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As Filed With the Securities and Exchange Commission on January 25, 2000
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
INTEGRITY BANCSHARES, INC.
------------------------
(Name of Small Business Issuer in its Charter)
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GEORGIA 6021 58-2508612
- ------------------------------ ---------------------------- ------------------------------------
<S> <C> <C>
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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11130 State Bridge Road
Suite D-203
Alpharetta, Georgia 30022
(770) 777-0324
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(Address, and telephone number of principal executive offices)
11130 State Bridge Road
Suite D-203
Alpharetta, Georgia 30022
(770) 777-0324
(Address of principal place of business or intended principal place of business)
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COPIES TO:
STEVEN M. SKOW T. KENNERLY CARROLL, JR., ESQ.,
11130 STATE BRIDGE ROAD MICHAEL P. MARSHALL, JR., ESQ.
SUITE D-203 MILLER & MARTIN LLP
ALPHARETTA, GEORGIA 30022 1275 PEACHTREE STREET, N.E.
(770) 777-0324 SEVENTH FLOOR
ATLANTA, GEORGIA 30309-3576
(Name, address and telephone number (404) 962-6406
of agent for service)
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Approximate date of proposed sale to the public: AS SOON AS PRACTICABLE AFTER
THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE.
If this Form is filed to register additional securities for an offering pursuant
to rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE:
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Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price per Unit (1) Aggregate Offering Registration Fee
Price (1)
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Common stock, no par value 1,200,000 shares $10.00 $12,000,000 $3,168
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
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 SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THE PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS DATED JANUARY 25, 2000; SUBJECT TO COMPLETION
INTEGRITY BANCSHARES, INC.
A Proposed Bank Holding Company for
INTEGRITY BANK
[IBANK LOGO]
(Proposed)
1,200,000 SHARES OF COMMON STOCK
(Minimum Purchase: 2,500 Shares)
Integrity Bancshares, Inc. is offering a minimum of 700,000 shares and
a maximum of 1,200,000 shares of its common stock to organize Integrity Bank., a
proposed state bank. Integrity Bancshares' organizers will offer and sell the
common stock on a best-efforts basis without compensation. Prior to this
offering, Integrity Bancshares has not conducted active business operations, and
there has not been a public market for the shares of common stock.
INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN
THE"RISK FACTORS" SECTION BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
The shares of common stock offered are not deposits, savings accounts,
or other obligations of a bank or savings association and are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
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Per Share Total Minimum Total Maximum
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Price to public ...................................... $ 10.00 $ 7,000,000 $12,000,000
Fees and commissions ................................. -0- -0- -0-
Net proceeds, before expenses, to Integrity Bancshares $ 10.00 $ 7,000,000 $12,000,000
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
We will promptly deposit subscription proceeds in an escrow account
with our escrow agent, The Banker's Bank of Atlanta. The escrow agent will hold
the subscription proceeds until we receive subscriptions for at least 700,000
shares and satisfy certain other conditions. We plan to end the offering on July
31, 2000, unless we decide to end it sooner or extend it. If we are unable to
sell 700,000 shares of common stock or satisfy the other conditions, the escrow
agent will return all subscription proceeds to investors, without interest, and
we will pay all of Integrity Bancshares' expenses.
THE DATE OF THIS PROSPECTUS IS JANUARY 25, 2000
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TABLE OF CONTENTS
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Summary........................................................................................................ 1
Risk factors................................................................................................... 3
The offering................................................................................................... 8
Plan of distribution........................................................................................... 9
Use of proceeds................................................................................................ 10
Capitalization................................................................................................. 11
Dividends...................................................................................................... 12
Management's discussion and analysis
Of financial condition and plan of operations.................................................................. 12
Proposed business of integrity bancshares and integrity bank................................................... 14
Management..................................................................................................... 20
Executive compensation......................................................................................... 22
Related party transactions..................................................................................... 23
Description of capital stock of integrity bancshares........................................................... 24
Important provisions of the articles of incorporation and bylaws............................................... 24
Shares eligible for future sale................................................................................ 27
Supervision and regulation..................................................................................... 28
Legal matters.................................................................................................. 34
Reports to shareholders........................................................................................ 34
Experts........................................................................................................ 35
Additional information......................................................................................... 35
Index to financial statements.................................................................................. F-1
Preliminary subscription agreement............................................................................. A-1
Diagram of premises............................................................................................ A-2
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SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary and does not contain all the information you should
consider before investing in the common stock. You should read carefully the
entire prospectus.
IN GENERAL
Integrity Bancshares is a Georgia corporation that was incorporated to
serve as the holding company for Integrity Bank, a proposed Georgia bank.
Integrity Bank will operate as a full service commercial bank
emphasizing prompt, personalized customer service to individuals and businesses
located in Alpharetta, Georgia (Fulton County). Integrity Bank expects to
operate out of an office to be constructed at 11130 State Bridge Road, Suite
D-203, Alpharetta, Georgia 30022. The telephone number of its main office will
be (770) 777-0324. Integrity Bank anticipates opening on April 1, 2000. The
actual opening date, however, may be delayed beyond April 1, 2000.
Integrity Bancshares and Integrity Bank must receive all necessary
regulatory approvals before Integrity Bancshares may purchase Integrity Bank's
common stock and before Integrity Bank may begin business. We have filed all of
the necessary applications with the banking regulators, and they are pending. We
anticipate that we will receive the necessary approvals and begin business in
the second quarter of 2000.
THE INTEGRITY MARKET
Integrity Bank will be located in Alpharetta, Georgia. We believe that
a majority of our potential customers shall reside within five miles of our
office in Alpharetta. Our primary market will consist of the geographic area
falling within a three mile radius of the Alpharetta office. Our secondary
market adds an additional two mile radius.
We believe the degree of success of any community bank is determined by
the growth rate of its market and the level of local competition. We conducted a
120-city bank market share analysis of potential growth areas which showed that
the Atlanta area had the highest deposits per bank location, deposits per
county, and population growth as of June 30, 1999. We believe that these
findings, coupled with the fact that there are few community banks remaining in
Alpharetta, will give Integrity Bank the opportunity for rapid growth of
deposits and loans.
We also believe that the proper strategy for Integrity Bank is to
emphasize customer relationships more than products. The large banks tend to
emphasize products. By contrast, if we emphasize customer relationships, we
think our customers will be more likely to bank with us for a long time and will
not be as sensitive to the price of our services. We also think a bank can
differentiate itself from other banks by identifying certain underserved but
profitable groups, developing customer relationships within those groups, and
then developing products to satisfy the financial needs of those customers. In
the Alpharetta market, we believe that consumers and small businesses are
underserved by other banks, and we plan to focus on them as customers.
PRODUCTS AND SERVICES
We plan to offer Integrity Bank's products and services through high
quality, personalized delivery systems, with a focus on community involvement
while providing our customers with the financial sophistication and array of
products typically offered by a larger bank. Integrity Bank's lending services
will include commercial loans to small- and medium-sized businesses and
professional concerns, consumer loans to individuals, and real estate-related
loans.
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Integrity Bank will offer a broad array of competitively priced deposit
services, including interest-bearing and non-interest bearing checking accounts,
statement savings accounts, money market deposits, certificates of deposit and
individual retirement accounts. To complement our lending and deposit services,
we will also provide ATM and debit cards, travelers checks, official checks,
MasterCard(R) and VISA(R) credit cards, direct deposit, automatic transfer,
savings bonds, night depository, stop payments, collections, wire transfer,
overdraft protection, and courier services.
DIRECTORS AND OFFICERS
Our management team will include individuals who have significant
experience in the banking industry. Steven M. Skow is the President and Chief
Executive Officer of Integrity Bancshares and will serve as the President and
the Chief Executive Officer of Integrity Bank. Mr. Skow has over 30 years of
banking experience, including 22 years of experience as President and Chief
Executive Officer of high performing banks. Integrity Bank is in the process of
identifying and interviewing candidates for other key employment positions.
The directors of Integrity Bancshares and Integrity Bank consist of the
9 organizers. Eight of the directors live, work, and/or own businesses in or
around Fulton County. The directors expect to utilize their diverse backgrounds
and their extensive local business relationships to attract customers from all
segments of the community. The directors and executive officers also intend to
purchase approximately 190,000 shares of the common stock offered by this
prospectus (27.1% of the minimum and 15.8% of the maximum number of shares to be
sold). The directors' financial interest in Integrity Bancshares and Integrity
Bank should encourage their active participation in growing our franchise.
BUSINESS STRATEGY
Our strategy as an independent bank holding company will be carried out
through the operations and growth of Integrity Bank. In an effort to emphasize
prompt, responsive service to our target customers and to expand our presence in
the Alpharetta market, our strategies include:
- maintaining the overall asset quality of Integrity Bank;
- maintaining Integrity Bank's profitability;
- achieving core deposit growth; and
- maximizing productivity.
EXECUTIVE OFFICES
Our offices will be located at 11130 State Bridge Road, Suite D-203,
Alpharetta, Georgia 30022. Our telephone number is 770-777-0324. Integrity
Bancshares does not currently have plans to open another office.
Integrity Bank will not open any branches until profits warrant expansion.
THE OFFERING
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Common stock offered...................................... Common stock, no par value, of Integrity Bancshares
Common stock to be outstanding after the offering ........ Minimum 700,000 shares;
Maximum 1,200,000 shares
Offering price............................................ $10.00 per share
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Use of proceeds........................................... To capitalize Integrity Bank, to pay organizational, offering
and pre-opening expenses, to construct Integrity Bank's main
office and to provide working capital for Integrity Bank to be
used for business purposes, including making loans and other
investments. See "Use of Proceeds" (page 10).
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The organizers will offer and sell the common stock to potential investors
without compensation.
NO DIVIDENDS
We do not intend to pay dividends at any time in the foreseeable
future.
RISK FACTORS
An investment in the common stock involves a significant degree of
risk. You should not invest in the common stock unless you can afford to lose
your entire investment. You should consider carefully the following risk factors
and other information in this prospectus before deciding to invest in the common
stock.
The following paragraphs describe some of the material risks of an
investment in the common stock. You should also carefully read the cautionary
statement following the Risk Factors regarding the use of forward-looking
statements.
WE HAVE NO OPERATING HISTORY, ANTICIPATE LOSSES AND MAY NOT BE ABLE TO IMPLEMENT
OUR BUSINESS STRATEGY.
Integrity Bank's proposed operations are subject to the risks inherent
in establishing a new business and specifically to those of opening a new bank.
Certain of these inherent risks, including the lack of an operating history, the
anticipation of losses and the potential inability to implement business
strategies, are discussed in more detail below.
No operating history. Neither Integrity Bancshares nor Integrity Bank
has any operating history on which to base any estimate of their future earnings
prospects. Integrity Bancshares was only recently formed, and Integrity Bank
will not receive regulatory approval to begin operations until after this
offering is completed. Consequently, you will not have access to historical
information that would be helpful in deciding whether to invest in Integrity
Bancshares.
Anticipated losses. Typically, most new banks incur substantial
start-up expenses, are not profitable in the first year of operation and, in
some cases, are not profitable for several years. Additionally, many of
Integrity Bank's loans initially will be new loans to new borrowers.
Accordingly, it will take several years to determine the borrowers' payment
histories, and management may not be able to evaluate reliably the quality of
the loan portfolio until that time. Our profitability will depend on Integrity
Bank's profitability, and we can give no assurance that Integrity Bank will ever
operate profitably. If we are ultimately unsuccessful, you may not recover all
or any part of your investment in the common stock. See "Management's Discussion
and Analysis of Financial Condition and Plan of Operations" (page 12).
Potential inability to implement business strategies. We have developed
a business plan that describes the strategy we intend to implement to achieve
profitable operations. The strategy includes hiring and retaining experienced
and qualified employees. If we cannot hire or retain qualified employees, or
otherwise cannot implement our business strategy, we will be hampered in our
ability to develop business and serve our customers,
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which could have an adverse affect on our financial performance. Even if we
successfully implement this strategy, it may not have the favorable impact on
operations that we anticipate. See "Proposed Business of Integrity Bancshares
and Integrity Bank -- Business Strategy" (page 14).
POTENTIAL DELAY IN OPENING MAY INCREASE OUR ACCUMULATED DEFICIT.
Any delay in Integrity Bank's opening for business will increase its
pre-opening expenses and postpone its realization of potential revenues. Such a
delay will cause our accumulated deficit to continue to increase as a result of
continuing operating expenses such as salaries and other administrative
expenses. Although we expect to receive all regulatory approvals and to open for
business in the second quarter of 2000, we can give no assurance as to when, if
at all, these events will occur.
WE MAY DISSOLVE AND LIQUIDATE IF REGULATORY CONDITIONS ARE NOT SATISFIED.
Although we have applied for all regulatory approvals required to begin
operations, we may not receive final approvals in a timely manner if at all. The
closing of this offering is not conditioned upon our receiving final approval to
begin business. If after the close of this offering, we do not receive final
approval to start banking operations or we do not satisfy other regulatory
requirements, we will solicit shareholder approval for dissolution and
liquidation of Integrity Bancshares under Georgia law. If Integrity Bancshares
is dissolved and liquidated, we will distribute to shareholders our net assets
remaining after payment or provision for payment of all claims against Integrity
Bancshares. Shareholders will receive only a portion, if any, of their original
investment because we will have used the proceeds of the offering to pay all
expenses and capital costs incurred by Integrity Bancshares. These expenses
would include the expenses of the offering, the organizational and pre-opening
expenses of Integrity Bancshares and Integrity Bank and the claims of creditors.
CHANGES IN OUR KEY PERSONNEL OR DIRECTORS MAY HAVE AN ADVERSE EFFECT ON OUR
SUCCESS.
Mr. Steven M. Skow is important to our success and if he leaves his
position with Integrity Bancshares or Integrity Bank, our financial condition
and results of operations may be adversely affected. Mr. Skow has been
instrumental in our organization and will be the key management official in
charge of daily business operations. Additionally, our directors' community
involvement, diverse backgrounds and extensive local business relationships are
important to our success. If the composition of our Board of Directors changes
materially, our growth could be adversely affected. See "Management" (page 20).
INDUSTRY COMPETITION MAY HAVE AN ADVERSE EFFECT ON OUR SUCCESS.
The banking business is highly competitive. Our profitability will
depend on our ability to compete successfully. Integrity Bank will compete with
numerous other lenders and deposit-takers, including other commercial banks,
savings and loan associations, credit unions, finance companies, mutual funds,
insurance companies and brokerage and investment banking firms. We will compete
primarily with other financial institutions in the Alpharetta market, but may
also compete with internet banks and financial institutions located throughout
the United States for products such as large certificates of deposit. All of our
competitors actively solicit business from residents of Fulton County. Some of
these institutions are not subject to the same degree of regulation as we will
be and have greater resources than will be available to us. See "Proposed
Business of Integrity Bancshares and Integrity Bank--Market
Opportunities--Competition" (page 15).
UNANTICIPATED CHANGES IN INTEREST RATES MAY HAVE AN ADVERSE EFFECT ON OUR NET
INTEREST INCOME.
Integrity Bank's operations will depend substantially on its net
interest income, which is the difference between the interest income earned on
its interest-earning assets and the interest expense paid on its
interest-bearing liabilities, such as deposits and borrowings. An increase or
decrease in interest rates could have a material adverse effect on the bank's
net income, capital and liquidity. Integrity Bank's earnings and net interest
income will be
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affected by changes in market interest rates and other economic factors beyond
its control. While we intend to take measures to guard against interest rate
risk, these measures may not be effective in minimizing the exposure to interest
rate risk. Also, Integrity Bank's results of operations will be affected by
credit policies of monetary authorities, particularly the Board of Governors of
the Federal Reserve System and other fiscal authorities. See "Management's
Discussion and Analysis of Financial Condition and Plan of Operations--Liquidity
and Interest Rate Sensitivity" (page 13).
POTENTIAL ADVERSE EFFECT OF UNPREDICTABLE ECONOMIC CONDITIONS MAY HAVE AN
ADVERSE EFFECT ON OUR SUCCESS.
The majority of Integrity Bank's borrowers and depositors will be
individuals and businesses located and doing business in the Alpharetta area.
Integrity Bank's success will therefore depend on the general economic
conditions in Alpharetta, which management cannot predict with certainty.
Factors that adversely affect the Alpharetta economy could adversely affect
Integrity Bank's performance. For example, an adverse change in the local
economy would make it more difficult for borrowers to repay their loans, which
could lead to loan losses for Integrity Bank. See "Proposed Business of
Integrity Bancshares and Integrity Bank" (page 14).
LOW LENDING LIMITS MAY LIMIT OUR ABILITY TO GROW.
At least during its first years of operations, Integrity Bank's legally
mandated lending limits will be lower than those of many of its competitors
because it will initially have less capital than many of its competitors. Our
lower lending limits may discourage potential borrowers who have lending needs
that exceed our limits and this may restrict our ability to grow. We may try to
serve the needs of these borrowers by selling loan participations to other
institutions, but this strategy may not succeed. See "Proposed Business of
Integrity Bancshares and Integrity Bank--Lending Services-Lending Limits" (page
17).
OUR ABILITY TO PAY DIVIDENDS IS LIMITED.
Integrity Bancshares does not plan to pay dividends in the foreseeable
future. Integrity Bancshares will initially have no source of income other than
dividends that it receives from Integrity Bank. Our ability to pay dividends to
you will therefore depend on Integrity Bank's ability to pay dividends to
Integrity Bancshares Bank holding companies and national banks are both subject
to significant regulatory restrictions on the payment of cash dividends. In
light of these restrictions and the need for Integrity Bancshares and Integrity
Bank to retain and build capital, it will be the policy of each of their Boards
of Directors to reinvest earnings for the period of time necessary to help
support the success of their operations. Our future dividend policy will depend
on our earnings, capital requirements, financial condition and other factors
that the Boards of Directors of Integrity Bancshares and Integrity Bank consider
relevant. We can give no assurance that dividends will ever be paid. See
"Dividends" (page 12).
OFFERING PRICE ARBITRARILY DETERMINED.
Because we were only recently formed and Integrity Bank is in the
process of being organized, the offering price of $10.00 per share could not be
set with reference to historical measures of Integrity Bancshares' financial
performance. Therefore, the offering price was determined arbitrarily by the
organizers. We did not retain an independent investment banking firm to assist
in determining the offering price. Shareholders may not be able to resell the
common stock for the offering price or any other amount. See "The Offering"
(page 8).
UNLIKELY THAT AN ACTIVE TRADING MARKET WILL DEVELOP.
Prior to the offering, there has been no public trading market for
Integrity Bancshares' common stock, and an active trading market is not likely
to develop or continue to develop after the offering. If an active trading
market does not develop or continue after the offering, you may not be able to
sell your shares at or above the price at which these shares are being offered
to the public. You should consider carefully the limited liquidity of your
investment before purchasing any shares of common stock.
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POTENTIAL ADVERSE EFFECT OF GOVERNMENT REGULATION
Bank holding companies and banks are subject to extensive state and
federal government supervision and regulation. Existing state and federal
banking laws and regulations subject us to substantial limitations relating to
making loans, purchasing securities, paying dividends and many other aspects of
our banking business, and therefore may affect our ability to achieve
profitability and to grow. Many of these laws and regulations are intended to
protect depositors, the public, and the FDIC, not shareholders. In addition, the
burden imposed by federal and state laws and regulations may place us at a
competitive disadvantage compared to competitors who are less regulated.
Applicable laws, regulations, interpretations and enforcement policies have been
subject to significant, and sometimes retroactively applied, changes in recent
years, and may be subject to significant future changes. Future legislation or
government policy may adversely affect the banking industry, our operations and
our shareholders. See "Supervision and Regulation" (page 28).
NO CONTRACT FOR THE PRESIDENT
Mr. Steven Skow, the President and Chief Executive Officer of both
Integrity Bank and Integrity Bancshares does not have an employment contract and
therefore may leave his positions at any time without penalty. Neither Integrity
Bank nor Integrity Bancshares can give any assurances that Mr. Skow will
continue to serve as its president. The loss of Mr. Skow would significantly
affect Integrity Bank's and Integrity Bancshares' ability to operate
successfully.
POTENTIAL INABILITY TO RAISE ADDITIONAL CAPITAL
Integrity Bank and Integrity Bancshares can give no guarantee that the
proceeds raised in this offering will be sufficient to meet their organizational
needs. The Board of Directors may determine from time to time that we need to
obtain additional capital through the issuance of additional shares of common
stock or other securities. We can give no assurance that we will be able to
access the capital markets in the future to obtain this additional capital or
that any newly issued shares will be sold at prices or on terms better than or
equal to those you receive in this offering. In addition, a future issuance of
common stock could dilute your ownership interests in Integrity Bancshares.
DETERRENT EFFECT OF ANTITAKEOVER PROVISIONS
Our Articles of Incorporation and Bylaws contain antitakeover
provisions that may deter an attempt to change or gain control of Integrity
Bancshares As a result, you may be deprived of opportunities to sell some or all
of your shares at prices that represent a premium over market prices. These
antitakeover provisions include the existence of staggered terms for the
directors, restrictions on the ability to change the number of directors or to
remove a director, supermajority voting requirements, and flexibility in
evaluating proposed actions. See "Description of Capital Stock of Integrity
Bancshares" (page 24) and "Important Provisions of the Articles of Incorporation
and Bylaws" (page 24).
ABILITY OF DIRECTORS AND OFFICERS TO INFLUENCE CORPORATE ACTIONS
After the offering, we anticipate that our directors and executive
officers will directly or indirectly own at least 190,000 shares, representing
approximately 27.1% of the minimum and 15.8% of the maximum number of shares to
be sold in this offering. As a result, our directors and executive officers will
be able to exercise significant control over Integrity Bancshares' management
and affairs. See "Description of Capital Stock of Integrity Bancshares" (page
24) and "Important Provisions of the Articles of Incorporation and Bylaws" (page
24).
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MANAGEMENT'S DISCRETION AS TO USE OF UNALLOCATED NET PROCEEDS
Integrity Bancshares and Integrity Bank intend to use the net proceeds
of this offering to capitalize Integrity Bank, purchase equipment and other
assets for Integrity Bank's operations, fund loans, provide working capital for
general corporate purposes, and pay offering, pre-opening and initial operating
expenses. The Georgia Department of Banking and Finance will require Integrity
Bancshares to contribute a minimum of $3.0 million to Integrity Bank as initial
capital. Our Board of Directors intends to contribute up to $10 million of the
proceeds of this offering, less amounts used to pay pre-opening expenses and
costs of this offering, to Integrity Bank.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus under the captions "Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Plan of Operations" and "Proposed Business of Integrity Bancshares and Integrity
Bank" and elsewhere in this prospectus are "forward-looking statements."
Forward-looking statements include, among other things, statements about the
competitiveness of the banking industry, potential regulatory obligations,
Integrity Bancshares' strategies and other statements that are not historical
facts. When used in this prospectus, the words "anticipate," "believe,"
"estimate" and similar expressions generally identify forward-looking
statements. Because forward-looking statements involve risks and uncertainties,
there are important factors that could cause actual results to differ materially
from those expressed or implied by the forward-looking statements. These factors
include, among other things:
- risks associated with starting a new business;
- a potential delay in beginning operations;
- a risk that Integrity Bancshares will be dissolved if
regulatory conditions are not satisfied;
- our dependence on our directors and key personnel;
- the potential adverse affect of competition;
- interest rate risks;
- the potential adverse affect of unpredictable economic
conditions;
- potential limitations on our growth resulting from low lending
limits; and
- other factors discussed under "Risk Factors."
THE OFFERING
MINIMUM/MAXIMUM
Integrity Bancshares is offering a minimum of 700,000 shares and a
maximum of 1,200,000 shares of its common stock for a price of $10.00 per share,
for a total minimum price of $7,000,000 and a total maximum price of
$12,000,000. The minimum purchase for any investor is 2,500 shares of common
stock, unless Integrity Bancshares, in its sole discretion, accepts a
subscription for a lesser number of shares. The maximum purchase for any
investor is 34,999 shares of common stock, unless Integrity Bancshares, in its
sole discretion, accepts a subscription for a greater number of shares.
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ORGANIZER SUBSCRIPTIONS
The organizers of Integrity Bancshares intend to purchase a total of
190,000 shares of common stock in this offering. This represents approximately
27.1% of the minimum and 15.8% of the maximum number of shares to be sold in
this offering. The organizers may also acquire additional shares of the common
stock, up to a maximum aggregate number for each individual organizer of 120,000
shares, in order to achieve the minimum subscription level necessary to release
subscription proceeds from escrow.
OFFERING PERIOD
The offering period for the shares will end when all of the shares of
the common stock are sold or 5:00 p.m., Georgia time, on July 31, 2000,
whichever occurs first. We may extend this date at our discretion for additional
periods not exceeding a total of 180 days (i.e., until January 31, 2001). We
will promptly notify subscribers of any extensions. The date on which this
offering ends plus any extension is referred to in this prospectus as the
"expiration date."
We also reserve the right to end the offering at any time after 700,000
shares have been subscribed if we determine that the total amount of
subscriptions will provide adequate capitalization for Integrity Bancshares
after payment of expenses.
HOW TO SUBSCRIBE
Preliminary nonbinding subscription. To subscribe, complete the
attached preliminary subscription agreement and return it to Integrity
Bancshares Since this is a preliminary prospectus, the preliminary subscription
agreements received by Integrity Bancshares,Inc. will not be binding on
subscribers. Preliminary subscription agreements should not be accompanied by
any subscription funds.
Final binding subscription. When this prospectus is finalized, we will
ask investors who have already submitted preliminary subscription agreements to
send us a check in the amount of $10.00 multiplied by the number of shares
subscribed. Our receipt of the check will convert the subscriber's preliminary
nonbinding subscription agreement into a final binding subscription agreement.
