<PAGE> 1
As filed with the Securities and Exchange Commission on March 17, 2000.
REGISTRATION NO. 333-______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
SOUTHERNBANK HOLDINGS, INC.
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C> <C>
GEORGIA 6021 58-2481524
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
2090 BUFORD HIGHWAY, SUITE 2A, BUFORD, GEORGIA 30518 (678) 482-4488
(Address and Telephone Number of Principal Executive Offices
and Principal Place of Business)
GEORGIA HIGHWAY 20 AT THE MALL OF GEORGIA, BUFORD, GEORGIA 30519-4929
(Address and Principal Place of Business or
Intended Principal Place of Business)
M. LAUCH MCKINNON
SOUTHERNBANK HOLDINGS, INC.
P.O. BOX 967
BUFORD, GEORGIA 30515
(678) 482-4488
(Name, Address, and Telephone Number of Agent for Service)
------------
WITH COPIES TO:
THOMAS O. POWELL, ESQUIRE KATHRYN L. KNUDSON, ESQUIRE
TROUTMAN SANDERS LLP POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
600 PEACHTREE STREET, N.E. 191 PEACHTREE STREET, N.E.
SUITE 5200 16TH FLOOR
ATLANTA, GEORGIA 30308-2216 ATLANTA, GEORGIA 30303
(404) 885-3294 (404) 572-6952
------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON
AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, check the following box. [ ]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, $1.00 par value per share 1,437,500(1) $10.00 $14,375,000(2) $3,795
- ---------------------------------------------------------------------------------------------------------------------------------
Warrants to purchase common stock 227,500 $ 0 $ 0(3) 0(3)
=================================================================================================================================
</TABLE>
(1) Includes 187,500 shares to cover over-allotments, if any, pursuant to
the over-allotment option granted to the underwriter.
(2) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457 under the Securities Act of 1933, as
amended.
(3) Because no separate consideration will be paid for the warrants, the
registration fee is included in the fee for the common stock.
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.
==============================================================================
<PAGE> 2
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. This 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 MARCH 17, 2000; SUBJECT TO COMPLETION
1,250,000 SHARES
SOUTHERNBANK HOLDINGS, INC.
A PROPOSED BANK HOLDING COMPANY FOR
SOUTHERNBANK, N.A. (IN ORGANIZATION)
COMMON STOCK
$10.00 PER SHARE
----------------------
We are offering common stock to raise capital to form SouthernBank,
N.A., a national bank in organization in Gwinnett County, Georgia. SouthernBank
Holdings, Inc. will be the holding company and sole shareholder of SouthernBank
after it is organized. This is a firm commitment underwriting. You may purchase
a minimum of 100 and a maximum of 50,000 shares, although we may waive these
limits and accept subscriptions for more or less shares. We expect that
quotations for our common stock will be reported on the Nasdaq OTC Bulletin
Board under the symbol "_____."
Our organizers will receive warrants to purchase one share of our
common stock for each share they purchase in the offering. Once vested, our
organizers may exercise their warrants and purchase additional shares of our
common stock at an exercise price of $10.00 per share. See "Description of Our
Capital Stock - Organizers' Warrants" on page ___.
OUR COMMON STOCK IS NOT A DEPOSIT, SAVINGS ACCOUNT, OR OTHER OBLIGATION
OF A BANK OR SAVINGS ASSOCIATION AND IS NOT INSURED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN OUR COMMON STOCK INVOLVES RISKS. YOU
SHOULD NOT INVEST IN THE OFFERING UNLESS YOU CAN AFFORD TO LOSE ALL OF YOUR
INVESTMENT. WE HAVE DESCRIBED WHAT WE BELIEVE TO BE THE MATERIAL RISKS OF THIS
INVESTMENT UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE __.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF SOUTHERNBANK HOLDINGS' SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public offering price $ 10.00 $12,500,000
Underwriting discount $ 0.68 $ 846,500
Proceeds to SouthernBank Holdings before expenses $ 9.32 $11,653,500
</TABLE>
We will pay an underwriting discount of $0.35 per share on shares sold
to our officers and organizers, up to 375,000 shares, and $0.75 per share on all
other shares sold. The underwriting discount shown in the table above reflects a
blended rate that assumes 227,500 shares will be sold to our officers and
organizers in the offering. Wachovia Securities has the right to purchase up to
an additional 187,500 shares at the public offering price, less an underwriting
discount of $0.75 per share, within 30 days from the date of this prospectus to
cover over-allotments.
The underwriter expects to deliver the shares of common stock on
______________, 2000.
----------------------
WACHOVIA SECURITIES, INC.
__________, 2000
<PAGE> 3
SOUTHERNBANK HOLDINGS, INC.
AND
SOUTHERNBANK, N.A. (IN ORGANIZATION)
[MAP OF PRIMARY SERVICE AREA]
<PAGE> 4
SUMMARY
This summary highlights information contained elsewhere in this
prospectus. Accordingly, this summary does not contain all of the information
you should consider before investing in our common stock. We encourage you to
read the entire prospectus carefully before investing, including the risk
factors and the financial statements. References in this prospectus to "we,"
"us" and "our" generally refers to SouthernBank Holdings, Inc., but may also
refer to both SouthernBank Holdings and SouthernBank, N.A. Unless otherwise
stated, all of the information in this prospectus assumes the underwriter will
not exercise its over-allotment option.
SOUTHERNBANK HOLDINGS AND SOUTHERNBANK
SouthernBank Holdings, Inc. is a Georgia corporation that was
incorporated on July 13, 1999 to organize and serve as the holding company for
SouthernBank, N.A., a national bank in organization. SouthernBank will operate
as a community bank emphasizing personalized banking relationships with
individuals and businesses predominantly located within the Gwinnett County,
Georgia area.
On November 19, 1999, we filed an application with the Office of the
Comptroller of the Currency to organize SouthernBank as a national bank in
Gwinnett County. We received preliminary approval of SouthernBank's charter
application on March 15, 2000. In order to receive final approval of our
application to organize SouthernBank, we anticipate that we will be required to
raise a minimum of $8,500,000 in capital, receive FDIC approval of our
application for deposit insurance and implement appropriate banking policies and
procedures. We filed an application with the FDIC for deposit insurance also on
November 19, 1999, and, in March 2000, we expect to file an application with the
Board of Governors of the Federal Reserve System to become a bank holding
company and to acquire all of the capital stock of SouthernBank. After receiving
all necessary regulatory approvals, we anticipate beginning operations at a
temporary facility in the second quarter of 2000, and we expect to move to our
permanent facility in the second quarter of 2001.
WHY WE ARE ORGANIZING A NEW BANK IN GWINNETT COUNTY
We believe the communities that make up our primary service area
present a growing and highly diversified economic environment that will support
the formation of SouthernBank. Situated approximately 35 minutes from downtown
Atlanta, our primary service area includes the communities of Buford, Dacula,
Lawrenceville, Lilburn, Sugar Hill and Suwanee in Gwinnett County, as well as
the communities of Flowery Branch in Hall County and Braselton in Jackson
County. Collectively, these communities are part of one of the fastest growing
regions in the nation and are expected to experience continued population
growth.
With our proposed main office location adjacent to the 1.7 million
square foot Mall of Georgia, the largest shopping mall in the state, we believe
that our physical location within our primary service area will provide us with
a unique opportunity to successfully expand and grow our banking operations.
Already, the recently opened mall has attracted over 170 retailers and
restaurant operators to the heart of our primary service area and is expected to
draw additional business into northern Gwinnett County. By strategically placing
our main office in the center of this development, we believe that we will be
able to capitalize on the influx of new residents and businesses locating to the
area, as well as the core residents and businesses already established in our
market.
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<PAGE> 5
The following were also major factors in our selection of our primary
service area:
- Estimated median income in 1999 was $62,500 compared to the
1998 U.S. median income of $38,885 and 1998 Georgia median
income of $36,553;
- The area's population grew by 60.9% from 1990 to 1999;
- The area's population is projected to increase by 21.7% from
1999 to 2004;
- Nearly 60% of the population in the area is of working age;
- Nearly 30% of Gwinnett County's population over age 25 has at
least a bachelor's degree, a factor in successfully attracting
high-tech firms to the area; and
- Gwinnett County's employment base is highly diversified,
representing the high-tech, service, retail trade,
manufacturing, wholesale and construction industries.
In addition to the economic and population growth experienced within
our primary service area, we believe that consolidation within the financial
services industry may further enhance our opportunity to establish a banking
presence in northern Gwinnett County. Over the last decade, large national and
regional banks such as First Union, Regions Bank and BB&T have entered or
expanded in the Gwinnett County market through the acquisition of smaller
community banks. Although most of these large financial institutions are well
established in Gwinnett County, these institutions experienced only a 15.0%
growth rate in deposits compared to a 34.1% growth in the overall deposit
market. The slower relative growth of these large banks resulted in their
combined relative deposit market share falling from 65.3% to 56.3%. Bank and
thrift deposits in our primary service area, which is smaller than the overall
Gwinnett County market, totaled more than $3.1 billion in June 1999. Bank of
America, Wachovia, SunTrust, First Union and BB&T control 65.4% of the deposits
in our primary service area. Four of the largest community banks in our primary
service area together hold 15.3% of the area's deposits. We will compete
directly with many of these institutions.
Acquisitions of community banks by large national and regional banks
often result in the dissolution of local boards of directors and in significant
turnover in management and customer service personnel who possess extensive
banking experience and strong ties to the local community. Accordingly, we
intend to hire experienced and talented individuals who will complement the
community banking experience and management style of our proposed executive
officers. As a locally-owned community bank based in Gwinnett County, we expect
to take advantage of this talent to help us offer convenient service, local
decision-making and competitive banking products. Additionally, by focusing our
operations on the communities we serve, we believe that we will be able to
respond to changes in our market more quickly than large, centralized
institutions.
DIRECTORS AND OFFICERS
M. Lauch McKinnon currently serves as our president, and is the
proposed president and chief executive officer of SouthernBank. Mr. McKinnon has
held numerous senior banking positions in both Georgia and Tennessee during his
20-year career in banking and banking-related industries, including president
and chief executive officer at both North Georgia National Bank in Calhoun,
Georgia and Volunteer Bank and Trust Company in Chattanooga, Tennessee. Rita B.
Gray, is our proposed chief financial officer and has 30 years of banking
experience, including service as chief financial officer at both North Georgia
National Bank in Calhoun, Georgia and Dalton/Whitfield Bank & Trust in Dalton,
Georgia. See "Management" on page __.
2
<PAGE> 6
Our directors intend to utilize their diverse backgrounds and their
extensive local business relationships to attract customers from all segments of
the communities we serve. Currently, our board of directors consists of the
following individuals:
- James O. Andrews
- James E. Hinshaw, Sr.
- Donald F. Jackson
- Lewis A. Massey
- Tyler C. McCain
- M. Lauch McKinnon
- D. Alan Najjar
- D. Arnold Tillman, Jr.
- Jeffery S. Tucker
Upon approval by the Office of the Comptroller of the Currency, we
anticipate these individuals will also be the directors of SouthernBank. See
"Management" on page ____.
PHILOSOPHY AND STRATEGY
Initially, our business strategy will be carried out through the
operations and growth of SouthernBank. At the bank level, our management
philosophy will be to deliver exceptional customer service through highly
trained personnel who understand and care about the banking needs of our
customers. We believe that this philosophy will distinguish SouthernBank
from its competitors and will enable us to be successful.
To carry out our philosophy, our business strategy will involve:
- Hiring and retaining highly experienced and qualified key
banking personnel, preferably with established client
relationships;
- Cross-training our entire staff to answer questions about all
of our products and services so that each employee can not
only resolve banking-related customer questions, but can also
suggest products and services that may be of interest to our
customers;
- Implementing on a comprehensive and on-going basis an active
call program involving all of our officers, directors and
employees, and monitoring the results and productivity of the
program, with specific goals required of our officers and
directors;
- Providing individualized attention with local decision-making
authority;
- Capitalizing on our directors' diverse community involvement
and business experience;
- Implementing an aggressive marketing program;
- Utilizing sophisticated financial services technology and
strategic outsourcing to provide a broad array of banking
products and services; and
- Establishing a community identity by positioning ourselves as
a locally-owned bank that is responsive to the banking needs
of the communities we serve.
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<PAGE> 7
PRODUCTS AND SERVICES
We plan to offer high quality products and personalized services while
providing our customers with the financial sophistication and array of products
typically offered by a larger bank. We intend to offer our services through a
variety of channels, including internet banking, automated teller machines,
telephone banking and in the future, branch offices. Our lending services will
include commercial loans to small- to medium-sized businesses and professional
concerns, real estate-related loans and consumer loans to individuals.
SouthernBank will offer a broad array of competitively priced deposit services
including demand deposits, regular savings accounts, money market deposits,
certificates of deposit and individual retirement accounts. To complement our
lending and deposit services, we intend to also provide debit cards, travelers
checks, direct deposit, savings bonds, night depository, collection services,
wire transfers, overdraft protection and automatic drafts for various accounts.
We also plan to offer courier deposit services to our business customers, and
will market the convenience and advantages of our internet banking services,
which will include on-line bill paying, money transfer and cash management
services. We believe these services will further enhance our ability to be
competitive with larger banks, without losing the personal touch of a
locally-owned community bank.
THE OFFERING AND OWNERSHIP BY OUR ORGANIZERS AND DIRECTORS
We are offering 1,250,000 shares of our common stock for $10.00 per
share. Our directors and organizers intend to purchase approximately 227,500
shares of our common stock, representing 18.2% of the 1,250,000 shares of our
common stock to be outstanding upon the close of the offering. In recognition of
the financial risks undertaken by our organizers in forming SouthernBank
Holdings and SouthernBank, they will be granted warrants to purchase, at $10.00
per share, one additional share of our common stock for each share they purchase
in the offering. We believe our directors' and organizers' financial interest in
SouthernBank Holdings will encourage their active participation in growing our
business. See "Description of Our Capital Stock - Organizers' Warrants" on page
__.
USE OF PROCEEDS
We will use $8,500,000 raised in this offering to capitalize
SouthernBank. We anticipate that this is the amount of capital that our banking
regulators will require us to invest in SouthernBank prior to the bank's
opening. We will use the remaining net proceeds of this offering to repay the
amounts drawn on our lines of credit, to provide SouthernBank Holdings with
working capital and for other general business purposes. Additionally,
SouthernBank will use the funds it receives from SouthernBank Holdings to
purchase the site for its main office, to construct and furnish the facility,
and to provide working capital to operate SouthernBank. See "Use of Proceeds" on
page __.
LOCATION OF OFFICES
The address and phone number of our temporary executive offices that we
are using prior to SouthernBank's opening are:
2090 Buford Highway, Suite 2A
Buford, Georgia 30518
(678) 482-4488
4
<PAGE> 8
Our permanent main office and executive offices will be located at:
Georgia Highway 20 at the Mall of Georgia
Buford, Georgia 30519-4929
Our main office will be a building of approximately 7,000 square feet
located adjacent to the recently opened Mall of Georgia on an approximately 1.2
acre site in the Mill Creek area of northern Gwinnett County. We anticipate that
construction of our main office will begin in the third quarter of 2000 and will
be completed in the second quarter of 2001. Until our main office is completed,
we plan to operate out of a modular facility that will be located on our
permanent site. We anticipate opening for business in our temporary facility in
the second quarter of 2000.
5
<PAGE> 9
RISK FACTORS
The following paragraphs describe what we believe are the material
risks of an investment in our common stock. We may face other risks as well,
which we have not anticipated. An investment in our common stock involves a
significant degree of risk. You should not invest in our common stock unless you
can afford to lose your entire investment. Before deciding to invest in our
common stock, please carefully read the entire prospectus, including the
cautionary statement following this Risk Factors section regarding our use of
forward-looking statements.
WE HAVE NO OPERATING HISTORY UPON WHICH TO BASE AN ESTIMATE OF OUR FUTURE
FINANCIAL PERFORMANCE.
SouthernBank, which initially will be our sole subsidiary, is in
organization, and neither SouthernBank Holdings nor SouthernBank has any
operating history on which to base any estimate of our future financial
performance. Because we lack an operating history, you do not have access to
either the type or amount of information that would be available to a purchaser
of securities of a financial institution with an operating history. Accordingly,
the financial statements presented in this prospectus may not be as meaningful
as those of a company which does have a history of operations. In addition, the
success of our operations must be considered in light of the expenses,
complications and delays frequently encountered in connection with the opening
and development of a new bank.
IF WE FAIL TO BEGIN BANKING OPERATIONS, YOU COULD LOSE ALL OR A PORTION OF YOUR
INVESTMENT.
If we do not receive final approval for SouthernBank to start its
banking operations by September 15, 2001, we anticipate that we will solicit
shareholder approval for the dissolution and liquidation of SouthernBank
Holdings. If we dissolve and liquidate after the close of the offering,
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. These expenses include the expenses of
the offering, our organizational and pre-opening expenses and the claims of
our creditors. We will distribute to our shareholders the net assets
remaining after payment or provision for payment of all claims against
SouthernBank Holdings. Although we have applied for all regulatory approvals
required to begin operations, final approval from the Office of the
Comptroller of the Currency may not be granted in a timely manner, if at all.
The close of the offering is not conditioned upon the receipt of the OCC's
final approval to begin business.
IF WE DO NOT RECEIVE REGULATORY APPROVALS IN A TIMELY MANNER, IT COULD DELAY
THE DATE ON WHICH SOUTHERNBANK OPENS FOR BUSINESS, RESULTING IN INCREASED
PRE-OPENING EXPENSES AND INITIAL LOSSES.
Although we expect to receive all regulatory approvals and to open for
business in the second quarter of 2000, we can give you no assurance as to when,
if at all, these events will occur. Any delay in beginning SouthernBank's
operations will increase our pre-opening expenses and postpone our realization
of potential revenues. Additionally, a delay will cause our accumulated deficit
to increase as a result of continuing operating expenses, such as salaries and
other administrative expenses, and our lack of revenue.
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<PAGE> 10
WE EXPECT TO INCUR SUBSTANTIAL START-UP EXPENSES, CAUSING US TO HAVE INITIAL
LOSSES, AND YOU MAY NOT RECOVER ALL OR ANY PART OF YOUR INVESTMENT IF WE DO NOT
BECOME PROFITABLE IN THE FUTURE.
Typically, 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. Because SouthernBank Holdings will initially act as the sole
shareholder of SouthernBank, our profitability will depend upon the bank's
successful operation. Consequently, you may not recover all or any part of your
investment in our common stock. We will incur substantial expenses in
establishing SouthernBank, and we can give you no assurance that the bank will
be profitable or that future earnings, if any, will meet the levels of earnings
prevailing in the banking industry. See "Management's Discussion and Analysis of
Financial Condition and Plan of Operations" on page __.
FAILURE TO IMPLEMENT KEY ELEMENTS OF OUR BUSINESS STRATEGY MAY ADVERSELY AFFECT
OUR FINANCIAL PERFORMANCE.
If we cannot implement key elements of our business strategy, our
financial performance may be adversely affected. Our organizers have developed a
business plan that details the strategy that we intend to implement in our
efforts to achieve profitable operations. The strategy includes hiring and
retaining experienced and qualified employees and attracting individuals and
business customers primarily from the Gwinnett County area. Even if the key
elements of our business strategy are successfully implemented, they may not
have the favorable impact on operations that we anticipate. See "Our Proposed
Business Philosophy and Strategy" on page __.
DEPARTURES OF OUR KEY PERSONNEL OR DIRECTORS MAY IMPAIR OUR OPERATIONS.
M. Lauch McKinnon and Rita B. Gray are important to our success and
if we were to lose either of their services our financial condition and
results of operations could be adversely affected. Mr. McKinnon has been
instrumental in our organization and will be the key management official in
charge of SouthernBank's daily business operations. Ms. Gray will be the key
officer in charge of our financial and accounting operations. In addition, if
either Mr. McKinnon or Ms. Gray were to leave SouthernBank, we would incur
additional costs in our search for new personnel. Although we have entered
into a one-year employment agreement with Mr. McKinnon and a letter agreement
with Ms. Gray, we cannot be assured of their continued service.
Additionally, our directors' community involvement, diverse backgrounds
and extensive local business relationships are important to our success. Our
growth could be adversely affected if the composition of our board of directors
changes significantly. See "Management" on page __.
OUR ORGANIZERS, DIRECTORS AND OFFICERS COULD HAVE THE ABILITY TO INFLUENCE
SHAREHOLDER ACTIONS, AND THEY MAY HAVE INTERESTS THAT ARE DIFFERENT FROM YOURS
AS AN INVESTOR.
Our organizers, directors and officers will be able to influence the
outcome of director elections or block a significant transaction that might
otherwise be approved by our shareholders and, as a result, will exercise
significant influence over our management and affairs. These persons,
individually or as a group, may have interests that are different from yours as
an investor. Our organizers intend to purchase 227,500 shares of our common
stock which will equal 18.2% of the 1,250,000 shares to be outstanding upon the
close of the offering. See "Management" on page ___.
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<PAGE> 11
WE INTEND TO GRANT WARRANTS TO OUR ORGANIZERS AND STOCK OPTIONS TO SOME OF
SOUTHERNBANK'S EMPLOYEES WHICH, IF EXERCISED, WOULD REDUCE YOUR PERCENTAGE
OWNERSHIP IN SOUTHERNBANK HOLDINGS.
Our organizers, directors, officers and employees may exercise their
warrants and options to purchase our common stock, which would result in the
dilution of your proportionate interest in SouthernBank Holdings. Upon the close
of the offering, we will grant to our organizers warrants to purchase one
additional share of our common stock for each share purchased in the offering in
recognition of the financial risks undertaken by them in forming SouthernBank
Holdings and SouthernBank. We anticipate that our organizers will purchase
227,500 shares in this offering. Accordingly, we expect that our organizers will
be granted warrants to purchase an aggregate of 227,500 shares. If all of these
warrants were exercised, our organizers would own 30.8% of the shares
outstanding after the offering, on a fully diluted basis. See "Description of
Our Capital Stock - Organizers' Warrants" on page ___.
In addition, we have established a stock option plan which will allow
us to grant stock options to employees who are contributing significantly to the
management or operation of SouthernBank. We have reserved 100,000 shares of our
common stock for issuance under our stock option plan, of which Mr. McKinnon may
receive an option to purchase up to 25,000 shares and Ms. Gray may receive an
option to purchase up to 10,000 shares if SouthernBank meets established
performance goals. If these options and all of the warrants granted to our
organizers were exercised in full, our organizers, directors and executive
officers would own 32.4% of the shares outstanding after the offering, on a
fully diluted basis. See "Executive Compensation - Stock Option Plan" on page
___.
WE WILL FACE STRONG COMPETITION FOR CUSTOMERS, ESPECIALLY FROM LARGE AND MORE
ESTABLISHED FINANCIAL INSTITUTIONS, WHICH MAY HINDER US FROM OBTAINING
CUSTOMERS AND MAY CAUSE US TO PAY HIGHER INTEREST RATES ON OUR DEPOSITS OR
CHARGE LOWER INTEREST RATES ON OUR LOANS THAN OUR COMPETITORS' RATES FOR AN
EXTENDED PERIOD.
We anticipate offering very competitive loan and deposit rates as we
establish ourselves in the market, but if excessive competition forces us to
offer more aggressive pricing indefinitely, our net interest margin will suffer
and our financial performance will be negatively impacted. SouthernBank 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. With multiple financial institutions already doing business in
our primary service area, and given the chance that additional competitors may
enter the market in the future, we will be faced with continuous competition.
Moreover, some of these competitors are not subject to the same degree of
regulation as we will be and may have greater resources than will be available
to us. Competition from non-traditional financial institutions may also affect
our success due to the Gramm-Leach-Bliley Act. See "Supervision and Regulation -
Gramm-Leach-Bliley Act" on page ___.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CUSTOMERS
BECAUSE OUR LENDING LIMITS WILL BE LOWER THAN THEIRS.
Our lending limit will be significantly less than the limits for most
of our competitors, and may hinder our ability to establish relationships with
larger businesses in our market area. A national bank's legal lending limit to a
single borrower is roughly equal to 15.0% of its capital and surplus plus an
additional 10.0%, if the amount that exceeds 15.0% is fully secured by readily
marketable collateral. Based on SouthernBank's proposed capitalization and
pre-opening expenses, SouthernBank's initial legal
8
<PAGE> 12
lending limit will be approximately $1,200,000 for loans not fully secured plus
an additional $800,000, or an estimated total of $2,000,000, for loans that meet
the federal guidelines. These legal limits will increase or decrease as
SouthernBank's capital increases or decreases as a result of its earnings or
losses, among other reasons. Based on our legal lending limit, SouthernBank will
need to sell participations in its loans to other financial institutions in
order to meet the lending needs of our customers requiring extensions of credit
above these limits. However, our strategy to accommodate larger loans by selling
participations in those loans to other financial institutions may not be
successful. See "Our Proposed Business - Lending Services" on page ____.
OUR SUCCESS WILL DEPEND SIGNIFICANTLY UPON GENERAL ECONOMIC CONDITIONS IN THE
GWINNETT COUNTY AREA.
Our operations and profitability may be more adversely affected by a
local economic downturn than those of our larger competitors who are more
geographically diverse. Since the majority of SouthernBank's borrowers and
depositors are expected to be individuals and businesses located and doing
business in the Gwinnett County area, our success will depend significantly
upon the general economic conditions in and around Gwinnett County. For
example, an adverse change in the local economy could make it more difficult
for borrowers to repay their loans, which could lead to loan losses for
SouthernBank. In addition, because many of our shareholders are likely to be
residents of the Gwinnett County area, a prolonged downturn in the general
economic conditions in the area could result in sales of large amounts of our
common stock.
CHANGES IN INTEREST RATES COULD SIGNIFICANTLY AFFECT OUR PROFITABILITY.
Our profitability depends substantially on SouthernBank's net interest
income. A rapid increase or decrease in interest rates could significantly
affect SouthernBank's net interest income, capital and liquidity. Net interest
income is the difference between the interest income earned on a bank's
interest-earning assets and the interest expense paid on its interest-bearing
liabilities. To the extent that the maturities of these assets and liabilities
differ, rapidly rising or falling interest rates could significantly and
adversely affect SouthernBank's earnings, which, in turn, would impact
SouthernBank Holdings' business. See "Our Proposed Business - Asset and
Liability Management" on page ___.
OUR ABILITY TO PAY DIVIDENDS TO OUR SHAREHOLDERS IS LIMITED AND DEPENDS ON
SOUTHERNBANK'S LEGAL ABILITY TO PAY DIVIDENDS, AS WELL AS THE JUDGMENT OF OUR
BOARD OF DIRECTORS.
SouthernBank Holdings will initially have limited sources of income
other than dividends it receives from SouthernBank. SouthernBank Holdings'
ability to pay dividends will therefore depend largely on SouthernBank's ability
to pay dividends to it, which will be based primarily on its earnings, capital
requirements and financial condition, among other factors.
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 our need to retain and build capital, it will be our
policy to reinvest earnings for the period of time necessary to help support the
success of our operations. As a result, we do not plan to pay dividends until
SouthernBank is cumulatively profitable. See "Dividends" on page ___.
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<PAGE> 13
THE OFFERING PRICE FOR OUR COMMON STOCK WAS ARBITRARILY DETERMINED AND OUR
FUTURE STOCK PRICE MAY FLUCTUATE BELOW THE INITIAL PUBLIC OFFERING PRICE ONCE
THE SHARES BECOME FREELY TRADEABLE.
SouthernBank Holdings and the underwriter arbitrarily set the public
offering price after considering prevailing market conditions and the price of
comparable publicly traded companies. Because we were only recently formed and
SouthernBank is in the process of being organized, the public offering price
could not be set by referencing historical measures of the bank's financial
performance. Therefore, the public offering price may not indicate the market
price for our common stock after this offering. Several factors will cause the
market price to fluctuate after the offering, and the price for our common stock
may drop below the public offering price. The factors include our results of
operations, financial analysts' future estimates of our earning potential,
economic conditions in our market and trends in the banking industry. See
"Underwriting" on page ___.
IF AN ACTIVE TRADING MARKET DOES NOT DEVELOP, IT MAY BE DIFFICULT FOR YOU TO
SELL YOUR SHARES OF OUR COMMON STOCK.
Prior to the offering, there has been no public market for our common
stock, and an active trading market may not develop. 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. Although we have applied to list our common stock on the Nasdaq OTC
Bulletin Board, an active trading market may not develop or continue after the
offering. You should consider carefully the limited liquidity of your investment
before purchasing any shares of our common stock.
THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE.
If a market develops for our common stock after this offering, the
price of our common stock may be volatile. Factors that may affect the price of
our common stock include market depth and liquidity, investor perception of our
financial strength, conditions in the banking industry such as credit quality
and monetary policies, and general economic and market conditions. Our quarterly
operating results, changes in analysts' earnings estimates or other developments
affecting us could cause the market price of our common stock to fluctuate
substantially. In addition, from time to time the stock market experiences
extreme price and volume fluctuations. This volatility may significantly affect
the market price of our common stock for reasons unrelated to our operating
performance.
OUR PROFITABILITY AND GROWTH COULD BE ADVERSELY AFFECTED BY CHANGES IN THE LAW,
ESPECIALLY CHANGES AFFECTING THE BANKING INDUSTRY.
We will be subject to extensive federal government supervision and
regulation. Our ability to achieve profitability and to grow could be adversely
affected by federal and state banking laws and regulations. These and other
restrictions limit the manner in which we may conduct our business and obtain
financing, including SouthernBank's ability to attract deposits, make loans and
achieve satisfactory interest spreads. Many of these regulations are intended to
protect depositors, the public, and the FDIC, not shareholders. In addition, the
burden imposed by federal and state 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 also adversely affect the banking industry or our operations. We
cannot predict the effects of any potential changes, but they could adversely
affect our future operations. See "Supervision and Regulation" on page ___.
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<PAGE> 14
THE OPERATION OF SOUTHERNBANK MAY, IN THE FUTURE, REQUIRE MORE CAPITAL THAN
SOUTHERNBANK HOLDINGS WILL RAISE IN THIS OFFERING, AND WE MAY NOT BE ABLE TO
OBTAIN ADDITIONAL CAPITAL ON TERMS WHICH ARE FAVORABLE TO INVESTORS.
In the future, should we need additional capital, we may not be able to
raise additional funds through the issuance of additional shares of our common
stock or other securities. Even if we were able to obtain additional capital
through the issuance of additional shares of our common stock or other
securities, we may not be able to issue these securities at prices or on terms
better than or equal to the public offering price and terms of this offering.
The issuance of new securities could dilute your ownership interest in
SouthernBank Holdings.
GEORGIA LAW AND PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS COULD
DETER OR PREVENT TAKEOVER ATTEMPTS BY A POTENTIAL PURCHASER OF OUR COMMON STOCK
THAT WOULD BE WILLING TO PAY YOU A PREMIUM FOR YOUR SHARES OF OUR COMMON STOCK.
In many cases, shareholders receive a premium for their shares when a
company is acquired by another company. Under Georgia law, however, no bank
holding company may acquire control of SouthernBank Holdings until SouthernBank
has been incorporated for five years. As a result, your ability to receive a
premium over market for your shares of our common stock may be severely limited
during the first five years of SouthernBank's operations. In addition, our
articles of incorporation and bylaws contain provisions that may deter or
prevent an attempt to change or gain control of SouthernBank Holdings. These
provisions include the potential existence of preferred stock, staggered terms
for directors, restrictions on the ability to change the number of directors or
to remove a director, special provisions regarding combinations with
"interested" shareholders and the price at which an acquirer may purchase your
shares of our common stock, and our board of directors' flexibility in
evaluating acquisition proposals. As a result, you may be deprived of
opportunities to sell some or all of your shares of our common stock at prices
that represent a premium over the market. See "Important Provisions of Our
Articles of Incorporation and Bylaws" on page ___.
FUTURE RESALES OF OUR COMMON STOCK MAY ADVERSELY AFFECT THE MARKET PRICE OF
YOUR SHARES OF OUR COMMON STOCK.
After the close of this offering, 1,250,000 shares of our common stock
will be outstanding, assuming the underwriter does not exercise its
over-allotment option. The sale of a large block of the shares outstanding after
the close of the offering could adversely affect the market price of our common
stock. All of the outstanding shares will be freely tradable without restriction
except for 227,500 shares that we anticipate our organizers and executive
officers will purchase in the offering. Our organizers and executive officers
have agreed, for a period of 180 days from the date of this prospectus, not to
sell or otherwise transfer, either directly or indirectly, any shares of our
common stock without the prior consent of the underwriter. As a result,
1,022,500 shares of our common stock, or 81.8% of the outstanding shares of our
common stock will be freely tradable without restriction upon the close of the
offering. Additionally, 227,500 shares of our common stock held by our
organizers and executive officers will be eligible for sale beginning 180 days
from the date of this prospectus under resale limitations of Rule 144 of the
Securities Act. See "Shares Eligible for Future Sale" on page __.
WE MAY NOT ALLOCATE ALL OF THE NET PROCEEDS IN THE MOST PROFITABLE MANNER.
After capitalizing SouthernBank with $8,500,000 our board of directors
and management will have broad discretion in allocating a total of approximately
$2,913,500 or approximately 23.3% of the net proceeds of the offering. We cannot
predict the extent to which we will allocate these funds to
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<PAGE> 15
income-generating assets, capital assets or liquidity. Because the allocation of
these proceeds will directly affect our earnings, it will be difficult to
predict our results of operations. Although we intend to utilize the funds to
serve SouthernBank Holdings' best interests, we cannot assure you that our
allocation will ultimately reflect the most profitable application of these
proceeds. See "Use of Proceeds" on page __.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus are "forward-looking
statements." Forward-looking statements include statements about the
competitiveness of the banking industry, potential regulatory obligations,
potential economic growth in our primary service area, our strategies and other
statements that are not historical facts. When we use in this prospectus words
like "anticipate," "believe," "expect," "estimate" and similar expressions, you
should consider them as identifying forward-looking statements. Because
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ significantly from those
expressed or implied by the forward-looking statements. Some of these factors
are set forth above in the section entitled "Risk Factors" on page __.
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<PAGE> 16
USE OF PROCEEDS
We estimate that we will receive net proceeds of $11,518,500 from the
sale of 1,250,000 shares of our common stock in the offering, after deducting
the estimated underwriting discount of $846,500 and estimated offering expenses
of $135,000. If the underwriter exercises its over-allotment option in full, we
will receive $1,734,375 in additional net proceeds, after deducting an
additional underwriting discount of $140,625. The following two sections
describe our proposed use of proceeds based on our present plans and business
conditions.
USE OF PROCEEDS BY SOUTHERNBANK HOLDINGS
The following table shows the anticipated use of the proceeds by
SouthernBank Holdings. We describe SouthernBank's anticipated use of proceeds in
the following section.
<TABLE>
<S> <C>
Gross proceeds from the offering ............ $12,500,000
Underwriting discount........................ 846,500
Offering expenses ........................... 135,000
Organizational expenses ..................... 85,000
Land purchase deposit ....................... 20,000
Investment in common stock of SouthernBank... 8,500,000
-----------
Remaining Proceeds ................. $ 2,913,500
===========
</TABLE>
SouthernBank Holdings has established a line of credit with The Bankers
Bank. The line of credit, which as of December 31, 1999 was for an amount up to
$250,000, is being used to pay SouthernBank Holdings' offering and
organizational expenses prior to the close of the offering. In addition, this
line of credit has been used to fund a $20,000 earnest money deposit on the
property on which our main office will be located. The line of credit, which is
due on June 28, 2000, bears interest at 1.0% less than the prime rate as
published in the Money Rates section of The Wall Street Journal. As of December
31, 1999, approximately $120,000 was outstanding on the line of credit. On
_____________, 2000, SouthernBank Holdings increased the line of credit to
$750,000, and, as of the date of this prospectus, approximately $_______________
was outstanding. This line of credit will be repaid in full after the close of
the offering.
As shown, we intend to capitalize SouthernBank with $8,500,000.
Additional funds from this offering are expected to be held by SouthernBank
Holdings and reserved for general corporate purposes at the holding company
level. For example, a portion of the net proceeds of this offering will be
retained by SouthernBank Holdings for the purpose of funding any required
additions to the capital of SouthernBank. Since national banks are regulated
with respect to the ratio that their total assets may bear to their total
capital, if SouthernBank experiences greater growth than anticipated, it may
require the infusion of additional capital to support that growth. We
anticipate, however, that the proceeds of this offering will be sufficient to
support SouthernBank's immediate capital needs and we will seek, if necessary,
additional long- and short-term financing to support any additional needs.
However, we can give you no assurance that such financing, if needed, will be
available or, if available, will be on terms acceptable to us.
We anticipate that the net proceeds received upon the exercise of the
underwriter's over-allotment option, if any, or the proceeds received upon the
exercise of the warrants, if any, will be used for working capital purposes.
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<PAGE> 17
USE OF PROCEEDS BY SOUTHERNBANK
The following table shows the anticipated use of the proceeds allocated
to SouthernBank. These proceeds will be in the form of an investment in
SouthernBank's common stock by SouthernBank Holdings. During the period between
the opening of SouthernBank and the completion of our permanent facility, we
will be conducting operations from a temporary modular facility. The following
table shows the rental cost of the temporary facility for a period of 12 months
from the completion of this offering. Construction, furniture, fixtures and
equipment costs will be capitalized and amortized over the estimated useful life
of the asset. SouthernBank will use the remaining proceeds to make loans,
purchase securities and otherwise conduct business operations.
