry the personal guaranties from each director of the proposed bank.
This note shall take effect as a sealed instrument and shall be construed,
governed and enforced in accordance with the laws of the State of South
Carolina. The undersigned and all other parties of this note agree to remain
fully bound hereunder until the note shall be fully paid, notwithstanding any
extension, renewal, or modification to the note. All collection expenses
incurred will be included as a liability of the borrower. The undersigned hereby
execute this note as principals of the borrowing entity.
Signed in the presence of: Greenville First Bancshares Inc.
/s/ E. B. Kise /s/ R. Arthur Seaver, Jr.
- ---------------------------- --------------------------------
Witness Borrower
President
- ---------------------------- --------------------------------
Witness Title
GUARANTY:
The undersigned guaranties the prompt and punctual payment of all monies due
under this promissory note. The individual guaranty is limited to $60,000.
/s/ E. B. Kise /s/ R. Arthur Seaver, Jr.
- ---------------------------- --------------------------------
Witness Guarantor
<PAGE> 1
EXHIBIT 23.1
ELLIOTT, DAVIS & COMPANY, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use of the incorporation by reference our
report dated July 8, 1999, relating to the financial statements of Greenville
First Bancshares, Inc., in the Registration Statement of Form SB-2 and
Prospectus, and to the reference to our firm under the caption "Experts".
/s/ Elliott, David & Company, L.L.P.
------------------------------------
ELLIOTT, DAVIS & COMPANY, L.L.P.
Greenville, South Carolina
July 26, 1999
Internationally -- Moore Stephens Elliott Davis, LLC
870 South Pleasantburg Drive
Greenville, South Carolina 29607
(864) 242-3370