All other investors who wish to subscribe will need to send us a completed and
signed final subscription agreement and a check in the amount of $10.00
multiplied by the number of shares subscribed. All checks should be payable to
"Integrity Bancshares" ALL FINAL BINDING SUBSCRIPTIONS WILL BE IRREVOCABLE UNTIL
THE CLOSE OF THE OFFERING.
COMPANY DISCRETION
We reserve the right, in our sole discretion, to accept or reject any
subscription in whole or in part on or before the expiration date. If the
offering is over subscribed, we plan to give preference to subscribers who are
residents of Fulton County. We also reserve the right to accept subscriptions on
a first-come, first-served basis or on a prorated basis if we receive
subscriptions for more than 1,200,000 shares. We will notify all subscribers
within ten business days after the expiration date whether their subscriptions
have been accepted. If we do not accept all or a portion of a subscription, we
will also return the unaccepted portion of the subscription funds, without
interest.
ESCROW
We will promptly deposit all subscription proceeds in an escrow account
with our escrow agent, The Banker's Bank of Atlanta, located in Atlanta,
Georgia. The escrow agent will invest the subscription proceeds in short-term
United States Government securities, or interest bearing accounts offered by the
escrow agent, or in other short-term investments as we may agree upon with the
escrow agent. The escrow agent has not investigated the desirability or
advisability of an investment in Integrity Bancshares, and has not approved,
endorsed, or passed upon the merits of the common stock.
9
<PAGE> 14
RELEASE FROM ESCROW
The escrow agent will release the subscription proceeds to us when all
of the following events have occurred:
- we have received subscriptions and subscription proceeds for a
total of at least 700,000 shares of common stock;
- the Board of Governors of the Federal Reserve System and the
Georgia Department of Banking and Finance have approved
Integrity Bancshares' application to become a bank holding
company; and
- the Georgia Department of Banking and Finance has
preliminarily approved Integrity Bank's application to operate
as a state chartered bank.
If the above conditions are met, we may instruct the escrow agent to release to
us the subscription proceeds. We will not deposit in the escrow account any
subscription proceeds we receive after the above conditions are met but before
this offering ends. Instead, those funds will be available for our immediate
use.
If we do not meet the conditions to release the funds from the escrow
account by the expiration date then the escrow agent will return the
subscription agreements and the full amount of all subscription funds, without
interest, to subscribers within ten business days after the expiration date.
Although we have applied for all regulatory approvals required to begin
operations, we may not receive final approvals in a timely manner, if at all.
The closing of this offering is not conditioned upon our receiving final
approval to doing business. If after the close of this offering, we do not
receive final approval to start banking operations or we do not satisfy other
regulatory requirements, we will solicit shareholder approval for dissolution
and liquidation of Integrity Bancshares under Georgia law. If Integrity
Bancshares is dissolved and liquidated, we will distribute to shareholders our
net assets remaining after payment or provision for payment of all claims
against Integrity Bancshares Shareholders will receive only a portion, if any,
of their original investment because we will have used the proceeds of the
offering to pay all expenses and capital costs incurred by Integrity Bancshares
These expenses would include the expenses of the offering, the organizational
and pre-opening expenses of Integrity Bancshares and Integrity Bank and the
claims of creditors.
PLAN OF DISTRIBUTION
Integrity Bancshares' organizers will offer and sell the common stock
on a best-efforts basis without compensation. We may find it desirable to
utilize the services of brokers and/or dealers to sell the common stock. We have
no present arrangements with any brokers or dealers relating to this offering.
If we use brokers or dealers, they would sell the common stock on a best-efforts
basis, and we would pay them a commission based on the shares sold by them. We
do not expect that sales of common stock through brokers or dealers will
comprise a major part of this offering.
USE OF PROCEEDS
We estimate that the minimum net proceeds of the offering to Integrity
Bancshares will be $7 million and the maximum will be $12 million. The table
illustrates how we intend to use the net proceeds of this offering.
10
<PAGE> 15
<TABLE>
<CAPTION>
Minimum Maximum
------- -------
<S> <C> <C>
Repay amounts drawn on line of credit $ 500,000 $ 500,000
Working capital 6,500,000 11,500,000
Total $7,000,000 $12,000,000
========== ===========
</TABLE>
As of January 7, 2000, Integrity Bancshares had drawn $350,000 under
its line of credit with The Banker's Bank of Atlanta and had used these funds to
pay organizational and pre-opening expenses. Integrity Bancshares will
contribute up to $9.5 million of its working capital, less amounts used to pay
expenses of this offering, to Integrity Bank as capital when Integrity Bank
receives final regulatory approval. Any amounts received pursuant to this
offering which exceed $9.5 million, after repaying the line of credit and
deducting expenses of this offering, will be held by Integrity Bancshares for
working capital and for future investments.
Integrity Bancshares' offering expenses will consist primarily of
registration fees and legal, accounting, and printing expenses. Integrity
Bancshares will use its working capital initially for liquidity and thereafter
for expansion and for general purposes such as payment of operating expenses,
the provision of additional capital for Integrity Bank or the purchase of
certificates of deposit from Integrity Bank, if necessary or deemed desirable by
Integrity Bancshares.
After Integrity Bank receives the necessary regulatory approvals,
Integrity Bancshares will purchase all of Integrity Bank's common stock for a
minimum of $6,500,000 and a maximum of $9,500,000. Integrity Bank intends to use
these proceeds for the following purposes:
<TABLE>
<CAPTION>
Minimum Maximum
<S> <C> <C>
Purchase of land for Integrity Bancshares' main office $ 850,000 $ 850,000
Construction of the main office building $1,960,000 $1,960,000
Furniture, fixtures and equipment for Integrity Bank's main office $ 301,900 $ 301,900
Funds to be used for loans to customers, for investments and for $3,388,100 $6,388,100
other general purposes
Total $6,500,000 $9,500,000
========== ==========
</TABLE>
We estimate that Integrity Bank's organizational expenses will be
$499,410 and will include consulting fees, expenses for market analysis and
feasibility studies, and legal fees and expenses, pre-opening salaries and
benefits, as well as lease payments for the modular facility expected to be used
temporarily by Integrity Bank, marketing expenses, interest expenses, accounting
and other pre-opening expenses. Until we apply the net proceeds of this offering
to the specific purposes described above, we plan to invest them in short-term,
investment-grade securities, federal funds, certificates of deposit or
guaranteed obligations of the United States government. We anticipate earning
$141,750 in pre-opening interest income on these investments which will be used
to offset the organizational expenses.
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<PAGE> 16
CAPITALIZATION
The following table shows its pro forma consolidated capitalization, as
adjusted to give effect to the receipt of the net proceeds from the sale of a
minimum of 700,000 shares and a maximum of 1,200,000 shares of common stock in
this offering.
Steven M. Skow purchased 5 shares of common stock upon Integrity
Bancshares' incorporation. Integrity Bancshares will redeem these shares for
$50.00, which is the price Mr. Skow paid for the 5 shares.
<TABLE>
<CAPTION>
Actual Minimum Maximum
Shareholders' Equity January 7, 2000 As Adjusted As Adjusted
- -------------------- --------------- ------------- -------------
<S> <C> <C> <C>
Common stock, no par value; 10,000,000
shares authorized; 5 shares issued
($10.00 each) and outstanding; 700,000 and
1,200,000 shares, respectively, issued
($10.00 each) and outstanding as adjusted $ 50 $ 6,935,100 * $ 11,935,100 *
Accumulated deficit $ (350,000)** $ (357,660)*** $ (357,660)***
------------ ------------ ------------
Total shareholders' equity $ (350,000) $ 6,577,440 $ 11,577,440
============ ============ ============
Book value per share $ (70,000) $ 9.40 $ 9.65
============ ============ ============
</TABLE>
- -----------------------------
* We will charge the expenses of the offering against this account. We
estimate that our offering expenses will be $64,900, including legal,
accounting, printing and filing fees.
** This deficit reflects pre-opening expenses incurred through January 7,
2000, consisting primarily of professional and filing fees.
*** The "As Adjusted" accumulated deficit results from estimated
pre-opening expenses of $499,410 which we expect to incur through April
1, 2000, Integrity Bank's target opening date, less pre-opening income
estimated at $141,750. Actual pre-opening expenses may be higher and
may therefore increase the deficit accumulated during the pre-opening
stage and further reduce shareholders' equity.
DIVIDENDS
Integrity Bancshares does not plan to pay dividends in the foreseeable
future. Integrity Bancshares will initially have no source of income other than
dividends that Integrity Bank pays to it. Integrity Bancshares' ability to pay
dividends to its shareholders will therefore depend on Integrity Bank's ability
to pay dividends to Integrity Bancshares. Bank holding companies and state
chartered banks are both subject to significant regulatory restrictions on the
payment of cash dividends. In light of these restrictions and the need for
Integrity Bancshares and Integrity Bank to retain and build capital, it will be
the policy of each of their Boards of Directors to reinvest earnings for the
period of time necessary to help support the success of their operations. As a
result, we do not plan to pay dividends in the foreseeable future, if at all.
Our future dividend policy will depend on our earnings, capital
12
<PAGE> 17
requirements, financial condition and other factors that the Boards of Directors
of Integrity Bancshares and Integrity Bank consider relevant.
Additionally, regulatory authorities may determine, under certain
circumstances relating to the financial condition of Integrity Bank or Integrity
Bancshares, that the payment of dividends would be an unsafe or unsound practice
and to prohibit dividend payments. See "Supervision and Regulation- Payment of
Dividends."
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PLAN OF OPERATIONS
Integrity Bancshares' financial statements and related notes, which are
included in this prospectus, provide additional information relating to the
following discussion of its financial condition. See "Index to Financial
Statements."
Integrity Bancshares was organized on November 12, 1999, to serve as a
holding company for a proposed state chartered bank. Since it was organized, the
main activities of Integrity Bancshares have been centered on seeking,
interviewing and selecting its directors and officers, applying for a State of
Georgia bank charter, applying for FDIC deposit insurance, applying to become a
bank holding company and raising equity capital through this offering.
Integrity Bancshares' operations from its inception through the close
of the offering have been and will continue to be funded through a line of
credit from The Banker's Bank of Atlanta. The total amount available on the line
of credit is $500,000, of which approximately $350,000 was outstanding at
January 7, 2000. This loan bears interest at the prime rate of eight percent
(8%), and is due on September 16, 2000. Integrity Bancshares plans to repay the
line of credit after the closing of this offering.
From inception through December 15, 1999, Integrity Bancshares' net
loss amounted to $271,246. The estimated net loss for the period from inception
through April 1, 2000, the anticipated opening date of Integrity Bank, is
$499,410, which is attributable to the following estimated noninterest expenses:
<TABLE>
<S> <C>
legal fees...................................................... $ 45,000
consulting fees................................................. $148,844
pre-opening salaries............................................ $243,066
application, investigation, and registration fees............... $ 17,000
temporary office expenses....................................... $ 29,000
travel, printing, site fees, moving and misc.................. $ 16,500
--------
Total........................................................... $499,410
</TABLE>
On October 8, 1999, Integrity Bancshares executed a Purchase and Sale
Agreement for the purchase of approximately 1.3 acres of land at 11130 State
Bridge Road, Suite D-203, Alpharetta, Georgia 30022 at a purchase price of
$850,000. The land was purchased from James E. Bridges, a director of Integrity
Bancshares Integrity Bank will use this property as the site for its main
office. Integrity Bancshares intends to close the purchase and sale on or before
March 31, 2000 using either the net proceeds of this offering or borrowings
under the line of credit. After Integrity Bancshares contributes the proceeds of
this offering to Integrity Bank as capital, Integrity Bank will purchase the
property from Integrity Bancshares for the same price that Integrity Bancshares
paid for it. We anticipate that Integrity Bank will operate a modular banking
office on the property while a permanent building is under construction, and
expect to begin construction in April, 2000 and complete construction in
November, 2000. Integrity Bank will fund the construction of the main building,
estimated at $1,960,000, with the proceeds received from the issuance of its
stock to Integrity Bancshares. The construction contract will be with Richard H.
Peden, Sr., a director of Integrity Bancshares
13
<PAGE> 18
LIQUIDITY AND INTEREST RATE SENSITIVITY
Since Integrity Bancshares has been in the organizational stage, there
are no results to present concerning liquidity and interest rate sensitivity at
this time. Nevertheless, once Integrity Bank starts operations, net interest
income, Integrity Bancshares' primary source of earnings, will fluctuate with
significant interest rate movements. To lessen the impact of these margin
swings, we intend to structure the balance sheet so that repricing opportunities
exist for both assets and liabilities in roughly the same amounts at
approximately the same time intervals. Imbalance in these repricing
opportunities at any point in time constitutes interest rate sensitivity.
Interest rate sensitivity refers to the responsiveness of
interest-bearing assets and liabilities to change in market interest rates. The
rate sensitive position, or gap, is the difference in the volume of rate
sensitive assets and liabilities at a given time interval. The general objective
of gap management is to manage actively rate sensitive assets and liabilities to
reduce the impact of interest rate fluctuations on the net interest margin. We
will generally attempt to maintain a balance between rate sensitive assets and
liabilities as the exposure period is lengthened to minimize Integrity Bank's
overall interest rate risk.
We will regularly evaluate the asset mix of the balance sheet in terms
of several variables: yield, credit quality, appropriate funding sources and
liquidity. To effectively manage the balance sheet's liability mix, we plan to
focus on expanding Integrity Bank's deposit base and other sources of funds.
As Integrity Bank continues to grow, we will continuously structure
its rate sensitivity position to best hedge against rapidly rising or falling
interest rates. Their strategy will include anticipating future interest rate
movements.
Liquidity represents the 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 can obtain these funds by converting assets to cash or by
attracting new deposits. Integrity Bank's ability to maintain and increase
deposits will serve as its primary source of liquidity.
Other than the offering, we know of no trends, demands, commitments,
events or uncertainties that should result in or are reasonably likely to result
in Integrity Bancshares' liquidity increasing or decreasing in any material way
in the foreseeable future.
CAPITAL ADEQUACY
There are now two primary measures of capital adequacy for banks and
bank holding companies: (1) risk-based capital guidelines and (2) the leverage
ratio.
The risk-based capital guidelines measure the amount of a bank's
required capital in relation to the degree of risk perceived in its assets and
its off-balance sheet items. Under the risk-based capital guidelines, capital
is divided into two "tiers." Tier 1 capital consists of common shareholders'
equity, noncumulative and cumulative (bank holding companies only) perpetual
preferred stock and minority interests. Goodwill is subtracted from the total.
Tier 2 capital consists of the allowance for loan losses, hybrid capital
instruments, term subordinated debt and intermediate term preferred stock. Banks
are required to maintain a minimum risk-based capital ratio of 8.0%, with at
least 4.0% consisting of tier 1 capital.
The second measure of capital adequacy, implemented by federal bank
regulatory authorities, relates to the leverage ratio. The leverage ratio is
computed by dividing tier 1 capital into total assets. In the case of Integrity
Bank and other banks that have not received the highest regulatory rating by
their primary regulator, the minimum leverage ratio should be 3.0% plus an
additional cushion of at least 1% to 2%, depending upon risk profiles and other
factors.
14
<PAGE> 19
The Board of Governors of the Federal Reserve System and the FDIC
recently established a rule that adds a measure of interest rate risk to the
determination of supervisory capital adequacy. In connection with this new rule,
the agencies have also proposed a measurement process to measure interest rate
risk. Under this proposal, all items on the balance sheet, as well as
off-balance sheet items, would be reported according to maturity, repricing
dates and cash flow characteristics. The bank would then multiply its reporting
position by duration-based risk factors that weight its position according to
rate sensitivity. The appropriate supervisory agency would assess capital
adequacy using this net risk weighted position. The objective of this complex
proposal is to determine a bank's sensitivity to various rising and falling
interest rate scenarios.
We believe that the net proceeds of the offering will satisfy our cash
requirements for at least the five-year period following the opening of
Integrity Bank. Accordingly, we do not anticipate that it will be necessary to
raise additional funds to operate Integrity Bancshares or Integrity Bank over
the next five years. For additional information about planned expenditures, see
"Use of Proceeds." For additional information about our plan of operations, see
"Proposed Business of Integrity Bancshares and Integrity Bank" and "Management."
PROPOSED BUSINESS OF INTEGRITY BANCSHARES
AND INTEGRITY BANK
BACKGROUND
Integrity Bancshares. Integrity Bancshares was incorporated as a
Georgia corporation on November 12, 1999, to serve as a bank holding company for
Integrity Bank. Integrity Bancshares plans to use up to a maximum of $9,500,000
of the net proceeds of this offering to capitalize Integrity Bank. In return,
Integrity Bank will issue all of its common stock to Integrity Bancshares, and
Integrity Bancshares will be Integrity Bank's sole shareholder. Integrity
Bancshares has applied to the Georgia Department of Banking and Finance and will
apply to the Federal Reserve Bank of Atlanta for prior approval to capitalize
Integrity Bank as soon as it receives preliminary approval from the Georgia
Department of Banking and Finance. If these agencies grant the necessary
approvals, upon its purchase of Integrity Bank's common stock, Integrity
Bancshares will become a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as currently in effect, and the Georgia Bank
Holding Company Act upon its purchase of Integrity Bank's common stock. See
"Supervision and Regulation--General."
Integrity Bancshares has been organized to make it easier for Integrity
Bank to serve its future customers. The holding company structure will provide
flexibility for expansion of Integrity Bancshares' banking business through the
possible acquisition of other financial institutions and the provision of
additional capital and banking-related services that are permissible for bank
holding companies and for state chartered banks. A holding company structure
will make it easier to raise capital for Integrity Bank because Integrity
Bancshares will be able to issue securities without the need for prior banking
regulatory approval and the proceeds of any debt securities issued by Integrity
Bancshares can be invested in Integrity Bank as primary capital.
Integrity Bank. The organizers filed applications on behalf of
Integrity Bank with the Georgia Department of Banking and Finance and with the
FDIC on November 12, 1999 for authority to organize as a state chartered bank
with federally insured deposits. Integrity Bank will not be authorized to
conduct its banking business until it obtains a charter from the Georgia
Department of Banking and Finance. The issuance of the charter will depend,
among other things, upon Integrity Bank's receiving at least $6.5 million in
capital from Integrity Bancshares and upon compliance with other standard
conditions expected to be imposed by the FDIC and the Georgia Department of
Banking and Finance. These conditions are generally designed to familiarize
Integrity Bank with certain operating requirements and to prepare it to begin
business. The Georgia Department of Banking and Finance requires that a new
Georgia bank open for business within 24 months after receipt of preliminary
approval from the Georgia Department of Banking and Finance. Integrity Bank's
application to the Georgia Department of Banking
15
<PAGE> 20
and Finance to form a bank is pending. Integrity Bank's application to the FDIC
for deposit insurance also is pending.
MARKET OPPORTUNITIES
Primary service area. Most of Integrity Bank's potential customers
reside within five miles of its Alpharetta office. Our primary service area is
within three miles of the Alpharetta office. Our secondary service area adds an
additional two mile radius. Current projections indicate that the population of
these areas will reach 160,481 by 2004.
Economic and demographic factors. The city of Alpharetta is the key
economic focal point of Integrity Bank's primary service area. According to the
1990 Census, the population of the portion of Alpharetta lying within five miles
of Integrity Bank's office at that time was 65,397 persons. According to
information compiled by National Decision Systems, the median age of that
population is 35.17 and the median family income is $87,009.
Employment. Alpharetta's economy is strong and growing. Its employment
sectors are diversified, representing virtually all industries. Service
employment is the largest sector, providing 41% of the businesses and 30% of the
employees in the five mile area surrounding Integrity Bank. Retail trade is the
next largest contributor, providing 21% of the businesses and 20% of the
employees. Manufacturing is also important to the area's economy, providing
approximately 9% of the businesses and 13% of the employees.
Bank site. Integrity Bank will be located at 11130 State Bridge Road,
Suite D-203, Alpharetta, Georgia 30022, which is part of the Grand Pavillion
shopping center. We selected the site because of its proximity to a large number
of businesses and households in the Alpharetta market, which will allow us to
reach customers throughout Alpharetta. We propose to build a 16,000 sq. foot
building at this location and to operate in a temporary, modular facility at
this location while the building is under construction.
Competition. The banking business is highly competitive. Integrity Bank
will compete with other commercial banks, savings and loan associations, credit
unions, and money market mutual funds operating in Alpharetta. The three mile
radius surrounding Integrity Bank's location is currently served by 6 financial
institutions with a total of 10 branches. Bank of America (formally
NationsBank), with 4 branches, has the largest presence. Its branches control
32.74% of the $362.27 million in deposits in the area. Premier Bank, located at
3209 Buford Highway, Duluth, Georgia 30096, also has a significant presence. Its
single location controls 22.55% of the deposits in the area.
The five mile radius surrounding Integrity Bank's location is currently
served by 13 financial institutions with a total of 30 branches. Bank of
America, SunTrust, and SouthTrust, with 8, 6, and 3 branches respectively, have
the largest presence. Together, these 17 branches control 45.5% of the $845.74
million in deposits in the area.
The large regional banks tend to market their products to the masses
and to large companies, resulting in a reduction in personal service. We believe
that we will be able to effectively compete with these regional banks in our
market area by emphasizing personal service. Currently, Alpharetta has few
community banks as many have been acquired by larger regional and national
banks. We cannot guarantee, however, that community banks will not be opened in
the future which could present significant competition to Integrity Bank.
All of the banks in the Alpharetta area have grown rapidly over the
past five years and indications are that this growth will continue. The large
banks are likely to continue doing what they do best, which is to market to the
masses and to very large businesses. The community banks are likely to continue
to grow rapidly by competing for customers that want a more personal approach to
transacting business, as well as by generating new business from the rapidly
increasing population.
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<PAGE> 21
BUSINESS STRATEGY
Management philosophy. Integrity Bank's philosophy will be to operate
as a community bank emphasizing prompt, personalized customer service to the
individuals and businesses located in Alpharetta and its surrounding areas.
Integrity Bank has adopted this philosophy in order to attract customers and to
acquire market share now controlled by other financial institutions operating in
the market. We believe that local ownership and control will allow Integrity
Bank to serve customers more efficiently and will aid in Integrity Bank's growth
and success. Additionally, we believe that the expansion and growth of Integrity
Bank's operations will be a significant factor in the success of Integrity
Bancshares Accordingly, we will implement the following operating strategy.
Operating strategy. In order to achieve the level of prompt, responsive
service that we believe will be necessary to attract customers and to develop
Integrity Bank's image as a local bank with an individual focus, we will employ
the following operating strategies:
- - Asset Quality - To maintain overall asset quality Integrity Bank will
adhere to our loan policy and utilize our Loan Committee. It will
follow an investment policy to produce a high quality investment
portfolio and will obtain professional investment advice for this
purpose.
- - Profitability - To maintain overall bank profitability Integrity Bank
will move toward a net interest margin of 5% or better by providing
above market pricing and providing high quality service to our
customers. It will develop a sales program and sales culture that will
allow its staff to give the highest quality service in the market area
to obtain higher fees. Integrity Bank will offer a variety of fee-based
services that will enhance profitability.
- - Deposit Growth - To achieve core deposit growth Integrity Bank will
continue the development of a sales program that will keep it at the
top of the market area. We will emphasize servicing the customer's
needs and will develop services and products to fulfill those needs.
The staff will continue to be trained on proper sales technique, cross
selling to build multiple relationships. We intend to develop quality
service standards that will be followed. Integrity Bank will develop a
formal marketing plan to schedule marketing and advertising goals and
objectives. It will form an officer calling program to achieve sales
goals. Integrity Bank intends to coordinate its marketing efforts with
a local marketing firm.
- - Productivity - To maximize productivity, Integrity Bank will promote
employee education programs to develop quality employees, promote a
cross-training program to increase efficiency, conduct staff sessions
on time management and how-to-work-smart vs. long hours and utilize
computer systems capabilities to streamline operations. We will develop
action plans to increase non-interest income along with increasing core
deposit growth.
LENDING SERVICES
Lending policy. Integrity Bank is being established to support
Alpharetta and its surrounding areas. Consequently, Integrity Bank will
aggressively seek creditworthy borrowers within a limited geographic area.
Integrity Bank's primary lending function will be to make consumer loans to
individuals and commercial loans to small businesses and professional concerns.
In addition, Integrity Bank plans to make real estate related loans, including
construction loans for residential and commercial properties, and primary and
secondary mortgage loans for the acquisition or improvement of personal
residences. We project that consumer loans to individuals will comprise 10% of
the portfolio, commercial loans to small businesses will comprise 30% of the
portfolio, and real estate related loans (including both consumer and
commercial) will comprise 60% of the portfolio.
Loan approval and review. Integrity Bank's loan approval policies will
provide for various levels of officer lending authority. When the total amount
of loans to a single borrower exceeds that individual officer's lending
authority, an officer with a higher lending limit or Integrity Bank's Loan
Committee will determine whether to approve the loan request. Initially,
however, all loans regardless of amount will go to the Loan Committee.
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<PAGE> 22
Integrity Bank will not make a loan to its directors or executive officers
unless the Board of Directors approves the loan and the terms of the loan are no
more favorable than would be available to any other borrower.
Lending limits. Integrity Bank's lending activities will be subject to
a variety of lending limits imposed by federal and state law. Differing limits
apply in certain circumstances based on the type of loan or the nature of the
borrower, including the borrower's relationship to Integrity Bank. In general,
however, Integrity Bank will be able to loan any one borrower a maximum amount
equal to either: (1) 15% of Integrity Bank's capital and surplus or (2) 25% of
its capital and surplus if the excess over 15% is secured by good collateral or
other ample security. Based on the proposed capitalization of Integrity Bank and
its projected pre-opening expenses, Integrity Bank's initial lending limit will
be approximately $1,436,616 for loans not fully secured plus an additional
$957,744, for a total of approximately $2,394,360 million, for loans that are
secured by fully marketable securities. Integrity Bank has not yet established
any minimum or maximum loan limits other than the statutory lending limits
described above. These limits will increase or decrease as Integrity Bank's
capital increases or decreases as a result of its earnings or losses, among
other reasons. Integrity Bank will need to sell loan participations to other
financial institutions to meet the needs of customers requiring loans above
these limits.