<TABLE>
<S> <C>
Investment by SouthernBank Holdings in SouthernBank's
common stock ........................................ 8,500,000
Reimbursement to SouthernBank Holdings for land
purchase deposit .................................... 20,000
Purchase of land ...................................... 837,000
Construction of bank facility, including land
preparation for modular building facility .......... 1,168,000
Furniture, fixtures and equipment ..................... 250,000
Rental payments for modular building facility
(12 months) ........................................ 48,000
----------
Remaining proceeds .................................... $6,177,000
==========
</TABLE>
Land South Properties, LLC, a real estate development company owned by
two of our organizers, has entered into an agreement to acquire the property on
which SouthernBank's main office will be located for a purchase price of
$857,000. Land South will assign its rights under the agreement to SouthernBank
and will receive no consideration for the assignment. To pay for the property,
SouthernBank has entered into a line of credit with The Bankers Bank for an
amount up to $860,000. The line of credit, which is due on June 28, 2000, bears
interest at 1.0% less than the prime rate as published in the Money Rates
section of The Wall Street Journal. As of the date of this prospectus,
approximately $__________ was outstanding on the line of credit. SouthernBank
expects to repay the line of credit immediately after its capitalization by
SouthernBank Holdings. See "Our Proposed Business - Offices" on page ___ and
"Related Party Transactions" on page ___.
During the period between the opening of SouthernBank and the
completion of our permanent facility, we will be conducting operations from a
temporary modular facility. SouthernBank will pay $4,000 per month for the
temporary facility. We expect our permanent facility to be completed in the
second quarter of 2001.
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<PAGE> 18
CAPITALIZATION
The following table shows SouthernBank Holdings' capitalization as of
December 31, 1999 and its pro forma consolidated capitalization, as adjusted to
give effect to the receipt of the net proceeds from the sale of 1,250,000 shares
of our common stock in this offering.
Upon SouthernBank Holdings' incorporation, D. Arnold Tillman, Jr.,
chairman of our board of directors and chief executive officer of SouthernBank
Holdings, purchased one share of our common stock at a price of $10.00. We will
redeem this share for $10.00 upon the issuance of shares in this offering. The
number of shares shown as outstanding after giving effect to this offering, and
the book value of those shares, do not include shares of our common stock
issuable upon the exercise of warrants that will be granted to our organizers or
stock options that may be granted under our stock option plan. For additional
information regarding the number and terms of those warrants and options, see
"Description of Our Capital Stock - Organizers' Warrants" on page ___ and
"Executive Compensation - Stock Option Plan" on page ___.
<TABLE>
<CAPTION>
Actual As Adjusted
------------ --------------
<S> <C> <C>
Shareholders' Equity
Preferred stock, par value $1.00 per share; 10,000,000 shares
authorized; no shares issued and outstanding $ -0- $ -0-
Common stock, par value $1.00 per share; 100,000,000 shares authorized; one
share issued and outstanding; 1,250,000 shares
issued and outstanding as adjusted $ 1 $ 1,250,000
Additional paid-in capital(1) $ 9
$ 10,268,500
Accumulated deficit during development stage $ (82,944)(2) $ (370,000)(3)
Total shareholders' equity $ (82,934) $ 11,148,500
============ ==============
Book value per share(4) $ N/A $ 8.92
============ ==============
</TABLE>
(1) The expenses of the offering will be charged against additional paid-in
capital. We estimate that the offering expenses will be $981,500, which
includes $846,500 in underwriting discounts and $135,000 in other
offering expenses, including legal, accounting and printing expenses
and registration fees.
(2) This deficit reflects pre-opening expenses incurred through
December 31, 1999, consisting primarily of salaries, employee benefits
and legal and consulting fees.
(3) The "As Adjusted" accumulated deficit results from estimated
organizational and pre-opening expenses of $370,000 incurred through
SouthernBank's target opening date in May 2000. Actual organizational
and pre-opening expenses may be higher and may therefore increase the
deficit accumulated during the pre-opening stage and further reduce
shareholders' equity.
(4) After giving effect to the receipt of the net proceeds from this
offering, there is an immediate dilution in the book value per
share of $1.08, resulting from recognition of organizational and
pre-opening expenses and charging the offering expenses against our
paid-in capital.
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<PAGE> 19
DIVIDENDS
We will initially have limited sources of income other than dividends
paid by SouthernBank. Our ability to pay dividends to our shareholders will
therefore depend largely on SouthernBank's ability to pay dividends. In the
future, we may begin income-producing operations independent from those of
SouthernBank, which may provide alternative sources of income from which we may
pay dividends. However, we can give you no assurance as to when, if at all,
these operations may begin or whether they will be profitable.
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 SouthernBank Holdings and SouthernBank to
retain and build capital, our boards of directors plans to reinvest earnings for
the period of time necessary to support successful operations. As a result, we
do not plan to pay dividends until we recover any losses incurred and become
profitable. Our future dividend policy will depend on our earnings, capital
requirements and financial condition and on other factors that our board of
directors considers relevant.
Regulatory authorities may determine, under circumstances relating to
the financial condition of SouthernBank Holdings or SouthernBank, that the
payment of dividends would be an unsafe or unsound practice and may prohibit
dividend payment. See "Supervision and Regulation - Payment of Dividends" on
page ___.
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<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND PLAN OF OPERATIONS
GENERAL
SouthernBank Holdings was organized in July 1999 to serve as a holding
company for SouthernBank. Since it was organized, SouthernBank Holdings' main
activities have been:
- seeking, interviewing and selecting its directors;
- preparing its business plan;
- applying for a national bank charter;
- applying for FDIC deposit insurance;
- applying to become a bank holding company; and
- raising equity capital through this offering.
Since July 13, 1999, our operations have been, and will continue to be,
funded through a line of credit from The Bankers Bank. The total amount
available on the line of credit is $750,000, of which approximately $120,000 was
outstanding at December 31, 1999. This loan has been guaranteed by our
organizers, bears interest at 1.0% less than the prime rate as published in the
Money Rates section of The Wall Street Journal, and is due on June 28, 2000. We
plan to repay the line of credit after the close of the offering using a portion
of the proceeds of this offering. See "Use of Proceeds" on page ___.
FINANCIAL RESULTS
From July 13, 1999 through December 31, 1999, our net loss amounted to
$82,944. The estimated net loss for the period from July 13, 1999 through May
2000, the anticipated opening date of SouthernBank, is $370,000 which is
attributable to the following estimated expenses:
<TABLE>
<S> <C>
Officer compensation ..................... $107,000
Legal, consulting and professional fees... 68,000
Equipment and occupancy expenses ......... 23,000
Other pre-opening expenses ............... 172,000
--------
Total .................................... $370,000
========
</TABLE>
SouthernBank Holdings' financial statements and related notes, which
are included in this prospectus, provide additional information relating to the
discussion of its financial condition. See "Index to Financial Report" on page
F-1.
OFFICES
Land South Properties, LLC, a real estate development company owned by
two of our organizers, has entered into an agreement to purchase an
approximately 1.2 acre lot located adjacent to the Mall of Georgia on Highway 20
in the Mill Creek area of northern Gwinnett County for a purchase price of
approximately $857,000. The property will be the site for our main office, which
is expected to have approximately 7,000 square feet of office space.
Construction of the permanent facility is expected to begin in the third quarter
of 2000. Land South will assign its rights under the agreement to SouthernBank
and will receive no consideration for the assignment. To pay for the property,
SouthernBank has established a line of credit with The Bankers Bank for an
amount up to $860,000. The
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<PAGE> 21
line of credit is guaranteed by our organizers, bears interest at 1.0% less than
the prime rate as published in the Money Rates section of The Wall Street
Journal, and is due on June 28, 2000. Costs of constructing our permanent
facility are estimated at $1,168,000, and will be paid by SouthernBank after it
is capitalized.
Until our permanent facility is completed, we plan to conduct our
operations in a temporary modular facility located on the site of the permanent
facility. The lease term for our modular facility will be for 12 months and
includes an additional ___-month renewal option. SouthernBank will pay monthly
rent in the amount of $4,000 for the modular facility. We expect to be open for
business in our modular facility in the second quarter of 2000.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Since SouthernBank Holdings has been in the development stage, there
are no results to present at this time. Nevertheless, once SouthernBank begins
operations, net interest income, its 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 we will have regular
opportunities to "reprice" or change the interest rates on SouthernBank's
interest-bearing assets and liabilities. 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 actively manage rate sensitive assets and liabilities in
order 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 overall
interest rate risks.
We will regularly evaluate our balance sheet's asset mix 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 our deposit base and converting assets to cash as necessary.
As SouthernBank continues to grow, we will continuously structure its
rate sensitivity position in an effort to hedge against rapidly rising or
falling interest rates. SouthernBank's asset/liability and investment management
committee will meet on a quarterly basis to develop a strategy for the upcoming
period.
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. SouthernBank can obtain these funds by converting assets to cash or
by attracting new deposits. SouthernBank's ability to maintain and increase
deposits will serve as its primary source of liquidity.
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<PAGE> 22
Other than this offering, we know of no trends, demands, commitments,
events or uncertainties that should result in, or are reasonably likely to
result in, SouthernBank's or SouthernBank Holdings' 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 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 relates to the leverage ratio.
The OCC has established a 3.0% minimum leverage ratio requirement. The leverage
ratio is computed by dividing Tier 1 capital into total assets. In the case of
SouthernBank and other banks that are experiencing growth or have not received
the highest regulatory rating from their primary regulator, the minimum leverage
ratio should be 3.0% plus an additional cushion of at least 1.0% to 2.0%,
depending upon risk profiles and other factors.
We believe that the net proceeds of this offering will satisfy our
capital requirements for at least the next 24 months following the opening of
SouthernBank. Accordingly, we do not anticipate that it will be necessary to
raise additional funds to operate SouthernBank Holdings or SouthernBank for at
least the next 24 months after SouthernBank opens. All anticipated material
expenditures for this period have been identified and provided for out of the
proceeds of this offering. For additional information about planned
expenditures, see "Use of Proceeds" on page ___. For additional information
about our plan of operations, see "Our Proposed Business" on page ___.
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<PAGE> 23
OUR PROPOSED BUSINESS
BACKGROUND
SOUTHERNBANK HOLDINGS. SouthernBank Holdings was incorporated as a
Georgia corporation on July 13, 1999 to serve as a bank holding company for
SouthernBank. We will apply to the Federal Reserve and the Georgia Department of
Banking and Finance for approval to capitalize SouthernBank. Upon receiving all
necessary regulatory approvals, we will become a bank holding company within the
meaning of the Bank Holding Company Act when we purchase SouthernBank's common
stock. We plan to use $8,500,000 of the net proceeds of this offering to
capitalize SouthernBank. In return, SouthernBank will issue all of its common
stock to us, and we will be its sole shareholder. Initially, SouthernBank will
be our sole operating subsidiary. See "Supervision and Regulation - General" on
page ___.
SouthernBank Holdings has been organized to make it easier for
SouthernBank to serve its future customers. The holding company structure
provides flexibility for expanding our banking business by allowing us to expand
into other banking related services, make potential future acquisitions of other
financial institutions and invest additional capital into SouthernBank. A
holding company structure will make it easier for us to raise capital for
SouthernBank because we will be able to issue securities without the need for
prior banking regulatory approval, and the proceeds of debt securities issued by
the holding company can be invested in the bank as primary capital.
SOUTHERNBANK. On November 19, 1999, our organizers filed applications
on behalf of SouthernBank with the OCC to organize as a national bank and with
the FDIC to obtain insurance for SouthernBank's deposits. SouthernBank will not
be authorized to conduct its banking business until it obtains a charter from
the OCC. The issuance of the charter will depend, among other things, upon
SouthernBank's receipt of at least $8,500,000 in capital from SouthernBank
Holdings and upon compliance with other standard conditions expected to be
imposed by the OCC. These conditions are generally designed to familiarize
SouthernBank with national bank operating requirements and to prepare it to
begin business operations. The OCC requires that a new national bank obtain a
charter and open for business within 18 months after receipt of its preliminary
approval from the OCC. SouthernBank received preliminary approval of its charter
application from the OCC on March 15, 2000 and is awaiting approval of its
FDIC deposit insurance application, as well as final approval from the OCC
and receipt of a charter. We expect SouthernBank will open for business in the
second quarter of 2000.
MARKET OPPORTUNITIES
PRIMARY SERVICE AREA. Situated approximately 35 minutes from downtown
Atlanta, our primary service area will consist of the 12-mile radius surrounding
our main office located adjacent to the Mall of Georgia on Georgia Highway 20 in
the Mill Creek area of northern Gwinnett County. Accordingly, our primary
service area will include the communities of Buford, Dacula, Lawrenceville,
Lilburn, Sugar Hill and Suwanee in Gwinnett County, as well as the communities
of Flowery Branch in Hall County and Braselton in Jackson County. Collectively,
these communities are part of one of the fastest growing regions in the nation
and, according to CACI Marketing Systems, are expected to experience continued
economic and population growth.
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<PAGE> 24
With our proposed main office location adjacent to the 1.7 million
square foot Mall of Georgia, the largest shopping mall in the state according to
Georgia Trend Magazine, we believe that our physical location will provide us
with a unique opportunity to successfully expand and grow our banking
operations. Thus far, the recently opened mall has attracted over 170 retailers
and restaurant operators to the heart of our primary service area, and is
expected to draw additional business interests into northern Gwinnett County. By
strategically placing our main office in the center of this development, we
believe that we will be able to capitalize on the influx of new residents and
businesses locating to the area, as well as the core residents and businesses
already established in our market.
POPULATION. The communities that represent our primary service area
have experienced substantial population growth over the past several decades.
During the period from 1990 to 1999, the U.S. Census Bureau estimates that
Gwinnett County had the largest population increase of any county in the
nation. According to estimates of CACI Marketing Systems, the population for
our primary service area was 360,086 in 1999, representing an increase of 60.9%
from 1990. CACI further expects the area to continue its rapid growth,
projecting a population increase of 21.7% for the period from 1999 to 2004.
This growth in population has also fueled a comparable demand for housing. For
example, the Atlanta Regional Commission estimates that 69,200 housing units
were constructed from 1990 to 1999, increasing the number of housing units in
Gwinnett County by 50.3%. Additionally, CACI projects the number of households
within our primary service area to increase from 129,581 in 1999 to 160,263 by
2004. Accordingly, we believe that this increase in population will provide
significant deposit base growth for our targeted market area, as well as a
strong demand for consumer, commercial and real estate-related loans and
services.
INDUSTRY, LABOR AND EMPLOYMENT. Job growth has played an important
role in facilitating the population growth in Gwinnett County. According to the
Georgia Department of Labor, an estimated 103,058 jobs have been created in
Gwinnett County since 1990, an increase of 49.9%. More than 20,000 businesses
are located in Gwinnett County, with approximately 20% of the Fortune 500
companies, more than 595 high-tech firms, and more than 275 international firms
conducting operations in the county. With nearly 60% of the residents in
Gwinnett County being between the ages of 25 and 64, and nearly one third of
the county's residents over age 25 having earned at least a bachelor's degree,
we believe that Gwinnett County's large, well-educated labor pool has helped
attract these employers to the county, and will continue to attract additional
employers to the area.
Gwinnett County's employment base is highly diversified, representing
the service, retail trade, manufacturing, wholesale trade and construction
industries. According to the Georgia Department of Labor, the service industry
represents the largest employment sector, providing 29.2% of Gwinnett County's
jobs, followed by retail trade at 22.0%, manufacturing and wholesale trade, each
at 14.4%, and construction at 7.0%.
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According to the Gwinnett Chamber of Commerce, the largest
private sector employers in Gwinnett County are Lucent Technologies and
Scientific-Atlanta. Gwinnett County's top ten employers are listed below and
illustrate the diversification of business and trade in the area.
<TABLE>
<CAPTION>
GWINNETT COUNTY'S TOP TEN EMPLOYERS TOTAL EMPLOYEES INDUSTRY
----------------------------------- --------------- --------
<S> <C> <C>
Gwinnett County Public Schools................................... 11,239 Education
Lucent Technologies.............................................. 3,500 Technology
Scientific-Atlanta............................................... 3,375 Technology
Gwinnett County Government....................................... 3,091 Public Service
Gwinnett Health System........................................... 2,400 Health Care
Ciba Vision Corporation.......................................... 1,600 Health Products
Primerica Financial Services..................................... 1,550 Financial
Motorola......................................................... 1,400 Manufacturing
Ikon Office Solutions............................................ 1,300 Retail Trade
Boeing North American............................................ 1,200 Manufacturing
</TABLE>
Gwinnett County also presently enjoys a low rate of unemployment.
According to the Georgia Department of Labor, Gwinnett County's 1999
unemployment rate was estimated at 2.4%, well below Georgia's estimated
unemployment rate of 3.8% and the national estimated unemployment rate of 4.2%.
The estimated median household income for our primary service area, according
to CACI, was $62,501 in 1999, and is projected to grow to $76,403 by 2004. The
median household income in our primary service area compares favorably with the
median income for all households in the United States, which was $38,885 in
1998, and the median income for all households in Georgia, which was $36,553 in
1998.
We believe that our primary service area presents a growing and
diversified economic environment that will support SouthernBank's formation. By
positioning ourselves as a community bank focused on serving the needs of the
citizens and businesses located within Gwinnett County, we believe that we will
be successful within this growing economy.
COMPETITION. According to the FDIC, bank and thrift deposits in
Gwinnett County grew from approximately $3.8 billion in June 1996 to more than
$5.4 billion in June 1999. This growing deposit base is primarily controlled by
large national and super-regional banks, which include Bank of America,
Wachovia, SunTrust and First Union. Although most of these large financial
institutions are well established in the county, local community banks have been
successful in competing for deposits. According to the FDIC, the following
trends occurred in Gwinnett County deposit market share from June 1996 to June
1999:
- Total deposits for the large national and super-regional banks
described above grew 15.7%, compared to 34.1% growth in the
overall deposit market.
- The slower relative growth of these large banks results in
their combined relative deposit market share falling from
65.3% to 56.3%.
- Five community banks based in Gwinnett County and operating
in the service area during the entire three-year period from
June 1996 to June 1999 experienced total deposit growth of
69.0%. These banks include The Brand Banking Company, Peoples
Bank & Trust, First Capital Bank, Eastside Bank & Trust
Company and Quantum National Bank.
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- These five community banks increased their combined relative
deposit market share from 12.0% to 15.1%.
Our primary service area represents a subset of the overall Gwinnett
County market and includes the communities of Buford, Dacula, Lawrenceville,
Lilburn, Sugar Hill and Suwanee. Additionally, our primary service area extends
to encompass Flowery Branch in Hall County and Braselton in Jackson County.
According to the FDIC, bank and thrift deposits in these communities totaled
more than $3.1 billion in June 1999. Bank of America, Wachovia, SunTrust and
First Union control 55.0% of the deposits in our primary service area, and
Atlanta-based Premier Bancshares (now BB&T) holds an additional 10.4% of the
deposits. Local banks with a significant presence include Peoples Bank & Trust
at 5.8%, The Brand Banking Company at 5.0%, Quantum National Bank at 2.3% and
Tucker Federal Bank at 2.2%. No other community bank holds more than 2.0% of the
deposits in our primary service area.
We will compete directly with many of the institutions previously
named. Additionally, we anticipate further competition as existing institutions
in the market expand their branch networks or as institutions from other markets
branch into our primary service area. Since 1996, one additional community
banks has opened and two are presently organizing in Gwinnett County. Gwinnett
Banking Company opened in October 1997 in Lawrenceville, approximately
10 miles from our proposed main office. Two other groups are also presently
organizing banks in the Lawrenceville community. Although community banks and
thrifts operating within our market area will compete with SouthernBank for
banking products and services, as of the date of this prospectus, none of them
has a branch office within the Mill Creek area.
We recognize that most of our competitors have substantially greater
resources and lending limits than SouthernBank will have and provide other
services, such as extensive and established branch networks and trust services,
that SouthernBank does not expect to provide initially. As a result of these
competitive factors, SouthernBank may have to pay higher interest rates to
attract depositors or extend credit with lower interest rates to attract
borrowers. However, we will attempt to minimize these competitive facts and
attract new banking relationships by offering our customers a personalized
approach to banking. For example, we intend to differentiate SouthernBank from
our competitors primarily through our active calling programs for directors and
employees, our significant involvement in the communities we serve, the quality
and experience of our staff and our convenient location near the Mall of
Georgia.
We also believe that recent acquisitions of several local banks in the
metropolitan Atlanta market, including BB&T's acquisition of Premier Bancshares,
may diminish the quality of banking services available to small- and
medium-sized businesses and consumers in the market. Further consolidation is
likely to create additional opportunities for community banks to capture
deposits and other banking business from affected customers who may be
dissatisfied with their new financial institutions.
PHILOSOPHY AND STRATEGY
SouthernBank's philosophy will be to deliver aggressive customer
service that will create a banking experience that will motivate our customers
to tell others about SouthernBank. SouthernBank has adopted this philosophy in
order to attract customers and acquire market share now controlled by other
financial institutions in its primary service area. Accordingly, to carry out
our philosophy we have developed a business strategy involving the following key
elements:
- SALES AND SERVICE-ORIENTED EMPLOYEES. We will strive to hire
highly trained and seasoned key employees, preferably with
existing customer relationships established through prior
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banking experience. By hiring key employees with established
customer relationships, SouthernBank will be able to grow more
rapidly than if we hired individuals who required more time to
develop a sufficient customer base. We also plan to
cross-train our staff to answer questions about all of our
products and services so that the first employee a customer
encounters can not only resolve all of the customer's
banking-related questions, but can also suggest products and
services that may be of interest to the customer.
- EXPERIENCED SENIOR MANAGEMENT. SouthernBank's senior
management possesses extensive experience in the banking
industry. For example, SouthernBank's principal executive
officer, M. Lauch McKinnon, has over 20 years of banking and
banking-related experience, and the bank's principal financial
officer, Rita B. Gray, has 30 years of banking experience. In
addition, we plan to hire an experienced senior lending
officer with established business contacts in SouthernBank's
primary service area. See "Management" on page ___.
- CALL PROGRAM. To promote SouthernBank, we will implement an
active call program involving all of our officers, directors
and employees. The purpose of this call program will be to
visit prospective customers, to describe SouthernBank's
products and services and to invite them to do business with
us. The results and productivity of our mandatory call program
will be monitored by our board of directors, with specific
goals required of our officers and directors.
- INDIVIDUAL CUSTOMER FOCUS. We will focus on providing
individualized service and attention to our target customers,
which may include individuals and small- to medium-sized
businesses. As our employees, officers and directors become
familiar with our customers, we will be able to respond to
credit requests quickly and be more flexible in approving
loans based on collateral quality and personal knowledge of
the customer's needs.
- LOCAL DECISION MAKING. We plan to position SouthernBank as a
locally-owned, community bank focused on being more responsive
to customer requests and to the banking needs of individuals
and businesses within the communities we serve.
- COMMUNITY-ORIENTED BOARD OF DIRECTORS. A majority of the
members of our board of directors are residents of, or
individuals owning businesses in, the Gwinnett County area.
Consequently, we believe our board members will be sensitive
and responsive to the needs of the communities we serve.
Additionally, our board of directors represents a wide array
of business experience and community involvement, and, as a
result, we expect that our directors will bring substantial
business and banking contacts to SouthernBank.
- HIGHLY VISIBLE SITE. SouthernBank's main office location,
adjacent to the Mall of Georgia in the Mill Creek area of
northern Gwinnett County, is highly visible and easily
accessible from Georgia Highway 20 and Interstate Highways 85
and 985. As a result, we believe that our location will
enhance SouthernBank's ability to compete successfully.
- MARKETING AND ADVERTISING. We plan to promote SouthernBank and
to develop its image as a community-oriented bank with an
emphasis on quality service and personal contact. We will also
use media services such as local newspapers, drive-time radio,
direct mail campaigns and television to promote its products
and services. Additionally, we plan to sponsor community
activities on an ongoing basis.
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- OFFER FEE-GENERATING PRODUCTS AND SERVICES. SouthernBank's
range of services, pricing strategies, interest rates paid and
charged, and hours of operation will be structured to attract
its target customers and increase its market share.
SouthernBank will offer creative loan services to small
businesses, professionals, entrepreneurs and consumers
superior loan services while charging appropriate fees for
such services and using technology and engaging third-party
service providers to perform some functions at a lower cost to
increase fee income. Further, since our staff will be trained
to suggest products and services that may be of interest to
our customers, we expect our sales and service-oriented
culture to help grow SouthernBank's market share and increase
fee income.
- CAPITALIZE ON THE TREND TOWARD CONSOLIDATION. We believe that
consolidation in the banking industry will continue, resulting
in many individuals and small- to medium- sized businesses
being dissatisfied with the upheaval in their banking
relationships. We expect to capitalize on continued industry
consolidation. By positioning ourselves as a community bank
that is interested in delivering unparalleled personal
service, we believe that we will draw many of those
dissatisfied customers to us.
LENDING SERVICES
LENDING POLICY. SouthernBank is being established to support the
communities in Gwinnett County, as well as the portions of Hall and Jackson
Counties that fall within the bank's primary service area. Consequently,
SouthernBank will aggressively seek opportunities to lend money to creditworthy
borrowers in this geographic area. SouthernBank will emphasize commercial loans
to small- and medium-sized businesses and professional concerns, as well as real
estate-related loans, including construction and acquisition and development
loans for residential and commercial properties, and primary and secondary
mortgage loans for the acquisition or improvement of personal residences.
SouthernBank will also emphasize consumer loans to individuals.
SouthernBank intends to maintain a balanced loan portfolio. We estimate
that SouthernBank's loan portfolio will be comprised of the following:
<TABLE>
<CAPTION>
LOAN CATEGORY RATIO
------------- -----
<S> <C>
Commercial loans to small- and medium- 40%
sized businesses
Real estate-related loans 35%
Consumer loans 25%
</TABLE>
SouthernBank plans to avoid concentrations of loans to a single
industry or based on a single type of collateral. To address the risks inherent
in making loans, SouthernBank will maintain an allowance for loan losses based
on, among other things, management's previous experience with similar loan
portfolios, an evaluation of the bank's loan loss experience, the amount of past
due and nonperforming loans, current and anticipated economic changes and the
values of loan collateral. Based upon these factors, SouthernBank's management
will make various assumptions and judgments about the ultimate collectibility of
the loan portfolio and provide an allowance for potential loan losses based upon
a percentage of the outstanding balances and for specific loans. However,
because there are risks that cannot be precisely quantified, management's
judgment of the appropriate loan loss allowance is only an approximation and may
be over or understated. The adequacy and methodology of our allowance for loan
losses will be subject to regulatory examination and compared to a peer group of
financial institutions identified by regulatory agencies.
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<PAGE> 29
LOAN APPROVAL AND REVIEW. SouthernBank's loan approval policies will
provide for various levels of officer lending authority. When the amount of
total loans to a single borrower exceeds that individual officer's lending
authority, either an officer with a higher lending limit or SouthernBank's loan
committee will determine whether to approve the loan request. SouthernBank will
not make any loans to any of our directors or executive officers unless a
majority of its disinterested board members approve the loan, the terms of the
loan are no more favorable than would be available to an unaffiliated applicant
similarly situated, and the loan otherwise complies with applicable law.
LENDING LIMITS. SouthernBank's lending activities will be subject to a
variety of lending limits imposed by law. Differing limits apply in some
circumstances based on the type of loan or the nature of the borrower, including
the borrower's relationship to SouthernBank. In general, however, SouthernBank
will be able to loan any one borrower a maximum amount equal to either: (1)
15.0% of its capital and surplus or (2) 25.0% of its capital and surplus if the
excess over 15.0% is within federal guidelines, which provide an exception to
the 15.0% limit for some types of secured debt. Based on its proposed minimum
capitalization and projected pre-opening expenses, SouthernBank's initial
lending limit will be approximately $1,200,000 for loans not fully secured plus
an additional $800,000, or a total of approximately $2,000,000, for loans that
meet the federal guidelines. SouthernBank has not yet established any minimum or
maximum loan limits other than the statutory lending limits described above.
These statutory limits will increase or decrease as SouthernBank's capital
increases or decreases as a result of its earnings or losses, among other
reasons. However, SouthernBank may sell participations in its loans to other
financial institutions in order to meet all of the lending needs of loan
customers.
CREDIT RISKS. The principal economic risk associated with each category
of loans that SouthernBank 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. General economic
factors affecting a borrower's ability to repay include interest, inflation and
employment rates, as well as other factors affecting a commercial borrower's
customers, suppliers and employees.
The risks associated with commercial loans depend upon various economic
factors, including the strength of the economy in our primary service area.
Well-established financial institutions are likely to make proportionately more
loans to large-sized businesses than SouthernBank will make. Accordingly, many
of SouthernBank's anticipated commercial loans will likely be made to small- to
medium-sized businesses that may be less able to withstand competitive, economic
and financial pressures than larger borrowers. In addition, because payments on
loans secured by commercial property generally depend primarily on the results
of operations and management of the properties, repayment of such loans may be
subject to greater collection risk as a result of adverse conditions in the real
estate market or the economy.
With respect to real estate loans generally, the ability of a borrower
to repay a real estate loan will depend upon a number of economic factors,
including employment levels and fluctuations in the value of real estate. In the
case of a real estate purchase loan, the borrower may be unable to repay the
loan at the end of the loan term and may thus be forced to refinance the loan at
a higher interest rate, or, in some cases, the borrower may default as a result
of an inability to refinance the loan. In either case, the risk of nonpayment by
the borrower is increased. In the case of a real estate construction loan, there
is generally no income from the underlying property during the construction
period, and the developer's personal obligations under the loan are typically
limited. Each of these factors increases the risk of nonpayment by the borrower.
SouthernBank will also face additional credit risks to the extent that it
engages in adjustable rate mortgage loans. In the case of an adjustable rate
mortgage loan, as interest
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<PAGE> 30
rates increase, the borrower's required payments increase, thus increasing the
potential for default. The marketability of all real estate loans, including
adjustable rate mortgage loans, is also generally affected by the prevailing
level of interest rates.
Consumer loans generally involve more credit risks than other loans
because of the type and nature of the underlying collateral or because of the
absence of any collateral. Consumer loan repayments depend on the borrower's
continuing financial stability and are likely to be adversely affected by, among
other things, job loss, divorce and illness. Furthermore, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount which can be recovered on such loans in
the case of default. In most cases, any repossessed collateral will not provide
an adequate source of repayment of the outstanding loan balance. Although the
underwriting process for consumer loans includes a comparison of the value of
the security, if any, to the proposed loan amount, SouthernBank cannot predict
the extent to which the borrower's ability to pay, and the value of the
security, will be affected by prevailing economic and other conditions.
COMMERCIAL LOANS. A primary component of SouthernBank's loan portfolio
will be loans for commercial purposes. The terms of these loans will vary by
purpose and by type of underlying collateral, if any. SouthernBank will
typically make equipment loans for a term of five years or less at fixed or
variable rates, with the loan fully amortized over a term not to exceed the
useful life of the equipment. Equipment loans generally will be secured by the
financed equipment, and the ratio of the loan principal to the value of the
financed equipment or other collateral will generally be 75.0% or less. Loans to
support working capital will typically have terms not exceeding one year and
will generally be secured by accounts receivable, inventory, or other
collateral, as well as 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. The quality of the commercial borrower's management and its ability
both to evaluate properly changes in the supply and demand for its products and
services and to respond effectively to such changes are significant factors in a
commercial borrower's creditworthiness.
REAL ESTATE LOANS. SouthernBank will make commercial real estate loans,
construction and acquisition and development loans, and residential real estate
loans. These loans will include some commercial loans where SouthernBank will
take 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.
- COMMERCIAL REAL ESTATE. Commercial real estate loan terms
generally will be limited to five years or less, although payments may
be structured on a longer amortization basis. Interest rates may be
fixed or adjustable with an origination fee generally being charged on
each loan funded. We will attempt to reduce credit risk on our
commercial real estate loans by emphasizing loans on owner-occupied
office and retail buildings where the ratio of the loan principal to
the value of the collateral as established by independent appraisal,
does not exceed 80.0% and net projected cash flow available for debt
service equals 115.0% of the debt service requirement. In addition,
SouthernBank may require personal guarantees from the principal owners
of the property supported by a review by SouthernBank's management of
the principal owners' personal financial statements. Risks associated
with commercial real estate loans include fluctuations in the value of
real estate, new job creation trends, tenant vacancy rates and the
quality of the borrower's management. SouthernBank will limit its risk
by analyzing the borrower's cash flow and collateral value on an
ongoing basis.
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<PAGE> 31
- CONSTRUCTION AND ACQUISITION AND DEVELOPMENT LOANS.
Construction and acquisition and development loans will be made both on
a pre-sold and speculative basis. If the borrower has entered into an
agreement to sell the property prior to beginning construction, then
the loan is considered to be on a pre-sold basis. If the borrower has
not entered into an agreement to sell the property prior to beginning
construction, then the loan is considered to be on a speculative basis.
Construction and acquisition and development loans are generally made
with a term of nine months and interest is paid periodically. The ratio
of the loan principal to the value of the collateral, as established by
independent appraisal, will not generally exceed 75.0%. Additionally,
speculative loans will be based on the borrower's financial strength
and cash flow position. Loan proceeds will be disbursed based on the
percentage of completion and only after the project has been inspected
by an experienced construction lender or appraiser. Risks associated
with construction loans include fluctuations in the value of real
estate and new job creation trends.
- RESIDENTIAL REAL ESTATE. SouthernBank's residential
real estate loans will consist of residential first and second mortgage
loans and residential construction loans. SouthernBank will offer fixed
and variable rates on our mortgages with the amortization of first
mortgages being three years or greater. These loans will be made
consistent with SouthernBank's appraisal policy and with the ratio of
the loan principal to the value of collateral, as established by
independent appraisal, generally not to exceed 80.0%. We expect these
loan-to-value ratios will be sufficient to compensate for fluctuations
in real estate market value and to minimize losses that could result
from a downturn in the residential real estate market. Immediately upon
opening, SouthernBank plans to open a mortgage department to process
home loans, which will allow it to originate long term mortgage loans.
We do not intend to hold long-term mortgage loans in SouthernBank's
loan portfolio. These loans will be approved based upon commitments
from end lenders, and will be sold to these lenders after closing.
CONSUMER LOANS. SouthernBank 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 home equity lines of
credit. Consumer loan repayments depend upon the borrower's financial stability
and are more likely to be adversely affected by divorce, job loss, illness and
personal hardships. Because many consumer loans are secured by depreciable
assets such as boats, cars, and trailers, the loan should be amortized over the
useful life of the asset. We will generally require that the borrower be
employed for at least 12 months prior to obtaining the loan. The loan officer
will review the borrower's past credit history, past income level, debt history
and, when applicable, cash flow to determine the impact of all of these factors
on the borrower's ability to make future payments as agreed.
INVESTMENTS
In addition to loans, SouthernBank 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 asset/liability and investment management
committee will review the investment portfolio on an ongoing basis in order to
ensure that the investments conform to our policy as set by our board of
directors.
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ASSET AND LIABILITY MANAGEMENT
The asset/liability and investment management committee will manage
SouthernBank's assets and liabilities and 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
SouthernBank 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
We 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, we will employ an aggressive marketing plan in
our primary service area 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 in, our primary service area. We plan to obtain
these deposits through personal solicitation by our directors, officers and
employees, direct mail solicitations and advertisements published in the local
media. In order to attract our initial deposit base, we may offer higher
interest rates on various deposit accounts.
OTHER BANKING SERVICES
Other anticipated banking services include internet banking, debit
cards, travelers checks, direct deposit of payroll and social security checks,
savings bonds, night depository, collection services, wire transfer services,
overdraft protections and automatic drafts for various accounts. SouthernBank
plans to become associated with the CIRRUS and Maestro nationwide networks of
automated teller machines that its customers will be able to use throughout
Georgia and other regions. SouthernBank may offer annuities, mutual funds and
other financial services through a third party that has not yet been chosen.
SouthernBank also plans to offer Mastercard(R) and VISA(R) credit card services
through a correspondent bank as an agent for the bank. SouthernBank will not
exercise trust powers during its early years of operation. It may in the future
offer a full-service trust department, but cannot do so without the prior
approval of the OCC.
SouthernBank will also offer its targeted commercial customers a
courier service that will pick up non-cash deposits from the customer's place of
business and deliver them to the bank. We believe that this will be an important
service for our customers because SouthernBank will initially have only one
location. Additionally, we will market the convenience and advantages of our
internet banking services, which will include on-line bill payment, money
transfer and cash management services. We believe these internet banking
services will encourage customers to retain their total banking relationships
with SouthernBank.
EMPLOYEES
When it begins operations, SouthernBank will have approximately 12
full-time employees. We do not expect SouthernBank Holdings to have any
employees who are not also employees of SouthernBank.
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<PAGE> 33
OFFICES
SouthernBank's main office will be located adjacent to the Mall of
Georgia on Georgia Highway 20, in the Mill Creek area of northern Gwinnett
County. Land South Properties, LLC, a real estate development company owned by
two of our organizers, has entered into an agreement to purchase the proposed
site for SouthernBank's main office for a purchase price of approximately
$857,000. Land South will assign its rights under the agreement to SouthernBank.
See "Related Party Transactions" on page ___. To pay for the property,
SouthernBank has established a line of credit with The Bankers Bank for an
amount up to $860,000. The line of credit is guaranteed by our organizers, bears
interest at 1.0% less than the prime rate, as published in the Money Rates
section of The Wall Street Journal, and is due on June 28, 2000.
Construction of our main office is expected to begin in the third
quarter of 2000 with completion anticipated to occur in the second quarter of
2001. The building will be approximately 7,000 square feet and will include two
vaults, a loan operations area, four teller stations, three drive in windows
and one automated teller machine. The estimated construction costs of the
building are projected to total $1,168,000.
SouthernBank will operate initially out of a temporary modular facility
that we plan to locate on the site of the permanent facility. The rental fee for
the modular facility will be approximately $4,000 per month for 12 months.
SouthernBank's main office location adjacent to the Mall of Georgia
will be highly visible, having ample parking and easy accessibility from Georgia
Highway 20 and Interstate Highways 85 and 985.
LEGAL PROCEEDINGS
As of the date of this prospectus, there were no material legal
proceedings to which we, or any of our properties, were subject.
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MANAGEMENT
GENERAL
The following table sets forth, for the directors and executive
officers of SouthernBank Holdings, (1) their names, addresses and ages at
December 31, 1999, (2) their respective positions with us, (3) the number of
shares of our common stock they intend to purchase in the offering, (4) the
percentage of outstanding shares such number will represent, and (5) the
number of shares subject to warrants and options that they will receive when
we complete this offering.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES SUBJECT TO
OUTSTANDING OPTIONS AND
NAME AND ADDRESS (AGE) POSITION HELD NUMBER OF SHARES SHARES WARRANTS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I DIRECTORS:
(TERM EXPIRING IN 2003)
James O. Andrews (48) Director 25,000 2.0 25,000
6604 Gaines Ferry Road
Flowery Branch, Georgia 30542
James E. Hinshaw, Sr. (73) Director 10,000 0.8 10,000
5262 Legends Drive
Braselton, Georgia 30517
Donald F. Jackson (35) Director 17,500 1.4 17,500
1258 Burnt Hickory Road
Cartersville, Georgia 30120
CLASS II DIRECTORS:
(INITIAL TERM EXPIRING IN 2001)
Lewis A. Massey (37) Director 7,500 0.6 7,500
4060 Blue Iris Hollow
Norcross, Georgia 30092
Tyler C. McCain (31) Director 35,000 2.8 35,000
1129 North Highland Avenue
Atlanta, Georgia 30306
M. Lauch McKinnon (57) President, 25,000 2.0 50,000(1)
337 Mount Vernon Drive Director
Calhoun, Georgia 30701
</TABLE>
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<PAGE> 35
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES SUBJECT TO
NUMBER OF OUTSTANDING OPTIONS AND
NAME AND ADDRESS (AGE) POSITION HELD SHARES SHARES WARRANTS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS III DIRECTORS:
(INITIAL TERM EXPIRING 2002)
D. Alan Najjar (48) Director 7,500 0.6 7,500
1835 Vintage Drive
Snellville, Georgia 30078
D. Arnold Tillman, Jr. (38) Chief Executive 50,000 4.0 50,000
4 Attaway Drive Officer, Chairman of
Cartersville, Georgia 30120 the Board of
Directors
Jeffrey S. Tucker (37) Director 25,000 2.0 25,000
5895 Rivoli Drive
Macon, Georgia 31210
EXECUTIVE OFFICER
Rita B. Gray (49) Chief Financial -- -- 10,000(2)
2029 Shields Road Officer
Dalton, Georgia 30720
------- ---- -------
All Proposed Directors and 202,500 16.2 237,500
Executive Officers as a Group
(10 persons)
</TABLE>
- ---------------
(1) Includes 25,000 shares subject to warrants, and an additional 25,000
shares issuable under an incentive stock option to be granted to Mr.
McKinnon if SouthernBank achieves pre-determined performance goals. See
"Executive Compensation - Employment Agreements" on page ___.
(2) Includes 10,000 shares issuable pursuant to an incentive stock option to
be granted to Ms. Gray if SouthernBank achieves pre-determined
performance goals. See "Executive Compensation - Employment Agreements"
on page ___.
In addition to the individuals listed in the table above, James H.
Daws, an organizer of SouthernBank, intends to purchase 25,000 shares of our
common stock in the offering. As an organizer, Mr. Daws will also receive
warrants to purchase an additional 25,000 shares of our common stock.
Each person listed in the table above, with the exception of Mr.
McKinnon and Ms. Gray, has been a director of SouthernBank Holdings since July
13, 1999. Mr. McKinnon became a director of SouthernBank Holdings on December
1, 1999. Our directors serve staggered terms, which means that one-third of
the directors will be elected each year at our annual meeting of shareholders.
The initial term of our Class I directors expired in February 2000. Each Class
I director was elected to serve an additional three-year term that will expire
in 2003. The initial term of our Class II directors expires in 2001, and the
initial term of our Class III directors expires in 2002. Thereafter, each
Class II and Class III director will serve for a term of three years. Our
officers are appointed by our board of directors and hold office at the will
of our board. See "Important Provisions of Our Articles of Incorporation and
Bylaws" on page ___.
Each of our directors listed above is also a proposed director of
SouthernBank. Each of SouthernBank's proposed directors will, upon approval of
the OCC, serve until SouthernBank's first shareholders' meeting, which will
convene shortly after SouthernBank receives its charter. SouthernBank
Holdings, as the sole shareholder of SouthernBank, will nominate each proposed
director
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<PAGE> 36
to serve as director of the bank at that meeting. After the first
shareholders' meeting, directors of SouthernBank will serve for a term of one
year and will be elected by SouthernBank Holdings each year at SouthernBank's
annual meeting of shareholders. SouthernBank's officers will be appointed by
its board of directors and will hold office at the will of its board of
directors.
The following is a biographical summary of each of our directors and
executive officers:
JAMES O. ANDREWS is chairman and founder of J.O.A. Distributors, Inc.,
one of the largest inland marine dealerships in the Southeast. The company's
subsidiaries include J.O.A. Marine, Marietta, Georgia; J.O.A.'s Lake Lanier
Boating Center, Buford, Georgia; and J.O.A.'s Yacht Division at Lazy Days
Marina, Buford, Georgia. Mr. Andrews is also a registered pharmacist. Mr.
Andrews lives in Flowery Branch, Georgia, and is a graduate of West Georgia
College and Mercer University's School of Pharmacy. Individually, and through
his companies, Mr. Andrews has been actively involved with a number of
charities including the March of Dimes and the Make a Wish Foundation.
JAMES E. HINSHAW, SR. is the president of Precision Molding, Inc., a
manufacturing firm. For the past eight years, Mr. Hinshaw has served as
chairman of Gwinnett Health System in Gwinnett County, Georgia, and for the
past year, he has been chairman of Promina Health Systems, Inc. In 1987, Mr.
Hinshaw helped to organize The Bank of Gwinnett County in Lawrenceville,
Georgia and served as chairman of the bank's board of directors from 1987
until 1989. Mr. Hinshaw has been a resident of Gwinnett County for more than
30 years, having lived the last ten years within one mile of SouthernBank's
proposed main office. He has served on the board of directors of Gwinnett
Hospital for 15 years and is currently serving on the board of directors of
Gwinnett County's Children's Shelter.
DONALD F. JACKSON is president of Georgia Vinyl Products, Inc., a
fence, decking and handrail company that he founded in July of 1999. Customers
of Georgia Vinyl Products are represented throughout the north Atlanta
metropolitan area, including Gwinnett County. Previously, Mr. Jackson had been a
dairy farmer for 15 years. Mr. Jackson graduated from the University of Georgia
in 1986. Mr. Jackson has served on the board of directors of the Bartow County
Chamber of Commerce, as an officer of the Cartersville Elks Lodge, and as a
member of the Cartersville Country Club Golf Course Committee. Mr. Jackson is a
former member of the Cartersville Exchange Club.
LEWIS A. MASSEY is president and chief executive officer of Directo,
Inc., a direct deposit payroll services company that acts as an intermediary
between employers and non-banked employees. From January 1996 to January 1999,
Mr. Massey served as Secretary of State of the State of Georgia. Prior to his
service as Secretary of State, Mr. Massey was vice president of Bank South
Securities, from April 1995 to January 1996, and Mr. Massey served as chief
of staff for Lieutenant Governor Pierre Howard from January 1991 to
April 1995. Mr. Massey graduated from the University of Georgia in 1984, and
is a resident of Gwinnett County. He serves on the boards of directors of the
Georgia Special Olympics and the Georgia Council on Child Abuse. He is also a
member of the Georgia Census 2000 Committee. Mr. Massey has been named the
Outstanding Young Alumnus of the University of Georgia Business School and as
one of the 100 Most Influential Georgians by Georgia Trend Magazine.
TYLER C. MCCAIN is a partner with the McCain Law Firm, which
specializes in residential and commercial real estate. He is a life-long
resident of Cartersville, Georgia, and has lived in Atlanta for the last two
years. Mr. McCain has represented a broad base of clients located throughout
metropolitan Atlanta, including Gwinnett County. Mr. McCain graduated from the
University of Georgia in 1990 and received his law degree from Cumberland
School of Law in 1993. Mr. McCain has been a volunteer for Habitat for
Humanity.
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<PAGE> 37
M. LAUCH MCKINNON is the president of SouthernBank Holdings and the
proposed president and chief executive officer of SouthernBank. Mr. McKinnon
has over 20 years of banking or banking-related experience, 14 of which were
spent as a resident of Gwinnett County. Most recently, from April 1998 to
November 1999, Mr. McKinnon was president and chief executive officer, as
well as an organizing director, of North Georgia National Bank in Calhoun,
Georgia, which successfully opened in February 1999. From September 1995 to
April 1998, Mr. McKinnon worked as an independent consultant, providing
consulting services in the areas of strategic planning, performance
management, acquisitions and executive selection to the banking industry.
From September 1991 to September 1995, Mr. McKinnon was president and chief
executive officer of Volunteer Bank & Trust Co. in Chattanooga, Tennessee.
From 1981 to 1991, Mr. McKinnon resided in Gwinnett County and provided
independent management consulting services to the banking and financial
services industries in and around the county. From 1977 to 1981, Mr. McKinnon
was president of Lawrence Collateral Management, where he operated out of
Gwinnett County and was responsible for a portfolio in excess of
$1 billion. Mr. McKinnon began his career in 1967 as a commercial lending
officer with First Union National Bank in Charlotte, North Carolina. He
graduated from Guilford College and received a Masters in Business
Administration from the University of South Carolina. He is active in the
Georgia Bankers Association's CEO Academy and has been active in a number of
civic organizations.
D. ALAN NAJJAR is the chief operating officer for BrightLane.com, Inc.,
an internet "super-site" offering various products and services to small
business owners. Mr. Najjar has over 27 years of banking and data processing
experience. He began his banking career in Atlanta, Georgia with Trust Company
Bank in 1973. From 1985 to 1988, he was president and chief executive officer of
SunTrust Data Systems, Inc. In 1988, Mr. Najjar founded Eastside Bank & Trust
Company in Snellville, Georgia, and served as a director and its chief executive
officer from 1988 to 1992. Most recently, from 1994 to 1999, Mr. Najjar was
southeastern regional manager for Bisys, Inc., a national data processing
company for financial institutions. Mr. Najjar has been a resident of Gwinnett
County since 1975. He graduated from the University of Georgia in 1974 and from
Stonier Graduate School of Banking in 1985. Mr. Najjar has served as a director
and chairman of the finance committee of the Gwinnett Hospital System for the
past nine years.
D. ARNOLD TILLMAN, JR. is the chief executive officer and chairman of
SouthernBank Holdings. Mr. Tillman is also a physician in Cartersville, Georgia.
In addition to his medical practice, Mr. Tillman is president of Steada, Inc., a
real estate development firm that he founded in 1985. Mr. Tillman also has
experience in organizing and serving as a director of a de novo bank. From its
inception in 1989 through 1998, Mr. Tillman served as a director of First
Community Bancorp, Inc. and First Community Bank & Trust of Bartow County in
Cartersville, Georgia. In 1998, Mr. Tillman was instrumental in the sale of the
bank to National Commerce Bank, Memphis, Tennessee. Mr. Tillman graduated from
Kennesaw State University and received his medical degree from Mercer
University. Mr. Tillman is a founding member of the Bartow County Rotary Club
and is a member of AIDS Alliance, the Bartow County Community Clinic and Habitat
for Humanity.
JEFFERY S. TUCKER is a partner, along with organizer James H. Daws, in
Land South Development, Inc., Land South Investments, Inc., Land South
Properties, LLC, and Land South Construction LLC. Through these companies, Mr.
Tucker and Mr. Daws have been involved in all phases of real estate development,
construction and property management. Since 1986, Mr. Tucker's and Mr. Daws'
companies have developed 3,000 multi-family apartment units with a value in
excess of $200 million, commercial property, office buildings and a 200-acre
mixed use development and residential subdivision. These real estate projects
are represented throughout Georgia, including Gwinnett County. Land South
Construction currently is developing projects totaling $40 million, including a
464-unit luxury apartment complex located within one mile of SouthernBank's
proposed main office in Mill
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<PAGE> 38
Creek. Mr. Tucker's and Mr. Daws' companies manage all of the property they
develop. Additionally, Mr. Tucker is active in a number of civic
organizations.
ADDITIONAL EXECUTIVE OFFICER
RITA B. GRAY is our chief financial officer. Ms. Gray has 30 years of
banking experience, primarily in the areas of finance and operations. From 1998
to 2000, Ms. Gray served as chief financial officer of North Georgia National
Bank in Calhoun, Georgia. From 1997 to 1998, Ms. Gray served as executive vice
president of Colonial Bank in Dalton, Georgia (formerly, Dalton/Whitfield Bank &
Trust) after the bank was acquired in 1997 by Montgomery, Alabama-based Colonial
BancGroup, Inc. In her capacity as executive vice president of Colonial Bank,
Ms. Gray was responsible for branch administration and customer service for the
North Georgia region. Prior to 1997, Ms. Gray served as chief financial officer
of the Dalton/Whitfield Bank and, among other things, was responsible for
selecting and purchasing all forms and equipment, policy creation, human
resources and assisting in the bank's organization in 1989. From 1987 to 1989,
Ms. Gray was employed by First Union National Bank, where she served as vice
president and compliance manager for the bank's Georgia branches. From 1968 to
1987, Ms. Gray served as vice president and controller of First Union Bank of
Dalton, formerly, The Bank of Dalton.
ADDITIONAL ORGANIZER
JAMES H. DAWS is a partner, along with organizer and director Jeffrey
S. Tucker, in Land South Development, Inc., Land South Investments, Inc., Land
South Properties LLC, and Land South Construction LLC. These companies have
developed, constructed and managed real estate projects throughout Georgia,
including Gwinnett County. Additionally, Mr. Daws is an associate of the Macon
Heritage Foundation, which is involved in the preservation of historic homes
and neighborhoods.
COMMITTEES OF THE BOARDS OF DIRECTORS
We have established the following committees. Other committees may be
established as needed once we begin banking operations.
EXECUTIVE COMMITTEE. The executive committee will be authorized,
between meetings of the board of directors, to perform all duties and exercise
all authority of the board of directors, except for those duties and
authorities specifically granted to other committees or which are exclusively
reserved to the full board of directors. Additionally, the committee will make
recommendations to the board of directors regarding matters relating to the
overall management and expansion of SouthernBank. Additionally, the committee
will be responsible for recommending nominations for expired board seats and
for additional board members. The committee will also be responsible for
establishing compensation levels for our officers. The committee will be
chaired by Mr. Tillman, and will also include Mr. Andrews, Mr. McKinnon and
Mr. Tucker.
AUDIT, COMPLIANCE AND CRA COMMITTEE. The audit, compliance and CRA
committee will recommend to the board of directors of SouthernBank Holdings
the independent public accountants to be selected to audit SouthernBank
Holdings' and SouthernBank's annual financial statements and will approve any
special assignments given to the independent public accountants. The committee
will also review the planned scope of the annual audit, any changes in
accounting principles and the effectiveness and efficiency of SouthernBank's
internal accounting staff. Additionally, the committee will provide oversight
to SouthernBank Holdings' and SouthernBank's compliance staff for adherence
with regulatory rules and regulations, including the Community Reinvestment
Act. The committee will also establish
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<PAGE> 39
appropriate levels of directors and officers insurance and blanket bond
insurance. The committee will be chaired by Mr. Andrews, and will also include
Mr. Hinshaw, Mr. Massey and Mr. Najjar.
LOAN COMMITTEE. The loan committee will review any loan request made
by a potential borrower over an established credit threshold for compliance
with SouthernBank's lending policies and federal and state rules and
regulations governing extensions of credit. After making this review, the
committee will decide whether to extend credit to the potential borrower. In
addition, the committee will have the responsibility for establishing and
approving, in conjunction with management, all major policies and procedures
pertaining to loan policy. The committee will also review all past due
reports, non-accrual reports, and other indicators of overall loan portfolio
quality, and will establish measurements for determining the adequacy of
SouthernBank's loan loss reserve. The committee will be chaired by Mr. Najjar,
and will also include Mr. Hinshaw, Mr. McCain, Mr. McKinnon and Mr. Tillman.
ASSET/LIABILITY AND INVESTMENT MANAGEMENT COMMITTEE. The
asset/liability and investment management committee will provide guidance to
our boards of directors in balancing the yields and maturities of
SouthernBank's loans and investments to those of its deposits. Additionally,
the committee will work closely with the board of directors to plan annual
budgets and develop three to five year strategic plans. The committee will be
chaired by Mr. Najjar, and will also include Mr. Hinshaw, Mr. Jackson and Mr.
McKinnon.
MARKETING COMMITTEE. The marketing committee will consult with the
entire board of directors regarding the development of safe and sound banking
business through the board members' contacts within the communities we serve.
Members of the committee will regularly contact other board members for their
assistance in introducing high quality potential customers to SouthernBank.
The committee will also aid SouthernBank's CRA officer in ascertaining the
credit needs of the communities we serve. The committee will be chaired by Mr.
Tucker, and will also include Mr. Andrews, Mr. Massey and Mr. McKinnon.
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<PAGE> 40
EXECUTIVE COMPENSATION
1999 COMPENSATION
The following table shows information for 1999 with regard to
compensation for services rendered in all capacities to SouthernBank Holdings
by its chief executive officer and its president. No other executive officer
earned more than $100,000 in salary and bonus in 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)
------------------ ---- ---------- --------- ----------------
<S> <C> <C> <C> <C>
D. Arnold Tillman, Jr.
Chief Executive Officer 1999 -0- -0- 1,900(1)
M. Lauch McKinnon,
President 1999(2) 7,500 -0- 2,958(3)
</TABLE>
- --------------------------
(1) Mr. Tillman receives no compensation for services rendered to
SouthernBank Holdings in his capacity as chief executive officer other
than a private club membership and health insurance benefits. In 1999,
Mr. Tillman was provided with a private club membership at a cost of
$1,900, but received no health insurance benefits.
(2) Mr. McKinnon's employment with SouthernBank Holdings and SouthernBank
commenced on December 1, 1999.
(3) In 1999, Mr. McKinnon was provided an automobile allowance of $583, as
well as a private club membership at a cost of $2,375.
EMPLOYMENT AGREEMENTS
Effective December 1, 1999, we entered into an employment agreement
with M. Lauch McKinnon regarding Mr. McKinnon's employment as president and
chief executive officer of SouthernBank, and as president of SouthernBank
Holdings. Under the terms of the agreement, Mr. McKinnon will receive a base
salary of $90,000 per year until SouthernBank opens for business, at which
time his base salary will increase to $120,000 per year. The agreement
provides that at the end of each year, Mr. McKinnon will be entitled to
receive a cash bonus, to be awarded by SouthernBank's board of directors,
based on the bank's performance. In addition, Mr. McKinnon will receive a
one-time bonus of $15,000 on June 30, 2000 if SouthernBank has opened for
business on or before May 31, 2000. The agreement also provides that
SouthernBank Holdings will grant Mr. McKinnon an incentive stock option to
purchase 25,000 shares of our common stock, or 25.0% of the shares reserved
for issuance under our stock option plan, at $10.00 per share. The option will
become exercisable in 20.0% annual increments beginning on the one-year
anniversary of the date of Mr. McKinnon's employment. SouthernBank will also
provide an automobile allowance to Mr. McKinnon in the amount of $7,000 per
year, as well as various club membership fees.
The initial term of the employment agreement commenced on December 1,
1999, and will continue for a period of one year. At the end of the initial
term of the agreement, and at the end of each year thereafter, the agreement
will be extended for a successive one-year period unless one of the parties to
the agreement notifies the other parties of his or its intent not to extend
the agreement. Employment under the agreement may be terminated:
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<PAGE> 41
- by SouthernBank for cause (as defined in the employment agreement);
- by Mr. McKinnon if SouthernBank breaches any material provision
of the employment agreement or there is a material diminution in
his duties or responsibilities; and
- upon Mr. McKinnon's death or disability.
If SouthernBank terminates Mr. McKinnon's employment without cause or
if Mr. McKinnon terminates employment with cause, SouthernBank will be
required to pay the compensation and provide the health and dental insurance
coverage due under the agreement for a period of 12 months from the date of
termination. If the employment of Mr. McKinnon is terminated for any reason
other than by non-renewal of the agreement by SouthernBank Holdings or
SouthernBank, Mr. McKinnon will be prohibited from competing with SouthernBank
or soliciting its customers or employees within the 50-mile radius of
SouthernBank's main office for one year after the date of termination.
In addition, we have entered into a letter agreement with Rita B.
Gray regarding her employment as chief financial officer of Southern Bank
Holdings and SouthernBank. Under the agreement, Ms. Gray will receive an
annual salary of $80,000, payable in monthly installments. The agreement
provides that Ms. Gray will receive a signing bonus of $5,000 as well as
another $5,000 bonus after she has been employed for six months. Additionally,
the agreement provides that SouthernBank Holdings will grant Ms. Gray an
incentive stock option to purchase 10,000 shares of our common stock, or 10.0%
of the shares reserved for issuance under our stock option plan, at $10.00 per
share. The option will become exercisable in 20.0% annual increments beginning
on the one-year anniversary of the date of Ms. Gray's employment. Under the
agreement, Ms. Gray will be entitled to participate in SouthernBank's employee
benefit plans, including SouthernBank Holding's stock option plan. Ms. Gray
will also be provided various club memberships. Employment under the agreement
is terminable at the will of either party upon advance written notice of one
month.
DIRECTOR COMPENSATION
Our directors will not be compensated separately for their services
as directors until we become cumulatively profitable. Thereafter, we will
adopt directors compensation policies that conform to applicable law.
STOCK OPTION PLAN
GENERAL. We have adopted a stock option plan that provides us with
the flexibility to grant the stock incentives described in this section of the
prospectus to our key employees, officers, directors, consultants and advisers
for the purpose of giving them a proprietary interest in, and to encourage
them to remain in the employ or service of, SouthernBank Holdings and
SouthernBank. Our board of directors has reserved 100,000 shares of our common
stock, an amount equal to 8.0% of the amount of shares of our common stock to
be sold in this offering, for issuance under the plan. However, the number of
shares reserved for issuance may change in the event of a stock split,
recapitalization or other similar event as described in the plan.
ADMINISTRATION. It is expected that a committee, which will be
comprised of at least two disinterested directors, will administer the plan.
Our board of directors will consider the standards contained in both Section
162(m) of the Internal Revenue Code and Rule 16(b)(3) under the Securities
Exchange Act, when appointing members to the committee. The committee and our
board of directors will have the authority to grant awards under the plan, to
determine the terms of each award, to interpret
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<PAGE> 42
the provisions of the plan and to make all other determinations that they may
deem necessary or advisable to administer the plan.
The plan permits the committee or our board of directors, to grant
stock options to eligible persons. Options may be granted on an individual
basis or to a group of eligible persons. Accordingly, the committee or our
board of directors, will determine, within the limits of the plan, the number
of shares of our common stock subject to an option, to whom an option is
granted and the exercise price and forfeiture or termination provisions of
each option. A holder of a stock option generally may not transfer the option
during his or her lifetime.
OPTION TERMS. The plan provides for incentive stock options and
non-qualified stock options. The committee or our board of directors, will
determine whether an option is an incentive stock option or a non-qualified
stock option when it grants the option, and the option will be evidenced by an
agreement describing the material terms of the option.
The committee or our board of directors will determine the exercise
price of an option. The exercise price of an incentive stock option may not be
less than the fair market value of our common stock on the date of the grant,
or less than 110.0% of the fair market value if the participant owns more than
10.0% our outstanding common stock. When the incentive stock option is
exercised, SouthernBank Holdings will be entitled to place a legend on the
certificates representing the shares of our common stock purchased upon
exercise of the option to identify them as shares of our common stock
purchased upon the exercise of an incentive stock option. The exercise price
of non-qualified stock options may be greater than, less than or equal to the
fair market value of our common stock on the date that the option is awarded,
based upon any reasonable measure of fair market value. The committee may
permit the exercise price to be paid in cash or by the delivery of previously
owned shares of our common stock, and, if permitted in the applicable option
agreement, through a cashless exercise executed through a broker or by having
a number of shares of our common stock otherwise issuable at the time of
exercise withheld.
The committee or our board of directors, will also determine the term
of an option. The term of an incentive stock option or non-qualified stock
option may not exceed ten years from the date of grant, provided that any
incentive stock option granted to a participant who owns more than 10.0% of
our outstanding common stock will not be exercisable after the expiration of
five years after the date the option is granted. Subject to any further
limitations in the applicable agreement, if a participant's employment
terminates, an incentive stock option will terminate and become unexercisable
no later than three months after the date of termination of employment. If,
however, termination of employment is due to death or disability, one year
will be substituted for the three-month period. Incentive stock options are
also subject to the further restriction that the aggregate fair market value,
determined as of the date of the grant, of our common stock as to which any
incentive stock option first becomes exercisable in any calendar year is
limited to $100,000 per recipient. If incentive stock options covering more
than $100,000 worth of our common stock first become exercisable in any one
calendar year, the excess will be non-qualified options. For purposes of
determining which options, if any, have been granted in excess of the $100,000
limit, options will be considered to become exercisable in the order granted.
TERMINATION OF OPTIONS. The terms of particular options may provide
that they terminate, among other reasons, upon the holder's termination of
employment or other status with SouthernBank Holdings or SouthernBank, upon a
specified date, upon the holder's death or disability, or upon the occurrence
of a change in control of SouthernBank Holdings. An agreement may provide that
if the holder dies or becomes disabled, the holder's estate or personal
representative may exercise the option. The committee or our board of
directors, may, within the terms of the plan and the applicable agreement,
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<PAGE> 43
cancel, accelerate, pay or continue an option that would otherwise terminate
for the reasons discussed above.
REORGANIZATIONS. The plan provides for an appropriate adjustment in
the number and kind of shares subject to unexercised options in the event of
any change in the outstanding shares of our common stock by reason of a stock
split, stock dividend, combination or reclassification of shares,
recapitalization, merger or similar event. In the event of some types of
corporate reorganizations, the committee or our board of directors, may,
within the terms of the plan and the applicable agreement, substitute, cancel,
accelerate, cancel for cash or otherwise adjust the terms of an option.
AMENDMENT AND TERMINATION OF THE PLAN. Our board of directors has the
authority to amend or terminate the plan. Our board of directors is not
required to obtain shareholder approval to terminate the plan or, generally,
to amend the plan, but may condition any amendment or termination of the plan
upon shareholder approval if it determines that shareholder approval is
necessary or appropriate under tax, securities, or other laws. However, any
action by our board of directors may not adversely affect the rights of a
holder of a stock option without the holder's consent.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion outlines
generally the federal income tax consequences of participation in the plan.
Individual circumstances may vary and each participant should rely on his or
her own tax counsel for advice regarding federal income tax treatment under
the plan.
- INCENTIVE STOCK OPTIONS. A participant will not recognize
income upon the grant of an incentive stock option, nor will
he or she be taxed when exercising all or a portion of the
option. Instead, the participant will be taxed when he or
she sells the shares of our common stock purchased upon
exercise of the incentive stock option. The participant will
be taxed on the difference between the price he or she paid
for the our common stock and the amount for which he or she
sells the stock. If the participant does not sell the shares
of our common stock prior to two years from the date of
grant of the incentive stock option and one year from the
date the stock is transferred to him or her, the gain will
be a capital gain and SouthernBank Holdings will not get a
corresponding deduction. If the participant sells the shares
of our common stock at a gain before that time, the
difference between the amount the participant paid for the
stock and the lesser of its fair market value on the date of
exercise or the amount for which the stock is sold will be
taxed as ordinary income and SouthernBank Holdings will be
entitled to a corresponding tax deduction. If the
participant sells the shares of our common stock for less
than the amount he or she paid for the stock prior to the
one- or two-year period indicated, no amount will be taxed
as ordinary income and the loss will be taxed as a capital
loss. Exercise of an incentive stock option may subject a
participant to, or increase a participant's liability for,
the alternative minimum tax.
- NON-QUALIFIED OPTIONS. A participant will not recognize
income upon the grant of a non-qualified option or at any
time before the exercise of the option or a portion of the
option. When the participant exercises a non-qualified
option or portion of the option, he or she will recognize
compensation taxable as ordinary income in an amount equal
to the excess of the fair market value of our common stock
on the date the option is exercised over the price paid for
the stock, and SouthernBank Holdings will then be entitled
to a corresponding deduction.
Depending upon the time period for which shares of our common stock
are held after exercising an option, the sale or other taxable disposition of
shares acquired by exercising a non-qualified option
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generally will result in a short- or long-term capital gain or loss equal to
the difference between the amount realized on the disposition and the fair
market value of such shares when the non-qualified option was exercised.
Special rules apply to a participant who exercises a non-qualified
option by paying the exercise price, in whole or in part, by selling back to
us shares of our common stock already held by the participant and to a
participant who is subject to the reporting requirements of Section 16 of the
Securities Exchange Act.
RELATED PARTY TRANSACTIONS
We expect to enter into banking and other business transactions in
the ordinary course of business with our directors and officers, including
members of their families or corporations, partnerships or other organizations
in which these directors and officers have a controlling interest. If
transactions between SouthernBank Holdings or SouthernBank and any of our
directors or officers occur, the 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 involve more than the
normal risk of collectibility or present other unfavorable
features to us;
- will be on terms no less favorable than could be obtained
from an unrelated third party; and
- will be approved by a majority of our directors who do not
have an interest in the transaction.
In addition, Land South Properties, LLC, a real estate development
company owned by Jeffrey S. Tucker and James H. Daws, two of our organizers,
has entered into an agreement to purchase the property that will serve as the
location for SouthernBank's main office, for a purchase price of approximately
$857,000. Land South will assign its rights under the agreement to
SouthernBank and will receive no consideration for the assignment. To pay for
the property, SouthernBank has established a line of credit with The Bankers
Bank for an amount up to $860,000. The line of credit is guaranteed by our
organizers, bears interest at 1.0% less than the prime rate, as published in
the Money Rates section of The Wall Street Journal, and is due on June 28,
2000.
DESCRIPTION OF OUR CAPITAL STOCK
COMMON STOCK
Our articles of incorporation authorize our board of directors,
without shareholder approval, to issue up to 100,000,000 shares of common
stock, par value $1.00 per share, of which 1,250,000 shares will be issued
pursuant to this offering. As of the date of this prospectus, 100,000 shares
of our common stock, or an amount equal to 8.0% of the shares of our common
stock to be sold in this offering, were reserved for issuance upon the
exercise of stock options to be issued under our stock option plan and 227,500
shares of our common stock were reserved for issuance upon the exercise of
warrants to be issued to our organizers.
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All of the shares of our common stock will be entitled to share
equally in dividends from legally available funds, when, as and if declared by
our board of directors. Upon SouthernBank Holdings' voluntary or involuntary
liquidation or dissolution, all shares of our common stock will be entitled to
share equally in any remaining assets that are available for distribution to
the shareholders. SouthernBank Holdings does not anticipate paying any cash
dividends on our common stock in the near future. Each holder of our common
stock will be entitled to one vote for each share held on all matters
submitted to shareholders. Holders of our common stock will not have any right
to acquire authorized but unissued capital stock when, as or if we decide to
issue new shares of capital stock. No cumulative voting right with respect to
the election of directors, redemption rights, sinking fund provisions or
conversion rights apply to our common stock. All shares of our common stock
issued in the offering will be fully paid and non-assessable.
PREFERRED STOCK
Our articles of incorporation also authorize our board of directors,
without shareholder approval, to issue up to 10,000,000 shares of preferred
stock, par value $1.00 per share. Our board of directors may determine the
terms of the preferred stock. Preferred stock may have voting rights, subject
to applicable law and determination by our board of directors. Although we
have no present plans to issue any preferred stock, the ownership and control
of SouthernBank Holdings by the holders of our common stock would be diluted
if we were to issue preferred stock that had voting rights.
ORGANIZERS' WARRANTS
Our organizers intend to purchase approximately 227,500 shares of our
common stock in this offering at a price of $10.00 per share. This represents
18.2% of the 1,250,000 shares that will be outstanding after the close of the
offering.
Our organizers have personally guaranteed two lines of credit from
The Bankers Bank, one for an amount up to $750,000, and one for an amount up
to $860,000. In recognition of the financial risks undertaken by personally
guaranteeing the lines of credit with The Bankers Bank, we will issue to our
organizers warrants to purchase additional shares of our common stock.
Specifically, we will issue to each organizer a warrant to purchase one share
of our common stock for each share the organizer purchases in this offering.
Accordingly, based on our organizers' intent to purchase approximately 227,500
shares of our common stock in this offering, we expect the organizers to be
able to purchase up to 227,500 additional shares through the exercise of
warrants. The warrants will become exercisable in one-third annual increments
beginning on the one-year anniversary of the date SouthernBank opens for
business. Warrants will remain exercisable for up to ten years following the
date on which SouthernBank opens for business. Each share purchased under a
warrant will be issued at a price of $10.00, subject to adjustment for stock
splits, recapitalizations or other similar events. Additionally, if either
SouthernBank Holdings' or SouthernBank's capital falls below the minimum level
mandated by its primary federal regulator, SouthernBank Holdings may be
directed to require the organizers to exercise or forfeit their warrants. If
all of the warrants were exercised, our organizers would own 30.8% of the
shares outstanding after the close of the offering, on a fully diluted basis.
TRANSFER AGENT
The transfer agent and registrar for our common stock is SunTrust
Bank, Atlanta.
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IMPORTANT PROVISIONS OF OUR
ARTICLES OF INCORPORATION AND BYLAWS
PROTECTIVE PROVISIONS
GENERAL. Shareholders' rights and related matters are governed by the
Georgia Business Corporation Code and SouthernBank Holdings' articles of
incorporation and bylaws. SouthernBank Holdings' articles of incorporation and
bylaws contain protective provisions that would have the effect of impeding an
attempt to change or remove SouthernBank Holdings' management or to gain
control of SouthernBank Holdings if a particular transaction was not supported
by SouthernBank Holdings' board of directors. These provisions are discussed
in more detail below. In general, the purpose of these provisions is to
protect SouthernBank Holdings' interests and those of its shareholders as
appropriate under the circumstances, including if the board of directors
determines that a sale of control is in the best interests of SouthernBank
Holdings and its shareholders, by enhancing the board of director's ability to
maximize the value to be received by shareholders upon such a sale.
Although our management believes the protective provisions are
beneficial to our shareholders, they also may tend to discourage some takeover
bids. As a result, our shareholders may be deprived of opportunities to sell
some or all of their shares at prices that represent a premium over prevailing
market prices. On the other hand, defeating undesirable acquisition offers can
be an expensive and time-consuming process. To the extent that the protective
provisions discourage undesirable proposals, we may be able to avoid those
expenditures of time and money.
The protective provisions also may discourage open market purchases
by a potential acquirer. These purchases could increase the market price of
our common stock, temporarily enabling shareholders to sell their shares at a
price higher than that which would otherwise prevail. In addition, the
provisions could decrease the market price of our common stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The provisions also could
make it more difficult and time consuming for a potential acquirer to obtain
control of SouthernBank Holdings by replacing its board of directors and
management. Furthermore, the provisions could make it more difficult for our
shareholders to replace our board of directors or management, even if a
majority of the shareholders believes that replacing them would be in
SouthernBank Holdings' best interests.
The protective provisions contained in our articles of incorporation
and bylaws are discussed more fully below.
PREFERRED STOCK. The existence of preferred stock could impede a
takeover of SouthernBank Holdings without the approval of its board of
directors. This is because our board of directors could issue shares of
preferred stock to persons friendly to current management, which could render
more difficult or discourage any attempt to gain control of SouthernBank
Holdings through a proxy contest, tender offer, merger or otherwise. In
addition, the issuance of shares of preferred stock with voting rights may
adversely affect the rights of the holders of our common stock and, in some
circumstances, could decrease its market price.
STAGGERED TERMS FOR BOARD OF DIRECTORS. Our articles of incorporation
provide that our board of directors will be divided into three classes.
Directors serve staggered terms, which means that one-third of the directors
will be elected each year at our annual meeting of shareholders. The initial
term of our Class I directors expired in February 2000, and each Class I
director was elected to serve an additional three-year term that will expire
in 2003. The initial term of our Class II directors expires in 2001 and the
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initial term of our Class III directors expires in 2002. Thereafter, each
Class II and each Class III director will serve for a term of three years.
This means that unless the existing directors were to resign, it would take at
least two annual meetings of our shareholders to replace a majority of our
directors.
Under Georgia law, directors are elected annually for a term of one
year unless the articles of incorporation provide otherwise.
REMOVAL OF DIRECTORS. Our articles of incorporation provide that one
or more directors may be removed from office at any time, but only for cause,
and only by the affirmative vote of the holders of at least two-thirds of the
total number of votes entitled to be cast by the holders of all of the shares
of our capital stock who are entitled to vote in an election of directors.
Under Georgia law, the shareholders may remove one or more directors
with or without cause unless the articles of incorporation or a bylaw adopted
by the shareholders provides that directors may be removed only for cause. A
director may be removed only by a majority of the votes entitled to be cast.
If the directors have staggered terms, directors may be removed only for
cause, unless the articles of incorporation or a bylaw adopted by shareholders
provides otherwise. A director may be removed by the shareholders only at a
meeting called for the purpose of removing him or her and the meeting notice
must state the purpose, or one of the purposes, of the meeting is the removal
of the director.