Credit risks. The principal economic risk associated with each category
of the loans that Integrity Bank expects to make is the creditworthiness of the
borrower. Borrower creditworthiness is affected by general economic conditions
and the strength of the services and retail market segments. Risks associated
with real estate loans also include fluctuations in the value of real estate,
new job creation trends, tenant vacancy rates and, in the case of commercial
borrowers, the quality of the borrower's management. In addition, a commercial
borrower's ability both to evaluate properly changes in the supply and demand
characteristics affecting its markets for products and services and to respond
effectively to such changes are significant factors in the creditworthiness of a
commercial borrower. General economic factors affecting a borrower's ability to
repay include interest, inflation and employment rates, as well as other factors
affecting a borrower's customers, suppliers and employees.
The well established banks in the Alpharetta market are likely to make
proportionately more loans to medium to large-sized businesses than Integrity
Bank. Many of the commercial loans that Integrity Bank expects to make will
likely be made to small businesses which may be less able to withstand
competitive, economic and financial pressures than larger borrowers.
Real estate loans. Integrity Bank will make commercial real estate
loans, construction and development loans, and residential real estate loans in
and around the Alpharetta area. These loans include certain commercial loans
where Integrity Bank takes a security interest in real estate out of an
abundance of caution and not as the principal collateral for the loan, but will
exclude home equity loans, which are classified as consumer loans. Interest
rates may be fixed or adjustable. Integrity Bank will generally charge an
origination fee. We will attempt to reduce the credit risk of our commercial
real estate loans by emphasizing loans on owner-occupied office and retail
buildings where the ratio of the amount of the loan to the value of the
collateral, established by independent appraisals, does not exceed 80%. In
addition, we may require personal guarantees from the principal owners of the
property backed with a review by Integrity Bank's management of the personal
financial statements of the principal owners.
Integrity Bank will compete for real estate loans with competitors that
are well established in the Alpharetta market.
Integrity Bank may also originate mortgage loans for sale to
institutional investors in the secondary market. Integrity Bank intends to limit
interest rate risk and credit risk on these loans by locking in the interest
rate for each loan with the secondary market investor and receiving the
investor's underwriting approval before making the loan.
Commercial loans. We expect that loans for commercial purposes in
various lines of businesses will be one of the primary components of Integrity
Bank's loan portfolio. The terms of these loans will vary by their
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purpose and by their underlying collateral, if any. Integrity Bank will
typically make equipment loans for a term of seven years or less at fixed or
variable rates, with the loan fully amortized over the term. Equipment loans
generally will be secured by the financed equipment, and the ratio of the amount
of the loan to the value of the financed equipment or other collateral will
generally be 80% or less. Loans to support working capital will typically have
terms of one year or less and will usually be secured by accounts receivable,
inventory or personal guarantees of the principals of the business. For loans
secured by accounts receivable or inventory, principal will typically be repaid
as the assets securing the loan are converted into cash, and for loans secured
with other types of collateral, principal will typically be due at maturity.
Consumer loans. Integrity Bank will make a variety of loans to
individuals for personal, family and household purposes, including secured and
unsecured installment and term loans, home equity loans and lines of credit. We
expect that the principal competitors for consumer loans will be the established
banks in the Alpharetta market.
Lending officers. Integrity Bank intends to hire a commercial lender
and a consumer lender in order to develop its loan portfolios. We expect that
each lender will have experience in the Alpharetta market and will be expected
to bring substantial contacts to Integrity Bank.
INVESTMENTS
In addition to loans, Integrity Bank will make other investments
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other taxable securities. No
investment in any of those instruments will exceed any applicable limitation
imposed by law or regulation. The Investment Committee will review the
investment portfolio on an ongoing basis to ensure that investments are
profitable and conform to Integrity Bank's policy set by the Board of Directors.
ASSET AND LIABILITY MANAGEMENT
Integrity Bank intends to have its Investment Committee manage its
assets and liabilities. This committee will strive to provide an optimum and
stable net interest margin, a profitable after-tax return on assets and return
on equity, and adequate liquidity. The committee will conduct these management
functions within the framework of written loan and investment policies that
Integrity Bank will adopt. The committee will attempt to maintain a balanced
position between rate sensitive assets and rate sensitive liabilities.
Specifically, it will chart assets and liabilities on a matrix by maturity,
effective duration and interest adjustment period and attempt to manage any gaps
in maturity ranges.
DEPOSIT SERVICES
Integrity Bank will seek to establish solid core deposits, including
checking accounts, money market accounts, a variety of certificates of deposit
and IRA accounts. To attract deposits, Integrity Bank will employ an aggressive
marketing plan for the Alpharetta market, and will feature a broad product line
and competitive services. The primary sources of deposits will be residents of,
and businesses and their employees located within five miles of Integrity Bank's
location. Integrity Bank plans to obtain these deposits primarily through
personal solicitation by its officers and directors, direct mail solicitations,
radio advertisements during peak driving times, and advertisements published in
the local media. It plans to generate deposits by offering a broad array of
competitively priced deposit services, including demand deposits, regular
savings accounts, money market deposits, certificates of deposit, retirement
accounts and other legally permitted deposit or funds transfer services that may
be offered to remain competitive in the market.
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<PAGE> 24
OTHER BANKING SERVICES
Integrity Bank intends to provide traveler's checks, direct deposit of
payroll and social security checks, and automatic transfers for various
accounts. Integrity Bank also plans to become associated with a shared network
of automated teller machines that Bank customers will be able to use throughout
Georgia and other regions. We plan to offer MasterCard(R) and VISA(R) credit
card services through a correspondent bank as an agent for Integrity Bank.
Integrity Bank does not plan to exercise trust powers during its initial years
of operation. In the future, it may offer a full-service trust department, but
cannot do so without the prior approval of the Georgia Department of Banking and
Finance.
MARKETING AND ADVERTISING
Integrity Bank's target customers will be the residents and the small
businesses and their employees located within five miles of its location. We
intend to develop a niche in providing banking services to these customers.
We plan to use a targeted marketing approach through local newspapers,
radio advertisements during peak driving times, direct mail campaigns, and
television spots as necessary. Additionally, we plan to sponsor community
activities on an active, ongoing basis.
EMPLOYEES
Integrity Bank expects to have approximately 14 employees when it opens
for business. Integrity Bancshares does not expect to have any employees who are
not also employees of Integrity Bank.
Steven M. Skow is the President and Chief Executive Officer of
Integrity Bancshares and will be the President of Integrity Bank. Mr. Skow has
over 30 years of banking experience, including 22 years as a bank President and
Chief Executive Officer. Integrity Bancshares and Integrity Bank are currently
in the process of identifying and interviewing candidates for other key
employment positions.
FACILITIES
Integrity Bank will be located at 11130 State Bridge Road, Suite D-203,
Alpharetta, Georgia 30022, which lies within Fulton County. The facility
consists of approximately 16,000 square feet and will include 4 inside teller
stations and 2 drive-up teller stations.
Integrity Bank's proposed location offers high visibility in an area
with significant traffic, and is located within the main shopping and retail
area in Alpharetta, Georgia.
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<PAGE> 25
MANAGEMENT
PROPOSED EXECUTIVE OFFICERS AND DIRECTORS OF INTEGRITY BANCSHARES AND INTEGRITY
BANK
The following table sets forth, for the initial members of the Board of
Directors of both Integrity Bancshares and Integrity Bank:
(1) their names, addresses, and ages at December 31, 1999,
(2) their respective positions with Integrity Bancshares and
Integrity Bank,
(3) the number of shares of common stock they intend to purchase
in the offering,
(4) the percentage of the minimum number of 700,000 shares and the
maximum number of 1,200,000 shares that such number will
represent.
<TABLE>
<CAPTION>
Minimum/
Maximum
Percentage Of
Position(s) Number Outstanding
Name And Address (Age): To Be Held Of Shares Shares
- ----------------------- ---------- --------- -------------
<S> <C> <C> <C>
Steven M. Skow (52) Director/ 10,000 1.4%/0.8%
8900 Glen Ferry Drive President and
Alpharetta, GA 30022 Chief Executive
Officer
James E. Bridges (52) Director 20,000 2.9%/1.7%
3030 Castle Pines Drive
Duluth, GA 30097
Johnny E. Cunningham (56) Director 20,000 2.9%/1.7%
3268 Crow Mountain Road
Russellville, AR 72802
Clinton M. Day (40) Director 50,000 7.1%/4.17%
10775 Bell Road (Chairman
Duluth, GA 30097 of Board)
Kent Lee Hannah (42) Director 20,000 2.9%/1.7%
52 Lewellen Drive
Marietta, GA 30064
Don C. Hartsfield (63) Director 20,000 2.9%/1.7%
8340 Lanier Drive
Cumming, GA 30041
Richard H. Peden, Sr. (57) Director 30,000 4.3%/2.5%
4645 Candacraig
Alpharetta, GA 30022
</TABLE>
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<PAGE> 26
<TABLE>
<S> <C> <C> <C>
Charles J. Puckett (67) Director 10,000 1.4%/0.8%
3844 Highway 166
Douglasville, GA 30135
Gerald Oneal ("Neal") Reynolds (44) Director 10,000 1.4%/0.8%
95 Old Stratton Chase
Atlanta, GA 30328
</TABLE>
Each person listed above will be a director of both Integrity
Bancshares and Integrity Bank. Directors of Integrity Bancshares serve staggered
terms which means that one-third of the directors will be elected each year at
Integrity Bancshares' annual meeting of shareholders. The initial Class I
directors include James E. Bridges, Johnny E. Cunningham, and Clinton M. Day.
Their terms will expire in 2000. The initial Class II directors include Kent Lee
Hannah, Don C. Hartsfield, and Richard H. Peden, Sr. Their terms will expire in
2001. The initial Class III directors include Charles I. Puckett, Gerald Oneal
("Neal") Reynolds, and Steven M. Skow. Their terms will expire in 2003.
Thereafter, each director will serve for a term of three years. Integrity
Bancshares' officers are appointed by the Board of Directors and hold office at
the will of the Board. See "Important Provisions of the Articles of
Incorporation and Bylaws-Staggered Terms for Board of Directors."
Each of Integrity Bank's proposed directors will, upon approval by the
Georgia Department of Banking and Finance, serve until Integrity Bank's first
shareholders meeting, which will be held shortly after Integrity Bank receives
its charter. Integrity Bancshares, as the sole shareholder of Integrity Bank,
will nominate each proposed director to serve as director of Integrity Bank at
that meeting. After the first shareholders meeting, directors of Integrity Bank
will serve for a term of one year and will be elected by Integrity Bancshares
each year at Integrity Bank's annual meeting of shareholders. Integrity Bank's
officers will be appointed by its Board of Directors and will hold office at the
will of its Board.
Additional information about the directors of Integrity Bancshares and
Integrity Bank follows.
Steven M. Skow - Mr. Skow has 30 years of banking experience, with
the last 22 years as President and Chief Executive
Officer of high performing banks. Prior to joining
the organizational team for Integrity Bank in June of
1999, Mr. Skow had served as an independent bank
consultant since October of 1997. Mr. Skow served as
the President and Chief Executive Officer of First
National Bank & Trust Co. in Williston, North Dakota
from January 1991 until October 1997. His initial
term as director will expire in 2002.
James E. Bridges - Mr. Bridges has since 1975 served as the President
of JEBCO Ventures, Inc., a real estate developing
firm. His initial term as director will expire in
2000.
Johnny E. Cunningham - Mr. Cunningham has since 1972 served as the
President and General Manager of Cunningham Metals,
Inc, which processes and sells scrap metal. He also
serves as the President of River Valley Steel, JLC,
LLC, and Aspen Trading, and the Vice President of
Davis Iron & Metals. His initial term as director
will expire in 2000.
Clinton M. Day - Mr. Day has for the last 15 years served as the
President of Del South Restaurants, Inc., an
investment properties firm. He also holds interests
in several real estate investment companies and is a
Vice President of DCR, Inc. His initial term as
director will expire in 2000.
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<PAGE> 27
Kent Lee Hannah - Mr. Hannah has since December 1998 served as the
Vice President of Financial Administration of
Advanced Computer Technologies, a network services
company. Prior to that time he was the owner and
manager of Keystone Consulting Group, a recruiting
and staffing company which he started in 1993. His
initial term as director will expire in 2001.
Don C. Hartsfield - Mr. Hartsfield currently serves as the President of
DCH, Inc. (since 1994), D.H. Lands, Inc. (since
1992), Georgia 400 Office Park, Inc. (since 1997),
The Commerce Co. (since 1994), Overlook Associates,
Inc. (since 1986), Top-Spin, Inc. (since 1999), and
Eagle 75, LLC (since 1998), all of which are involved
in various real estate development projects. His
initial term as director will expire in 2001.
Richard H. Peden, Sr. - Mr. Peden has since 1968 been the owner and
President of U.S. General Construction, a
construction company. His initial term as director
will expire in 2001. His initial term as director
will expire in 2001.
Charles J. Puckett - Mr. Puckett has been retired since he sold People's
Dodge, a car dealership, in 1998. He had owned the
dealership since 1988. His initial term as director
will expire in 2002.
Gerald ONeal
("Neal") Reynolds - Mr. Reynolds has since 1990 served as the Chairman
and Chief Executive Officer of The Ad Shop, Inc., an
advertising agency. His initial term as director will
expire in 2002.
COMMITTEES OF THE BOARDS OF DIRECTORS
The Board of Directors of Integrity Bancshares has established the
committees described below. The members of each committee will be the same for
Integrity Bank and Integrity Bancshares
Loan committee. The Loan Committee will establish and update loan
policies, review loan management and administration, review loan approval
procedures, review loan loss reserve adequacy, review loan problems
administration, and review real estate appraisal policies and OREO management.
The initial members of the Loan Committee are expected to be James E. Bridges,
Don C. Hartsfield, Steven M. Skow, and Clinton M. Day.
Investment committee. The Investment Committee will establish and
update investment, liquidity, and asset/liability policies, monitor those
policies for compliance, monitor Integrity Bancshares' and Integrity Bank's
capital adequacy position, and set and monitor investment strategies. The
initial members of the Investment Committee are expected to be Gerald ONeal
("Neal") Reynolds, and Richard H. Peden, Sr.
Audit committee. The Audit Committee will review examinations and
responses to those examinations, select both internal and external auditors,
monitor internal controls, conduct annual audit planning, and conduct quarterly
meetings with the internal auditor. The initial members of the Audit Committee
are expected to be Kent L. Hannah, Charles J. Puckett, and Johnny E. Cunningham.
EXECUTIVE COMPENSATION
1999 COMPENSATION
The following table shows information for 1999 with regard to
compensation for services rendered in all capacities to Integrity Bancshares and
Integrity Bank by its Chief Executive Officer. No executive officer earned more
than $100,000 in salary and bonus in 1999.
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<PAGE> 28
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------------------------
Other (1)
Name and Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- ------------------ ---- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Steven M. Skow 1999 $40,000 $0 $25,344
President and Chief
Executive Officer
</TABLE>
(1) The $25,344 in other annual compensation consists of consulting fees
paid to Mr. Skow. Mr. Skow receives no long-term compensation.
Currently, Mr. Skow does not have an employment contract, which means his
employment may be terminated by any party at any time for any reason. Once
operational, Integrity Bank and Integrity Bancshares may enter into a joint
employment agreement with Mr. Skow which will have comparable terms as other
employment agreements with bank Chief Executive Officers with similar
experience. Any such employment agreement may contain provisions for long term
compensation through stock options, stock appreciation rights, or other similar
vehicles.
DIRECTOR COMPENSATION
Integrity Bancshares and Integrity Bank will not separately compensate
their directors for their service as directors until they have recovered all of
their losses. Thereafter, Integrity Bancshares and Integrity Bank may adopt
compensatory policies for their directors that conform to applicable law.
RELATED PARTY TRANSACTIONS
Integrity Bancshares has entered into a purchase and sale agreement
with James E. Bridges for the purchase of its site at 11130 State Bridge Road.
The purchase price for this land is $850,000, which is lower than the values
assigned to the property by two independent appraisals. All of the organizers
other than Mr. Bridges approved the purchase agreement and believe this price to
be fair. Integrity Bancshares also expects to enter into a construction contract
with Richard H. Peden, Sr. for the construction of its facility. The cost of the
construction, estimated to be $1,960,000, was approved by all of the organizers
other than Mr. Peden and is considered by them to be a fair price.
In addition to the above, Integrity Bancshares and Integrity Bank will
have banking and other business transactions in the ordinary course of business
with their directors and officers, including members of the directors' and
officers' families or corporations, partnerships or other organizations in which
their directors and officers have a controlling interest. If these transactions
occur, each transaction:
- will be on substantially the same terms, including price or
interest rate and collateral, as those prevailing at the time
for comparable transactions with unrelated parties, and any
banking transactions will not be expected to involve more than
the normal risk of collectibility or present other unfavorable
features to Integrity Bank;
- will be on terms no less favorable than could be obtained from
an unrelated party; and
- will be approved by a majority of the directors, including a
majority of the directors who do not have an interest in the
transaction.
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<PAGE> 29
DESCRIPTION OF CAPITAL STOCK OF INTEGRITY BANCSHARES
COMMON STOCK
Integrity Bancshares' Articles of Incorporation authorize it to issue
up to 10 million shares of common stock, no par value, of which a minimum of
700,000 up to a maximum of 1,200,000 shares will be issued in this offering.
All shares of common stock will be entitled to share equally in
dividends from legally available funds, when, as and if declared by Integrity
Bancshares Inc.'s Board of Directors. Upon Integrity Bancshares' voluntary or
involuntary liquidation or dissolution, all shares of common stock will be
entitled to share equally in all of Integrity Bancshares' assets available for
distribution to the shareholders. We do not anticipate that Integrity Bancshares
will pay any cash dividends on the common stock in the near future. Each holder
of common stock will be entitled to one vote for each share on all matters
submitted to the shareholders. Holders of common stock will not have any right
to acquire authorized but unissued capital stock of Integrity Bancshares
whenever it issues new shares of capital stock. No cumulative voting,
redemption, sinking fund or conversion rights or provisions apply to the common
stock. All shares of the common stock issued in the offering will be fully paid
and non-assessable.
IMPORTANT PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
ANTITAKEOVER PROVISIONS
The following is a description of the antitakeover provisions that are
in the Integrity Bancshares' articles of incorporation and bylaws.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Article 7 of Integrity Bancshares's articles of incorporation divides
the board of directors into three classes, Class I, Class II and Class III, each
of which is as nearly equal in numbers as possible. The directors in each class
will hold office for staggered terms of three years each, after initial terms of
one year, two years and three years, respectively. Each director also serves
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal. If the number of directors is modified, any
increase or decrease in directorships would be apportioned among the classes so
as to make all classes as nearly equal in number as possible.
CHANGE IN NUMBER OF DIRECTORS
Article 3.2 of Integrity Bancshares's bylaws provides that a change in
the number of directors of Integrity Bancshares would have to be made by the
affirmative vote of two-thirds of the entire board of directors or by the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of Integrity Bancshares stock. Article 8 of the articles of
incorporation of Integrity Bancshares provides that any amendment to this Bylaw
will require the affirmative vote of at least two-thirds of the issued and
outstanding shares of Integrity Bancshares stock. The applicable provisions of
the Georgia Business Corporation Code provide that, in the absence of a
provision such as article 8, the number of directors may be increased or
decreased from time to time as provided in the bylaws unless the number of
directors is otherwise fixed by the shareholders.
REMOVAL OF DIRECTORS
Article 9 of the articles of incorporation of Integrity Bancshares
provides that directors of Integrity Bancshares may be removed during their
terms for "cause" by the affirmative vote of the holders of a majority of the
outstanding shares of Integrity Bancshares stock or by the affirmative vote of a
majority of the directors then in office. They may be removed without cause only
by the affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares. The articles of incorporation define "cause" for this
purpose as final conviction of a felony, request or demand for removal by any
bank regulatory authority having jurisdiction over Integrity Bancshares,
adjudication as an incompetent by a court, determination by at least two-thirds
of the incumbent directors of Integrity Bancshares that the conduct of the
director to be removed has been inimical to the best interest of Integrity
Bancshares, or the director was an employee or officer of Integrity Bancshares
or any of its subsidiaries and was discharged or resigned at the request of the
board of directors of Integrity Bancshares or any subsidiary of Integrity
Bancshares for reasons relating to the performance of his or her duties.
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<PAGE> 30
In the absence of a provision dealing with the removal of directors,
such as article 9, the Georgia Business Corporation Code provides that if the
directors have staggered terms, then the shareholders may remove directors only
for cause, unless the articles of incorporation or a bylaw adopted by the
shareholders provides otherwise.
ADVANTAGES AND DISADVANTAGES OF ARTICLES 7, 8 AND 9
Articles 7, 8 and 9 of Integrity Bancshares' articles of incorporation
would make it more difficult for shareholders of Integrity Bancshares, including
those holding a majority of the outstanding shares of Integrity Bancshares
stock, to force an immediate change in the composition of a majority of the
board of directors, even if the reason for the change was the performance of the
present directors. Under article 7, the terms of only one-third of the incumbent
directors will expire each year, provided no new directorships are created and
no directors resign or are removed from office. Under article 8 and article 3.2
of Integrity Bancshares' bylaws, it will be more difficult to create new
directorships, and under article 9, it will be more difficult to remove
directors without cause. Accordingly, generally two annual shareholders'
meetings will be required to change a majority of the directors of Integrity
Bancshares instead of one such meeting.
The board believes that articles 7, 8 and 9 will help to assure
continuity and stability in the leadership and policies of Integrity Bancshares.
We also believe that these articles will enable Integrity Bancshares to protect
the interests of its shareholders in the event that another party, through a
takeover bid or otherwise, obtains a substantial number of shares of Integrity
Bancshares stock.
It would be impossible, assuming that no new directorships were
created, no directors resigned and no directors were removed from office, for
shareholders to change a majority of the directors at any one annual meeting
should they consider such a change desirable unless the shareholders controlled
sufficient votes to amend articles 7, 8 or 9 (two-thirds of the outstanding
shares). Although articles 7, 8 and 9 will make it more difficult to acquire
operating control of Integrity Bancshares in an unfriendly manner, directors who
oppose or who are discouraged by new controlling shareholders might resign,
thereby allowing directors elected by the new controlling shareholders to fill
the vacancies created by such resignations.
SUPERMAJORITY VOTING ON CERTAIN TRANSACTIONS
Article 13 of the articles of incorporation of Integrity Bancshares,
provides, with certain exceptions, that any merger or share exchange involving
Integrity Bancshares or any sale or other disposition of all or substantially
all of its assets will require the affirmative vote of the holders of at least
two-thirds of the issued and outstanding shares of Integrity Bancshares stock.
However, an exception to this rule exists where the board of directors of
Integrity Bancshares has approved the particular transaction by the affirmative
vote of more than two-thirds of the entire board. In cases where this exception
applies, the applicable provisions of the Georgia Business Corporation Code
govern, and shareholder approval of the transaction would require a favorable
vote by a majority of all votes entitled to be cast.
The primary purpose of this article is to discourage any party from
attempting to acquire control of Integrity Bancshares without negotiation with
the board of directors. Such a merger or sale might not be in the best interests
of Integrity Bancshares or its shareholders. This provision may also serve to
reduce the risk of a potential conflict of interest between a substantial
shareholder on the one hand and Integrity Bancshares and its other shareholders
on the other.
You should recognize that the foregoing provision could enable the
holders of a minority of the shares of Integrity Bancshares stock to prevent a
transaction favored by the holders of a majority of such shares. Also, in some
circumstances, the board of directors could, by withholding its consent to such
a transaction, cause a two-thirds vote to be required to approve the
transaction, thereby enhancing the ability of management to retain control over
the affairs of Integrity Bancshares and their positions with Integrity
Bancshares. However, of the nine persons who are directors of Integrity
Bancshares, only one is affiliated with Integrity Bancshares or one of its
subsidiary banks in full-time management positions.
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<PAGE> 31
EVALUATION OF AN ACQUISITION PROPOSAL
Article 14 provides that the response of Integrity Bancshares to any
acquisition proposal made by another party will be based on the board's
evaluation of the best interests of Integrity Bancshares and its shareholders.
As used in this Prospectus, an acquisition proposal refers to any offer of
another party:
1. to make a tender offer or exchange offer for any equity
security of Integrity Bancshares;
2. to merge or consolidate Integrity Bancshares with another
corporation; or
3. to purchase or otherwise acquire all or substantially all of
the assets owned by Integrity Bancshares.
Article 14 charges the board, in evaluating an acquisition proposal, to
consider all relevant factors, including:
- the expected social and economic effects of the transaction on
the employees, customers and other constituents (e.g.,
suppliers of goods and services) of Integrity Bancshares and
its subsidiaries;
- the expected social and economic effects on the communities
within which Integrity Bancshares and its subsidiaries
operate; and
- the consideration being offered by the other corporation in
relation
- to the then current value of Integrity Bancshares as
determined by a freely negotiated transaction; and
- to the board of directors' then estimate of Integrity
Bancshares' future value as an independent entity.
The enumerated factors are not exclusive, and the board may consider other
relevant factors.
Integrity Bancshares included this article in its articles of
incorporation because banks are charged with providing support to and being
involved with the communities they serve. The board believes its obligations in
evaluating an acquisition proposal extend beyond evaluating merely the
consideration being offered in relation to the then market or book value of
Integrity Bancshares stock. Neither the Georgia Business Corporation Code nor
the Georgia Financial Institutions Code specifically enumerates the factors the
board of directors of a corporation or a bank, respectively, should consider in
the event the corporation or the bank is presented with an acquisition proposal.