BUSINESS COMBINATIONS. Our articles of incorporation and bylaws
explicitly "opt in" to Georgia's business combination statute. Under this
statute, mergers or purchases of 10.0% or more of our assets or securities
("business combinations") with a person who beneficially owns 10.0% or more of
our voting stock (an "interested shareholder") that occur within five years of
the acquirer becoming an interested shareholder are generally prohibited
unless:
- the board of directors approved the business combination
or the transaction that made the acquirer an interested
shareholder;
- the interested shareholder attained 90.0% of the voting
stock in the transaction that made the shareholder an
interested shareholder; or
- the interested shareholder attains 90.0% of the voting stock
subsequent to becoming an interested shareholder and a
majority of SouthernBank Holdings' voting shares approves
the acquisition.
FAIR PRICE. Similar to the protective provisions relating to business
combinations, our articles of incorporation and bylaws explicitly "opt in" to
Georgia's fair price provisions. Under these provisions, in addition to any
other approvals required by law, a business combination with an interested
shareholder generally must be (1) unanimously approved by the directors who
are not affiliates or associates of the interested shareholder and who were
directors prior to the time the shareholder became an interested shareholder
("continuing directors") or (2) recommended by at least two-thirds of the
continuing directors and approved by the affirmative vote of a majority of the
shares not beneficially owned by the interested shareholder unless:
- the consideration to be received by our shareholders meets
specified minimum levels (typically the highest price paid
by the interested shareholder for any shares it has
acquired);
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- the consideration to be received by shareholders who are not
interested is paid in cash or in the same form as the interested
shareholder previously paid for other purchased shares; and
- there has been no reduction in the annual dividend rate from
that which was paid prior to the time the interested shareholder
became an interested shareholder.
CONSIDERATIONS IN EVALUATING AN ACQUISITION PROPOSAL. Our articles of
incorporation provide factors that our board of directors must consider in
evaluating whether an acquisition proposal made by another party is in the
best interest of SouthernBank Holdings and its shareholders. The term
"acquisition proposal" refers to any offer of another party:
- to make a tender offer or exchange offer for our common stock
or any other equity security of SouthernBank Holdings;
- to merge or consolidate SouthernBank Holdings with another
corporation; or
- to purchase or otherwise acquire all or substantially all of
the properties and assets owned by SouthernBank Holdings.
Our articles of incorporation charge our board of directors, in
evaluating an acquisition proposal, to consider all relevant factors,
including:
- the payment being offered by the other corporation in
relation (1) our current value at the time of the proposal, as
determined in a freely negotiated transaction, and (2) to our
board of directors' estimate of SouthernBank Holdings' future
value as an independent company at the time of the proposal;
- the expected social and economic effects of the transaction
on our employees, customers and other constituents, such as
suppliers of goods and services; and
- the expected social and economic effects on the communities
within which we operate.
Our board of directors may also consider other relevant factors.
The provision regarding the evaluation of an acquisition proposal is
included in our articles of incorporation because we are charged with
providing support to, and being involved with, the communities we serve. As a
result, our board of directors believes its obligations in evaluating an
acquisition proposal extend beyond evaluating merely the payment being offered
in relation to the market or book value of our common stock at the time of the
proposal. Georgia law does not specifically list the factors a corporation's
board of directors should consider in the event the corporation is presented
with an acquisition proposal.
While the value of what is being offered to shareholders in exchange
for their stock is the main factor when weighing the benefits of an
acquisition proposal, our board of directors believes it is appropriate also
to consider all other relevant factors. For example, this provision directs
our board of directors to evaluate what is being offered in relation to our
current value at the time of the proposal, as determined in a freely
negotiated transaction, and in relation to our board of directors' estimate of
the future value of SouthernBank Holdings as an independent concern at the
time of the proposal. A takeover bid often places the target corporation
virtually in the position of making a forced sale,
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sometimes when the market price of its stock may be depressed. Our board of
directors believes that frequently the payment offered in such a situation,
even though it may exceed the value at which shares are then 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 that would reflect not only SouthernBank Holdings'
current value, but also its future value.
One effect of this provision, as well as the business combination and
fair price provisions discussed above, may be to discourage a tender offer in
advance. Often an offeror consults the board of directors of a target
corporation before or after beginning a tender offer in an attempt to prevent
a contest from developing. In the opinion of our board of directors, these
provisions will strengthen our position in dealing with any potential offeror
that might attempt to acquire SouthernBank Holdings through a hostile tender
offer. Another effect of these provisions may be to dissuade our shareholders
who might be displeased with our board of directors' response to an
acquisition proposal from engaging SouthernBank Holdings in costly litigation.
These provisions permit our board of directors to determine that an
acquisition proposal is not in SouthernBank Holdings' and its shareholders'
best interest, and thus to oppose it. The effect of these provisions, as well
as the other protective provisions discussed above, in some cases, may have
the effect of maintaining incumbent management.
INDEMNIFICATION
Our bylaws contain indemnification provisions that provide that our
directors and officers, and, in some cases, our employees or agents
(collectively, the "insiders"), will be indemnified against expenses that they
actually and reasonably incur if they are successful on the merits of a claim
or proceeding. In addition, our bylaws provide that we must advance to our
insiders reasonable expenses of any claim or proceeding so long as the insider
furnishes us with a written affirmation of his or her good faith belief that
the applicable standard of conduct has been met and a written statement that
the insider will repay any advances if it is ultimately determined by our
board of directors that he or she is not entitled to indemnification.
When a case or dispute is settled or otherwise not ultimately
determined on its merits, the indemnification provisions provide that we will
indemnify insiders when they meet the applicable standard of conduct. The
applicable standard of conduct is met if the insider:
- in his or her official capacity, acted in a manner he or she
in good faith believed to be in our best interests;
- in all cases not involving official capacity or criminal
activities, he or she acted in a manner that was at least not
opposed to our best interests; and
- in the case of a criminal action or proceeding, if he or she
had no reasonable cause to believe his or her conduct was
unlawful.
Our board of directors, our shareholders or independent legal counsel
will determine whether the insider has met the applicable standard of conduct
in each specific case.
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Our bylaws also provide that the indemnification rights contained in
the bylaws do not exclude other indemnification rights to which an insider may
be entitled under any bylaw, resolution or agreement, either specifically or
in general terms approved by the affirmative vote of the holders of a majority
of the shares entitled to vote. We can also provide for greater
indemnification than is provided for in the bylaws if it chooses to do so,
subject to approval by its shareholders. We may not, however, indemnify an
insider for liability arising out of circumstances that would cause the
insider to remain liable for his or her actions as described under
"- Limitation of Liability" below.
The indemnification provisions of our bylaws specifically provide
that we may purchase and maintain insurance on behalf of any director against
any liability asserted against and incurred by him or her in his or her
capacity as a director, whether or not we would have had the power to
indemnify against such liability.
We are not aware of any pending or threatened action, suit or
proceeding involving any of its insiders for which indemnification may be
sought.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to insiders under the foregoing provisions, or
otherwise, we have 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.
LIMITATION OF LIABILITY
Our articles of incorporation, eliminate, with certain exceptions,
the potential personal liability of a director for monetary damages to us or
to our shareholders for any failure to take any action as a director. However,
there is no elimination of liability for:
- a breach of duty involving the appropriation of a
SouthernBank Holdings business opportunity;
- 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
- distributions, such as the payment of a dividend or approval
of a stock repurchase, that are illegal under Georgia law.
Georgia law allows corporations to include in their articles of
incorporation provisions eliminating or limiting the liability of directors,
except in the circumstances described above. As a result, and to encourage
qualified individuals to serve and remain as directors, we have included these
types of provisions in our articles of incorporation. While we have not
experienced any problems in locating directors, we could experience difficulty
in the future as our business activities increase and diversify. We have also
adopted liability limiting provisions to enhance our ability to secure
liability insurance for our directors at a reasonable cost. We intend to
obtain liability insurance covering actions taken by our directors in their
capacities as directors. Our board of directors believes that liability
limiting provisions will enable us to obtain such insurance on terms more
favorable than if they were not included in our articles of incorporation.
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AMENDMENTS
Any amendment of the provisions contained in our articles of
incorporation regarding:
- our staggered board of directors;
- the ability of our board of directors to consider various factors
when evaluating an acquisition proposal; or
- the limitation of a director's personal liability requires the
affirmative vote of the holders of two-thirds of the total number of
votes entitled to be cast by the holders of all of the shares of our
capital stock who are entitled to vote in an election of directors.
Except as may otherwise be required by Georgia law, our board of
directors may amend any provision of our bylaws by the affirmative vote of a
majority of our entire board, unless our shareholders have adopted, amended or
repealed a particular bylaw provision and, in doing so, have expressly
reserved to our shareholders the right of amendment or repeal therefor. Our
bylaws require the affirmative vote of the holders of not less than two-thirds
of the total number of votes entitled to be cast by the holders of all of the
shares of our capital stock then entitled to vote in the election of directors
to amend our bylaws.
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SUPERVISION AND REGULATION
The following discussion describes the material elements of the
regulatory framework that applies to banks and bank holding companies and
provides certain specific information related to SouthernBank.
GENERAL
SouthernBank Holdings will be a bank holding company registered with
the Federal Reserve under the Bank Holding Company Act. As a result,
SouthernBank Holdings and any future non-bank subsidiaries will be subject to
the supervision, examination, and reporting requirements of the Bank Holding
Company Act and the regulations of the Federal Reserve.
The Bank Holding Company Act requires every bank holding company to
obtain the Federal Reserve's prior approval before:
- 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 5.0% of
the bank's voting shares;
- it or any of its non-bank subsidiaries may acquire all or
substantially all of the assets of any bank; or
- 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 or, substantially lessen competition or otherwise function as
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.
Under the Riegle-Neal Interstate Banking and Branching Efficiency
Act, the restrictions on interstate acquisitions of banks by bank holding
companies were repealed. As a result, SouthernBank Holdings, and any other
bank holding company located in Georgia is able to acquire a bank located in
any other state, and a bank holding company located outside of Georgia can
acquire any Georgia-based bank, in either case subject to specified deposit
percentage and other restrictions. The legislation provides that unless an
individual state has elected to prohibit out-of-state banks from operating
interstate branches within its territory, adequately capitalized and managed
bank holding companies will be able to consolidate their multistate banking
operations into a single bank subsidiary and to branch interstate through
acquisitions. De novo branching by an out-of-state bank is permitted only if
it is expressly permitted by the laws of the host state. Georgia does not
permit de novo branching by an out-of-state bank. Therefore, the only method
by which an out-of-state bank or bank holding company may enter Georgia is
through an acquisition. Georgia has adopted an interstate banking statute that
removes the existing restrictions on the ability of banks to branch interstate
through mergers, consolidations and acquisitions. However, Georgia law
prohibits a bank holding company from acquiring control of a financial
institution until the target financial institution has been incorporated five
years. As a result, no
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bank holding company may acquire control of SouthernBank Holdings until after
the fifth anniversary date of SouthernBank's incorporation.
The Bank Holding Company Act generally prohibits bank holding
companies 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 to be closely
related to banking or managing or controlling banks. The Gramm-Leach-Bliley
Act has added additional financial related activities that may be conducted by
a bank holding company that qualifies as a financial holding company. See
"-- Gramm-Leach-Bliley Act" below.
In determining whether a particular activity is permissible, the
Federal Reserve must consider whether the performance of such an 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.
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 to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that the holding company's
continued ownership, activity or control constitutes a serious risk to the
financial safety, soundness, or stability of any of its bank subsidiaries.
SouthernBank's deposits will be insured by the FDIC to the maximum
extent provided by law. SouthernBank will also be subject to numerous state
and federal statutes and regulations that will affect its business, activities
and operations, and it will be supervised and examined by one or more state or
federal bank regulatory agencies.
The OCC will regularly examine SouthernBank's operations and has the
authority to approve or disapprove mergers, the establishment of branches and
similar corporate actions. The OCC also has the power to prevent the
continuance or development of unsafe or unsound banking practices or other
violations of law.
GRAMM-LEACH-BLILEY ACT
On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act which implements major changes to the statutory
framework for providing banking and other financial services in the United
States. The Gramm-Leach-Bliley Act, among other things, eliminates many of the
restrictions on affiliations among banks and securities firms, insurance
firms, and other financial service providers. A bank holding company that
qualifies as a financial holding company will be permitted to engage in
activities that are financial in nature or incidental or complimentary to a
financial activity. The activities that the Gramm-Leach-Bliley Act expressly
lists as financial in nature include insurance activities, providing financial
and investment advisory services, underwriting securities and limited merchant
banking activities.
To become eligible for these expanded activities, a bank holding
company must qualify as a financial holding company. To qualify as a financial
holding company, each insured depository institution controlled by the bank
holding company must be well-capitalized, well-managed, and have at least a
satisfactory rating under the Community Reinvestment Act. In addition, the
bank holding company must file a declaration with the Federal Reserve of its
intention to become a financial holding company. Presently, we have no plans
to become a financial holding company.
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Although considered to be one of the most significant banking laws
since Depression-era statutes were enacted, because of our small size and
recent organization, we do not expect the Gramm-Leach-Bliley Act to materially
affect our initial products, services or other business activities. To the
extent the Gramm-Leach-Bliley Act allows banks, securities firms, and
insurance firms to affiliate, the financial services industry may experience
further consolidation. The Gramm-Leach-Bliley Act may have the result of
increasing the amount of competition we face from larger financial
institutions and other companies offering financial products and services,
many of which have substantially more financial resources.
PAYMENT OF DIVIDENDS
SouthernBank Holdings is a legal entity separate and distinct from
SouthernBank. The principal sources of SouthernBank Holdings' cash flow,
including cash flow to pay dividends to its shareholders, are dividends that
SouthernBank pays to its sole shareholder, SouthernBank Holdings. Statutory
and regulatory limitations apply to SouthernBank's payment of dividends to the
company as well as to the company's payment of dividends to its shareholders.
If, in the opinion of the OCC, SouthernBank were engaged in or about
to engage in an unsafe or unsound practice, the OCC could require, after
notice and a hearing, the bank to cease and desist from the 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, a depository institution may not pay any dividend
if payment would cause it to become undercapitalized or if it already is
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" on page ___.
The payment of dividends by SouthernBank Holdings and SouthernBank
may also be affected by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
SouthernBank Holdings and SouthernBank will be required to comply
with the capital adequacy standards established by the Federal Reserve, in the
case of the company, and the OCC, in the case of the 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, such as letters of credit and unfunded loan
commitments, are assigned to broad 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 8.0%. 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,
or "Tier 1 Capital." The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves, or "Tier 2
Capital."
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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 3.0% 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 3.0%, plus an additional cushion of 1.0% to 2.0%. The guidelines also
provide that bank holding companies experiencing internal growth, as will be
the case for SouthernBank Holdings, 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.
SouthernBank will be subject to risk-based and leverage capital
requirements adopted by the OCC, 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 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" below.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, we are expected to act as a source of
financial strength for, and to commit resources to support, SouthernBank. This
support may be required at times when, without this Federal Reserve policy, we
might not be inclined to provide it. In addition, any capital loans by a bank
holding company to SouthernBank 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 establishes
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,
with respect 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 federal 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's obligation to fund a capital restoration plan is
limited to the lesser of 5.0% of an undercapitalized subsidiary's assets
52
<PAGE> 56
or the amount required to meet regulatory 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 test 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 then 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.
The FDIC may terminate its insurance of deposits 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.
COMMUNITY REINVESTMENT ACT
SouthernBank will be subject to the provisions of the Community
Reinvestment Act, which requires the OCC, in connection with its regular
examination of a bank, to assess the bank's record of meeting the credit needs
of the communities it serves, including low- and moderate-income
neighborhoods, consistent with safe and sound banking practices.
Regulations promulgated under the CRA are intended to set distinct
assessment standards for financial institutions. The regulations provide for
streamlined procedures for institution's with assets of less than $250
million. The regulations contain the following three evaluation tests:
- A lending test, which compares the institution's market
share of loans in low- and moderate-income areas to its
market share of loans in its entire service area;
- A service test, which evaluates the provision of services
that promote the availability of credit to low- and
moderate-income areas; and
- An investment test, which evaluate's the institution's
record of investments in organizations designed to foster
community development, small- and minority-owned businesses
and affordable housing lending, including state and local
government housing or revenue bonds.
53
<PAGE> 57
Institutions are required to make public disclosure of their written
CRA evaluations made by regulatory agencies. This promotes enforcement of CRA
requirements by providing the public with the status of a particular
institution's community investment record. In addition to public disclosure of
an institution's CRA assessment, regulatory authorities are required to
consider an institution's CRA assessment when an institution applies for
approval to establish a new branch which will accept deposits, to relocate an
existing branch or to merge with another federally regulated financial
institution.
RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES
We are subject to the provisions of Section 23A of the Federal
Reserve Act. Section 23A places limits on the amount of:
- A bank's loans or extensions of credit to affiliates;
- A bank's investment in affiliates;
- Assets a bank may purchase from affiliates, except for real
and personal property exempted by the Federal Reserve;
- The amount of loans or extensions of credit to third parties
collateralized by the securities or obligations of
affiliates; and
- A bank's guarantee, acceptance or letter of credit issued on
behalf of an affiliate.
The total amount of the above transactions is limited in amount, as
to any one affiliate, to 10.0% of a bank's capital and surplus and, as to all
affiliates combined, to 20.0% of a bank's capital and surplus. In addition to
the limitation on the amount of these transactions, each of the above
transactions must also meet specified collateral requirements. SouthernBank
must also comply with other provisions designed to avoid the taking of
low-quality assets.
We are also subject to the provisions of Section 23B of the Federal
Reserve Act which, among other things, prohibits an institution from engaging
in the above transactions with affiliates unless the transactions are on terms
substantially the same, or at least as favorable to the institution or its
subsidiaries, as those prevailing at the time for comparable transactions with
nonaffiliated companies.
SouthernBank is also subject to restrictions on extensions of credit
to its executive officers, directors, principal shareholders and their related
interests. These extensions of credit (1) must be made on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with third parties, and (2) must not
involve more than the normal risk of repayment or present other unfavorable
features.
MONETARY POLICY
The earnings of SouthernBank, as well SouthernBank Holdings, will be
affected by domestic and foreign conditions, particularly by the monetary and
fiscal policies of the United States government and its agencies. The Federal
Reserve has had, and will continue to have, an important impact on the
operating results of commercial banks through its power to implement national
monetary policy in order, among other things, to mitigate recessionary and
inflationary pressures by regulating the national money supply. The techniques
used by the Federal Reserve include setting the reserve requirements of member
banks and establishing the discount rate on member bank borrowings.
The Federal Reserve also conducts open market transactions in United States
government securities.
54
<PAGE> 58
SHARES ELIGIBLE FOR FUTURE SALE
Upon the close of the offering, we will have 1,250,000 shares of our
common stock outstanding, or 1,437,500 shares of our common stock outstanding
if the underwriter exercises its over-allotment option in full. These shares
of common stock will be freely tradable without restriction, except that
"affiliates" of SouthernBank Holdings must comply with the resale limitations
of Rule 144 under the Securities Act. Rule 144 defines an "affiliate" of a
company as a person who directly, or indirectly through one or more
intermediaries, 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. We expect that a total of 227,500 shares
owned directly or indirectly by our affiliates will be eligible for public
sale under Rule 144, subject to the contractual and volume restrictions
discussed below, beginning 180 days after the date of this prospectus.
Purchasers of our common stock in this offering or on the open market
may resell those shares immediately, although our affiliates will be subject
to the volume and other limitations of Rule 144. In general, under Rule 144,
as currently in effect, affiliates will be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1.0%
of the outstanding shares of common stock or the average weekly trading volume
during the four calendar weeks preceding his or her sale. Sales under Rule 144
are also subject to certain manner of sale provisions, notice requirements and
the availability of current public information about SouthernBank Holdings.
Affiliates will not be subject to the volume restrictions and other
limitations under Rule 144 beginning 90 days after their status as an
affiliate terminates.
Even though Rule 144 would otherwise permit the sale of shares held
by affiliates beginning 90 days after the date of this prospectus, we have
agreed, along with our organizers, directors and officers, with the
underwriter that we will not sell, contract to sell, or otherwise dispose of
any shares of our common stock or any securities convertible into or
exchangeable for any shares of our common stock for a period of 180 days from
the date of this prospectus without the underwriter's prior written consent,
except in limited circumstances.
We intend to issue warrants to purchase up to a total of 227,500
shares of our common stock, representing an amount equal to 18.2% of our
common stock sold in the offering. We also intend to grant options to purchase
up to a total of 100,000 shares of our common stock, representing an amount
equal to 8.0% of our common stock sold in the offering, under our stock option
plan. SouthernBank Holdings intends to register the shares issuable upon
exercise of these warrants and options. Upon registration, these shares will
be eligible for resale in the public market without restriction by persons who
are not affiliates of SouthernBank Holdings, and to the extent they are held
by affiliates, under Rule 144 without a holding period.
Prior to the offering, there has been no public market for our 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 our common
stock in the public market could adversely affect prevailing market prices and
our ability to raise equity capital in the future.
55
<PAGE> 59
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement
between SouthernBank Holdings and the underwriter named below, the underwriter
has agreed to purchase from us, and we have agreed to sell to the underwriter,
the number of shares of our common stock listed opposite the underwriter's
name below.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF OVER-ALLOTMENT
UNDERWRITER FIRM SHARES SHARES
----------- ----------- ------
<S> <C> <C>
Wachovia Securities, Inc ................... 1,250,000 187,500
</TABLE>
The underwriting agreement provides that the underwriter's
obligations are subject to approval of various legal matters by counsel and to
other conditions customary in a firm commitment underwritten public offering.
The underwriter is required to purchase and pay for the shares offered by this
prospectus other than those covered by the over-allotment option described
below.
The underwriting discount that will apply to shares not purchased by
our organizers and executive officers in this offering will equal 7.5% of the
public offering price listed on the cover page of this prospectus, or $0.75
per share. The underwriting discount that will apply to shares purchased in
this offering by our organizers and executive officers, up to 375,000 shares,
will equal 3.5% of the public offering price, or $0.35 per share.
The underwriter proposes to offer our common stock directly to the
public at the public offering price listed on the cover page of this
prospectus and to various securities dealers at that price less a concession
not in excess of $___ per share. The underwriter may allow, and the selected
dealers may reallow, a concession not in excess of $___ per share to certain
other brokers and dealers. We expect that the shares of our common stock
will be ready for delivery on or about _______, 2000. After the offering, the
offering price and other selling terms may change.
SouthernBank Holdings and the underwriter arbitrarily determined the
public offering price based on several factors. These factors include
prevailing market conditions and the price of comparable publicly traded
companies.
We have granted the underwriter an option, exercisable within 30 days
after the date of this prospectus, to purchase up to 187,500 additional shares
of our common stock to cover over-allotments, if any, at the public offering
price listed on the cover page of this prospectus, less the 7.5% underwriting
discount. The underwriter may purchase these shares only to cover
over-allotments made in connection with this offering.
In addition, we have granted to the underwriter a right of first
refusal to serve as exclusive or lead advisor on all corporate finance
transactions undertaken or considered by us for a period of three years after
the date of this prospectus. If the underwriter's right of first refusal is
subsequently waived in exchange for cash or non-cash consideration, any waiver
may require the prior approval of the National Association of Securities
Dealers, Inc.
The underwriter does not intend to sell shares of our common stock to
any account over which it exercises discretionary authority.
56
<PAGE> 60
Each of our organizers, directors and officers has agreed with the
underwriter that they will not sell, contract to sell, or otherwise dispose of
any shares of our common stock or any securities that can be converted into or
exchanged for shares of our common stock for a period of 180 days from the
date of this prospectus without the underwriter's prior written consent,
except in limited circumstances. The underwriter and its affiliates may on
occasion be a customer of, engage in transactions with, and perform services
for SouthernBank Holdings or SouthernBank in the ordinary course of business.
We have agreed to indemnify the underwriter against specified
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the underwriter may be required to make in connection with
these liabilities.
In connection with this offering, the underwriter may purchase and
sell our common stock in the open market. These transactions may include
over-allotment and stabilizing transactions, and purchases to cover syndicate
short positions created in connection with this offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of our common stock, and
syndicate short positions involve the underwriter's sale of a greater number
of shares of our common stock than it is required to purchase from us in the
offering. These activities may stabilize, maintain or otherwise affect the
market price of our common stock, which may be higher than the price that
might otherwise prevail in the open market. The underwriter may effect these
transactions on the Nasdaq OTC Bulletin Board, or otherwise, and may
discontinue them at any time.
LEGAL MATTERS
Troutman Sanders LLP, Atlanta, Georgia, will pass upon the validity
of the shares of common stock offered by this prospectus for SouthernBank
Holdings. Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia, is acting
as counsel for the underwriter in connection with legal matters relating to
the shares of common stock offered by this prospectus.
EXPERTS
SouthernBank Holdings' audited financial statements for the period
from July 13, 1999 through December 31, 1999, 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.
REPORTS TO SHAREHOLDERS
Upon the effective date of the Registration Statement on Form SB-2
that registers the shares of our common stock offered by this prospectus with
the Securities and Exchange Commission, we will be subject to the reporting
requirements of the Securities Exchange Act, 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
for at least one year and will continue for successive fiscal years, except
that these reporting obligations may be suspended for any subsequent fiscal
year if at the beginning of such year our common stock is held of record by
less than 300 persons.
At any time that we are not a reporting company, we will furnish our
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. Our fiscal year ends on December 31. Additionally, we will also
furnish other reports as we may determine to be appropriate or as otherwise
may be required by law.
57
<PAGE> 61
ADDITIONAL INFORMATION
SouthernBank Holdings 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, with respect to the shares of our common stock
offered by this prospectus. This prospectus does not contain all of the
information contained in the Registration Statement. For further information
with respect to SouthernBank Holdings and its common stock, we refer you to
the Registration Statement and the exhibits to it. 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 Room of
the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain additional information regarding the operation of
the public reference facilities by calling the Securities and Exchange
Commission at 1-800-SEC-0330. 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 SouthernBank Holdings, that file electronically
with the Securities and Exchange Commission.
SouthernBank Holdings and our organizers have filed or will file
various applications with the FDIC, the Federal Reserve, the OCC 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 SouthernBank Holdings and information in public
files and records maintained by the FDIC, the Federal Reserve, the OCC 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 our organizers believe are reasonable, but as to which
they can make no assurances. We specifically disaffirm those projections for
purposes of this prospectus and cautions you against relying on them for
purposes of making an investment decision.
58
<PAGE> 62
SOUTHERNBANK
HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL REPORT
DECEMBER 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT...................................................... 1
BALANCE SHEET, DECEMBER 31, 1999.................................................. 2
STATEMENT OF LOSS, PERIOD FROM JULY 13, 1999, DATE OF INCEPTION,
TO DECEMBER 31, 1999............................................................ 3
STATEMENT OF CASH FLOWS, PERIOD FROM JULY 13, 1999, DATE OF INCEPTION,
TO DECEMBER 31, 1999............................................................ 4
NOTES TO FINANCIAL STATEMENTS..................................................... 5-7
</TABLE>
<PAGE> 63
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS
SOUTHERNBANK HOLDINGS, INC.
BUFORD, GEORGIA
We have audited the accompanying balance sheet of SOUTHERNBANK
HOLDINGS, INC., a development stage company, as of December 31, 1999, and the
related statements of loss and cash flows for the period from July 13, 1999,
date of inception, to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SouthernBank
Holdings, Inc., a development stage company, as of December 31, 1999, and the
results of its operations and its cash flows for the period from July 13, 1999,
date of inception, to December 31, 1999, in conformity with generally accepted
accounting principles.
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
February 22, 2000
<PAGE> 64
SOUTHERNBANK HOLDINGS, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Cash $ 19,690
Equipment (net of accumulated depreciation of $114) 3,972
Related party receivable 20,000
Other assets 1,000
--------
TOTAL ASSETS $ 44,662
========
LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES
Line of credit $120,000
Accrued expenses 7,596
--------
TOTAL LIABILITIES 127,596
--------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDER'S (DEFICIT)
Preferred stock, $1 par value; 10,000,000 shares
authorized, no shares issued and outstanding 0
Common stock, $1 par value; 100,000,000 shares
authorized, 1 share issued and outstanding 1
Capital surplus 9
Deficit accumulated during the development stage (82,944)
--------
Total stockholder's deficit (82,934)
--------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $ 44,662
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 65
SOUTHERNBANK HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
PERIOD FROM JULY 13, 1999, DATE OF INCEPTION,
TO DECEMBER 31, 1999
<TABLE>
<S> <C>
EXPENSES
Salaries and employee benefits $ 7,500
Equipment and occupancy expenses 2,093
Interest 1,902
Legal and consulting 50,081
Regulatory fees 15,000
Other expenses 6,368
--------
82,944
--------
NET LOSS AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE $(82,944)
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 66
SOUTHERNBANK HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM JULY 13, 1999, DATE OF INCEPTION,
TO DECEMBER 31, 1999
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (82,944)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 114
Increase in related party receivable (20,000)
Increase in other assets (1,000)
Increase in accrued expenses 7,596
---------
Net cash used in operating activities (96,234)
---------
INVESTING ACTIVITIES
Purchase of equipment (4,086)
---------
Net cash used in investing activities (4,086)
---------
FINANCING ACTIVITIES
Proceeds from line of credit 120,000
Proceeds from issuance of common stock 10
---------
Net cash provided by financing activities 120,010
---------
Net increase in cash 19,690
Cash at beginning of period 0
---------
Cash at end of period $ 19,690
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 67
SOUTHERNBANK HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
SouthernBank Holdings, Inc. (the "Company") was incorporated on July
13, 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 SouthernBank, N.A.
(Proposed) (the "Bank"), a corporation to be organized under the
laws of the State of Georgia to conduct a general banking business
in Buford, Georgia. On November 19, 1999, the organizers filed an
application for approval of the organization of the Bank with the
Office of the Comptroller of the Currency ("OCC") and also with the
Federal Deposit Insurance Corporation ("FDIC") for insurance of the
Bank's deposits. The Company will apply to the Federal Reserve Bank
of Atlanta ("FRB") and the Georgia Department of Banking and Finance
("DBF") to become a bank holding company. 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 have been 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.
EQUIPMENT
Equipment is carried at cost less accumulated depreciation.
Depreciation is computed by the straight-line method over an
estimated useful life of three years.
5
<PAGE> 68
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 and tax
reporting purposes.
NOTE 2. LINE OF CREDIT
To facilitate the formation of the Company and the Bank, the organizers
have established a $250,000 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% and matures on June 28, 2000. Interest is payable quarterly.
The interest rate at December 31, 1999 was 7.5%. 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.
NOTE 3. COMMITMENTS AND RELATED PARTY TRANSACTIONS
To facilitate the Company's acquisition of a site for its main office,
a real estate business owned by two of the Company's directors has
entered into an agreement to purchase approximately one acre of land at
a cost of $857,000. The rights in the agreement will be assigned to the
Company. As of December 31, 1999, the Company has paid the real estate
business $20,000 which has been used as an earnest money deposit on the
land. The payment is reflected as a related party receivable in the
balance sheet.
6
<PAGE> 69
NOTES TO FINANCIAL STATEMENTS
NOTE 3. COMMITMENTS AND RELATED PARTY TRANSACTIONS (CONTINUED)
The Company is leasing temporary office facilities under a six month
operating lease agreement for $1,000 per month. Total rental expense
included in the statement of loss under this agreement amounted to
$1,000.
NOTE 4. COMMON STOCK OFFERING
The Company proposes to file a Registration Statement on Form SB-2 with
the Securities and Exchange Commission offering for sale 1,250,000
shares of the Company's common stock at a price of $10 per share.
NOTE 5. STOCK WARRANTS AND STOCK OPTIONS
Upon completion of the common stock offering, the Company intends to
grant a maximum of 227,500 stock warrants to its organizers. The
warrants will allow the organizers to purchase one share of common
stock for each warrant granted at a price of $10 per share.
The Company has also established a stock option plan which will allow
the granting of stock options to employees. At December 31, 1999, the
Company had 100,000 shares of its common stock reserved for future
grants under this plan. Options may be granted at prices no less than
the fair value of the Company's common stock on the date of grant.
As permitted by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation", the Company will recognize
compensation cost for stock-based compensation awards in accordance
with APB Opinion No. 25, "Accounting for Stock Issued to Employees".
The Company anticipates recognizing no compensation cost for
stock-based compensation awards upon the granting of stock warrants and
options.
7
<PAGE> 70
================================================================================
- --------------------------------------------------------------------------------
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. NO ONE HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH
INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS
NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS
OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Summary............................................
Risk Factors.......................................
A Warning About Forward-Looking
Statements...................................
Use of Proceeds....................................
Capitalization.....................................
Dividends..........................................
Management's Discussion and Analysis of
Financial Condition and Plan of
Operations....................................
Our Proposed Business .............................
Management.........................................
Executive Compensation.............................
Related Party
Transactions..................................
Description of Our Capital Stock ..................
Important Provisions of Our Articles
of Incorporation and Bylaws...................
Supervision and Regulation.........................
Shares Eligible for Future Sale....................
Underwriting.......................................
Legal Matters......................................
Experts............................................
Reports to Shareholders............................
Additional Information.............................
Index to Financial Report..........................
</TABLE>
UNTIL ____________, 2000 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT EFFECT TRANSFERS IN THESE SECURITIES OR TRADE THE COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
================================================================================
1,250,000 SHARES
SOUTHERNBANK
HOLDINGS, INC.
A PROPOSED BANK HOLDING COMPANY FOR
SOUTHERNBANK, N.A.
(IN ORGANIZATION)
COMMON STOCK
-----------------
PROSPECTUS
-----------------
WACHOVIA SECURITIES, INC.
_______, 2000
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 71
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Consistent with the applicable provisions of the laws of Georgia, the
Registrant's bylaws provide that the Registrant shall have the power to
indemnify its directors, officers, employees and agents 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, officer,
employee or agent acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Registrant and,
with respect to a criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. Advances against expenses shall be made
so long as the person seeking indemnification agrees to refund the advances if
it is ultimately determined that he or she is not entitled to indemnification. A
determination of whether indemnification of a director, officer, employee or
agent is proper because he or she met the applicable standard of conduct shall
be made (1) by the board of directors of the Registrant, (2) in certain
circumstances, by independent legal counsel in a written opinion or (3) by the
affirmative vote of a majority of the shares entitled to vote.
In addition, Article 11 of the Registrant's articles of incorporation,
subject to certain exceptions, eliminates the potential personal liability of a
director for monetary damages to the Registrant and to the shareholders of the
Registrant for breach of a duty as a director. There is no elimination of
liability for (1) a breach of duty involving appropriation of a business
opportunity of the Registrant, (2) an act or omission involving intentional
misconduct or a knowing violation of law, (3) a transaction from which the
director derives an improper material tangible personal benefit or (4) 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 the Registrant or its shareholders to seek
injunctive or other equitable relief not involving monetary damages.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses, other than underwriting discounts and commissions,
of the sale of the Registrant's Common Stock, $1.00 par value per share, are as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................................. $ 3,795
National Association of Securities Dealers, Inc. Filing Fee......................... 1,938
Blue Sky Fees and Expenses.......................................................... 10,000
Legal Fees and Expenses............................................................. 65,000
Accounting Fees and Expenses........................................................ 10,000
Printing and Engraving Expenses..................................................... 40,000
Miscellaneous....................................................................... 4,267
--------
Total...................................................................... $135,000
========
</TABLE>
II-1
<PAGE> 72
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
On July 13, 1999, the Registrant issued to D. Arnold Tillman, Jr. in a
private placement, one share of the Registrant's Common Stock, $1.00 par value
per share, for an aggregate price of $10.00 in connection with the organization
of the Company. The sale to Mr. Tillman was exempt from registration under the
Securities Act of 1933, as amended (the "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
------ -----------
1.1 Form of Underwriting Agreement*
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Common Stock Certificate
4.2 See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining rights of holders of the
Common Stock
4.3 Form of Organizer Warrant Agreement
5.1 Legal Opinion of Troutman Sanders LLP*
10.1 Letter Agreement for purchase of main office property dated
__________________ *
10.2 Assignment Agreement, dated as of _______, 2000, by and
between Land South Properties, LLC, and SouthernBank, N.A.
(In Organization)*
10.3 Lease Agreement for temporary modular facility, dated as
of ________, 2000, by and between SouthernBank, N.A.
(In Organization) and __________________*
10.4 Form of Loan Agreement, by and between SouthernBank Holdings,
Inc., as Borrower and The Bankers Bank, as Lender, and the
Organizers as Guarantors
10.5 Form of Loan Agreement, by and between SouthernBank, N.A. (In
Organization), as Borrower and The Bankers Bank, as Lender,
and the Organizers as Guarantors*
10.6 Employment Agreement, dated and effective as of December 1,
1999, by and among SouthernBank Holdings, Inc., SouthernBank,
N.A. (In Organization) and M. Lauch McKinnon
10.7 Letter Agreement, dated February 9, 2000, by and between
SouthernBank Holdings, Inc. and Rita B. Gray
II-2
<PAGE> 73
10.8 SouthernBank Holdings, Inc. Stock Option Plan
10.9 Form of SouthernBank Holdings, Inc. Incentive Stock Option
10.10 Form of SouthernBank Holdings, Inc. Non-Qualified Stock Option
21.1 List of Subsidiaries*
23.1 Consent of Mauldin & Jenkins, LLC
23.2 Consent of Troutman Sanders LLP (contained in Exhibit 5.1)
24.1 Power of Attorney (included in the original signature page to
this Registration Statement)
27.1 Financial Data Schedule (for SEC use only)
- --------------------------
*To be filed by amendment.
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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 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
II-3
<PAGE> 74
no more than a 20.0% 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 Registrant hereby 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 the Registrant 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.
II-4
<PAGE> 75
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Buford, State of Georgia, on March 16, 2000.
SOUTHERNBANK HOLDINGS, INC.
/s/ D. Arnold Tillman, Jr.
-------------------------------------------
D. Arnold Tillman, Jr.
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints D. Arnold Tillman, Jr. and M. Lauch
McKinnon, and each of them, as his true and lawful attorneys-in-fact and agents,
with full powers of substitution and resubstitution, for him, in his name, place
and stead, in any and all such capacities, to sign any and all amendments
(including post-effective amendments and any Registration Statement filed
pursuant to Rule 462(b) of the Securities Act) to said Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises as fully and to all intents and purposes as might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement, has been signed below by the following persons in
the capacities and on the dates indicated.
In accordance with the requirements of the Securities Act of 1933, as amended,
this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
- -------------------------------------- Director March ___, 2000
James O. Andrews
/s/ Rita B. Gray
- -------------------------------------- Chief Financial Officer March 16, 2000
Rita B. Gray (Principal Financial and Accounting
Officer)
/s/ James. E. Hinshaw, Sr.
- -------------------------------------- Director March 15, 2000
James E. Hinshaw, Sr.
/s/ Donald F. Jackson
- -------------------------------------- Director March 16, 2000
Donald F. Jackson
</TABLE>
II-5
<PAGE> 76
<TABLE>
<S> <C> <C>
/s/ Lewis A. Massey
- -------------------------------------- Director March 16, 2000
Lewis A. Massey
/s/ Tyler C. McCain
- -------------------------------------- Director March 16, 2000
Tyler C. McCain
/s/ M. Lauch McKinnon
- -------------------------------------- Director and President March 15, 2000
M. Lauch McKinnon
- -------------------------------------- Director March __, 2000
D. Alan Najjar
/s/ D. Arnold Tillman, Jr. Director and Chief Executive March 16, 2000
- -------------------------------------- Officer
D. Arnold Tillman, Jr. (Principal Executive Officer)
- -------------------------------------- Director March ___, 2000
Jeffrey S. Tucker
</TABLE>
II-6
<PAGE> 77
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Common Stock Certificate
4.3 Form of Organizer Warrant Agreement
10.4 Form of Loan Agreement by and between SouthernBank Holdings, Inc.,
as Borrower and The Bankers Bank, as Lender, and the Organizers as
Guarantors
10.6 Employment Agreement, dated and effective as of December 1, 1999, by
and among SouthernBank Holdings, Inc., SouthernBank, N.A. (In
Organization) and M. Lauch McKinnon
10.7 Letter Agreement, dated February 9, 2000, by and between SouthernBank
Holdings, Inc. and Rita B. Gray
10.8 SouthernBank Holdings, Inc. Stock Option Plan
10.9 Form of SouthernBank Holdings, Inc. Incentive Stock Option
10.10 Form of SouthernBank Holdings, Inc. Nonqualified Stock Option
23.1 Consent of Mauldin & Jenkins, LLC
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
SOUTHERNBANK HOLDINGS, INC.
I.
The name of the corporation is SouthernBank Holdings, Inc. (the
"Corporation").
II.
The Corporation is organized for the following purpose or purposes:
To act as a bank holding company and, to the extent permitted under
applicable federal and state laws, now or hereafter existing, to engage in such
business as related to banks and to bank holding companies and their
activities;
To acquire, own, hold, sell, exchange, assign, transfer, create
security interests in, pledge or otherwise dispose of shares, or voting trust
certificates or depository receipts for shares, or capital stock of, or any
bonds, notes debentures or other evidence of indebtedness, options, warrants or
other securities issued by any other business of any lawful character,
including, but not limited to, banks and other businesses providing goods or
services related to banking;
To acquire and hold other investment assets and to engage in any
lawful activities related thereto;
To acquire, own interest in and otherwise participate in and exercise
ownership rights in joint ventures, partnerships, limited partnerships, trusts,
corporations, unincorporated associations and other entities for the
furtherance of all corporate activities;
To borrow and to lend money and to buy, sell, guarantee and otherwise
deal in the obligations of others and conduct financing, brokerage, and
discount and factoring businesses in connection with the foregoing or
otherwise; and
In general, to carry on any other lawful business whatsoever, and to
have, enjoy and exercise all the rights, powers and privileges which are now or
which may hereafter be conferred upon corporations organized under the Georgia
Business Corporation Code, as amended (the "Code").
<PAGE> 2
III.
The Corporation shall have authority to issue 110,000,000 shares of
capital stock, which shall be divided into classes and shall have the following
designations, preferences, limitations and relative rights:
A. Common Stock. One class shall consist of 100,000,000 shares of
common stock of $1.00 par value per share, designated "Common Stock." The
holders of Common Stock shall be entitled to elect the members of the Board of
Directors of the Corporation, and such holders shall be entitled to vote as a
class on all matters required or permitted to be submitted to the shareholders
of the Corporation.
B. Preferred Stock. One class shall consist of 10,000,000 shares of
preferred stock of $1.00 par value per share, designated "Preferred Stock." The
Board of Directors of the Corporation shall be empowered to divide any and all
shares of the Preferred Stock into series and to fix and determine the relative
rights and preferences of the shares of any series so established. Before any
shares of Preferred Stock of any particular series shall be issued, the Board
of Directors of the Corporation shall fix and determine, and is hereby
expressly empowered to fix and determine, in the manner provided by law, the
following provisions of the shares of such series: (i) the distinctive
designation of such series and the number of shares which shall constitute such
series, which number may be increased (except where otherwise provided by the
Board of Directors of the Corporation in creating such series) or decreased
(but not below the number of shares thereof then outstanding) from time to time
by like action of the Board of Directors of the Corporation; (ii) the annual
rate of dividends payable on shares of such series, whether dividends shall be
cumulative and conditions upon which and the date when such dividends shall be
accumulated on all shares of such series issued prior to the record date for
the first dividend of such series; (iii) the time or times, if any, when the
price or prices at which shares of such series shall be redeemable at the
option of the holder or of the Corporation and the sinking fund provisions, if
any, for the purchase or redemption of such shares; (iv) the amount payable on
shares of such series in the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, whether all or a portion is paid before
any amount is paid on Common Stock; (v) the rights, if any, of the holders of
shares of such series to convert such shares into, or exchange such shares for,
shares of Common Stock or shares of any other series of Preferred Stock and the
terms and conditions of such conversion or exchange; and (vi) whether the
shares of such series have voting rights and the extent of such voting rights,
if any.
The Board of Directors of the Corporation shall have the power to
reclassify any unissued shares of any series of Preferred Stock from time to
time by setting or changing the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption, including but not limited to, but subject to the
limitations described in, the above provisions.
Any action by the Board of Directors of the Corporation in authorizing
the issuance of Preferred Stock and fixing and determining the provisions
thereof is hereby ratified and approved.
2
<PAGE> 3
IV.
The street address of the initial registered office of the Corporation
is 600 Peachtree Street, N.E., Suite 5200, Atlanta, Georgia 30308-2216. The
initial registered office of the Corporation is located in Fulton County. The
initial registered agent of the Corporation at such office is Thomas O. Powell.
V.
The mailing address of the initial principal office of the Corporation
is 600 Peachtree Street, N.E., Suite 5200, Atlanta, Georgia 30308-2216.
VI.
A. Except as otherwise fixed or pursuant to the provisions of these
Articles of Incorporation relating to the rights of the holders of any series
of Preferred Stock to elect additional directors under specified circumstances,
the number of directors of the Corporation shall be fixed from time to time by
resolution of the Board of Directors adopted by no less than 66 2/3% of those
directors voting in favor of such resolution; provided, however, that the
number of directors fixed by the Board of Directors shall not be less than five
or more than 25.
B. The Board of Directors of the Corporation shall be divided into
three classes, as nearly equal in number as possible, with the term of office
of the first class of directors to expire at the annual meeting of shareholders
to be held in 2000, the term of office of the second class of directors to
expire at the annual meeting of shareholders to be held in 2001, and the term
of office of the third class of directors to expire at the annual meeting of
shareholders to be held in 2002, with each member of each class to hold office,
until his successors are elected and qualified. At each annual meeting of
shareholders, and except as otherwise fixed or pursuant to the provisions of
these Articles of Incorporation relating to the rights of the holders of any
series of Preferred Stock to elect additional directors under specified
circumstances, the successors of the class of directors whose terms expire at
that meeting shall be elected to hold office for a term expiring at the annual
meeting of shareholders held in the third year following the year of their
election.
C. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the number of directors or any vacancies occurring in the Board of Directors
of the Corporation resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office,
although less than a quorum of the Board of Directors, or by the sole remaining
director. A director so chosen shall hold office until the next annual meeting
of shareholders. No decrease in the number of directors constituting the Board
of Directors of the Corporation shall shorten the term of any incumbent
director.
3
<PAGE> 4
D. Notwithstanding the foregoing provisions of this Article VI, any
director whose term of office has expired shall continue to hold office until
his successor shall be elected and qualified.
E. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any director, or the entire Board of Directors of the
Corporation, may be removed from office at any time, but only for cause, and
only by the affirmative vote of the holders of at least 66 2/3% of the total
number of votes entitled to be cast by the holders of all of the shares of
capital stock of the Corporation then entitled to vote generally in the
election of directors. The holder of each share of capital stock entitled to
vote thereon shall be entitled to cast the same number of votes as the holder
of such shares is entitled to cast generally in the election of each director.
F. Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the Corporation), the affirmative vote of the
holders of at least 66 2/3% of the total number of votes entitled to be cast by
the holders of all of the shares of capital stock of the Corporation then
entitled to vote generally in the election of directors shall be required to
amend, alter, change or repeal, or to adopt any provision as part of these
Articles of Incorporation inconsistent with, this Article VI. The holder of
each share of capital stock entitled to vote thereon shall be entitled to cast
the same number of votes as the holder of such shares is entitled to cast
generally in the election of each director.
VII.
The name and address of the incorporator of the Corporation are:
Thomas O. Powell
Troutman Sanders LLP
NationsBank Plaza
600 Peachtree Street, NE, Suite 5200
Atlanta, Georgia 30308-2216
VIII.
The fair price requirements contained in the Code (O.C.G.A. Sections
14-2-1110 through 14-2-1113) shall apply to the Corporation.
IX.
The requirements regarding business combinations with interested
shareholders contained in the Code (O.C.G.A. Sections 14-2-1131 through
14-2-1133) shall apply to the Corporation.
4
<PAGE> 5
X.
A. The Board of Directors of the Corporation, when evaluating any
offer of another individual, firm, Corporation or other entity ("Person") (i)
to make a tender or exchange offer for any equity security of the Corporation,
(ii) to merge or consolidate the Corporation with such other Person, or (iii)
to purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation (such offers individually referred to as an
"Acquisition Proposal"), shall, in connection with the exercise of its business
judgment in determining what is in the best interest of the Corporation and its
shareholders, give due consideration to all relevant factors, including without
limitation, the consideration being offered in the Acquisition Proposal in
relation to the then-current market price of the Corporation's stock, but also
in relation to the then-current value of the Corporation in a freely negotiated
transaction and in relation to the Corporation's Board of Directors'
then-estimate of the future value of the Corporation as an independent entity,
the social and economic effects on the employees, customers, suppliers, and
other constituents of the Corporation and on the communities in which the
Corporation operates or is located and the desirability of maintaining
independence from any other business or business entity; provided, however,
that this Article X shall be deemed solely to grant discretionary authority to
the Corporation's Board of Directors and shall not be deemed to provide any
constituency any right to be considered.
B. If the Corporation's Board of Directors determines that an
Acquisition Proposal should be rejected, it may take any lawful action to
accomplish its purpose including, without limitation, any or all of the
following: advising the Corporation's shareholders not to accept the
Acquisition Proposal, litigation against the offeror, filing complaints with
governmental and regulatory authorities, acquiring the Corporation's
securities, selling or otherwise issuing authorized but unissued securities or
treasury stock or granting options with respect thereto, acquiring an unrelated
entity to create an antitrust or other regulatory problem for the offeror and
soliciting a more favorable offer from another individual or entity.
C. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article X, unless such
amendment, in addition to receiving any shareholder vote or consent required by
law, shall receive the affirmative vote or consent of the holders of 66 2/3% of
the outstanding shares of each class of stock of the Corporation entitled to
vote in elections of directors.
XI.
A. No director of the Corporation shall be liable to the Corporation
or its shareholders for monetary damages for any action taken, or any failure
to take any action as a director; provided, however, that to the extent
required by applicable law, this Article XI shall not eliminate or limit the
liability of a director (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 Section 14-2-832 of the Code, or (iv) for
any transaction from which the director derived an improper personal benefit.
If applicable law is amended to authorize corporate action further eliminating
or limiting the liability of directors, then the liability of each director of
the
5
<PAGE> 6
Corporation shall be eliminated or limited to the fullest extent permitted by
applicable law, as amended. Neither the amendment or repeal of this Article XI,
nor the adoption of any provision of these Articles of Incorporation
inconsistent with this Article XI, shall eliminate or reduce the effect of this
Article XI in respect of any acts or omissions occurring prior to such
amendment, repeal or adoption of an inconsistent provision.
B. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article XI, unless such
amendment, in addition to receiving any shareholder vote or consent required by
law, shall receive the affirmative vote or consent of the holders of 66 2/3% of
the outstanding shares of each class of stock of the Corporation entitled to
vote in elections of directors.
XII.
Except as otherwise specifically provided herein, these Articles of
Incorporation may be amended, altered, changed or repealed only by the
affirmative vote or consent of the holders of at least 50% of the shares of
each class of stock of the Corporation entitled to vote in elections of
directors.
XIII.
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.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation on July 13, 1999.
/s/ Thomas O. Powell
---------------------------------
Thomas O. Powell
6
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
SOUTHERNBANK HOLDINGS, INC.
ARTICLE I.
DEFINITIONS
As used in these Bylaws, the capitalized terms set forth below shall
have the following meanings:
"Articles of Incorporation" means the Articles of Incorporation of the
Corporation, as amended from time to time.
"Board" shall mean the Board of Directors of the Corporation.
"Chief Executive Officer" shall mean the Chairman of the Corporation,
or such other Officer as shall be designated by the Board as having the duties
of the Chief Executive Officer, as described in Section 4 of Article V of these
Bylaws.
"Code" shall mean the Georgia Business Corporation Code, as amended
from time to time.
"Corporation" shall mean SouthernBank Holdings, Inc., a Georgia
corporation.
"Secretary" shall mean the Secretary of the Corporation, or such other
officer as shall be designated by the Board as having the duties of the
corporate Secretary as described in Section 6 of Article V of these Bylaws.
"Secretary of State" shall mean the Secretary of State of Georgia.
"Voting group" shall have the meaning set forth in subsection (a) of
Section 6 of Article III of these Bylaws.
ARTICLE II.
GENERAL PROVISIONS REGARDING NOTICES
Section 1. Notices. Except as otherwise provided in the Articles of
Incorporation or these Bylaws, or as otherwise required by applicable law:
(a) Any notice required by these Bylaws or by law shall be in writing
unless oral notice is reasonable under the circumstances.
<PAGE> 2
(b) Notice may be communicated in person; by telephone, telegraph,
teletype, or other form of wire or wireless communication; or by mail or
private carrier. If these forms of personal notice are impracticable, notice
may be communicated by a newspaper of general circulation in the area where
published, or by radio, television, or other form of public broadcast
communication.
(c) Written notice by the Corporation to any shareholder, if in a
comprehensible form, is effective when mailed, if mailed with first-class
postage prepaid and correctly addressed to the shareholder's address shown in
the Corporation's current record of shareholders; provided, however, that if
the Corporation has more than 500 shareholders of record entitled to vote at a
meeting, it may utilize a class of mail other than first class if the notice of
the meeting is mailed, with adequate postage prepaid, not less than 30 days
before the date of the meeting.
(d) Written notice to the Corporation may be addressed to its
registered agent at its registered office or to the Corporation or its
Secretary at its principal office shown in its most recent annual registration
with the Secretary of State.
(e) Except as provided in subsection (c) of this Section 1, written
notice, if in a comprehensible form, is effective at the earliest of the
following:
(1) When received, or when delivered, properly
addressed, to the addressee's last known principal
place of business or residence;
(2) Five days after its deposit in the mail, as
evidenced by the postmark, if mailed with
first-class postage prepaid and correctly addressed;
or
(3) on the date shown on the return receipt, if sent by
registered or certified mail, return receipt
requested, and the receipt is signed by or on behalf
of the addressee.
(f) Oral notice is effective when communicated if communicated in a
comprehensible manner.
(g) In calculating time periods for notice under these Bylaws, when a
period of time measured in days, weeks, months, years, or other measurement of
time is prescribed for the exercise of any privilege or the discharge of any
duty, the first day shall not be counted but the last day shall be counted.
Section 2. Waiver of Notice. Except as otherwise provided or required
by the Articles of Incorporation, these Bylaws or applicable law:
(a) A shareholder may waive any notice required to be given to such
shareholder, before or after the date and time stated in the notice. The waiver
must be in writing, be signed by the shareholder entitled to the notice, and be
delivered to the Corporation for inclusion in the minutes or filing with the
Corporation's corporate records.
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(b) A shareholder's attendance at a meeting:
(1) Waives objection to lack of notice or defective
notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the
meeting or transacting business at the meeting; and
(2) Waives objection to consideration of a particular
matter at the meeting that is not within the purpose
or purposes described in the meeting notice, unless
the shareholder objects to considering the matter
when it is presented.
(c) Neither the business transacted nor the purpose of the meeting
need be specified in the waiver, except that any waiver by a shareholder of the
notice of a meeting of shareholders with respect to an amendment of the
Articles of Incorporation, a plan of merger or share exchange, a sale of assets
or any other action which would entitle the shareholder to exercise statutory
dissenter's rights under the Code and obtain payment for his shares shall not
be effective unless:
(1) Prior to the execution of the waiver, the
shareholder shall have been furnished the same
material that under the Code would have been
required to be sent to the shareholder in a notice
of the meeting, including notice of any applicable
dissenters' rights as provided in the Code; or
(2) The waiver expressly waives the right to receive the
material required to be furnished.
(d) A director may waive any notice required to be given to such
director by the Code, the Articles of Incorporation, or these Bylaws before or
after the date and time stated in the notice. Except as provided by subsection
(e) of this Section 2, the waiver must be in writing, signed by the director
entitled to the notice, and delivered to the Corporation for inclusion in the
minutes or filing with the Corporation's corporate records.
(e) A director's attendance at or participation in a meeting waives
any required notice to him of the meeting unless the director at the beginning
of the meeting (or promptly upon his arrival) objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
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ARTICLE III.
SHAREHOLDERS' MEETINGS
Section 1. Place of Meeting. The Board may designate any place within
or outside the State of Georgia as the place of meeting for any annual or
special meeting of shareholders.
Section 2. Annual Meeting. An annual meeting of the Corporation's
shareholders shall be held each year, on such date, at such time and place as
the Board shall determine, at which time the Corporation's shareholders shall
elect directors and transact such other business as may be properly brought
before the meeting.
Section 3. Special Meetings. Except to the extent otherwise prescribed
by statute or the Articles of Incorporation, special meetings of shareholders,
for any purpose or purposes, may be called by the Chairman of the Board or the
Board pursuant to resolution adopted by a majority of the Board.
Section 4. Notice to Shareholders.
(a) Except as otherwise specifically provided in this Section 4,
requirements with respect to the giving of notice and waiver of notice shall be
governed by the provisions of Article II of these Bylaws.
(b) The Corporation shall give notice to each shareholder entitled to
vote thereat of the date, time and place of each annual and special
shareholders, meeting no fewer than 10 nor more than 60 days before the meeting
date.
(c) Unless otherwise required by the Code with respect to meetings at
which specified actions will be considered (including but not limited to
mergers, certain share exchanges, certain asset sales by the Corporation, and
dissolution of the Corporation), notice of an annual meeting need not contain a
description of the purpose or purposes for which the meeting is called.
(d) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(e) Unless a new record date is set (or is required by law or by the
terms of these Bylaws to be set) therefor, notice of the date, time and place
of any adjourned meeting need not be given otherwise than by the announcement
at the meeting before adjournment. If a new record date for the adjourned
meeting is or must be fixed, however, notice of the adjourned meeting must be
given in accordance with these Bylaws as if such adjourned meeting were a
newly-called meeting.
(f) If any corporate action proposed to be considered at a meeting of
shareholders would or might give rise to statutory dissenters' rights under the
Code, the notice of such meeting shall state that the meeting is to include
consideration of such proposed corporate action, and that
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the consummation of such action will or might give rise to such dissenters
rights, and shall include the description of such statutory dissenters rights
required by the Code.
(g) If any corporate action which would give rise to statutory
dissenters rights under the Code is taken by written consent of shareholders
without a meeting, or is taken at a meeting with respect to which less than all
shareholders were entitled to receive notice, or is otherwise taken without a
vote of shareholders, the Corporation shall cause notice thereof, including the
information concerning statutory dissenters rights contemplated by paragraph
(b) above, to be given, not more than 10 days after the adoption of such action
by shareholder vote at a meeting or by written consent to those shareholders
who did not execute such written consent or who were not entitled to receive
notice of such meeting, or to all shareholders if such action was otherwise
taken without a vote of shareholders.
Section 5. Fixing of Record Date.
(a) For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders, or shareholders entitled to demand a
special meeting of shareholders, or shareholders entitled to take any other
action, the Board may fix in advance (but not retroactively from the date the
Board takes such action) a date as the record date for any such determination
of shareholders, such date in any case to be not more than 70 days prior to the
meeting or action requiring such determination of shareholders. If no record
date is fixed for the determination of shareholders entitled to notice of or to
vote at a meeting of shareholders, the close of business on the last business
day before the first notice of such meeting is delivered to shareholders shall
be the record date. If no record date is fixed for determining shareholders
entitled to take action without a meeting, the date the first shareholder signs
the consent shall be the record date for such purpose. If no record date is
fixed for determining shareholders entitled to demand a special meeting, or to
take other action, the date of receipt of notice by the Corporation of demand
for such meeting, or the date on which such other action is to be taken by the
Corporation's shareholders, shall be the record date for such purpose.
(b) A separate record date may be established for each voting group
entitled to vote separately on a matter at a meeting.
(c) A determination of shareholders entitled to notice of or to vote
at a shareholders meeting is effective for any adjournment of the meeting
unless the Board fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
(d) For the purpose of determining shareholders entitled to a
distribution by the Corporation (other than one involving a purchase,
redemption or other acquisition of the Corporation's shares), the record date
shall be the date fixed for such purpose by the Board, or if the Board does not
fix such a date, the date on which the Board authorizes such distribution.
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Section 6. Quorum and Voting Requirements.
(a) Except as otherwise provided by the Articles of Incorporation or
the Code:
(1) A "voting group" with respect to any given matter
means all shares of one or more class or series
which, under the Articles of Incorporation or the
Code, are entitled to vote and be counted together
collectively on that matter, and unless specified
otherwise in the Articles of Incorporation, the Code
or these Bylaws, all shares entitled to vote on a
given matter shall be deemed to be a single voting
group for purposes of that matter.
(2) Each outstanding share, which is entitled to vote,
is entitled to one vote on each matter voted on at a
shareholders' meeting.
(3) A majority of the votes entitled to be cast on the
matter by a voting group constitutes a quorum of
that voting group for action on that matter.
(4) The presence of a quorum of each voting group
entitled to vote thereon shall be the requisite for
transaction of business on a given matter.
(5) Action on a matter other than election of directors
is approved by a voting group if a quorum of such
voting group exists and the number of votes cast
within such voting group in favor of such action
exceeds the number of votes cast within such voting
group against such action.
(6) Except as otherwise provided in these Bylaws, all
shares entitled to vote for election of directors
shall vote thereon as a single voting group, and
directors shall be elected by a plurality of votes
cast by shares entitled to vote in the election in a
meeting at which a quorum of such voting group is
present.
(b) Once a share is represented for any purpose other than solely to
object to holding a meeting or transacting business at the meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is required by law or
these Bylaws to be set for that adjourned meeting.
(c) If a quorum for transaction of business shall not be present at a
meeting of the Corporation's shareholders, the shareholders entitled to vote
thereat, present in person or by proxy, shall have the power to adjourn the
meeting from time to time, until the requisite amount of voting stock shall be
present. No notice other than announcements at the meeting before adjournment
shall be required of the new date, time or place of the adjourned meeting,
unless a new record date for such adjourned meeting is, or is required by law
or these Bylaws to be, fixed. At such adjourned meeting (for which no new
record date is required to be set) at which a quorum shall be present in person
or by proxy, any business may be transacted that might have been transacted at
the meeting originally called.
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Section 7. Proxies. At every meeting of shareholders, any shareholder
having the right to vote shall be entitled to vote in person or by proxy, but
no proxy shall be: (i) effective unless given in writing and signed, either
personally by the shareholder or his agent or his attorney-in-fact; or (ii)
effective until received by the inspector of election or the officer or the
agent authorized to tabulate votes; or valid after 11 months after its date,
unless said proxy expressly provides for a longer period.
Section 8. Informal Actions by Shareholders. Any action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if written consent (which may take the form of one or more counterpart
copies), bearing the date of signature and setting forth the action so taken,
shall be signed by all the holders of all the shares entitled to vote with
respect to the subject matter thereof and delivered to the Corporation for
inclusion in the minutes or filing with the corporate records. Such consent
shall have the same force and effect as a unanimous vote of the Corporation's
shareholders; provided, however, that no such consent which purports to be an
approval of any plan of merger, share exchange, asset sale or other transaction
(i) as to which shareholder approval is required by the Code and (ii) with
respect to which specific disclosure requirements to voting shareholders are
imposed by the Code, shall be effective unless:
(1) prior to the execution of the consent, each consenting
shareholder shall have been furnished the same material
which, under the Code, would have been required to be sent to
shareholders in a notice of a meeting at which the proposed
action would have been submitted to the shareholders for
action, including notice of any applicable dissenters rights;
or
(2) the written consent contains an express waiver of the right
to receive the material otherwise required to be furnished.
ARTICLE IV.
DIRECTORS
Section 1. General Powers. All corporate powers of the Corporation
shall be exercised by or under the authority of, and the business and affairs
of the Corporation managed under the direction of, its Board, subject to any
limitation set forth in the Articles of Incorporation, or any amendment to
these Bylaws approved by the Corporation's shareholders, or any otherwise
lawful agreement among the Corporation's shareholders.
Section 2. Number, Election and Terms. Except as otherwise fixed by or
pursuant to the provisions of the Articles of Incorporation relating to the
rights of the holders of any series of preferred stock to elect additional
directors under specified circumstances, the number of directors comprising the
Board shall be fixed from time to time by resolution of the Board; provided,
however, that the number of directors fixed by the Board shall not be less than
five or more than 25. The Board shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class of
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<PAGE> 8
directors to expire at the annual meeting of the Corporation's shareholders to
be held in 2000, the term of office of the second class of directors to expire
at the annual meeting of the Corporation's shareholders to be held in 2001, and
the term of office of the third class of directors to expire at the annual
meeting of the Corporation's shareholders to be held in 2002. At each annual
meeting of the Corporation's shareholders, and except as otherwise so fixed by
or pursuant to the provisions of the Articles of Incorporation relating to the
rights of holders of any series of preferred stock to elect additional
directors under specified circumstances, the successors of the class of
directors whose terms expire at that meeting shall be elected for a term of
office expiring at the annual meeting of the Corporation's shareholders held in
the third year following the year of their election.
Section 3. Vacancies, How Filled. Subject to the rights of the holders
of any series of preferred stock then outstanding, newly created directorships
resulting from any increase in the number of directors or any vacancies
occurring in the Board resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled by the
affirmative vote of a majority of the remaining directors then in office,
although less than a quorum of the Board, or by the sole remaining director. A
director so chosen shall hold office until the next annual meeting of the
Corporation's shareholders. No decrease in the number of directors constituting
the Board shall shorten the term of any incumbent director.
Section 4. Continuances in Office. Notwithstanding the foregoing
provisions of this Article IV, any director whose term of office has expired
shall continue to hold office until his successor shall be elected and
qualified.
Section 5. Removal. Subject to the rights of the holders of any series
of preferred stock then outstanding, any director, or the entire Board, may be
removed from office at any time, but only for cause, and only by the
affirmative vote of the holders of at least 66 2/3% of the total number of
votes entitled to be cast by the holders of all of the shares of capital stock
of the Corporation then entitled to vote generally in the election of
directors. The holder of each share of capital stock entitled to vote thereon
shall be entitled to cast the same number of votes as the holder of such shares
is entitled to cast generally in the election of each director.
Section 6. Place of Meeting. The Board may hold its meetings at such
place or places within or outside the State of Georgia as it may from time to
time determine.
Section 7. Compensation. Directors may be allowed such compensation
for attendance at regular or special meetings of the Board and of any special
or standing committees thereof as the Board may from time to time determine.
Section 8. Regular Meetings. A regular annual meeting of the Board
shall be held, without other notice than this Bylaw, immediately after, and at
the same place as, the annual meeting of shareholders. The Board may provide,
by resolution, the time and place within or outside the State of Georgia, for
the holding of additional regular meetings without other notice than such
resolution.
Section 9. Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board on not less than two days notice to each
director by mail, telegram, cablegram or other form of wire or wireless
communication, or personal delivery or other form
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of communication authorized under the circumstances by the Code, and shall be
called by the Chairman of the Board or the Secretary in like manner and on like
notice on the written request of any two or more members of the Board. Such
notice shall state the time, date and place of such meeting, but need not
describe the purpose of the meeting. Any such special meeting shall be held at
such time and place as shall be stated in the notice of the meeting.
Section 10. General Provisions Regarding Notice and Waiver. Except as
otherwise expressly provided in this Article IV, matters relating to notice to
directors and waiver of notice by directors shall be governed by the provisions
of Article II of these Bylaws.
Section 11. Quorum. At all meetings of the Board, unless otherwise
provided in the Articles of Incorporation or other provisions of these Bylaws,
the presence of a majority of the directors shall constitute a quorum for the
transaction of business. In the absence of a quorum a majority of the directors
present at any meeting may adjourn from time to time until a quorum be had.
Notice of the time and place of any adjourned meeting need only be given by
announcement at the meeting at which adjournment is taken.
Section 12. Manner of Acting. Except as expressly otherwise provided
in the Articles of Incorporation or other provisions of these Bylaws, if a
quorum is present when a vote is taken, the affirmative vote of a majority of
directors present is the act of the Board. A director who is present at a
meeting when corporate action is taken is deemed to have assented to the action
unless:
(1) He objects at the beginning of the meeting (or
promptly upon his arrival) to holding it or
transacting business at the meeting;
(2) His dissent or abstention from the action taken is
entered in the minutes of the meeting; or
(3) He delivers written notice of his dissent or
abstention to the presiding officer of the meeting
before its adjournment or to the Corporation
immediately after adjournment of the meeting.
Section 13. Committees.
(a) Except as otherwise provided by the Articles of Incorporation, the
Board may create one or more committees and establish their respective
authority and duties. The Chairman of the Board shall appoint members of the
Board to serve on each committee. Each committee may have one or more members,
who serve at the pleasure of the Chairman of the Board.
(b) The provisions of these Bylaws and of the Code which govern
meetings, action without meetings, notice and waiver of notice, and quorum and
voting requirements of the Board, shall apply as well to committees created
under this Section 13 and their members.
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(c) To the extent specified by the Articles of Incorporation, these
Bylaws and the resolution of the Board creating such committee, each committee
may exercise the authority of the Board as to certain matters consistent with
the scope of duties authorized by the Board; provided, however, that a
committee may not:
(1) Approve, or propose to shareholders for approval,
action required by the Code to be approved by
shareholders;
(2) Fill vacancies on the Board or on any of its
committees;
(3) Exercise any authority which the Board may have to
amend the Articles of Incorporation;
(4) Adopt, amend, or repeal bylaws; or
(5) Approve a plan of merger not requiring shareholder
approval.
Section 14. Action Without Formal Meeting. Except as expressly
otherwise provided in the Articles of Incorporation, any action required or
permitted to be taken at any meeting of the Board or of any committee thereof
may be taken without a meeting if written consent thereto (which may take the
form of one or more counterparts) is signed by all members of the Board or of
such committee, as the case may be, and such written consent is filed with the
minutes of the proceedings of the Board or committee. A consent executed in
accordance herewith has the effect of a meeting vote and may be described as
such in any document.
Section 15. Conference Call Meetings. Members of the Board, or any
committee of the Board, may participate in a meeting of the Board or committee
by means of conference, telephone or similar communications equipment by means
of which all persons participating in the meeting can simultaneously hear each
other during the meeting, and participation in a meeting pursuant to this
Section 15 shall constitute presence in person at such meeting.
Section 16. Honorary Directors, Directors Emeritus and Advisory
Boards. The Board may appoint any individual as an honorary director, a
director emeritus, or a member of any advisory board. Any individual appointed
as an honorary director, a director emeritus, or a member of an advisory board
may be compensated as provided in Section 7 of this Article IV, but such
individual may not vote at any meeting of the Board or be counted in
determining a quorum as provided in Section 11 of this Article IV and shall not
have any responsibility or be subject to any liability imposed upon a director
or otherwise be deemed a director of the Corporation.
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ARTICLE V.
OFFICERS
Section 1. Generally. The Board shall from time to time elect or
appoint such officers as it shall deem necessary or appropriate to the
management and operation of the Corporation, which officers shall hold their
offices for such terms as shall be determined by the Board and shall exercise
such powers and perform such duties as are specified in these Bylaws or in a
resolution of the Board. Except as specifically otherwise provided in
resolutions of the Board, the following requirements shall apply to election or
appointment of officers:
(a) The Corporation shall have, at a minimum, the following officers,
whose offices shall bear the titles designated therefor by resolution of the
Board, but in the absence of such designation shall bear the titles set forth
below:
<TABLE>
<CAPTION>
Office Title
------ -----
<S> <C>
Chief Executive Officer Chairman and Chief Executive Officer
Chief Operating Officer President
Chief Financial Officer Treasurer
Secretary Secretary
</TABLE>
(b) All officers of the Corporation shall serve at the pleasure of the
Board, and in the absence of specification otherwise in a resolution of the
Board, each officer shall be elected to serve until the next succeeding annual
meeting of the Board and the election and qualification of his successor,
subject to his earlier death, resignation or removal.
(c) Any person may hold two or more offices simultaneously, and no
officer need be a shareholder of the Corporation.
(d) If so provided by resolution of the Board, any officer may be
delegated the authority to appoint one or more officers or assistant officers,
which appointed officers or assistant officers shall have the duties and powers
specified in the resolution of the Board.
Section 2. Compensation. The salaries of the officers of the
Corporation shall be fixed by the Board, except that the Board may delegate to
any officer or officers the power to fix the compensation of any other officer.
Section 3. Vacancies. A vacancy in any office, because of resignation,
removal or death may be filled by the Board for the unexpired portion of the
term, or if so provided by resolution of the Board, by an officer of the
Corporation to whom has been delegated the authority to appoint the holder of
such vacated office.
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Section 4. Chief Executive Officer. The Chief Executive Officer shall
have such title or titles designated by the Board or these Bylaws and shall be
the principal executive officer of the Corporation. Subject to the control of
the Board, the Chief Executive Officer shall in general manage, supervise and
control all of the business and affairs of the Corporation. He may sign,
individually or in conjunction with any other proper officer of the Corporation
thereunto authorized by the Board, certificates for shares of the Corporation,
any deeds, mortgages, bonds, policies of insurance, contracts, investment
certificates, or other instruments which the Board has authorized to be
executed, except in cases where the execution thereof shall be expressly
delegated by the Board or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed;
and in general shall perform all duties incident to the office of the Chief
Executive Officer and such other duties as may be prescribed by the Board from
time to time.
Section 5. Chief Operating Officer. The Chief Operating Officer shall
have such title or titles designated by the Board or these Bylaws and shall be
the principal operating officer of the Corporation. Subject to the control of
the Board, the Chief Operating Officer shall in general manage, supervise and
control the day-to-day business operations of the Corporation. He may sign,
individually or in conjunction with any other proper officer of the Corporation
thereunto authorized by the Board, certificates for shares of the Corporation,
any deeds, mortgages, bonds, policies of insurance, contracts, investment
certificates, or other instruments which the Board has authorized to be
executed, except in cases where the execution thereof shall be expressly
delegated by the Board or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed;
and in general shall perform all duties incident to the office of the Chief
Operating Officer and such other duties as may be prescribed by the Board from
time to time.
Section 6. Secretary. The Secretary may be designated by any such
title as determined by resolution of the Board, but shall have the duties of
the officer denominated the "Secretary" under the Code. Such officer shall
(unless otherwise determined by the Board): (i) attend and keep the Minutes of
all shareholders' meetings and all of the Board's meetings in one or more books
provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these Bylaws or as otherwise required by law
or the provisions of the Articles of Incorporation; (iii) be custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents, the execution of which on behalf
of the Corporation under its seal is duly authorized; (iv) maintain, or cause
an agent designated by the Board to maintain, a record of the Corporation's
shareholders in a form that permits the preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares, showing
the number and class of shares held by each; (v) have general charge of the
stock transfer books of the Corporation or responsibility for supervision, on
behalf of the Corporation, of any agent to which stock transfer responsibility
has been delegated by the Board; (vi) have responsibility for the custody,
maintenance and preservation of those corporate records which the Corporation
is required by the Code or otherwise to create, maintain or preserve; and (vii)
in general, perform all duties incident to the legal office of "Secretary," as
described in the Code, and such other duties as from time to time may be
assigned to him by the Board.
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Section 7. Chief Financial Officer. The Chief Financial Officer,
unless otherwise determined by the Board, shall: (i) have charge and custody of
and be responsible for all funds and securities of the Corporation; receive and
give receipts for monies due and payable to the Corporation from any source
whatsoever, and deposit all such monies in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected by the Board;
and (ii) in general, perform all the duties incident to the office of Chief
Financial Officer and such other duties as from time to time may be assigned by
the Board.