While the value of the consideration offered to shareholders is the
main factor when weighing the benefits of an acquisition proposal, the board
believes it appropriate also to consider all other relevant factors. For
example, this article directs the board to evaluate the consideration being
offered in relation to the then current value of Integrity Bancshares determined
in a freely negotiated transaction and in relation to the board's then estimate
of the future value of Integrity Bancshares as an independent concern. A
takeover bid often places the target corporation virtually in the position of
making a forced sale, sometimes when the market price of its stock may be
depressed. The board believes that frequently the consideration offered in such
a situation, even though it may be in excess of the then market value (i.e., the
value at which shares are then currently trading), is less than that which could
be obtained in a freely negotiated transaction. In a freely negotiated
transaction, management would have the opportunity to seek a suitable partner at
a time of its choosing and to negotiate for the most favorable price and terms
which reflect not only the current value, but also the future value of Integrity
Bancshares.
One effect of this article may be to discourage a tender offer in
advance. Often a potential acquirer consults the board of a target corporation
prior to or after commencing a tender offer in an attempt to avoid a contest
from developing. In the opinion of the board, this provision will strengthen its
position in dealing with any potential acquirer which might attempt to acquire
Integrity Bancshares through a hostile tender offer. Another effect of this
article may be to dissuade shareholders who might be displeased with the board's
response to an acquisition
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<PAGE> 32
proposal from engaging Integrity Bancshares in costly litigation. This
provision, however, does not affect the right of a shareholder displeased with
the board's response to an acquisition proposal to institute litigation against
Integrity Bancshares and to allege that the board breached an obligation to
shareholders by not limiting its evaluation of an acquisition proposal to the
value of the consideration being offered in relation to the then market or book
value of Integrity Bancshares stock.
Article 14 would not make an acquisition proposal regarded by the board
as being in the best interests of Integrity Bancshares more difficult to
accomplish. It would, however, permit the board to determine that an acquisition
proposal was not in the best interests of Integrity Bancshares (and thus to
oppose it) on the basis of the various factors deemed relevant. In some cases,
such opposition by the board might have the effect of maintaining the positions
of incumbent management.
AMENDMENT OF ANTITAKEOVER PROVISIONS
Any amendment of articles 7, 8, 9, 13 and 14 of Integrity Bancshares'
articles of incorporation requires the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Integrity Bancshares stock, unless
two-thirds of the entire board of directors approves the amendment. If
two-thirds of the board approves the amendment, the applicable provisions of the
Georgia Business Corporation Code would govern, and the amendment would be
approved by a majority of the shares entitled to be cast on the amendment.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Integrity Bancshares' articles of incorporation eliminate a director's
personal liability for breach of duty as a director to the fullest extent
permitted by law.
Integrity Bancshares' bylaws provide for indemnification to the fullest
extent permitted by law. Federal law prohibits Integrity Bancshares from paying
any indemnification with respect to any liability or legal expense incurred by a
director, officer, or employee as result of an action or proceeding by a federal
banking agency resulting in a civil money penalty or certain other remedies
against such person.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
Integrity Bancshares pursuant to the foregoing provisions, Integrity Bancshares
has been informed that in the opinion of the SEC indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, Integrity Bancshares will have a
minimum of 700,000 and a maximum of 1,200,000 shares of common stock
outstanding. These shares will be freely tradable without restriction, except
that "affiliates" of Integrity Bancshares must comply with the registration
requirements of the Securities Act of 1933 or an exemption from registration,
such as an exemption provided by Rule 144.
Rule 144 defines an affiliate of a company as a person who directly or
indirectly controls, or is controlled by, or is under common control with, the
company. Affiliates of a company generally include its directors, officers and
principal shareholders.
Each of Integrity Bancshares' affiliates who purchases common stock in
this offering may sell under Rule 144, within any three-month period, such
number of shares of common stock that does not exceed the greater of:
(1) 1% of the outstanding shares of common stock, or
(2) Integrity Bancshares' average weekly trading volume during the
four calendar weeks preceding the affiliate's proposed sale.
Sales by affiliates under Rule 144 are also subject to certain manner
of sale provisions, notice requirements and the availability of current public
information about Integrity Bancshares.
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<PAGE> 33
Prior to the offering, there has not been a public market for the
common stock, and we cannot predict the effect, if any, that the sale of shares
or the availability of shares for sale will have on the market price prevailing
from time to time. Nevertheless, sales of substantial amounts of common stock on
the public market could adversely affect prevailing market prices and the
ability of Integrity Bancshares to raise equity capital in the future.
SUPERVISION AND REGULATION
The following discussion sets forth the material elements of the
regulatory framework that applies to banks and bank holding companies and
provides certain specific information related to Integrity Bancshares
GENERAL
Integrity Bancshares will be a bank holding company registered with the
Board of Governors of the Federal Reserve System under the Bank Holding Company
Act of 1956 and the Georgia Department of Banking and Finance under the Georgia
Bank Holding Company Act, as currently in effect. As a result, Integrity
Bancshares and any future non-bank subsidiaries it establishes will be subject
to the supervision, examination, and reporting requirements of these acts and
the regulations of the Federal Reserve and the Georgia Department of Banking and
Finance issued under these acts.
The Bank Holding Company Act requires every bank holding company to
obtain the Federal Reserve's prior approval before:
(1) it may acquire direct or indirect ownership or control of any
voting shares of any bank if, after the acquisition, the bank
holding company will directly or indirectly own or control
more than 5% of the bank's voting shares;
(2) it or any of its non-bank subsidiaries may acquire all or
substantially all of the assets of any bank; or
(3) it may merge or consolidate with any other bank holding
company.
The Bank Holding Company Act further provides that the Federal Reserve
may not approve any transaction that would result in or tend to create a
monopoly, substantially lessen competition or otherwise function as a restraint
of trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. The Federal Reserve's consideration of financial resources generally
focuses on capital adequacy, which is discussed below.
Integrity Bancshares and any other bank holding company located in
Georgia may acquire a bank located in any other state, and any bank holding
company located outside of Georgia may acquire any Georgia-based bank,
regardless of state law to the contrary. In either case, certain
deposit-percentage, aging requirements, and other restrictions apply. National
and state-chartered banks may branch across state lines by acquiring banks in
other states. By adopting legislation prior to June 1, 1997, a state could elect
either to "opt in" and accelerate the date after which interstate branching
would be permissible or "opt out" and prohibit interstate branching altogether.
The Georgia Interstate Banking Act provides that interstate acquisitions by or
of institutions located in Georgia are permitted in states that also allow
national interstate acquisitions. The Georgia Interstate Branching Act permits
Georgia-based banks and bank holding companies owning or acquiring banks outside
of Georgia and all non-Georgia banks and bank holding companies owning or
acquiring banks in Georgia to merge any lawfully acquired bank into an
interstate branch network. The Georgia Interstate Branching Act also allows
banks to establish new branches throughout Georgia.
Except as amended by the Gramm-Leach-Bliley Act of 1999 discussed
below, the Bank Holding Company Act generally prohibits Integrity Bancshares
from engaging in activities other than banking or managing or controlling banks
or other permissible subsidiaries and from acquiring or keeping direct or
indirect control of any company engaged in any activities other than those
activities that the Federal Reserve determines that to be closely related to
banking or managing or controlling banks. In determining whether a particular
activity is permissible, the
29
<PAGE> 34
Federal Reserve must consider whether the activity reasonably can be expected to
produce benefits to the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased or unfair competition,
conflicts of interest, or unsound banking practices. For example, the Federal
Reserve has determined that factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities are permissible activities of bank holding
companies. The Bank Holding Company Act does not place territorial limitations
on permissible non-banking activities of bank holding companies. Despite prior
approval, the Federal Reserve may order a holding company or its subsidiaries to
terminate any activity or ownership or control of any subsidiary when it has
reasonable cause to believe that the holding company's continued activity,
ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiaries.
Integrity Bank is a Georgia chartered commercial bank. As a result, it
is subject to the supervision, examination and reporting requirements of the
Georgia Department of Banking and Finance and the FDIC. The FDIC and the Georgia
Department of Banking and Finance regularly examine the operations of Georgia
chartered banks and are given the authority to approve or disapprove mergers,
consolidations, the establishment of branches and similar corporate actions. The
FDIC and the Georgia Department of Banking and Finance also have the power to
prevent the continuance or development of unsafe or unsound banking practices or
other violations of law.
GRAMM-LEACH-BLILEY ACT OF 1999
President Clinton signed the Gramm-Leach-Bliley Act of 1999, which
reforms financial services regulation, into law on November 12, 1999. This new
law covers various topics such as insurance, unitary thrifts, privacy protection
provisions for customers of financial institutions, the Federal Home Loan Bank
system's modernization, automatic teller machine reform, the Community
Reinvestment Act and certain changes related to the securities industry. This
new law also eliminates legal barriers to affiliations among banks and
securities firms, insurance companies, and other financial services companies.
The Gramm-Leach-Bliley Act amends the Bank Holding Company Act to
clarify that a bank holding company may hold shares of any company that the
Federal Reserve Board determined, as of the day before the date of enactment of
the Gramm-Leach-Bliley Act, to be engaged in activities that were sufficiently
closely related to banking. This act also amends the Bank Holding Company Act to
establish a new type of bank holding company--the "financial holding company".
Pursuant to the Gramm-Leach-Bliley Act, financial holding companies have the
authority to engage in financial activities in which other bank holding
companies may not engage. Financial holding companies may also affiliate with
companies that are engaged in financial activities. These financial activities
include activities that are:
- financial in nature;
- incidental to an activity that's financial in nature; or
- complimentary to a financial activity and don't pose a
substantial risk to the safety and soundness of depository
institutions or the financial system in general.
The Federal Reserve Board and the Secretary of the Treasury may determine which
activities meet these standards. However, the Gramm-Leach-Bliley Act lists
certain activities as being financial in nature. For example, some of these
activities are:
- lending, exchanging, transferring, investing for others, or
safeguarding money or securities;
- insuring, guaranteeing, or indemnifying against loss, harm,
damage, illness, disability, or death, or providing and
issuing annuities, and acting as principal, agent, or broker
for these purposes in any state;
- providing financial, investment or economic advice;
30
<PAGE> 35
- issuing or selling interests in pools of assets that a bank
could hold directly;
- underwriting, dealing in or making markets in securities;
- engaging in any activity that the Federal Reserve Board
determined by an order or regulation that's in effect on the
date of enactment of the Gramm-Leach-Bliley Act to be related
closely to banking; and
- engaging within the United States in any activity that a bank
holding company could engage in outside of the United States,
if the Federal Reserve Board found before the
Gramm-Leach-Bliley Act that the activity was usual in
connection with banking or other financial operations
internationally.
The Gramm-Leach-Bliley Act also directs the Federal Reserve Board to
adopt a regulation or order defining certain additional activities as financial
in nature, to the extent that they are consistent with that act. These include:
- lending, exchanging, transferring, investing for others or
safeguarding financial assets other than money or securities;
- providing any device or other instrumentality for transferring
financial assets; and
- arranging, effecting or facilitating financial transactions
for third parties.
Not all bank holding companies may become financial holding companies.
A bank holding company must meet three requirements before becoming a financial
holding company:
- all of the bank holding company's depository institution
subsidiaries must be well capitalized;
- all of the bank holding company's depository institution
subsidiaries must be well managed; and
- the bank holding company must file with the Federal Reserve
Board a declaration of its election to become a financial
holding company, including a certification that its depository
institution subsidiaries meet the prior two criteria.
With only a few exceptions, in order to exercise the powers granted to them
under the Gramm-Leach-Bliley Act, a financial holding company or insured
depository institution also must meet the Community Reinvestment Act's
requirements. If any insured depository institution, insured depository
institution affiliate, or insured depository institution subsidiary of a
financial holding company didn't receive a Community Reinvestment Act rating of
at least "satisfactory record of meeting community credit needs" at its most
recent Community Reinvestment Act examination, the regulatory agencies are to
prevent the insured depository institution or financial holding company from
exercising the new powers, either directly or through a subsidiary.
A company that is not a bank holding company nor a foreign bank, which
becomes a financial holding company, may be able to continue to engage in
nonfinancial activities and the company may be able to keep its ownership
interests in other companies that are engaged in nonfinancial activities. The
ability to continue the nonfinancial activities or keep ownership interests in
other companies that are engaged in nonfinancial activities lasts for ten years
after the Gramm-Leach-Bliley Act's enactment and may be extended for an
additional five-year term if granted by the Federal Reserve Board pursuant to an
application. In order to continue in the nonfinancial activities:
- the holding company must have been engaged in the nonfinancial
activity or held the shares in the other companies engaged in
nonfinancial activities on September 30, 1999;
- the holding company must be predominantly engaged in financial
activities; and
31
<PAGE> 36
- the company engaged in the nonfinancial activity must continue
to engage in the same nonfinancial activities it did on
September 30, 1999 and engage in other authorized activities
under the Gramm-Leach-Bliley Act.
A holding company is predominantly engaged in financial activities
where at least 85% of the consolidated annual gross revenues of the holding
company and its subsidiaries, other than depository institutions, come from
financial activities.
PAYMENT OF DIVIDENDS
Integrity Bancshares is a legal entity separate and distinct from
Integrity Bank. The principal sources of Integrity Bancshares' cash flow,
including cash flow to pay dividends to its shareholders, are dividends that
Integrity Bank pays to its sole shareholder, Integrity Bancshares Statutory and
regulatory limitations apply to Integrity Bank's payment of dividends to
Integrity Bancshares as well as to Integrity Bancshares' payment of dividends to
its shareholders.
If, in the opinion of the FDIC, Integrity Bank were engaged in or about
to engage in an unsafe or unsound practice, such authority could require, after
notice and a hearing, that Integrity Bank cease and desist from its practice.
The federal banking agencies have indicated that paying dividends that deplete a
depository institution's capital base to an inadequate level would be an unsafe
and unsound banking practice. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991, a depository institution may not pay any dividend if
payment would cause it to become undercapitalized or if it already is already
undercapitalized. Moreover, the federal agencies have issued policy statements
that provide that bank holding companies and insured banks should generally only
pay dividends out of current operating earnings. See "Prompt Corrective Action"
below.
The Georgia Financial Institutions Code and the Georgia Banking
Department's regulations provide:
- - that dividends of cash or property may be paid only out of the bank's
retained earnings;
- - that dividends may not be paid if the banks' paid-in capital and
retained earnings which are set aside for dividend payment and other
distributions do not, in combination, equal at least 20% of the bank's
capital stock; and
- - that dividends may not be paid without prior approval of the Georgia
Banking Department if
- the bank's total classified assets at its most recent
examination exceed 80% of its equity capital;
- the aggregate amount of dividends to be declared exceeds 50%
of the bank's net profits after taxes but before dividends for
the previous calendar year; or
- the ratio of equity capital to total adjusted assets is less
than 6%.
The payment of dividends by Integrity Bancshares and Integrity Bank may
also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Integrity Bancshares and Integrity Bank will be required to comply with
the capital adequacy standards established by the Federal Reserve in the case of
Integrity Bancshares and the Georgia Department of Banking and Finance in the
case of Bank. The Federal Reserve has established two basic measures of capital
adequacy for bank holding companies - a risk-based measure and a leverage
measure. A bank holding company must satisfy all applicable capital standards to
be considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items are assigned to broad
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<PAGE> 37
risk categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. At least half of total capital must comprise common stock,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets, of 3% for bank holding companies that meet certain specified
criteria including having the highest regulatory rating. All other bank holding
companies generally are required to maintain a leverage ratio of at least 3%,
plus an additional cushion of 100 to 200 basis points. The guidelines also
provide that bank holding companies experiencing internal growth, as will be the
case for Integrity Bancshares, or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum supervisory
levels without significant reliance on intangible assets. Furthermore, the
Federal Reserve has indicated that it will consider a bank holding company's
Tier 1 Capital leverage ratio, after deducting all intangibles, and other
indicators of capital strength in evaluating proposals for expansion or new
activities.
Integrity Bank will be subject to risk-based and leverage capital
requirements adopted by the Georgia Department of Banking and Finance, which are
substantially similar to those adopted by the Federal Reserve for bank holding
companies.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed on FDIC-insured
depository institutions that fail to meet applicable capital requirements.
See "Prompt Corrective Action."
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Integrity Bancshares is expected to act
as a source of financial strength for, and to commit resources to support,
Integrity Bank. This support may be required at times when, without this Federal
Reserve policy, Integrity Bancshares might not be inclined to provide it. In
addition, any capital loans by a bank holding company to its subsidiary bank
will be repaid only after its deposits and certain other indebtedness are repaid
in full. In the event of a bank holding company's bankruptcy, any commitment by
the bank holding company to a federal bank regulatory agency to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
established a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system, the federal banking regulators
have established five capital categories (well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized), and are required to take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, relating to
institutions in the three undercapitalized categories. The severity of the
action will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the banking regulator must appoint a
receiver or conservator for an institution that is critically undercapitalized.
The federal banking agencies have specified by regulation the relevant capital
level for each category.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate banking agency. A bank
holding company must guarantee that a subsidiary depository institution meets
its capital restoration plan, subject to certain limitations. The controlling
holding company' obligation to fund a capital restoration plan is limited to the
lesser of 5% of an undercapitalized subsidiary's assets or the amount required
to meet regulatory
<PAGE> 38
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches, or engaging in any new line of business, except under
an accepted capital restoration plan or with FDIC approval. In addition, the
appropriate federal banking agency may treat an undercapitalized institution in
the same manner as it treats a significantly undercapitalized institution, if it
determines that those actions are necessary.
FDIC INSURANCE ASSESSMENTS
The FDIC has adopted a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The system
assigns an institution to one of three capital categories: (1) well capitalized;
(2) adequately capitalized; and (3) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. The FDIC also assigns an
institution to one of three supervisory subgroups within each capital group. The
supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation that the institution's primary federal regulator provides
to the FDIC and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. The FDIC determines an institution's insurance assessment rate based on
the institution's capital category and supervisory category. Under the
risk-based assessment system, there are nine combinations of capital groups and
supervisory subgroups to which different assessment rates are applied.
Assessments range from 0 to 27 cents per $100 of deposits, depending on the
institution's capital group and supervisory subgroup.
Effective January 1, 1997, the FDIC imposed assessments to help repay
the $780 million in annual interest payments on the $8 billion of Financing
Corporation bonds issued in the late 1980s as part of the government rescue of
the thrift industry. The FDIC will assess banks at a rate of 1.3 cents per $100
of deposits until December 31, 1999. Thereafter, it will add approximately 2.4
cents per $100 of deposits to each assessment.
The FDIC may terminate an institution's deposit insurance if it finds
that the institution has engaged in unsafe and unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC.
PROPOSED LEGISLATION AND REGULATORY ACTION
New regulations and statutes are regularly proposed that contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. We cannot predict whether
or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.
LEGAL MATTERS
Miller & Martin LLP, Atlanta, Georgia, will pass upon the validity of
the shares of common stock offered by this prospectus.
REPORTS TO SHAREHOLDERS
Upon the effective date of the Registration Statement on Form SB-2 that
registers the shares of common stock offered by this prospectus with the
Securities and Exchange Commission, Integrity Bancshares will be subject to the
reporting requirements of the Securities Exchange Act of 1934, as currently in
effect, which include requirements to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Securities and Exchange Commission.
This reporting obligation will exist at least through the end of this fiscal
year and will continue for fiscal years thereafter, except that these reporting
obligations may be suspended for any subsequent fiscal year if at the beginning
of the year the common stock is held of record by less than 300 persons.
At any time that Integrity Bancshares is not a reporting company, it
will furnish its shareholders with annual reports containing audited financial
information for each fiscal year on or before the date of the annual meeting of
shareholders as required by Rule 80-6-1-.05 of the Georgia Department of Banking
and Finance.
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Integrity Bancshares' fiscal year ends on December 31. Additionally, Integrity
Bancshares will also furnish such other reports as it may determine to be
appropriate or as otherwise may be required by law.
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<PAGE> 40
EXPERTS
Integrity Bancshares' audited financial statements at January 12, 2000,
and from the period from June 11, 1999 (inception) until January 12, 2000,
included in this prospectus have been included in reliance on the report of
Mauldin & Jenkins, LLC, independent certified public accountants, given on the
authority of that firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
Integrity Bancshares has filed with the Securities and Exchange
Commission a Registration Statement on Form SB-2 under the Securities Act of
1933, as currently in effect, relating to the shares of common stock offered by
this prospectus. This prospectus does not contain all of the information
contained in the Registration Statement. For further information about Integrity
Bancshares and the common stock, we refer you to the Registration Statement and
its exhibits. The Registration Statement may be examined and copied at the
public reference facilities maintained by the Securities and Exchange Commission
at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the regional offices of the Securities and Exchange Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of the Registration Statement are available at prescribed rates from the
Public Reference Section of the Securities and Exchange Commission, Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549. The Securities
and Exchange Commission also maintains a Web site (http://www.sec.gov) that
contains registration statements, reports, proxy and information statements and
other information regarding registrants, such as Integrity Bancshares, that file
electronically with the Securities and Exchange Commission.
Integrity Bancshares and its directors have filed or will file various
applications with the FDIC, the Federal Reserve, and the Georgia Department of
Banking and Finance. These applications and the information they contain are not
incorporated into this prospectus. You should rely only on information contained
in this prospectus and in the related Registration Statement in making an
investment decision. To the extent that other available information not
presented in this prospectus, including information available from Integrity
Bancshares and information in public files and records maintained by the FDIC,
the Federal Reserve, and the Georgia Department of Banking and Finance, is
inconsistent with information presented in this prospectus or provides
additional information, that information is superseded by the information
presented in this prospectus and should not be relied on. Projections appearing
in the applications are based on assumptions that we believe are reasonable, but
as to which we can make no assurances. We specifically disaffirm those
projections for purposes of this prospectus and caution you against relying on
them for purposes of making an investment decision.
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<PAGE> 41
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditor's Report....................................................................................F-2
Balance sheet, January 12, 2000.................................................................................F-3
Statement of loss, period from June 11, 1999, date of inception,
to January 12, 2000...........................................................................................F-4
Statement of cash flows, period from June 11, 1999, date of inception,
to January 12, 2000...........................................................................................F-5
Notes to financial statements...................................................................................F-6
</TABLE>
F-1
<PAGE> 42
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Integrity Bancshares, Inc.
Alpharetta, Georgia
We have audited the accompanying balance sheet of INTEGRITY
BANCSHARES, INC., a development stage company, as of January 12, 2000, and the
related statements of loss and cash flows for the period from June 11, 1999,
date of inception, to January 12, 2000. 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 Integrity
Bancshares, Inc., a development stage company, as of January 12, 2000, and the
results of its operations and its cash flows for the period from June 11, 1999,
date of inception, to January 12, 2000, in conformity with generally accepted
accounting principles.
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
January 17, 2000
F-2
<PAGE> 43
INTEGRITY BANCSHARES, INC.
(A Development Stage Company)
Balance Sheet
JANUARY 12, 2000
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Cash $ 21,813
Equipment (net of accumulated depreciation of $1,369) 64,990
Earnest money deposit on land 10,000
--------
Total assets $ 96,803
========
LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES
Line of credit 350,000
Note payable 31,875
Accrued expenses 1,556
--------
Total liabilities 383,431
--------
COMMITMENTS
STOCKHOLDER'S (DEFICIT)
Common stock, no par value; 10,000,000 shares
authorized, 5 shares issued and outstanding 50
Deficit accumulated during the development stage (286,678)
--------
Total stockholder's deficit (286,628)
--------
Total liabilities and stockholder's deficit $ 96,803
========
</TABLE>
See Notes to Financial Statements
F-3
<PAGE> 44
Integrity Bancshares, Inc.
(A Development Stage Company)
STATEMENT OF LOSS
PERIOD FROM JUNE 11, 1999, DATE OF INCEPTION,
TO JANUARY 12, 2000
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
Expenses
Personnel expenses $ 66,921
Interest 8,436
Equipment and occupancy expenses 4,919
Legal and consulting 138,162
Other expenses 68,240
------------
286,678
------------
Net loss and deficit accumulated during the development stage $ (286,678)
============
</TABLE>
See Notes to the Financial Statements.
F-4
<PAGE> 45
INTEGRITY BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM JUNE 11, 1999, DATE OF INCEPTION,
TO JANUARY 12, 2000
------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (286,678)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 1,369
Increase in accrued expenses 1,556
--------------
Net cash used in operating activities (283,753)
--------------
INVESTING ACTIVITIES
Purchase of premises and equipment (42,359)
--------------
Net cash used in investing activities (42,359)
--------------
FINANCING ACTIVITIES
Proceeds from line of credit 350,000
Repayment of note payable (2,125)
Proceeds from issuance of common stock 50
--------------
Net cash provided by financing activities 347,925
--------------
Net increase in cash 21,813
Cash at beginning of period 0
--------------
Cash at end of period $ 21,813
==============
NONCASH FINANCING ACTIVITIES:
Purchases of equipment financed $ 34,000
==============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 46
INTEGRITY BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Integrity Bancshares, Inc. (the "Company") was incorporated on November
12, 1999 to operate as a bank holding company pursuant to the Federal Bank
Holding Act of 1956, as amended, and the Georgia Bank Holding Company Act. The
Company intends to acquire 100% of the issued and outstanding capital stock of
Integrity Bank (In Organization) (the "Bank"), a corporation to be organized
under the laws of the State of Georgia to conduct a general banking business in
Alpharetta, Georgia. On November 12, 1999, the organizers filed an application
for approval of the organization of the Bank with the Georgia Department of
Banking and Finance ("DBF") and also with the Federal Deposit Insurance
Corporation ("FDIC") for insurance of the Bank's deposits. The Company has
applied to the DBF to become a bank holding company and will apply to the
Federal Reserve Bank of Atlanta ("FRB") as soon as it receives preliminary
approval from the DBF. Upon obtaining regulatory approval, the Company will be a
registered bank holding company subject to regulation by the FRB and DBF.