Section 8. Deputy Officers. The Board may create one or more deputy
officers whose duties shall be, among any other designated thereto by the
Board, to perform the duties of the officer to which such office has been
deputized in the event of the unavailability, death or inability or refusal of
such officer to act. Deputy officers may hold such titles as designated
therefor by the Board; provided, however, any office designated with the prefix
"Vice" or "Deputy" shall be, unless otherwise specified by resolution of the
Board, automatically a deputy officer to the office with the title of which the
prefix term is conjoined. Deputy officers shall have such other duties as
prescribed by the Board from time to time.
Section 9. Assistant Officers. The Board may appoint one or more
officers who shall be assistants to principal officers of the Corporation, or
their deputies, and who shall have such duties as shall be delegated to such
assistant officers by the Board or such principal officers, including the
authority to perform such functions of those principal officers in the place of
and with full authority of such principal officers as shall be designated by
the Board or (if so authorized) by such principal officers. The Board may by
resolution authorize appointment of assistant officers by those principal
officers to which such appointed officers will serve as assistants.
ARTICLE VI.
INDEMNIFICATION
Section 1. Definitions for Indemnification Provisions.
(a) As used in this Article VI, the term:
(1) "Corporation" (when spelled with an initial capital
letter) includes any domestic or foreign predecessor
entity of the "Corporation" (as defined in Article I
of these Bylaws) in a merger or other transaction in
which the predecessor's existence ceased upon
consummation of the transaction.
(2) "director" or "officer" means an individual who is
or was a director or officer, respectively, of the
Corporation or an individual who, while a director
or officer of the Corporation, is or was serving at
the Corporation's request as a director, officer,
partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other
entity. A director or officer is considered to be
serving an employee benefit plan at the
Corporation's
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request if his duties to the Corporation also impose
duties on, or otherwise involve services by, him to
the plan or to participants in or beneficiaries of
the plan. Director or officer includes, unless the
context requires otherwise, the estate or personal
representative of a director or officer.
(3) "disinterested director" means a director who at the
time of a vote or selection referred to in
subsection (b) or (c) of Section 4 of this Article
VI or subsection (a) of Section 5 of this Article VI
or a vote referred to in subsection (c) of Section 6
of this Article VI is not:
(A) A party to the proceeding; or
(B) An individual who is a party to a proceeding
having a familial, financial, professional, or
employment relationship with the director whose
indemnification or advance for expenses is the
subject of the decision being made with respect to
the proceeding, which relationship would, in the
circumstances, reasonably be expected to exert an
influence on the director's judgment when voting on
the decision being made.
(4) "expenses" include attorneys fees.
(5) "liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan),
or reasonable expenses incurred with respect to a
proceeding.
(6) "official capacity" means:
(A) When used with respect to a director, the office
of director in the Corporation; and
(B) When used with respect to an officer, as
contemplated in Section 7 of this Article VI, the
office in the Corporation held by the officer.
Official capacity does not include service for any
other domestic or foreign corporation or any
partnership, joint venture, trust, employee benefit
plan, or other entity.
(7) "party" includes an individual who was, is, or is
threatened to be made a named defendant or
respondent in a proceeding.
(8) "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether
civil, criminal, administrative, arbitrative or
investigative and whether formal or informal.
14
<PAGE> 15
Section 2. Mandatory Indemnification Against Expenses. The Corporation
shall indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
was a director of the Corporation against reasonable expenses incurred by the
director in connection with the proceeding.
Section 3. Authority For Permissive Indemnification.
(a) Except as otherwise provided in this Section 3, the Corporation
may indemnify an individual who is a party to a proceeding because he is or was
a director against liability incurred in the proceeding if he conducted himself
in good faith and reasonably believed, in the case of conduct in his official
capacity, that such conduct was in the best interests of the Corporation; in
all other cases, that such conduct was at least not opposed to the best
interests of the Corporation; and in the case of a criminal proceeding, that he
had no reasonable cause to believe such conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for
a purpose he believed in good faith to be in the interests of the participants
in and beneficiaries of the plan is conduct that the director reasonably
believed was at least not opposed to the best interests of the Corporation.
(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 3.
(d) The Corporation may not indemnify a director under this Section 3:
(1) In connection with a proceeding by or in the right
of the Corporation; except for reasonable expenses
incurred in connection with the proceeding if it is
determined that the director has met the relevant
standard of conduct set forth in subsection (a) of
this Section 3; or
(2) In connection with any proceeding with respect to
conduct for which he was adjudged liable on the
basis that personal benefit was improperly received
by him, whether or not involving action in his
official capacity.
Section 4. Determination and Authorization of Permitted
Indemnification.
(a) The Corporation may not indemnify a director under Section 3 of
this Article VI unless authorized thereunder and a determination has been for a
specific proceeding that indemnification of the director is permissible in the
circumstances because he has met the relevant standard of conduct set forth in
subsection (a) of such Section 3.
(b) The determination required by subsection (a) hereof shall be made:
(1) If there are two or more disinterested directors, by
the Board by a majority vote of all the
disinterested directors (a majority of whom shall
for such
15
<PAGE> 16
purpose constitute a quorum) or by a majority of the
members of a committee of two or more disinterested
directors appointed by such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in
paragraph (1) of this subsection; or
(B) If there are fewer than two disinterested
directors, selected by the Board (in which
selection directors who do not qualify as
disinterested directors may participate);
or
(3) By the Corporation's shareholders, but shares owned
by or voted under the control of a director who at
the time does not qualify as a disinterested
director 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, as set forth in
subsection (b) hereof, except that if there are fewer than two disinterested
directors or 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 subsection (b)(2)(B) of this
Section 4 to select special legal counsel.
Section 5. Shareholder-Approved Indemnification.
(a) Without regard to any limitations contained in any other section
of this Article VI, the Corporation may, if authorized by its shareholders by a
majority of votes which would be entitled to be cast (which authorization may
take the form of an amendment to the Articles of Incorporation or a contract,
resolution or bylaw approved or ratified by the requisite shareholder vote),
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, but shares owned or voted under the control of a director who at
the time does not qualify as a disinterested director with respect to any
existing or threatened proceeding that would be covered by the authorization
may not be voted on the authorization.
(b) The Corporation shall not indemnify a director under this Section
5 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:
(1) For any appropriation, in violation of his duties,
of any business opportunity of the Corporation;
(2) For acts or omissions which involve intentional
misconduct or a knowing violation of law;
16
<PAGE> 17
(3) For any type of liability for unlawful distributions
under Section 14-2-832 of the Code; or
(4) 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 5, the Corporation may advance or reimburse expenses
incurred in advance of final disposition of the proceeding only if:
(1) The director furnishes the Corporation a written
affirmation of his good faith belief that his
conduct does not constitute behavior of the kind
described in subsection (b) of this Section 5; and
(2) 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 5.
Section 6. Advances For Expenses.
(a) The Corporation may 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:
(1) 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 3 of this Article VI or that the
proceeding involves conduct for which liability has
been eliminated under a provision of the Articles of
Incorporation of the Corporation as authorized by
paragraph (4) of subsection (b) of Section 14-2-202
of the Code; and
(2) The director furnishes the Corporation a written
undertaking to repay any funds advanced if it is
ultimately determined that he is not entitled to
indemnification under this Article.
(b) The undertaking required by paragraph (2) of subsection (a) of
this Section 6 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.
(c) Authorizations under this Section 6 shall be made:
(1) By the Board:
(A) When there are two or more disinterested
directors, by a majority vote of all the
disinterested directors (a majority of whom
shall for such purpose constitute a quorum)
or by a majority of the members of a
committee of two or more disinterested
directors appointed by such a vote; or
17
<PAGE> 18
(B) When there are fewer than two disinterested
directors, by the vote necessary for action
by the Board in accordance with subsection
(c) of Section 14-2-824 of the Code, in
which authorization directors who do not
qualify as disinterested directors may
participate; or
(2) By the Corporation's shareholders, but shares owned
or voted under the control of a director who at the
time does not qualify as a disinterested director
with respect to the proceeding may not be voted on
the authorization.
Section 7. Indemnification of Officers, Employees, and Agents.
(a) The Corporation may indemnify and advance expenses under this part
to an officer of the Corporation who is a party to a proceeding because he is
an officer of the Corporation:
(1) To the same extent as a director; and
(2) If he is not a director, to such further extent as
may be provided by the Articles of Incorporation,
these Bylaws, a resolution of the Board, or contract
except for liability arising out of conduct that
constitutes:
(A) Appropriation, in violation of his duties,
of any business opportunity of the
Corporation;
(B) Acts or omissions which involve intentional
misconduct or a knowing violation of law;
(C) The types of liability for unlawful
distributions under Section 14-2-832 of the
Code; or
(D) Receipt of an improper personal benefit.
(b) The provisions of paragraph (2) of subsection (a) of this Section
7 shall apply to an officer who is also a director if the sole basis on which
he is made a party to the proceeding is an act or omission solely as an
officer.
(c) An officer of the Corporation who is not a director is entitled to
mandatory indemnification under Section 2 of this Article VI, and may apply to
a court under Section 14-2-854 of the Code for indemnification or advances for
expenses, in each case to the same extent to which a director may be entitled
to indemnification or advances for expenses under those provisions.
18
<PAGE> 19
(d) The Corporation may also indemnify and advance expenses to an
employee or agent who is not a director to the extent, consistent with public
policy, that may be provided by the Articles of Incorporation, Bylaws, general
or specific action of the Board, or contract.
Section 8. 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, serves at the request of the Corporation
as a director, officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, employee benefit
plan, or other entity 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 or advance
expenses to him against the same liability under this Article VI.
Section 9. Expenses for Appearance as Witness. Nothing contained in
this Article VI shall be deemed to limit the Corporation's power to pay or
reimburse expenses incurred by a director or officer in connection with his
appearance as a witness in a proceeding at a time when he is not a party.
ARTICLE VII.
FAIR PRICE
The fair price requirements contained in Sections 14-2-1110 through
14-2-1113 of the Code shall apply to the Corporation.
ARTICLE VIII.
CERTAIN BUSINESS COMBINATIONS
The requirements regarding business combinations with interested
shareholders contained in Sections 14-2-1131 through 14-2-1133 of the Code
shall apply to the Corporation.
ARTICLE IX.
REIMBURSEMENT OF NON-DEDUCTIBLE
PAYMENTS TO OFFICERS AND EMPLOYEES
In the event any payments to an officer or employee of the
Corporation, such as salary, commission, bonus, interest or rent expenses
incurred by him, is thereafter disallowed in whole or in part by the Internal
Revenue Service as a proper deduction for income tax purposes under Section 162
of the Internal Revenue Code of 1986, as amended (or disallowed under any
similar statutory section which may subsequently replace such Section 162),
such disallowed payments shall be deemed to be an obligation owed by such
officer or employee to the Corporation. Such disallowed payments shall be
reimbursed by such officer or employee to the Corporation on or before 90 days
following the final determination of such disallowance by the Internal Revenue
Service or entry of the final judgment of such determination if adjudicated. It
shall be the duty of
19
<PAGE> 20
the Board to enforce reimbursement of each such amount disallowed, including
the withholding from future compensation payments to such officer or employee
until the amount owed to the Corporation has been recovered.
ARTICLE X.
FISCAL YEAR
The fiscal year of the Corporation shall be established by the Board
or, in the absence of Board action establishing such fiscal year, by the Chief
Executive Officer.
ARTICLE XI.
ANNUAL STATEMENTS
(a) No later than four months after the close of each fiscal year, and
in any case prior to the next annual meeting of shareholders, the Corporation
shall prepare:
(1) A balance sheet showing in reasonable detail the
financial condition of the Corporation as of the
close of the fiscal year; and
(2) A profit and loss statement showing the results of
its operation during the fiscal year.
Upon written request, the Corporation shall mail promptly to any
shareholder of record a copy of the most recent such balance sheet and profit
and loss statement. If prepared for other purposes, the Corporation shall also
furnish upon written request a statement of sources and applications of funds
and a statement of changes in shareholders' equity for the fiscal year. If
financial statements are prepared by the Corporation on the basis of generally
accepted accounting principles, the annual financial statements must also be
prepared, and disclose that they are prepared, on that basis. If financial
statements are prepared otherwise than on the basis of generally accepted
accounting principles, they must so disclose and must be prepared on the same
basis as other reports or statements prepared by the Corporation for the use of
others.
(b) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the Chief Executive Officer or the person
responsible for the Corporation's accounting records:
(1) Stating his reasonable belief whether the statements
were prepared on the basis of generally accepted
accounting principles and, if not, describing the
basis of preparation; and
(2) Describing any respects in which the statements were
not prepared on a basis of accounting consistent
with the statements prepared for the preceding year.
20
<PAGE> 21
ARTICLE XII.
CAPITAL STOCK
Section 1. Form.
(a) Except as otherwise provided in subsection (b) of this Section 1,
the interest of each shareholder shall be evidenced by a certificate
representing shares of stock of the Corporation, which shall be in such form as
the Board 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
shall exhibit the holder's name, the number of shares and class of shares and
series, if any, represented thereby, the name of the Corporation and a
statement that the Corporation is organized under the laws of the State of
Georgia. Each certificate shall be signed, either manually or by facsimile, by
one or more officers of the Corporation specified by resolution of the Board,
but in the absence of such specifications, shall be valid if executed by the
Chief Executive Officer or any Deputy or Assistant thereto, and such execution
is countersigned by the Secretary, or any Deputy or Assistant thereto. If the
certificate is signed by facsimile, then it must be countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or an
employee of the Corporation. The transfer agent or a registrar may sign either
manually or by facsimile. Each stock certificate may but need not be sealed
with the seal of the Corporation.
(b) If authorized by resolution of the Board, the Corporation may
issue some or all of the shares of any or all of its classes or series without
certificates. The issuance of such shares shall not affect shares already
represented by certificates until they are surrendered to the Corporation.
Within a reasonable time after the issuance or transfer of any shares not
represented by certificates, the Corporation shall send to the holder of such
shares a written statement setting forth, with respect to such shares (i) the
name of the Corporation as issuer and that the Corporation is organized under
the laws of the State of Georgia, (ii) the name of the person to whom such
shares are issued, (iii) the number of shares and class of shares and series,
if any, and (iv) the terms of any restrictions on transfer which, were such
shares represented by a stock certificate, would be required to be noted on
such certificate, by law, by the Articles of Incorporation or these Bylaws, or
by any legal agreement among the shareholders of the Corporation.
Section 2. Transfer. Transfers of stock shall be made on the books of
the Corporation only by the person named in the certificate, or, in the case of
shares not represented by certificates, the person named in the Corporation's
stock transfer records as the owner of such shares, or, in either case, by
attorney lawfully constituted in writing. In addition, with respect to shares
represented by certificates, transfers shall be made only upon surrender of the
certificate therefor, or in the case of a certificate alleged to have been
lost, stolen or destroyed, upon compliance with the provisions of Section 4 of
this Article XII.
21
<PAGE> 22
Section 3. Rights of Holder. The Corporation shall be entitled to
treat the holder of record of any share of the Corporation as the person
entitled to vote such share (to the extent such share is entitled to vote), to
receive any distribution with respect to such share, and for all other purposes
and, accordingly, shall not be bound to recognize any equitable or other claim
to 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.
Section 4. Lost or Destroyed 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 may require and shall, if
the Board so requires, give the Corporation a bond of indemnity in the form and
amount and with one or more sureties satisfactory to the Board, whereupon an
appropriate new certificate may be issued in lieu of the one alleged to have
been lost, stolen or destroyed.
ARTICLE XIII.
SEAL
The corporate seal shall be in such form as shall be specified in the
minutes of the organizational meeting of the Corporation, or as the Board may
from time to time determine.
ARTICLE XIV.
REGISTERED OFFICE AND REGISTERED AGENT
The street address of the initial registered office of the Corporation
is 600 Peachtree Street, Suite 5200, Atlanta, Georgia 30308-2216. The initial
registered office is located in Fulton County. The initial registered agent of
the Corporation at such office is Thomas O. Powell. The Corporation may amend
this Article XIV at any time to change its registered office or registered
agent, without further action of its officers or directors, by filing with the
Secretary of State a notice of such change, in accordance with Section 14-2-502
of the Code, or any successor statute. The Corporation may have other offices
at such places within or outside of the State of Georgia as the Board may from
time to time designate or the business of the Corporation may require or make
desirable.
ARTICLE XV.
AMENDMENT TO BYLAWS
Section 1. Amendment of Bylaws by Board. Except as otherwise provided
in the Articles of Incorporation, by applicable law, or by the provisions of
this Article XV, the Board may amend or repeal any provision of these Bylaws or
adopt any new bylaw by the affirmative vote of a majority of the entire Board,
unless the Corporation's shareholders have adopted, amended or repealed a
particular bylaw provision and, in doing so, have expressly reserved to the
Corporation's shareholders the right of amendment or repeal therefor.
22
<PAGE> 23
Section 2. Supermajority Required for Amendment by Shareholders. The
Corporation's shareholders have the right, in accordance with the voting
requirements set forth in this Section 2, to amend or repeal any provision of
these Bylaws or adopt any new bylaw, even though such provision may also be
amended, repealed or adopted by the Board. Except as may otherwise specifically
be required by law, the affirmative vote of the holders of not less than 66
2/3% of the total number of votes entitled to be cast by the holders of all of
the shares of capital stock of the Corporation then entitled to vote generally
in the election of directors shall be required for the shareholders to amend or
repeal any provision of these Bylaws or adopt any new bylaw.
23
<PAGE> 1
EXHIBIT 4.1
COMMON STOCK 1.00 PAR VALUE PER SHARE
[SOUTHERNBANK HOLDINGS, INC. LOGO APPEARS HERE]
INCORPORATED UNDER THE LAWS OF THE STATE OF GEORGIA
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP __________
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
SOUTHERNBANK HOLDINGS, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney, upon the surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile signatures of its duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED:
SUNTRUST BANK, ATLANTA
TRANSFER AGENT
AND REGISTRAR
BY
-------------------- ----------------------- ---------------------
AUTHORIZED SIGNATURE SECRETARY CHAIRMAN OF THE BOARD
<PAGE> 2
SOUTHERNBANK HOLDINGS, INC.
The Corporation will furnish without charge to each stockholder who so
requests a statement or summary of the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof which the Corporation is authorized to issue and of the
qualifications, limitations or restrictions of such preferences and/or rights.
Such request may be made to the office of the Secretary of the Corporation or
the Transfer Agent named on the face of this Certificate.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT __________________________ Custodian ______________________
(Cust) (Minor)
under Uniform Gifts to Minors Act
_______________________________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated _________________________________
_________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
_________________________________________
SIGNATURE(S) GUARANTEED: THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 4.3
THE WARRANT GRANTED PURSUANT TO THIS AGREEMENT SHALL BE NON-TRANSFERABLE,
EXCEPT IN THE CASE OF THE WARRANT HOLDER'S DEATH, AND THEREUPON ONLY BY WILL OR
UNDER THE LAWS OF DESCENT AND DISTRIBUTION. UPON THE DEATH OF THE WARRANT
HOLDER, THE DECEASED HOLDER'S LEGAL OR PERSONAL REPRESENTATIVE, OR ANY
PERMITTED TRANSFEREE OF THE WARRANT SHALL, WITHIN 30 DAYS OF THE HOLDER'S
DEATH, NOTIFY THE COMPANY OF SUCH EVENT AND THE NEW HOLDER'S NAME, ADDRESS AND
CAPACITY IN WHICH THE WARRANT IS HELD. SUCH PERMITTED TRANSFEREE WILL BE
SUBJECT TO, AND BOUND BY, THE TERMS AND PROVISIONS OF THIS AGREEMENT TO THE
SAME EXTENT AS THE ORIGINAL HOLDER.
ORGANIZER WARRANT AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of this
_____ day of _____________, 2000, by and between SouthernBank Holdings, Inc., a
Georgia corporation (the "Company"), and ________________________ (the "Warrant
Holder").
WITNESSETH
WHEREAS, the Warrant Holder has served as an organizer in the
formation of the Company and the formation and establishment of SouthernBank,
N.A. (the "Bank"), the wholly-owned subsidiary of the Company; and
WHEREAS, the Warrant Holder has purchased ___________ shares of the
Company's common stock, $1.00 par value per share (the "Common Stock"), at a
price per share of $10.00, subject to certain adjustments; and
WHEREAS, the Company, in recognition of the financial risk undertaken
by the Warrant Holder in organizing the Company and the Bank, desires to
provide the Warrant Holder with the right to acquire the same number of shares
as the Warrant Holder purchased in the initial stock offering of the Company's
Common Stock, including any additional shares purchased specifically to attain
the minimum subscription requirements of the minimum offering.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Warrant. Subject to the terms, restrictions, limitations
and conditions stated herein, the Company hereby grants to the Warrant Holder
the right (the "Warrant") to purchase all or any part of an aggregate of
______________ shares of the Company's Common Stock, subject to adjustment in
accordance with Sections 7 and 8 hereof (such shares, as adjusted, the "Warrant
Shares").
<PAGE> 2
2. Vesting and Term.
(a) The Warrant shall vest at the rate of 20% per year
beginning on the first anniversary of the date that the Bank opens for
business (the "Issue Date"). On each successive anniversary of the
Issue Date, an additional 20% of the Warrant shall vest. The portion
of the Warrant which is vested may be exercised in whole, or from time
to time in part, at any time prior to the Expiration Time (as defined
herein).
(b) The term for the exercise of the Warrant begins at 9:00
a.m., Eastern Time, on the Issue Date and ends at 5:00 p.m., Eastern
Time, on the 10th anniversary of the Issue Date (the "Expiration
Time").
(c) Notwithstanding any other provision of this Agreement,
the Warrant shall expire on any earlier date than that provided in
Section 2(b) hereof in the event the primary federal regulator of the
Company or the Bank (the "Federal Regulator") may require the Warrant
Holder to exercise or forfeit the Warrant due to the capital of the
Company or the Bank falling below the minimum requirements as
determined by the Federal Regulator.
3. Purchase Price. The price per share to be paid by the Warrant
Holder for the Warrant Shares shall be $10.00 subject to adjustment as set
forth in Section 7 hereof (such price, as adjusted, the "Purchase Price").
4. Exercise of Warrant. The Warrant may be exercised by the Warrant
Holder by delivery to the Company, at the address of the Company set forth
under Section 11(a) hereof or such other address as to which the Company
advises the Warrant Holder pursuant to Section 11(a) hereof, of the following:
(a) A completed and signed notice of exercise (including the
Substitute Form W-9, which forms a part thereof) (the "Notice of
Exercise"), as attached hereto as Schedule A;
(b) A cashier's or certified check payable to the Company for
the full amount of the aggregate Purchase Price for the number of
Warrant Shares as to which the Warrant is being exercised; and
(c) A copy of this Agreement.
5. Issuance of Warrant Shares. Upon receipt of the items set forth in
Section 4 hereof, and subject to the terms hereof, the Company shall cause to
be delivered to the Warrant Holder stock certificate(s) for the number of
Warrant Shares specified in the Notice of Exercise, such share or shares to be
registered under the name of the Warrant Holder. Notwithstanding the foregoing,
the Company shall not be required to issue or deliver any certificate for the
Warrant Shares or any portion thereof prior to the fulfillment of the following
conditions:
2
<PAGE> 3
(a) The completion of any registration or other qualification
of such shares which the Company shall deem necessary or advisable
under any federal or state law or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental
regulatory body, unless the availability of an exemption from such
registration or qualification shall be established to the satisfaction
of counsel for the Company;
(b) The obtaining of any approval or other clearance from any
federal or state governmental agency or body, which the Company shall
determine to be necessary or advisable; or
(c) The lapse of such reasonable period of time following the
exercise of the Warrant, or any portion thereof, as the Company from
time to time may establish for reasons of administrative convenience.
Each stock certificate delivered pursuant to the Notice of Exercise
shall be in such denomination as may be requested by the Warrant Holder and
shall be registered in the name of the Warrant Holder. If the Warrant shall
have been exercised only in part, the Company shall, at the time of delivery of
said stock certificate(s), deliver to the Warrant Holder a new Warrant
evidencing the right of the Warrant Holder to purchase the remaining Warrant
Shares covered by this Agreement. The Company shall pay all expenses, stock
transfer taxes and other charges payable in connection with the preparation,
execution and delivery of such stock certificate(s).
6. Restrictive Legends. Each certificate representing the Warrant
Shares shall contain the following legends:
(a) "The shares of the Company's Common Stock represented by
this certificate are held subject to, and transfer of such shares
restricted by, the terms of a Warrant Agreement, dated as of the ___
day of _________, 2000, a copy of which is on file at the office of
the Company. No transfer of any share represented by this certificate
shall be valid unless made in accordance with the terms of the Warrant
Agreement."
(b) "The securities evidenced by this certificate have not
been registered under the Securities Act of 1933, as amended (the
"1933 Act"), or the securities laws of any state, in reliance upon
exemptions from the registration requirements of the 1933 Act and such
state laws. These securities may not be transferred, nor will any
assignee or endorsee hereof be recognized as an owner hereof by the
issuer for any purposes, except in transactions registered under the
1933 Act and any applicable state securities laws, unless the
availability of an exemption from registration under the 1933 Act and
any applicable state securities laws with respect to any proposed
transfer or disposition of such securities shall be established to the
satisfaction of counsel for the issuer."
The Warrant Holder understands and agrees that the Company may refuse
to permit the transfer of the Warrant Shares, and that the Warrant Holder may
be required to hold the Warrant Shares indefinitely, in the absence of
compliance with the terms of such legends.
3
<PAGE> 4
7. Antidilution, Etc.
(a) If, at any time, the Company shall:
(i) establish a record date for the determination of
holders of record of its outstanding shares of Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distributions of, additional shares of
its Common Stock;
(ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock;
then (A) the number of Warrant Shares for which the Warrant Holder's
Warrant is exercisable immediately after the occurrence of any such
event shall be adjusted to equal the number of shares of Company
Common Stock which a record holder of the same number of shares of
Common Stock for which Warrant Shares is exercisable immediately prior
to the occurrence of such event would own or be entitled to receive
after the happening of such event, and (B) the Purchase Price shall be
adjusted to equal (x) the Purchase Price multiplied by the Warrant
Shares for which the Warrant Holder's Warrant is exercisable
immediately prior to the adjustment divided by (y) the Warrant Shares
for which Holder's Warrant is exercisable immediately after such
adjustment.
(b) The following provisions shall be applicable to
adjustments made pursuant to Section 7(a) hereof:
(i) The adjustments required by Section 7(a) hereof
shall be made whenever and as often as any event requiring an
adjustment shall occur. For the purpose of any such
adjustment, any event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(ii) In computing adjustments under this Section
7(b), fractional interests in the Company's Common Stock
shall be taken into account to the nearest 1/10th of a share.
In no event, however, shall fractional shares or a scrip
representing fractional shares be issued upon the exercise of
the Warrant. In lieu thereof, a cash payment shall be made to
the Warrant Holder in an amount equal to such fraction
multiplied by the Purchase Price.
(iii) If the Company shall establish a record date
for the determination of the holders of record of the
Company's Common Stock for the purpose of entitling such
holders to receive a dividend payable in Company Common Stock
and shall, thereafter and before the distribution to
shareholders thereof, legally abandon its plan to pay or
deliver such dividend, then no adjustment shall be
4
<PAGE> 5
required by reason of the establishment of such record date
and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
8. Reorganization, Reclassification, Consolidation or Merger.
(a) If, prior to the Expiration Time, there shall be any
reorganization or reclassification of the Company's Common Stock
(other than a subdivision or combination of shares provided for in
Section 7 hereof), or any consolidation or merger of the Company with
another entity, the Warrant Holder shall thereafter be entitled to
receive, during the term hereof and upon payment of the Purchase
Price, the number of shares of stock or other securities or property
of the Company or of the successor entity (or its parent company)
resulting from such consolidation or merger, as the case may be, to
which a holder of the Company's Common Stock, deliverable upon the
exercise of the Warrant, would have been entitled upon such
reorganization, reclassification, consolidation or merger; and in any
case, appropriate adjustment (as determined by the Board of Directors
of the Company in its sole discretion) shall be made in the
application of the provisions herein set forth with respect to the
rights and interest thereafter of the Warrant Holder to the end that
the provisions set forth herein (including the adjustment of the
Purchase Price and the Warrant Shares) shall thereafter be applicable,
as near as may reasonably be practicable, in relation to any shares or
other property thereafter deliverable upon the exercise hereof.
(b) If any such reorganization, reclassification,
consolidation, merger or share exchange results in a cash distribution
in excess of the Purchase Price provided by this Warrant, the Warrant
Holder may, at the Warrant Holder's option, exercise this Warrant
without making payment of the Purchase Price, and in such case the
Company or its successors and assigns shall, upon distribution to such
Warrant Holder, consider the Purchase Price to have been paid in full,
and in making settlement to such Warrant Holder, shall deduct an
amount equal to the Purchase Price from the amount payable to such
Warrant Holder. Notwithstanding anything herein to the contrary, the
Company will not effect any such reorganization, reclassification,
merger, consolidation or share exchange unless prior to the
consummation thereof, the corporation that may be required to deliver
any stock, securities or other assets upon the exercise of the Warrant
issuable pursuant to this Agreement shall agree by an instrument in
writing to deliver such stock, cash, securities or other assets to the
Warrant Holder. A sale, transfer or lease of all or substantially all
of the assets of the Company to another person shall be deemed a
reorganization, reclassification, consolidation, merger or share
exchange for the foregoing purposes.
9. Notice of Adjustments. Upon any adjustment provided for in Section
7 or Section 8 hereof, the Company, within 30 days thereafter, shall give
written notice thereof to the Warrant Holder at the address set forth under
Section 11(a) hereof or such other address as the Warrant Holder may advise the
Company pursuant to Section 11(a) hereof, which notice shall state the Purchase
Price as adjusted and the increased or decreased number of Warrant Shares,
setting, forth in reasonable detail the method of calculation of each.
5
<PAGE> 6
10. Transfer and Assignment.
(a) This Agreement shall be non-transferable, except in the
case of the Warrant Holder's death, and thereupon only by will or
under the laws of descent and distribution. Upon the death of the
Warrant Holder, the deceased Warrant Holder's heirs, legal or personal
representative, or any permitted transferee of the Warrant shall,
within 30 days of the Warrant Holder's death, notify the Company of
such event and the new holder's name, address and capacity in which
the Warrant is held, and present letters testamentary, a death
certificate and such other information as the Company may reasonably
request to ascertain the authority of such person. Such permitted
transferee will be subject to, and bound by, the terms and provisions
of this Agreement to the same extent as the original Warrant Holder.
(b) The Warrant Shares granted hereby may not be transferred
or sold unless the transfer is exempt from further regulatory approval
or otherwise permissible under applicable law, including state and
federal securities laws, and will bear a legend to this effect as set
forth in Section 6 hereof.
11. Miscellaneous.
(a) All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, telegram or
facsimile transmission, or if mailed, by postage prepaid first class
mail, on the third business day after mailing, to the following
address (or at such other address as a party may notify the other
hereunder):
To the Company:
SouthernBank Holdings, Inc.
2090 Buford Highway, Suite 2A
Buford, Georgia 30518
Attention: D. Arnold Tillman, Jr.,
Chief Executive Officer
To the Warrant Holder:
------------------------------------
------------------------------------
------------------------------------
(b) The Company covenants that it has reserved and will keep
available, solely for the purpose of issue upon the exercise of the
Warrant, a sufficient number of shares of the Company's Common Stock
to permit the exercise of the Warrant in full.
6
<PAGE> 7
(c) No holder of the Warrant, as such, shall be entitled to
vote or receive dividends with respect to the Warrant Shares subject
thereto or be deemed to be a shareholder of the Company for any
purpose until the Company's Common Stock has been issued.
(d) This Agreement may be amended only by an instrument in
writing executed by the party against whom enforcement of amendment is
sought.
(e) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute
one and the same instrument.
(f) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by a duly authorized officer and its corporate seal to be affixed hereto and
the Warrant Holder has executed this Agreement, all as of the day and year
first above written.
SOUTHERNBANK HOLDINGS, INC.
By:
--------------------------------------
D. Arnold Tillman, Jr.
Chief Executive Officer
WARRANT HOLDER
-----------------------------------------
7
<PAGE> 8
SCHEDULE A
NOTICE OF EXERCISE
OF WARRANT TO PURCHASE COMMON STOCK OF
SOUTHERNBANK HOLDINGS, INC.
To: SouthernBank Holdings, Inc.
The undersigned, the registered owner of the right to purchase shares
of Common Stock (the "Common Stock") of SouthernBank Holdings, Inc. (the
"Company"), hereby irrevocably elects to exercise such right to purchase
thereunder ________ shares of the Common Stock of the Company and herewith
makes payment of $________ therefor, and requests that the certificate(s)
evidencing such shares be issued in the name of and be delivered to:
Name:
-----------------------------------------------
Address:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Social Security or
Tax I.D. Number:
--------------------------------
and if such shares shall not be all of the shares purchasable hereunder, that a
new warrant of like tenor for the balance of the shares purchasable hereunder
be delivered to the undersigned.
Date:
---------------------------
NAME OF WARRANT HOLDER
By:
------------------------------------
Name:
-------------------------------
THIS NOTICE OF EXERCISE SHALL NOT BE GIVEN EFFECT
BY THE COMPANY UNLESS THE HOLDER OF THE UNDERLYING
WARRANT HAS PROPERLY COMPLETED AND SIGNED BOTH
THIS NOTICE OF EXERCISE FORM AND THE SUBSTITUTE FORM W-9
ATTACHED HERETO.
<PAGE> 9
SUBSTITUTE FORM 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 either because I have
not been notified that I am subject to backup withholding as
a result of a failure to report all interest or dividends, or
because the Internal Revenue Service has notified me that I
am no longer subject to backup withholding.
IMPORTANT INSTRUCTIONS: 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 under reporting interest or dividends on your tax return and if you
have not received a notice from the Internal Revenue Service advising you that
backup withholding due to notified payee under reporting has terminated.
SIGNATURE*
-----------------------------------------
DATE
--------------------------------
* If a corporation, please sign in full corporate name by president or other
authorized officer. When signing as officer, attorney, custodian, trustee,
administrator, guardian, etc., please give your full title as such. In case of
joint tenants, each person must sign.
<PAGE> 1
EXHIBIT 10.4
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$750,000.00 03-06-2000 06-28-2000 4021395101 4021395 JKG
- ----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
BORROWER: SOUTHERNBANK HOLDINGS, INC. LENDER: THE BANKERS BANK
P.O. BOX 967 2410 PACES FERRY ROAD
BUFORD, GA 30515-0967 600 PACES SUMMIT
ATLANTA, GA 30339
===============================================================================
<TABLE>
<S> <C> <C>
PRINCIPAL AMOUNT: $750,000.00 INITIAL RATE: 7.750% DATE OF NOTE: MARCH 6, 2000
</TABLE>
PROMISE TO PAY. SOUTHERNBANK HOLDINGS, INC. ("BORROWER") PROMISES TO PAY TO THE
BANKERS BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF SEVEN HUNDRED FIFTY THOUSAND & 00/100 DOLLARS
($750,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH INTEREST ON THE
UNPAID OUTSTANDING PRINCIPAL 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 JUNE 28, 2000. IN ADDITION,
BORROWER WILL PAY REGULAR QUARTERLY PAYMENTS OF ACCRUED UNPAID INTEREST
BEGINNING MARCH 28, 2000, 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, and 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 8.750% PER ANNUM. THE INTEREST RATE TO BE APPLIED TO THE UNPAID
PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF 1.000 PERCENTAGE POINT
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 to 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.
<PAGE> 2
03-06-2000 PROMISSORY NOTE PAGE 2
Loan No. 4021395101 (Continued)
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) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
any of Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) 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. (e) 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 commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) 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. (g) Any guarantor dies or any of the other events described in
this default section occurs with respect to any guarantor of this Note. (h) A
material adverse change occurs in Borrower's financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is
impaired. (i) 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 rate 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, it 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 also will 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 an 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
<PAGE> 3
03-06-2000 PROMISSORY NOTE PAGE 3
Loan No. 4021395101 (Continued)
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a 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: D. ARNOLD TILLMAN, TYLER C.
MCCAIN AND M. LAUCH MCKINNON. 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 the terms of this Note or any
agreement that Borrower or any guarantor has with Lender, including any
agreement made in connection with the signing of 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 guarantor'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.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, 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 limitations, 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
<PAGE> 4
03-06-2000 PROMISSORY NOTE PAGE 4
Loan No. 4021395101 (Continued)
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.
ACCRUAL METHOD. INTEREST WILL BE CALCULATED ON AN ACTUAL/360 DAY 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 or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and lake 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 ACKNOWLEDGES A COMPLETED COPY HEREOF.
BORROWER:
SOUTHERNBANK HOLDINGS, INC.
<TABLE>
<S> <C>
BY: (SEAL) BY: (SEAL)
---------------------------- -------------------------------
D. ARNOLD TILLMAN, CEO M. LAUCH MCKINNON, PRESIDENT
</TABLE>
<PAGE> 5
03-06-2000 PROMISSORY NOTE PAGE 5
Loan No. 4021395101 (Continued)
LENDER:
THE BANKERS BANK
BY:
---------------------------------------
AUTHORIZED OFFICER
<PAGE> 6
FORM OF COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- -------------- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4021395 JKG
- -------------- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or lien.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
BORROWER: SOUTHERNBANK HOLDINGS, INC. LENDER: THE BANKERS BANK
P.O. BOX 967 2410 PACES FERRY ROAD
BUFORD, GA 30515-0967 600 PACES FERRY SUMMIT
ATLANTA, GA 30339
GUARANTOR:
AMOUNT OF GUARANTY. The principal amount of this Guaranty is Seven Hundred
Fifty Thousand & 00/100 Dollars ($750,000.00).