Activities since inception have consisted primarily of the Company's
and the Bank's organizers engaging in organizational and preopening activities
necessary to obtain regulatory approvals and to prepare to commence business as
a financial institution.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
ORGANIZATION AND STOCK OFFERING COSTS
Organization costs will be expensed as incurred in accordance with
generally accepted accounting principles. Stock offering costs will be charged
to capital surplus upon completion of the stock offering. Additional costs are
expected to be incurred for organization costs and stock offering costs.
INCOME TAXES
The Company will be subject to Federal and state income taxes when
taxable income is generated. No income taxes have been accrued because of
operating losses incurred during the preopening period.
FISCAL YEAR
The Company will adopt a calendar year for both financial reporting and
tax reporting purposes.
NOTE 2. LINE OF CREDIT
To facilitate the formation of the Company and the Bank, the organizers
have established a $500,000 line of credit with an independent bank for the
purpose of paying organization and preopening expenses for the Company
and the Bank and the expenses of the Company's common stock offering. The line
of credit bears interest at the lender's prime rate less 1/2% and matures on
September 16, 2000. Interest is payable quarterly. The interest rate at January
12, 2000 was 8.00%. The organizers have personally guaranteed repayment of the
line of credit. All funds advanced on behalf of the Company and the Bank will be
repaid from the proceeds of the stock offering. The Company's ability to repay
these advances and relieve the organizers from their personal guarantees depends
upon the completion of the offering.
F-6
<PAGE> 47
NOTE 3. NOTE PAYABLE
Note payable consists of a note used to finance the purchase of the
Company's vehicle. The note requires 48 monthly payments of $861.73 including
interest at 9.75%.
NOTE 4. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company has entered into an agreement to purchase approximately 1.3
acres of land at a price of $850,000. The land was purchased from a director of
the Company and will be used as the site for its main office. As of January 12,
2000, the Company has made a $10,000 deposit on the land.
The Company is also leasing temporary office facilities on a
month-to-month basis for $900 from the aforementioned director. Total rental
expense included in the statement of loss under this arrangement amounted to
$2,700.
NOTE 5. COMMON STOCK OFFERING
The Company proposes to file a Registration Statement on Form SB-2 with
the Securities and Exchange Commission offering for sale a minimum of 700,000
shares and a maximum of 1,200,000 shares of the Company's common stock at a
price of $10 per share.
F-7
<PAGE> 48
PRELIMINARY SUBSCRIPTION AGREEMENT
To the Board of Directors of
INTEGRITY BANCSHARES
11130 State Bridge Road, Suite D-203
Alpharetta, Georgia 30022
Gentlemen:
I hereby subscribe to purchase the number of shares of Integrity
Bancshares' common stock indicated below.
I have received a copy of Integrity Bancshares' preliminary prospectus,
dated January ___, 2000. I understand that my purchase of Integrity Bancshares'
common stock involves significant risk, as described under "Risk Factors" in the
preliminary prospectus. I also understand that no federal or state agency has
made any finding or determination regarding the fairness of Integrity
Bancshares' offering of common stock, the accuracy or adequacy of the
preliminary prospectus, or any recommendation or endorsement concerning an
investment in the common stock.
I am not sending the purchase price for the shares I wish to buy at
this time. After I receive the final prospectus, if I still wish to purchase
shares, I will send Integrity Bancshares a check in the amount of $10.00
multiplied by the number of shares I wish to buy. My check will be made payable
to "The Bankers Bank - Escrow Account for Integrity Bancshares."
WHEN INTEGRITY BANCSHARES RECEIVES MY CHECK, THIS SUBSCRIPTION
AGREEMENT WILL BECOME FINAL AND BINDING AND WILL BE IRREVOCABLE UNTIL THE
OFFERING IS CLOSED.
Number of Shares (Minimum 2,500 shares): __________________
Total Subscription Price (at $10.00 per share): $__________________
------------------------------------------------
------------------------------------------------
(Please print or type exact name(s) in which the
shares should be registered)
Accepted as of __________________, 2000, as to _____________ shares.
INTEGRITY BANCSHARES
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
A-1
<PAGE> 49
SUBSTITUTE W-9
Under the penalties of perjury, I certify that: (1) the Social Security
number or Taxpayer Identification number given below is correct; and (2) I am
not subject to backup withholding. INSTRUCTION: YOU MUST CROSS OUT #2 ABOVE IF
YOU HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.
- --------------------------- ---------------------------------
Date Signature(s)*
- ---------------------------
Area Code and Telephone No.
---------------------------------
Please indicate the form of
ownership desired for the
shares (individual, joint
tenants with right of
survivorship, tenants in
common, trust, corporation,
partnership, custodian,
etc.)
- ---------------------------------
Social Security Number or Federal
Taxpayer Identification Number
----------------------------------
Street Address
----------------------------------
City/State/Zip Code
*When signing as attorney, trustee, administrator or guardian, please give your
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. In case of joint tenants, each joint
owner must sign.
<PAGE> 50
[DIAGRAM OF PREMISES]
A-2
<PAGE> 51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Consistent with the applicable provisions of the laws of Georgia,
Integrity Bancshares' Bylaws provide that it shall have the power to indemnify
its directors and officers against expenses (including attorneys' fees) and
liabilities arising from actual or threatened actions, suits or proceedings,
whether or not settled, to which they become subject by reason of having served
in such role if such director or officer acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
Integrity Bancshares and, with respect to a criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful. Advances against
expenses shall be made so long as the person seeking indemnification agrees to
refund the advances if it is ultimately determined that he or she is not
entitled to indemnification. A determination of whether indemnification of a
director or officer is proper because he met the applicable standard of conduct
shall be made
- by the Board of Directors by majority vote of a quorum
consisting of Directors not at the time parties to the
proceeding, or, if a quorum cannot be obtained, by majority
vote of a committee duly designated by the Board of Directors
(in which designation Directors who are parties may
participate), consisting solely of two or more Directors not
at the time parties to the proceeding;
- in certain circumstances, by independent legal counsel; or
- by the shareholders, but shares owned by or voted under the
control of Directors who are at the time parties to the
proceeding may not be voted on the determination.
In addition, Article 11 of Integrity Bancshares' Articles of
Incorporation, subject to certain exceptions, eliminates the potential personal
liability of a director for monetary damages to Integrity Bancshares and to the
shareholders of Integrity Bancshares for breach of a duty as a director. There
is no elimination of liability for
- a breach of duty involving appropriation of a business
opportunity of Integrity Bancshares;
- an act or omission involving intentional misconduct or a
knowing violation of law;
- a transaction from which the director derives an improper
material tangible personal benefit; or
- as to any payment of a dividend or approval of a stock
repurchase that is illegal under the Georgia Business
Corporation Code.
The Articles of Incorporation do not eliminate or limit the right of
Integrity Bancshares or its shareholders to seek injunctive or other equitable
relief not involving monetary damages.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses of the sale of Integrity Bancshares' common stock
are as follows:
<PAGE> 52
Securities and Exchange Commission Registration Fee $ 3,168
Legal Fees and Expenses* __________
Accounting Fees and Expenses* __________
Printing and Engraving Expenses* __________
Mail and Distribution*
Miscellaneous* __________
Total $
==========
*To be filed by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Upon formation, Integrity Bancshares issued to Steven M. Skow in a
private placement, five shares of its common stock for a total price of $50.00
in connection with the organization of Integrity Bancshares The sale to Mr. Skow
was exempt from registration under the Securities Act pursuant to Section 4(2)
of the Act because it was a transaction by an issuer that did not involve a
public offering.
ITEM 27. EXHIBITS.
Exhibit
Number Description
- ------ -----------
3.1 Articles of incorporation
3.2 Bylaws
4.1 See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining rights of holders of the
common stock
5.1 Opinion re: legality
10.1 Purchase and Sale of Real Estate Contract
10.2 Promissory Note in favor of The Bankers Bank
10.3 Escrow Agreement
21.1 Subsidiaries of the registrant
23.1 See Exhibit 5.1 for Consent of Miller & Martin LLP
23.2 Consent of Mauldin & Jenkins
24.1 Power of Attorney (refer to signature page)
27.1 Financial Data Schedule (for SEC use only)
99.1 Final Subscription Letter
99.2 Final Subscription Agreement
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Integrity
Bancshares pursuant to foregoing provisions, or otherwise, Integrity Bancshares
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Integrity Bancshares of
expenses incurred or paid by a director, officer or controlling person of
Integrity 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, Integrity Bancshares will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE> 53
The undersigned registrant hereby undertakes as follows:
(a)(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration Statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities being registered that remain unsold at the end of the offering.
The undersigned registrant hereby further undertakes as follows:
(b)(1) For determining any liability under the Securities Act, to treat
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Integrity Bancshares under Rule 424(b)(1), or (4) or 497(h)
under the Securities Act as part of this Registration Statement as of the time
the Commission declared it effective.
(2) For determining any liability under the Securities Act, to treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration Statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, Integrity Bancshares certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-2 and
authorized this Registration Statement to be signed on its behalf by the
undersigned in the city of Alpharetta, State of Georgia, on January 25, 2000.
INTEGRITY BANCSHARES
By: /s/ Steven M. Skow
-----------------------------------
Steven M. Skow
President and Chief Executive Officer
<PAGE> 54
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, Steven M. Skow
their respective attorneys-in-fact with the power of substitution, for him or
her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments) and any
Registration Statement filed pursuant to Rule 462(b) of the Securities Act of
1933, as amended, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Steven M. Skow Director January 25, 2000
- ----------------------------------------
Steven M. Skow
/s/ James E. Bridges Director January 25, 2000
- ----------------------------------------
James E. Bridges
/s/ Johnny E. Cunningham Director January 25, 2000
- ----------------------------------------
Johnny E. Cunningham
/s/ Clinton M. Day Director January 25, 2000
- ----------------------------------------
Clinton M. Day
/s/ Kent Lee Hannah Director January 25, 2000
- ----------------------------------------
Kent Lee Hannah
/s/ Don C. Hartsfield Director January 25, 2000
- ----------------------------------------
Don C. Hartsfield
/s/ Richard H. Peden, Sr. Director January 25, 2000
- ----------------------------------------
Richard H. Peden, Sr.
/s/ Charles J. Puckett Director January 25, 2000
- ----------------------------------------
Charles J. Puckett
/s/ Gerald Oneal ("Neal") Reynolds Director January 25, 2000
- ----------------------------------------
Gerald Oneal ("Neal") Reynolds
</TABLE>
<PAGE> 55
INDEX OF EXHIBITS
Exhibit
Number Description
- ------ -----------
3.1 Articles of incorporation
3.2 Bylaws
4.1 See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining rights of holders of the
common stock
5.1 Opinion re: legality
10.1 Purchase and Sale of Real Estate Contract
10.2 Promissory Note executed in favor of The Bankers' Bank
10.3 Escrow Agreement
21.1 Subsidiaries of the registrant
23.1 See Exhibit 5.1 for Consent of Miller & Martin LLP
23.2 Consent of Mauldin & Jenkins
24.1 Power of Attorney (refer to signature page)
27.1 Financial Data Schedule (for SEC use only)
99.1 Final Subscription Letter
99.2 Final Subscription Agreement
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
INTEGRITY BANCSHARES, INC.
1.
The name of the Corporation is: "Integrity Bancshares, Inc.".
2.
The Corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
3.
The object of the Corporation is pecuniary gain and profit, and the
Corporation is formed for the purpose of becoming and operating as a bank
holding company and engaging in such related and permissible activities in
connection therewith as the Board of Directors may from time to time specify by
resolution.
4.
The Corporation shall have authority to issue up to Ten Million
(10,000,000) shares of common stock (the "Common Stock").
5.
The initial registered office of the Corporation shall be at 11130
State Bridge Road, Alpharetta, Fulton County, Georgia 30022. The initial
registered agent of the Corporation at such address shall be Steven M. Skow.
6.
The mailing address of the initial principal office of the Corporation
is 11130 State Bridge Road, Alpharetta, Georgia 30022.
7.
(a) The Board of Directors shall be divided into three (3)
classes, Class I, Class II, and Class III which shall be as nearly equal in
number as possible. Each director in Class I shall be elected to an initial term
of one (1) year, each director in Class II shall be elected to an initial term
of two (2) years, each director in Class III shall be elected to an initial term
of three (3) years, and each director shall serve until the election and
qualification of his or her successor or until his or her earlier resignation,
death or removal from office. Upon the expiration of the initial terms of office
of each Class of directors, the directors of each Class shall be elected for
terms of three (3) years, to serve until the election and qualification of their
successors or until their earlier resignation, death or removal from office.
(b) Unless two-thirds (2/3) of the directors then in office shall
approve the proposed change, this Article 7 may be amended or rescinded only by
the affirmative vote of the holders of at least two-thirds (2/3) of the issued
and outstanding shares of the Corporation entitled to vote in an election of
directors, at any regular or special meeting of the shareholders, and notice of
the proposed change must be contained in the notice of the meeting.
<PAGE> 2
8.
(a) Except as provided in paragraph (b) of this Article 8, the
Board of Directors shall have the right to adopt, amend or repeal the bylaws of
the Corporation by the affirmative vote of a majority of all directors then in
office, and the shareholders shall have such right by the affirmative vote of a
majority of the issued and outstanding shares of the Corporation entitled to
vote in an election of directors.
(b) Notwithstanding paragraph (a) of this Article 8, any amendment
of the bylaws of the Corporation changing the number of directors shall require
the affirmative vote of two-thirds (2/3) of the issued and outstanding shares of
the Corporation entitled to vote in an election of directors, at any regular or
special meeting of the shareholders, and notice of the proposed change must be
contained in the notice of the meeting.
9.
(a) At any shareholders' meeting with respect to which notice of
such purpose has been given, the entire Board of Directors or any individual
director may be removed without cause only by the affirmative vote of the
holders of at least two-thirds (2/3) of the issued and outstanding shares of the
Corporation entitled to vote in an election of directors.
(b) At any shareholders' meeting with respect to which notice of
such purpose has been given, the entire Board of Directors or any individual
director may be removed with cause by the affirmative vote of the holders of at
least a majority of the issued and outstanding shares of the Corporation
entitled to vote in an election of directors; and the Board of Directors may
remove a director for cause by the affirmative vote of a majority of all the
directors then in office.
(c) For the purpose of this Article 9, a director of the
Corporation may be removed for cause if: (i) the director had been convicted of
a felony; (ii) any bank regulatory authority having jurisdiction over the
Corporation requests or demands the removal; (iii) the director is adjudicated
an incompetent by a court; (iv) at least two-thirds (2/3) of the directors of
the Corporation then in office, excluding the director to be removed, determine
that the director's conduct has been inimical to the best interest of the
Corporation; or (v) the director was an employee or duly elected officer of the
Corporation or any of its subsidiaries and was discharged or resigned at the
request of the Board of Directors of the Corporation or of any of its
subsidiaries for reasons relating to the performance of his or her duties as an
employee or officer of the Corporation or any of its subsidiaries.
(d) Unless two-thirds (2/3) of the directors then in office shall
approve the proposed change, this Article 9 may be amended or rescinded only by
the affirmative vote of the holders of at least two-thirds (2/3) of the issued
and outstanding shares of the Corporation entitled to vote in an election of
directors, at any regular or special meeting of the shareholders, and notice of
the proposed change must be contained in the notice of the meeting.
10.
The initial Board of Directors of the Corporation shall consist of ten
(10) members. The members, their addresses and classes for purposes of Article 7
are follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS CLASS
- ---------------- -----
<S> <C>
James E. Bridges I
3030 Castle Pines Dr.
Duluth, GA 30097
Johnny E. Cunningham I
3408 S. Arkansas
Russellville, AR 72801
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
NAME AND ADDRESS CLASS
- ---------------- -----
<S> <C>
Clint Day I
10775 Bell Road
Duluth, GA 30097
Kent Lee Hannah II
52 Lewellen Drive
Marietta, GA 30064
Don C. Hartsfield II
8340 Lanier Drive
Cumming, GA 30041
Richard H. Peden, Sr. II
4645 Candacraig
Alpharetta, GA 30022
Charles J. Puckett III
3844 Hwy. 166
Douglasville, GA 30135
Gerald Oneal ("Neal") Reynolds III
95 Old Stratton Chase
Atlanta, GA 30328
Steven M. Skow III
8900 Glenn Ferry Dr.
Alpharetta, GA 30022
Andrew E. Wolf III
8160 Sentinae Chase Dr.
Roswell, GA 30076
</TABLE>
11.
(a) A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for monetary damages, for breach of any
duty as a director, except for liability for:
(i) any appropriation, in violation of his or her duties,
of any business opportunity of the Corporation;
(ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(iii) the types of liability set forth in Section 14-2-832
of the Code dealing with unlawful distributions of
corporate assets to shareholders; or
(iv) any transaction from which the director derived an
improper personal benefit.
(b) Any repeal or modification of this Article by the shareholders
of the Corporation shall be prospective only and shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
(c) Unless two-thirds (2/3) of the directors then in office shall
approve the proposed change, this Article 11 may be amended or rescinded only by
the affirmative vote of the holders of at least two-thirds (2/3) of the
<PAGE> 4
issued and outstanding shares of the Corporation entitled to vote thereon, at
any regular or special meeting of the shareholders, and notice of the proposed
change must be contained in the notice of the meeting.
12.
Any action required by law or by the Bylaws of the Corporation to be
taken at a meeting of the shareholders of the Corporation, and any action which
may be taken at a meeting of the shareholders, may be taken without a meeting if
a written consent, setting forth the action so taken, shall be signed by persons
entitled to vote at a meeting those shares having sufficient voting power to
cast not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
were present and voted. Notice of such action without a meeting by less than
unanimous written consent shall be given within ten (10) days after taking such
action to those shareholders of record on the date when the written consent is
first executed and whose shares were not represented on the written consent.
13.
(a) Except as set forth in subparagraph (b) of this Article, the
affirmative vote of the holders of at least two-thirds (2/3) of the issued and
outstanding shares of the Corporation entitled to vote thereon shall be required
to approve:
(i) any merger or share exchange of the Corporation with
or into any other corporation; or
(ii) any sale, lease, exchange or other disposition of all
or substantially all of the assets of the Corporation
to any other corporation, person or other entity.
(b) The provisions of this Article shall not apply to any merger,
share exchange or sale, lease, exchange or other disposition of all or
substantially all of the assets of the Corporation if more than two-thirds (2/3)
of the directors of the Corporation then in office have approved any such
transaction.
(c) Unless two-thirds (2/3) of the directors then in office shall
approve the proposed change, this Article 13 may be amended or rescinded only by
the affirmative vote of the holders of at least two-thirds (2/3) of the issued
and outstanding shares of the Corporation entitled to vote thereon at any
regular or special meeting of the shareholders, and notice of the proposed
change must be contained in the notice of the meeting.
14.
(a) In discharging the duties of their respective positions and in
determining what is believed to be 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 action on the
Corporation or its shareholders, may consider the interests of the employees,
customers, suppliers, and creditors of the Corporation and its subsidiaries, the
communities in which offices or other establishments of the Corporation and its
subsidiaries are located, and all other factors such directors consider
pertinent; provided, however, that this provision shall be deemed solely to
grant discretionary authority to the directors and shall not be deemed to
provide to any constituency any right to be considered.
(b) Unless two-thirds (2/3) of the directors then in office shall
approve the proposed change, this Article 14 may be amended or rescinded only by
the affirmative vote of the holders of at least two-thirds (2/3) of the issued
and outstanding shares of the Corporation entitled to vote thereon, at any
regular or special meeting of the shareholders, and notice of the proposed
change must be contained in the notice of the meeting.
15.
Should any provision of these Articles of Incorporation, or any clause
hereof, be held to be invalid, illegal or unenforceable, in whole or in part,
the remaining provisions and clauses of these Articles of Incorporation shall
remain valid and fully enforceable.
<PAGE> 5
16.
The name and address of the incorporator of the Corporation is:
Steven M. Skow
11130 State Bridge Road
Alpharetta, Georgia 30022
IN WITNESS WHEREOF, the undersigned has caused these Articles of
Incorporation to be executed this 9th day of November, 1999.
/s/ T. Kennerly Carroll, Jr.
------------------------------
T. Kennerly Carroll, Jr.
Attorney for the Incorporator
MILLER & MARTIN LLP
1275 Peachtree Street, N.E.
Seventh Floor
Atlanta, Georgia 30309-3576
(404) 962-6100
<PAGE> 1
EXHIBIT 3.2
BYLAWS
BYLAWS
OF
INTEGRITY BANCSHARES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. OFFICES.......................................................................................... 1
1.1 Registered and Principal Offices........................................................... 1
1.2 Other Offices.............................................................................. 1
ARTICLE 2. SHAREHOLDERS' MEETINGS........................................................................... 1
2.1 Annual Meeting............................................................................. 1
2.2 Special Meeting............................................................................ 1
2.3 Place...................................................................................... 1
2.4 Notice..................................................................................... 1
2.5 Quorum..................................................................................... 2
2.6 Proxies; Required Vote..................................................................... 2
2.7 Presiding Officer and Secretary............................................................ 2
2.8 Shareholder List........................................................................... 2
2.9 Action in Lieu of Meeting.................................................................. 3
ARTICLE 3. DIRECTORS........................................................................................ 3
3.1 Management................................................................................. 3
3.2 Number of Directors........................................................................ 3
3.3 Vacancies.................................................................................. 3
3.4 Election of Directors...................................................................... 3
3.5 Removal.................................................................................... 4
3.6 Resignation................................................................................ 4
3.7 Compensation............................................................................... 4
ARTICLE 4. COMMITTEES....................................................................................... 4
4.1 Executive Committee........................................................................ 4
4.2 Other Committees........................................................................... 5
4.3 Removal.................................................................................... 6
ARTICLE 5. MEETINGS OF THE BOARD OF DIRECTORS............................................................... 6
5.1 Time and Place............................................................................. 6
5.2 Regular Meetings........................................................................... 6
5.3 Special Meetings........................................................................... 6
5.4 Content and Waiver of Notice............................................................... 6
5.5 Quorum; Participation by Telephone......................................................... 6
5.6 Action in Lieu of Meeting.................................................................. 7
5.7 Interested Directors and Officers.......................................................... 7
ARTICLE 6. OFFICERS, AGENTS AND EMPLOYEES................................................................... 7
6.1 General Provisions......................................................................... 7
6.2 Powers and Duties of the Chairman of the Board and the President........................... 8
6.3 Powers and Duties of Vice Presidents....................................................... 8
6.4 Powers of Duties of the Secretary.......................................................... 9
6.5 Powers and Duties of the Treasurer......................................................... 9
6.6 Appointment, Powers and Duties of Assistant Secretaries.................................... 9
6.7 Appointment, Powers and Duties of Assistant Treasurers..................................... 10
6.8 Delegation of Duties....................................................................... 10
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 7. CAPITAL STOCK................................................................................... 10
7.1 Certificates.............................................................................. 10
7.2 Shareholder List.......................................................................... 11
7.3 Transfer of Shares........................................................................ 11
7.4 Record Dates.............................................................................. 11
7.5 Registered Owner.......................................................................... 11
7.6 Transfer Agent and Registrars............................................................. 12
7.7 Lost Certificates......................................................................... 12
7.8 Fractional Shares or Scrip................................................................ 12
ARTICLE 8. BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS...................................................... 12
8.1 Inspection of Books and Records........................................................... 12
8.2 Seal...................................................................................... 13
8.3 Annual Statements......................................................................... 13
ARTICLE 9. INDEMNIFICATION................................................................................. 13
9.1 Definitions............................................................................... 13
9.2 Authority to Indemnify.................................................................... 13
9.3 Mandatory Indemnification................................................................. 14
9.4 Advance for Expenses...................................................................... 14
9.5 Court Ordered Indemnification and Advances for Expenses................................... 15
9.6 Determination and Authorization of Indemnification........................................ 15
9.7 Shareholder Approval Indemnification...................................................... 17
9.8 Indemnification of Officers, Employees and Agents......................................... 18
9.9 Insurance................................................................................. 18
9.10 Limitations............................................................................... 18
9.11 Nonseverability........................................................................... 18
9.12 Amendment to Code......................................................................... 19
ARTICLE 10. NOTICES; WAIVERS OF NOTICE..................................................................... 19
10.1 Notices................................................................................... 19
10.2 Waivers of Notice......................................................................... 19
ARTICLE 11. EMERGENCY POWERS............................................................................... 19
11.1 Bylaws.................................................................................... 19
11.2 Lines of Succession....................................................................... 19
11.3 Head Office............................................................................... 20
11.4 Period of Effectiveness................................................................... 20
11.5 Notices................................................................................... 20
11.6 Officers as Directors Pro Tempore......................................................... 20
11.7 Liability of Officers, Directors and Agents............................................... 20
ARTICLE 12. CHECKS, NOTES, DRAFT, ETC...................................................................... 20
ARTICLE 13. AMENDMENTS..................................................................................... 20
</TABLE>
<PAGE> 4
BYLAWS
OF
INTEGRITY BANCSHARES, INC.
ARTICLE 1. OFFICES
1.1 REGISTERED AND PRINCIPAL OFFICES. The initial registered
office of the Corporation shall be 11130 State Bridge Road, Alpharetta, Fulton
County, Georgia 30022, and the name of the registered agent at this address is
Steven M. Skow. The mailing address of the initial principal office of the
Corporation shall be 11130 State Bridge Road, Alpharetta, Georgia 30022. The
registered office need not be identical with the principal office of the
Corporation and may be charged at any time by the Board of Directors.
1.2 OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Georgia as the Board of
Directors may from time to time determine or the business of the Corporation may
require to make desirable.
ARTICLE 2. SHAREHOLDERS' MEETINGS
2.1 ANNUAL MEETING. A meeting of shareholders of the Corporation
shall be held annually at such time and place and on such date as the Directors
shall determine from time to time for the purpose of electing Directors and
transacting such other business as may properly be brought before the meeting.
2.2 SPECIAL MEETING. Special meetings of the shareholders may be
called at any time by the Corporation's Board of Directors, its President, and
by the Corporation upon the written request of any one or more shareholders,
owning an aggregate of not less than two-thirds (2/3) of the outstanding capital
stock of the Corporation. Any such request shall state the purposes for which
the meeting is to be called. Special meetings shall be held at such a time and
place and on such date as shall be specified in the notice of the meeting.
2.3 PLACE. Annual or special meetings of shareholders may be held
within or without the State of Georgia.
2.4 NOTICE. Notice of annual or special shareholders meetings
stating place, day and hour of the meeting shall be given in writing not less
than ten nor more than sixty days before the date of the meeting, either mailed
to the last known address or personally given to each shareholder. Notice of any
special meeting of shareholders shall state the purpose or purposes for which
the meeting is called. The notice of any meeting at which amendments to or
restatements of the articles of incorporation, merger or share exchange of the
Corporation, or the disposition of corporate assets requiring shareholder
approval are to be considered shall state such purpose, and shall further comply
with all requirements of law. Notice of a meeting may be waived by an instrument
in writing executed before or after the meeting. The waiver need not specify the
purpose of the meeting or the business transacted, unless one of the purposes of
the meeting concerns a plan of merger or share exchange, in which event the
waiver shall comply with the further requirements of law concerning such
waivers. Attendance at such meeting in person or by proxy shall constitute a
waiver of notice thereof.
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2.5 QUORUM. At all meetings of shareholders a majority of the
outstanding shares of stock shall constitute a quorum for the transaction of
business, and no resolution or business shall be transacted without the
favorable vote of the holders of a majority of the shares represented at the
meeting and entitled to vote. A lesser number may adjourn from day to day, and
shall announce the time and place to which the meeting is adjourned.
2.6 PROXIES; REQUIRED VOTE. At every meeting of the shareholders,
including meetings of shareholders for the election of Directors, any
shareholder having the right to vote shall be entitled to vote in person or by
proxy, but no proxy shall be voted after eleven months from its date, unless
said proxy provides for a longer period. Each shareholder shall have one vote
for each share of stock having voting power, registered in his or her name on
the books of the Corporation. If a quorum is present, the affirmative vote of
the majority of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders, except as otherwise
provided by law, by the Articles of Incorporation or by these bylaws.
2.7 PRESIDING OFFICER AND SECRETARY. At every meeting of
shareholders, the Chairman or the President, or, if such officers shall not be
present, then the person appointed by one of them shall preside. The Secretary
or an Assistant Secretary, or if such officers shall not be present, the
appointee of the presiding officer of the meeting, shall act as secretary of the
meeting.
2.8 SHAREHOLDER LIST. The officer or agent having charge of the
stock transfer books of the Corporation shall produce for inspection of any
shareholder at, and continuously during, every meeting of the shareholders, a
complete alphabetical list of shareholders showing the address and share
holdings of each shareholder. If the record of shareholders readily shows such
information, it may be produced in lieu of such a list.
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2.9 ACTION IN LIEU OF MEETING. Any action to be taken at a meeting
of the shareholders of the Corporation, or any action that may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by those persons who
would be entitled to vote at a meeting those shares having voting power to cast
not less than the minimum number (or numbers, in the case of voting by class) of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote were present and voted.
ARTICLE 3. DIRECTORS
3.1 MANAGEMENT. Subject to these bylaws, or any lawful agreement
between the shareholders, the full and entire management of the affairs and
business of the Corporation shall be vested in the Board of Directors, which
shall have and may exercise all of the powers that may be exercised or performed
by the Corporation.
3.2 NUMBER OF DIRECTORS. The Board of Directors shall consist of
not less than five (5) nor more than twenty-five (25) members. The number of
Directors may be fixed or changed from time to time, within the minimum and
maximum, by the shareholders by the affirmative vote of two-thirds (66-2/3%) of
the issued and outstanding shares of the Corporation entitled to vote in an
election of Directors, or by the Board of Directors by the affirmative vote of
two-thirds (66-2/3%) of all Directors then in office.
3.3 VACANCIES. A vacancy occurring in the Board of Directors
whether caused by removal or otherwise and including vacancies resulting from an
increase in the number of Directors, may be filled for the unexpired term and
until the shareholders shall have elected a successor by the affirmative vote of
a majority of the Directors remaining in office, though less than a quorum of
the Board of Directors.
3.4 ELECTION OF DIRECTORS. The Board of Directors shall be divided
into three (3) classes, Class I, Class II, and Class III which shall be as
nearly equal in number as possible. Each director in Class I shall be elected to
an initial term of one (1) year, each director in Class II shall be elected to
an initial term of two (2) years, each director in Class III shall be elected to
an initial term of three (3) years, and each director shall serve until the
election and qualification of his or her successor or until his or her earlier
resignation, death or removal from office. Upon the expiration of the initial
terms of office of each Class of directors, the directors of each Class shall be
elected for terms of three (3) years, to serve until the election and
qualification of their successors or until their earlier resignation, death or
removal from office.
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3.5 REMOVAL. Any Director may be removed from office, at a meeting
with respect to which notice of such purpose is given (a) without cause, only
upon the affirmative vote of the holders of at least two-thirds (662/3%) of the
issued and outstanding shares of the Corporation, and (b) with cause, upon the
affirmative vote of the holders of a majority of the issued and outstanding
shares of the Corporation or by the affirmative vote of a majority of all the
Directors then in office. For purposes hereof, "cause" is defined in Article 9
of the Articles of Incorporation.
3.6 RESIGNATION. Any Director may resign at any time either orally
at any meeting of the Board of Directors or by so advising the Chairman of the
Board or the President or by giving written notice to the Corporation. A
Director who resigns may postpone the effectiveness of his or her resignation to
a future date or upon the occurrence of a future event specified in a written
tender of resignation. If no time of effectiveness is specified therein, a
resignation shall be effective upon tender. A vacancy will be deemed to exist at
the time a resignation is tendered, and the Board of Directors or the
shareholders may, then or thereafter, elect a successor to take office when the
resignation by its terms becomes effective.
3.7 COMPENSATION. Directors may be allowed such compensation for
their services as Directors as may from time to time be fixed by resolution of
the Board of Directors.
ARTICLE 4. COMMITTEES
4.1 EXECUTIVE COMMITTEE. (a) The Board of Directors may, by
resolution adopted by a majority of the entire Board, designate an Executive
Committee consisting of one or more Directors. Each Executive Committee member
shall hold office until the first meeting of the Board of Directors after the
annual meeting of shareholders and until the member's successor is elected and
qualified, or until the member's death, resignation or removal, or until the
member shall cease to be a Director.
(b) During the intervals between the meetings of the
Board of Directors, the Executive Committee may exercise all the authority of
the Board of Directors; provided, however, that the Executive Committee shall
not have the power to amend or repeal any resolution of the Board of Directors
that by its terms shall not be subject to amendment or repeal by the Executive
Committee, and the Executive Committee shall not have the authority of the Board
of Directors in reference to (i) the amendment of the Articles of Incorporation
or bylaws of the Corporation; (ii) the adoption of a plan of merger or
consolidation; (iii) the sale, lease, exchange or other disposition of all or
substantially all the
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property and assets of the Corporation; or (iv) a voluntary dissolution of the
Corporation or the revocation of any such voluntary dissolution.
(c) The Executive Committee shall meet from time to time
on call of the Chairman of the Board or the President or of any two or more
members of the Executive Committee. Meetings of the Executive Committee may be
held at such place or places, within or without the State of Georgia, as the
Executive Committee shall determine or as may be specified or fixed in the
respective notices or waivers of such meetings. The Executive Committee may fix
its own rules of procedure, including provision for notice of its meetings. It
shall keep a record of its proceedings and shall report these proceedings to the
Board of Directors at the meeting thereof held next after they have been taken,
and all such proceedings shall be subject to revision or alteration by the Board
of Directors except to the extent that action shall have been taken pursuant to
or in reliance upon such proceedings prior to any such revision or alteration.
(d) The Executive Committee shall act by majority vote of
its members; provided, however, that contracts or transactions of and by the
Corporation in which officers or Directors of the Corporation are interested
shall require the affirmative vote of a majority of the disinterested members of
the Executive Committee at a meeting of the Executive Committee at which the
material facts as to the interest and as to the contract or transaction are
disclosed or known to the members of the Executive Committee prior to the vote.
(e) Members of the Executive Committee may participate in
committee proceedings by means of conference telephone or similar communications
equipment by means of which all persons participating in the proceedings can
hear each other, and such participation shall constitute presence at such
proceedings.
(f) The Board of Directors, by resolution adopted in
accordance with paragraph (a) of this section, may designate one or more
Directors as alternate members of the Execution Committee who may act in the
place and stead of any absent member or members at any meeting of said
committee.
4.2 OTHER COMMITTEES. The Board of Directors, by resolution
adopted by majority of the entire Board, may designate one or more additional
committees, each committee to consist of one or more of the Directors of the
Corporation, which shall have such name or names and shall have and may exercise
such powers of the Board of Directors, except the powers denied to the Executive
Committee, as may be determined from time to time by the Board of Directors.
Such committees shall provide for their own rules of procedure, subject to the
same restrictions thereon as provided above for the Executive Committee.
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4.3 REMOVAL. The Board of Directors shall have power at any time
to remove any member of any committee, with or without cause, and to fill
vacancies in and to dissolve any such committee.
ARTICLE 5. MEETINGS OF THE BOARD OF DIRECTORS
5.1 TIME AND PLACE. Meetings of the Board of Directors may be held
any place either within or without the State of Georgia.
5.2 REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and place, within or without the State
of Georgia, as shall be determined by the Board of Directors from time to time.
5.3 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President on not less than one
day's notice by mail, telegram, cablegram, personal delivery or telephone to
each Director and shall be called by the Chairman of the Board of Directors or
the President in like manner and on like notice on the written request of any
two or more Directors. Any such special meeting shall be held at such time and
place, within or without the State of Georgia, as shall be stated in the notice
of the meeting.
5.4 CONTENT AND WAIVER OF NOTICE. No notice of any meeting of the
Board of Directors need state the purposes thereof. Notice of any meeting may be
waived by an instrument in writing executed before or after the meeting.
Attendance in person at any such meeting shall constitute a waiver of notice
thereof unless the Director at the beginning of the meeting (or promptly upon
his or her arrival) objects to holding the meeting or transaction business at
the meeting and does not thereafter vote for or assent to action taken at the
meeting.
5.5 QUORUM; PARTICIPATION BY TELEPHONE. At all meetings of the
Board of Directors, the presence of a majority of the authorized number of
Directors shall be necessary and sufficient to constitute a quorum for the
transaction of business. Directors may participate in any meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting by means of such communications equipment shall constitute the presence
in person at such meeting. Except as may be otherwise specifically provided by
law, the Articles of Incorporation or these bylaws, all resolutions adopted and
all business transacted by the Board of Directors shall require the affirmative
vote of a majority of the Directors present at the meeting. In the absence of a
quorum, a majority of the Directors present at any meeting may adjourn the
meeting from time to time until a quorum is present. Notice of any adjourned
meeting need only be given by announcement at the meeting at which the
adjournment is taken.
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5.6 ACTION IN LIEU OF MEETING. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of the proceedings of the Board
of Directors and upon compliance with any further requirements of law pertaining
to such consents.
5.7 INTERESTED DIRECTORS AND OFFICERS. An interested Director or
officer is one who is a party to a contract or transaction with the Corporation
or who is an officer or Director of, or has a financial interest in, another
Corporation, partnership or association which is a party to a contract or
transaction with the Corporation. Contracts and transactions between the
Corporation and one or more interested Directors or officers shall not be void
or voidable solely because of the involvement or vote of such interested persons
as long as (a) the contract or transaction is approved in good faith by the
Board of Directors or appropriate committee by the affirmative vote of a
majority of disinterested Directors, even if the disinterested Directors be less
than a quorum, at a meeting of the Board or committee at which the material
facts as to the interested person or persons and the contract or transaction are
disclosed or known to the Board or committee prior to the vote; (b) the contract
or transaction is approved in good faith by the shareholders after the materials
facts as to the interested person or persons and the contract or transaction
have been disclosed to them; or (c) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified by the
Board, committee or shareholders. Interested Directors may be counted in
determining the presence of a quorum at a meeting of the Board or committee
which authorizes the contract or transaction.
ARTICLE 6. OFFICERS, AGENTS AND EMPLOYEES
6.1 GENERAL PROVISIONS. The officers of the Corporation shall be a
President and a Secretary, and may include a Treasurer, Chairman of the Board,
one or more Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. The officers shall be elected by the Board of Directors at
the first meeting of the Board of Directors after the annual meeting of the
shareholders in each year or shall be appointed as provided in these bylaws. The
Board of Directors may elect other officers, agents and employees, who shall
have such authority and perform such duties as may be prescribed by the Board of
Directors. All officers shall hold office until the meeting of the Board of
Directors following the next annual meeting of the shareholders after their
election or appointment and until their successors shall
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have been elected or appointed and shall have qualified. Any two or more offices
may be held by the same person. Any officer, agent or employee of the
Corporation may be removed by the Board of Directors with or without cause.
Removal without cause shall be without prejudice to such person's contract
right, if any, but the election or appointment of any person as an officer,
agent or employee of the Corporation shall not of itself create contract rights.
The compensation of officers, agents and employees elected by the Board of
Directors shall be fixed by the Board of Directors or by a committee thereof,
and this power may also be delegated to any officer, agent or employee as to
persons under his or her direction or control. The Board of Directors may
require any officer, agent or employee to give security for the faithful
performance of his or her duties.
6.2 POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD AND THE
PRESIDENT. The powers and duties of the Chairman of the Board and the President,
subject to the supervision and control of the Board of Directors, shall be those
usually appertaining to their respective offices and whatever other powers and
duties are prescribed by these bylaws or by the Board of Directors.
(a) The CHAIRMAN OF THE BOARD shall preside at all
meetings of the Board of Directors and at all meetings of the shareholders. The
Chairman of the Board shall perform such other duties as the Board of Directors
may from time to time direct, but shall not participate in any major policy
functions of the Corporation other than in his or her capacity as director. The
President shall act as Chairman of the Board of Directors in the absence of the
Chairman unless another Director is elected Chairman.
(b) The PRESIDENT shall, unless otherwise provided by the
Board of Directors, be the chief executive officer of the Corporation. The
President shall have general charge of the business and affairs of the
Corporation and shall keep the Board of Directors fully advised. The President
shall employ and discharge employees and agents of the Corporation, except such
as shall be elected by the Board of Directors, and he or she may delegate these
powers. The President shall have such powers and perform such duties as
generally pertain to the office of the President, as well as such further powers
and duties as may be prescribed by the Board of Directors. The President may
vote the shares or other securities of any other domestic or foreign Corporation
of any type or kind which may at any time be owned by the Corporation, may
execute any shareholders' or other consents in respect thereof and may in his or
her discretion delegate such powers by executing proxies, or otherwise, on
behalf of the Corporation. The Board of Directors, by resolution from time to
time, may confer like powers upon any other person or persons.
6.3 POWERS AND DUTIES OF VICE PRESIDENTS. Each Vice President
shall have such powers and perform such duties as the Board of Directors or the
President may prescribe and shall perform such other duties as may be prescribed
by these bylaws. In the absence or inability to act of the President, unless the
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Board of Directors shall otherwise provide, the Vice President who has served in
that capacity for the longest time and who shall be present and able to act,
shall perform all duties and may exercise any of the powers of the President.
The performance of any such duty by a Vice President shall be conclusive
evidence of his or her power to act.
6.4 POWERS OF DUTIES OF THE SECRETARY. The Secretary shall have
charge of the minutes of all proceedings of the shareholders and of the Board of
Directors and shall keep the minutes of all their meetings at which he or she is
present. Except as otherwise provided by these bylaws, the Secretary shall
attend to the giving of all notices to shareholders and Directors. He or she
shall have charge of the seal of the Corporation, shall attend to its use on all
documents, the execution of which on behalf of the Corporation under its seal is
duly authorized and shall attest the same by his or her signature whenever
required. The Secretary shall have charge of the record of shareholders of the
Corporation, of all written requests by shareholders that notices be mailed to
them at an address other than their addresses on the record of shareholders, and
of such other books and papers as the Board of Directors may direct. Subject to
the control of the Board of Directors, the Secretary shall have all such powers
and duties as generally are incident to the position of Secretary or may be
assigned to the Secretary by the President or the Board of Directors.
6.5 POWERS AND DUTIES OF THE TREASURER. The Treasurer shall have
charge of all funds and securities of the Corporation, shall endorse the same
for deposit or collection when necessary and deposit the same to the credit of
the Corporation in such banks or depositaries as the Board of Directors may
authorize. The Treasurer may endorse all commercial documents requiring
endorsement for or on behalf of the Corporation and may sign all receipts and
all commercial documents requiring endorsements for or on behalf of the
Corporation and may sign all receipts and vouchers for payments made to the
Corporation. The Treasurer shall have all such powers and duties as generally
are incident to the position of Treasurer or as may be assigned to the Treasurer
by the President or by the Board of Directors.
6.6 APPOINTMENT, POWERS AND DUTIES OF ASSISTANT SECRETARIES.
Assistant Secretaries may be appointed by the President or elected by the Board
of Directors. In the absence or inability of the Secretary to act, any Assistant
Secretary may perform all the duties and exercise all the powers of the
Secretary. The performance of any such duty shall be conclusive evidence of the
Assistant Secretary's power to act. An Assistant Secretary shall also perform
such other duties as the Secretary or the Board of Directors may assign to him
or her.
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6.7 APPOINTMENT, POWERS AND DUTIES OF ASSISTANT TREASURERS.
Assistant Treasurers may be appointed by the President or elected by the Board
of Directors. In the absence or inability of the Treasurer to act, an Assistant
Treasurer may perform all the duties and exercise all the powers of the
Treasurer. The performance of any such duty shall be conclusive evidence of the
Assistant Treasurer's power to act. An Assistant Treasurer shall also perform
such other duties as the Treasurer or the Board of Directors may assign to him
or her.
6.8 DELEGATION OF DUTIES. In case of the absence of any officer of
the Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors (or in the case of Assistant Secretaries or
Assistant Treasurers only, the President) may confer for the time being the
powers and duties, or any of them, of such officer upon any other officer or
elect or appoint any new officer to fill a vacancy created by death,
resignation, retirement or termination of any officer. In such latter event such
new officer shall serve until the next annual election of officers.
ARTICLE 7. CAPITAL STOCK
7.1 CERTIFICATES. (a) The interest of each shareholder shall be
evidenced by a certificate or certificates representing shares of the
Corporation which shall be in such form as the Board of Directors may from time
to time adopt and shall be numbered and shall be entered in the books of the
Corporation as they are issued. Each certificate representing shares shall set
forth upon the face thereof the following:
(i) the name of the Corporation;
(ii) that the Corporation is organized under the laws of
the State of Georgia;
(iii) the name or names of the person or persons to whom
the certificate is issued;
(iv) the number and class of shares, and the designation
of the series, if any, which the certificate
represents; and
(v) if any shares represented by the certificate are
nonvoting shares, a statement or notation to that
effect; and, if the shares represented by the
certificate are subordinate to shares of any other
class or series with respect to dividends or amounts
payable on liquidation, the certificate shall further
set forth on either the face or back thereof a clear
and concise statement to that effect.
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(b) Each certificate shall be signed by the President or
a Vice President and the Secretary or an Assistant Secretary and may be sealed
with the seal of the Corporation or a facsimile thereof. If a certificate is
countersigned by a transfer agent or registered by a registrar, other than the
Corporation itself or an employee of the Corporation, the signature of any such
officer of the Corporation may be a facsimile. In case any officer or officers
who shall have signed, or whose facsimile signature or signatures shall have
been used on any such certificate or certificates shall cease to be such officer
or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signatures shall have been used thereon had not ceased to be
such officer or officers.
7.2 SHAREHOLDER LIST. The Corporation shall keep or cause to be
kept a record of the shareholders of the Corporation which readily shows, in
alphabetical order or by alphabetical index, and by classes or series of stock,
if any, the names of the shareholders entitled to vote, with the address of and
the number of shares held by each. Said record shall be presented and kept open
at all meetings of the shareholders.
7.3 TRANSFER OF SHARES. Transfers of stock shall be made on the
books of the Corporation only by the person named in the certificate, or by
power of attorney lawfully constituted in writing, and upon surrender of the
certificate, or in the case of a certificate alleged to have been lost, stolen
or destroyed, upon compliance with the provisions of Section 7.7 of these
bylaws.
7.4 RECORD DATES. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than seventy (70) days
and, in case of a meeting of shareholders, not less than ten (10) days, prior to
the date on which the particular action requiring such determination of
shareholders is to be taken.
7.5 REGISTERED OWNER. The Corporation shall be entitled to treat
the holder of record of any share of stock of the Corporation as the person
entitled to vote such share, to receive any dividend or other distribution with
respect to such share, and for all other purposes and accordingly shall not be
bound to
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<PAGE> 15
recognize any equitable or other claim or interest in such share on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
7.6 TRANSFER AGENT AND REGISTRARS. The Board of Directors may
appoint one or more transfer agents and one or more registrars and may require
each stock certificate to bear the signature or signatures of a transfer agent
or a registrar or both.
7.7 LOST CERTIFICATES. Any person claiming a certificate of stock
to be lost, stolen or destroyed shall make an affidavit or affirmation of the
fact in such manner as the Board of Directors may require and, if the Directors
so require, shall give the Corporation a bond of indemnity in form and amount
and with one or more sureties satisfactory to the Board of Directors, whereupon
an appropriate new certificate may be issued in lieu of the certificate alleged
to have been lost, stolen or destroyed.
7.8 FRACTIONAL SHARES OR SCRIP. The Corporation may, when and if
authorized so to do by its Board of Directors, issue certificates for fractional
shares or scrip in order to effect share transfers, share distributions or
reclassifications, mergers, consolidations or reorganizations. Holders of
fractional shares shall be entitled, in proportion to their fractional holdings,
to exercise voting rights, receive dividends and participate in any of the
assets of the Corporation in the event of liquidation. Holders of scrip shall
not, unless expressly authorized by the Board of Directors, be entitled to
exercise any rights of a shareholder of the Corporation, including voting
rights, dividend rights or the right to participate in any assets of the
Corporation in the event of liquidation. In lieu of issuing fractional shares or
scrip, the Corporation may pay in cash the fair value of fractional interests as
determined by the Board of Directors; and the Board of Directors may adopt
resolutions regarding rights with respect to fractional shares or scrip as it
may deem appropriate, including without limitation the right for persons
entitled to receive fractional shares to sell such fractional shares or purchase
such additional fractional shares as may be needed to acquire one full share, or
sell such fractional shares or scrip for the account of such persons.
ARTICLE 8. BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS
8.1 INSPECTION OF BOOKS AND RECORDS. A shareholder's right to
inspect the records of the Corporation is set forth in O.C.G.A. ss. 14-2-1602.
Pursuant to O.C.G.A. ss. 14-2-1602(e), a shareholder's right to inspect the
corporate records enumerated in O.C.G.A. ss. 14-2-1602(c) is limited to
shareholders owning more than two percent (2%) of the outstanding shares of
stock in the Company.
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<PAGE> 16
8.2 SEAL. The corporate seal shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such a seal at any time, the signature of the Corporation followed by the
word "Seal" enclosed in parentheses or scroll shall be deemed the seal of the
Corporation.
8.3 ANNUAL STATEMENTS. Not later than four months after the close
of the fiscal year, and in any case prior to the next annual meeting of
shareholders, the Corporation shall prepare:
(a) A balance sheet showing in reasonable detail the
financial condition of the Corporation as of the close of its fiscal year; and
(b) A profit and loss statement showing the results of
its operations during its fiscal year. Upon written request, the Corporation
promptly shall mail to any shareholder of record a copy of its most recent
balance sheet and profit and loss statement.
ARTICLE 9. INDEMNIFICATION
9.1 DEFINITIONS. The terms "Director", "expenses", "liability",
"party", "proceeding", shall have the meanings found in the Georgia Business
Corporation Code ("Code") Section 14-2-850, as amended.
9.2 AUTHORITY TO INDEMNIFY.
(a) Except as provided in subsections (d) and (e) of this
Section 9.2, the Corporation shall indemnify or obligate itself to indemnify an
individual made a party to a proceeding because he is or was a Director against
liability incurred in the proceeding if he acted in a manner he believed in good
faith to be in or nor opposed to the best interests of the Corporation and, in
the case of any criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful.
(b) A Director's conduct with respect to any employee
benefit plan for a purpose he believed in good faith to be in the interests of
the participants and beneficiaries of the plan is conduct that satisfies the
requirements of subsection (a) of this Section 9.2.
(c) The termination of a proceeding by judgment, order,
settlement, or 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 set forth in subsection (a) of this Section 9.2.
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<PAGE> 17
(d) The Corporation may not indemnify a Director under
Section 9.2:
(i) In connection with a proceeding by or in the
light of the Corporation in which the
Director was adjudged liable to the
Corporation; or
(ii) In connection with any other proceeding in
which he was adjudged liable on the basis
that personal benefit was improperly
received by him.
(e) Indemnification permitted under this Section 9.2 in
connection with a proceeding by or in light of the Corporation is limited to
reasonable expenses incurred in connection with the proceeding.
9.3 MANDATORY INDEMNIFICATION. To the extent that a Director has
been successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party, or in defense of any claim, issue, or matter therein,
because he is or was a Director of the Corporation, the Corporation shall
indemnify the Director against reasonable expenses incurred by him in connection
therewith.