GUARANTY. IN CONSIDERATION OF THE SUM OF FIVE DOLLARS ($5.00) AND OTHER GOOD
AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH ARE HEREBY
ACKNOWLEDGED BY GUARANTOR AND TO INDUCE LENDER TO MAKE LOANS OR OTHERWISE
EXTEND CREDIT TO BORROWER, OR TO RENEW OR EXTEND IN WHOLE OR IN PART ANY
EXISTING INDEBTEDNESS OF BORROWER TO LENDER, OR TO MAKE OTHER FINANCIAL
ACCOMMODATIONS TO BORROWER, JEFF S. TUCKER ("GUARANTOR") ABSOLUTELY AND
UNCONDITIONALLY GUARANTEES AND PROMISES TO PAY TO THE BANKERS BANK ("LENDER")
OR ITS ORDER, IN LEGAL TENDER OF THE UNITED STATES OF AMERICA, THE INDEBTEDNESS
(AS THAT TERM IS DEFINED BELOW) OF SOUTHERNBANK HOLDINGS, INC. ("BORROWER") TO
LENDER ON THE TERMS AND CONDITIONS SET FORTH IN THIS GUARANTY.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
BORROWER. The word "Borrower" means SouthernBank Holdings, Inc..
GUARANTOR. The word "Guarantor" means Jeff S. Tucker.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor
for the benefit of Lender dated March 6, 2000.
INDEBTEDNESS. The word "Indebtedness" means the Note, including (a)
all principal, (b) all interest, (c) all late charges, (d) all loan
fees and loan charges, and (e) all collection costs and expenses
relating to the Note or to any collateral for the Note. Collection
costs and expenses include without limitation all of Lender's
attorneys' fees and Lender's legal expenses, including court costs
and fifteen percent (15%) of the principal plus accrued interest as
attorneys' fees, if any sums owing under this Guaranty are collected
by or through an attorney-at-law, whether or not suit is instituted,
and attorneys' fees 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,
LENDER. The word "Lender" means The Bankers Bank, its successors and
assigns.
<PAGE> 7
NOTE. The word "Note" means the promissory note or credit agreement
dated March 6, 2000, IN THE ORIGINAL PRINCIPAL AMOUNT OF $750,000.00
from Borrower to Lender, together with all renewals of, extensions
of, modifications of, refinancings of, consolidations of, and
substitutions for the promissory note or agreement. NOTICE TO
GUARANTOR: THE NOTE EVIDENCES A REVOLVING LINE OF CREDIT FROM LENDER
TO BORROWER.
RELATED DOCUMENTS. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security
agreements, security deeds, mortgages, deeds of trust, and all other
instruments, agreements and documents, whether now or hereafter
existing, executed in connection with the Indebtedness.
MAXIMUM LIABILITY. THE MAXIMUM LIABILITY OF GUARANTOR UNDER THIS GUARANTY SHALL
NOT EXCEED AT ANY ONE TIME THE SUM OF THE PRINCIPAL AMOUNT OF $750,000.00, PLUS
ALL INTEREST THEREON, PLUS ALL OF LENDER'S COSTS, EXPENSES, AND ATTORNEYS' FEES
INCURRED IN CONNECTION WITH OR RELATING TO (A) THE COLLECTION OF THE
INDEBTEDNESS, (B) THE COLLECTION AND SALE OF ANY COLLATERAL FOR THE
INDEBTEDNESS OR THIS GUARANTY, OR (C) THE ENFORCEMENT OF THIS GUARANTY.
ATTORNEYS' FEES INCLUDE, WITHOUT LIMITATION, ATTORNEYS' FEES WHETHER OR NOT
THERE IS A LAWSUIT, AND IF THERE IS A LAWSUIT, ANY FEES AND COSTS FOR TRIAL AND
APPEALS.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided
below to the contrary) affect or invalidate any such other guaranties. The
liability of Guarantor will be the aggregate liability of Guarantor under the
terms of this Guaranty and any such other unterminated guaranties.
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all Indebtedness within the limits set forth in
the preceding section of this Guaranty. THIS GUARANTY COVERS A REVOLVING LINE
OF CREDIT AND GUARANTOR UNDERSTANDS AND AGREES THAT THIS GUARANTEE SHALL BE
OPEN AND CONTINUOUS UNTIL THE LINE OF CREDIT IS TERMINATED AND THE INDEBTEDNESS
IS PAID IN FULL, AS PROVIDED BELOW.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all Indebtedness shall
have been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. THIS GUARANTY COVERS
A REVOLVING LINE OF CREDIT AND IT IS SPECIFICALLY ANTICIPATED THAT FLUCTUATIONS
WILL OCCUR IN THE AGGREGATE AMOUNT OF INDEBTEDNESS OWING FROM BORROWER TO
LENDER. GUARANTOR SPECIFICALLY ACKNOWLEDGES AND AGREES THAT
<PAGE> 8
FLUCTUATIONS IN THE AMOUNT OF INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), SHALL
NOT CONSTITUTE A TERMINATION OF THIS GUARANTY. GUARANTOR'S LIABILITY UNDER THIS
GUARANTY SHALL TERMINATE ONLY UPON (A) TERMINATION IN WRITING BY BORROWER AND
LENDER OF THE LINE OF CREDIT, (B) PAYMENT OF THE INDEBTEDNESS IN FULL IN LEGAL
TENDER, AND (C) PAYMENT IN FULL IN LEGAL TENDER OF ALL OTHER OBLIGATIONS OF
GUARANTOR UNDER THIS GUARANTY.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, WITHOUT
NOTICE OR DEMAND AND WITHOUT LESSENING GUARANTOR'S LIABILITY UNDER THIS
GUARANTY, FROM TIME TO TIME: (A) TO MAKE ONE OR MORE ADDITIONAL SECURED OR
UNSECURED LOANS TO BORROWER, TO LEASE EQUIPMENT OR OTHER GOODS TO BORROWER, OR
OTHERWISE TO EXTEND ADDITIONAL CREDIT TO BORROWER; (B) TO ALTER, COMPROMISE,
RENEW, EXTEND, ACCELERATE, OR OTHERWISE CHANGE ONE OR MORE TIMES THE TIME FOR
PAYMENT OR OTHER TERMS OF THE INDEBTEDNESS OR ANY PART OF THE INDEBTEDNESS,
INCLUDING INCREASES AND DECREASES OF THE RATE OF INTEREST ON THE INDEBTEDNESS;
EXTENSIONS MAY BE REPEATED AND MAY BE FOR LONGER THAN THE ORIGINAL LOAN TERM;
(C) TO TAKE AND HOLD SECURITY FOR THE PAYMENT OF THIS GUARANTY OR THE
INDEBTEDNESS, AND EXCHANGE, ENFORCE, WAIVE, SUBORDINATE, FAIL OR DECIDE NOT TO
PERFECT, AND RELEASE ANY SUCH SECURITY, WITH OR WITHOUT THE SUBSTITUTION OF NEW
COLLATERAL; (D) TO RELEASE, SUBSTITUTE, AGREE NOT TO SUE, OR DEAL WITH ANY ONE
OR MORE OF BORROWER'S SURETIES, ENDORSERS, OR OTHER GUARANTORS ON ANY TERMS OR
IN ANY MANNER LENDER MAY CHOOSE; (E) TO DETERMINE HOW, WHEN AND WHAT
APPLICATION OF PAYMENTS AND CREDITS SHALL BE MADE ON THE INDEBTEDNESS; (F) TO
APPLY SUCH SECURITY AND DIRECT THE ORDER OR MANNER OF SALE THEREOF, INCLUDING
WITHOUT LIMITATION, ANY NONJUDICIAL SALE PERMITTED BY THE TERMS OF THE
CONTROLLING SECURITY AGREEMENT OR DEED OF TRUST, AS LENDER IN ITS DISCRETION
MAY DETERMINE; (G) TO SELL, TRANSFER, ASSIGN, OR GRANT PARTICIPATIONS IN ALL OR
ANY PART OF THE INDEBTEDNESS; AND (H) TO ASSIGN OR TRANSFER THIS GUARANTY IN
WHOLE OR IN PART,
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor's financial condition; (h) no litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes)
against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis
<PAGE> 9
information regarding Borrower's financial condition. Guarantor agrees to keep
adequately informed from such means of any facts, events, or circumstances
which might in any way affect Guarantor's risks under this Guaranty, and
Guarantor further agrees that, absent a request for information, Lender shall
have no obligation to disclose to Guarantor any information or documents
acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
the provisions of O.C.G.A. Section 10-7-24 concerning Guarantor's right to
require Lender to take action against Borrower or any "one action" or
"anti-deficiency" law or any other law which may prevent Lender from bringing
any action, including a claim for deficiency, against Guarantor, before or
after Lender's commencement or completion of any foreclosure action, either
judicially or by exercise of a power of sale; (b) any election of remedies by
Lender which destroys or otherwise adversely affects Guarantor's subrogation
rights or Guarantor's rights to proceed against Borrower for reimbursement,
including without limitation, any loss of rights Guarantor may suffer by reason
of any law limiting, qualifying, or discharging the Indebtedness; (c) any
disability or other defense of Borrower, of any other guarantor, or of any
other person, or by reason of the cessation of Borrower's liability from any
cause whatsoever, other than payment in full in legal tender, of the
Indebtedness; (d) any right to claim discharge of the Indebtedness on the basis
of unjustified impairment of any collateral for the Indebtedness; (e) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (f) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or other, or by any third party, on the Indebtedness and thereafter
Lender is forced to
<PAGE> 10
remit the amount of that payment to Borrower's trustee in bankruptcy or to any
similar person under any federal or State bankruptcy law or law for the relief
of debtors, the Indebtedness shall be considered unpaid for the purpose of
enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to Lender all of
Guarantor's right, title and interest in and to, all deposits, moneys,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Lender, whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all IRA, Keogh, and trust accounts.
Every such security interest and right of setoff may be exercised without
demand upon or notice to Guarantor. No security interest or right of setoff
shall be deemed to have been waived by any act or conduct on the part of Lender
or by any neglect to exercise such right of setoff or to enforce such security
interest or by any delay in so doing. Every right of setoff and security
interest shall continue in full force and effect until such right of setoff or
security interest is specifically waived or released by an instrument in
writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation ' or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender
and shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to
<PAGE> 11
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Guaranty. No alteration of or
amendment to this Guaranty shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by
the alteration or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and
accepted by Lender in the State of Georgia. Subject to the provisions
on arbitration, this Guaranty shall be governed by and construed in
accordance with the laws of the State of Georgia.
ARBITRATION. LENDER AND GUARANTOR AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN
NATURE, ARISING FROM THIS GUARANTY 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 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, including any claim to rescind,
reform, or otherwise modify any agreement relating to the Collateral,
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 Guaranty
shall preclude any party from seeking equitable relief from a court of
competent jurisdiction. The statute of limitations, 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.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this
Guaranty. Lender may pay someone else to help
<PAGE> 12
enforce this Guaranty, and Guarantor shall pay the costs and expenses
of such enforcement. Costs and expenses include all costs and expenses
of collection, including fifteen percent (15%) of the principal plus
accrued interest as attorneys' fees, if any sums owing under this
Guaranty are collected by or through an attorney-at-law, whether or not
there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court
costs and such additional fees as may be directed by the court.
NOTICES. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile
(unless otherwise required by law), and shall be effective when
actually delivered or when deposited with a nationally recognized
overnight courier, or when deposited in the United States mail, first
class postage prepaid, addressed to the party to whom the notice is to
be given at the address shown above or to such other addresses as
either party may designate to the other in writing. It there is more
than one Guarantor, notice to any Guarantor will constitute notice to
all Guarantors. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall
be deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower
named in this Guaranty or when this Guaranty is executed by more than
one Guarantor, the words "Borrower" and "Guarantor" respectively shall
mean all and any one or more of them. The words "Guarantor,"
Borrower," and "Lender" include the heirs, successors, assigns, and
transferees of each of them. Caption headings in this Guaranty are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Guaranty. If a court of competent
jurisdiction finds any provision of this Guaranty to be invalid or
unenforceable as to any person or circumstance, such finding shall not
render that provision invalid or unenforceable as to any other persons
or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of
Borrower or Guarantor are corporations or partnerships, it is not
necessary for Lender to inquire into the powers of Borrower or
Guarantor or of the officers, directors, partners, or agents acting or
purporting to act on their behalf, and any Indebtedness made or
created in reliance upon the professed exercise of such powers shall
be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under
this Guaranty unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Guaranty shall not prejudice
or constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Guaranty. No prior waiver by Lender, nor any course of dealing between
Lender and Guarantor, shall constitute a waiver of any of Lender's
rights or of any of Guarantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Guaranty, the granting of such
<PAGE> 13
consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole
discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED MARCH 6, 2000.
IN WITNESS WHEREOF, THIS GUARANTY HAS BEEN SIGNED AND SEALED BY THE
UNDERSIGNED, WHO ACKNOWLEDGES A COMPLETED COPY HEREOF.
X (SEAL)
-------------------------------------------
Guarantor
Signed, Sealed and Delivered in the presence of:
X (SEAL)
-------------------------------------------
Unofficial Witness
- --------------------------------------------
Notary Public,_______________________ County
(NOTARY SEAL)
My Commission expires:______________________
LENDER:
The Bankers Bank
By:
-----------------------------------------
Authorized Officer
<PAGE> 14
SCHEDULE OF GUARANTORS
James O. Andrews
James H. Daws
James E. Hinshaw, Sr.
Donald F. Jackson
Lewis A. Massey
Tyler C. McCain
M. Lauch McKinnon
D. Alan Najjar
D. Arnold Tillman, Jr.
Jeffrey S. Tucker
<PAGE> 15
FORM OF CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
- ----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C>
$750,000.00 03-06-2000 06-28-2000 4021395101 4021395 JKG
- ---------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
BORROWER: SOUTHERNBANK HOLDINGS, INC. LENDER: THE BANKERS BANK
P.O. BOX 967 2410 PACES FERRY ROAD
BUFORD, GA 30515-0967 600 PACES SUMMIT
ATLANTA, GA 30339
===============================================================================
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF SOUTHERNBANK HOLDINGS,
INC. (THE "CORPORATION"), HEREBY CERTIFY THAT the Corporation is organized and
existing under and by virtue of the laws of the State of Georgia as a
corporation for profit, with its principal office at P.O. Box 967, BUFORD, GA
30515-0967, and is duly authorized to transact business in the State of
Georgia.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on __________________________, at which a quorum was present
and voting, or by other duly authorized corporate action in lieu of a meeting,
the following resolutions were
BE IT RESOLVED, that any TWO (2) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
<S> <C> <C>
D. Arnold Tillman CEO x
-----------------------
M. Lauch McKinnon President x
-----------------------
</TABLE>
acting for and on behalf of the Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from The Bankers Bank
("Lender"), on such terms as may be agreed upon between the Corporation
and Lender, such sum or sums OF money as in their judgment should be
borrowed; however, not exceeding at any one time the amount OF SEVEN
HUNDRED FIFTY THOUSAND & 00/100 DOLLARS ($750,000.00), in addition to such
sum or sums of money as may be currently borrowed by the Corporation from
Lender.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accommodations of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender
one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the notes, any portion
of the notes, or any other evidence of credit accommodations.
<PAGE> 16
GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accommodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to Lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or
in which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible
or intangible) of the Corporation. Such property may be mortgaged,
pledged, transferred, endorsed, hypothecated, or encumbered at the time
such loans are obtained or such indebtedness is incurred, or at any other
time or times, and may be either in addition to or in lieu of any property
theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or,
encumbered.
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances . or any of them, are given;
and also to execute and deliver to Lender any other written instruments,
any chattel paper, or any other collateral, of any kind or nature, which
they may in their discretion deem reasonably necessary or proper in
connection with or pertaining to the giving of the liens and encumbrances.
Notwithstanding the foregoing, any one of the above authorized persons may
execute, deliver, or record financing statements.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or
to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
FURTHER ACTS. in the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents
and agreements as they may in their discretion deem reasonably necessary
or proper in order to carry into effect the provisions of these
Resolutions. The following person or persons currently are authorized to
request advances and authorize payments under the line OF credit until
Lender receives written notice of revocation of their authority: D.
Arnold Tillman, Tyler C. McCain and M. Lauch McKinnon.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any OF the Corporation's agreements or commitments in effect
at the time notice is given.
<PAGE> 17
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation,, (d) change in the authorized signer(s), (e)
conversion of the Corporation to A new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever. The Corporation has no corporate seal, and
therefore, no seal is affixed to this certificate,
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND AND SEAL ON MARCH 6, 2000 AND
ATTEST THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR
GENUINE SIGNATURES.
CERTIFIED TO AND ATTESTED BY:
X (SEAL)
----------------------------
X (SEAL)
----------------------------
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into
effective as of December 1, 1999 by and among M. Lauch McKinnon, a resident of
the State of Georgia ("Employee"), SouthernBank, N.A., a proposed national
banking association ("Employer") and SouthernBank Holdings, Inc., a Georgia
corporation and sole shareholder of Employer ("Holdings").
WITNESSETH:
WHEREAS, Employer and Employee each deem it necessary and desirable,
for their mutual protection, to execute a written document setting forth the
terms and conditions of their employment relationship;
NOW, THEREFORE, in consideration of the employment of Employee by
Employer, of the premises and the mutual promises and covenants contained
herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. Employment and Duties. Employer and Holdings hereby employ Employee
to serve as President and Chief Executive Officer of Employer and as President
of Holdings and to perform such other duties and responsibilities as
customarily performed by persons acting in such capacities. During the term of
this Agreement, Employee will devote his full time and effort to his duties
hereunder.
2. Term. Subject to the provisions of Section 12 of this Agreement,
the period of Employee's employment under this Agreement shall be deemed to
have commenced as of the effective date hereof and shall continue for a period
of 12 calendar months thereafter (i) unless Employee dies before the end of
such 12 months or (ii) Employer is not successful in obtaining final opening
approvals (the "Final Approvals") from the Office of the Comptroller of the
Currency (the "OCC") and the Federal Deposit Insurance Corporation (the
"FDIC"). In either case, the period of employment shall continue until the end
of the month of Employee's death or
<PAGE> 2
the inability to obtain the OCC's and FDIC's Final Approvals. The said 12 month
period of employment shall automatically be extended for additional one year
terms without further action by the parties, commencing on the first year
anniversary of this Agreement and each one year anniversary thereafter. No such
automatic extension shall occur if either party shall, within 90 days prior to
any said anniversary, have served written notice upon the other of its
intention that this Agreement shall not be so extended.
3. Compensation. For all services to be rendered by Employee during
the term of this Agreement, Employer shall pay Employee in accordance with the
terms set forth in Exhibit A, net of applicable withholdings, payable in
semi-monthly installments.
4. Expenses. So long as Employee is employed hereunder, Employee is
entitled to receive reimbursement for, or seek payment directly by Employer of,
all reasonable expenses which are consistent with the normal policy of Employer
in the performance of Employee's duties hereunder, provided that Employee
accounts for such expenses in writing.
5. Employee Benefits. So long as Employee is employed hereunder,
Employee shall be entitled to participate in the various employee benefit
programs adopted by Employer and Holdings from time to time.
6. Vacation. Employee shall be entitled to the greater of either three
weeks annual vacation or the number of weeks of annual vacation provided to
executive officers in any employee policy handbook adopted by Employer during
the term of this Agreement.
7. Confidentiality. In Employee's position as an employee of Employer,
Employee has had and will have access to confidential information, trade
secrets and other proprietary information of vital importance to Employer and
Holdings and has and will also develop relationships with customers, employees
and others who deal with Employer or Holdings which are of value to Employer
and Holdings. Employer requires, as a condition to Employee's employment with
Employer, that Employee agree to certain restrictions on Employee's use of the
proprietary information and valuable relationships developed during Employee's
employment
2
<PAGE> 3
with Employer. In consideration of the terms and conditions contained herein,
the parties hereby agree as follows:
7.1 Employer and Employee mutually agree and acknowledge that
Employer and Holdings may entrust Employee with highly sensitive, confidential,
restricted and proprietary information concerning various Business
Opportunities (as hereinafter defined), customer lists, and personnel matters.
Employee acknowledges that he shall bear a fiduciary responsibility to Employer
and Holdings to protect such information from use or disclosure as an essential
incident of Employee's employment with Employer.
7.2 For the purposes of this Section 7, the following
definitions shall apply:
7.2.1 "Trade Secret" shall mean the identity and
addresses of customers of Employer or Holdings, the whole or any portion or
phase of any scientific or technical information, design, process, procedure,
formula or improvement that is valuable and secret (in the sense that it is not
generally known to competitors of Employer or Holdings) and which meets the
definition of a "trade secret" under Georgia law pursuant to the Georgia Trade
Secrets Act.
7.2.2 "Confidential Information" shall mean any data
or information, other than Trade Secrets, which is material to Employer or
Holdings and not generally known by the public. Confidential Information shall
include, but not be limited to, Business Opportunities of Employer or Holdings
(as hereinafter defined), the details of this Agreement, Employer's or
Holdings' business plans and financial statements and projections, information
as to the capabilities of Employer's or Holdings' employees, their respective
salaries and benefits and any other terms of their employment and the costs of
the services Employer or Holdings may offer or provide to the customers it
serves, to the extent such information is material to Employer or Holdings and
not generally known by the public.
7.2.3 "Business Opportunities" shall mean any
specialized information or plans of Employer or Holdings concerning the
provision of financial services to the public, together with all related
information concerning the specifics of any contemplated financial
3
<PAGE> 4
services regardless of whether Employer has contacted or communicated with such
target person or business.
7.2.4 Notwithstanding the definitions of Trade
Secrets, Confidential Information, and Business Opportunities set forth above,
Trade Secrets, Confidential Information, and Business Opportunities shall not
include any information:
(i) that is or becomes generally known to
the public;
(ii) that is already known by Employee or
is developed by Employee after termination of employment through entirely
independent efforts;
(iii) that Employee obtains from an
independent source having a bona fide right to use and disclose such
information;
(iv) that is required to be disclosed by
law, except to the extent eligible for special treatment under an appropriate
protective order; or
(v) that Employer's or Holdings' Board of
Directors approves for release.
7.3 Employee shall not, without the prior approval of
Employer's or Holdings' Board of Directors, during his employment with Employer
and for so long thereafter as the information or data remain Trade Secrets, use
or disclose, or negligently permit any unauthorized person who is not an
employee of Employer or Holdings to use, disclose, or gain access to, any Trade
Secrets.
7.4 Employee shall not, without the prior written consent of
Employer or Holdings, during his employment with Employer and for a period of
12 months thereafter as long as the information or data remain competitively
sensitive, use or disclose, or negligently permit any unauthorized person who
is not employed by Employer or Holdings to use, disclose, or gain access to,
any Confidential Information to which the Employee obtained access by virtue of
his employment with Employer, except as provided in Section 7.2.4 of this
Agreement.
4
<PAGE> 5
8. Observance of Security Measures. During Employee's employment with
Employer, Employee is required to observe all security measures adopted to
protect Trade Secrets, Confidential Information and Business Opportunities.
9. Return of Materials. Upon the request of Employer or Holdings and,
in any event, upon the termination of his employment with Employer, Employee
shall deliver to Employer all memoranda, notes, records, manuals or other
documents, including all copies of such materials containing Trade Secrets or
Confidential Information, whether made or compiled by Employee or furnished to
him from any source by virtue of his employment with Employer.
10. Severability. Employee acknowledges and agrees that the covenants
contained in Sections 7 through 9 and Section 14 of this Agreement shall be
construed as covenants independent of one another and distinct from the
remaining terms and conditions of this Agreement, and severable from every
other contract and course of business by and among Employer, Holdings and
Employee, and that the existence of any claim, suit or action by Employee
against Employer and/or Holdings, whether predicated upon this Agreement or any
other agreement, shall not constitute a defense to Employer's or Holdings'
enforcement of any covenant contained in Sections 7 through 9 and Section 14 of
this Agreement.
11. Specific Performance. Employee acknowledges and agrees that the
covenants contained in Sections 7 through 9 and Section 14 of this Agreement
shall survive any termination of employment, as applicable, with or without
Cause (as hereinafter defined), at the instigation or upon the initiative of
any party. Employee further acknowledges and agrees that the ascertainment of
damages in the event of Employee's breach of any covenant contained in Sections
7 through 9 and Section 14 of this Agreement would be difficult, if at all
possible. Employee therefore acknowledges and agrees that Employer and Holdings
shall be entitled in addition to and not in limitation of any other rights,
remedies, or damages available to Employer and Holdings in arbitration, at law
or in equity, upon submitting whatever affidavit the law may require, and
posting any necessary bond, to have a court of competent jurisdiction enjoin
Employee from committing any such breach.
5
<PAGE> 6
12. Termination.
12.1 Employee's employment hereunder may be terminated under
the following circumstances:
12.1.1 At the election of Employer, for Cause.
12.1.2 At the election of Employee, for Good Reason.
12.1.3 Upon Employee's death, or, at the election of
either party, upon Employee's disability as determined in accordance with the
standards and procedures under Employee's then-current long-term disability
insurance coverage provided by Employer, or, if such disability insurance
coverage provided by Employer is not then in place, upon Employee's disability
resulting in inability to perform the duties described in Section 1 of this
Agreement for a period of 180 consecutive days.
12.2 "Cause" shall mean (i) conduct by Employee that amounts
to fraud, material dishonesty, gross negligence or willful misconduct in the
performance of his duties hereunder; (ii) the conviction (from which no appeal
may be, or is, timely taken) of Employee of a felony; (iii) initiation of
suspension or removal proceedings against Employee by federal or state
regulatory authorities acting under lawful authority pursuant to provisions of
federal or state law or regulation which may be in effect from time to time;
(iv) knowing violation of federal or state banking laws or regulations ; or (v)
refusal to perform a duly authorized directive of Employer's Board of
Directors.
12.3 "Good Reason" shall mean a material diminution in
Employee's office, title, reporting requirements, lending authority, duties or
responsibilities hereunder or upon material breach of this Agreement by
Employer.
12.4 If this Agreement is terminated either (i) by Employer
at any time for any reason other than for Cause, (ii) by Employee for Good
Reason or (iii) upon Employer's material breach of this Agreement, then
Employer shall pay to Employee as Employee's sole remedy hereunder the
compensation and benefits provided in this Agreement for a term equal to 12
months, as if no termination occurred.
6
<PAGE> 7
12.5 If the Agreement is terminated for Cause, Employee shall
receive no further compensation or benefits, other than Employee's Base Salary
and other compensation as accrued through the date of termination for Cause.
13. Notices. All notice provided for herein shall be in writing and
shall be deemed to be given when delivered in person or deposited in the United
States Mail, registered or certified, return receipt requested, with proper
postage prepaid and addressed as follows:
Employer and Holdings: SouthernBank Holdings, Inc.
Post Office Box 218
Cartersville, Georgia 30120
Attn: D. Arnold Tillman, Chairman
with a copy to: Troutman Sanders LLP
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308-2216
Attn: Thomas O. Powell, Esquire
Employee: M. Lauch McKinnon
3124 Waterfront Drive
Chattanooga, Tennessee 37419
with a copy to: Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, Suite 1600
Atlanta, Georgia 30303
Attn: Kathryn L. Knudson, Esquire
14. Covenant Not to Compete and Not to Solicit.
14.1 For purposes of this Section 14, Employer and Employee
conduct the following business in the following geographic areas:
14.1.1 Employer is engaged in the business of
transacting business as a bank which accepts deposits, makes loans, cashes
checks and otherwise engages in the business of banking (collectively, the
"Business of Employer").
14.1.2 Employer actively conducts business in a
certain geographic area of Georgia from its office located at Georgia Highway
20 and the Mall of Georgia, Buford, Georgia 30515 (the "Main Office").
7
<PAGE> 8
14.1.3 Employee will establish business
relationships and performs the duties described in Section 1 of this Agreement
in the geographic area covered by a circle having a radius of 50 miles from the
Main Office, and will work primarily in such area while in the employ of
Employer.
14.2 Employee covenants and agrees that for a period of one
year after the termination of this Agreement for any reason other than
non-renewal of this Agreement by Employer or Holdings on any anniversary date
or pursuant to Section 12.1.2 of this Agreement, Employee shall not, directly
or indirectly, as principal, agent, trustee, consultant or through the agency
of any financial institution, corporation, partnership, association, trust or
other entity or person, on Employee's own behalf or for others, provide the
duties described in Section 1 of this Agreement for any entity or person
conducting the Business of Employer within the geographic area covered by a
circle having a radius of 50 miles from the Main Office.
14.3 During the term of this Agreement and for a period of
one year after the termination of this Agreement for any reason other than
non-renewal of this Agreement by Employer or Holdings on any anniversary date
or pursuant to Section 12.1.2 of this Agreement, Employee will not enter into,
and will not participate in, any plan or arrangement to cause any employee of
Employer to terminate his or her employment with Employer, and, Employee agrees
that for a period of at least two years after the termination of employment by
any employee of Employer, Employee will not hire such employee in connection
with any business initiated by Employee or any other person, firm or
corporation. Employee further agrees that information as to the capabilities of
Employer's employees, their salaries and benefits, and any other terms of their
employment is Confidential Information and proprietary to Employer.
14.4 Employee and Employer shall periodically amend this
Agreement by updating the address referenced in Section 14.1.2 of this
Agreement so that it at all times lists the then current geographic area served
by Employer for which Employee performs the duties described in Section 1 of
this Agreement.
8
<PAGE> 9
14.5 Notwithstanding any provision herein to the contrary,
the covenant not to compete and not to solicit set forth in Sections 14.2 and
14.3 shall be null and void in the event either (i) this Agreement is not
renewed by Employer or Holdings on any anniversary date or (ii) terminated by
Employee pursuant to Section 12.1.2 of this Agreement.
15. Miscellaneous.
15.1 This Agreement, together with Exhibit A, constitutes and
expresses the whole agreement of the parties in reference to the employment of
Employee by Employer, and there are no representations, inducements, promises,
agreements, arrangements, or undertakings oral or written, between the parties
other than those set forth herein.
15.2 This Agreement shall be governed by the laws of the
State of Georgia.
15.3 Should any clause or any other provision of this
Agreement be determined to be void or unenforceable for any reason, such
determination shall not affect the validity or enforceability of any clause or
provision of this Agreement, all of which shall remain in full force and
effect.
15.4 Time is of the essence in this Agreement.
15.5 This Agreement shall be binding upon and enure to the
benefit of the parties hereto and their successors and assigns. This Agreement
shall not be assignable by Employee without the prior written consent of
Employer.
15.6 This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together shall
constitute but a single instrument.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
<TABLE>
<S> <C>
"Employee"
/s/ Thomas O. Powell /s/ M. Lauch McKinnon (SEAL)
- --------------------------------- --------------------------------------
Witness M. Lauch McKinnon
ATTEST: "Employer"
SouthernBank, N.A.
By: /s/ Tyler C. McCain /s/ D. Arnold Tillman
------------------------------ --------------------------------------
Tyler C. McCain, Secretary D. Arnold Tillman, Chairman
(BANK SEAL)
ATTEST: "Holdings"
SOUTHERNBANK HOLDINGS, INC.
By: /s/ Tyler C. McCain /s/ D. Arnold Tillman
------------------------------ --------------------------------------
Tyler C. McCain, Secretary D. Arnold Tillman, Chairman
(CORPORATE SEAL)
</TABLE>
10
<PAGE> 11
Exhibit A
to Employment Agreement By and Among
M. Lauch McKinnon, Southern Bank, N.A. (proposed) and
SouthernBank Holdings, Inc.
Employee Compensation
Capitalized terms used herein and not defined shall have the meanings set forth
in the Employment Agreement.
BASE SALARY: $90,000 per year until the date of the opening of SouthernBank,
N.A. (the "Bank") then increasing to $120,000 per year thereafter subject to
annual increases in an amount equal to such amount as the Board of Directors in
its discretion shall determine to be appropriate under the circumstances after
review of Employee's performance.
OPTION PLANS: Assuming shareholder approval of that certain incentive stock
option plan of SouthernBank Holdings, Inc. ("Holdings"), ten year incentive
stock options to acquire 25,000 shares of Holdings Common Stock granted at the
initial offering price of Holdings' common stock, vesting over 5 years, at 20%
per year for each year of continued employment thereafter. The option shall be
granted as an option qualified under Section 422 of the Internal Revenue Code
of 1986, as amended, subject to the approval of the shareholders of Holdings.
BONUSES:
(1) Annual. Payable each January, based on a performance matrix
established against budgets and approved by the Bank's Board of Directors; and
(2) Bank Opening. The Bank will pay Employee a one time bonus of
$15,000 on June 30, 2000 if the Bank has opened for business on or before May
31, 2000.
AUTO ALLOWANCE: The Bank will provide an automobile allowance of $7,000 per
year payable in 12 equal monthly payments of $584 per month on the first day of
each month.
CLUB MEMBERSHIP: Employee's initiation fee and current monthly dues for a
private country club and a private dining club as determined to be appropriate
by the Bank's Board of Directors.
INSURANCE: Employee's and his dependents' hospitalization, and dental, any
other insurance plans as adopted by the Bank's Board of Directors for employees
of the Bank.
<PAGE> 1
EXHIBIT 10.7
[SOUTHERNBANK HOLDINGS LETTERHEAD]
February 8, 2000
Ms. Rita B. Gray
2029 Shields Road
Dalton, GA 30720
Dear Rita:
It is my pleasure to confirm the terms of your employment as the Chief
Financial Officer for SouthernBank Holdings, Inc. and subsequently as Chief
Financial Officer for SouthernBank, N.A. when it is formed. My interest in
having you come on board immediately is tempered by the recognition that you
have specific issues and activities to address prior to your departure from
your current bank employer.
You and I are in complete agreement that your commitment to North Georgia
National Bank is likely to require your being there into early March. It is very
important for you to transition out of the bank with as little disruption as
possible, and I therefore do not expect that you would be able to begin your
responsibilities here prior to the week of March 6th.
Your salary will be $80,000.00 per annum to be earned and paid on a monthly
basis ($6,666.67 per month). A performance and salary review will be conducted
at least annually.
In addition, within thirty days of joining our organization, you will be paid a
signing bonus of $5,000.00. Should your employment terminate in less than six
(6) months, you agree to repay a pro rata portion portion of this signing bonus
at a rate of $833.33 per month for each month less than six (6) months that you
are employed. You will also be paid a bonus of $5,000.00 after you have been
employed for six (6) full months. You agree to repay a pro rata portion of this
bonus at a rate of $833.33 per month for each month less than twelve (12) but
more than six (6) months that you are employed should your employment terminate
in less than twelve (12) months.
You will participate in stock options after the bank has opened as the Board of
Directors determines such options for the executive officers of the bank. We
expect that the number of share to be 10,000 subject to an even vesting schedule
over ten (10) years.
You will participate in benefits such as a retirement plan, ESOP, and/or 401-K,
medical, and life insurance, long-term disability, vacation, and sick leave as
such benefits are adopted and approved by the Board of Directors. At the outset
of your employment, SouthernBank Holdings, Inc. will pay your COBRA coverage.
<PAGE> 2
Ms. Rita B. Gray
February 8, 2000
Page 2
You will be provided membership in civic/service organization(s) and/or club(s)
to be mutually agreed upon. Specifically, we would want you to be active in
Rotary as you have been, and we would provide a membership in the 1818 Club.
Even though your employment is for no set or guaranteed time period, resignation
by you would be expected to be preceded by written notification one (1) month in
advance. If you were terminated for just cause (reasons such as dishonesty,
violation of any law or regulation of policy), there would be no notice or pay
in lieu of notice. If you were terminated for other than just cause, then you
would receive one (1) month notice or pay in lieu of notice.
Rita, I am genuinely pleased with your decision to join SouthernBank Holdings,
Inc. and look forward to the excitement and challenges of our building a
quality organization.
Sincerely,
/s/ M. Lauch McKinnon
-------------------------------------
President
Accepted:
/s/ Rita B. Gray Date: February 9, 2000
- --------------------------- -------------------------------
Rita B. Gray
<PAGE> 1
EXHIBIT 10.8
SOUTHERNBANK HOLDINGS, INC.
STOCK OPTION PLAN
ARTICLE I
PURPOSE, SCOPE AND ADMINISTRATION OF THE PLAN
1.1 Purpose. The purpose of this Stock Option Plan is to promote
the long-term success of SouthernBank Holdings, Inc. (the "Company"), and its
affiliates and to encourage growth in shareholder value by providing financial
incentives to selected members of its and its affiliates' boards of directors,
employees, consultants and advisers who are in positions to make significant
contributions toward that success. It is intended that the Company will,
through the grant of options to purchase its common stock, attract and retain
(and allow its affiliates to attract and retain) highly qualified and competent
employees and directors and motivate such employees and directors to exert
their best efforts on behalf of the Company and its affiliates.
1.2 Definitions. Unless the context clearly indicates otherwise,
for purposes of this Plan:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means a committee of the Board of
Directors, which shall be composed of two or more members appointed from time
to time by the Board of Directors from among its members. If the Board of
Directors does not appoint a such a committee, all references in this Plan to
the "Committee" shall be deemed to be references to the Board of Directors
where the context so permits or requires.
(d) "Common Stock" means the Common Stock of the
Company, $1.00 par value per share, or such other class of shares or other
securities to which the provisions of the Plan may be applicable by reason of
the operation of Section 3.1 hereof.
(e) "Company" means the Company and any affiliates of
the Company, including affiliates of the Company which become such after
adoption of this Plan; provided, however, that for purposes of granting
Incentive Stock Options, the term "Company" shall include only the Company and
its subsidiaries that are corporations in which the Company directly or
indirectly owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in such corporation as provided in Code
Section 424(f).