9.4 ADVANCE FOR EXPENSES.
(a) The Corporation shall pay for or reimburse the
reasonable expenses incurred by a Director who is a party to a proceeding in
advance of final disposition of the proceeding if:
(i) The Director furnishes the Corporation a
written affirmation of his good faith belief
that he has met the standard of conduct set
forth in subsection (a) of Section 9.2; and
(ii) The Director furnishes the Corporation a
written undertaking executed personally or
on his behalf, to repay any advances if it
is ultimately determined that he is not
entitled to indemnification under this part.
(b) The undertaking required by paragraph (ii) of
subsection (a) of this Section 9.4 must 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.
9.5 COURT ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES. A
Director of the Corporation who is a party to a proceeding may apply for
indemnification or advances for expenses to the
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<PAGE> 18
court conducting the proceeding or to another court of competent jurisdiction.
On receipt of an application, the court after giving any notice the court
considers necessary may order indemnification or advances for expenses if it
determines:
(i) The Director is entitled to mandatory indemnification
under Section 9.3 of these bylaws, in which case the
court shall also order the Corporation to pay the
Director's reasonable expenses incurred to obtain
court ordered indemnification;
(ii) The Director is fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances, whether or not he met the standard of
conduct set forth in subsection (a) of Section 9.2 or
was adjudged liable as described in subsection (d) of
Section 9.2, but if he was adjudged so liable, his
indemnification is limited to reasonable expenses
incurred unless the Articles of Incorporation or
other provisions of these bylaws, a contract, or a
resolution approved or ratified by the shareholders
pursuant to Section 9.7 provides otherwise; or
(iii) In the case of advances for expenses, the Director is
entitled, pursuant to the Articles of Incorporation,
these bylaws, or any applicable resolution or
agreement, to payment or reimbursement of his
reasonable expenses incurred as a party to a
proceeding in advance of final disposition of the
proceeding.
9.6 DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.
(a) The Corporation may not indemnify a Director under
Section 9.2 unless authorized thereunder and a determination has been made in
the specific case that indemnification of the Director is permissible in the
circumstances because he has met the standard of conduct set forth in subsection
(a) of Section 9.2.
(b) The determination shall be made:
(i) By the Board of Directors by majority vote
of a quorum consisting of Directors not at
the time parties to the proceeding;
(ii) If a quorum cannot be obtained under
paragraph (i) of this subsection, by
majority vote of a committee duly designated
by the Board of
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<PAGE> 19
Directors (in which designation Directors
who are parties may participate), consisting
solely of two or more Directors not at the
time parties to the proceeding;
(iii) By special legal counsel:
(A) Selected by the Board of Directors
or its committee in the manner
prescribed in paragraph (i) or (ii)
of this subsection; or
(B) If a quorum of the Board of
Directors cannot be obtained under
paragraph (i) of this subsection and
a committee cannot be designated
under paragraph (ii) of this
subsection, selected by majority
vote of the full Board of Directors
(in which selection Directors who
are parties may participate); or
(iv) By the shareholders, but shares owned by or
voted under the control of Directors who are
at the time parties to the proceeding may
not be voted on the determination.
(c) Authorization of indemnification or an obligation to
indemnify and evaluation as to reasonableness of expenses shall be made in the
same manner as the determination that indemnification is permissible, except
that if the determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be made by
those entitled under paragraph (iii) of subsection (b) of this Section 9.6 to
select counsel.
9.7 SHAREHOLDER APPROVAL INDEMNIFICATION.
(a) The Corporation may indemnify or obligate itself to
indemnify a Director made a party to a proceeding, including a proceeding
brought by or in the right of the Corporation, without regard to the limitations
found in other sections of these bylaws or the Code so long as such
indemnification or obligation is authorized by the Articles of Incorporation or
a bylaw, contract, or resolution approved or ratified by the shareholders by a
majority of the votes entitled to be cast.
(b) The Corporation shall not indemnify a Director under
this Section 9.7 for any liability incurred in a proceeding in which the
Director is adjudged liable to the Corporation or is subjected to injunctive
relief in favor of the Corporation:
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<PAGE> 20
(i) For any appropriation, in violation of his
duties, of any business opportunity of the
Corporation;
(ii) For acts or omissions which involve
intentional misconduct or a knowing
violation of law;
(iii) For the types of liability set forth in Code
Section 14-2-832, as amended; or
(iv) For any transaction from which he received
an improper personal benefit.
(c) Where approved or authorized in the manner described
in subsection (a) of this Section 9.7, the Corporation may advance or reimburse
expenses incurred in advance of final disposition of the proceeding only if:
(i) The Director furnishes the Corporation a
written affirmative of his good faith belief
that his conduct does not constitute
behavior of the kind described in subsection
(b) of this Section 9.7; and
(ii) The Director furnishes the Corporation a
written undertaking, executed personally or
on his behalf, to repay any advances if it
is ultimately determined that he is not
entitled to indemnification under this
Section 9.7.
9.8 INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS.
(a) An officer of the Corporation who is not a Director
is entitled to indemnification and advancement of expenses to the same extent,
and subject to the same conditions, as a Director of the Corporation is entitled
to and subject to under Section 9.2, Section 9.3, Section 9.4, Section 9.6 and
Section 9.7 of these bylaws.
(b) An employee or agent of the Corporation who is not a
Director or officer is entitled to indemnification and advancement of expenses
to the same extent, and subject to the same conditions, as a Director of the
Corporation is entitled to and subject to under Section 9.2, Section 9.3,
Section 9.4, Section 9.5 and Section 9.6 of these bylaws.
9.9 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
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<PAGE> 21
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 power to indemnify him against
the same liability under Section 9.2 or Section 9.3.
9.10 LIMITATIONS.
(a) The provision for indemnification of or advance for
expenses to Directors contained in the Articles of Incorporation, these bylaws,
a resolution of the Corporation's shareholders or Board of Directors, or in a
contract or otherwise, is valid only if and to the extent the provision is
consistent with the Code. If the Articles of Incorporation limit indemnification
or advance for expenses, indemnification and advance for expenses are valid only
to the extent consistent with the Articles of Incorporation.
(b) This Article 9 does not limit the Corporation's power
to pay or reimburse expenses incurred by a Director in connection with his
appearance as a witness in a proceeding at a time when he has not been made a
named defendant or respondent to the proceeding.
9.11 NONSEVERABILITY. In the event that any of the provisions of
this Article 9 (including any provision within a single sentence) is held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable,
the remaining provisions are severable and shall remain enforceable to the
fullest extent permitted by law.
9.12 AMENDMENT TO CODE. If the Code hereafter is amended to
authorize broader indemnification of Directors, officers, agents and employees,
then the indemnification of such Directors, officers, agents and employees of
the Corporation shall be expanded to the fullest extent permitted by the amended
Code.
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<PAGE> 22
ARTICLE 10. NOTICES; WAIVERS OF NOTICE
10.1 NOTICES. Except as otherwise specifically provided in these
bylaws, whenever under the provisions of these bylaws notice is required to be
given to any shareholder, Director or officer, it shall not be construed to mean
personal notice, but such notice may be given by personal notice, by telegram or
cablegram, or by mail by depositing the same in the post office or letter box in
a postage prepared sealed wrapper, addressed to such shareholder, Director or
officer at such address as appears on the books of the Corporation, and such
notice shall be deemed to be given at the time when the same shall be thus sent
or mailed.
10.2 WAIVERS OF NOTICE. Except as otherwise provided in these
bylaws, when any notice is required to be given by law, by the Articles of
Incorporation or by these bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. In the case of a shareholder, such waiver of notice
may be signed by the shareholder's attorney or proxy duly appointed in writing.
ARTICLE 11. EMERGENCY POWERS
11.1 BYLAWS. The Board of Directors may adopt emergency bylaws,
subject to repeal or change by action of the shareholders, which shall,
notwithstanding any provision of law, the Articles of Incorporation or these
bylaws, be operative during any emergency in the conduct of the business of the
Corporation resulting from an attack on the United States or on a locality in
which the Corporation conducts its business or customarily holds meetings of its
Board of Directors or its shareholders, or during any nuclear or atomic
disaster, or during the existence of any catastrophe, or other similar emergency
condition, as a result of which a quorum of the Board of Directors or a standing
committee thereof cannot readily be convened for action. The emergency bylaws
may make any provision that may be practical and necessary for the circumstances
of the emergency.
11.2 LINES OF SUCCESSION. The Board of Directors, either before or
during any such emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
11.3 HEAD OFFICE. The Board of Directors, either before or during
any such emergency, may (effective during the emergency) change the head office
or designate several alternative head offices or regional offices, or authorize
the officers to do so.
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<PAGE> 23
11.4 PERIOD OF EFFECTIVENESS. To the extent not inconsistent with
any emergency bylaws so adopted, these bylaws shall remain in effect during any
such emergency and upon its termination, the emergency bylaws shall cease to be
operative.
11.5 NOTICES. Unless otherwise provided in emergency bylaws, notice
of any meeting of the Board of Directors during any such emergency may be given
only to such of the Directors as it may be feasible to reach at the time, and by
such means as may be feasible at the time, including publication, radio or
television.
11.6 OFFICERS AS DIRECTORS PRO TEMPORE. To the extent required to
constitute a quorum at any meeting of the Board of Directors during any such
emergency, the officers of the Corporation who are present shall, unless
otherwise provided in emergency bylaws, be deemed, in order of rank and within
the same rank in order of seniority, Directors for such meeting.
11.7 LIABILITY OF OFFICERS, DIRECTORS AND AGENTS. No officer,
Director, agent or employee acting in accordance with any emergency bylaw shall
be liable except for willful misconduct. No officer, Director, agent or employee
shall be liable for any action taken by him or her in good faith in such an
emergency in furtherance of the ordinary business affairs of the Corporation
even though not authorized by the bylaws then in effect.
ARTICLE 12. CHECKS, NOTES, DRAFT, ETC.
Checks, notes, drafts, acceptances, bills of exchange and other orders
or obligations for the payment of money shall be signed by such officer or
officers or person or persons the Board of Directors by resolution shall from
time to time designate.
ARTICLE 13. AMENDMENTS
The bylaws of the Corporation may be altered or amended and new bylaws
may be adopted by the shareholders at any annual or special meeting of the
shareholders or by the Board of Directors at any regular or special meeting of
the Board of Directors; provided, however, that, if such action is to be taken
at a meeting of the shareholders, notice of the general nature of the proposed
change in the bylaws shall be given in the notice of meeting. The shareholders
may provide by resolution that any bylaw provision repealed, amended, adopted,
or altered by them may not be repealed, amended, adopted or altered by the Board
of Directors. Except as otherwise provided in the Articles of Incorporation,
action by the shareholder with respect to bylaws shall be taken by an
affirmative vote of a majority of all shares entitled
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<PAGE> 24
to elect Directors, and action by the Board of Directors with respect to bylaws
shall be taken by an affirmative vote of a majority of all Directors then
holding office.
<PAGE> 1
EXHIBIT 5.1
OPINION LETTER
Miller & Martin LLP
1275 Peachtree Street, Seventh Floor
Atlanta, Georgia 30309
January 24, 2000
Integrity Bancshares, Inc.
11130 State Bridge Road, Suite D-203
Alpharetta, Georgia 30022
Re: Registration Statement on Form SB-2 (File no. _________)
Ladies and Gentlemen:
We have acted as counsel to Integrity Bancshares, Inc., a Georgia
corporation (the "Company"), in connection with the filing of the
above-referenced Registration Statement (as amended through the date hereof, the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") to register under the Securities Act of 1933, as amended (the
"Act"), shares of the Company's Common Stock (the "Shares").
We have examined the Company's Articles of Incorporation and Bylaws,
records of proceedings of the Board of Directors, or committees thereof, and the
Registration Statement. We also have examined originals or copies, certified or
otherwise identified to our satisfaction, of such other corporate records or
documents of the Company, such certificates of officers of the Company and
public officials, and such other records and documents as we have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed. In
such examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity and completeness of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed, photostatic or facsimile
copies, and the authenticity of the originals of such copies, and we have
assumed all certificates of public officials to have been properly given and to
be accurate.
On the basis of the foregoing, and subject to the limitations set forth
herein, we are of the opinion that the Shares have been legally authorized and,
when paid for, issued and sold in accordance with the terms described in the
Registration Statement, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the prospectus constituting a part thereof. In giving such consent,
we do not thereby admit that we are within the category of persons whose consent
is required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
This opinion letter is being furnished by us solely in connection with
the Registration Statement and is not to be used, reproduced, circulated, quoted
or otherwise relied upon for any other purpose
<PAGE> 2
without our express written consent. No opinion may be implied or inferred
beyond those expressly stated. This opinion letter is rendered as of the date
hereof, and we have no obligation to update this opinion letter.
Sincerely,
MILLER & MARTIN LLP
<PAGE> 1
EXHIBIT 10.1
CONTRACT FOR THE PURCHASE AND
SALE OF REAL PROPERTY
THIS AGREEMENT made and entered into this 8 day of October, 1999, by
and between JAMES E. BRIDGES D/B/A GRAND PAVILLION ("Seller"), and INTEGRITY
BANK ORGANIZING GROUP, L.L.P. ("Purchaser"),
W I T N E S S E T H: THAT
FOR AND IN CONSIDERATION of the sum of Ten ($10.00) Dollars and other
good and valuable considerations, paid by each party to the other, the receipt
and sufficiency of which are herewith acknowledged, and in consideration of the
mutual covenants contained herein, the parties hereto do hereby agree as
follows:
1. PURCHASE AND SALE. Subject to and in accordance with the terms
and provisions hereof, Seller agrees to sell and Purchaser agrees to purchase
the real estate described as Exhibit "A" and made a part hereof (the
"Premises"); all buildings, structures, improvements, and fixtures, if any, now
situated on the Premises; all right, title and interest of the Seller, including
any after-acquired title or reversion, in and to the beds of the ways, roads,
streets, avenues and alleys adjoining the Premises; all and singular the
tenements, hereditaments, easements, appurtenances, licenses, passages, waters,
water rights, water courses, riparian rights, other rights, liberties and
privileges thereof or in any way now or hereafter appertaining, including
homestead or any other claim at law or in equity as well as any after-acquired
title, franchise or license and the reversion and reversions, remainder and
remainders thereof; and all alley rights, drainage rights and all other rights
appertaining to the use or enjoyment of the Premises and improvements located in
or upon the Premises; (all of the foregoing property being hereinafter referred
to collectively as the "Property").
2. EARNEST MONEY. On the date of the full execution and delivery
of this Contract by Seller and Purchaser (which date is set forth on the
signature page hereof and is referred to herein as the "Contract Date"),
Purchaser will deliver to Perimeter Title Services, Inc., as Escrow Agent, the
amount of Ten Thousand Dollars ($10,000.00), said sum to be held by said Escrow
Agent as earnest money (the "Earnest Money"), pursuant to the terms and
provisions of this Contract.
3. PURCHASE PRICE. The purchase price (the "Purchase Price") for
the Property, subject to all adjustment and credits hereinafter provided, shall
be Eight Hundred Fifty Thousand Dollars ($850,000.00), to be paid in readily
available or in certified funds or by title company or attorney trust or escrow
account check at Closing inclusive of all Earnest Money paid.
4. ACCESS AND UTILITY EASEMENTS. At Closing, Seller shall grant
and convey to Purchaser, its successors and assigns, the following perpetual,
non-exclusive easements, for the benefit of the Premises, which easements shall
be in a form reasonably acceptable to Purchaser, to-wit:
(a) An easement for vehicular and pedestrian ingress and egress,
between the Premises and Grand Pavillion Shopping Center; and
<PAGE> 2
(b) An easement for electric, gas, telephone, water, sanitary
sewer, and storm water utility service to serve the Premises (the "Utility
Easement"), which Utility Easement shall run on, above, or under such portion of
Grand Pavillion Shopping Center that is adjacent to the Premises as is necessary
to cause such utility services to be delivered to the Premises.
5. REPRESENTATIONS AND WARRANTIES. Seller hereby warrants and
represents to Purchaser, and agrees that the following matters are now true and
shall be true as of the Closing Date:
(a) That Seller has no actual knowledge, nor has Seller received
any notice of, any actual or threatened action, litigation or proceeding
(including any condemnation or eminent domain proceedings) by any organization,
person, individual, or governmental agency against either Seller or the
Property, or with respect thereto, nor does Seller know of any basis for any
such action;
(b) That Seller will convey to Purchaser at Closing unencumbered
fee simple title to the Property, with title to the Property and to the Access
Easement and to the Utility Easement] insurable by a title insurance company
designated by Purchaser (the "Title Insurer") in the full amount of the Purchase
Price, in ALTA Form B-1992, at standard published rates, free and clear of all
restrictions, liens, encumbrances, assessments, leases, options, and other
exceptions of every kind and character except for real estate taxes relating to
the Property which are liens but not yet due and payable; Purchaser shall, at
Purchaser's expense, cause an accurate survey (the "Survey") to be made of the
Property by a registered Georgia land surveyor of Purchaser's choice, and the
legal description of the Property contained in the deed from Seller and insured
by Title Insurer and the legal description of the areas encumbered by the Access
Easement and by the Utility Easement insured by Title Insurer] shall be based
upon and conform to said Survey;
(c) That Seller has received no notice of any disputes concerning
the location of the lines and comers of the Property;
(d) That Seller has received no notice of action, contemplated
action, or plans: to close any public street adjoining the Premises; to
terminate, modify, or change any curb cut or street opening permit, license,
approval with respect to vehicular or pedestrian access between the Premises and
any adjoining public street; or to erect a median or similar barrier within any
public street adjoining the Premises that would restrict or limit access between
the Premises and such street; or to change the zoning classification or
regulations applicable to the Premises or any adjoining property;
(e) That Seller has received no notice of action, contemplated
action, or plans for a moratorium on the issuance of utility, development, or
building permits, licenses, or approvals necessary to utilize the Property
pursuant to the Plans (as said term is hereinafter defined), nor is Seller aware
of any moratorium or threat of a moratorium on applications to rezone or to seek
variances with respect to the Property;
(f) That Seller has received no notice of violations or alleged
violations of any governmental rules and/or regulations with reference to the
Property, or with reference to public or private easements for utilities which
serve and inure to the benefit of the Property;
(g) That Seller has received no notice of and has no knowledge of
any Contaminants (as said term is hereinafter defined) that have been deposited,
discharged, placed or disposed of at, on, under or near the Premises, nor has
any portion of the Premises been used as a landfill or for the disposal,
storage, sale, treatment, processing or other handling of any Contaminants. For
purposes of this Agreement, the term "Contaminants" shall mean pollutants,
contaminants, toxic waste and other substances (including but
<PAGE> 3
not limited to asbestos and to petroleum and petroleum-based products and
related constituents), the removal of which is required or the disposal or use
of which is regulated, restricted, prohibited or penalized by any Federal,
State, or local law or ordinance applicable to the Premises relating to
pollution or protection of the environment, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 and
all State laws relating to underground storage tank facilities. Seller has
received no notice that any portion of the Property constitutes "wetlands" as
that term is defined by the United States Corp of Engineers or the United States
Environmental Protection Agency or is subject to regulation as "wetlands" under
any state or local law, rule or regulation;
(h) That to Seller's best knowledge no part of the Property is
located in a flood zone as such is identified by Federal, State or local
agencies; and
(i) That Seller has the authority to enter into this Contract and
to perform its obligations hereunder.
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<PAGE> 4
6. CONDITIONS PRECEDENT. The obligation of Purchaser to
consummate this Agreement, and the purchase and sale contemplated hereby in
accordance with the terms and provision of this Agreement, is subject to the
fulfillment and satisfaction on or prior to Closing as to the conditions
described below:
(a) Each and all agreements and covenants of Seller as provided in
this Agreement shall have been fully and duly performed in accordance with the
terms and provisions of this Agreement;
(b) Each and all warranties and representations of Seller as
contained in this Agreement shall be true and correct as of Closing;
(c) Receipt by Purchaser of a building permit (the "Building
Permit") for the improvement of the Premises in accordance with the Purchaser's
plans for development of the Premises as same exist from time to time (the
"Plans");
(d) Receipt by Purchaser of all authorizations and permits, in
addition to the Building Permit, including, without limitation, construction and
use permits, curb cuts, driveway access or access control permits and sign
permits relating to the development and use of the Premises, in accordance with
the Plans and the receipt of verification confirming that the development and
use of the Premises in accordance with the Plans is consistent with all
applicable zoning and subdivision laws and regulations. All applications to
procure said authorizations and permits shall be obtained at the expense of the
Purchaser, but Seller shall cooperate with Purchaser to obtain same, and shall
execute all applications, petitions and consents necessary for such purposes]
(e) Receipt by Purchaser of verification that sanitary sewer and
storm sewer and other suitable drainage facilities, and water, gas, telephone
and electric utility services, satisfactory for the proposed use of the Premises
by Purchaser, are available to and for the use of the Premises in accordance
with the Plans. All such services shall be located at the property lines of the
Premises and available for immediate connection and use without payment of any
charges or assessments by Purchaser other than usual and ordinary connection
fees or services charges;
(f) Receipt by the Purchaser of engineering studies of the
Premises, including typographical survey, soil bearing tests, hydrology tests,
and other engineering data as Purchaser may reasonably require, all meeting, in
the Purchaser's sole discretion, engineering costs and standards for development
of the Premises in accordance with the Plans for development of the Premises.
The cost of such studies shall be paid by the Purchaser;
(g) Receipt by the Purchaser of all necessary Governmental
Charters to establish Integrity Bank; and
(h) Receipt by the Purchaser of all approvals required under
Sellers Leases for Grand Pavillion concerning the use, square footage or height
of the intended use by Purchaser. Purchaser hereby represents that the intended
use is for a 16000 sq. ft., 2-story office/bank building, and shall only be used
for such purposes. The design of said building will be similar to The Peachtree
Bank building in Norcross. Purchaser will provide Seller with its plans and
specifications as soon as available for Seller to get such approvals.
Purchaser, its agents and representatives, shall have the right to
enter upon the Premises for the purpose of examining, inspecting, testing, and
surveying the Premises.
In the event Purchaser fails and/or refuses to give written notice to
Seller of the satisfaction (or waiver) of the conditions set forth above within
150 days ("Due Diligence Period"), or in the event Purchaser provides Seller
with written notice within the stipulated period(s) set forth above that it
shall be unable to satisfy one or more of the conditions set forth above within
such stipulated period(s), this Contract shall be deemed terminated without the
necessity of further documentation, all Earnest Money, if any, shall be promptly
refunded to Purchaser, and neither party to this Contract shall thereafter have
any further right or claim against the other hereunder.
-3-
<PAGE> 5
The Purchaser may extend the Due Diligence Period for sixty (60) days
(the "Extension Period") by delivering an additional Five Thousand Dollar
($5000.00) Earnest Money Deposit to the Escrow Agent on or prior to the original
date for the expiration of the Due Diligence Period.
7. CLOSING.
(a) Purchaser and Seller shall consummate and close the sale
contemplated by this Contract (the "Closing") on or before the thirtieth (30th)
day following the expiration of the Due Diligence Period, at a time, at a place,
and on a date designated by Purchaser after the Purchaser has provided the
Seller with not less than two (2) days prior notice. Seller shall pay the State
of Georgia Transfer Tax and the cost of obtaining Purchasers Title Insurance
including Title Insurance Premium and Sellers attorney's fees. Purchaser shall
pay for all other costs associated with the closing;
(b) City, state and county ad valorem taxes and special
assessments for the calendar year of Closing shall be prorated between the
Seller and the Purchaser as of the date of Closing, provided that if the tax
bill for such calendar year has not been issued as of Closing, such proration
shall be based upon the tax bill for the prior calendar year with the parties
hereby agreeing following the Closing to adjust between themselves the
difference between such tax bills;
(c) At Closing, Seller shall pay all property transfer and similar
taxes;
(d) At the Closing, Seller will deliver to Purchaser all documents
reasonably necessary to fulfill its obligations herein, including but not
limited to the following documents (all of which shall be duly executed and
acknowledged where required and shall be in a form acceptable to Purchaser):
(i) General Warranty Deed, conveying good and marketable
fee simple title to the Property;
(ii) The Access Easement and the Utility Easement];
(iii) An Owner's Affidavit executed by the Seller
containing such representations as the Title Insurer
shall reasonably require;
(iv) Such other documents as shall be required by the
Title Insurer as a condition to insuring Purchaser's
title to the Property and to the areas encumbered by
the Access Easement and to the Utility Easement, free
of exceptions;
(v) Reaffirmation of the truth and accuracy of Sellers
representations and warranties set forth in this
Contract, and a representation that all of Seller's
agreements contained in this Contract are completely
satisfied and discharged; and
(vi) Affidavits and other documentation necessary to
satisfy State of Georgia and United States income tax
withholding requirements.
8. DEFAULT. Except as specifically provided in this Contract
relating to Conditions Precedent, or otherwise specifically provided in this
Contract, in the event the purchase and sale of the Property pursuant to this
Contract is not closed and consummated through default by Purchaser, then the
Earnest Money shall be delivered to Seller, as the full and only liquidated
damages for such default of Purchaser and as the sole remedy of Seller for any
such default by Purchaser, it being acknowledged and agreed that Seller's actual
damages would be difficult (if not impossible) to ascertain, and thereupon
neither of the parties hereto shall have any rights, duties, obligations, or
liabilities hereunder whatsoever. In the event of a default by Seller hereunder,
Purchaser may pursue an action against Seller for specific performance in
addition to the other remedies of Purchaser at law or in equity.
-4-
<PAGE> 6
9. NOTICES. Whenever any notice is required or permitted
hereunder, such notice shall be in writing and shall be delivered in person, or
transmitted by facsimile communication or sent by U.S. Registered or Certified
Mail, Return Receipt Requested, postage prepaid, or by Federal Express, Express
Mail, or other reputable overnight delivery service, to the addresses set forth
below or at such other addresses as or specified by written notice delivered in
accordance herewith:
SELLER: James E. Bridges d/b/a Grand Pavillion
11130 State Bridge Rd.
Suite D-201
Alpharetta, GA 30022
Facsimile #: 678-297-7522
PURCHASER: Integrity Bank Organizing Group, LLP
1215 Hightower Trail
Atlanta, Ga. 30350
with copy to: Andrew E. Wolf, Esq.
Wolf & Sabatini
1215 Hightower Trail, A-100
Atlanta, Ga. 30350
Notices mailed as hereinabove provided shall be deemed effectively
given on the postmarked date of such notice if mailed, on the date delivered to
the reputable overnight delivery service if sent by overnight delivery, the date
delivered to a commercial courier service il personal delivery is made by a
commercial courier, and, otherwise, on the date actually received at the address
or facsimile number provided above.
11. MISCELLANEOUS.
(a) This agreement shall be construed and interpreted under the
laws of the state where the Property is located, without giving effect to
principals of conflicts of law.
(b) Except as otherwise provided herein, all rights, powers and
privileges conferred hereunder upon the parties shall be cumulative and not
restrictive to those given by law.
(c) The failure of either party to exercise any power given either
party hereunder or to insist upon strict compliance by either party of its
obligations hereunder shall not constitute a waiver of either party's right to
demand exact compliance with the terms hereof.
(d) This Contract contains the entire agreement of the parties
hereto with respect to the subject matter of this Agreement, and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein shall be of any force or effect. This provision
may not be orally waived.
(e) This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and assigns.
(f) No amendment to this Contract shall be binding on any of the
parties to this Contract unless such amendment is in writing, and such amendment
is executed by all of the parties to this Contract. This provision may not be
orally waived.
-5-
<PAGE> 7
(g) No waiver or consent permitted or contemplated by this
Contract shall be effective or binding on any of the parties hereto unless the
same is in writing and delivered and received from one party to the other.
(h) The captions and headings of the paragraphs contained in this
Contract are inserted only as a matter of convenience and in no way define,
limit, construe, or describe the scope or intent of such paragraphs, or in any
way affect this Contract.
(i) Time shall not be of the essence in this Contract, except with
respect to the Closing Date.
(j) Possession of the Property shall be delivered by Seller to
Purchaser no later than the date of Closing.
(k) This Contract may be executed in several counterparts, each of
which shall be deemed an original, and all such counterparts together shall
constitute one and the same instrument.
(1) All representation, warranties, and agreements which are
contained in this Contract shall survive the Closing, and any investigation made
by or any actual or constructive notice of Purchaser, and shall not be deemed to
be merged into the Warranty Deed or into any of the other documents executed and
delivered at the time of Closing.
(m) In the event that any notice or performance date hereunder
shall be required to be performed on a weekend or legal holiday, then such date
shall automatically be extended to the next regular business day.
(n) Purchaser shall have the right to assign this Contract, and
its rights hereunder, in whole or in part, at any time and from time to time, to
any third party or entity; in each instance, such assignee shall assume all
obligations of Purchaser hereunder, and shall agree to execute all documents
which Purchaser is obligated to execute pursuant to the terms and provisions of
this Contract; upon such assignment as herein authorized and permitted,
Purchaser shall be fully and completely discharged of all of Purchaser's duties,
obligations, and liabilities hereunder to the extent of such assignment.
(o) The risk of loss or damage to the Property by fire or other
casualty up to the Closing is assumed by the Seller.
(p) Within ten (10) days of the Contract Date, the Seller shall
deliver to the Purchaser copies of all surveys, civil documents, test reports,
and environmental assessments relating to the Property that are within the
Seller's possession or control.
(q) In the event of litigation to enforce the rights and
obligations under the Contract, the prevailing party shall be entitled to
recover against the other party the prevailing party's reasonable attorneys'
fees and costs arising out of such litigation.
(r) If any paragraph, section, provision, sentence, clause, or
portion of this Contract is determined to be illegal, invalid, or unenforceable,
such determination shall in no way affect the legality, validity, or
enforceability of any other paragraph, section, provision, sentence, clause, or
portion of this Contract, and any such affected portion or provision shall be
modified, amended, or deleted to the extent possible and permissible to give the
fullest effect to the purposes of the parties to this Contract.
(s) If, prior to Closing, all or any portion of the Property is
subject to an eminent domain proceeding or the threat of an eminent domain
proceeding, Seller shall promptly provide Purchaser with written notice thereof.
After receiving such notice, Purchaser shall have the option of purchasing the
Property subject to such proceedings, without reduction of the Purchase Price,
whereupon any awards attributable to the Property shall be paid to Purchaser, or
cancelling this Contract without further obligation hereunder, in which event
the Earnest Money shall be returned forthwith to Purchaser.
-6-
<PAGE> 8
(t) The Parties hereby agree to hold Escrow Agent harmless for any
and all matters concerning this Contract and holding the Earnest Money Deposit.
Escrow Agent shall execute this Contract for the sole purpose of acknowledging
receipt of the Earnest Money from Purchaser.
IN WITNESS WHEREOF, each of the parties have hereunto set their hands
and affixed their seals the day and year written above.
SELLER: James E. Bridges d/b/a Grand
Pavillion
-------------------------------(I.S.)
As to Seller:
October 8, 1999.
PURCHASER:
Integrity Bank Organizing Group, L.L.P.
By:
------------------------------------
Steve Skow, Managing Partner
As to Purchaser:
October 8, 1999.
ESCROW AGENT:
Perimeter Title Services, Inc.
---------------------------------------
As to Escrow Agent:
October __, 1999.
<PAGE> 1
EXHIBIT 10.2
PROMISSORY NOTE
Borrower: Integrity Bank Organizing Group, L.L.P. Lender: The Bankers Bank
1215A Hightower Trail, Suite 230 2410 Paces Ferry Road
Atlanta, GA 30350 600 Paces Summit
Atlanta, GA 30339
Principal Amount:$500,000 Initial Rate:7.750% Date of Note: September 16, 1999
PROMISE TO PAY. Integrity Bank Organizing Group, L.L.P. ("Borrower") promises to
pay to The Bankers Bank ("Lender"), or order, in lawful money of the United
States of America, the [principal amount to Five Hundred Thousand and 00/100
Dollars ($500,000.00) or so much as may be outstanding, together with interest
on the unpaid outstanding balance of each advance. Interest shall be calculated
from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on September 16, 2000. In addition, Borrower
will pay regular quarterly payments of accrued unpaid interest beginning
December 16, 1999, and all subsequent interest payments are due on the same day
of each quarter after that. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, ad any remaining amount to any
unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the Prime rate as published
in the Money Rates section of the Wall Street Journal (the "Index"). If two or
more rates exist, then the highest rate will prevail. Lender will tell Borrower
the current index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each day. The Index currently is 8.250% per annum. The
interest rate to be applied to the unpaid principal balance of this Note will be
at a rate of 0.500 percentage points under the Index, resulting in an initial
annual rate of simple interest of 7.750%. NOTICE: Under no circumstances will
the interest rate on this Note be more than the maximum rate allowed by
applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
$100.00.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) Any partner dies or any
of the partners or Borrower becomes insolvent, a receiver is appointed for any
part of Borrower's property, Borrower makes an assignment for the benefit of
creditors, or any proceeding is
<PAGE> 2
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (e) Any creditor tries to take any of Borrower's property on or
in which Lender has a lien or security interest. This includes a garnishment of
any of Borrower's accounts with Lender. (f) Any of the events described in this
default section occurs with respect to any general partner of Borrower or any
guarantor of this Note. (g) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the indebtedness is impaired. (h) Lender in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest on this Note 3.000 percentage
points. The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
subject to any limits under applicable law, Lender's, costs of collection,
including court costs and fifteen percent (15%) of the principal plus accrued
interest as attorneys' fees, if any sums owing under this Note are collected by
or through an attorney-at-law, whether or not there is a lawsuit, and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. If not prohibited by applicable law, Borrower will also pay
any court costs, in addition to all other sums provided by law. This Note has
been delivered to Lender and accepted by Lender in the State of Georgia. Subject
to the provisions on arbitration, this Note shall be governed by and construed
in accordance with the laws of the State of Georgia.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of twenty dollars
($20.00) or five percent (5%) of the face amount of the check, whichever is
greater, if Borrower makes a payment on Borrower's loan and the check or
preauthorized charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note, as well as directions for payment from Borrower's accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. The
following party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: Steven M. Skow, Managing
Partner. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (a) Borrower or any guarantor is
in default under this Note; (b) Borrower or any guarantor ceases doing business
or is insolvent; (c) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such grantor's guarantee of this Note or any other loan with
Lender; (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (e) Lender in good faith
deems itself insecure under this Note or any other agreement between Lender and
Borrower.
<PAGE> 3
ARBITRATION. Lender and Borrower agree that all disputes, claims and
controversies between the, whether individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any collateral securing this Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right concerning any
collateral securing this Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing this Note,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitation, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.
ACCRUAL METHOD. Interest will be calculated on an Actual/360 basis.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties waive any right to
require Lender to take action against any other party who signs this Note as
provided in O.C.G.A. Section 10-7-24 and agree that Lender may renew or extend
(repeatedly and for any length of time) this loan, or release any party,
partner, or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.
IN WITNESS WHEREOF, THIS NOTE HAS BEEN SIGNED AND SEALED BY THE UNDERSIGNED, WHO
ACKNOWLEDGED A COMPLETED COPY HEREOF.
BORROWER:
Integrity Bank Organizing Group, L.L.P.
By: -----------------------------------(SEAL)
Steven M. Skow, General Partner
LENDER:
The Bankers Bank
By: -----------------------------------
Authorized Officer
<PAGE> 1
EXHIBIT 10.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective
as of the 16th day of September, 1999, by and between Integrity Bank (In
Organization), a corporation (the "Company"), and The Bankers Bank (the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, the Company proposes to offer and sell (the "Offering") up to
1,200,000 shares of Common Stock, $10 par value per share (the "Shares"), to
investors at $10 per Share pursuant to a registered public offering; and
WHEREAS, the Company desires to establish an escrow for funds forwarded
by subscribers for Shares, and the Escrow Agent is willing to serve as Escrow
Agent upon the terms and conditions herein set forth.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEPOSIT WITH ESCROW AGENT.
(a) The Escrow Agent agrees that it will from time to time accept,
in its capacity as escrow agent, subscription funds for the Shares (the
"Escrowed Funds") in the form of checks received by the Company from
subscribers. All checks shall be made payable to the Escrow Agent. If any check
does not clear normal banking channels in due course, the Escrow Agent will
promptly notify the Company. Any check which does not clear normal banking
channels and is returned by the drawer's bank to Escrow Agent will be promptly
turned over to the Company along with all other subscription documents relating
to such check. Any check received that is made payable to a party other than the
Escrow Agent shall be returned to the Company for return to the proper party.
The company in its sole and absolute discretion may reject any subscription for
shares for any reason and upon such rejection, it shall notify and instruct the
Escrow Agent in writing to return the Escrowed Funds by check made payable to
the subscriber. If the Company rejects or cancels any subscription for any
reason the Company will retain any interest earned on the Escrowed Funds to help
defray organizational costs.
(b) Subscription agreements for the Shares shall be reviewed for
accuracy by the Company and, immediately thereafter, the Company shall deliver
to the Escrow Agent the following information: (i) the name and address of the
subscriber; (ii) the number of Shares subscribed for by such subscriber; (iii)
the subscription price paid by such subscriber; (iv) the subscriber's tax
identification number certified by such subscriber; and (v) a copy of the
subscription agreement.
2. INVESTMENT OF ESCROWED FUNDS. Upon collection of each check by
the Escrow Agent, the Escrow Agent shall invest the funds in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit Insurance
Corporation or another agency of the United States government, short-term
securities issued or fully guaranteed by the United States government federal
funds, or such other investments as the Escrow Agent and the Company shall
agree. The Company shall provide the Escrow Agent with instructions from time to
time concerning in which of the specific investment instruments described above
the Escrowed Funds shall be invested and the Escrow Agent shall adhere to
<PAGE> 2
such instructions. Unless and until otherwise instructed by the Company, the
Escrow Agent shall by means of a "Sweep" or other automatic, investment program
invest the Escrowed Funds in blocks of $10,000 in federal funds. Interest and
other earnings shall start accruing on such funds as soon as such funds would be
deemed to be available for access under applicable banking laws and pursuant to
the Escrow Agent's own banking policies.
3. DISTRIBUTION OF ESCROWED FUNDS. The Escrow Agent shall
distribute the Escrowed Funds in the amounts, at the time, and upon the
conditions hereinafter set forth in this Agreement.
(a) If at any time on or prior to the expiration date of the
offering as described in the prospectus relating to the offering, (the "Closing
Date"), (i) the Escrow Agent has certified to the Company in writing that the
Escrow Agent has received at least $7,000,000 in Escrowed Funds, and (ii) the
Escrow Agent has received a certificate from the President or the Chairman of
the Board of the Company that all other conditions to the release of funds as
described in the Company's Registration Statement filed with the Securities and
Exchange Commission pertaining to the public offering have been met, then the
Escrow Agent shall deliver the Escrowed Funds to the company to the extent such
Escrowed Funds are collected funds. If any portion of the Escrowed Funds are not
collected funds, then the Escrow Agent shall notify the Company of such facts
and shall distribute such funds to the Company only after such funds become
collected funds. For purposes of this Agreement, "collected funds" shall mean
all funds received by the Escrow Agent which have cleared normal banking
channels.
(b) If the Escrowed Funds do not, on or prior to the Closing Date,
become deliverable to the Company based on failure to meet the conditions
described in Paragraph 3(a), or if the Company terminates the offering at any
time prior to the Closing Date and delivers written notice to the Escrow Agent
of such termination (the "Termination Notice"), the Escrow Agent shall return
the Escrowed Funds which are collected funds as directed in writing by the
Company to the respective subscribers in amounts equal to the subscription
amount theretofore paid by each of them. All uncleared checks representing
Escrowed Funds which are not collected funds as of the Initial Closing Date
shall be collected by the Escrow Agent, and together with all related
subscription documents thereof shall be delivered to the Company by the Escrow
Agent, unless the Escrow Agent is otherwise specifically directed in writing by
the Company.
4. DISTRIBUTION OF INTEREST. Any interest earned on the Escrowed
Funds shall be retained by the Company.
5. FEE OF ESCROW AGENT. The escrow account will accrue a service
charge of $15.00 per month. In addition, a $20.00 per check fee will be charged
if the escrow account has to be refunded due to a failure to complete the
subscription. All of these fees are payable upon the release of the Escrowed
Funds, and the Escrow Agent is hereby authorized to deduct such fees from the
Escrowed Funds prior to any release thereof pursuant to Section 3 hereof.
6. LIABILITY OF ESCROW AGENT.
(a) In performing any of its duties under the Agreement, or upon
the claimed failure to perform its duties hereunder, the Escrow Agent shall not
be liable to anyone for any damages, losses or expenses which it may incur as a
result of the Escrow Agent so acting, or failing to act; provided, however, the
Escrow Agent shall be liable for damages arising out of its willful default or
misconduct or its gross negligence under this Agreement. Accordingly, the Escrow
Agent shall not incur any such liability with respect to (i) any action taken or
omitted to be taken in good faith upon advice of its counsel or counsel for the
Company which is given with respect to any questions relating to the duties and
responsibilities of the
<PAGE> 3
Escrow Agent hereunder; or (ii) any action taken or omitted to be taken in
reliance upon any document, including any written notice or instructions
provided for this Escrow Agreement, not only as to its due execution and to the
validity and effectiveness of its provisions but also as to the truth and
accuracy of any information contained therein, if the Escrow Agent shall in good
faith believe such document to be genuine, to have been signed or presented by a
proper person or persons, and to conform with the provisions of this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow
Agent against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and counsel
fees and disbursements which may be imposed by the Escrow Agent or incurred by
it in connection with its acceptance of this appointment as Escrow Agent
hereunder or the performance of its duties hereunder, including, without
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter thereof; except, that if the Escrow Agent shall be found guilty
of willful misconduct or gross negligence under this agreement, then, in that
event, the Escrow agent shall bear all such losses, claims, damages and
expenses.
(c) If a dispute ensues between any of the parties hereto which,
in the opinion of the Escrow Agent, is sufficient to justify its doing so, the
Escrow Agent shall retain legal counsel of its choice as it reasonably may deem
necessary to advise it concerning its obligations hereunder and to represent it
in any litigation to which it may be a part by reason of this Agreement. The
Escrow Agent shall be entitled to tender into the registry or custody of any
court of competent jurisdiction all money or property in its hands under the
terms of this Agreement, and to file such legal proceedings as it deems
appropriate, and shall thereupon be discharged from all further duties under
this Agreement. Any such legal action may be brought in any such court as the
Escrow Agent shall determine to have jurisdiction thereof. In connection with
such dispute, the Company shall indemnify the Escrow Agent against its court
costs and reasonable attorney's fees incurred.
(d) The Escrow Agent may resign at any time upon giving thirty
(30) days written notice to the Company. If a successor escrow agent is not
appointed by Company within thirty (30) days after notice of resignation, the
Escrow Agent may petition any court of competent jurisdiction to name a
successor escrow agent and the Escrow Agent herein shall be fully relieved of
all liability under this Agreement to any and all parties upon the transfer of
the Escrowed Funds and all related documentation thereto, including appropriate
information to assist the successor escrow agent with the reporting of earnings
of the Escrowed Funds to the appropriate state and federal agencies in
accordance with the applicable state and federal income tax laws, to the
successor escrow agent designated by the Company appointed by the court.
7. APPOINTMENT OF SUCCESSOR. The Company may, upon the delivery
of thirty (30) days written notice appointing a successor escrow agent to the
Escrow Agent, terminate the services of the Escrow Agent hereunder. In the event
of such termination, the Escrow Agent shall immediately deliver to the successor
escrow agent selected by the Company, all documentation and Escrowed Funds
including interest earnings thereon in its possession, less any fees and
expenses due to the Escrow Agent or required to be paid by the Escrow Agent to a
third party pursuant to this Agreement.
8. NOTICE. All notices, requests, demands and other
communications or deliveries required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given three days after
having been deposited for mailing if sent by registered mall, or certified mail
return receipt requested, or delivery by courier, to the respective addresses
set forth below:
<PAGE> 4
IF TO THE SUBSCRIBERS FOR SHARES: To their respective addresses as
specified in their Subscription Agreements.
THE COMPANY: Integrity Bank (In Organization)
11130 State Bridge Road
Suite D-203
Alpharetta, Georgia 30022
THE ESCROW AGENT: The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, GA 30339-4098
Attention: Mr. Kevin J. Wilson
Vice President
9. REPRESENTATIONS OF THE COMPANY. The Company hereby
acknowledges that the status of the Escrow Agent with respect to the offering of
the Shares is that of agent only for the limited purposes herein set forth, and
hereby agrees it will not represent or imply that the Escrow Agent, by serving
as the Escrow Agent hereunder or otherwise, has investigated the desirability or
advisability in an investment in the Shares, or has approved, endorsed or passed
upon the merits of the Shares, nor shall the Company use the name of the Escrow
Agent in any manner whatsoever in connection with the offer or sale of the
Shares, other than by acknowledgment that it has agreed to serve as Escrow Agent
for the limited purposes herein set forth.
10. GENERAL.
(a) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Georgia.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
(c) This Agreement sets forth the entire agreement and
understanding of the parties with regard to this escrow transaction and
supersedes all prior agreements, arrangements and understandings relating to the
subject matter hereof.
(d) This Agreement may be amended, modified, superseded or
canceled, and any of the terms or conditions hereof may be waived, only by a
written instrument executed by each party hereto or, in the case of a waiver, by
the party waiving compliance. The failure of any part at any time or times to
require performance of any provision hereof shall in no manner affect the righ
at a later time to enforce. the same. No waiver in any one or more instances by
any part of any condition, or of the breach of any term contained in this
Agreement, whether by conduct or otherwise, shall be deemed to be, or construed
as, a further or continuing waiver of any such condition or breach or a waiver
of any other condition or of the breach of any other terms of this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties
hereto and their respective administrators, successors and assigns. The Escrow
Agent shall be bound only by the terms of this Escrow
<PAGE> 5
Agreement and shall not be bound by or incur any liability with respect to any
other agreement or understanding between.the parties except as herein expressly
provided. The Escrow Agent shall not have any duties hereunder except those
specifically set forth herein.
(g) No interest in any part to this Agreement shall be assignable
in the absence of a written agreement by and between all the parties to this
Agreement, executed with the same formalities as this original Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
the date first written above.
COMPANY: ESCROW AGENT:
INTEGRITY BANK, I.O. THE BANKERS BANK
By: By:
---------------------------- ------------------------
Steven M. Skow Kevin J. Wilson
President Vice President
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Integrity Bancshares shall have one wholly-owned subsidiary, Integrity
Bank, which shall be a Georgia chartered bank.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the incorporation of our report dated January 17,
2000, relating to the financial statements of Integrity Bancshares, Inc., in the
Registration Statement on Form SB-2 and prospectus, and to the reference to our
firm therein under the caption "Experts."
MAULDIN & JENKINS, LLC
Atlanta, Georgia
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INTEGRITY BANCSHARES,INC. AS OF AND FOR THE PERIOD FROM
INCEPTION (JUNE 11, 1999) TO JANUARY 12, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUN-11-1999
<PERIOD-END> JAN-12-2000
<CASH> 21,813
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 96,803
<DEPOSITS> 0
<SHORT-TERM> 350,000
<LIABILITIES-OTHER> 1,556
<LONG-TERM> 31,875
0
0
<COMMON> 50
<OTHER-SE> (286,678)
<TOTAL-LIABILITIES-AND-EQUITY> (286,678)
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 8,436
<INTEREST-INCOME-NET> (8,436)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 278,242
<INCOME-PRETAX> (286,678)
<INCOME-PRE-EXTRAORDINARY> (286,678)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (286,678)
<EPS-BASIC> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
FINAL SUBSCRIPTION LETTER
To the Board of Directors of
INTEGRITY BANCSHARES, INC.
11130 State Bridge Road, Suite D-203
Alpharetta, Georgia 30022
Gentlemen:
I have previously subscribed to purchase ________ shares of Integrity
Bancshares, Inc.'s common stock.
I have received a copy of Integrity Bancshares, Inc.'s final
prospectus, dated, ___________, 2000. I understand that my purchase of Integrity
Bancshares, Inc.'s common stock involves significant risk, as described under
"Risk Factors" in the final prospectus. I also understand that no federal or
state agency has made any finding or determination regarding the fairness of
Integrity Bancshares, Inc.'s offering of common stock, the accuracy or adequacy
of the final prospectus, or any recommendation or endorsement concerning an
investment in the common stock.
I have enclosed my check in the amount of $10.00 multiplied by the
number of shares listed above. My check is made payable to "The Bankers Bank -
Escrow Account for Integrity Bancshares, Inc.." Your receipt of my check will
convert my prior preliminary subscription agreement into a final subscription
agreement.
I UNDERSTAND THAT WHEN INTEGRITY BANCSHARES, INC. RECEIVES THIS LETTER
AND MY CHECK, THIS SUBSCRIPTION WILL BE IRREVOCABLE UNTIL THE OFFERING IS
CLOSED.
-----------------------------------
Print Name
-----------------------------------
Signature
-----------------------------------
Date
<PAGE> 1
EXHIBIT 99.2
FINAL SUBSCRIPTION AGREEMENT
To the Board of Directors of
INTEGRITY BANCSHARES, INC.
11130 State Bridge Road, Suite D-203
Alpharetta, Georgia 30022
Gentlemen:
I hereby subscribe to purchase the number of shares of Integrity
Bancshares, Inc.'s common stock indicated below.
I have received a copy of Integrity Bancshares, Inc.'s final
prospectus, dated _________, 2000. I understand that my purchase of Integrity
Bancshares, Inc.'s common stock involves significant risk, as described under
"Risk Factors" in the preliminary prospectus. I also understand that no federal
or state agency has made any finding or determination regarding the fairness of
Integrity Bancshares, Inc.'s offering of common stock, the accuracy or adequacy
of the final prospectus, or any recommendation or endorsement concerning an
investment in the common stock.
I enclose my check in the amount of $10.00 multiplied by the number of
shares I wish to buy. My check will be made payable to "The Bankers Bank -
Escrow Account for Integrity Bancshares, Inc.."
WHEN INTEGRITY BANCSHARES, INC. RECEIVES THIS AGREEMENT AND MY CHECK,
THIS SUBSCRIPTION AGREEMENT WILL BECOME FINAL AND BINDING AND WILL BE
IRREVOCABLE UNTIL THE OFFERING IS CLOSED.
Number of Shares (Minimum 2,500 shares): __________________
Total Subscription Price (at $10.00 per share): $__________________
__________________________
__________________________
Please print or type exact
name(s) in which the
shares should be
registered)
Accepted as of __________________, 2000, as to _____________ shares.
INTEGRITY BANCSHARES, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE> 2
SUBSTITUTE W-9
Under the penalties of perjury, I certify that: (1) the Social Security
number or Taxpayer Identification number given below is correct; and (2) I am
not subject to backup withholding. INSTRUCTION: YOU MUST CROSS OUT #2 ABOVE IF
YOU HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.
- ------------------------ ---------------------------------
Date Signature(s)*
- ------------------------
Area Code and Telephone No.
-------------------------------
Please indicate the form of
ownership desired for the
shares (individual, joint
tenants with right of
survivorship, tenants in
common, trust, corporation,
partnership, custodian,
etc.)
- ---------------------------------
Social Security Number or Federal
Taxpayer Identification Number
-------------------------------
Street Address
-------------------------------
City/State/Zip Code
*When signing as attorney, trustee, administrator or guardian, please give your
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. In case of joint tenants, each joint
owner must sign.