<PAGE> 2
(f) "Fair Market Value" of a share of Common Stock on a
specified date means:
(i) if the Common Stock is then traded on a
national securities exchange, the closing price on such date
of a share of the Common Stock as traded on the largest
securities exchange on which it is then traded; or
(ii) if the Common Stock is not then traded on a
national securities exchange, the mean between the closing
composite inter-dealer "bid" and "ask" prices for Common
Stock, as quoted on the NASDAQ National Market System (A) on
such date, or (B) if no "bid" and "ask" prices are quoted on
such date, then on the next preceding date on which such
prices were quoted; or
(iii) if the Common Stock is not then traded on a
national securities exchange or quoted on the NASDAQ National
Market System, the value determined in good faith by the
Committee.
(g) "Grant Date," as used with respect to a particular
Option, means the date as of which the Option is granted by the Committee
pursuant to the Plan.
(h) "Grantee" means the person to whom an Option is
granted by the Committee pursuant to the Plan.
(i) "Incentive Stock Option" means an Option, or any
portion thereof, granted to an employee of the Company which qualifies as an
Incentive Stock Option as described in Section 422 of the Code, unless the
Committee expressly designates the Option, or such portion thereof, as a
Nonqualified Stock Option.
(j) "Nonqualified Stock Option" means any option granted
under this Plan, other than an Incentive Stock Option.
(k) "Option" means an Option granted by the Committee
pursuant to Article II to purchase shares of Common Stock, which shall be
designated at the time of grant as either an Incentive Stock Option or a
Nonqualified Stock Option, as provided in Section 2.1 hereof.
(l) "Option Agreement" means the agreement between the
Company and a Grantee under which the Grantee is granted an Option pursuant to
the Plan. Option Agreements need not be identical with other Option Agreements,
either in form or substance, and need only conform to the terms and conditions
of this Plan.
(m) "Option Period" means, with respect to any Option
granted hereunder, the period beginning on the Grant Date and ending at such
time not later than the tenth anniversary of the Grant Date as the Committee in
its sole discretion shall determine and during which the Option may be
exercised.
(n) "Plan" means the SouthernBank Holdings, Inc. Stock
Option Plan as set forth herein and as amended from time to time.
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<PAGE> 3
1.3 Aggregate Limitation.
(a) The maximum number of shares of Common Stock with
respect to which Options may be granted shall not exceed a total of one hundred
thousand (100,000) shares in the aggregate, subject to possible adjustment in
accordance with Section 3.1.
(b) Any shares of Common Stock to be delivered by the
Company upon the exercise of Options shall, at the discretion of the Board of
Directors, be issued from the Company's authorized but unissued shares of
Common Stock or transferred from any available Common Stock held in treasury.
(c) The Committee may grant new Options hereunder with
respect to any shares for which an Option expires or otherwise terminates prior
to being exercised.
1.4 Administration of the Plan.
(a) The Plan shall be administered by the Committee,
which shall have the authority:
(i) To determine the directors, employees,
consultants and advisers of the Company to whom, and the
times at which, Options shall be granted, and the number of
shares of Common Stock to be subject to each such Option,
taking into consideration the nature of the services rendered
by the particular Grantee, the Grantee's potential
contribution to the long-term success of the Company and such
other factors as the Committee in its discretion may deem
relevant;
(ii) To interpret and construe the provisions of
the Plan and to establish rules and regulations relating to
it;
(iii) To prescribe the terms and conditions of
the Option Agreements for the grant of Options (which need not
be identical for all Grantees) in accordance and consistent
with the requirements of the Plan; and
(iv) To make all other determinations necessary
or advisable to administer the Plan in a proper and effective
manner.
(b) All decisions and determinations of the Committee in
the administration of the Plan and on other matters concerning the Plan or any
Option shall be final, conclusive and binding on all persons, including (but
not by way of limitation) the Company, the shareholders and directors of the
Company, and any persons having any interest in any Options. The Committee
shall be entitled to rely in reaching its decisions on the advice of counsel
(who may be counsel to the Company).
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<PAGE> 4
1.5 Eligibility for Awards. The Committee shall in accordance
with Article II designate from time to time the directors, employees,
consultants and advisers of the Company who are to be granted Options. In no
event may a person who is not an employee of the Company be granted an
Incentive Stock Option under the Plan.
1.6 Effective Date and Duration of Plan. The Plan shall become
effective on the date of its adoption by the Board of Directors; provided, that
any grant of Options under the Plan prior to approval of the Plan by the
shareholders of the Company is subject to such shareholder approval within 12
months of adoption of the Plan by the Board of Directors. Unless previously
terminated by the Board of Directors, the Plan (but not any Options then
outstanding) shall terminate on the tenth anniversary of its adoption by the
Board of Directors.
ARTICLE II
STOCK OPTIONS
2.1 Grant of Options.
(a) The Committee may from time to time, subject to the
provisions of the Plan, grant Options to directors, employees, consultants and
advisers of the Company under appropriate Option Agreements to purchase shares
of Common Stock up to the aggregate number of shares of Common Stock set forth
in Section 1.3(a).
(b) The Committee may designate as an Incentive Stock
Option any Option (or portion thereof) granted to an employee of the Company
which satisfies the requirements of Sections 2.2 and 2.3 hereof. Any portion of
an Option that is not designated as an Incentive Stock Option (or otherwise
does not qualify as an Incentive Stock Option) shall be a Nonqualified Stock
Option. A Nonqualified Stock Option must satisfy the requirements of Section
2.2 hereof, but shall not be subject to the requirements of Section 2.3.
2.2 Option Requirements.
(a) An Option shall be evidenced by an Option Agreement
specifying the number and class of shares of Common Stock that may be purchased
upon its exercise and containing such other terms and conditions consistent
with the Plan as the Committee may determine to be applicable to that Option.
(b) No Option shall be granted under the Plan on or
after the tenth anniversary of the date upon which the Plan was adopted by the
Board of Directors.
(c) An Option shall expire by its terms at the
expiration of the Option Period and shall not be exercisable thereafter.
(d) The Committee may provide in the Option Agreement
for the expiration or termination of the Option prior to the expiration of the
Option Period, upon the occurrence of any event specified by the Committee.
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<PAGE> 5
(e) The Committee may provide in the Option Agreement
for vesting periods which require the passage of time and/or the occurrence of
events in order for the Option to become exercisable.
(f) The option price per share of Common Stock of an
Incentive Stock Option shall not be less than the Fair Market Value of a share
of Common Stock on the Grant Date. The option price per share of Common Stock
of a Nonqualified Stock Option shall be such price as shall be determined by
the Committee at the time any such Nonqualified Option is granted, and may be
greater than, equal to, or less than the Fair Market Value of a share of Common
Stock at the time such Nonqualified Option is granted.
(g) An Option shall not be transferable other than by
will or the laws of descent and distribution, except that any vested portion of
Nonqualified Stock Options may be transferred if the transfer is approved in
advance in writing by the Committee or Board of Directors in their sole
discretion. Unless transferred with approval as provided in the preceding
sentence, during the Grantee's lifetime an Option shall be exercisable only by
the Grantee or, if the Grantee is disabled and the Option remains exercisable,
by his or her duly appointed guardian or other legal representative. Upon the
Grantee's death, but only to the extent that the Option is otherwise
exercisable hereunder, an Option may be exercised by the Grantee's legal
representative or by a person who receives the right to exercise the Option
under the Grantee's will or by the applicable laws of descent and distribution.
(h) Each Option Agreement shall contain an agreement
that, upon demand by the Committee for such a representation, the Grantee (or
any person acting on the Grantee's behalf) shall deliver to the Committee at
the time of any exercise of an Option a written representation that the Common
Stock to be acquired upon such exercise is to be acquired for investment and
not for resale or with a view to the distribution thereof or such other
representation as may be required by the Committee. Upon such demand, delivery
of such representation prior to the delivery of any Common Stock issued upon
exercise of an Option and prior to the expiration of the Option period shall be
a condition precedent to the right of the Grantee or such other person to
purchase any shares of Common Stock.
(i) A person electing to exercise an Option shall give
written notice of election to the Company in such form as the Committee may
require, accompanied by payment of the full purchase price of the shares of
Common Stock for which the election is made. Payment of the purchase price
shall be made in cash or in such other form as the Committee may specify in the
applicable Option Agreement.
2.3 Incentive Stock Option Requirements.
(a) An Option granted to an employee of the Company and
designated by the Committee as an Incentive Stock Option is intended to qualify
as an "incentive stock option" within the meaning of Section 422 of the Code
and shall satisfy, in addition to the conditions of Section 2.2 above, the
conditions set forth in this Section 2.3.
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<PAGE> 6
(b) An Incentive Stock Option shall not be granted to an
individual who on the Grant Date owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company, unless
the option price per share of Common Stock will not be less than 110% of the
Fair Market Value thereof on the Grant Date and the Option Period does not
extend beyond five years from the Grant Date.
(c) The aggregate Fair Market Value, determined on the
Grant Date, of the shares of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by a Grantee during any calendar
year (under the Plan or any other plan of the Company or any parent or
subsidiary thereof) shall not exceed $100,000.
ARTICLE III
GENERAL PROVISIONS
3.1 Adjustment Provisions.
(a) In the event of:
(i) payment of a stock dividend in respect of
Common Stock; or
(ii) any recapitalization, reclassification,
split-up or consolidation of or other change in the Common
Stock; or
(iii) any exchange of the outstanding shares of
Common Stock in connection with a merger, consolidation or
other reorganization of or involving the Company or a sale by
the Company of all or a portion of its assets, for a
different number or class of shares of stock or other
securities of the Company or for shares of the stock or other
securities of any other corporation;
then the Committee shall, in such manner as it may determine in its sole
discretion, appropriately adjust the number and class of shares or other
securities which shall be subject to Options and the purchase price per share
which must be paid thereafter upon exercise of any Option. Any such adjustments
made by the Committee shall be final, conclusive and binding upon all persons,
including (but not by way of limitation) the Company, the shareholders and
directors of the Company, and any persons having any interest in any Options
which may be granted under the Plan.
(b) Except as provided above in subparagraph (a) of this
paragraph 3.1, issuance by the Company of shares of stock of any class or
securities convertible into shares of stock of any class shall not affect the
Options.
3.2 Additional Conditions. Any shares of Common Stock issued or
transferred under any provision of the Plan may be issued or transferred
subject to such conditions, in addition to those specifically provided in the
Plan, as the Committee or the Company may impose, and may require as a
condition to exercise of the Option that the Grantee (or any person acting on
the
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<PAGE> 7
Grantee's behalf) enter into any agreement or execute any acknowledgment that
the Committee shall deem necessary to ensure that the shares of Common Stock
acquired pursuant to the Option will be subject to any shareholders agreement
as may be in effect at the time such Option is exercised.
3.3 No Rights as Shareholder or to Employment. No Grantee or any
other person authorized to purchase Common Stock upon exercise of an Option
shall have any interest in or shareholder rights with respect to any shares of
the Common Stock which are subject to any Option until certificates evidencing
the shares have been issued and delivered to the Grantee or any such person
upon the exercise of the Option. Furthermore, an Option shall not confer upon
any Grantee any rights to employment or any other relationship with the
Company, including without limitation any right to continue in the employ of
the Company, nor affect the right of the Company to terminate the employment or
other relationship of the Grantee with the Company at any time with or without
cause.
3.4 Legal Restrictions. If in the opinion of legal counsel for
the Company the issuance or sale of any shares of Common Stock pursuant to the
exercise of an Option would not be lawful for any reason, including (but not by
way of limitation) the inability or failure of the Company to obtain from any
governmental authority or regulatory body the authority deemed necessary by
such counsel for such issuance or sale, the Company shall not be obligated to
issue or sell any Common Stock pursuant to the exercise of an Option to a
Grantee or any other authorized person unless the Company receives evidence
satisfactory to its legal counsel that the issuance and sale of the shares
would not constitute a violation of any applicable securities laws. The Company
shall in no event be obligated to take any action which may be required in
order to permit, or to remedy or remove any prohibition or limitation on, the
issuance or sale of such shares to any Grantee or other authorized person.
3.5 Rights Unaffected. The existence of the Options shall not
affect: the right or power of the Company and its shareholders to make
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; any issuance of bonds, debentures,
preferred or prior preference stocks affecting the Common Stock or the rights
thereof; the dissolution or liquidation of the Company, or sale or transfer of
any part of its assets or business; or any other corporate act, whether of a
similar character or otherwise.
3.6 Withholding Taxes. As a condition to exercise of an Option,
the Company may in its sole discretion withhold or require the Grantee to pay
or reimburse the Company for any taxes which the Company determines are
required to be withheld in connection with the grant or any exercise of an
Option.
3.7 Choice of Law. The validity, interpretation and
administration of the Plan and of any rules, regulations, determinations or
decisions made thereunder, and the rights of any and all persons having or
claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with the laws of the State of Georgia. Without
limiting the generality of the foregoing, the period within which any action in
connection with the Plan must be commenced shall be governed by the laws of the
State of Georgia, without regard to the place where the act or
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<PAGE> 8
omission complained of took place, the residence of any party to such action or
the place where the action may be brought or maintained.
3.8 Amendment, Suspension and Termination of Plan. The Plan may
from time to time be terminated, suspended or amended by the Board of Directors
in such respects as it may deem advisable, including any such amendment
effected (i) so that the Incentive Stock Options granted hereunder shall be
"incentive stock options" as such term is defined in Section 422 of the Code,
or (ii) to conform to any change in any law or regulation governing the Plan,
or the Options granted hereunder; provided, however, that no such amendment
shall change the following unless approved by the shareholders of the Company
within twelve months following the date such amendment is adopted:
(a) The maximum aggregate number of shares for which
Options may be granted under the Plan, except as required under any
adjustment pursuant to Section 3.1 hereof; or
(b) The requirements as to eligibility for participation
in the Plan in any material respect.
3.9 Headings. The headings in this Plan are for convenience only
and are not to be used in interpreting the meaning or effect of any provisions
hereof.
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<PAGE> 9
<PAGE> 1
EXHIBIT 10.9
SOUTHERNBANK HOLDINGS, INC.
INCENTIVE STOCK OPTION
COMMON STOCK
($1.00 PAR VALUE PER SHARE)
STOCK OPTION PLAN: SOUTHERNBANK HOLDINGS, INC. STOCK OPTION PLAN
OPTION FOR THE PURCHASE OF: _______ SHARES
EXERCISE PRICE PER SHARE: __________
DATE OF GRANT: __________________
THIS OPTION AGREEMENT, made and entered into this ____ day of
__________, ____ by and between SouthernBank Holdings, Inc., a Georgia
corporation (the "Company"), and ______________________________________ (the
"Grantee");
W I T N E S S E T H:
WHEREAS, the SOUTHERNBANK HOLDINGS, INC. STOCK OPTION PLAN (the
"Plan") has been adopted by the Company; and
WHEREAS, Article II of the Plan authorizes the Committee to cause the
Company to enter into a written agreement with the Grantee setting forth the
form and the amount of any award and any conditions and restrictions of the
award imposed by the Plan and the Committee; and
WHEREAS, the Committee desires to make an award to the Grantee
consisting of an Incentive Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Grantee hereby agree as follows:
1. General Definitions. Any capitalized terms herein shall have
the meaning set forth in the Plan, and, in addition, for purposes of this
Option Agreement, each of the following terms, when used herein, shall have the
meaning set forth below:
(a) The "Company" shall mean SouthernBank Holdings, Inc.
(b) The "Code" shall mean the Internal Revenue Code of
1986, as amended.
(c) The "Common Stock" shall mean the common stock of
the Company, $1.00 par value per share.
(d) The "Exercise Date" shall mean the first anniversary
of the Date of Grant. At any time during the period of this Option commencing
with the first anniversary of the Date of Grant, the Grantee may purchase up
to 20% of the shares covered by this Option and may purchase
<PAGE> 2
an additional 20% on the second, third, fourth and fifth anniversary from
the Date of Grant so that this Option will be fully vested on the fifth
anniversary of the Date of Grant.
(e) The "Expiration Date" shall mean the date on which
this Option expires pursuant to the provisions of paragraph 4 hereof.
(f) "Fair Market Value" of a share of Common Stock on a
specified date means:
(i) if the Common Stock is then traded
on a national securities exchange, the closing price
on such date of a share of the Common Stock as
traded on the largest securities exchange on which
it is then traded; or
(ii) if the Common Stock is not then
traded on a national securities exchange, the mean
between the closing composite inter-dealer "bid" and
"ask" prices for Common Stock, as quoted on the
NASDAQ National Market System (A) on such date, or
(B) if no "bid" and "ask" prices are quoted on such
date, then on the next preceding date on which such
prices were quoted; or
(iii) if the Common Stock is not then
traded on a national securities exchange or quoted
on the NASDAQ National Market System, the value
determined in good faith by the Committee.
(g) "Good Cause," with respect to any dismissal of
Grantee from his or her employment with the Company or any of its affiliates,
shall mean the dismissal of the Grantee from such employment by the Company or
any of its affiliates by reason of (i) the Grantee's being convicted of, or
pleading guilty or confessing to, any felony or any act of fraud,
misappropriation or embezzlement, (ii) the Grantee's improperly releasing or
misappropriating trade secrets or other tangible or intangible property of the
Company or any of its affiliates or engaging in a dishonest act to the damage
or prejudice of the Company or any of its affiliates or in willful or grossly
negligent conduct or activities materially damaging to the property, business
or reputation of the Company or any of its affiliates, or (iii) the Grantee's
failing, without reasonable cause, to devote his or her full business time and
efforts to the Company or any of its affiliates.
(h) This "Option" shall mean the option evidenced by
this Option Agreement, which is intended to be an "incentive stock option"
within the meaning of Code Section 422.
(i) The "Option Price" shall mean the purchase price of
each share of Common Stock that may be purchased by the Grantee upon the
exercise of this Option, in whole or in part. The Option Price is set forth
under "Exercise Price Per Share" on page 1 of this Option Agreement as adjusted
from time to time in accordance with the provisions hereof.
2. Grant of Option. Upon the terms and subject to the conditions
and limitations hereinafter set forth, the Grantee shall have the right, at any
time after the Exercise Date and on or before the Expiration Date, to purchase
the number of shares of Common Stock set forth on page 1 of this Option
Agreement and vested under Paragraph 1(d), such number of shares and the Option
Price being subject to adjustment in accordance with the provisions set forth
below and in accordance with the terms of the Plan notwithstanding anything to
the contrary herein.
3. Manner of Exercise. Subject to the terms, conditions, and
limitations set forth herein, this Option may be exercised in whole or in part
at any time or from time to time after the Exercise Date and on or before the
Expiration Date as to any part of the number of whole shares of
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<PAGE> 3
Common Stock then vested under Paragraph 1(d) and available under this Option.
Such exercise shall be effective only if the Grantee duly executes and delivers
to the Company, at the principal executive office of the Company or at such
other address as the Company may designate by notice in writing to the Grantee,
an option exercise form substantially the same as that attached hereto as
Exhibit A, indicating the number of shares of Common Stock to be purchased and
accompanied by payment of the Option Price and any withholding amounts
described below. Payment of the Option Price and any such withholding amounts
may be made (i) in cash or by the Grantee's personal check, a certified check,
a bank draft, or a postal or express money order payable to the order of the
Company in lawful money of the United States or in any combination of the
foregoing, or (ii) by delivery of mature shares of Common Stock, the Fair Value
of which is equal to the Option Price as of the Exercise Date.
Upon any effective exercise of this Option, the Company shall become
obligated to issue a certificate or certificates to the Grantee representing
the number of shares of Common Stock so purchased. Notwithstanding the
foregoing, no shares of Common Stock will be issued unless the Grantee (or his
representative as the case may be) shall pay to the Company or any affiliate,
as applicable, such amount as the Company or any affiliate may advise it is
required under applicable federal, state or local law to withhold and pay over
to governmental taxing authorities by reason of the purchase of such shares of
Common Stock pursuant to this Option. No fractional shares will be issued.
4. Expiration of Option. This Option shall expire, shall become
null and void, and shall be of no further force and effect upon the earlier to
occur of the following events:
(a) Three months after the date of the Grantee's
resignation or other voluntary termination of his or her employment with the
Company or any of its affiliates (other than by reason of his or her death or
"disability" within the meaning of Section 22(e)(3) of the Code), but during
such three month period the Option shall be exercisable only to the extent that
it was exercisable as of the date of resignation or termination;
(b) The dismissal of the Grantee from his or her
employment with the Company or any affiliate for Good Cause at any time;
(c) Three months after the date on which the Company or
any affiliate terminates the Grantee's employment for any reason other than
Good Cause, but during such three month period the Option shall be exercisable
only to the extent that it was exercisable as of the date of termination;
(d) One year after the date on which Grantee's
employment with the Company or any affiliate is terminated by reason of the
Grantee's death or "disability" within the meaning of Section 22(e)(3) of the
Code, but during such one year period the Option shall be exercisable only to
the extent that it was exercisable as of the date of death or disability; or
(e) Ten years from the Date of Grant.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the Grantee furnishes the Company an agreement in such form as the
Committee may specify) in which the Grantee (or any person acting on his
behalf) represents that the Common Stock acquired by him upon exercise are
being acquired for investment and not with a view to the sale or distribution
thereof, or such other representations as may be required by
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<PAGE> 4
the Committee in accordance with the advice of legal counsel, unless the
Committee shall have received advice from legal counsel that such
representation is not required.
6. Adjustment of Option Price and Number of Shares That May be
Purchased Hereunder. The Option Price and the number of shares of Common Stock
that may be purchased hereunder shall be subject to adjustment from time to
time by the Committee in accordance with the terms of the Plan in the event of
certain changes in the Common Stock or certain corporate transactions affecting
the number or value of the shares of Common Stock.
7. Notice of Adjustments. Upon the occurrence of any adjustment
of the Option Price, or any increase or decrease in the number of shares of
Common Stock that may be purchased upon the exercise of this Option, then, and
in each such case, the Company, within 30 days thereafter, shall give written
notice thereof to the Grantee at the address of the Grantee as shown on the
books of the Company, which notice shall state the Option Price as adjusted and
the increased or decreased number of shares that may be purchased upon the
exercise of this Option, setting forth in reasonable detail the method of
calculation of each.
8. Additional Conditions. The Grantee and any person acting on
the Grantee's behalf agrees and acknowledges that any shares of Common Stock
issued or transferred under this Option may be issued or transferred subject to
such conditions, in addition to those set forth in this Option, as the
Committee or the Company may impose and may require the Grantee (or any person
acting on the Grantee's behalf) to deliver and comply in all respects with the
Company's shareholders agreement, if any, as may be in effect at the time of
any exercise of this Option. No shares shall be issued upon exercise of this
Option prior to the delivery of a properly executed shareholders agreement or
such other agreement or acknowledgment that the Committee shall deem necessary
to ensure that the Common Stock acquired pursuant to the Option will be subject
to such shareholders agreement.
9. Assignment. This Option may not be transferred or assigned by
the Grantee otherwise than by will or by the laws of descent and distribution
and, during the lifetime of the Grantee, may be exercised, in whole or in part,
only by the Grantee; provided, however, subject to paragraph 4(d) hereof, in
the event of the Grantee's death or disability, this Option may be exercised by
his or her personal representative, heirs or legatees.
10. No Right to Continued Employment. This Option does not confer
upon the Grantee the right to continued employment with the Company or any
affiliate, nor shall it interfere with the right of the Company or any
affiliate to terminate his or her employment at any time.
11. Disqualifying Disposition. If the Grantee disposes of any
shares of Common Stock acquired pursuant to exercise of this Option prior to
the later of two years after the Date of Grant of this Option or one year after
the transfer of any share to the Grantee pursuant to the exercise of this
Option, such disposition shall be treated as a disqualifying disposition under
Code Section 421(b) and not a disposition of a share acquired pursuant to the
exercise of an incentive stock option. The Grantee shall notify the Company in
writing in the event that, prior to the later of two years after the date of
grant of this Option or one year after the transfer of any share to the Grantee
pursuant to the exercise of this Option, the Grantee shall dispose of such
share. Such notice shall state the date of disposition, the nature of the
disposition and the price, if any, received for the share.
12. Miscellaneous.
(a) The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
of this Option, a sufficient number of shares of
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<PAGE> 5
Common Stock to permit the exercise of this Option in full.
(b) The terms of this Option shall be binding upon and
shall inure to the benefit of any successors or assigns of the Company and of
the Grantee.
(c) The Grantee shall not be entitled to vote or to
receive dividends with respect to any Common Stock that may be, but has not
been, purchased under this Option and shall not be deemed to be a shareholder
of the Company with respect to any such Common Stock for any purpose.
(d) This Option has been issued pursuant to the Plan and
shall be subject to, and governed by, the terms and provisions thereof. The
Grantee hereby agrees to be bound by all the terms and provisions of the Plan.
In the event of any conflict between the terms of the Plan and this Option
Agreement, the provisions of the Plan shall govern.
(e) This Option Agreement shall be governed by the laws
of the State of Georgia.
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<PAGE> 6
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Option Agreement as of the day and year first above written.
SOUTHERNBANK HOLDINGS, INC.
By:
----------------------------------------
Its:
----------------------------------------
GRANTEE:
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<PAGE> 7
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Grantee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: SouthernBank Holdings, Inc.
The undersigned hereby exercises the right to purchase __________
shares of Common Stock covered by the attached Option in accordance with the
terms and conditions thereof, and herewith makes payment of the Option Price of
such shares in full.
-------------------------------------
Signature
-------------------------------------
-------------------------------------
Address
-------------------------------------
Social Security Number
Date:__________
<PAGE> 1
EXHIBIT 10.10
SOUTHERNBANK HOLDINGS, INC.
NONQUALIFIED STOCK OPTION
COMMON STOCK
($1.00 PAR VALUE PER SHARE)
STOCK OPTION PLAN: SOUTHERNBANK HOLDINGS, INC. STOCK OPTION PLAN
OPTION FOR THE PURCHASE OF: _________ SHARES
EXERCISE PRICE PER SHARE: _________
DATE OF GRANT: __________________
THIS OPTION AGREEMENT, made and entered into this ____ day of
__________, ____ by and between SOUTHERNBANK HOLDINGS, INC., a Georgia
corporation (the "Company"), and ______________________________________ (the
"Grantee");
W I T N E S S E T H:
WHEREAS, the SOUTHERNBANK HOLDINGS, INC. STOCK OPTION PLAN (the
"Plan") has been adopted by the Company; and
WHEREAS, Article II of the Plan authorizes the Committee to cause the
Company to enter into a written agreement with the Grantee setting forth the
form and the amount of any award and any conditions and restrictions of the
award imposed by the Plan and the Committee; and
WHEREAS, the Committee desires to make an award to the Grantee
consisting of a Nonqualified Stock Option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Grantee hereby agree as follows:
1. General Definitions. Any capitalized terms herein shall have
the meaning set forth in the Plan, and, in addition, for purposes of this
Option Agreement, each of the following terms, when used herein, shall have the
meaning set forth below:
(a) The "Company" shall mean SouthernBank Holdings, Inc.
(b) The "Code" shall mean the Internal Revenue Code of
1986, as amended.
<PAGE> 2
(c) The "Common Stock" shall mean the common stock of
the Company, $1.00 par value per share.
(d) The "Exercise Date" shall mean the first anniversary
of the Date of Grant. At any time during the period of this Option commencing
with the first anniversary of the Date of Grant, the Grantee may purchase up to
20% of the shares covered by this Option and may purchase an additional 20% on
the second, third, fourth and fifth anniversary from the Date of Grant so that
this Option will be fully vested on the fifth anniversary of the Date of Grant.
(e) The "Expiration Date" shall mean the date on which
this Option expires pursuant to the provisions of paragraph 4 hereof.
(f) "Fair Market Value" of a share of Common Stock on a
specified date means:
(i) if the Common Stock is then
traded on a national securities exchange, the
closing price on such date of a share of the Common
Stock as traded on the largest securities exchange
on which it is then traded; or
(ii) if the Common Stock is not then
traded on a national securities exchange, the mean
between the closing composite inter-dealer "bid" and
"ask" prices for Common Stock, as quoted on the
NASDAQ National Market System (A) on such date, or
(B) if no "bid" and "ask" prices are quoted on such
date, then on the next preceding date on which such
prices were quoted; or
(iii) if the Common Stock is not then
traded on a national securities exchange or quoted
on the NASDAQ National Market System, the value
determined in good faith by the Committee.
(g) "Good Cause," with respect to any dismissal of
Grantee from his or her employment with the Company or any of its affiliates,
shall mean the dismissal of the Grantee from such employment by the Company or
any of its affiliates by reason of (i) the Grantee's being convicted of, or
pleading guilty or confessing to, any felony or any act of fraud,
misappropriation or embezzlement, (ii) the Grantee's improperly releasing or
misappropriating trade secrets or other tangible or intangible property of the
Company or any of its affiliates or engaging in a dishonest act to the damage
or prejudice of the Company or any of its affiliates or in willful or grossly
negligent conduct or activities materially damaging to the property, business
or reputation of the Company or any of its affiliates, or (iii) the Grantee's
failing, without reasonable cause, to devote his or her full business time and
efforts to the Company or any of its affiliates.
(h) This "Option" shall mean the option evidenced by
this Option Agreement, which is intended to be a "nonqualified stock option".
(i) The "Option Price" shall mean the purchase price of
each share of Common Stock that may be purchased by the Grantee upon the
exercise of this Option, in whole or in part. The Option Price is set forth
under "Exercise Price Per Share" on page 1 of this Option Agreement as adjusted
from time to time in accordance with the provisions hereof.
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<PAGE> 3
2. Grant of Option. Upon the terms and subject to the conditions
and limitations hereinafter set forth, the Grantee shall have the right, at any
time after the Exercise Date and on or before the Expiration Date, to purchase
the number of shares of Common Stock set forth on page 1 of this Option
Agreement and vested under Paragraph 1(d), such number of shares and the Option
Price being subject to adjustment in accordance with the provisions set forth
below and in accordance with the terms of the Plan notwithstanding anything to
the contrary herein.
3. Manner of Exercise. Subject to the terms, conditions, and
limitations set forth herein, this Option may be exercised in whole or in part
at any time or from time to time after the Exercise Date and on or before the
Expiration Date as to any part of the number of whole shares of Common Stock
then vested under Paragraph 1(d) and available under this Option. Such exercise
shall be effective only if the Grantee duly executes and delivers to the
Company, at the principal executive office of the Company or at such other
address as the Company may designate by notice in writing to the Grantee, an
option exercise form substantially the same as that attached hereto as Exhibit
A, indicating the number of shares of Common Stock to be purchased and
accompanied by payment of the Option Price and any withholding amounts
described below. Payment of the Option Price and any such withholding amounts
may be made (i) in cash or by the Grantee's personal check, a certified check,
a bank draft, or a postal or express money order payable to the order of the
Company in lawful money of the United States or in any combination of the
foregoing, or (ii) by delivery of mature shares of Common Stock, the Fair Value
of which is equal to the Option Price as of the Exercise Date.
Upon any effective exercise of this Option, the Company shall become
obligated to issue a certificate or certificates to the Grantee representing
the number of shares of Common Stock so purchased. Notwithstanding the
foregoing, no shares of Common Stock will be issued unless the Grantee (or his
representative as the case may be) shall pay to the Company or any affiliate,
as applicable, such amount as the Company or any affiliate may advise it is
required under applicable federal, state or local law to withhold and pay over
to governmental taxing authorities by reason of the purchase of such shares of
Common Stock pursuant to this Option. No fractional shares will be issued.
4. Expiration of Option. This Option shall expire, shall become
null and void, and shall be of no further force and effect upon the earlier to
occur of the following events:
(a) Three months after the date of the Grantee's
resignation or other voluntary termination of his or her employment with the
Company or any of its affiliates (other than by reason of his or her death or
"disability" within the meaning of Section 22(e)(3) of the Code), but during
such three month period the Option shall be exercisable only to the extent that
it was exercisable as of the date of resignation or termination;
(b) The dismissal of the Grantee from his or her
employment with the Company or any affiliate for Good Cause at any time;
(c) Three months after the date on which the Company or
any affiliate terminates the Grantee's employment for any reason other than
Good Cause, but during such three
3
<PAGE> 4
month period the Option shall be exercisable only to the extent that it was
exercisable as of the date of termination;
(d) One year after the date on which Grantee's
employment with the Company or any affiliate is terminated by reason of the
Grantee's death or "disability" within the meaning of Section 22(e)(3) of the
Code, but during such one year period the Option shall be exercisable only to
the extent that it was exercisable as of the date of death or disability; or
(e) Ten years from the Date of Grant.
5. Holder's Exercise Subject to Compliance with Securities Laws.
Notwithstanding the exercise of this Option, in whole or in part, in accordance
with all other provisions of this Option, the Company shall have no obligation
to honor such exercise and to issue Common Stock pursuant thereto unless and
until the Grantee furnishes the Company an agreement in such form as the
Committee may specify) in which the Grantee (or any person acting on his
behalf) represents that the Common Stock acquired by him upon exercise are
being acquired for investment and not with a view to the sale or distribution
thereof, or such other representations as may be required by the Committee in
accordance with the advice of legal counsel, unless the Committee shall have
received advice from legal counsel that such representation is not required.
6. Adjustment of Option Price and Number of Shares That May be
Purchased Hereunder. The Option Price and the number of shares of Common Stock
that may be purchased hereunder shall be subject to adjustment from time to
time by the Committee in accordance with the terms of the Plan in the event of
certain changes in the Common Stock or certain corporate transactions affecting
the number or value of the shares of Common Stock.
7. Notice of Adjustments. Upon the occurrence of any adjustment
of the Option Price, or any increase or decrease in the number of shares of
Common Stock that may be purchased upon the exercise of this Option, then, and
in each such case, the Company, within 30 days thereafter, shall give written
notice thereof to the Grantee at the address of the Grantee as shown on the
books of the Company, which notice shall state the Option Price as adjusted and
the increased or decreased number of shares that may be purchased upon the
exercise of this Option, setting forth in reasonable detail the method of
calculation of each.
8. Additional Conditions. The Grantee and any person acting on
the Grantee's behalf agrees and acknowledges that any shares of Common Stock
issued or transferred under this Option may be issued or transferred subject to
such conditions, in addition to those set forth in this Option, as the
Committee or the Company may impose and may require the Grantee (or any person
acting on the Grantee's behalf) to deliver and comply in all respects with the
Company's shareholders agreement, if any, as may be in effect at the time of
any exercise of this Option. No shares shall be issued upon exercise of this
Option prior to the delivery of a properly executed shareholders agreement or
such other agreement or acknowledgment that the Committee shall deem necessary
to ensure that the Common Stock acquired pursuant to the Option will be subject
to such shareholders agreement.
4
<PAGE> 5
9. Assignment. This Option may not be transferred or assigned by
the Grantee otherwise than by will or by the laws of descent and distribution
and, during the lifetime of the Grantee, may be exercised, in whole or in part,
only by the Grantee; provided, however, subject to paragraph 4(d) hereof, in
the event of the Grantee's death or disability, this Option may be exercised by
his or her personal representative, heirs or legatees.
10. No Right to Continued Employment. This Option does not confer
upon the Grantee the right to continued employment with the Company or any
affiliate, nor shall it interfere with the right of the Company or any
affiliate to terminate his or her employment at any time.
11. Miscellaneous.
(a) The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
of this Option, a sufficient number of shares of Common Stock to permit the
exercise of this Option in full.
(b) The terms of this Option shall be binding upon and
shall inure to the benefit of any successors or assigns of the Company and of
the Grantee.
(c) The Grantee shall not be entitled to vote or to
receive dividends with respect to any Common Stock that may be, but has not
been, purchased under this Option and shall not be deemed to be a shareholder
of the Company with respect to any such Common Stock for any purpose.
(d) This Option has been issued pursuant to the Plan and
shall be subject to, and governed by, the terms and provisions thereof. The
Grantee hereby agrees to be bound by all the terms and provisions of the Plan.
In the event of any conflict between the terms of the Plan and this Option
Agreement, the provisions of the Plan shall govern.
(e) This Option Agreement shall be governed by the laws
of the State of Georgia.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Option Agreement as of the day and year first above written.
SOUTHERNBANK HOLDINGS, INC.
By:
---------------------------------------------
Its:
--------------------------------------------
GRANTEE:
------------------------------------------------
6
<PAGE> 7
EXHIBIT A
OPTION EXERCISE FORM
(To be executed by the Grantee to
exercise the rights to purchase Common Stock
evidenced by the foregoing Option)
TO: SOUTHERNBANK HOLDINGS, INC.
The undersigned hereby exercises the right to purchase __________
shares of Common Stock covered by the attached Option in accordance with the
terms and conditions thereof, and herewith makes payment of the Option Price of
such shares in full.
------------------------------------
Signature
------------------------------------
------------------------------------
Address
------------------------------------
Social Security Number
Date: _____________________
<PAGE> 1
EXHIBIT 23.1
CONSENT OF MAULDIN & JENKINS, LLC
CONSENT OF INDEPENDENT AUDITOR
We have issued our report, dated February 22, 2000, accompanying the financial
statements as of and for the period ended December 31, 1999 contained in the
Registration Statement on Form SB-2 of SouthernBank Holdings, Inc. (the
"Registration Statement") and the Prospectus constituting a part thereof (the
"Prospectus"). We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts."
/s/ Mauldin & Jenkins, LLC
March 17, 2000
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-13-1999
<PERIOD-END> DEC-31-1999
<CASH> 19,690
<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> 44,662
<DEPOSITS> 0
<SHORT-TERM> 120,000
<LIABILITIES-OTHER> 7,596
<LONG-TERM> 0
0
0
<COMMON> 1
<OTHER-SE> (82,935)
<TOTAL-LIABILITIES-AND-EQUITY> 44,662
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 1,902
<INTEREST-INCOME-NET> (1,902)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 81,042
<INCOME-PRETAX> (82,944)
<INCOME-PRE-EXTRAORDINARY> (82,944)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82,944)
<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>
